HomeMy WebLinkAboutC-7670-5 - West Coast Highway, 3101 - Consent, Estoppel and Recognition Certificate 2022Recording Requested By
And When Recorded Mail To:
JOHN HANCOCK LIFE INSURANCE
COMPANY (U.S.A.)
197 Clarendon Street, C-2
Boston, Massachusetts 02116
JHUSA Loan No. 529024:11
RIC Loan No. 529024:51
WITH A COPY TO:
CITY OF NEWPORT BEACH
CITY CLERK'S OFFICE
100 Civic Center Drive RECORDING REQUESTED BY
FIRSTAMERICAN TITLE CO,
Newport Beach, CA 92660 NATIONAL COMMERCIAL SERVICES
W66- to 767gg
Recorded in Official Records, Orange County
Hugh Nguyen, Clerk -Recorder
241.00
$ R 0 0 1 3 5 4 6 3 5 6$
202200006835411:53 am 02118122
227 RW9A C34 78
0.00 0.00 0.00 0.00 231.00 0.00 0.000.000.00 3.00
Reference is made to that certain Lease Agreement (with Options for Renewal), dated May 13,
2019, as amended by that certain Amendment No. One to Lease Agreement (with Options for
Renewal) dated January 22, 2020, by and between City of Newport Beach, a California municipal
corporation and charter city ("Lessor") and Quay Works LLC, a California limited liability
company ("Lessee") (as amended, the "Lease") conveying a leasehold interest in the "Premises"
as defined in the Lease.
Lessor has been notified that Lessee will be obtaining a loan in the amount of Twenty -Four Million
and No/ 100 Dollars ($24,000,000.00) (as the same may be modified from time to time, the "Loan")
from John Hancock Life Insurance Company (U.S.A.), a Michigan corporation ("JHUSA") and
John Hancock GA Mortgage Trust, a Delaware statutory trust ("GA Trust" and together with
JHUSA, collectively, the "Lender"), which Loan is evidenced by that certain Deed of Trust Note
in favor of JHUSA in the amount of $12,000,000.00 and that certain Deed of Trust Note in favor
of GA Trust in the amount of $12,000,000.00 (collectively, as the same may be modified from
time to time, the "Note"). In connection therewith, Lessee and Lender desire to secure the Note
by, among other things, a Fee and Leasehold Deed of Trust, Assignment of Leases and Rents and
Security Agreement (the "Leasehold Mortgage"), encumbering, among other things, Lessee's
leasehold interest in the Premises, as more particularly set forth in the Leasehold Mortgage. The
Leasehold Mortgage shall be in a form substantially similar to Exhibit "I" attached hereto.
This Consent, Estoppel and Recognition Certificate (this "Certificate") is given for the benefit of
Lessee and Lender and, in particular, is given with the understanding that this Certificate
constitutes a material inducement for Lessee to execute the Leasehold Mortgage and for Lender to
make the Loan available to Lessee, and that Lender shall rely hereon in continuing to make the
Loan available to Lessee.
Exempt from fee per GC 27388.1 (a)(Ii,
fee cap of $225.00 reached.
4874-1593-1144.3
204555.00566/2-14-22/ndt/ndt
NOW, THEREFORE, FOR GOOD AND VALUABLE CONSIDERATION, THE
RECEIPT AND SUFFICIENCY OF WHICH ARE HEREBY ACKNOWLEDGED, THE
LESSOR HEREBY AGREES AS FOLLOWS:
1. Consent. In accordance with Section 16 of the Lease, Lessor hereby consents to
the Leasehold Mortgage, and agrees that (a) Lessee has satisfied all requirements under the Lease
for entering into the Leasehold Mortgage including but not limited to the requirements in Section
16(d) of the Lease; (b) Lessor acknowledges that it has reviewed the appraisal provided by Lessee
and pursuant to the value conclusions outlined in the appraisal, Lessor agrees that the Leasehold
Mortgage does not exceed the loan -to -value ratio limits set forth in Section 16(d) of the Lease; and
(c) Lessee shall have the right to execute the Leasehold Mortgage and record the same against the
Premises.
2. Estoppel and Recognition. Lessor hereby certifies to Lender that as of the date of
this Certificate:
a. The Lease has not been modified, supplemented, amended, extended or
renewed, with the exception of the above -referenced Amendment No. One
dated January 22, 2020.
b. To Lessor's knowledge, there exists no breach, default, or event or condition
which, with the giving of notice or the passage of time or both, would constitute
a breach or default by Lessee under the Lease.
c. The term of the Lease is five (5) years, beginning on May 13, 2019, and ending
May 13, 2024, with one (1) additional successive "Renewal Term" of thirty (30)
years, on the same terms and conditions contained in the Lease subject to Lessee
meeting the requirements for exercise of the extension.
d. Lessor hereby acknowledges and recognizes Lender as a "Leasehold
Mortgagee" as such term is defined in the Lease.
e. Lessor hereby acknowledges and recognizes the Leasehold Mortgage as a
"Leasehold Mortgage" as such term is defined in the Lease.
f. Lessor hereby acknowledges and recognizes Leasehold Mortgagee's name and
address for purposes of receiving notices pursuant Section 16(d)(ii) of the Lease
as follows:
John Hancock Life Insurance Company (U.S.A.)
Real Estate Finance Group
197 Clarendon Street, C-2
Boston, MA 02116
Re: JHUSA Loan No. 529024:11 &
RIC Loan No. 529024:51
4874-1593-1144.3
204555.00566/2-14-22/ndt/ndt -2-
Recording. Recordation of this document shall at discretion of Lender.
[Signature Page Follows]
4874-1593-11443
204555.00566/2-14-22/ndt/ndl _3_
Lessor acknowledges that this Certificate is made for the benefit of Lessee and Lender and,
in particular, that Lender is relying upon this Certificate in the extension of credit to Lessee.
"LESSOR"
CITY OF NEWPORT BEACH,
a California municipal corporation and charter city
Date: 2 15 ?,U 2 Z
By:
Grac4/ager ung
City
ATTEST:
Date: 2Mr)z022
By:
/�eil
City
APPROVED AS TO FORM:
CITY ATTORNE ' SFFICE
Date: �22-
By:
on . Harp
ti
ChyAttorney oya
(ALL SIGNATURES MUST BE ACKNOWLEDGED BY A NOTARY PUBLIC)
A notary public or other officer completing this certificate
verifies only the identity of the individual who signed the
document to which this certificate is attached, and not the
truthfulness, accuracy, or validity of that document.
State of California )
County of QRAAICE )
On FeMft`l I S ( 2-02-2, before me, J1cNNl FK 4NN rnV LVCY , Notary Public,
personally appeared (ABLE K . (.EV I LC, , who proved to me on the basis
of satisfactory evidence to be the person(4 whose nameFs) is/ar-e subscribed to the within
instrument and acknowledged to me that Lc, she/*my executed the same in kz�her/their authorized
capacity(4es), and that by his{her/t4eir signatures) on the instrument the person( -o), or the entity
upon behalf of which the person(s) acted, executed the instrument.
I certify under PENALTY OF PERJURY under the laws of the State of California that the
foregoing paragraph is true and correct.
hand and official seal.
Signature: ~» V './ (seal)
16my
JENNIFER ANN MULVEY
Notary Public • California
Orange County
Commission # 2375299
Comm. Expires Oct 12, 2025 r
Notary Page Consent, Estoppel and Recognition Certificate
EXHIBIT "1"
LEASEHOLD MORTGAGE
4874-1593-1144.3 EXHIBIT "I"
204555.00566/2-14-22/ndt/ndt - I -
RECORDING REQUESTED BY
AND WHEN RECORDED MAIL TO:
ALLEN MATKINS LECK GAMBLE
MALLORY & NATSIS LLP
Three Embarcadero Center, 12th Floor
San Francisco, California 94111-4074
Attention: Nancy Lundeen, Esq.
JHUSA Loan No. 529024:11
RIC Loan No. 529024:51
FEE AND LEASEHOLD DEED OF TRUST, ASSIGNMENT OF LEASES
AND RENTS AND SECURITY AGREEMENT
QUAY WORKS LLC,
a California limited liability company
(Trustor)
TO
FIRST AMERICAN TITLE INSURANCE COMPANY
(Trustee)
FOR THE BENEFIT OF
JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.)
(Beneficiary)
Dated as of February , 2022
LOCATION OF PROPERTY:
3101 West Coast Highway, Newport Beach, CA 92663
4848-1780-2228.6
2045 5 5.005 66/2-1 -22/bsd/ndt Quay
TABLE OF CONTENTS
4848-1780-2228.6
204555.00566/2-1-22/bsd/udt 0) Quay
Page
1.
Payment of Indebtedness and Incorporation of Covenants, Conditions and
Agreements.......................................................................................................................
5
2.
Warranty of Title...............................................................................................................
5
3.
Insurance; Casualty...........................................................................................................
5
4.
Payment of Taxes, Etc....................................................................................................11
5.
Reserve Fund..................................................................................................................12
6.
Condemnation.................................................................................................................14
7.
Leases and Rents.............................................................................................................15
8.
Maintenance and Use of Trust Property .........................................................................18
9.
Transfer or Encumbrance of the Trust Property or Interests in the Trustor; Other
Indebtedness....................................................................................................................19
10.
Estoppel Certificates.......................................................................................................
24
11.
No Cooperative or Condominium...................................................................................24
12.
Changes in the Laws Regarding Taxation......................................................................
25
13.
No Credits on Account of the Indebtedness...................................................................25
14.
Documentary Stamps......................................................................................................
25
15.
Right of Entry .................................................................................................................25
16.
Books and Records.........................................................................................................25
17.
Performance of Other Agreements.................................................................................26
18.
Representations and Covenants Concerning Loan.........................................................26
19.
Single Asset Entity/Separateness....................................................................................29
20.
Events of Default; Remedies..........................................................................................31
21.
Additional Remedies.......................................................................................................33
22.
Right to Cure Defaults....................................................................................................35
23.
Late Payment Charge......................................................................................................35
24.
Prepayment.....................................................................................................................35
25.
Prepayment After Event of Default................................................................................
36
26.
Appointment of Receiver................................................................................................36
27.
Security Agreement........................................................................................................36
28.
Authority.........................................................................................................................
37
29.
Actions and Proceedings.................................................................................................38
30.
Further Acts, Etc.............................................................................................................
38
31.
Recording of Deed of Trust, Etc.....................................................................................38
32.
Usury Laws.....................................................................................................................
39
33.
Sole Discretion of Beneficiary........................................................................................39
34.
Recovery of Sums Required To Be Paid........................................................................39
35.
Marshalling and Other Matters.......................................................................................
39
36.
Waiver of Notice.............................................................................................................39
37.
Remedies of Trustor........................................................................................................39
38.
Reporting Requirements.................................................................................................40
39.
Hazardous Materials.......................................................................................................40
40.
Asbestos..........................................................................................................................
43
41.
Bankruptcy or Insolvency...............................................................................................43
42.
Compliance with ERISA and State Statutes on Governmental Plans .............................44
4848-1780-2228.6
204555.00566/2-1-22/bsd/udt 0) Quay
4848-1780-222&6
204555.00566/2-1-22/bsd/ndt Quay
Page
43.
44.
Assignments.................................................................................................................... 45
Cooperation
.....................................................................................................................45
45.
Indemnification for Recourse Obligations......................................................................46
46.
Exculpation and Recourse...............................................................................................46
47.
48.
Notices............................................................................................................................48
Non-Waiver
.....................................................................................................................49
49.
Joint and Several Liability..............................................................................................49
50.
Severability.....................................................................................................................49
51.
52.
Duplicate Originals.........................................................................................................
Indemnity and Beneficiary's Costs.................................................................................50
49
53.
Certain Definitions..........................................................................................................50
54.
No Oral Change..............................................................................................................
50
55.
No Foreign Person..........................................................................................................51
56.
57.
Separate Tax Lot.............................................................................................................
Right to Release Any Portion of the Trust Property .......................................................
51
51
58.
Subrogation.....................................................................................................................51
59.
60.
Administrative Fees........................................................................................................51
Disclosure
.......................................................................................................................51
61.
Headings, Etc..................................................................................................................
52
62.
Address of Real Property................................................................................................
52
63.
Method of Payment.........................................................................................................52
64.
Publicity..........................................................................................................................
52
65.
Relationship.................................................................................................................... 52
66.
Homestead.......................................................................................................................52
67.
No Third -Party Beneficiaries..........................................................................................52
68.
Compliance with Regulation U.......................................................................................52
69.
70.
Entire Agreement............................................................................................................
Servicer
52
71.
...........................................................................................................................
Book Entry
52
......................................................................................................................
53
72.
Governing Law; Consent to Jurisdiction........................................................................
53
73.
Incorporation of State Law.............................................................................................
54
74.
Representations and Warranties Regarding Ground Lease............................................54
75.
Notices Under Ground Lease..........................................................................................55
76.
Trustor's Obligations to Comply with Ground Lease.....................................................55
77.
Beneficiary's Right to Cure Ground Lessee Defaults .....................................................
56
78.
Covenants to Protect Leasehold Estate...........................................................................
56
79.
Ground Lessee's Bankruptcy..........................................................................................56
80.
Ground Lessor's Bankruptcy..........................................................................................
57
81.
No Merger of Estates......................................................................................................
57
82.
New Lease.......................................................................................................................58
83.
Appointment of Beneficiary as Trustor's Attorney-in-Fact............................................58
84.
Definitions Relating to Ground Lease............................................................................58
85.
Ground Lease Estoppel Certificate and Agreement........................................................59
86.
Extension Options...........................................................................................................59
4848-1780-222&6
204555.00566/2-1-22/bsd/ndt Quay
AdditionalLand..........................................................................................................................2
Architect...................................................................................................................................... 9
Assignee....................................................................................................................................16
Assignment of Leases and Rents..............................................................................................16
Assignor....................................................................................................................................16
BankruptcyCode........................................................................................................................3
BarredPerson............................................................................................................................30
Beneficiary............................................................................................................................1, 51
Beneficiary's Assumption Notice.............................................................................................57
CERC LA................................................................................................................................... 42
Code..........................................................................................................................................39
Collateral................................................................................................................................... 38
CondemnationRestoration........................................................................................................15
ConfirmatoryEvidence............................................................................................................... 8
Corporation...............................................................................................................................25
Deedof Trust..............................................................................................................................1
Depository.................................................................................................................................11
EnvironmentalLaws.................................................................................................................42
Equipment................................................................................................................................... 3
ERISA.......................................................................................................................................45
Eventof Default........................................................................................................................32
FeeEstate..................................................................................................................................58
FinalVersion.............................................................................................................................18
FinancialControl Laws.............................................................................................................29
foreignperson........................................................................................................................... 51
GAAP........................................................................................................................................31
Guarantor..................................................................................................................................51
Guarantors................................................................................................................................. 47
Guaranty.................................................................................................................................... 51
HazardousMaterials.................................................................................................................42
Improvements.............................................................................................................................2
Indebtedness................................................................................................................................1
Internal Transfer Conditions.....................................................................................................24
InternalTransfers......................................................................................................................24
Land............................................................................................................................................1
LateCharge...............................................................................................................................37
Leases.......................................................................................................................................... 3
Loan............................................................................................................................................1
LoanDocuments....................................................................................................................... 51
MajorTenant.............................................................................................................................10
ManagementAgreement...........................................................................................................29
Manager....................................................................................................................................29
Mold.......................................................................................................................................... 42
4848-1780-2228.6
204555.00566/2-1-22/bsd/ndt �ll1� Quay
Page(s)
Notes.....................................................................................................................................1, 51
OFAC........................................................................................................................................30
Option.......................................................................................................................................60
OptionExercise Window.......................................................................................................... 60
OtherCharges...........................................................................................................................12
PermittedEncumbrances............................................................................................................5
person........................................................................................................................................ 51
Policies........................................................................................................................................ 7
ProposedDraft..........................................................................................................................18
RatingAgencies........................................................................................................................23
RCRA........................................................................................................................................42
RealProperty ..............................................................................................................................2
RecourseObligations................................................................................................................47
Rents.....................................................................................................................................3, 17
ReplacementReserve Fund.......................................................................................................13
ReserveFund............................................................................................................................15
Restoration.................................................................................................:................................ 8
SARA........................................................................................................................................ 42
Secondary Market Transactions................................................................................................46
Servicer.....................................................................................................................................53
SmallLease...............................................................................................................................17
SNDA........................................................................................................................................17
Specially Designated National and Blocked Person.................................................................30
SuspensionPeriod.......................................................................................................................7
Taxand Insurance Fund............................................................................................................13
Taxes.........................................................................................................................................12
Tenant Improvement and Leasing Commission Reserve Fund................................................14
Terrorism Insurance Coverage....................................................................................................7
TidelandsLease..........................................................................................................................1
TidelandsLessor.........................................................................................................................1
TidelandsRent..........................................................................................................................55
Transferee.................................................................................................................................22
TrustProperty .......................................................................................................................1, 51
Trustee...................................................................................................................................1, 51
Trustor...................................................................................................................................1, 51
TSCA........................................................................................................................................42
UniformCommercial Code.........................................................................................................3
4848-1780-2228.6
204555.00566/2-1-22/bsd/ndt (iv) Quay
MUSA Loan No. 529024:11
RIC Loan No. 529024:51
THIS FEE AND LEASEHOLD DEED OF TRUST, ASSIGNMENT OF LEASES
AND RENTS AND SECURITY AGREEMENT (this "Deed of Trust"), made as of February ,
2022, by QUAY WORKS LLC, a California limited liability company, having its principal place
of business at 3101 West Coast Highway, Suite 100 Newport Beach, California 92663
("Trustor"), to FIRST AMERICAN TITLE INSURANCE COMPANY, having its principal place
of business at 18500 Von Karman Avenue, Suite 600, Irvine, California 92612 ("Trustee"), to and
for the benefit of JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.), a Michigan
corporation, having an address at 197 Clarendon Street, C-2, Boston, Massachusetts 02116, as
collateral agent for itself and any other noteholders (`Beneficiary").
WITNESSETH:
To secure the payment of an indebtedness in the principal sum of Twenty Four
Million and NO/100 Dollars ($24,000,000.00), lawful money of the United States of America, to
be paid with interest and all other sums and fees payable according to those certain deed of trust
notes, each dated the date hereof made by Trustor to Beneficiary (in its capacity as a lender) and
to John Hancock GA Mortgage Trust, a Delaware statutory trust (the deed of trust notes, together
with all extensions, renewals or modifications thereof, being hereinafter collectively called the
"Notes"; and the loan evidenced by the Notes being hereinafter referred to as the "Loan") and all
indebtedness, obligations, liabilities and expenses due hereunder and under any other Loan
Document (as hereinafter defined) (the indebtedness, interest, other sums, fees, obligations and all
other sums due under the Notes and/or hereunder and/or any other Loan Document being
collectively called the "Indebtedness"), Trustor by these presents does mortgage, give, grant,
bargain, sell, alien, enfeoff, convey, confirm, pledge, assign and hypothecate unto Trustee, in trust
for the benefit of Beneficiary and hereby grants unto Beneficiary a security interest in all right,
title and interest of Trustor in the following property and rights, whether now owned or held by
Trustor or hereafter acquired by Trustor (collectively, the "Trust Property").
GRANTING CLAUSE ONE
All right, title and interest in and to the real property or properties described on
Exhibit A hereto (the "Fee Land"), all of Trustor's leasehold title and interest in and to the real
property or properties described on Exhibit C hereto (the "Leasehold Land" and together with the
Fee Land, collectively referred to herein as, the "Land"), and Trustor's right, title and interest in
the Tidelands Lease (defined below), which is referred to herein as the Leasehold Estate (as in
Paragraph 84 below). The Leasehold Estate was created pursuant to that certain Lease Agreement
(With Options for Renewal) dated May 13, 2019, by and between Trustor, as lessee, and City of
Newport Beach, a California municipal corporation ("Tidelands Lessor"), as lessor, as amended
by that certain Amendment No. One to Lease Agreement (with Options for Renewal) dated
January 22, 2020, as memorialized by that certain Memorandum of Lease Agreement (with
Options for Renewal) dated May 13, 2019 and recorded on May 15, 2019, in the Official Records
of Orange County, California as Instrument Number 2019000162461 (as amended, the "Tidelands
Lease").
This conveyance shall include and the lien, security interest and assignment created
hereby shall encumber and extend to all other, further or additional title, estates, interest or rights
4848-1780-2228.6
204555.00566i2-1-22/bsd/ndt Quay
JHUSA Loan No. 529024:11
RIC Loan No. 529024:51
that may exist now or at any time be acquired by Trustor in or to the real property demised under
the Tidelands Lease creating a leasehold estate related to or covering all or any of the Trust
Property and including without limitation Trustor's rights, if any, to purchase the real property
demised under the Tidelands Lease and, if fee simple title to any of such real property shall ever
become vested in Trustor, such fee simple interest shall be encumbered by this Deed of Trust in
the same manner as if Trustor had fee simple title to such real property as of the date of execution
hereof.
GRANTING CLAUSE TWO
All additional lands, estates and development rights hereafter acquired by Trustor
for use in connection with the Land and the development of the Land and all additional lands and
estates therein which may, from time to time, by supplemental deed of trust or otherwise, be
expressly made subject to the lien thereof (collectively, the "Additional Land").
GRANTING CLAUSE THREE
All Trustor's right, title and interest in any and all buildings, structures, fixtures,
additions, enlargements, extensions, modifications, repairs, replacements and improvements now
or hereafter located on the Land or any part thereof (collectively, the "Improvements"); the Land,
the Additional Land and the Improvements hereinafter collectively referred to as the "Real
Property").
GRANTING CLAUSE FOUR
All easements, rights-of-way, strips and gores of land, streets, ways, alleys,
passages, sewer rights, water, water courses, water rights and powers, oil, gas and mineral rights,
air rights and development rights, zoning rights, tax credits or benefits and all estates, rights, titles,
interests, privileges, liberties, tenements, hereditaments and appurtenances of any nature
whatsoever in any way now or hereafter belonging, relating or pertaining to the Real Property or
any part thereof and the reversion and reversions, remainder and remainders and all land lying in
the bed of any street, road or avenue, opened or proposed, in front of or adjoining the Land or any
part thereof to the center line thereof and all the estates, rights, titles, interests, dower and rights of
dower, curtesy and rights of curtesy, property, possession, claim and demand whatsoever, both in
law and in equity, of Trustor in, of and to the Real Property and every part and parcel thereof, with
the appurtenances thereto.
GRANTING CLAUSE FIVE
All machinery, equipment, fixtures and other property of every kind and nature
whatsoever owned by Trustor or in which Trustor has or shall have an interest (to the extent of
such interest) now or hereafter located upon the Real Property or appurtenant thereto and usable
in connection with the present or future operation and occupancy of the Real Property and all
building equipment, materials and supplies of any nature whatsoever owned by Trustor or in which
Trustor has or shall have an interest (to the extent of such interest) now or hereafter located upon
the Real Property or appurtenant thereto or usable in connection with the present or future
operation and occupancy of the Real Property, including but not limited to all heating, ventilating,
4848-1780-2228.6
20455 5.00566/2-1-22/bsd/ndt -2- Quay
JHUSA Loan No. 529024:11
RIC Loan No. 529024:51
air conditioning, plumbing, lighting, communications and elevator machinery, equipment and
fixtures (hereinafter collectively called the "Equipment") and the right, title and interest of Trustor
in and to any of the Equipment which may be subject to any security agreements (as defined in the
Uniform Commercial Code of the State in which the Trust Property is located (the "Uniform
Commercial Code")) superior, inferior or pari passu in lien to the lien of this Deed of Trust. In
connection with Equipment which is leased to Trustor or which is subject to a lien or security
interest which is superior to the lien of this Deed of Trust, this Deed of Trust shall also cover all
right, title and interest of Trustor in and to all deposits and the benefit of all payments now or
hereafter made with respect to such Equipment.
