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Home My WebLink About1994-09-06; Housing & Redevelopment Commission; 258 Exhibit 7; Family Housing Revenue Refunding BondsEXHIBIT 7 .+-- \ I I i i ,J ’ ‘.. ) . , ,- FIRST DEED OF TRUST AND SECIJRITY AGREEMENT WITH ASSIGNMENT OF LEASES AND RENTS Dated as of [DATE], 1994 From &ASCfU'E&'ARTMENTS,INC. Address: CNA Plaza Chicago, Illinois 60685 To as Security Trustee Address: FOR THE BENEFIT OF: C-BAD HOUSING AND REDEVELOPMENT COMMISSION Address: Carlsbad, California And CONTINENTAL CASUALTY COMPANY Address: CNA Plaza Chicago, Illinois 60685 Recording Requested By And When Recorded Mail To: Jeffrey A. Burger Chapman and Cutler 111 West Monroe Street Chicago, Illinois 60603 257005.01 B7.B 1088145lJAB 5Km94 SECI-ION HEADING PAGE Parties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 Recitals . . . . . . . . . . . . . . . . . . . . . . ..I.............................................................................................. 1 Section 1. Section 2. Section 3. Section 4. Section 5. Section 6. Section 7. Section 8. Section 9. Section 10. Section 11. Section 12. Section 13. Section 14. Section 15. Section 16. Section 17. Section 18. Section 19. Section 20. Section 2 1. Section 22. Section 23. Section 24. Section 25. Section 26. Section 27. Section 28. Section 29. Section 30. Section 31. Section 32. Section 33. Section 34. Definitions ................................................................................... 7 Payment of Indebtedness; Performance of Covenants, Maintenance, Repair, Compliance with Law, Use, Etc .................... 12 Liens, Contest and Defense of Title .............................................. 13 Payment and Contest of Taxes ...................................................... 15 Deed of Trust Taxes ................................................................... 16 Insurance Coverage .................................................................... 16 Insurance Policies ....................................................................... 18 Reserve Accounts ....................................................................... 19 Casualty Loss; Proceeds of Insurance ............................................ 20 Condemnation and Eminent Domain ............................................. 22 Disbursement of Insurance Proceeds and Awards ........................... 23 Prepayment of Note and Redemption of Bonds .............................. 25 Assignment of Leases and of Rents ............................................... 25 Representations, Warranties and Covenants Regarding Leases, Project Revenues and Financing Documents.. ..................... 26 Beneficiaries’ Performance of Grantor’s Obligations.. .................... 28 Security Agreement .................................................................... 29 Restrictions on Transfer .............................................................. 30 Events of Default, Remedies ........................................................ 31 Foreclosure and Sale ................................................................... 33 Right of Possession ..................................................................... 37 Receiver .................................................................................... 39 Proceeds of Sale ......................................................................... 40 Insurance During Foreclosure ...................................................... 41 Waiver of Rights ........................................................................ 42 Rights Cumulative ...................................................................... 42 Successors and Assigns ................................................................ 44 Effect of Extensions and Amendments .......................................... 44 Future Advances ......................................................................... 45 Execution of Separate Security Agreements, Financing Statements, Etc.; Estoppel Letter .................................................. 45 Subrogation ............................................................................... 46 Interpretation of Agreement ....................................................... .46 Governing Law; Invalidity of Certain Provisions ........................... 46 Loan Legal ................................................................................ 47 Inspection of Premises and Records .............................................. 47 -i- Section 35. Section 36. Section 37. Section 38. Section 39. Section 40. Section 41. Section 42. Section 43. Section 44. Section 45. Section 46. Section 47. Financial Statements .................................................................... 47 Time is of the Essence ................................................................. 47 Captions and Pronouns ................................................................ 