GRANTING CLAUSE SIX
All awards or payments, including interest thereon, which may heretofore and
hereafter be made with respect to the Real Property or any part thereof, whether from the exercise
of the right of eminent domain (including but not limited to any transfer made in lieu of or in
anticipation of the exercise of said right), or for a change of grade or for any other injury to or
decrease in the value of the Real Property; provided however, that the foregoing shall not include
any awards or payments received by Trustor in connection with that certain action fled by Trustor,
as plaintiff, against Morris Cerullo World Evangelism, a California corporation, et al., as
defendants, fled in the Superior Court of the County of Orange in the State of California as case
number 30-2019-01056982-CU-BC-CJC (the "Pending Lawsuit") and Beneficiary shall have no
interest therein.
GRANTING CLAUSE SEVEN
All leases and subleases (including, without limitation, all guarantees thereof) and
other agreements affecting the use, enjoyment and/or occupancy of the Real Property or any part
thereof (including, without limitation, agreements for possessory interests granted to third parties
with respect to the boat slips within the Leased Premises (as hereinafter defined), now or hereafter
entered into (including any use or occupancy arrangements created pursuant to Section 365(h) of
Title 11 of the United States Code (the "Bankruptcy Code") or otherwise in connection with the
commencement or continuance of any bankruptcy, reorganization, arrangement, insolvency,
dissolution, receivership or similar proceedings or any assignment for the benefit of creditors in
respect of any tenant or occupant of any portion of the Real Property), together with any extension
or renewal of the same (the "Leases") and all income, rents, issues, profits, revenues and proceeds
including, but not limited to, all oil and gas or other mineral royalties and bonuses from the Real
Property (including any payments received pursuant to Section 502(b) of the Bankruptcy Code or
otherwise in connection with the commencement or continuance of any bankruptcy,
reorganization, arrangement, insolvency, dissolution, receivership or similar proceedings or any
assignment for the benefit of creditors in respect of any tenant or occupant of any portion of the
Real Property and all claims as a creditor in connection with any of the foregoing) (the "Rents")
and all proceeds from the sale, cancellation, surrender or other disposition of the Leases and the
right to receive and apply the Rents to the payment of the Indebtedness.
GRANTING CLAUSE EIGHT
4848-1780-2228.6
204555.00566/2- I-22/bsd/ndt -3- Quay
JHUSA Loan No. 529024:11
RIC Loan No. 529024:51
All proceeds of and any unearned premiums on any insurance policies covering the
Real Property or any part thereof including, without limitation, the right to receive and apply the
proceeds of any insurance, judgments or settlements made in lieu thereof, for damage to the Real
Property or any part thereof.
GRANTING CLAUSE NINE
All tax refunds, including interest thereon, tax credits and tax abatements and the
right to receive or benefit from the same, which may be payable or available with respect to the
Real Property.
GRANTING CLAUSE TEN
The right, in the name and on behalf of Trustor, to appear in and defend any action
or proceeding brought with respect to the Real Property or any part thereof and to commence any
action or proceeding to protect the interest of Beneficiary in the Real Property or any part thereof.
GRANTING CLAUSE ELEVEN
All accounts receivable, utility or other deposits, intangibles, contract rights,
interests, estates or other claims, both in law and in equity, which Trustor now has or may hereafter
acquire arising out of the Real Property or any part thereof.
GRANTING CLAUSE TWELVE
All rights which Trustor now has or may hereafter acquire to be indemnified and/or
held harmless from any liability, loss, damage, cost or expense (including, without limitation,
reasonable attorneys' fees and disbursements) relating to the Real Property or any part thereof.
GRANTING CLAUSE THIRTEEN
All plans and specifications, maps, surveys, studies, reports, contracts,
subcontracts, service contracts, management contracts, franchise agreements and other
agreements, franchises, trade names, trademarks, symbols, service marks, approvals, consents,
permits, special permits, licenses and rights, whether governmental or otherwise, respecting the
use, occupation, development, construction and/or operation of the Real Property or any part
thereof or the activities conducted thereon or therein, or otherwise pertaining to the Real Property
or any part thereof.
GRANTING CLAUSE FOURTEEN
All proceeds, products, offspring, rents and profits from any of the foregoing,
including, without limitation, those from sale, exchange, transfer, collection, loss, damage,
disposition, substitution or replacement of any of the foregoing.
WITH RESPECT to any portion of the Trust Property which is not real estate under
the laws of the State in which the Trust Property is located, Trustor hereby grants to Beneficiary a
security interest in the same for the purposes set forth hereunder and Beneficiary shall be vested
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with a security interest in all rights, power and authority granted hereunder or by law to Trustee
with respect thereto.
TO HAVE AND TO HOLD the above granted and described Trust Property unto
and to the use and benefit of Trustee and its successors and assigns for the benefit of Beneficiary
and the successors and assigns of Beneficiary forever.
IN TRUST, WITH POWER OF SALE, to secure the payment to Beneficiary of the
Indebtedness at the time and in the manner provided for its payment in the Note and in this Deed
of Trust;
PROVIDED, HOWEVER, these presents are upon the express condition, if Trustor
shall pay to Beneficiary the Indebtedness as provided in the Notes and this Deed of Trust and shall
well and truly abide by and comply with each and every covenant and condition set forth herein,
in the Notes and in the other Loan Documents, these presents and the estate hereby granted shall
cease, terminate and be void.
AND Trustor represents and warrants to and covenants and agrees with Beneficiary
and Trustee as follows:
PART I - GENERAL PROVISIONS
1. Payment of Indebtedness and Incorporation of Covenants, Conditions
and Agreements. Trustor shall pay the Indebtedness at the time and in the manner provided in
the Notes, this Deed of Trust and the other Loan Documents. All the covenants, conditions and
agreements contained in the Notes 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.
2. Warranty of Title. Trustor has good and marketable title to the Trust
Property; Trustor has the right to mortgage, give, grant, bargain, sell, alienate, enfeoff, convey,
confirm, pledge, lease, assign, hypothecate and grant a security interest in the Trust Property
(except the Leased Land); Trustor has the right to grant a security interest in Trustor's leasehold
interest in the Leased Land; Trustor possesses an indefeasible fee estate in the Real Property
(except for the Leased Land), and Trustor possesses an indefeasible leasehold estate in the Leased
Premises; and Trustor owns the Trust Property free and clear of all liens, encumbrances and
charges whatsoever except those exceptions shown in the title insurance policy insuring the lien
of this Deed of Trust (this Deed of Trust and the liens, encumbrances and charges shown as
exceptions in such title policy, hereinafter collectively referred to as the "Permitted
Encumbrances"). Trustor 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 the same to
Beneficiary and Trustee against the claims of all persons whomsoever.
3. Insurance; Casualty.
(a) Trustor, at its sole cost and expense, shall keep the Trust Property
insured during the term of this Deed of Trust for the mutual benefit of Trustor, Trustee and
Beneficiary against loss or damage by any peril covered by a standard "special perils" or "all -risk -
of -physical -loss" insurance policy including, without limitation, riot and civil commotion, acts of
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terrorism, vandalism, malicious mischief, burglary, theft and mysterious disappearance in an
amount (i) equal to at least one hundred percent (100%) of the then "full replacement cost" of the
Improvements and Equipment, without deduction for physical depreciation and (ii) such that the
insurer would not deem Trustor a coinsurer under such policies. The policies of insurance carried
in accordance with this Paragraph 3 shall be paid annually in advance and shall contain the
"Replacement Cost Endorsement" with a waiver of depreciation, and shall have a deductible no
greater than $25,000 unless so agreed by Beneficiary. In addition, Beneficiary may, at its option,
retain the services of a firm to monitor the policies of insurance for conformance with this Deed
of Trust, the cost of which shall be borne by Trustor.
(b) Trustor, at its sole cost and expense, for the mutual benefit of
Trustor, Trustee and Beneficiary, shall also obtain and maintain during the term of this Deed of
Trust the following policies of insurance:
(i) Flood insurance if any part of the Real Property is located in
an area identified by the Secretary of Housing and Urban Development 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 successor act thereto) in an amount at least
equal to the outstanding principal amount of the Notes or the maximum limit of coverage
available with respect to the Improvements and Equipment under said Act, whichever is
less.
(ii) Comprehensive public liability insurance, including
broad form property damage, blanket contractual and personal injuries (including death
resulting therefrom) coverages.
(iii) Rental loss insurance in an amount equal to at least
one hundred percent (100%) of 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 (1) 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) Insurance against loss or damage from 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.
(v) Such other insurance (including, without limitation,
earthquake insurance) as may from time to time be reasonably required by Beneficiary in
order to protect its interests or, in the event of a Secondary Market Transaction, as required
by the Rating Agencies (as such terms are hereinafter defined).
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(c) All policies of insurance (the "Policies") required pursuant to this
Paragraph 3 shall be issued by an insurer reasonably satisfactory to Beneficiary (and, in the event
of a Secondary Market Transaction, to the Rating Agencies), (ii) shall contain the standard New
York Mortgagee non -contribution clause, or other mortgagee clause from the applicable insurer
reasonably satisfactory to Beneficiary, naming Beneficiary as the person to which all payments
made by such insurance company shall be paid, (iii) shall be maintained throughout the term of
this Deed of Trust without cost to Beneficiary, (iv) shall be delivered to Beneficiary, (v) shall
contain such provisions as Beneficiary deems reasonably necessary or desirable to protect its
interest including, without limitation, endorsements providing that neither Trustor, Trustee,
Beneficiary nor any other parry shall be a co-insurer under such Policies and that Beneficiary shall
receive at least thirty (3 0) days prior written notice of any modification or cancellation (ten (10)
days in the event of non-payment) and (vi) shall be reasonably satisfactory in form and substance
to Beneficiary (and, in the event of a Secondary Market Transaction, to the Rating Agencies) and
shall be approved by Beneficiary (and, in the event of a Secondary Market Transaction, by the
Rating Agencies) as to amounts, form, risk coverage, deductibles, loss payees and insureds. All
amounts recoverable thereunder are hereby assigned to the Beneficiary, subject to the terms and
conditions of this Deed of Trust. Prior to the expiration date of each of the Policies, Trustor will
deliver to Beneficiary satisfactory evidence of the renewal of each of the Policies.
Notwithstanding the foregoing, earthquake insurance shall only be required if a
Seismic Risk study acceptable to Lender indicates a Scenario Expected Loss of 20% or greater.
Further notwithstanding the foregoing, insurance coverage obligations, the property
insurance coverage applicable to the Trust Property may exclude coverage for acts of terrorism
("Terrorism Insurance Coverage") until the earlier of (A) the expiration of the existing insurance
policy, if any, and (B) 12 months from the date hereof ("Suspension Period"), so long as the
Terrorism Coverage Suspension Conditions (as defined below) are satisfied.
following:
The term Terrorism Coverage Suspension Conditions shall mean all of the
i. No default has occurred and is continuing under the Loan Documents
beyond any applicable notice and cure period;
ii. The Trustor named herein is the owner of the Trust Property; and
iii. Terrorism Insurance Coverage is not available at a Commercially
Reasonable Cost (as defined below). It is understood that if standard
coverage is not available at a Commercially Reasonable Cost, but some
more limited coverage is available at a Commercially Reasonable Cost,
Trustor will purchase such limited coverage.
The term Commercially Reasonable Cost shall mean that the cost of Terrorism
Insurance Coverage (a) does not increase the premium for the then -existing
property insurance coverage applicable to the Trust Property by more than one
hundred percent (100%).
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Beneficiary shall have the right, from time to time, to require the Trustor to
provide satisfactory evidence to Beneficiary indicating whether the required
Terrorism Insurance Coverage is available at a Commercially Reasonable Cost
("Confirmatory Evidence"). If, at the end of the Suspension Period, the
Terrorism Coverage Suspension Conditions have been satisfied, this suspension
shall continue.
If the Terrorism Coverage Suspension Conditions are not satisfied at any time or
Trustor fails to provide Confirmatory Evidence as required, then the suspension of
the requirement to provide Terrorism Insurance Coverage shall terminate and
Trustor shall be required to obtain such coverage and provide evidence of such
coverage reasonably satisfactory to Beneficiary within ten business (10) days.
(d) If the Improvements shall be damaged or destroyed, in whole or in
part, by fire or other casualty, Trustor shall give prompt notice thereof to Beneficiary and prior to
the making of any repairs thereto. In no event shall Trustor terminate the Tidelands Lease as a
result of any casualty, damage or destruction without Beneficiary's prior written consent.
Following the occurrence of fire or other casualty, Trustor, regardless of whether insurance
proceeds are payable under the Policies or, if paid, are made available to Trustor by Beneficiary,
shall promptly proceed with the repair, alteration, restoration, replacement or rebuilding of the
Improvements as near as possible to their value, utility, condition and character prior to such
damage or destruction. Such repairs, alterations, restoration, replacement and rebuilding are herein
collectively referred to as the "Restoration". The Restoration shall be performed in accordance
with the following provisions:
(i) Trustor shall procure, pay for and furnish to Beneficiary true
copies of all required governmental permits, certificates and approvals with respect to the
Restoration.
(ii) Trustor shall furnish Beneficiary, within sixty (60) days of
the casualty, evidence reasonably satisfactory to Beneficiary of the cost to complete the
Restoration.
(iii) If the Restoration involves structural work or the estimated
cost to complete the Restoration exceeds five percent (5%) of the original principal amount
of the Loan, the Restoration shall be conducted under the supervision of an architect (the
"Architect") selected by Trustor and approved by Beneficiary (which approval shall not
be unreasonably withheld), and no such Restoration shall be made except in accordance
with detailed plans and specifications, detailed cost estimates and detailed work schedules
approved by Beneficiary (which approval shall not be unreasonably withheld).
(iv) If the estimated cost of the Restoration shall exceed twenty
percent (20%) of the original principal amount of the Loan in the aggregate, at the request
of Beneficiary, Trustor, before commencing any work, shall cause to be furnished to
Beneficiary a surety bond or bonds, in form and substance reasonably satisfactory to
Beneficiary, naming Trustor and Beneficiary as co -obligees, in an amount that is not less
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than the estimated cost of the Restoration, issued by a surety company or companies
reasonably satisfactory to Beneficiary.
(v) The Restoration shall be prosecuted to completion with all
due diligence and in an expeditious and first class workmanlike manner and in compliance
with all laws and other governmental requirements, all permits, certificates and approvals,
all requirements of fire underwriters and all insurance policies then in force with respect to
the Real Property.
(vi) At all times when any work is in progress, Trustor shall
maintain all insurance then required by law or customary with respect to such work, and,
prior to the commencement of any work, shall furnish to Beneficiary duplicate originals or
certificates of the policies therefor.
(vii) Upon completion of the Restoration, Trustor shall obtain
(A) any occupancy permit which may be required for the Improvements and (B) all other
governmental permits, certificates and approvals and all permits, certificates and approvals
of fire underwriters which are required for or with respect to the Restoration, and shall
furnish true copies thereof to Beneficiary.
(viii) An Event of Default (as hereinafter defined) shall be deemed
to have occurred under this Deed of Trust if Trustor, after having commenced demolition
or construction of any Improvements, (A) shall abandon such demolition or the
construction work (and shall fail to diligently recommence such demolition or construction
within ten (10) days after written notice from Beneficiary) or, (B) shall fail to complete
such demolition and construction within a reasonable time after the commencement
thereof.
(e) Trustor and Beneficiary shall jointly adjust and settle all insurance
claims, provided, however, if an Event of Default shall have occurred and be continuing,
Beneficiary shall have the right to adjust and settle such claims without the prior consent of
Trustor. In the event of any insured loss, the payment for such loss shall be made directly to
Beneficiary. Any insurance proceeds payable under any of the Policies may, at the option of
Beneficiary, be used in one or more of the following ways: (w) except as provided below, applied
to the Indebtedness, whether such Indebtedness then be matured or unmatured (such application
to be without prepayment fee or premium, except that if an Event of Default has occurred and
remains uncured, then such application shall be subject to the applicable premium computed in
accordance with the Notes); (x) except as provided below, used to fulfill any of Trustor's
covenants contained herein as Beneficiary may determine, (y) used to replace or restore the Trust
Property to a condition reasonably satisfactory to the Beneficiary (including Restoration described
above), or (z) released to the Trustor. Notwithstanding the foregoing, provided (A) not more than
thirty percent (30%) of the gross area of the Improvements is damaged or destroyed by such
damage, destruction or loss and the amount of the loss does not exceed twenty percent (20%) of
the original principal amount of the Loan, (B) no Event of Default has occurred, under the Notes
or under any of the other Loan Documents and remains uncured at the time of such application,
(C) the insurer does not deny liability to any named insured, (D) each Major Tenant (as defined
below) whose Lease permits termination thereof as a result of such insured loss, agrees in writing
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to continue its Lease, (E) rental loss insurance is available and in force and effect to offset in full
any abatement of rent to which any tenant may be entitled as a result of such damage, destruction
or loss (or, to the extent there is a shortfall in full rental loss coverage, Trustor deposits the amount
of such shortfall with Beneficiary), (F) the remaining Improvements continue at all times to
comply with all applicable building, zoning and other land use laws and regulations (or will so
comply following the Restoration), (G) in Beneficiary's reasonable judgment, the Restoration is
practicable and can be completed within two (2) years after the damage, destruction or loss and at
least six (6) months prior to the Maturity Date (as such term is defined in the Notes), and
(H) rebuilding of the Improvements to substantially identical size, condition and use as existed
prior to the casualty is permitted by all applicable laws and ordinances, then all of such proceeds
shall be used for Restoration. For the purpose of this provision, the term "Major Tenant" shall
mean a tenant or occupant under any Lease or occupancy agreement representing twenty percent
(20%) or more of the income, or twenty percent (20%) or more of the leasable square feet or more
of the Improvements. Any application of insurance proceeds to the Indebtedness shall be to the
unpaid installments of principal due under the Notes in the inverse order of their maturity, such
that the regular payments under the Notes shall not be reduced or altered in any manner. In the
event the above criteria are satisfied (including that no Event of Default is continuing, under the
Notes or other Loan Documents) or Beneficiary otherwise elects to allow the use of such proceeds
for the Restoration, such insurance proceeds shall be disbursed in accordance with the following
provisions:
(i) Each request for an advance of insurance proceeds shall be
made on seven (7) days' prior notice to Beneficiary and shall be accompanied by a
certificate of the Architect, if one be required under Subparagraph 3(d)(iii) above,
otherwise by an executive officer or managing general partner or managing member of
Trustor, stating (A) that all work completed to date has been performed in compliance with
the approved plans and specifications and in accordance with all provisions of law, (B) the
sum requested is properly required to reimburse Trustor for payments by Trustor to, or is
properly due to, the contractor, subcontractors, materialmen, laborers, engineers, architects
or other persons rendering services or materials for the Restoration (giving a brief
description of such services and materials), and that when added to all sums, if any,
previously disbursed by Beneficiary, does not exceed the value of the work done to the
date of such certificate, and (C) that the amount of such proceeds remaining in the hands
of Beneficiary will be sufficient on completion of the work to pay the same in full (giving,
in such reasonable detail as Beneficiary may require, an estimate of the cost of such
completion).
(ii) Each request for an advance of insurance proceeds shall, to
the extent permitted under applicable law, be accompanied by waivers of liens satisfactory
to Beneficiary covering that part of the Restoration previously paid for, if any, and by a
search prepared by a title company or by other evidence reasonably satisfactory to
Beneficiary including without limitation a title endorsement satisfactory to Beneficiary if
available in the state where the Real Property is located, that there has not been filed with
respect to the Real Property any mechanic's lien or other lien or instrument and that there
exist no encumbrances on or affecting the Real Property other than the Permitted
Encumbrances or otherwise approved by Beneficiary. In addition to the foregoing, the
request for the final advance shall be accompanied by (A) any final occupancy permit
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which may be required for the Improvements, (B) all other governmental permits,
certificates and approvals and all other permits necessary for the occupancy and operation
of the Real Property, (C) Tenant estoppels from tenants whose space was affected, and
(D) final lien waivers from all contractors, subcontractors and materialmen.
(iii) No advance of insurance proceeds shall be made if there
exists at that time an Event of Default or event which with the passage of time or the giving
of notice or both would constitute a default on the part of Trustor under this Deed of Trust,
the Notes or any other Loan Document.
(iv) If the cost of the Restoration (as reasonably estimated by
Beneficiary) at any time shall exceed the amount of the insurance proceeds available
therefor, insurance proceeds shall not be advanced until Trustor, before commencing the
Restoration or continuing the Restoration, as the case may be, shall deposit the full amount
of the deficiency (or other assurances reasonably satisfactory to Beneficiary) with
Beneficiary and the amount so deposited shall first be applied toward the cost of the
Restoration before any portion of the insurance proceeds is disbursed for such purpose.
Upon completion of the Restoration and payment in full therefor, or upon failure
on the part of Trustor promptly to commence or diligently to continue the Restoration (and
provided Trustor continues such failure for a period of ten (10) business days after written notice
from Beneficiary of such failure), or at any time upon request by Trustor, Beneficiary may apply
the amount of any such proceeds then or thereafter in the hands of Beneficiary to the payment of
the Indebtedness; provided, however, that nothing herein contained shall prevent Beneficiary from
applying at any time the whole or any part of such proceeds to cure any Event of Default that has
not been cured under this Deed of Trust, the Notes or any other Loan Document.
(f) Insurance proceeds and any additional funds deposited by Trustor
with Beneficiary shall constitute additional security for the Indebtedness. Trustor shall execute,
deliver, file and/or record, at its expense, such documents and instruments as Beneficiary deems
necessary or advisable to grant to Beneficiary a perfected, first priority security interest in the
insurance proceeds and such additional funds. If Beneficiary elects to (or is required to) have the
insurance proceeds applied to Restoration, (i) the insurance proceeds shall be, at Beneficiary's
election, disbursed in installments as provided in Paragraph 3(e), above, by Beneficiary or by a
disbursing agent ("Depository") selected by Beneficiary and whose fees and expenses shall be
paid by Trustor in the manner provided in Subparagraph 3(e) above, and (ii) all costs and expenses
incurred by Beneficiary in connection with the Restoration, including, without limitation,
reasonable counsel fees and costs, shall be paid by Trustor.
4. Payment of Taxes, Etc.
(a) Trustor shall pay all taxes, assessments, water rates and sewer rents,
now or hereafter levied or assessed or imposed against the Trust Property or any part thereof (the
"Taxes") and all ground rents, maintenance charges, other governmental impositions, and other
charges, including, without limitation, vault charges and license fees (collectively, "Other
Charges") for the use of vaults, chutes and similar areas adjoining the Real Property, as same
become due and payable. Trustor will deliver to Beneficiary, promptly upon Beneficiary's request,
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evidence satisfactory to Beneficiary that the Taxes and Other Charges have been so paid and are
not then delinquent. Trustor shall not suffer or permit any lien or charge (including, without
limitation, any mechanic's lien) against all or any part of the Trust Property and Trustor shall
promptly cause to be paid and discharged any lien or charge whatsoever which may be or become
a lien or charge against the Trust Property. Trustor shall promptly pay for all utility services
provided to the Trust Property. In addition, Beneficiary may, at its option, retain the services of a
firm to monitor the payment of Taxes, the cost of which shall be borne by Trustor.