47 Notices ...................................................................................... 48 Limited Recourse Provisions ....................................................... 49 Relationship of Surety, Commission and Trustee.. .......................... 49 Other Remedies.. ........................................................................ 50 After-Acquired Property ............................................................. 51 Non-Merger Provision ................................................................ 51 Replacement of Note ................................................................... 51 Benefit of Deed of Trust ............................................................. 52 Retention of Money by Security Trustee ....................................... 52 Successor Security Trustee .......................................................... 52 Signatures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53 ACKNOWLEDGMENTS EXHIBIT A - Form of Secured Note EXHIBIT B - Legal Description of Land and Permitted Encumbrances -ii- A-- FIRSTDEEDOFTRUSTANDSECURITY AGREEMENT WITH ASSIGNMENT OF LEASES AND RENTS THIS FIRSTDEEDOFTRUSTANDSECURITYAGREEMENT WITHASSIGNMENTOF LEASES AND RENTS dated as of [DATE], 1994 (herein, together with all supplements and amendments hereto, referred to as this “First Deed of Trust” or “Deed of Trust”), from SEASCAPE APARTMENTS, INC., an Illinois corporation, having its principal place of business at CNA Plaza, Chicago, Illinois 60685 (herein, together with any successor owner of all or part of the hereinafter described Premises, referred to as the “Grantor” or “Owner”), to , a California corporation, as Security Trustee, having an address at , California (herein, together with its successors in trust, referred to as the “Security Trustee”) for the benefit of the Carlsbad Housing and Redevelopment Commission, a public body corporate and politic duly organized and existing under the laws and Constitution of the State of California (herein, together with any successor to its rights, duties and obligations under the hereinafter described Law, referred to as the “Commission”), having an address at , Carlsbad, California and CONTINENTAL CASUALTY COMPANY, an Illinois insurance company duly created, organized and existing under the laws of the State of Illinois (herein, together with its successors and assigns, the “Surety”), having its principal place of business at CNA Plaza, Chicago, Illinois 60685 (herein, together with its successors and assigns, referred to as the “Surety”) (the Commission and the Surety are herein collectively referred to as the “Benejiciaries” and individually as a “Beneficiary”, provided that references to the Beneficiary under the Second Deed of Trust or Second Deed of Trust Documents means and refers solely to the Surety and its successors and assigns). RECITALS: [l] Contemporaneously with the execution and delivery of this First Deed of Trust, (i) the Commission is issuing its Multifamily Housing Revenue Refunding Bonds, Series 1994- (Seascape Apartments Project) in the aggregate principal amount of $ (the “Bonds”) pursuant to that certain Indenture of Trust dated as of [DATE], 1994 (together with all supplements and amendments thereto, the “Indenture”), the proceeds of which are to be applied as provided in the Indenture and (ii) as described and respectively defined in the Indenture (A) the Grantor is executing and delivering the Note, the Loan Agreement and the other First Deed of Trust Documents, (B) the Surety is issuing the Surety Bond, (C) the Grantor and the Surety are entering into the Reimbursement Agreement and (D) the Commission is assigning to the Trustee to provide for and secure the payment of the Bonds the Trust Estate as defined in the Indenture, including without limitation all of the Commission of its rights, titles and interests in, to and under the Note, the Loan Agreement (except the Commission’s right to receive payments of fees and expenses pursuant to Section 7.05 thereof, its indemnification rights thereunder and its right to receive notices) and the First Deed of Trust Documents referred to therein subject to the - prior rights and interests granted to the Surety or other Credit Facility Issuer as defined therein. - [2] This Deed of Trust is being executed and delivered to secure the payment and performance of the Grantor’s indebtedness and obligations under the First Mortgage Documents and the Reimbursement Agreement upon and subject to the terms and conditions set forth herein. GRANTING CLAUSES NOW, THEREFORE, to secure the payment of the principal indebtedness under the Note in the original principal amount of DOLLARS AND No/100 6 ) with the final payment due and the interest and premium, if any, payable thereon (and all replacements, renewals and extensions thereof, in whole or in part) according to its tenor and effect (subject, however, to the Surety’s right to elect otherwise by written notice to the