(b) Notwithstanding the provisions of subparagraph (a) of this
Paragraph 4„ Trustor shall have the right to contest in good faith the amount or validity of any
such Taxes, liens or Other Charges (including, without limitation, tax liens and mechanics' liens)
referred to in subparagraph (a) above by appropriate legal proceedings and in accordance with all
applicable law, after notice to, but without cost or expense to, Beneficiary, provided that (i) no
Event of Default or event that, with the passage of time or giving of notice or both, would constitute
a default hereunder, under the Notes or other Loan Documents has occurred and is continuing,
(ii) Trustor pays such Taxes, liens or Other Charges as same become due and payable, unless
Trustor delivers evidence satisfactory to Beneficiary that, as a result of Trustor's contest, Trustor's
obligation to pay such Taxes, liens or Other Charges has been deferred by the appropriate
governmental authority (or that the appropriate governmental authority will not take enforcement
action pending such contest), in which event, Trustor may defer such payment of such Taxes, liens
or Other Charges until the date specified by such governmental authority, (iii) such contest shall
be promptly and diligently prosecuted by and at the expense of Trustor, (iv) Beneficiary shall not
thereby suffer any civil penalty, or be subjected to any criminal penalties or sanctions, (v) such
contest shall be discontinued and such Taxes, liens or Other Charges promptly paid if at any time
all or any part of the Trust Property shall be in imminent danger of being foreclosed, sold, forfeited
or otherwise lost or if the title, lien and security interest created by this Deed of Trust or the priority
thereof shall be in imminent danger of being impaired, (vi) Trustor shall have set aside adequate
reserves (in Beneficiary's judgment) for the payment of such Taxes, liens or Other Charges,
together with all interest and penalties thereon and (vii) Trustor shall have furnished such security
as may be required in the proceeding or as may be reasonably requested by Beneficiary, to insure
the payment of any such Taxes, liens or Other Charges, together with all interest and penalties
thereon.
5. Reserve Fund.
(a) Tax and Insurance Fund. If required by Beneficiary, Trustor shall
pay to Beneficiary on the first day of each calendar month such amounts as Beneficiary from time
to time estimates to be sufficient to create and maintain a reserve fund from which (i) to pay the
Taxes and Other Charges, at least thirty (30) days prior to the date they are due without the
payment of any penalties or interest, and (ii) to pay, at least thirty (30) days prior to their due date
for the renewal of the coverage afforded by the Policies upon the expiration thereof, the insurance
premiums for the Policies estimated by Beneficiary to be payable on such due date, (said amounts
in (i) and (ii) above hereafter called the "Tax and Insurance Fund").
Notwithstanding the foregoing, Trustor will not be required to fund and maintain a reserve
fund for insurance premiums so long as each and all of the following conditions are satisfied:
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(i) No Event of Default has occurred and is continuing under the Loan
Documents;
(ii) Trustor complies with all obligations set forth herein or in any other
Loan Document regarding insurance, including without limitation, providing Beneficiary
with timely evidence (1) that the required insurance is in place for the Trust Property and
is never delinquent or suspended, and (2) that all insurance premiums are paid in full.
Further notwithstanding the foregoing, Trustor will not be required to fund and maintain a
reserve fund for Taxes and Other Charges so long as each and all of the following conditions are
satisfied:
(i) No Event of Default has occurred and is continuing under the Loan
Documents;
(ii) Trustor pays such Taxes and Other Charges prior to the date they
are delinquent and prior to the assessment of any penalties or interest and provides evidence
of such to Beneficiary within ten (10) days of payment of such Taxes and Other Charges
(or alternatively, Trustor is challenging such Taxes and Other Charges as permitted in
Paragraph 4(b), above and because of such challenge, Trustor is not required to pay such
Taxes or Other Charges).
(b) Replacement Reserve Fund. If required by Beneficiary, Trustor
shall enter into a Replacement Reserve Agreement which shall require Trustor to pay to
Beneficiary on the first day of each calendar month one twelfth (1/12) of the amount reasonably
estimated by Beneficiary to be due for the replacements and capital repairs required to be made to
the Trust Property during each calendar year (the "Replacement Reserve Fund"). Beneficiary
shall make disbursements from the Replacement Reserve Fund for items specified in the
Replacement Reserve Agreement as set forth in such Agreement. Beneficiary may require an
inspection of the Trust Property prior to making a disbursement in order to verify completion of
replacements and repairs. Beneficiary reserves the right to make any disbursement from the
Replacement Reserve Fund directly to the party furnishing materials and/or services.
Notwithstanding the foregoing, Trustor will not be required to fund and maintain a
Replacement Reserve Fund so long as each and all of the following conditions are satisfied:
(i) No Event of Default has occurred and is continuing under the Loan
Documents;
(ii) Trustor complies with all obligations set forth herein or in any other
Loan Document concerning repair and maintenance of the Trust Property, including
without limitation Paragraphs 3(d), 6, 8, 39 and 40 hereof.
If all of the foregoing conditions are no longer satisfied, Trustor shall promptly
commence making monthly deposits into the Replacement Reserve Fund.
(c) Tenant Improvement and Leasing Commission Reserve. If required
by Beneficiary, Trustor shall enter into a Tenant Improvement and Leasing Commission
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Agreement which shall require Trustor to pay to Beneficiary on the first day of each calendar
month deposits for tenant improvements and leasing commissions in amounts determined by
Beneficiary in its sole discretion, for payment of costs and expenses incurred by Trustor in
connection with the performance of work to refit and release space in the Improvements that is
currently vacant or anticipated to be vacated during the term of the Loan, and for payment of
leasing commissions incurred by Trustor in connection with the releasing of space in the
Improvements that is currently vacant or anticipated to be vacated during the term of the Loan (the
"Tenant Improvement and Leasing Commission Reserve Fund"), all according to the Tenant
Improvement and Leasing Commission Agreement.
Notwithstanding the foregoing, Trustor will not be required to fund and maintain a
Tenant Improvement and Leasing Commission Reserve Fund so long as each and all of the
following conditions are satisfied:
(i) No Event of Default has occurred and is continuing under the Loan
Documents;
(ii) Trustor has complied, and shall continue to comply, with each and
all of Trustor's obligations hereunder, under the Assignment of Leases and Rents and under
the other Loan Documents, concerning Leases, including without limitation ParagLaph 7
hereof.
(d) Debt Service Reserve. Trustor shall enter into that certain Debt
Service Reserve Agreement (the "Debt Service Reserve Agreement") dated as of the date hereof
between Trustor and Beneficiary, which shall require Trustor to deposit with Beneficiary an
amount equal to six (6) months of debt service to be applied towards the first six (6) debt service
payments due in connection with the Loan, except as otherwise set forth therein, all according to
the Debt Service Reserve Agreement.
(e) Lease Termination Reserve. Trustor shall enter into that certain
Lease Termination Reserve Agreement (the "Lease Termination Reserve Agreement") dated as
of the date hereof between Trustor and Beneficiary, which requires Trustor to pay to Beneficiary
certain amounts to fund tenant improvements and leasing commissions, but only in the event the
term of the Jobot Lease (as defined in the Lease Termination Reserve Agreement) is not renewed
or terminates early, as more particularly set forth therein, all according to the Lease Termination
Reserve Agreement.
The amounts in (a), (b), (c), (d) and (e) above shall hereinafter be collectively called
the "Reserve Fund". Trustor hereby pledges to Beneficiary any and all monies now or hereafter
deposited as the Reserve Fund as additional security for the payment of the Indebtedness.
Beneficiary may apply the Reserve Fund to payments of Taxes, Other Charges, insurance
premiums and, as applicable, payments for replacements and capital repairs, tenant improvements
and leasing commissions required to be made by Trustor pursuant to the terms hereof or pursuant
to the terms of any other Loan Documents (even though subsequent owners of the Trust Property
may benefit thereby); provided, however, if there is an Event of Default which is continuing, then
Beneficiary may credit such Reserve Fund against the Indebtedness in such priority and
proportions as Beneficiary in its discretion shall deem proper. If the Reserve Fund is not sufficient
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to fully pay for the Taxes, Other Charges and/or the insurance premiums or, as applicable, amounts
for replacements and capital repairs, tenant improvements and leasing commissions when due,
Trustor shall promptly pay to Beneficiary, upon demand, an amount which Beneficiary shall
estimate as sufficient to make up the deficiency. The Reserve Fund shall not constitute a trust fund
and may be commingled with other monies held by Beneficiary. No earnings or interest on the
Reserve Fund shall be payable to Trustor.
6. Condemnation. Trustor shall promptly give Beneficiary and Trustee
written notice of the actual or threatened commencement of any condemnation or eminent domain
proceeding and shall deliver to Beneficiary and Trustee copies of any and all papers served in
connection with such proceedings. Following the occurrence of a condemnation, Trustor,
regardless of whether an award is available, shall promptly proceed to restore, repair, replace or
rebuild the Improvements to the extent practicable 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 ("Condemnation Restoration"). Notwithstanding any taking by any public or quasi -public
authority through eminent domain or otherwise (including but not limited to any transfer made in
lieu of or in anticipation of the exercise of such taking), Trustor shall continue to pay the
Indebtedness at the time and in the manner provided for its payment in the Notes, in this Deed of
Trust and the other Loan Documents and the Indebtedness shall 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 Indebtedness. Trustor shall cause the award or payment made
in any condemnation or eminent domain proceeding, which is payable to Trustor, to be paid
directly to Beneficiary. Beneficiary may, at Beneficiary's election, use the award in any one or
more of the following ways: (a) except as provided below, apply any such award or payment (for
purposes of this Paragraph 6, the award or payment that may be made in any condemnation or
eminent domain proceeding shall mean the entire award allocated to Trustor in any capacity) to
the discharge of the Indebtedness whether or not then due and payable (such application to be
without prepayment fee or premium, except that if an Event of Default, or an event which with
notice and/or the passage of time, or both, would constitute an Event of Default, has occurred, then
such application shall be subject to the applicable premium computed in accordance with the
Notes), (b) except as provided below, use the same or any part thereof to fulfill any of Trustor's
covenants contained herein as the Beneficiary may determine, (c) use the same or any part thereof
to replace or restore the Trust Property to a condition reasonably satisfactory to the Beneficiary,
or (d) release the same to the Trustor. If the Trust Property is sold, through foreclosure or
otherwise, prior to the receipt by Beneficiary of such award or payment, Beneficiary shall have the
right, whether or not a deficiency judgment on the Notes shall have been sought, recovered or
denied, to receive said award or payment or a portion thereof sufficient to pay the Indebtedness.
Trustor hereby specifically, unconditionally and irrevocably waives all rights of a property
owner granted under California Code of Civil Procedure Section 1265.225(a), which provides for
allocation of condemnation proceeds between a property owner and a lienholder, and any other
law, including case law, or successor statute of similar import.
Notwithstanding the foregoing, Beneficiary shall not apply the condemnation award or
payment to the Indebtedness (but instead shall make the condemnation award and payment
available to Trustor to complete the Condemnation Restoration, provided that the requirements in
Paragraph 3(e) (except that, as applicable to this Paragraph 6, Paragraph 3(e) shall refer to
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condemnation not damage and destruction, and the insurance requirements in
subparagraphs 3(e)(C) shall not apply) are satisfied, and, if so, the Condemnation Restoration shall
be completed in accordance with Paragraph 3(e) and the award or payment shall be distributed to
Trustor under the same procedure as set forth in Paragraph 3(e).
7. Leases and Rents.
(a) Trustor does hereby absolutely and unconditionally assign to
Beneficiary its right, title and interest in all current and future Leases and Rents and all proceeds
from the sale, cancellation, surrender or other disposition of the Leases, it being intended by
Trustor that this assignment constitutes a present, absolute assignment and not an assignment for
additional security only. Such assignment to Beneficiary shall not be construed to require
Beneficiary to perform any of the covenants, conditions or provisions contained in any such Lease
or otherwise to impose any obligation upon Beneficiary. Trustor agrees to 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 Paragraph 7, Beneficiary grants to Trustor
a revocable license to operate and manage the Trust Property and to collect the Rents. Trustor
shall hold a portion of the Rents sufficient to discharge all current sums due on the Indebtedness,
in trust for the benefit of Beneficiary for use in the payment of such sums. The grant of the
foregoing license is subject to the provisions of Paragraph 1 of the separate Assignment of Leases
and Rents of even date herewith granted by the Trustor as "Assignor" to the Beneficiary as
"Assignee" with respect to the Trust Property ("Assignment of Leases and Rents"). Upon the
occurrence of an Event of Default, the license granted to Trustor herein shall be automatically
revoked and Beneficiary shall immediately be entitled to possession of all Rents, whether or not
Beneficiary enters upon or takes control of the Trust Property. Beneficiary is hereby granted and
assigned by Trustor the right, at its option, upon the revocation of the license granted herein to
enter upon the Trust Property in person, by agent or by court-appointed receiver to collect the
Rents. Any Rents collected after the revocation of the license herein granted may be applied
toward payment of the Indebtedness in such priority and proportion as Beneficiary in its discretion
shall deem proper. It is further the intent of Trustor and Beneficiary that the Rents hereby
absolutely assigned are no longer, during the term of this Deed of Trust, property of Trustor or
property of any estate of Trustor as defined in Section 541 of the Bankruptcy Code and shall not
constitute collateral, cash or otherwise, of Trustor. The term "Rents" as used herein shall mean
the gross rents without deduction or offsets of any kind. Upon cure or waiver of the Event Default,
the revoked license shall be reinstated and any funds held by Beneficiary returned to Trustor.
(b) Except as provided below, all Leases executed after the date of this
Deed of Trust shall provide that they are subordinate to this Deed of Trust and that the lessee
agrees to attom to Beneficiary; provided, however, that nothing herein shall affect Beneficiary's
right to designate from time to time any one or more Leases as being superior to this Deed of Trust
and Trustor shall execute and deliver to Beneficiary and shall cause to be executed and delivered
to Beneficiary from each tenant under such Lease any instrument or agreement as Beneficiary may
deem necessary to make such Lease superior to this Deed of Trust. Upon request, Trustor shall
promptly furnish Beneficiary with executed copies of all Leases.
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(c) Trustor shall not, without the prior approval of Beneficiary (which
shall not be unreasonably withheld, conditioned or delayed), (i) lease all or any part of the Trust
Property, (ii) alter or change the terms of any Lease or cancel or terminate, abridge or otherwise
modify the terms of any Lease, (iii) consent to any assignment of or subletting under any Lease
not in accordance with its terms, (iv) cancel, terminate, abridge or otherwise modify any guaranty
of any Lease or the terms thereof, (v) collect or accept prepayments of installments of Rents for a
period of more than one (1) month in advance or (vi) further assign the whole or any part of the
Leases or the Rents; provided, however, that such action as described in subparagraphs (i) -(iv)
above may be taken without Beneficiary's approval for any Lease which is for 10,000 square feet
or less of net rentable area, with an annual rent of not less than the prevailing market rent in
Trustor's reasonable judgment, and has an original or remaining term (without giving effect to any
unexercised option(s) to extend) not exceeding ten (10) years (a Lease satisfying those criteria
shall be referred to as a "Small Lease") so long as the taking of such action is in the ordinary
course of Trustor's business and that such action is still subject to Paragraph 1 of the separate
Assignment of Leases and Rents pertaining to Termination Amounts (as defined therein).
Beneficiary agrees to enter into a subordination, non -disturbance and attornment agreement
("SNDA") upon terms and conditions reasonably acceptable to Beneficiary with respect to all
Major Leases or Small Leases approved by Beneficiary, and on Beneficiary's standard form of
SNDA, with respect to all Small Leases for which Beneficiary's approval is not required.
(d) In all cases requiring Beneficiary's approval of a new Lease, or the
cancellation, termination or other modification of a Lease, Beneficiary's approval shall be deemed
to occur if all of the following conditions are satisfied:
(i) No Event of Default has occurred and is continuing.
(ii) The proposed Lease is fully subject and subordinate to this Deed of
Trust and the other Loan Documents.
(iii) Borrower shall, at least five (5) business days prior to request for
approval deliver to Beneficiary a copy of a draft of the proposed Lease, cancellation,
termination or modification ("Proposed Draft"), together with information reasonably
required by Beneficiary relating to the tenant.
(iv) Prior to execution of the Lease, or the cancellation, termination or
other modification of a Lease, Trustor shall send to Beneficiary the final version of the
Lease, cancellation, termination or modification ("Final Version") together with (a) a
black -lined version of the Final Version showing in one document, all of the changes from
the Proposed Draft to the Final Version and (b) a cover sheet or letter with the Final Version
containing a bold legend in capital letters as follows:
THIS IS A REQUEST FOR APPROVAL OF A LEASE OR A
CANCELLATION, TERMINATION OR MODIFICATION
OF A LEASE FOR LOAN NUMBER 529024:11. IF THIS
REQUEST IS NOT ACTED UPON IN ACCORDANCE WITH
THE LOAN DOCUMENTS FOR THE RELATED LOAN
WITHIN FIFTEEN (15) BUSINESS DAYS OF THIS NOTICE,
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THE LEASE OR THE CANCELLATION, TERMINATION
OR MODIFICATION OF A LEASE WILL BE DEEMED
APPROVED.
(v) Beneficiary will have fifteen (15) business days from receipt of the
Final Version and such complying notice to review and respond to such request for
approval, and if Beneficiary fails to respond within such fifteen (15) business days, then
the Final Version shall be deemed approved.
(vi) Any approval or deemed approval of Beneficiary to the Lease shall
be effective only if the Final Version is the one actually signed and only if it is signed
within sixty (60) days of delivery of the Final Version to Beneficiary.
(e) Any deemed approval of a Lease shall not constitute Beneficiary's
approval of any provision of the Lease, only compliance with the terms of the Loan Documents
requiring prior approval of Beneficiary, and such deemed approval shall not obligate Beneficiary
to take any further action relating to such Lease, including without limitation entering into an
SNDA.
(f) With respect to each Lease, Trustor shall (i) observe and perform
each and every provision thereof on the lessor's part to be fulfilled or performed under each Lease
and not do or permit to be done anything to impair the value of the Lease as security for the Loan,
including surrender or voluntary termination of any Lease (except as permitted in this Deed of
Trust), (ii) promptly send to Beneficiary copies of all notices of default which Trustor shall send
or receive thereunder, (iii) enforce all of the terms, covenants and conditions contained in such
Lease upon the lessee's part to be performed, short of termination thereof, (iv) execute and deliver,
at the request of Beneficiary, all such further assurances, confirmations and assignments in
connection with the Trust Property as Beneficiary shall, from time to time, require and (v) upon
request, furnish Beneficiary with executed copies of all Leases; provided, however, the notice to
Beneficiary referenced in subparagraph (ii) above and the restriction on termination of a Lease in
connection with the enforcement of its terms, covenants and conditions set forth in
subparagraph (iii) above shall not be required or apply, as the case may be, for any Small Lease.
(g) All security deposits of tenants, whether held in cash or any other
form, shall be deposited by Trustor at such commercial or savings bank or banks as may be
reasonably satisfactory to Beneficiary. Any bond or other instrument which Trustor is permitted
to hold in lieu of cash security deposits under any applicable legal requirements shall be maintained
in full force and effect in the full amount of such deposits unless replaced by cash deposits as
hereinabove described, shall be issued by an institution reasonably satisfactory to Beneficiary,
shall, if permitted pursuant to any legal requirements, name Beneficiary as payee or beneficiary
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. Trustor shall, upon request, provide Beneficiary with evidence reasonably
satisfactory to Beneficiary of Trustor's compliance with the foregoing. Following the occurrence
and during the continuance of any Event of Default, Trustor shall, upon Beneficiary's request, if
permitted by any applicable legal requirements, turn over to Beneficiary the security deposits (and
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any interest theretofore earned thereon which is due or payable to a tenant) with respect to all or
any portion of the Trust Property, to be held by Beneficiary subject to the terms of the Leases.
(h) Notwithstanding anything provided in this Deed of Trust or any of
the Loan Documents, Beneficiary acknowledges that Trustor leases a portion of the Trust Property
to QW Marina Enterprises LLC, a California limited liability company ("QW") pursuant to that
certain Lease dated June 21, 2021, by and between Trustor, as landlord, and QW, as tenant, and
Beneficiary hereby consent to such lease.
8. Maintenance and Use of Trust Property. Trustor shall, at its sole cost
and expense, keep and maintain the Trust Property, including, without limitation, parking lots and
recreational and landscaped portions thereof, if any, in good order and condition. The
Improvements and the Equipment shall not be diminished, removed, demolished or materially
altered (except for normal replacement of Equipment) and Trustor shall not erect any new
buildings, structures or building additions on the Trust Property without the prior consent of
Beneficiary. So long as no Event of Default shall have occurred and be continuing, Trustor shall
have the right at any time and from time to time after providing Beneficiary with written notice to
make or cause to be made reasonable alterations of and additions to the Trust Property or any part
thereof, provided that any alteration or addition (i) shall not change the general character of the
Trust Property or reduce the fair market value thereof below its value immediately before such
alteration or addition, or impair the usefulness of the Trust Property, (ii) is effected with due
diligence, in a good and workmanlike manner and in compliance with all applicable laws and with
all provisions of any insurance policy covering or applicable to the Trust Property and all
requirements of the issuers thereof, (iii) is promptly and fully paid for, or caused to be paid for, by
Trustor, (iv) the estimated cost of such alteration or addition does not exceed ten percent (10%) of
the original principal amount of the Loan, and (v) is made under the supervision of a qualified
architect or engineer, (vi) shall not violate the terms of any Leases, and (vii) upon completion,
Trustor shall provide Beneficiary with (aa) a reasonably satisfactory final improvement survey if
the footprint of the building has been altered, (bb) any final occupancy permit which may be
required for the Improvements, (cc) all other governmental permits, certificates and approvals and
all other permits, certificates and approvals of fire underwriters which are required with respect to
the alterations and additions and the use and occupancy thereof, and shall furnish true copies
thereof to Beneficiary, and (dd) final lien waivers from all contractors, subcontractors and
materialmen; provided that any improvements pursuant to a Small Lease shall not require notice
to Beneficiary as long as items (i) through (v), above are satisfied. Trustor shall promptly comply
with all laws, orders and ordinances affecting the Trust Property, or the use thereof, provided,
however, that nothing in the foregoing clause shall require Trustor to comply with any such law,
order or ordinance so long as Trustor shall in good faith, after notice to, but without cost or expense
to, Beneficiary, contest the validity of such law, order or ordinance by appropriate legal
proceedings and in accordance with all applicable law, which proceedings must operate to prevent
(i) the enforcement thereof, (ii) the payment of any fine, charge or penalty, (iii) the sale or
forfeiture of the Trust Property or any part thereof, (iv) the lien of this Deed of Trust and the
priority thereof from being impaired, (v) the imposition of criminal liability on Beneficiary and
(vi) the imposition, unless stayed, of civil liability on Beneficiary; provided that during such
contest Trustor shall, at the option of Beneficiary, provide cash, bonds or other security reasonably
satisfactory to Beneficiary, indemnifying and protecting Beneficiary against any liability, loss or
injury by reason of such non-compliance or contest, and provided further, that such contest shall
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be promptly and diligently prosecuted by and at the expense of Trustor. Trustor shall promptly, at
its sole cost and expense, repair, replace or rebuild any part of the Trust Property which may be
destroyed by any casualty, or become damaged, worn or dilapidated. Trustor shall not commit
any waste at the Trust Property. Trustor 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 Trust Property or any part thereof, provided that,
subject to compliance with Para rgraphh 7 above, Trustor shall be entitled to enter into Leases that
provide exclusive rights or impose prohibited uses. If under applicable zoning provisions the use
of all or any portion of the Trust Property is or shall become a nonconforming use, Trustor will
not knowingly cause or permit such nonconforming use to be discontinued or abandoned without
the express consent of Beneficiary. Trustor covenants and agrees that it shall operate the Trust
Property at all times as a first-class office building facility and marina, provided that
notwithstanding anything otherwise provided in this Deed of Trust (or in the Loan Documents),
Trustor shall have the right to lease all or a portion of the first (lst) and second (2°a) floors of the
building for restaurant use, provided that such use complies with zoning regulations and all
applicable laws; and provided further, that any such lease is entered into in accordance with
Paragraph 7 hereof.
9. Transfer or Encumbrance of the Trust Property or Interests in the
Trustor; Other Indebtedness.
(a) Trustor acknowledges that Beneficiary has examined and relied on
the creditworthiness and experience of Trustor in owning and operating properties such as the
Trust Property in agreeing to make the Loan, and that Beneficiary will continue to rely on Trustor's
ownership of the Trust Property as a means of maintaining the value of the Trust Property as
security for repayment of the Indebtedness. Trustor acknowledges that Beneficiary has a valid
interest in maintaining the value of the Trust Property so as to ensure that, should Trustor default
in the repayment of the Indebtedness, Beneficiary can recover the Indebtedness by a sale of the
Trust Property. Except as provided in subparagraphs (f), (g), and (h) below in this Deed of Trust,
Trustor shall not, without the prior written consent of Beneficiary, sell, convey, alienate, mortgage,
encumber, pledge or otherwise transfer in trust or otherwise the Trust Property or any part thereof
or interest therein or in Trustor described in (b)(i)-(v) below, or permit the Trust Property or any
part thereof or any interest in Trustor described in (b)(i)-(v) below, to be sold, conveyed, alienated,
deeded, encumbered, pledged or otherwise transferred.
(b) A sale, conveyance, alienation, deed, encumbrance, pledge or
transfer within the meaning of this Paragph 9 shall be deemed to include (i) an installment sales
agreement wherein Trustor agrees to sell the Trust Property or any part thereof for a price to be
paid in installments, (ii) an agreement by Trustor leasing all or a substantial part of the Trust
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, Trustor's right, title and interest in and to
any Leases or any Rents, (iii) if Trustor is a corporation, the voluntary or involuntary sale,
assignment, conveyance or transfer of such corporation's stock (or the stock of any corporation
directly or indirectly controlling such corporation by operation of law or otherwise), in each case
the result of which is that twenty percent (20%) or more of the equity interest in Trustor shall be
vested in a party or parties who are not now equity holders in Trustor or any change in the control
of such corporation, (iv) if Trustor is a limited or general partnership, joint venture or limited
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liability company, the change, removal, resignation or addition of a general partner, managing
partner, or managing member (as the case may be), or the transfer of the equity interest in Trustor
the result of which is that more than twenty percent (20%) of the equity interest in Trustor shall be
vested in a parry or parties who are not now equity holders in Trustor or any change in the control
of such entity and (v) if Trustor is an entity, whether one of the above-mentioned entities or not,
any change in the equity interest of Trustor the result of which is that twenty percent (20%) or
more of the equity interest in Trustor shall be vested in a party or parties who are not now equity
holders in Trustor or any change of or control of such entity, or any merger, consolidation or
dissolution or syndication affecting Trustor, or the pledge of 20% or more of the equity interest of
Trustor in favor of any party or parties who are not now equity holders in Trustor, whether at one
time or in a series of related transactions.
(c) 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
Indebtedness immediately due and payable upon Trustor's sale, conveyance, alienation, deed,
encumbrance, pledge or transfer of the Trust Property without Beneficiary's consent. This
provision shall apply to every sale, conveyance, alienation, deed, encumbrance, pledge or transfer
in trust or otherwise of the Trust Property regardless of whether voluntary or not, or whether or
not Beneficiary has consented to any previous sale, conveyance, alienation, deed, encumbrance,
pledge or transfer of the Trust Property.
(d) Beneficiary's consent to a sale, conveyance, alienation, deed,
encumbrance, pledge or transfer in trust or otherwise of the Trust Property or any other action
described in this Paragraph 9 shall not be deemed to be a waiver of Beneficiary's right to require
such consent to any future occurrence of same. Any sale, conveyance, alienation, deed,
encumbrance, pledge or transfer in trust or otherwise of the Trust Property or other action made in
contravention of this Paragraph 9 shall be null and void and of no force and effect.
(e) Trustor agrees to bear and shall pay or reimburse Beneficiary on
demand for all reasonable expenses (including, without limitation, reasonable attorneys' fees and
disbursements, title search costs and title insurance endorsement premiums) incurred by
Beneficiary in connection with the review, approval and documentation of any such sale,
conveyance, alienation, deed, encumbrance, pledge or transfer in trust or otherwise.
(f) Notwithstanding the foregoing, Beneficiary shall permit two (2)
transfers of the Trust Property together with an assumption of the Loan by the Transferee (defined
below), provided that the following conditions are satisfied, and provided further that, with respect
to all such conditions, Beneficiary shall act reasonably and shall not unreasonably withhold its
approval:
(i) no Event of Default shall have occurred and remain uncured;
(ii) the proposed transferee ("Transferee"), the proposed
guarantors of Recourse Obligations, any other proposed guarantors, and the proposed
indemnitors of environmental liabilities shall be reputable entities or persons of good
character, creditworthy, with sufficient financial worth considering the obligations
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assumed and undertaken, as evidenced by financial statements and other information
reasonably requested by Beneficiary;
(iii) the Transferee and its property manager shall have sufficient
experience in the ownership and management of properties similar to the Trust Property,
and Beneficiary shall be provided with reasonable evidence thereof (and Beneficiary
reserves the right to approve the Transferee without approving the substitution of the
property manager);
(iv) that Beneficiary has received a written request for approval
from the Trustor at least thirty (30) days prior to the proposed transfer (including a
description of the proposed terms of the transfer), together with a diagram showing the
legal structure of the Transferee, the proposed guarantors of Recourse Obligations, any
other proposed guarantors, and the proposed indemnitors of environmental liabilities and
all of the constituent entities of each, after the contemplated transfer, and a list of the names,
types of interests and ownership percentages of all persons to have ownership interests in
any of the foregoing or any constituent entity thereof, financial statements for all such
entities and an administrative fee of $5,000, which shall be deemed fully earned on the date
of receipt and shall be retained by Beneficiary regardless of whether or not the transfer
occurs and whether or not approval is given;
(v) Beneficiary and its counsel have received (aa) certification
from Trustor and the Transferee that the proposed terms of the transfer described in
Subparagraph 9(f)(iv) are the actual terms of the transfer, (bb) evidence of casualty
insurance and other applicable insurance, (cc) all corporate, partnership or other entity
documents, and (dd) all other certificates, legal opinions, title materials and other
documents which Beneficiary may require, all in form and substance satisfactory to
Beneficiary, at least thirty (30) days prior to the proposed transfer;
(vi) The debt service coverage ratio for the Loan is not less than
1.40:1.0, as calculated to the satisfaction of Beneficiary, and the loan -to -value ratio of the
Loan to the Trust Property does not exceed 64.90%, calculated to the satisfaction of
Beneficiary;
(vii) Beneficiary be provided satisfactory evidence concerning
the effect of any change in the real estate taxes to result from the sale and the effect of such
change on the ability of the Trust Property to generate a cash flow sufficient for the debt
service coverage ratio for the Loan to be 1.40:1.0 or greater;
(viii) to the extent applicable, Beneficiary shall have received in
writing evidence from the Rating Agencies to the effect that such transfer will not result in
a re -qualification, reduction or withdrawal of any rating initially assigned or to be assigned
in a Secondary Market Transaction together with such legal opinions as may be requested
by the Rating Agencies. The term "Rating Agencies" as used herein shall mean each of
Standard & Poor's Ratings Group, Moody's Investors Service, Inc., Duff & Phelps Credit
Rating Co., Fitch Investors Service, Inc. or any other nationally -recognized statistical
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rating agency who shall then be rating the certificates or securities issued in connection
with the Secondary Market Transaction;
(ix) the Transferee and its constituent entities shall comply with
all of the single asset entity requirements set forth in Paragraph 19 hereof,
(x) the Transferee shall have executed and delivered to
Beneficiary an assumption agreement in form and substance acceptable to Beneficiary,
evidencing such Transferee's agreement to abide and be bound by the terms of the Notes,
this Deed of Trust and the other Loan Documents, together with an executed guaranty of
Recourse Obligations and any other guaranty from an approved guarantor and an executed
separate environmental indemnity agreement from an approved indemnitor, both in form
and substance reasonably acceptable to Beneficiary but not materially different from those
forms executed concurrently with the closing hereof, and such legal opinions and title
insurance endorsements as may be reasonably requested by Beneficiary;
(xi) Beneficiary shall have received an assumption fee equal to
one percent (1%) of the then unpaid principal balance of the Notes in addition to the
payment of all costs and expenses incurred by Beneficiary in connection with such
assumption (including reasonable attorney's fees and costs); and
(xii) the Transferee shall be able to make the representations and
warranties set forth in Subparagraph 18(h) of this Deed of Trust.
In the event all of the foregoing conditions are satisfied and Beneficiary consents
to the sale or transfer, Beneficiary agrees to release (aa) the transferor Trustor and the prior
guarantors of Recourse Obligations with respect to matters first arising solely after the transfer,
and (bb) the prior indemnitors of environmental liabilities with respect to a presence and/or release
which first occurs solely after the transfer; provided, however, the transferor Trustor, the prior
guarantors and the prior indemnitors, respectively, shall have the burden of proving that all the
conditions in this Paragraph 9 (including, without limitation, the time as to which matters
described herein arose) were satisfied by clear and convincing evidence and shall continue to
defend with counsel satisfactory to Beneficiary and shall indemnify and hold Beneficiary harmless
for all matters set forth in Paragraph 39 and in the Recourse Obligations unless and until a court
of competent jurisdiction finds that such transferor Trustor, prior guarantors or prior indemnitors,
respectively, met such burden.
(g) Notwithstanding the foregoing, as long as all of the Internal Transfer
Conditions (as defined below) are satisfied prior to and after any of the following transfers, it shall
not be a default hereunder (and the following are hereby permitted): for any member of Trustor to
transfer ownership interests in Trustor (i) for estate planning purposes subject to Beneficiary's
prior written approval, not to be unreasonably withheld, conditioned or delayed, or (ii) to another
member of Trustor who is a member of Trustor as of the date of this Deed of Trust, or (iii) to a
Family Member (as defined below) of John J. Jakosky, III, or (iv) to a conservator pursuant to
court order upon disability of such transferring member (collectively, the "Internal Transfers"").
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The term "Internal Transfer Conditions" shall mean that all of the following are
satisfied:
i. No uncured Event of Default shall have occurred under the Loan
Documents and remain uncured;
ii. After taking into account any prior transfers pursuant to this
subpara rg_aph 9(g), whether to the proposed transferee or otherwise, no such transfer (or
series of transfers) shall result in a proposed transferee, an Affiliate (as defined below) of
such proposed transferee and his/her Family Member owning (directly or indirectly) more
than forty-nine percent (49%) of the interest in Trustor; provided, however, that the
foregoing shall not apply to a transfer of ownership interests in Trustor from The John J.
Jakosky Family Trust to another trust with the same beneficial ownership as The John J.
Jakosky Family Trust;
iii. No such transfer of interest shall result in a change of control of
Trustor or the day-to-day operations of the Trust Property, and John J. Jakosky, III either
individually or as trustee of The John J. Jakosky Family Trust shall continue to own at least
25% direct or indirect ownership interests in Trustor (individually or through companies
they control) and shall continue to control Trustor and the day-to-day operations of the
Trust Property;
iv. Without limiting the foregoing, no such transfer, either singly or in
the aggregate with other transfers, will result in a violation of Paragraph 19 of this Deed of
Trust or Trustor's organizational documents;
V. Trustor shall provide to Beneficiary prior written notice of each such
transfer together with a diagram showing the structure of the Trustor and all of its
constituent entities after the contemplated transfer and a list of the names, types of interest
and percentages of ownership of all owners of interests in the Trustor and its constituent
entities after such transfer, together with an administrative fee of $2,500, which shall be
deemed fully earned upon receipt; and
vi. Trustor shall pay all fees and costs in connection with any such
transfer, including without limitation, Beneficiary's reasonably attorneys' fees.
"Family Member" shall mean an individual's immediate family members
(spouse, brothers and sisters (whether by the whole or half blood), and ancestors or lineal
descendants by birth or adoption) and/or any (i) trusts for the benefit of any immediate family
member, (ii) partnership in which an immediate family member is a general partner, (iii) limited
partnership in which an immediate family member is a general partner, (iv) limited liability
company in which an immediate family member is a managing member, or (v) corporation in
which an immediate family member is an officer, director, or controlling (as defined below)
shareholder.
The term "control" or "controlling" shall mean the possession, directly or
indirectly, of the power to direct or cause the direction of management, policies or activities of a
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person or entity, whether through ownership of voting securities or other interests, by contract or
otherwise.
"Affiliate" shall mean in the case of a corporate borrower, any person or
entity other than the special purpose, bankruptcy remote corporation serving as the borrower (the
"Corporation"), (i) which owns beneficially, directly or indirectly, any outstanding shares of the
Corporation's stock, or (ii) which controls or is under common control with the Corporation.
"Affiliate" shall mean in the case of a corporate member of a limited
liability company borrower ("LLC"), any person or entity other than the special purpose,
bankruptcy remote corporation serving as a member of the LLC (the "Corporation"), (i) which
owns beneficially, directly or indirectly, any outstanding shares of the Corporation's stock or any
membership interest in the LLC, or (ii) which controls or is under common control with the
Corporation or the LLC.
(h) The sole member of Trustor is John J. Jakosky III, Trustee of the
John J. Jakosky Family Trust, dated October 15, 2014 (the "Jakosky Trust"). Notwithstanding the
foregoing, the following shall not constitute a default under this Deed of Trust and is hereby
permitted: the change of the trustee of the Jakosky Trust upon the death of John J. Jakosky I11.
(i) Trustor shall not incur any indebtedness, secured or unsecured, other
than the Loan except for trade debt and amounts owing in connection with construction (i) incurred
in the ordinary course of business to vendors and suppliers of services or materials to the Trust
Property, (ii) not secured by the Trust Property, or any portion thereof, or a controlling interest in
Trustor, and (iii) not accompanied by any rights to control or to obtain control of the Trustor. No
indebtedness other than the Loan may be secured (subordinate or Pari passu) by the Trust Property,
or any portion thereof, or by a controlling interest in the Trustor.
10. Estoppel Certificates.
(a) Trustor, within ten (10) business days after request by Beneficiary,
shall furnish Beneficiary from time to time with a statement, duly acknowledged and certified,
setting forth (i) the amount of the original principal amount of the Notes, (ii) the unpaid principal
amount of the Notes, (iii) the rate of interest in the Notes, (iv) the date through which all
installments of interest, commitment fees and/or principal have been paid, (v) any offsets or
defenses to the payment of the Indebtedness, if any, (vi) that the Notes and this Deed of Trust have
not been modified or if modified, giving particulars of such modification and (vii) such other
information as shall be reasonably requested by Beneficiary.
(b) Trustor, after request by Beneficiary, will use commercially
reasonable diligence to obtain and furnish (within the time periods, if any, provided in the
applicable Leases or if no time period is so specified, within ten (10) business days after request)
Beneficiary from time to time with estoppel certificates from any tenants under then existing
Leases (except for Dock Leases), which certificates shall be in form and substance as required by
such Leases, or if not required, then in form and substance reasonably satisfactory to Beneficiary.
Estoppel certificates shall not be required from any tenant more than once annually. It shall not be
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an Event of Default of Trustor if Trustor is unable to obtain any estoppel certificates as long as
Trustor is diligently pursuing such certificates.
11. No Cooperative or Condominium. Trustor represents and warrants that
the Trust Property has not been subjected to a cooperative or condominium form of ownership.
Trustor hereby covenants and agrees that it will not file a declaration of condominium, map or any
other document having the effect of subjecting the Trust Property to a condominium or cooperative
form of ownership.
12. Changes in the Laws Regarding Taxation. If any law is enacted or
adopted or amended after the date of this Deed of Trust which deducts the Indebtedness or any
portion thereof from the value of the Trust Property for the purpose of taxation or which imposes
a tax, either directly or indirectly, on the principal amount of the Notes or Beneficiary's interest in
the Trust Property, Trustor will pay such tax, with interest and penalties thereon, if any. In the
event Beneficiary is advised by counsel chosen by it that the payment of such tax or interest and
penalties by Trustor 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 notice
of not less than one hundred eighty (180) days, to declare the Indebtedness immediately due and
payable without prepayment fee or premium, except that if an Event of Default, or an event which
with notice and/or the passage of time, or both, would constitute an Event of Default, has occurred,
the applicable premium computed in accordance with the Notes shall apply.
13. No Credits on Account of the Indebtedness. Trustor will not claim or
demand or be entitled to any credit or credits on account of the Indebtedness for any part of the
Taxes assessed against the Trust Property or any part thereof and no deduction shall otherwise be
made or claimed from the taxable value of the Trust Property, or any part thereof, by reason of this
Deed of Trust or the Indebtedness. In the event such claim, credit or deduction shall be required
by law, Beneficiary shall have the option, by notice of not less than one hundred eighty (180) days,
to declare the Indebtedness immediately due and payable without prepayment fee or premium,
except that if an Event of Default, or an event which with notice and/or the passage of time, or
both, would constitute an Event of Default, has occurred, the applicable premium computed in
accordance with the Notes shall apply.
14. 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 Notes or this Deed of Trust, or impose any other tax or charge on the same, Trustor
will pay for the same, with interest and penalties thereon, if any.
15. Right of Entry. Beneficiary and its agents shall have the right to enter and
inspect the Trust Property at any time during reasonable business hours forty-eight (48) hour
written notice to Trustor, except in the case of an emergency, in which event Beneficiary and its
agents may enter and inspect the Trust Property at any time following reasonable notice under the
circumstances.
16. Books and Records.
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(a) Trustor will maintain full, accurate and complete books of accounts
and other records reflecting the results of the operations of the Trust Property as well as its other
operations and will furnish, or cause to be furnished, to Beneficiary the following:
(i) within one hundred twenty (120) days after the end of each
fiscal year, the Trustor will furnish to Beneficiary, a statement of Trustor's financial
condition, including a balance sheet and profit and loss statement, and a statement of annual
income and expenses reasonably satisfactory in form and substance to Beneficiary in
connection with the operation of the Trust Property and such additional financial
information as Beneficiary shall reasonably require and a rent roll, in each case in form
and substance reasonably satisfactory to Beneficiary, prepared and certified by Trustor,
provided that Trustor shall not be required to provide audited financial statements or
statements certified by a certified public accountant. Additionally, within forty-five (45)
days after the end of each fiscal quarter of Trustor, if requested by Beneficiary in writing,
Trustor shall provide the above information.
(ii) accompanying the submission of the certified statements of
annual and quarterly income and expenses, when the Trust Property is office, retail or
multi -tenant industrial property, shall be a certified current rent roll, which shall include,
among other things, tenant names, lease commencement and expiration dates, square
footage, annual rent, annual operating expense and real estate tax contributions, a statement
as to whether or not there are any purchase options and/or co -tenancy requirements, and
any and all other fees paid by tenants and security deposits currently held.
(iii) accompanying the submission of the certified statements of
annual and quarterly income and expenses shall be such additional financial information
as Beneficiary shall reasonably require.
(b) Beneficiary shall have the right, upon five (5) days' prior notice to
Trustor, to inspect and make copies of Trustor's books and records and income tax returns and
notices.
(c) In the event of a Secondary Market Transaction, Trustor shall
furnish from time to time such information relating to Trustor and the Trust Property as shall be
requested by the Rating Agencies.
(d) If any of the materials described in subparagraphs 16(a) and 16Ub
that are required to be delivered to Beneficiary is not timely delivered, then, after ten (10) days'
notice, if Trustor has not delivered such materials, Trustor shall promptly pay to Beneficiary, as a
late charge, the sum of $500. Trustor acknowledges that Beneficiary will incur additional expenses
as a result of any such late deliveries, which expenses would be impracticable to quantify, and that
Trustor's payments under this subparagraph (d) are a reasonable estimate of such expenses.
17. Performance of Other Agreements. Trustor shall observe and perform
each and every term to be observed or performed by the Trustor pursuant to the terms of any
agreement or recorded instrument affecting or pertaining to the Trust Property.
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18. Representations and Covenants Concerning Loan. Trustor represents,
warrants and covenants as follows:
(a) The Notes, this Deed of Trust and the other Loan Documents 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 Notes, this Deed of Trust and the other Loan
Documents, or the exercise of any right thereunder, render this Deed of Trust unenforceable, in
whole or in part, or subject to any right of rescission, set-off, counterclaim or defense, including
the defense of usury.
(b) All certifications, permits, licenses and approvals, including,
without limitation, certificates of completion and occupancy permits required for the legal use and
occupancy of the Trust Property, have been obtained (or will be obtained, as applicable) and are
(or will be, as applicable) in full force and effect. The Trust Property is free of material damage
and is in good repair, and there is no proceeding pending for the total or partial condemnation of,
or affecting, the Trust Property.
(c) All of the Improvements which were included in determining the
appraised value of the Trust Property lie wholly within the boundaries and building restriction
lines of the Trust Property, and to Trustor's knowledge, (i) no improvements on adjoining
properties encroach upon the Trust Property, and (ii) no easements or other encumbrances upon
the Land encroach upon any of the Improvements, so as to affect the value or marketability of the
Trust Property except those which are insured against by title insurance. All of the Improvements
comply with all requirements of applicable zoning and subdivision laws and ordinances in all
material respects.
(d) The Trust Property is not subject to any Leases other than the Leases
described in the rent roll delivered to Beneficiary in connection with this Deed of Trust. No person
has any possessory interest in the Trust Property or right to occupy the same except under and
pursuant to the provisions of the Leases. Except as otherwise disclosed in writing to Beneficiary,
the current Leases are in full force and effect and there are no defaults thereunder by either party
and there are no conditions that, with the passage of time or the giving of notice, or both, would
constitute defaults thereunder.
(e) The Trust Property and the Leases are in compliance with all
statutes, ordinances, regulations and other governmental or quasi -governmental requirements and
private covenants now or hereafter relating to the ownership, construction, use or operation of the
Trust Property.
Additionally, no portion of the Trust Property is and shall ever be used (a) in
violation of Title 21 USC Controlled Substances Act Section 856(a) or any similar or successor
law now in effect, (b) for the growing, manufacturing, administration, distribution (including
without limitation, any retail or wholesale sales or delivery), use or consumption of any cannabis,
marijuana or cannabinoid product, compound or produce, (c) for the operation of a medical
marijuana or cannabis product facility or dispensary.
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(f) There has not been and shall never be committed by Trustor or any
other person in occupancy of or involved with the operation or use of the Trust Property any act
or omission affording the federal government or any state or local government the right of
forfeiture as against the Trust Property or any part thereof or any monies paid in performance of
Trustor's obligations under any of the Loan Documents. Trustor hereby covenants and agrees not
to commit, permit or suffer to exist any act or omission affording such right of forfeiture.
(g) The Management Agreement dated September 3, 2021 (the
"Management Agreement") between Trustor and Jakosky Properties, Inc. ("Manager") pursuant
to which Manager operates the Trust Property (a true, correct and complete copy of which has
been delivered to Beneficiary) is in full force and effect and there is no default or violation by any
parry thereunder. The fee due under the Management Agreement, and the terms and provisions of
the Management Agreement, are subordinate to this Deed of Trust and the Manager shall attorn to
Beneficiary. Trustor shall not terminate, cancel, modify, renew or extend the Management
Agreement, or enter into any agreement relating to the management or operation of the Trust
Property with Manager or any other parry without the express written consent of Beneficiary,
which consent shall not be unreasonably withheld. If at any time Beneficiary consents to the
appointment of a new manager, such new manager and Trustor shall, as a condition of
Beneficiary's consent, execute a Manager's Consent and Subordination of Management
Agreement in the form then used by Beneficiary.