Commission, the Trustee and the Grantor so long as the Surety Bond shall be in effect and no Event of Default shall have occurred and be continuing under the Indenture), and to secure the payment of all other sums which may be at any time due and owing to the Commission, the Surety or their respective successors and assigns under the Loan Agreement, the Note, this Deed of Trust, the other First Deed of Trust Documents and the Reimbursement Agreement (herein referred to collectively as the “Indebtedness Hereby Secured”); and to secure the performance and observance of all the covenants, agreements and provisions contained in the Loan Agreement, this Deed of Trust, the other First Deed of Trust Documents and the Reimbursement Agreement, and to charge the properties, interests and rights hereinafter described with such payment, performance and observance, and for other valuable considerations, the receipt and sufficiency of which are hereby acknowledged, the Grantor DOES HEREBY GRANT, BARGAIN, SELL, CONVEY, MORTGAGE, DEMISE, ASSIGN, TRANSFER, PLEDGE AND SET OVER to the Security Trustee in trust, WITH POWER OF SALE and right of entry and possession, for the benefit of the Beneficiaries, and their respective successors and assigns forever, the following described properties, rights, and interests, except the Collateral, as defined in Section 1 hereof, and DOES HEREBY GRANT, BARGAIN, SELL, CONVEY, MORTGAGE, DEMISE, ASSIGN, TRANSFER, PLEDGE AND SET OVER to the Beneficiaries a security interest in the following described properties, rights and interests which constitute the Collateral, as defined in Section 1 hereof (herein collectively referred to as the “Grunted Property”): GRANTING CLAUSE FIRST: THE LAND located in the County of San Diego, State of California and legally described in Exhibit B attached hereto and made a part hereof (the “Land”); GRANTING CLAUSESECOND: TOGETHER WITH all buildings, structures and improvements of every nature whatsoever now or hereafter situated on the Land, including all extensions, additions, improvements, betterments, renewals, substitutions and replacements to or for any such buildings, structures and improvements and all of the right, title and interest of the Grantor now or hereafter acquired in and to any of the foregoing (the “‘Improvements”); -2- GRANTING CLAUSE THIRD: - TOGETHER WITH all easements, rights of way, strips and gores of land, streets, ways, alleys, sidewalks, vaults, passages, sewer rights, waters, water courses, water, drainage and reservoir rights and powers (whether or not appurtenant), all estates, rights, titles, interests, privileges, liberties, tenements, hereditaments, easements, franchises, appendages and appurtenances whatsoever, in any way belonging, relating or appertaining to the Land or the Improvements, whether now owned or hereafter acquired by the Grantor, including without limitation all existing and future mineral, oil and gas rights which are appurtenant to or which have been used in connection with the Land, all existing and future water stock relating to the Land or the Improvements, all existing and future shares of stock respecting water and water rights pertaining to the Land or the Improvements and all other evidence of ownership thereof, and the reversions and remainders thereof (the “Appurtenant Rights”); GRANTING CLAUSEFOURTH: TOGETHER WITH all machinery, apparatus, equipment, fittings and fixtures of every kind and nature whatsoever, and all furniture, furnishings and other personal property now or hereafter owned by the Grantor and forming a part of, or used, usable or obtained for use in connection with the Land or the Improvements or any present or future operation, occupancy, maintenance or leasing thereof; including, but without limitation, any and all heating, ventilating and air conditioning equipment and systems, antennae, appliances, apparatus, awnings, basins, bathtubs, bidets, boilers, bookcases, cabinets, carpets, communication systems, coolers, curtains, dehumidifiers, dishwashers, disposals, doors, drapes, drape rods, dryers, ducts, dynamos, elevators, engines, equipment, escalators, fans, fittings, floor coverings, furnaces, furnishings, furniture, hardware, heaters, humidifiers, incinerators, lighting, machinery, motors, ovens, pipes, plumbing and electric equipment, pool equipment, pumps, radiators, ranges, recreational facilities and equipment, refrigerators, screens, sprinklers, stokers, stoves, shades, shelving, sinks, security systems, toilets, ventilators, wall coverings, washers, windows, window covering, wiring and all extensions, renewals or replacements thereof or substitutions therefor or additions thereto, whether or not the same are or shall be attached to the Land or the Improvements in any manner (the “Fixtures”); it being agreed that all of said property owned by the Grantor and placed on the Land or on or in the Improvements (whether affixed or annexed thereto or not) shall, so far as