(h) Improper Financial Transactions.
i. Trustor is, and shall remain at all times, in full compliance with
all applicable laws and regulations of the United States of America that prohibit, regulate
or restrict financial transactions, and any amendments or successors thereto and any
applicable regulations promulgated thereunder (collectively, the "Financial Control
Laws"), including but not limited to those related to money laundering offenses and related
compliance and reporting requirements (including any money laundering offenses
prohibited under the Money Laundering Control Act, 18 U.S.C. Sections 1956, 1957 and
the Bank Secrecy Act, 31 U.S.C. Sections 5311 et seq.) and the Foreign Assets Control
Regulations, 31 C.F.R. Section 500 et seq.
ii. Trustor represents and warrants that: (a) Trustor is not a Barred
Person (hereinafter defined); (b) Trustor is not owned or controlled, directly or indirectly,
by any Barred Person; and (c) Trustor is not acting, directly or indirectly, for or on behalf
of any Barred Person.
iii. Trustor represents and warrants that it understands and has been
advised by legal counsel on the requirements of the Financial Control Laws.
iv. Under any provision of this Deed of Trust or any of the other
Loan Documents where the Beneficiary shall have the right to approve or consent to any
particular action, including without limitation any (A) sale, transfer, assignment of the
Trust Property or of any direct or indirect ownership interest in Trustor, (B) leasing of the
Trust Property, or any portion thereof, or (C) incurring of additional financing secured by
Trust Property, or any portion thereof or by any direct or indirect ownership interest in the
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Trustor, Beneficiary shall have the right to withhold such approval or consent, in its sole
discretion, if the granting of such approval or consent could be construed as a violation of
any of the Financial Control Laws.
V. Trustor covenants and agrees that it will upon request provide
Beneficiary with (or cooperate with Beneficiary in obtaining) information required by
Beneficiary for purposes of complying with any Financial Control Laws.
As used in this Deed of Trust, the term "Barred Person" shall mean (A) any
person, group or entity named as a "Specially Designated National and Blocked Person"
or as a person who commits, threatens to commit, supports, or is associated with terrorism
as designated by the United States Department of the Treasury's Office of Foreign Assets
Control ("OFAC"), (B) any person, group or entity named in the lists maintained by the
United States Department of Commerce (Denied Persons and Entities), (C) any
government or citizen of any country that is subject to a United States Embargo identified
in regulations promulgated by OFAC and (D) any person, group or entity named as a
denied or blocked person or terrorist in any other list maintained by any agency of the
United States government.
19. Single Asset Entity/Separateness. Trustor represents, warrants and
covenants as follows:
(a) The purpose for which the Trustor is organized shall be limited
solely to (A) owning, holding, selling, leasing, transferring, exchanging, operating and managing
the Trust Property, (B) entering into the Loan with the Beneficiary, (C) refinancing the Trust
Property in connection with a permitted repayment of the Loan, and (D) transacting any and all
lawful business for which Trustor may be organized under its constitutive law that is incident,
necessary and appropriate to accomplish the foregoing.
(b) Trustor does not own and will not own any asset or property other
than (i) the Trust Property, (ii) incidental personal property necessary for and used in connection
with the ownership or operation of the Trust Property, and (iii) cash.
(c) Trustor will not engage in any business other than the ownership,
management and operation of the Trust Property.
(d) Trustor will not enter into any contract or agreement with any
affiliate of Trustor, any constituent party of Trustor, any owner of the Trustor, the Guarantors (as
hereinafter defined) or any affiliate or any constituent party of Guarantor, except upon terms and
conditions that are intrinsically fair, commercially reasonable and substantially similar to those
that would be available on an arms -length basis with third parties not affiliated with the Trustor or
any constituent party of Trustor or any owner of Trustor; Beneficiary agrees that the Management
Agreement complies with this subparagraph.
(e) Trustor has not incurred and will not incur any indebtedness,
secured or unsecured, other than the Loan and debt (i) incurred in the ordinary course of business
to vendors and suppliers of services and materials to the Trust Property, (ii) not secured by the
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Trust Property, or any portion thereof, or by a controlling interest in the Trustor, and (iii) not
accompanied by any rights to control or to obtain control of the Trustor. No indebtedness other
than the Loan may be secured (subordinate or >l afi passu) by the Trust Property, or any portion
thereof, or by a controlling interest in Trustor.
(f) Trustor has not made and will not make any loans or advances to
any entity or person (including any affiliate or any party that has a controlling interest in Trustor,
any Guarantor or any affiliate or any constituent party of Guarantor), and shall not acquire
obligations or securities of its affiliates or any party that has a controlling interest in Trustor.
(g) Trustor will pay its debts and liabilities (including, as applicable,
shared personnel and overhead expenses) from its assets, but only to the extent of such assets.
(h) Trustor has done or caused to be done and will do all things
necessary to observe organizational formalities and preserve its existence, and Trustor will not
amend, modify or otherwise change the partnership certificate, partnership agreement, articles of
incorporation and bylaws, operating agreement, trust or other organizational documents of Trustor
or such party that has a controlling interest in Trustor or Guarantor without the written consent of
Beneficiary, which shall not be unreasonably withheld, conditioned or delayed.
(i) Trustor will maintain all of its books, records, financial statements
and bank accounts separate from those of its affiliates and any constituent party. Trustor's assets
will not be listed as assets on the financial statement of any other entity. Trustor shall have its own
separate financial statement, provided, however, that Trustor's assets may be included in a
consolidated financial statement of its parent companies if inclusion on such a consolidated
statement is required to comply with the requirements of generally accepted accounting principles
("GAAP"), provided that such consolidated financial statement shall contain a footnote to the
effect that Trustor's assets are owned by Trustor and that they are being included on the financial
statement of its parent solely to comply with the requirements of GAAP, and further provided that
such assets shall be listed on Trustor's own separate balance sheet. Trustor will file its own tax
returns, if legally required, and will not file a consolidated federal income tax return with any other
corporation (unless legally required). Trustor shall maintain its books, records, resolutions and
agreements as official records.
0) Trustor 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 of Trustor, any
constituent party of Trustor, any Guarantor, any affiliate or any constituent party of Guarantor),
shall correct any known misunderstanding regarding its status as a separate entity, shall conduct
business in its own name, shall not identify itself or any of its affiliates as a division or part of the
other and shall maintain and utilize separate stationery, invoices and checks.
(k) To the extent that cash flow from the Trust Property is available,
Trustor will maintain adequate capital for the normal obligations reasonably foreseeable in a
business of its size and character and in light of its contemplated business operations.
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(1) Neither Trustor nor any party that has a controlling interest in
Trustor will seek dissolution, winding up, liquidation, consolidation or merger, in whole or in part,
or the sale of material assets of Trustor in violation of this Deed of Trust.
(m) Trustor will not commingle the funds and other assets of Trustor
with those of any affiliate or any constituent party of Trustor or any owner of Trustor, any
Guarantor, or any affiliate or any constituent party of Guarantor, or any other person.
(n) Trustor will not commingle its assets with those of any other person
or entity and will hold all of its assets in its own name.
(o) Trustor will not guarantee or become obligated for the debts of any
other entity or person and does not and will not hold itself out as being responsible for the debts
or obligations of any other person.
(p) The stationery, invoices and checks utilized by Trustor or utilized to
collect its funds or pay its expenses shall bear its own name and shall not bear the name of any
other entity unless such entity is clearly designated as being Trustor's agent.
(q) Trustor shall not pledge its assets for the benefit of any other person
or entity, and other than with respect to the Loan.
(r) Trustor shall correct any known misunderstanding regarding its
separate identity.
(s) Trustor shall not identify itself as a division of any other person or
entity.
20. Events of Default; Remedies. Each of the following events shall constitute
an "Event of Default" hereunder:
(a) if (i) any installment of interest or principal is not paid within five
(5) days after the same is due, (ii) the entire Indebtedness is not paid on or before the Maturity
Date (or if the Maturity Date has been accelerated, upon such acceleration), or (iii) any other
payment or charge due under the Notes, this Deed of Trust or any other Loan Documents is not
paid within five (5) days after the same becomes due;
(b) if any Taxes payable directly to the billing authority by Trustor are
not paid before interest becomes payable on the amount due or a penalty is assessed (provided that
the foregoing provisions of this clause b shall be subject to the right to contest Taxes granted to
Trustor in Subparagraph 4(b) of this Deed of Trust, but only for so long as the conditions in
Subparagraph 4(b) of this Deed of Trust remain satisfied);
(c) if the Policies are not kept in full force and effect and are not
delivered to Beneficiary when required hereunder, or if the Policies are not delivered to
Beneficiary within ten (10) days after written request by Beneficiary;
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(d) if any of the provisions of Paragraphs 7, 9, 19 or 39 herein are
violated or not complied with;
(e) if any of the events described in Paragraph 41 shall occur;
(f) if at any time any representation or warranty of Trustor or any
Guarantor made herein or in any guaranty, agreement, certificate, report, affidavit, owner's
affidavit, financial statement or other instrument furnished to Beneficiary shall be false or
misleading in any material respect;
(g) if any beneficiary under a deed of trust on the Trust Property,
whether superior or subordinate to this Deed of Trust (i) demands payment in full or otherwise
accelerates any indebtedness of Trustor, or (ii) otherwise commences the exercise of any remedy
available to such party under any such deed of trust or other loan document related to such deed
of trust;
(h) if Trustor fails to cure promptly any violation of any law or
ordinance affecting the Trust Property (provided that the foregoing provisions of this clause
shall be subject to any right to contest such violation specifically granted to Trustor in
Paragraph 8 of this Deed of Trust);
(i) if any Guaranty (as hereinafter defined) is terminated by Guarantor
or if any Guarantor attempts to withdraw, cancel or disclaim any Guaranty;
0) if a default by Trustor under any of the other terms, covenants or
conditions of the Note, this Deed of Trust or any other Loan Document shall occur and such default
shall not have been cured within thirty (30) days after written notice from Beneficiary, provided
that if such default is not susceptible of being cured within such thirty (30) day period and Trustor
shall have commenced the cure of such default within such thirty (30) day period and thereafter
diligently pursues such cure to completion, then such thirty (30) day period shall be extended for
a period of ninety (90) days from the occurrence of the default, provided, further, that the notice
and grace period set forth in this subparagraph (j) shall not apply to any other Event of Default
expressly set forth in this Paragraph 20 or to any other Event of Default defined as such in any
other Loan Document or to any other covenant or condition with respect to which a grace period
is expressly provided elsewhere;
(k) if any of the provisions of Paragraphs 42(d) and/or Paragraph 42(f)
are violated or not complied with, and/or if any representation or warranty in Paragraph 42(b)
and/or 4�c� shall prove false or misleading in any material respect and/or if any of the events
described in Paragraph 42(e) shall occur;
(1) if any of the provisions of Paragraph 74 herein are violated or not
complied with and the same are not cured within thirty (30) days after written notice from Trustor;
(m) if a default occurs by Trustor and remains uncured beyond any
applicable notice and cure period in the Tidelands Lease, or if a default occurs under any of the
provisions under this Deed of Trust relating to the Tidelands Lease; or
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(n) if Trustor fails to timely exercise the Option pursuant to
Paragra hp 86(a) below.
Upon the occurrence and during the continuation of any Event of Default, the
Indebtedness shall immediately become due at the option of Beneficiary.
Upon the occurrence of any Event of Default, Trustor shall pay Default Interest on
the entire unpaid principal balance of the Notes, as defined in and provided for in the Notes.
Upon the occurrence of any Event of Default, Beneficiary may, to the extent
permitted under applicable law, elect to treat the fixtures included in the Trust Property either as
real property or as personal property, or both, and proceed to exercise such rights as apply thereto.
With respect to any sale of real property included in the Trust Property made under the powers of
sale herein granted and conferred, Beneficiary may, to the extent permitted by applicable law,
include in such sale any fixtures included in the Trust Property and relating to such real property.
21. Additional Remedies.
(a) Upon the occurrence of any Event of Default, to the extent permitted
by law, Beneficiary may take such action, without notice or demand, as it shall deem advisable to
protect and enforce its rights against Trustor and in and to the Trust Property or any part thereof
or interest therein, including, but not limited to, 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) enter into or upon the Real Property, either personally or by its agents, nominees
or attorneys and dispossess Trustor and its agents and servants therefrom, and thereupon
Beneficiary may (A) use, operate, manage, control, insure, maintain, repair, restore and otherwise
deal with all and every part of the Trust Property and conduct the business thereat, (B) complete
any construction on the Trust Property in such manner and form as Beneficiary deems advisable,
(C) make alterations, additions, renewals, replacements and improvements to or on the Trust
Property, (D) exercise all rights and powers of Trustor with respect to the Trust Property, whether
in the name of Trustor 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
earnings, revenues, rents, issues, profits and other income of the Trust Property and every part
thereof and (E) apply the receipts from the Trust Property to the payment of the Indebtedness, after
deducting therefrom all expenses (including reasonable attorneys' fees and expenses) incurred in
connection with the aforesaid operations and all amounts necessary to pay the taxes, assessments,
insurance and other charges in connection with the Trust Property, as well as just and reasonable
compensation for the services of Beneficiary and its counsel, agents and employees, or (ii) institute
proceedings for the complete foreclosure of this Deed of Trust in which case the Trust Property
may be sold for cash or upon credit in one or more parcels, or (iii) with or without entry, to the
extent permitted and pursuant to the procedures provided by applicable law, institute proceedings
for the partial foreclosure of this Deed of Trust for the portion of the Indebtedness then due and
payable, subject to the continuing lien of this Deed of Trust for the balance of the Indebtedness
not then due, or (iv) sell or cause Trustee to sell for cash or upon credit the Trust Property or any
part thereof and all or any part of any estate, claim, demand, right, title and interest of Trustor
therein and rights of redemption thereof, pursuant to power of sale or otherwise, at one or more
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sales, as an entirety or in parcels, at such time and place, upon such terms and after such notice
thereof as may be required or permitted by law, and in the event of a sale, by foreclosure or
otherwise, of less than all of the Trust Property, this Deed of Trust shall continue as a lien on the
remaining portion of or estate in the Trust Property, or (v) institute an action, suit or proceeding in
equity for the specific performance of any covenant, condition or agreement contained herein or
in the Notes or any other Loan Document, or (vi) recover judgment on the Notes or any Guaranty
either before, during or after any proceedings for the enforcement of this Deed of Trust, or
(vii) pursue such other remedies as Beneficiary may have under applicable law.
(b) The purchase money proceeds or avails of any sale made under or
by virtue of this Paragraph 21, together with any other sums which then may be held by Beneficiary
under this Deed of Trust, whether under the provisions of this Paragraph 21 or otherwise, shall be
applied as follows:
First: To the payment of the costs and expenses of any such sale, including
reasonable compensation to Beneficiary and Trustee, their agents and counsel, and of any judicial
proceedings wherein the same may be made, and of all expenses, liabilities and advances made or
incurred by Beneficiary or Trustee under this Deed of Trust, together with interest as provided
herein on all advances made by Beneficiary or Trustee and all taxes or assessments, except any
taxes, assessments or other charges subject to which the Trust Property shall have been sold.
Second: To the payment of the whole amount then due, owing or unpaid upon
the Notes for principal, together with any and all applicable interest, fees and late charges.
Third: To the payment of any other sums required to be paid by Trustor pursuant
to any provision of this Deed of Trust or of the Notes.
Fourth: To the payment of the surplus, if any, to whomsoever may be lawfully
entitled to receive the same.
Beneficiary, Trustee and any receiver of the Trust Property, or any part thereof,
shall be liable to account for only those rents, issues and profits actually received by it.
(c) Beneficiary may adjourn from time to time any sale by Trustee 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 the same shall be so adjourned.
(d) Upon the completion of any sale or sales made by Beneficiary or
Trustee under or by virtue of this Paragraph 21, Beneficiary, Trustee, or an officer of any court
empowered to do so, as the case may be, 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.
Beneficiary or Trustee, as the case may be, is hereby irrevocably appointed the true and lawful
attorney of Trustor, in its name and stead, to make all necessary conveyances, assignments,
transfers and deliveries of the Trust Property and rights so sold and for that purpose Beneficiary
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or Trustee, as the case may be, may execute all necessary instruments of conveyance, assignment
and transfer, and may substitute one or more persons with like power, Trustor hereby ratifying and
confirming all that its said attorney or such substitute or substitutes shall lawfully do by virtue
hereof. Any such sale or sales made under or by virtue of this Paragraph 21, 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 Trustor in and to the properties and rights so
sold, and shall be a perpetual bar both at law and in equity against Trustor and against any and all
persons claiming or who may claim the same, or any part thereof from, through or under Trustor.
(e) In the event of any sale made under or by virtue of this Para ra h 21
(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) the entire Indebtedness, if not previously due
and payable, immediately thereupon shall, anything in the Notes, this Deed of Trust, any Guaranty
or any other Loan Document to the contrary notwithstanding, become due and payable.
(f) Upon any sale made under or by virtue of this Paragraph 21
(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), Beneficiary may bid for and acquire the Trust
Property or any part thereof and in lieu of paying cash therefor may make settlement for the
purchase price by crediting upon the Indebtedness (including any prepayment premium due
thereon) the net sales price after deducting therefrom the expenses of the sale and the costs of the
action and any other sums which Beneficiary is authorized to deduct or receive under this Deed of
Trust.
(g) No recovery of any judgment by Beneficiary and no levy of an
execution under any judgment upon the Trust Property or upon any other property of Trustor shall
affect in any manner or to any extent, the lien of this Deed of Trust upon the Trust 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.
22. Right to Cure Defaults. Upon the occurrence of any Event of Default or
if Trustor fails to make any payment or to do any act as herein provided, Beneficiary may, but
without any obligation to do so and without further notice to or demand on Trustor and without
releasing Trustor from any obligation hereunder, make or do the same in such manner and to such
extent as Beneficiary may deem necessary to protect the security hereof. Without limiting the
foregoing, Beneficiary may enter upon the Trust Property for such purposes or appear in, defend,
or bring any action or proceeding to protect its interest in the Trust Property, and the cost and
expense thereof (including, without limitation, reasonable attorneys' fees and disbursements to the
extent permitted by law), with interest as provided in this Paragraph 22, shall be immediately due
and payable to Beneficiary upon demand by Beneficiary therefor. All such costs and expenses
incurred by Beneficiary in remedying such Event of Default or in appearing in, defending, or
bringing any such action or proceeding shall bear interest at the Default Rate (as such term is
defined in the Notes), for the period from the date that such cost or expense was incurred to the
date of payment to Beneficiary. All such costs and expenses, together with interest thereon at the
Default Rate, shall be added to the Indebtedness and shall be secured by this Deed of Trust. If the
principal sum of the Notes or any other amount required to be paid on the Maturity Date under the
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Notes shall not be paid on the Maturity Date, interest shall thereafter be computed and paid at the
Default Rate.
23. Late Payment Charge. If any monthly principal and interest payment is
not paid in accordance with the Notes, a late charge (the "Late Charge") shall be due as provided
for in the Notes; there shall be no Late Charge with respect to the payment of the Notes due at
maturity or on the Maturity Date.
24. Prepayment. The Indebtedness may be prepaid only in accordance with
the terms of the Notes.
25. Prepayment After Event of Default. A tender of the amount necessary to
satisfy the entire Indebtedness paid at any time following an Event of Default or acceleration
(which acceleration shall be at Beneficiary's sole option), including at a foreclosure sale or during
any subsequent redemption period, if any, shall be deemed a voluntary prepayment, which
payment shall include a premium, the calculation of which shall be in accordance with the terms
of the Notes and shall depend upon whether the foreclosure sale occurred (i) prior to the time, if
any, the prepayment of the principal balance is permitted pursuant to the terms of the Notes or
(ii) on or after the date on which prepayment of the principal balance is permitted pursuant to the
terms of the Notes.
26. _Appointment of Receiver. Beneficiary, upon the occurrence of an Event
of Default or in any action to foreclose this Deed of Trust or upon the actual or threatened waste
to any part of the Trust Property, shall be entitled to the appointment of a receiver without notice
(except as provided in this Deed of Trust or as otherwise required by law) and without regard to
the value or condition of the Trust Property as security for the Indebtedness or the solvency or
insolvency of any person liable for the payment of the Indebtedness.
Trustor hereby irrevocably consents to such appointment and waives notice of any
application therefor (except as provided in this Deed of Trust or as otherwise required by law).
Any such receiver or receivers shall have all the usual powers and duties of receivers in like or
similar cases and all the powers and duties of Beneficiary in case of entry as provided herein and
shall continue as such and exercise all such powers until the date of confirmation of sale of the
Trust Property or a sale of the Trust Property under the power of sale herein contained, unless such
receivership is sooner terminated.
27. Security Agreement.
(a) This Deed of Trust is both a real property Deed of Trust and a
"security agreement" within the meaning of the Uniform Commercial Code. The Trust Property
includes both real and personal property and all other rights and interests, whether tangible or
intangible in nature, of Trustor in the Trust Property. Trustor, by executing and delivering this
Deed of Trust grants to Beneficiary and Trustee, as security for the Indebtedness, a security interest
in the Trust Property to the full extent that the Trust Property may be subject to the Uniform
Commercial Code (such portion of the Trust Property so subject to the Uniform Commercial Code
being called in this Paragraph 27 the "Collateral"). Trustor hereby authorizes Beneficiary to file
financing statements in order to create, perfect, preserve and continue the security interest(s) herein
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granted. This Deed of Trust shall also constitute a "fixture filing" for the purposes of the Uniform
Commercial Code and shall cover all items of the Collateral that are or are to become fixtures.
Information concerning the security interest(s) herein granted may be obtained from Beneficiary
upon request.
If an Event of Default shall occur, Beneficiary and/or Trustee, 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 parry upon default under the
Uniform Commercial Code, including, without limiting the generality of the foregoing, the right
to take possession of the Collateral or any part thereof, and to take such other measures as
Beneficiary and/or Trustee may deem necessary for the care, protection and preservation of the
Collateral. Upon request or demand of Beneficiary and/or Trustee, Trustor shall at its expense
assemble the Collateral and make it available to Beneficiary and/or Trustee at a convenient place
acceptable to Beneficiary and/or Trustee. Trustor shall pay to Beneficiary and Trustee on demand
any and all expenses, including legal expenses and reasonable attorneys' fees and disbursements,
incurred or paid by Beneficiary and Trustee in protecting its interest in the Collateral and in
enforcing its rights hereunder with respect to the Collateral. Any notice of sale, disposition or
other intended action by Beneficiary and/or Trustee with respect to the Collateral sent to Trustor
in accordance with the provisions hereof at least ten (10) days prior to such sale, disposition or
action shall constitute reasonable notice to Trustor. The proceeds of any disposition of the
Collateral, or any part thereof, may be applied by Beneficiary to the payment of the Indebtedness
in such priority and proportions as Beneficiary in its discretion shall deem proper.
Trustor shall notify Beneficiary of any change in name, identity or structure
of Trustor, and Trustor hereby expressly authorizes Beneficiary to file and record, at Trustor's sole
cost and expense, such Uniform Commercial Code forms as are necessary to maintain the priority
of the lien of Beneficiary upon and security interest in the Collateral. In addition, Trustor shall
promptly execute, file and record such additional 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, provided that no such additional documents
shall increase the obligations of Trustor under the Notes, this Deed of Trust or the other Loan
Documents. Trustor hereby authorizes Beneficiary and grants to Beneficiary an irrevocable power
of attorney, coupled with an interest, to file with the appropriate public office on its behalf any
financing or other statements in connection with the Collateral covered by this Deed of Trust.
(b) That portion of the Trust Property consisting of personal property
and equipment, shall be owned by Trustor and, except for tenant improvements installed for the
benefit of any tenants, shall not be the subject matter of any lease or other transaction whereby the
ownership or any beneficial interest in any of such property is held by any person or entity other
than Trustor nor shall Trustor create or suffer to be created any security interest covering any such
property as it may from time to time be replaced, other than the security interest created herein.
28. Authority.
(a) Trustor has full power, authority and legal right to execute this Deed
of Trust, and to deed, give, grant, bargain, sell, alien, enfeoff, convey, confirm, pledge, hypothecate
and assign unto Trustee and grant a security interest in the Trust Property pursuant to the terms
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hereof and to keep and observe all of the terms of this Deed of Trust on Trustor's part to be
performed.
(b) Trustor represents and warrants to Beneficiary that Trustor is not a
"foreign person" and covenants with Beneficiary that Trustor will not, throughout the term of the
Notes, become a "foreign person" within the meaning of § 1445 and § 7701 of the Internal
Revenue Code of 1986, (26 U.S.C. §§ 1445, 7701) and the related Treasury Department
regulations, including, without limitation, temporary regulations (hereinafter collectively the
"Code"); that is, the Trustor is not a non-resident alien, foreign corporation, foreign partnership,
foreign trust or foreign estate as those terms are defined in the Code.
(c) Trustor represents and warrants to Beneficiary that Trustor is a
limited liability company, organized and existing under the laws of the State of California.
29. Actions and Proceedings. Beneficiary and Trustee shall have the right to
appear in and defend any action or proceeding brought with respect to the Trust Property and to
bring any action or proceeding, in the name and on behalf of Trustor, which Beneficiary and/or
Trustee, in its discretion, shall decide should be brought to protect its interests in the Trust
Property.
30. Further Acts, Etc. Trustor will, at the sole cost of Trustor, and without
expense to Beneficiary or Trustee, do, execute, acknowledge and deliver all and every such further
acts, deeds, conveyances, deeds of trust, assignments, notices of assignments, transfers and
assurances as Beneficiary or Trustee shall, from time to time, require, for the better assuring,
conveying, assigning, transferring and confirming unto Beneficiary and/or Trustee the property
and rights hereby given, granted, bargained, sold, aliened, enfeoffed, conveyed, confirmed,
pledged, assigned and hypothecated or intended now or hereafter so to be, or which Trustor may
be or may hereafter become bound to convey or assign to Beneficiary and/or Trustee, 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 and, on demand, will execute and deliver within
five (5) business days after request of Beneficiary or Trustee, and if Trustor fails to so deliver,
hereby authorizes Beneficiary or Trustee thereafter to execute in the name of Trustor without the
signature of Trustor to the extent Beneficiary and/or Trustee may lawfully do so, one or more
financing statements, chattel mortgages or comparable security instruments, to evidence more
effectively the lien hereof upon the Trust Property. Trustor grants to Beneficiary and Trustee 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 and Trustee at law and in equity, including
without limitation such rights and remedies available to Beneficiary and Trustee pursuant to this
Paragraph 30.
31. Recording of Deed of Trust, Etc. Trustor forthwith upon the execution
and delivery of this Deed of Trust, will cause this Deed of Trust, and any security instrument
creating a lien or security interest or evidencing the lien hereof upon the Trust Property, to be filed,
registered or recorded and, thereafter, from time to time, each such other instrument of further
assurance to be filed, registered or recorded, all 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 hereof upon, and the interests of Beneficiary and Trustee in, the Trust Property.
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Trustor will pay all filing, registration or recording fees, and all expenses incident to the
preparation, execution and acknowledgment of this Deed of Trust, any Deed of Trust supplemental
hereto, any security instrument with respect to the Trust Property and any instrument of further
assurance, and all federal, state, county and municipal, taxes, duties, imposts, assessments and
charges arising out of or in connection with the making, execution, delivery and/or recording of
this Deed of Trust, any Deed of Trust supplemental hereto, any security instrument with respect to
the Trust Property or any instrument of further assurance, except where prohibited by law so to
do. Trustor 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, execution, delivery and/or
recording of this Deed of Trust, any Deed of Trust supplemental hereto, any security instrument
with respect to the Trust Property or any instrument of further assurance.
32. Usury Laws. This Deed of Trust and the Notes are subject to the express
condition that at no time shall Trustor be obligated or required to pay interest on the principal
balance due under the Notes at a rate which could subject the holder of the Notes to either civil or
criminal liability as a result of being in excess of the maximum interest rate which Trustor is
permitted by law to contract or agree to pay. If by the terms of this Deed of Trust or the Notes,
Trustor is at any time required or obligated to pay interest on the principal balance due under the
Notes at a rate in excess of such maximum rate, the rate of interest under the Notes shall be deemed
to be immediately reduced to such maximum rate and the interest payable shall be computed at
such maximum rate and all prior interest payments in excess of such maximum rate shall be applied
and shall be deemed to have been payments in reduction of the principal balance of the Notes and
the principal balance of the Notes shall be reduced by such amount in the inverse order of maturity.
33. 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, except as may be otherwise specifically provided in this Deed of
Trust, the decision of Beneficiary to approve or disapprove or to decide that arrangements or terms
are satisfactory or not satisfactory shall be in the sole discretion of Beneficiary (but made in good
faith) and shall be final and conclusive.
34. Recovery of Sums Required To Be Paid. To the extent permitted by law,
Beneficiary shall have the right from time to time to take action to recover any sum or sums which
constitute a part of the Indebtedness as the same become due, without regard to whether or not the
balance of the Indebtedness 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 Trustor
existing at the time such earlier action was commenced.
35. Marshalling and Other Matters. Trustor 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 marshalling in the event of any sale hereunder of
the Trust Property or any part thereof or any interest therein. Further, Trustor 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 Trustor, and on behalf of each and every person acquiring any interest in or title
to the Trust Property subsequent to the date of this Deed of Trust and on behalf of all persons to
the extent permitted by applicable law.
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36. Waiver of Notice. Except with respect to matters for which Beneficiary or
Trustee is required by applicable law to give notice, Trustor shall not be entitled to any notices of
any nature whatsoever from Beneficiary or Trustee except with respect to matters for which this
Deed of Trust specifically and expressly provides for the giving of notice by Beneficiary or Trustee
to Trustor; and except with respect to matters for which Beneficiary or Trustee is required by
applicable law to give notice, Trustor hereby expressly waives the right to receive any notice from
Beneficiary or Trustee with respect to any matter for which this Deed of Trust does not specifically
and expressly provide for the giving of notice by Beneficiary or Trustee to Trustor.
37. Remedies of Trustor. In the event that a claim or adjudication is made that
Beneficiary or Trustee has acted unreasonably or unreasonably delayed acting in any case where
by law or under the Notes, this Deed of Trust or the other Loan Documents, it has an obligation to
act reasonably or promptly, Beneficiary or Trustee shall not be liable for any monetary damages,
and Trustor's remedies shall be limited to injunctive relief or declaratory judgment.
38. Reporting Requirements. At the request of Beneficiary or Trustee,
Trustor shall supply or cause to be supplied to Beneficiary either (a) a copy of a completed Form
1099-13, Statement for Recipients of Proceeds from Real Estate, Broker and Barter Exchange
Proceeds prepared by Trustor's attorney or other person responsible for the preparation of such
form, together with a certificate from the person who prepared such form to the effect that such
form has, to the best of such person's knowledge, been accurately prepared and that such person
will timely file such form or (b) a certification from Trustor that the Loan is a refinancing of the
Trust Property or is otherwise not required to be reported to the Internal Revenue Service pursuant
to Section 6045(e) of the Code. Trustor hereby indemnifies, defends and holds Beneficiary and
Trustee harmless from and against all loss, cost, damage and expense (including without limitation,
reasonable attorneys' fees and disbursements and costs incurred in the investigation, defense and
settlement of claims) that Beneficiary or Trustee may incur, directly or indirectly, as a result of or
in connection with the assertion against Beneficiary or Trustee of any claim relating to the failure
of Beneficiary or Trustee to comply with this Para ra h 38.
39. Hazardous Materials.
(a) Trustor represents and warrants that, to Trustor's knowledge, except
as otherwise disclosed in the Environmental Reports (as defined below): (i) the Trust Property is
now and at all times during Trustor's ownership thereof has been free of contamination from any
petroleum product and all hazardous or toxic substances, wastes or substances, any substances
which because of their quantitative concentration, chemical, radioactive, flammable, explosive,
infectious or other characteristics, constitute or may reasonably be expected to constitute or
contribute to a danger or hazard to public health, safety or welfare or to the environment, including,
without limitation, any asbestos (whether or not friable) and any asbestos -containing materials,
Mold (defined as the presence of any form of (a) multicellular fungi that live on plant or animal
matter and an indoor environment (including without limitation Cladosporium, Penicillium,
Alternaria, Aspergillus, Fusarium, Trichoderma, Memnoniella, Mucor, and Stachybotrys
chartarum (SC) often found in water damaged building materials), (b) spores, scents or byproducts
produced or released by fungi, including mycotoxins and (c) microbial matter which reproduces
through mold, mildew and viruses, whether or not such microbial matter is living (collectively
"Mold")), waste oils, solvents and chlorinated oils, polychlorinated biphenyls (PCBs), toxic
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metals, etchants, pickling and plating wastes, explosives, reactive metals and compounds,
pesticides, herbicides, radon gas, lead (whether in water, paint or soil), urea formaldehyde foam
insulation and chemical, biological and radioactive wastes, or any other similar materials or any
hazardous or toxic wastes or substances which are included under or regulated by any federal, state
or local law, rule or regulation (whether now existing or hereafter enacted or promulgated, as they
may be amended from time to time) pertaining to environmental regulations, contamination, clean-
up or disclosures, and any judicial or administrative interpretation thereof, including any judicial
or administrative orders or judgments ("Hazardous Materials"), including, without limitation,
the Comprehensive Environmental Response, Compensation and Liability Act of 1980, 42 U.S.C.
section 9601 et sem. ("CERCLA"); The Federal Resource Conservation and Recovery Act, 42
U.S.C. section 6901 et seq. ("RCRA"); Superfund Amendments and Reauthorization Act of 1986,
Public Law No. 99-499 ("SARA"); Toxic Substances Control Act, 15 U.S.C. section 2601 et sea.
("TSCA"); the Hazardous Materials Transportation Act, 49 U.S.C. section 1801 et seq.; and any
other state superlien or environmental clean-up or disclosure statutes (all such laws, rules and
regulations being referred to collectively as "Environmental Laws"), (ii) Trustor has not caused
or suffered to occur any discharge, spill, uncontrolled loss or seepage of any Hazardous Materials
onto any property adjoining the Trust Property, (iii) Trustor has not received any complaint, notice,
letter, or other communication from occupants, tenants, guests, employees, licensees or any other
person regarding odors, poor indoor air quality, Mold, or any activity, condition, event or omission
that causes or facilitates the growth of Mold and Trustor further represents to the best of its
knowledge that no Mold or any activity, condition, event or omission that causes or facilitates the
growth of Mold exists at the Trust Property, and (iv) neither the Trustor nor any tenant or occupant
of all or part of the Trust Property is now or has been involved in operations at the Trust Property
which could lead to liability for Trustor or any other owner of the Trust Property or the imposition
of a lien on the Trust Property under any Environmental Law. As used herein "Environmental
Reports" shall mean that certain Phase I Environmental Site Assessment dated September 15,
2021, prepared by AES Due Diligence, Inc., as Project No. 21055012.
(b) At its sole cost and expense, Trustor shall comply with and shall
cause all tenants and other occupants of the Trust Property to comply with all Environmental Laws
now in effect or hereafter enacted with respect to the discharge, generation, removal,
transportation, storage and handling of Hazardous Materials. Trustor shall promptly notify
Beneficiary if Trustor shall become aware of any Hazardous Materials on or near the Trust
Property and/or if Trustor shall become aware that the Trust Property is in direct or indirect
violation of any Environmental Laws and/or if Trustor shall become aware of any condition on or
near the Trust Property which shall pose a threat to the health, safety or welfare of humans. Trustor
shall promptly remove all Hazardous Materials in violation of Environmental Laws and/or which
pose a threat to the health, safety or welfare of humans, from the Trust Property, such removal to
be performed in accordance with all applicable federal, state and local laws, statutes, rules and
regulations. Trustor shall pay immediately when due the cost of such removal of any Hazardous
Materials and shall keep the Trust Property free of any lien imposed pursuant to any Environmental
Laws now in effect or hereinafter enacted.
(c) Trustor grants Beneficiary and its employees and agents an
irrevocable and non-exclusive license, subject to the rights of tenants, after an Event of Default
under the Loan Documents or prior to such Event of Default if Lender reasonably believes that an
environmental condition exists at the Trust Property, to enter the Trust Property to make reasonable
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RIC Loan No. 529024:51
inspections of its condition, including but not limited to soil and groundwater sampling and
monitoring, and including but not limited to inspections for Hazardous Materials, underground
and above ground tanks, ACMs, PCBs, Mold and/or radon gas. The reasonable costs of such
testing shall be due and payable upon ten (10) days' notice, except that, if an Event of Default
exists, such costs shall immediately be due and payable without notice. After an Event of Default
under the Loan Documents or prior to such Event of Default if Lender reasonably believes that an
environmental condition exists at the Trust Property, Trustor, promptly upon the request of
Beneficiary, shall provide Beneficiary with an environmental site assessment or environmental
audit report, or an update of such an assessment or report, all in scope, form and content reasonably
satisfactory to Beneficiary. Trustor shall maintain the integrity of all storage tanks and drums on
or under the Trust Property during the term of the Loan in compliance with all Environmental
Laws now in effect or hereafter enacted. Trustor shall follow an operation and maintenance
program with respect to all storage tanks and drums on or under the Trust Property, which program
has been approved in writing by Beneficiary.
(d) Trustor shall indemnify Beneficiary and Trustee and hold
Beneficiary and Trustee harmless from and against all liability, loss, cost, damage and expense
(including, without limitation, reasonable attorneys' fees and costs incurred in the investigation,
defense and settlement of claims) that Beneficiary or Trustee may incur as a result of or in
connection with the assertion against Beneficiary or Trustee (whether as past or present holder of
this Deed of Trust, as lender in possession or as past or present owner of the Trust Property by
virtue of a foreclosure or acceptance of a deed in lieu of foreclosure or the exercise of a power of
sale) of any claim relating to the presence and/or release, threatened release, storage, disposal,
generating or removal of any Hazardous Materials or compliance with any Environmental Laws
now in effect or hereafter enacted. The obligations and liabilities of Trustor under this
Paragraph 39 shall survive full payment of the Loan, entry of a judgment of foreclosure or
acceptance of a deed in lieu of foreclosure or any subsequent transfer to a third party.
Notwithstanding the above, it is understood that the presence and/or release, threatened release,
storage, disposal, generating or removal of substances referred to in this section does not pertain
to a presence and/or release, threatened release, storage, disposal, generating or removal which is
caused solely by the gross negligence or willful misconduct of Beneficiary or its agents or which
first occurs solely after (A) repayment of the Loan in full in accordance with the Loan Documents
or (B) acquisition of title to the Property by Beneficiary (or any third party unrelated to Trustor)
upon a foreclosure or acceptance of a deed in lieu of foreclosure or the exercise of a power of sale
and surrender of possession and occupancy of the Property by Trustor, its agents, affiliates,
employees and independent contractors. Trustor shall have the burden of proving that the above
conditions are satisfied by clear and convincing evidence and shall continue to defend with counsel
reasonably satisfactory to Beneficiary and shall indemnify and hold Beneficiary harmless for all
matters set forth in this Paragraph 39, unless and until a court of competent jurisdiction finds that
Trustor has met such burden.
(e) Nothing contained herein shall constitute or be construed as a waiver
of any statutory or judicial federal, state or local law which may provide rights or remedies to
Beneficiary against Trustor or others in connection with any claim relating to the Trust Property
and pertaining to the presence and/or release, threatened release, storage, disposal, generating or
removal of any Hazardous Materials or to the failure to comply with any Environmental Laws now
or hereafter enacted.
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RIC Loan No. 529024:51
40. Asbestos. Trustor shall not hereafter install or permit to be installed in the
Trust Property, friable asbestos or any substance containing asbestos. With respect to any such
material currently present in the Trust Property, Trustor, at Trustor's expense, shall promptly
comply with and shall cause all occupants of the Trust Property to comply with all present and
future applicable federal, state or local laws, rules, regulations or orders relating to asbestos, friable
asbestos and asbestos containing materials. In the event any asbestos, friable asbestos or asbestos
containing material is discovered at the Trust Property, Trustor shall obtain a comprehensive
asbestos report prepared by a licensed engineer or asbestos consultant acceptable to Beneficiary
describing the form, extent, location and condition of such asbestos and recommending methods
of removal or abatement. Trustor shall promptly comply at its sole cost and expense with the
recommendations contained in such report, such compliance to be performed in accordance with
all applicable federal, state and local laws, statutes, rules and regulations. Trustor shall indemnify
Beneficiary and Trustee and hold Beneficiary and Trustee harmless from and against all loss, cost,
damage and expense (including, without limitation, reasonable attorneys' fees and costs incurred
in the investigation, defense and settlement of claims) that Beneficiary or Trustee may incur as a
result of or in connection with the assertion against Beneficiary or Trustee (whether as past or
present beneficiary or trustee of this Deed of Trust, as mortgagee in possession, or as past or
present owner of the Trust Property by virtue of a foreclosure or acceptance of a deed in lieu of
foreclosure or the exercise of a power of sale) of any claim relating to the presence or removal of
any asbestos substance referred to in this Paragraph 40, or compliance with any federal, state or
local laws, rules, regulations or orders relating thereto. The obligations and liabilities of Trustor
under this Paragraph 40 shall survive full payment of the Loan, a foreclosure or the acceptance of
a deed in lieu of foreclosure.
41. Bankruptcy or Insolvency. In the event Trustor or any Guarantor
(a)commences as debtor any case or proceeding under any bankruptcy, insolvency,
reorganization, liquidation, dissolution or similar law, (b) has appointed for it or the whole or any
substantial part of its property a receiver, conservator, trustee, custodian, manager, liquidator, or
similar official by any governmental or judicial authority (except any such action by Beneficiary),
(c) makes any assignment for the benefit of its creditors, or enters into an arrangement or
composition or similar plan or scheme with or for the benefit of creditors generally occurring in
circumstances in which such entity is unable to meet its obligations as they become due or (d) has
filed against it any case or proceeding under any bankruptcy, insolvency, reorganization,
liquidation, dissolution or similar law which (i) is consented to by such entity, or (ii) is not
dismissed within sixty (60) days, or (f) by reason of the operation of federal bankruptcy, state
insolvency, or similar creditor's rights laws, asserts a claim that the transaction creating a lien of
this Deed of Trust is either (i) a fraudulent conveyance or fraudulent transfer, or (ii) a preferential
transfer, then an Event of Default shall have occurred and as a result, the entire principal balance
of the Notes shall become immediately due and payable at the option of Beneficiary without notice
to Trustor and Beneficiary may exercise any remedies available to it hereunder, under any other
Loan Document, at law or in equity.
42. Compliance with ERISA and State Statutes on Governmental Plans.
(a) Beneficiary represents and warrants to Trustor that, as of the date of
this Deed of Trust and throughout the term of this Deed of Trust, the source of funds from which
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RIC Loan No. 529024:51
Beneficiary extends this Deed of Trust is its general account, which is subject to the claims of its
general creditors under state law.
(b) Trustor represents and warrants that, as of the date of this Deed of
Trust and throughout the term of this Deed of Trust, (i) Trustor is not an "employee benefit plan"
as defined in Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended
("ERISA"), which is subject to Title I of ERISA and (ii) the assets of the Trustor do not constitute
"plan assets" of one or more such plans within the meaning of ERISA Section 3(42) and 29 C.F.R.
§ 2510.3-101.
(c) Trustor represents and warrants to Beneficiary that, as of the date of
this Deed of Trust and throughout the term of this Deed of Trust (i) Trustor is not a "governmental
plan" within the meaning of Section 3(32) of ERISA and (ii) transactions by or with Trustor are
not subject to state statutes regulating investments of and fiduciary obligations with respect to
governmental plans.
(d) Trustor 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 (i) Trustor is not an "employee benefit plan"
or a "governmental plan", (ii) Trustor 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 Trustor are publicly offered securities, within the
meaning of 29 C.F.R. § 2510.3-101(b)(2);
(B) Less than 25 percent of all equity interests in the Trustor are held by
"benefit plan investors" within the meaning of ERISA
Section 3(42); or
(C) Trustor qualifies as a "venture capital operating company" or a "real
estate operating company" within the meaning of 29 C.F.R.
§ 2510.3.-101(d) or (e).
(e) Any of the following shall constitute an Event of Default under this
Deed of Trust, entitling Beneficiary to exercise any and all remedies to which it may be entitled
under this Deed of Trust, and any other Loan Documents (i) the failure of any representation or
warranty made by the Trustor under this Paragraph 42 to be true and correct in all material respects,
(ii) the failure of the Trustor to provide Beneficiary with the written certifications and evidence
referred to in this Paragraph 42 or (iii) the consummation by Trustor of a transaction which would
cause the establishment or maintenance of this Deed of Trust or the other Loan Documents, or any
exercise of Beneficiary's rights under this Deed of Trust, or the other Loan Documents to constitute
a non-exempt prohibited transaction under ERISA or a violation of a state statute regulating
governmental plans, or otherwise subjecting Beneficiary to liability for violation of ERISA or such
state statute.
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(f) Trustor shall indemnify Beneficiary and defend and hold
Beneficiary harmless from and against all civil penalties, excise taxes, or other loss, cost, damage
and expense (including, without limitation, reasonable attorneys' fees and disbursements and costs
incurred in the investigation, defense and settlement of claims and losses incurred in correcting
any prohibited transaction or in the sale of a prohibited loan, and in obtaining any individual
prohibited transaction exemption under ERISA that may be required, in Beneficiary's sole
discretion) that Beneficiary may incur, directly or indirectly, as a result of a default under this
Paragraph 42. This indemnity shall survive any termination, satisfaction or foreclosure of or
exercise of power of sale under this Deed of Trust.
43. 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.
44. Cooperation. Trustor acknowledges that Beneficiary and its successors
and assigns may (a) sell this Deed of Trust, the Notes and other Loan Documents to one or more
investors as a whole loan, (b) participate the Loan to one or more investors, (c) deposit this Deed
of Trust, the Notes and other Loan Documents with a trust, which trust may sell certificates to
investors evidencing an ownership interest in the trust assets or (d) otherwise sell the Loan or
interest therein to investors (the transactions referred to in Clauses (a) through (d) are hereinafter
referred to as "Secondary Market Transactions"). Trustor shall, at Beneficiary's sole expense,
cooperate in good faith with Beneficiary (aa) in effecting any such Secondary Market Transaction
and (bb) to implement all requirements imposed by the Rating Agency involved in any Secondary
Market Transaction including, without limitation, all structural or other changes to the Loan,
modifications to any documents evidencing or securing the Loan, and addressing such matters as
the Rating Agency may require; provided, however, that Trustor shall not be required to modify
any documents evidencing or securing the Loan which would modify (i) the interest rate payable
under the Notes, (ii) the stated maturity of the Notes, (iii) the amortization of principal of the Notes
or (iv) any other material term of the Loan. Trustor shall provide such information and documents
relating to Trustor, Guarantor, if any, the Trust Property, the Leases and the tenants under the
Leases as Beneficiary may reasonably request in connection with a Secondary Market Transaction.
Beneficiary shall have the right to provide to prospective investors any information in its
possession, including, without limitation, financial statements relating to Trustor, the Guarantor,
if any, the Trust Property and the tenants under the Leases. Trustor acknowledges that certain
information regarding the Loan and the parties thereto and the Trust Property may be included in
a private placement memorandum, prospectus or other disclosure documents.
45. Intentionally Deleted.
46. Exculpation and Recourse. The obligations and liability of Trustor
pursuant to the following Subparagraphs 46(a) and 46f b are collectively referred to as "Recourse
Obligations".