permitted by law, conclusively be deemed to be real property and conveyed hereby for purposes of this Deed of Trust; GRANTING CLAUSE FIFTH: TOGETHER WITH all existing and future goods and items of personal property located on the Land or in the Improvements which are now or in the future owned by the Grantor and used, usable or obtained for use in connection with the Land or the Improvements or any present or future operation, occupancy, maintenance or leasing thereof, or any construction on or at the Land or the Improvements, but which are not effectively made Fixtures under Granting Clause Fourth, and all right, title and interest of the Grantor in and -3- ,-- to any such property which is leased by the Grantor with the consent of the Beneficiaries; including, but not limited to, building materials, supplies, equipment and inventories located on the Land or in the Improvements or elsewhere and all extensions, renewals or replacements thereof or substitutions therefor or additions thereto (the “Personal Property”); GRANTING CLAUSE SIXTH: TOGETHER WITH all right, title and interest which the Grantor now has or hereafter may acquire in and to all leases and other agreements now or hereafter entered into for the occupancy or use of the Land, the Appurtenant Rights, the Improvements, the Fixtures and the Personal Property (herein collectively referred to as the “Premises”) or any portion thereof, whether written or oral (herein collectively referred to as the “Leases”) and all right, title, and interest which the Grantor now has or hereafter may acquire in and to any bank accounts, security deposits, and any and all other amounts held as security under the Leases, reserving to the Grantor any statutory rights; GRANTING CLAUSESEVENTH: TOGETHER WITH all rents, revenues, issues, profits and other income derived from the Premises and any present or future operation, occupancy, leasing or other use thereof, including but not limited to all rents and other sums payable to the Grantor under the Leases and accounts receivable relating to the Premises (the “Project Revenues”), which Project Revenues are hereby expressly and presently assigned to the Beneficiaries, together with the right, but not the obligation, to collect, receive and receipt for all such Project Revenues and apply them to the Indebtedness Hereby Secured or otherwise as provided in Section 13 hereof and to demand, sue for and recover the same when due or payable (subject, however, to the permission granted the Grantor to collect such Project Revenues prior to an Event of Default under Section 13 hereof), provided that the assignments made hereby shall not impair or diminish the obligations of Grantor under the provisions of such Leases or otherwise with respect to such Project Revenues, nor shall such obligations be imposed upon the Security Trustee or the Beneficiaries; GRANTING CLAUSEEIGHTH: TOGETHER WITH all existing and future accounts, contract rights, instruments, documents, claims, causes of action, general intangibles and notes or chattel paper in which the Grantor has an interest arising from or by virtue of any present or future operation, occupancy, or other use of the Premises or transactions related to the Premises or any portion thereof (excluding, however, any right or claims of the Grantor against any stockholder or partner of the Grantor to require such stockholder or partner to make capital contributions or loans to the Grantor), including but not limited to, all governmental permits, licenses and approvals now or hereafter issued with respect to the construction, - ownership, operation, occupancy, maintenance or leasing thereof, all contracts now or hereafter executed by any architects, engineers, contractors or consultants relating to the -4- ,.-- Premises, (including any plans and specifications and any payment and performance bonds) including all amendments, supplements, and revisions thereof, together with all the Grantor’s rights and remedies thereunder and the benefit of all covenants and warranties therein, and also together with all drawings, designs, estimates, layouts, surveys, plats, plans, specifications and test results prepared by any architect, engineer, contractor or consultant, to the extent of Grantor’s ownership interest therein, including any amendments, supplements and revisions thereof and the right to use and enjoy the same, all management and other service contracts now or hereafter entered into with respect to the Premises or any portion thereof, all files, books of account and other records pertaining to the financing, acquisition, construction, equipping, operation, occupancy, maintenance and leasing of the Premises and any portions thereof, wherever located, all existing and future names under or by which the Premises or any portion thereof may at any time be operated or known, all rights to carry on business under any such names or any variant thereof, and all existing and future telephone numbers