(a) Limited Recourse Obligations: Notwithstanding anything to the
contrary contained herein, but subject to subparagraph (b) below, any claim based on or in respect
of any liability of Trustor under the Notes or under this Deed of Trust or any other Loan Document
shall be enforced only against the Trust Property and any other collateral now or hereafter given
4848-1780-2228.6
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RIC Loan No. 529024:51
to secure the Loan and not against any other assets, properties or funds of Trustor; and therefore
this Deed of Trust, the Note, the other Loan Documents and the Debt is to be non-recourse to
Trustor and any guarantors under any guaranties ("Guarantors") and Trustor and Guarantors shall
have no personal liability in connection therewith; provided, however, that Trustor and Guarantors
shall be personally liable for amounts under the Loan Documents to the extent of, but limited to
the amount of, any loss, costs or damage arising out of the matters described in the subsections (i)
through (x) below, which liability shall not be limited solely to the Trust Property and other
collateral now or hereafter given to secure the Note but shall include all of the assets, properties
and funds of Trustor: (i) fraud, intentional misrepresentation and waste, (ii) any rents, issues or
profits collected more than one (1) month in advance of their due dates, (iii) any misappropriation
of rents, issues or profits, security deposits and any other payments from tenants or occupants
(including, without limitation, lease termination fees) insurance proceeds, condemnation awards,
or other sums of a similar nature, (iv) liability under environmental covenants, conditions and
indemnities contained in the Deed of Trust and in any separate environmental indemnity
agreements, (v) personalty or fixtures (not including trade fixtures or tenant improvements)
removed or allowed to be removed by or on behalf of Trustor and not replaced by items of equal
or greater value or functionality than the personalty or fixtures so removed, (vi) failure to pay taxes
unless such taxes are impounded by Beneficiary, assessments or ground rents prior to delinquency,
or to pay charges for labor, materials or other charges which can create liens on any portion of the
Trust Property, and any sums expended by Beneficiary in the performance of or compliance with
the obligations of Trustor under the Loan Documents (other than payment of principal and
interest), including, without limitation, sums expended to pay taxes or assessments or hazard
insurance premiums or bills for utilities or other services or products for the benefit of the Trust
Property; (vii) the unauthorized sale, conveyance or transfer of title to the Trust Property or
encumbrance of the Trust Property (provided that any transfer permitted under Paragraph 9 of this
Deed of Trust shall be deemed authorized), (viii) the failure of Trustor to maintain its status as a
single asset entity pursuant to its organizational documents and the Loan Documents as required
by Paragraph 19 of this Deed of Trust, provided that the following shall never be a requirement to
maintain status as a single asset entity: (1) maintaining solvency or the ability to pay debts as they
come due, or (2) any matter beyond Trustor's control, (ix) a violation of the provisions of
Paragraph 18(h) and/or Paragraph 86(a) of this Deed of Trust; and (x) reasonable attorneys' fees,
court costs and other expenses incurred by Beneficiary in connection with its enforcement of its
remedies under the Loan Documents, including, but not limited to, in connection with any
bankruptcy proceeding or reorganization brought by or against the Trustor or any of its principals.
Nothing herein shall be deemed: (w) to be a waiver of any right which Beneficiary may have
under any bankruptcy law of the United States or the state where the Trust Property is located
including, but not limited to, Sections 506(a), 506(b), 1111(b) or any other provisions of the
U.S. Bankruptcy Code, to file a claim for the full amount of the indebtedness secured by this Deed
of Trust or to require that all of the collateral securing the indebtedness secured hereby shall
continue to secure all of the indebtedness owing to Beneficiary in accordance with the Notes, this
Deed of Trust and the other Loan Documents; (x) to impair the validity of the indebtedness secured
by this Deed of Trust; or (y) to impair the right of Beneficiary as Beneficiary or secured party or
the Trustee to commence an action to foreclose any lien or security interest.
(b) Full Recourse Obligations. Notwithstanding anything to the
contrary contained in this Deed of Trust or the other Loan Documents, the exculpation provisions
of Subparagraph 46(a) above will BECOME NULL AND VOID and the Loan will be FULLY
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RIC Loan No. 529024:51
RECOURSE to Trustor and Guarantors in the event that Trustor (i) commences as debtor any case
or proceeding under any bankruptcy, insolvency, reorganization, liquidation, dissolution or similar
law, (ii) has appointed for it or the whole or any substantial part of the Trust Property (other than
upon the petition or filing of Beneficiary), a receiver, conservator, trustee, custodian, manager,
liquidator, or similar official, by any governmental or judicial authority; (iii) makes any
assignment for the benefit of its creditors, or enters into an arrangement or composition or similar
plan or scheme with or for the benefit of creditors generally occurring in circumstances in which
such entity is unable to meet its obligations as they become due; (iv) has filed against it any case
or proceeding under any bankruptcy, insolvency, reorganization, liquidation, dissolution or similar
law which (aa) is consented to by such entity, or (bb) is not dismissed within sixty (60) days; or
(v) if required to do so under the terms of this Deed of Trust or the other Loan Documents, fails to
maintain its status as a single asset entity pursuant to its organizational documents and
Paragraph 19 of this Deed of Trust, provided that the following shall never be a requirement to
maintain status as a single asset entity: (1) maintaining solvency or the ability to pay debts as they
come due, or (2) any matter beyond Trustor's control; or (vi) by reason of the operation of federal
bankruptcy, state insolvency, or similar creditors' rights laws, asserts a claim that the transaction
creating the lien of this Deed of Trust is either (aa) a fraudulent conveyance or fraudulent transfer,
or (bb) a preferential transfer.
47. Notices. Any notice, demand, statement, request or consent made
hereunder shall be effective and valid only if in writing, referring to this Deed of Trust, signed by
the party giving such notice, and delivered either personally to such other party, or sent by
nationally recognized overnight courier delivery service or by certified mail of the United States
Postal Service, postage prepaid, return receipt requested, addressed to the other party as follows
(or to such other address or person as either party or person entitled to notice may by notice to the
other party specify):
To Beneficiary:
John Hancock Life Insurance Company (U.S.A.)
Real Estate Finance Group
197 Clarendon Street, C-2
Boston, MA 02116
Re: JHUSA Loan No. 529024:11 &
RIC Loan No. 529024:51
and with a copy concurrently to:
Allen Matkins Leck Gamble Mallory & Natsis LLP
Three Embarcadero Center, 12th Floor
San Francisco, CA 94111-4074
Attention: Nancy Lundeen, Esq
To Trustor:
Quay Works
3101 West Coast Highway
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JHUSA Loan No. 529024:11
RIC Loan No. 529024:51
Suite 100
Newport Beach, CA 92663
Attention: John J. Jakosky, III
and with a copy concurrently to:
Foster Advisors
a Professional law corporation
11755 Wilshire Boulevard, Suite 1250
Los Angeles, CA 90025
Attention: Richard M. Foster, Esq.
To Trustee:
First American Title Insurance Company
18500 Von Karman Avenue, Suite 600
Irvine, California 92612
Attention: Escrow Dept.
Unless otherwise specified, notices shall be deemed given as follows: (i) if
delivered personally, when delivered, (ii) if delivered by nationally recognized overnight courier
delivery service, on the day following the day such material is sent, or (iii) if delivered by certified
mail, on the day of delivery.
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. Trustor
shall not be relieved of Trustor's obligations hereunder by reason of (a) failure of Beneficiary to
comply with any request of Trustor or any Guarantor to take any action to foreclose this Deed of
Trust or otherwise enforce any of the provisions hereof or of the Notes, any Guaranty or the other
Loan Documents, (b) the release, regardless of consideration, of the whole or any part of the Trust
Property, or of any person liable for the Indebtedness or portion thereof (except to the extent of
such release) or (c) any agreement or stipulation by Beneficiary extending the time of payment or
otherwise modifying or supplementing the terms of the Notes, any Guaranty, this Deed of Trust or
the other Loan Documents. Subject to Paragraph 46, above, Beneficiary may resort for the
payment of the Indebtedness to any other security held by Beneficiary in such order and manner
as Beneficiary, in its discretion, may elect. Subject to Paragraph 46, above, to the extent permitted
by law, Beneficiary may take action to recover the Indebtedness, 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 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. Subject to Paragraph 46, above, 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 by law.
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49. Joint and Several Liability. If there is more than one party comprising
Trustor, then the obligations and liabilities of each party under this Deed of Trust shall be joint
and several.
50. Severability. If any term, covenant or condition of the Notes, any Guaranty
or this Deed of Trust is held to be invalid, illegal or unenforceable in any respect, the Notes, any
Guaranty and this Deed of Trust shall be construed without such provision.
51. Duplicate Originals. This Deed of Trust may be executed in any number
of duplicate originals and each such duplicate original shall be deemed to constitute but one and
the same instrument.
52. Indemnity and Beneficiary's Costs. Trustor agrees to pay all costs,
including, without limitation, reasonable attorneys' fees and expenses, incurred by Beneficiary or
Trustee in enforcing the terms hereof and/or the terms of any of the other Loan Documents or the
Notes or any Guaranty, and in protecting, defending, preserving or enforcing the lien and security
interest of this Deed of Trust or any other Loan Document or any interest in the Trust Property,
whether or not suit is filed and waives to the full extent permitted by law all right to plead any
statute of limitations as a defense to any action hereunder. Trustor agrees to indemnify and hold
Beneficiary and Trustee harmless from any and all liability, loss, damage or expense (including,
without limitation, reasonable attorneys' fees and disbursements) that Beneficiary or Trustee may
or might incur hereunder or in connection with the enforcement of any of their rights or remedies
hereunder, any action taken by Beneficiary or Trustee hereunder, or by reason or in defense of any
and all claims and demands whatsoever that may be asserted against Beneficiary or Trustee arising
out of the Trust Property; and should Beneficiary or Trustee incur any such liability, loss, damage
or expense, the amount thereof with interest thereon at the Default Rate shall be payable by Trustor
immediately without demand, shall be secured by this Deed of Trust, and shall be a part of the
Indebtedness, provided that the above indemnity shall not apply to any such liability, loss, damage
or expense which is the result solely of the gross negligence or willful misconduct of Beneficiary
or Trustee.
53. Certain Definitions. Unless the context clearly indicates a contrary intent
or unless otherwise specifically provided herein, words used in this Deed of Trust shall be used
interchangeably in singular or plural form. The word "Trustor" shall mean Trustor and/or any
subsequent owner or owners of the Trust Property or any part thereof or interest therein. The word
"Beneficiary" shall mean Beneficiary or any subsequent holder of the Notes or collateral agent
for the holder of the Notes. The word "Trustee" shall mean Trustee and any successor or substitute
Trustee. The word "Guaranty" shall mean any Guaranty of Payment, Guaranty of Completion,
Environmental Indemnity or any other guaranty or indemnity given at any time to or for the benefit
of Beneficiary in connection with the Loan. The word "Guarantor" shall mean any person giving
or making any Guaranty. The word "Notes" shall mean the Notes or any other evidence of
indebtedness secured by this Deed of Trust. The words "Loan Documents" shall mean the Notes,
this Deed of Trust, the assignment of leases and rents, if any, made by Trustor to Beneficiary, any
reserve agreements between Trustor and Beneficiary, any escrow agreements between Trustor and
Beneficiary, the assignment of contracts, if any, made by Trustor to Beneficiary, all Guaranties, if
any, made to Beneficiary, any other deed of trust or mortgage securing the Notes and any other
agreement, instrument, affidavit or document executed by Trustor, any Guarantor or any
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indemnitor and delivered to Beneficiary in connection with the Loan. The word "person" shall
include an individual, corporation, partnership, trust, unincorporated association, government,
governmental authority or other entity. The words "Trust Property" shall include any portion of
the Trust Property or interest therein. 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.
54. 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 Trustor or Beneficiary or Trustee, 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.
55. No Foreign Person. Trustor 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.
56. Separate Tax Lot. The Trust Property is assessed for real estate tax
purposes as one or more wholly independent tax lot or lots, separate from any adjoining land or
improvements not constituting a part of such lot or lots, and no other land or improvements is
assessed and taxed together with the Trust Property or any portion thereof.
57. Right to Release Any Portion of the Trust Property. Beneficiary or
Trustee may release or reconvey any portion of the Trust Property for such consideration as
Beneficiary may require without, as to the remainder of the Trust Property, in any way impairing
or affecting the lien or priority of this Deed of Trust, or improving the position of any subordinate
lienholder with respect thereto, except to the extent that the obligations hereunder shall have been
reduced by the actual monetary consideration, if any, received by Beneficiary for such release, and
may accept by assignment, pledge or otherwise any other property in place thereof as Beneficiary
may require without being accountable for so doing to any other lienholder. This Deed of Trust
shall continue as a lien and security interest in the remaining portion of the Trust Property.
58. Subrogation. The Beneficiary shall be subrogated for further security to
the lien, although released of record, of any and all encumbrances paid out of the proceeds of the
Loan secured by this Deed of Trust, provided that in no event shall this provision change the
provisions of Paragraph 46 of this Deed of Trust.
59. Administrative Fees. Beneficiary may charge reasonable administrative
fees (to the extent specifically designated in this Deed of Trust) and be reimbursed for all costs
and expenses, including reasonable attorneys' fees and disbursements, associated with reviewing
and processing post -closing requests of Trustor.
60. Disclosure. Trustor represents and warrants that (a) to its actual knowledge
it has fully disclosed to Beneficiary all facts material to the Trust Property and the operation and
tenants thereof, the Trustor, the Trustor's business operations and the background,
creditworthiness, financial condition and business operations of Trustor, (b) all material
information submitted in connection with this Loan is in all material respects true, correct and
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complete, (c) the financial and operating statements and other accounting information submitted
in connection with the Loan are in all material respects true, correct, complete, and fairly present
the financial condition of the Trustor, and have been prepared consistent with proper accounting
standards; and (d) except as otherwise disclosed to Beneficiary in writing (including, without
limitation, the Pending Lawsuit), there is no litigation, action, claim, or other proceeding, pending
or, to Trustor's knowledge, threatened which might, in any way, materially and/or adversely affect
the Trustor, or the Trust Property, Beneficiary's lien thereon, or the financial condition of the Trust
Property or any of Trustor, and a misrepresentation or breach of any representation, warranty or
covenant shall be an Event of Default under the Loan Documents.
61. Headings, Etc. The headings and captions of various paragraphs 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.
62. Address of Real Property. The street address of the Real Property is as
follows: 3101 West Coast Highway, Newport Beach, California 92663.
63. Method of Payment. All payments of principal and interest and other
amounts due under this Deed of Trust shall be paid to Beneficiary by Automated Clearing House
debit against Trustor's account. Trustor agrees to provide Beneficiary with all necessary
authorizations.
64. Publicity. Trustor agrees that Beneficiary, at its expense, may publicize the
financing of the Trust Property, and/or (b) the credit rating of the Loan in trade and similar
publications.
65. Relationship. The relationship of Beneficiary to Trustor under this Deed
of Trust is strictly and solely that of lender and borrower and nothing contained in this Deed of
Trust or any other Loan Document is intended to create, or shall in any event or under any
circumstance be construed to create, a partnership, joint venture, tenancy -in -common, joint
tenancy or other relationship of any nature whatsoever between Beneficiary and Trustor other than
that of lender and borrower.
66. Homestead. Trustor 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 Land as against the collection of the Indebtedness, or any part hereof.
67. No Third -Party Beneficiaries. Nothing contained herein is intended or
shall be deemed to create or confer any rights upon any third person not a party hereto, whether as
a third -party beneficiary or otherwise, except as expressly provided herein.
68. Compliance with Regulation U. Trustor represents, warrants and
covenants that no part of the proceeds of the Loan will be used for the purpose (whether immediate,
incidental or ultimate) of buying or carrying any margin stock within the meaning of Regulation U
(12 CFR part 221) of the Board of Governors of the Federal Reserve System of the United States
or for the purpose of reducing or retiring any indebtedness which was originally incurred for any
such purpose, or for any other purpose which might constitute this Loan a "purpose credit" within
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the meaning of such Regulation U, provided that Trustor discloses that some of the proceeds may
be distributed to members of Trustor to use for their own purposes.
69. Entire Agreement. This Deed of Trust, the Notes and the other Loan
Documents constitute the entire agreement between Trustor and Beneficiary with respect to the
subject matter hereof and all understandings, oral representations and agreements heretofore or
simultaneously had among the parties are merged in, and are contained in, such documents and
instruments.
70. Servicer. Beneficiary may from time to time, at Beneficiary's own expense
(notwithstanding anything otherwise provided in this Deed of Trust), appoint a servicer (the
"Servicer") to administer the Loan, which Servicer shall have the power and authority to exercise
all of the rights and remedies of Beneficiary and to act as agent of Beneficiary hereunder.
71. Book Entry. Trustor hereby appoints Beneficiary as its agent for the
purpose of maintaining a registration book in which the ownership of the Notes shall be recorded.
In addition to any provisions set forth in the Loan Documents, the Notes may be sold, transferred
or assigned only upon notification by the holder to Beneficiary at the address indicated below that
a sale, transfer or assignment of the Notes has been duly executed by the holder.
Notice of any sale, transfer or assignment of the Notes is to be provided to:
John Hancock Life Insurance Company (U.S.A.)
c/o Book Entry Agent
Real Estate Finance Group
197 Clarendon Street, C-2
Boston, Massachusetts 02116
Attention: Kimberly Highfield
72. Governing Law; Consent to Jurisdiction. THIS DEED OF TRUST
SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAW OF
THE STATE IN WHICH THE TRUST PROPERTY IS LOCATED WITHOUT REGARD TO
CONFLICT OF LAW PROVISIONS THEREOF. EACH TRUSTOR AND ENDORSER
HEREBY SUBMITS TO PERSONAL JURISDICTION IN SAID STATE AND THE FEDERAL
COURTS OF THE UNITED STATES OF AMERICA LOCATED IN SAID STATE (AND ANY
APPELLATE COURTS TAKING APPEALS THEREFROM) FOR THE ENFORCEMENT OF
SUCH TRUSTOR'S OR ENDORSER'S OBLIGATIONS HEREUNDER, UNDER THE NOTE
AND THE OTHER LOAN DOCUMENTS, AND WAIVES ANY AND ALL PERSONAL
RIGHTS UNDER THE LAW OF ANY OTHER STATE TO OBJECT TO JURISDICTION
WITHIN SUCH STATE FOR THE PURPOSES OF SUCH ACTION, SUIT, PROCEEDING OR
LITIGATION TO ENFORCE SUCH OBLIGATIONS OF SUCH TRUSTOR OR ENDORSER.
EACH TRUSTOR OR ENDORSER HEREBY WAIVES AND AGREES NOT TO ASSERT, AS
A DEFENSE IN ANY ACTION, SUIT OR PROCEEDING ARISING OUT OF OR RELATING
TO THIS DEED OF TRUST, THE NOTE OR ANY OTHER LOAN DOCUMENT, (A) THAT
IT IS NOT SUBJECT TO SUCH JURISDICTION OR THAT SUCH ACTION, SUIT OR
PROCEEDING MAY NOT BE BROUGHT OR IS NOT MAINTAINABLE IN THOSE
COURTS OR THAT THIS DEED OF TRUST, THE NOTE AND/OR ANY OF THE OTHER
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LOAN DOCUMENTS MAY NOT BE ENFORCED IN OR BY THOSE COURTS OR THAT IT
IS EXEMPT OR IMMUNE FROM EXECUTION, (B) THAT THE ACTION, SUIT OR
PROCEEDING IS BROUGHT IN AN INCONVENIENT FORUM OR (C) THAT THE VENUE
OF THE ACTION, SUIT OR PROCEEDING IS IMPROPER. IN THE EVENT ANY SUCH
ACTION, SUIT, PROCEEDING OR LITIGATION IS COMMENCED, TRUSTOR AND ANY
ENDORSER AGREE THAT SERVICE OF PROCESS MAY BE MADE, AND PERSONAL
JURISDICTION OVER SUCH TRUSTOR OR ENDORSER OBTAINED, BY SERVICE OF A
COPY OF THE SUMMONS, COMPLAINT AND OTHER PLEADINGS REQUIRED TO
COMMENCE SUCH LITIGATION UPON SUCH TRUSTOR OR ENDORSER AT c/o
JAKOSKY PROPERTIES, INC., 3101 WEST COAST HIGHWAY, SUITE 100, NEWPORT
BEACH, CALIFORNIA 92663.
73. Incorporation of State Law. Certain provisions/sections of this Deed of
Trust and certain additional provisions/sections that are required by laws of the State in which the
Trust Property is located may be amended, described and/or otherwise set forth in more detail on
Exhibit B attached hereto, which such Exhibit by this reference, is incorporated into and made a
part of this Deed of Trust. In the event of any conflict between such state law provisions and any
provision herein, the state law provisions shall control.
74. Representations and Warranties Regarding Tidelands Lease. Trustor
represents and warrants to Beneficiary that the following statements are true and correct:
(a) Except for that certain Consent, Estoppel and Recognition
Certificate (the "Recognition Certificate") by the Tidelands Lessor ("Ground Lessor") in favor
of Trustor and Beneficiary, the documents listed in the definition of the Tidelands Lease above are
all of the documents amending, modifying, affecting or assigning the Tidelands Lease. Except for
the Recognition Certificate, there are no other oral or written agreements, understandings or the
like between Tidelands Lessor and Trustor relating to the Leased Premises (as defined in Paragraph
84 below), the Leasehold Estate (as defined in Paragraph 84 below) or the Tidelands Lease
transaction. A memorandum of the Tidelands Lease has been or will be recorded among the Real
Property Records in Orange County, California. True, correct and complete copies of the
documents listed in the definition of the Tidelands Lease in Granting Clause One above are
attached to the Borrower's Certificate delivered by Trustor in connection with this Deed of Trust.
(b) The Tidelands Lease is in full force and effect and is valid, binding
and enforceable against Trustor.
(c) Trustor has accepted possession of the Leased Premises, is in
occupancy thereof under the Tidelands Lease, and the term of the Tidelands Lease commenced on
May 13, 2019.
(d) The current term of the Tidelands Lease expires on May 13, 2024.
(e) Under the Tidelands Lease, Trustor is currently obligated to pay
Rent as described in Section 4 of the Tidelands Lease and otherwise set forth in the Tidelands
Lease ("Tidelands Rent"). Tidelands Rent has been paid current as of the date hereof.
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(f) Trustor presently maintains insurance coverage that satisfies the
requirements imposed upon the Trustor for insurance coverage as set forth in the Tidelands Lease.
(g) Trustor has no defense, set off, basis for withholding of Tidelands
Rent, claims or counter claims against the Tidelands Lessor under the Tidelands Lease. To
Trustor's knowledge, there are no claims against the Trustor relating to the Leased Premises or its
use.
(h) Trustor has not assigned, conveyed, transferred, sold, encumbered
or mortgaged its interest in the Tidelands Lease or the Leased Premises, except with respect to a
loan that is being paid off prior to the Closing of this Loan, and no mortgages, deeds of trust or
other security interests encumber the Leasehold Estate in the Leased Premises except this Deed of
Trust.
(i) Except as described in subsection (h), above and except for certain
lease agreements for dock spaces previously provided to Beneficiary, Trustor has not assigned the
Tidelands Lease or sublet the Leased Premises.
0) Other than the Option (defined below), the Tidelands Lease contains
no options, rights of first refusal or other preferential right to purchase or lease all or any portion
of the Leased Premises, and contains no rights that have accrued as of the date of this Deed of
Trust, to terminate, or (except as set forth herein) renew or extend the term of the Tidelands Lease.
(k) Trustor has not waived, canceled or surrendered any of its rights
under the Tidelands Lease;
(1) Trustor is the sole owner of, and has good and marketable title to,
the Leasehold Estate;
(m) the Leased Premises and the Trust Property are free and clear of all
liens, encumbrances and other matters affecting title, other than the lien of this Deed of Trust and
the easements and restrictions listed in a schedule of exceptions to coverage in the title insurance
policy issued to Beneficiary contemporaneously with the execution and recordation of this Deed
of Trust and insuring Beneficiary's interest in the Trust Property;
(n) there is no existing Tidelands Lessee Default (hereinafter defined)
and no event has occurred which, with the passage of time or the giving of notice, or both, would
constitute a Tidelands Lessee Default; and
(o) to the best of Trustor's knowledge in each case, there is no existing
Tidelands Lessor Default (hereinafter defined) and no event has occurred which, with the passage
of time or the giving of notice, or both, would constitute a Tidelands Lessor Default.