and listings, advertising and marketing materials, trademarks and good will in any way relating to the Premises or any portion thereof, and all other permits, licenses, franchises, certificates and other privileges of the Grantor obtained in connection with the Premises or any portion thereof; GRANTING CLAUSE NINTH: TOGETHER WITH all proceeds of the foregoing, including without limitation any and all Awards and Insurance Proceeds, as hereinafter respectively defined, or proceeds of any sale, option or contract to sell the Premises or any portion thereof (provided that no right, consent or authority to sell the Granted Property or any portion thereof except as expressly provided in Section 17 hereof shall be inferred or deemed to exist by reason hereof); and the Grantor hereby authorizes, directs and empowers the Beneficiaries, at their option, on the Grantor’s behalf, or on behalf of the successors or assigns of the Grantor to adjust, compromise, claim, collect and receive such proceeds (except for any express right of the Grantor contained in Sections 9, 10 or 11 hereof), to give proper receipts and acquittances therefor and, after deducting expenses of collection, including reasonable attorneys’ fees, costs and disbursements, to apply the Net Proceeds, as hereinafter defined, upon the Indebtedness Hereby Secured or as otherwise provided herein, notwithstanding the fact that the Indebtedness Hereby Secured may not then be due and payable or is otherwise adequately secured; and the Grantor agrees to execute and deliver from time to time such further instruments as may be requested by the Beneficiaries to confirm such assignment to the Beneficiaries of any such proceeds; GRANTING CLAUSE TENTH: - TOGETHER WITH all right, title, interest, claim or demand of the Grantor in and to all moneys and the investments thereof held by the Grantor (or the Property Manager for the account of the Grantor), or by the Commission, the Surety, the Trustee or any other Person from time to time hereunder or under the Indenture, the Loan Agreement or any other First Deed of Trust Document until expended or disbursed by the Grantor, Trustee (or the Property Manager for the account of the Grantor), the Commission, the Surety or the -5- - Trustee in accordance with and subject to the provisions of the Loan Agreement, the Indenture or such other First Deed of Trust Documents, and all earnings, profits and proceeds thereof; and the Grantor hereby authorizes and empowers the Beneficiaries at their option (but without any obligation to do so) to apply or cause the other Person holding the same to apply such moneys and investments upon the Indebtedness Hereby Secured or toward the payment or performance of any of the Grantor’s obligations and undertakings hereunder, or under any of the First Deed of Trust Documents, as provided herein and in the other First Deed of Trust Documents; and GRANTING CLAUSEELEVENTH: TOGETHER WITH all estate, right, title and interest, homestead or other claim or demand, as well in law as in equity, which the Grantor now has or hereafter may acquire of, in and to the Premises, or any part thereof, and any and all other property of every kind and nature from time to time hereafter (by delivery or by writing of any kind) conveyed, pledged, assigned or transferred as and for additional security hereunder by the Grantor or by anyone on behalf of the Grantor to Beneficiaries or to the Security Trustee for the benefit of the Beneficiaries. TO HAVE AND TO HOLD the Granted Property unto the Security Trustee, and its successors and assigns IN TRUST for the benefit of the Beneficiaries with respect to the Granted Property, except the Collateral, and unto the Beneficiaries and their successors and assigns with respect to the Collateral; SUBJECT, however, to Permitted Encumbrances, as defined in Section 1 hereof. UPON CONDITION that, subject to the terms hereof, until the occurrence of an Event of Default hereunder, the Grantor shall be permitted to possess and use the Granted Property, and to collect, receive and use the Project Revenues as provided in Section 13 hereof. PROVIDED, NEVERTHELESS, that if the Grantor shall pay in full when due the Indebtedness Hereby Secured and shall duly and timely perform and observe all of the covenants, conditions, agreements and provisions herein and in the First Deed of Trust Documents provided to be performed and observed by the Grantor, then the Beneficiaries shall promptly execute and deliver to the Grantor (and cause the Security Trustee to execute and deliver to the Grantor) such instruments as may be reasonably requested by the Grantor which are sufficient to release this Deed of Trust and any financing statements filed to perfect the lien and security interests granted hereby. -6- SECTION 1. DEFINITIONS. For all purposes of this Deed of Trust: (a) All references in this Deed of Trust designated “Sections” and other subdivisions are to the designated Sections and other