75. Notices Under Tidelands Lease. Within three (3) business days after
Trustor's receipt, Trustor shall deliver to Beneficiary a true and correct copy of each notice,
demand, complaint or request from Tidelands Lessor under, or with respect to, the Tidelands
Lease.
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76. Trustor's Obligations to Comply with Tidelands Lease. Trustor shall (i)
pay the Tidelands Rent and all other sums of money due and payable by Trustor at any time and
from time to time under the Tidelands Lease as and when such sums become due and payable, but
in any event before the expiration of any grace period provided in the Tidelands Lease for the
payment of any such sum, and (ii) at all times fully perform, observe and comply in all material
respects with all other terms, covenants and conditions of the Tidelands Lease to be performed,
observed or complied with by Trustor as Trustor under the Tidelands Lease, but in any event before
the expiration of any grace period provided in the Tidelands Lease for the performance of thereof.
If the Tidelands Lease does not provide for a grace period for the payment of a sum of money,
Trustor shall make the payment on or before the date on which the payment becomes due and
payable. Trustor shall deliver to Beneficiary evidence of the payments under the Tidelands Lease
within ten (10) days after receipt of a written request from Beneficiary.
77. Beneficiary's Right to Cure Tidelands Lessee Defaults. At any time after
Beneficiary receives notice of a Tidelands Lessee Default, to the extent legally permitted to do so,
(i) Beneficiary may (but shall not be obligated to do so), make any payment, perform any
obligation and take any other action Trustor would have the right to pay, perform or take under the
Tidelands Lease which Beneficiary deems necessary or desirable to cure the Tidelands Lessee
Default, and (ii) Beneficiary and its authorized agents shall have the right at any time or from time
to time to enter the Land and Improvements, or any part thereof, to such extent and as often as
Beneficiary, in its reasonable discretion, deems necessary or desirable in order to cure the
Tidelands Lessee Default. Beneficiary may exercise its rights hereunder immediately after receipt
of notice of a Tidelands Lessee Default. For purposes of exercising its rights hereunder,
Beneficiary shall be fully protected for any action taken or omitted to be taken by Beneficiary, in
good faith, in reliance on any written notice from Tidelands Lessor stating that a Tidelands Lessee
Default has occurred and is continuing even though Trustor may question or deny the existence or
nature of the Tidelands Lessee Default. All expenditures made by Beneficiary pursuant hereto to
cure a Tidelands Lessee Default shall become an additional part of the Indebtedness.
78. Covenants to Protect Leasehold Estate. Trustor shall not, without the
written consent of Beneficiary (which may be given or withheld by Beneficiary in its sole
discretion), (i) surrender the Leasehold Estate to Tidelands Lessor or terminate or cancel the
Tidelands Lease, (ii) amend, modify or change the Tidelands Lease, either orally or in writing, or
waive any of Trustor's rights under the Tidelands Lease, (iii) subordinate the Tidelands Lease or
the Leasehold Estate to any mortgage, deed of trust or other lien on Tidelands Lessor's fee title to
the Leased Premises, or (iv) except as otherwise provided herein, reject or assume the Tidelands
Lease or assign the Leasehold Estate pursuant to Section 365(h) of the Bankruptcy Code. To the
extent legally permitted to do so, Trustor absolutely and unconditionally transfers and assigns to
Beneficiary all of Trustor's rights to surrender, terminate, cancel, modify and change the Tidelands
Lease, and any such surrender, termination, cancellation, modification or change made without the
prior written consent of Beneficiary shall be void and have no legal effect.
79. Tidelands Lessee's Bankruptcy.
(a) To the extent legally permitted to do so, Trustor assigns to
Beneficiary, as additional security for the Indebtedness, Trustor's right to reject the Tidelands
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Lease under Section 365 of the Bankruptcy Code after the occurrence of an Event of Tidelands
Lessee Bankruptcy (hereinafter defined), subject to subparagraph (b) below.
(b) If, after the occurrence of an Event of Tidelands Lessee Bankruptcy
(hereinafter defined), Trustor decides to reject the Tidelands Lease, Trustor shall give Beneficiary
written notice, at least ten (10) days in advance of the date on which Trustor intends to apply to
the Bankruptcy Court for authority and permission to reject the Tidelands Lease. Beneficiary shall
have the right, but not the obligation, within twenty (20) days after receipt of Trustor's notice, to
deliver to Trustor a notice (`Beneficiary's Assumption Notice") in which (i) Beneficiary
demands that Trustor assume the Tidelands Lease and assign the Tidelands Lease to Beneficiary,
or its designee, in accordance with the Bankruptcy Code, and (ii) Beneficiary agrees to cure or
provide adequate assurance of prompt cure of all Tidelands Lessee Defaults reasonably susceptible
of being cured by Beneficiary and of future performance under the Tidelands Lease. If Beneficiary
timely delivers Beneficiary's Assumption Notice to Trustor, Trustor shall not reject the Tidelands
Lease and shall, within ten (10) days after receipt of Beneficiary's notice, comply with the demand
contained in clause (i) of Beneficiary's notice. If Beneficiary does not timely deliver Beneficiary's
Assumption Notice to Trustor, Trustor shall have the right to reject the Tidelands Lease.
80. Tidelands Lessor's Bankruptcy.
(a) If, after the occurrence of an Event of Tidelands Lessor Bankruptcy
(hereinafter defined), Tidelands Lessor rejects the Tidelands Lease pursuant to Section 365(h) of
the Bankruptcy Code (i) Trustor, immediately after obtaining notice of the rejection, shall deliver
a copy of the notice to Beneficiary, (ii) Trustor shall not, without Beneficiary's prior written
consent (which may be given or withheld in Beneficiary's sole discretion), elect to treat the
Tidelands Lease as terminated pursuant to Section 365(h) or any other applicable provision of the
Bankruptcy Code, and (iii) to the extent legally permissible, this Deed of Trust and the lien created
by this Deed of Trust shall extend to and encumber Trustor's retained rights, if any, under the
Tidelands Lease that are appurtenant to the Leased Premises for the balance of the term of the
Tidelands Lease and for any renewal or extension of those rights under the Tidelands Lease.
Trustor transfers and assigns to Beneficiary, as additional security for the Indebtedness, Trustor's
rights, after Tidelands Lessor's rejection of the Tidelands Lease, to treat the Tidelands Lease as
terminated, and any termination of the Tidelands Lease made by Trustor without Beneficiary's
prior written consent shall be void and have no legal effect.
(b) Trustor transfers and assigns to Beneficiary, as additional security
for the Indebtedness, all of Trustor's rights to damages caused by Tidelands Lessor's rejection of
the Tidelands Lease after the occurrence of an Event of Tidelands Lessor Bankruptcy and all of
Trustor's rights to offset such damages against rent payable under the Tidelands Lease. As long
as no Event of Default has occurred and is continuing, Beneficiary agrees that it will not enforce
its rights under the preceding sentence, but will permit Trustor to exercise such rights with
Beneficiary's prior written consent. Any amounts received by Beneficiary as damages arising out
of Tidelands Lessor's rejection of the Tidelands Lease shall be applied in the manner set forth in
this Deed of Trust.
81. No Meaner of Estates. If Trustor acquires the fee estate of Tidelands
Lessor under the Tidelands Lease (the "Fee Estate") (i) there shall be no merger between the Fee
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Estate and the Leasehold Estate unless all persons, including Beneficiary, having an interest in the
Tidelands Lease consent in writing to the merger, and (ii) simultaneously with Trustor's
acquisition of the Fee Estate, the lien of this Deed of Trust shall automatically, without the
necessity of any further conveyance, be spread to cover the Fee Estate and as so spread shall be
prior to the lien of any mortgage, deed of trust or other lien placed on the Fee Estate after the date
of this Deed of Trust. Promptly after Trustor's acquisition of the Fee Estate, Trustor, at its sole
cost and expense, including payment of Beneficiary's reasonable attorneys' fees and out-of-pocket
disbursements, shall execute and deliver all documents and instruments necessary to subject the
Fee Estate to the lien of this Deed of Trust, and shall provide to Beneficiary a title insurance policy
insuring the lien of this Deed of Trust as a first lien on the Fee Estate and the Leasehold Estate. If
Beneficiary acquires the Fee Estate and the Leasehold Estate (whether pursuant to the provisions
of the Tidelands Lease, by foreclosure of this Deed of Trust, or otherwise), the Fee Estate and the
Leasehold Estate shall not merge as a result of such acquisition and shall remain separate and
distinct for all purposes after such acquisition unless and until Beneficiary shall elect to merge the
Fee Estate and the Leasehold Estate.
82. New Lease. If (i) the Tidelands Lease is canceled or terminated for any
reason before the natural expiration of its term, and (ii) Beneficiary (or its designee) obtains from
Tidelands Lessor a new lease in accordance with the terms of the Tidelands Lease or such other
agreement providing for same, Trustor shall have no right, title or interest in and to the new lease
or the leasehold estate created by the new lease.
83. _Appointment of Beneficiary as Trustor's Attorney -in -Fact. Trustor
makes, constitutes and appoints Beneficiary as Trustor's attorney-in-fact, in Trustor's name, place
and stead, with full power of substitution, to take all actions and to sign all documents and
instruments which Beneficiary, in its reasonable discretion, considers to be necessary or desirable
to (i) prevent or cure a Tidelands Lessee Default, (ii) perform or carry out any of the Trustor's
covenants under Paragraphs 76 through 86 hereof, (iii) renew or extend the term of the Tidelands
Lease pursuant to the terms hereof, (iv) appoint arbitrators and conduct arbitration proceedings
pursuant to the Tidelands Lease, and (v) request and obtain estoppel certificates from Tidelands
Lessor pursuant to the Tidelands Lease. Trustor gives and grants to Beneficiary, as Trustor's
attorney-in-fact, full power and authority to do and perform every act and sign every document
and instrument necessary and proper to be done in the exercise of the foregoing power as fully as
Trustor might or could do, and Trustor hereby ratifies and confirms all acts that Beneficiary, as
Trustor's attorney-in-fact, shall lawfully do or cause to be done by virtue of this power of attorney.
This power of attorney, being coupled with an interest, shall be irrevocable as long as any of the
Indebtedness remains unpaid or outstanding.
84. Definitions Relating to Tidelands Lease. The following terms shall have
the meanings defined below for all purposes of this Deed of Trust, and the definitions shall be
applicable to both the singular and the plural form of the term defined, where either of such form
is used herein.
(a) "Event of Tidelands Lessee Bankruptcy": Either of the following
actions taken by or with respect to Trustor: (i) Trustor pursuant to or within the meaning of the
Bankruptcy Code (x) commences a voluntary case, or (y) consents to the entry of an order for relief
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against it in an involuntary case; or (ii) a court of competent jurisdiction enters an order or decree
under the Bankruptcy Code that is for relief against Trustor in an involuntary case.
(b) "Event of Tidelands Lessor Bankruptcy": Either of the following
actions taken by or with respect to Tidelands Lessor: (i) Tidelands Lessor pursuant to or within the
meaning of the Bankruptcy Code (x) commences a voluntary case, or (y) consents to the entry of
an order for relief against it in an involuntary case; or (ii) a court of competent jurisdiction enters
an order or decree under the Bankruptcy Code that is for relief against Tidelands Lessor in an
involuntary case.
(c) "Tidelands Lessee Default": A failure by Trustor in making any
payment of rent, additional rent or other sum of money payable by Trustor to Tidelands Lessor
under the Tidelands Lease if such failure remains uncured after the expiration of any applicable
cure period provided in the Tidelands Lease, or a default by Trustor in performing or observing
any of the terms, covenants or conditions of the Tidelands Lease (other than the payments referred
to in the first clause) required to be performed or observed by Trustor and such default remains
uncured after the expiration of any applicable cure period provided to Trustor in the Tidelands
Lease.
(d) "Tidelands Lessor Default": A default by Tidelands Lessor in
performing or observing any of the terms, covenants or conditions of the Tidelands Lease required
to be performed or observed by Tidelands Lessor.
(e) "Leased Premises": The land leased pursuant to the Tidelands
Lease and any other real property leased by Trustor pursuant to the Tidelands Lease.
(f) "Leasehold Estate": Trustor's interest in the Leased Premises and
any other real property leased by Trustor pursuant to the Tidelands Lease, including (i) all rights
of Trustor to renew or extend the term of the Tidelands Lease, (ii) all amounts deposited by Trustor
with Tidelands Lessor under the Tidelands Lease, (iii) Trustor's right or privilege to terminate,
cancel, surrender, modify or amend the Tidelands Lease, and (iv) all other options, privileges and
rights granted and demised to Trustor under the Tidelands Lease and all appurtenances with respect
to the Tidelands Lease.
85. Recognition Certificate. No provision of this Deed of Trust shall in any
way alter, amend or otherwise derogate the rights of Beneficiary under the Recognition Certificate.
86. Extension Options.
(a) The Tidelands Lease provides for an option to extend the lease term
(the "Option"), exercisable by Trustor no earlier than August 17, 2023, and no later than
February 13, 2024 (the "Option Exercise Window"). Borrower shall (x) exercise the Option
within the Option Exercise Window in accordance with the terms of the Tidelands Lease, and
(y) provide Beneficiary with evidence that the Option has been exercised in accordance with the
Tidelands Lease on or prior to February 20, 2024. Upon a default by Trustor under this
Paragraph 86(a), such default will trigger the limited recourse obligations of Trustor pursuant to
Paragraph 46(a) above, and of the Guarantor under the Guaranty.
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(b) Without limiting any of Beneficiary's rights under this Deed of
Trust, if Trustor fails to exercise the Option before January 1, 2024, to the extent legally permitted
to do so, Trustor hereby grants Beneficiary the right, but not the obligation, to exercise such
Option, or, through a receiver appointed in accordance to Paragraph 26 above, exercise such
Option.
[Remainder of page is blank; signatures appear on next page.]
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IN WITNESS WHEREOF, Trustor has duly executed and delivered this Deed of Trust as
of the day and year first above written.
TRUSTOR:
QUAY WORKS LLC,
a California limited liability company
IN
Name: John J. Jakosky, III
Title: Manager
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ACKNOWLEDGMENT
A notary public or other officer completing this certificate verifies only the identity of the individual
who signed the document to which this certificate is attached, and not the truthfulness, accuracy,
or validity of that document.
State of California
County of
On , before me,
(insert name of notary)
Notary Public, personally appeared ,
who proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are
subscribed to the within instrument and acknowledged to me that he/she/they executed the same
in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the
person(s), or the entity upon behalf of which the person(s) acted, executed the instrument.
I certify under PENALTY OF PERJURY under the laws of the State of California that the
foregoing paragraph is true and correct.
WITNESS my hand and official seal.
Signature
(Seal)
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FXHiR1T A
DESCRIPTION OF LAND
The Land referred to herein below is situated in the City of Newport Beach, County of Orange,
State of California, and is described as follows:
PARCEL 1, AS SHOWN ON PARCEL MAP 81-713 FILED IN THE OFFICE OF THE
RECORDER OF THE COUNTY OF ORANGE, STATE OF CALIFORNIA ON DECEMBER
8, 1983, IN BOOK 184 OF PARCEL MAPS PAGES 38 AND 39.
For conveyancing purposes only: APN 049-130-18
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EXHIBIT A
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EXHIBIT B
APPLICABLE STATE LAWS
1. Remedies Not Exclusive; Waiver. Trustee and Beneficiary shall have all powers,
rights and remedies under applicable law whether or not specifically or generally granted or
described in this Deed of Trust. Nothing contained herein shall be construed to impair or to restrict
such powers, rights and remedies or to preclude any procedures or process otherwise available to
trustees or beneficiaries under deeds of trust in the State of California. Trustee and Beneficiary,
and each of them, shall be entitled to enforce the payment and performance of any indebtedness
or obligations secured hereby and to exercise all rights and powers under this Deed of Trust or
under any other Loan Document or other agreement or any laws now or hereafter in force,
notwithstanding the fact that some or all of the indebtedness and obligations secured hereby may
now or hereafter be otherwise secured, whether by mortgage, deed of trust, pledge, lien,
assignment or otherwise. Neither the acceptance of this Deed of Trust nor its enforcement, whether
by court action or pursuant to the power of sale or other powers contained herein, shall prejudice
or in any manner affect Trustee's or Beneficiary's right to realize upon or enforce any other rights
or security now or hereafter held by Trustee or Beneficiary. Trustee and Beneficiary, and each of
them, shall be entitled to enforce this Deed of Trust and any other rights or security now or
hereafter held by Beneficiary or Trustee in such order and manner as they or either of them may
in their absolute discretion determine. No remedy herein conferred upon or reserved to Trustee or
Beneficiary is intended to be exclusive of any other remedy contained herein or by law provided
or permitted, but each shall be cumulative and in addition to every other remedy given hereunder
or now or hereafter existing at law or in equity. Every power or remedy given by any of the Loan
Documents to Trustee or Beneficiary, or to which either of them may be otherwise entitled, may
be exercised, concurrently or independently, from time to time and as often as may be deemed
expedient by Trustee or Beneficiary, and either of them may pursue inconsistent remedies. By
exercising or by failing to exercise any right, option or election hereunder, Beneficiary shall not
be deemed to have waived any provision hereof or to have released Trustor from any of the
obligations secured hereby unless such waiver or release is in writing and signed by Beneficiary.
The waiver by Beneficiary of Trustor's failure to perform or observe any term, covenant or
condition referred to or contained herein to be performed or observed by Trustor shall not be
deemed to be a waiver of such term, covenant or condition or of any subsequent failure of Trustor
to perform or observe the same or any other such term, covenant or condition referred to or
contained herein, and no custom or practice which may develop between Trustor and Beneficiary
during the term hereof shall be deemed a waiver of or in any way affect the right of Beneficiary to
insist upon the performance by Trustor of the obligations secured hereby in strict accordance with
the terms hereof or of any other Loan Document.
2. Power of Sale.
(i) Notwithstanding anything to the contrary contained herein, the following
shall control:
(a) Should Beneficiary elect to foreclose by exercise of the power of sale
contained herein, Beneficiary shall notify Trustee and shall, if required, deposit with
Trustee the Note, the original or a certified copy of this Deed of Trust, and such other
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documents, receipts and evidences of expenditures made and secured hereby as Trustee
may require. Upon receipt of such notice from Beneficiary, Trustee shall cause to be
recorded and delivered to Trustor such notice as may then be required by law and by this
Deed of Trust. Trustee shall, without demand on Trustor, after lapse of such time as may
then be required by law and after recordation of such notice of default and after notice of
sale has been given as required by law, sell the Trust Property at the time and place of sale
fixed by it in said notice of sale, either as a whole or in separate lots or parcels or items as
Trustee shall deem expedient, and in such order as it may determine, at public auction to
the highest bidder for cash in lawful money of the United States payable at the time of sale.
Trustee shall deliver to the purchaser or purchasers at such sale its good and sufficient deed
or deeds conveying the property so sold, but without any covenant or warranty, express or
implied. The recitals in such deed of any matters or facts shall be conclusive proof of the
truthfulness thereof. Any person, including, without limitation, Trustor, Trustee or
Beneficiary, may purchase at such sale, and Trustor hereby covenants to warrant and
defend the title of such purchaser or purchasers.
(b) Trustee shall apply the proceeds of such sale as provided in Paragraph 21(b)
of this Deed of Trust
3. Right of Rescission. Beneficiary may from time to time rescind any notice of
default or notice of sale before any Trustee's sale in accordance with the laws of the State of
California. The exercise by Beneficiary of such right of rescission shall not constitute a waiver of
any breach or default then existing or subsequently occurring, or impair the right of Beneficiary to
execute and deliver to Trustee, as above provided, other declarations or notices of default to satisfy
the obligations of this Deed of Trust or secured hereby, nor otherwise affect any provision,
covenant or condition of any Loan Document or any of the rights, obligations or remedies of
Trustee or Beneficiary hereunder or thereunder.
4. Full Reconveyance. Upon written request of Beneficiary stating that all sums
secured hereby have been paid, upon surrender to Trustee of the Note and the original or a certified
copy of this Deed of Trust for cancellation and retention, and upon payment of its fees, Trustee
shall fully reconvey, without warranty, the entire remaining Trust Property then held hereunder.
The recitals in such reconveyance of any matters of facts shall be conclusive proof of the
truthfulness thereof. The grantee in such reconveyance may be described as "the person or persons
legally entitled thereto."
5. Environmental Provisions. Without limiting any of the remedies provided in the
Loan Documents, Trustor acknowledges and agrees that the provisions of Paragraph 39 and 40 of
this Deed of Trust are environmental provisions (as defined in Section 736(f)(2) of the California
Code of Civil Procedure) made by the Trustor relating to the real property security (the
"Environmental Provisions"). Trustor's breach or a failure to comply with the Environmental
Provisions shall constitute a breach of contract entitling Beneficiary to all remedies provided under
Section 736 of the California Code of Civil Procedure ("Section 736") for the recovery of damages
and for the enforcement of the Environmental Provisions. Pursuant to Section 736, Beneficiary's
action for recovery of damages or enforcement of the Environmental Provisions shall not constitute
an action within the meaning of Section 726(a) of the California Code of Civil Procedure or
constitute a money judgment for a deficiency or a deficiency judgment within the meaning of
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Section 580a, 580b, 580d, or 726(b) of the California Code of Civil Procedure. Other than the
remedy provided under Section 736, all remedies provided for by the Loan Documents are separate
and distinct causes of action that are not abrogated, modified, limited or otherwise affected by the
remedies provided under Section 736(a) of the California Code of Civil Procedure.
6. Title Acts by Trustee. At any time upon written request of Beneficiary, payment
of its fees and presentation of this Deed of Trust and the Note for endorsement (in case of full
reconveyance, for cancellation and retention), without affecting the liability of any person for the
payment of the Indebtedness (except upon full reconveyance and payment in full of the
Indebtedness), Trustee shall (a) consent to the making of any map or plat of the Trust Property,
(b) join in granting any easement or creating any restriction thereon, (c) join in any subordination
or other agreement affecting this Deed of Trust or the lien or charge thereof or (d) reconvey,
without warranty, all or any part of the Trust Property. The Trustee in any reconveyance may be
described as the "person or persons legally entitled thereto," and the recitals therein of any matters
or facts shall be conclusive proof of the truthfulness thereof. Trustor agrees to pay a reasonable
Trustee's fee for full or partial reconveyance, together with a recording fee if Trustee, at its option,
elects to record said reconveyance.
7. Successor Trustee. At the option of Beneficiary, with or without any reason, a
successor or substitute trustee may be appointed by Beneficiary without any formality other than
a designation in writing of a successor or substitute trustee, who shall thereupon become vested
with and succeed to all the powers and duties given to Trustee herein named, the same as if the
successor or substitute trustee had been named original Trustee herein; and such right to appoint a
successor or substitute trustee shall exist as often and whenever Beneficiary desires.
8. Authorization Regarding Trustee. Trustee (and any successor or substitute
trustee) may act hereunder and may sell and convey the Trust Property, or any part thereof, if and
as permitted in this Deed of Trust, although the Trustee (or successor or substitute trustee) has
been, may now be, or is hereafter the attorney or agent of Beneficiary with respect to the Loan, or
with respect to any other matter or business whatsoever.
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EXHIBIT C
Legal Description of Leased Premises
An area of public tidelands, adjacent to 3101 Coast Hwy W, APN 049-130-18; as shown in
Commercial Pier Permit #12830171, more particularly described as follows:
Bound on the northwest and southwest by the prolongation of the parcel lines of Parcel 1,
Resub 688, as recorded in Parcel Map book PM 184/38-39, recorded 12/08/1983; Bound on the
Northeast by the U.S. Bulkhead Line, and on the southwest by the U.S. Pierhead Line; as shown
upon a map entitled "Harbor Lines, Newport Bay Harbor, California", approved May 2 1936 by
the Secretary of War, and on file in the office of the U.S. District Engineer at Los Angeles,
California, such area containing approximately 13,128 square feet.
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EXHIBIT C
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