subdivisions of this Deed of Trust as originally executed and delivered. The words “herein”, “hereof”, “hereto”, “hereby”, and “hereunder” and other words of similar import refer to this Deed of Trust as a whole and not to any particular Section or other subdivision. (b) All other terms used herein which are defined in the Indenture and not defined herein shall have the same meanings assigned to them in the Indenture unless otherwise expressly provided or unless the context requires otherwise. The terms defined in this Section and the Indenture shall include the plural as well as the singular. (c) All references in this Deed of Trust to any document defined in this Section shall be deemed to include all supplements and amendments to any such document entered into in accordance with the terms thereof and, if applicable, the terms of the Loan Agreement and the Indenture. (d) The following terms shall have the meanings hereinafter specified in this Section, except as otherwise expressly provided or unless the context otherwise requires: “AfJXate” means (a) any general partner or subsidiary of the Grantor, if any, (b) any general partner of any partnership which is a general partner of the Grantor, if any, or a general partner of such general partner, if any, (c) the owner of any shares of stock in any corporate general partner of the Grantor or of any partnership which is a general partner of the Grantor, if any, and (d) any other Person which, directly or indirectly, through one or more intermediaries, controls any of the foregoing, and shall include any Person which constitutes an Affiliate or an Affiliated Party as defined in the Indenture. The term “control” means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of voting stock, by contract or otherwise. “Appurtenant Rights” is defined in Granting Clause Third. “Assignment” means the Assignment of First Deed of Trust Documents dated as of [DATE], 1994 from the Commission to the Trustee, as the same may be amended and supplemented in accordance with the terms thereof and of the Indenture. “Awards” is defined in Section 10 hereof. - -7- - - “BeneJiciaries” means the Commission and the Surety, and their respective successors and assigns, including in the case of the Commission, from and after execution and delivery of the Assignment, the Trustee. “Collateral” means the Granted Property, except the Land, the Improvements, the Appurtenant Rights, and that part of the Fixtures which constitute real property under the laws of the State. “Commission” is defined in the first paragraph of this Deed of Trust. “Default” means the occurrence of any Event of Default hereunder, or the occurrence of any event or condition which with the lapse of time or giving of notice, or both, would become an Event of Default hereunder. “Event ofDefault” is defined in Section 18 hereof. “Financing Documents” means, collectively, the Indenture, the First Deed of Trust Documents and the Second Deed of Trust Documents. “First Deed of Trust” or “Deed of Trust” means this First Deed of Trust and Security Agreement with Assignment of Loans and Rents, dated as of [DATE], 1994, from the Grantor to or for the benefit of the Beneficiaries, as the same may be amended and supplemented from time to time in accordance with the terms thereof. “First Deed of Trust Documents” means collectively, the Note, the Loan Agreement, this Deed of Trust, all financing and continuation statements filed to perfect the liens and security interests granted hereby and thereby, the Assignment, and all other documents, instruments and agreements executed and delivered by the Grantor to evidence or secure the obligations of the Grantor under the Note and the Loan Agreement (other than the Regulatory Agreement and the Second Deed of Trust Documents) as such documents, instruments and agreements may be amended and supplemented from time to time. “Fixtures” is defined in Granting Clause Fourth herein. “Granted Property” means the property described in Granting Clauses First through Eleventh herein. “Grantor” or “Owner” means Seascape Apartments, Inc., an Illinois corporation, or the Person or Persons who shall succeed to the ownership of the Premises, or any portion thereof, in accordance with the provisions of Section 17 hereof. “Improvements” is defined in Granting Clause Second. “Zncreased Rate” means a per annum rate of interest equal to the Increased Rate as defined and provided for in Section 1.1 (h) of the Reimbursement Agreement. -8- “Indebtedness Hereby Secured” is defined in the Granting Clauses. “Indenture” means the Indenture of Trust dated as of [DATE] 1994, between the Commission and the Trustee, as the same may be amended and supplemented from time to time in accordance with the terms thereof. “Insurance Policies” is defined in Section 6 hereof. “Insurance Proceeds” is defined in Section 9 hereof. “Land” is defined in Granting Clause First. “Law” means . “Leases” is defined in Granting Clause Sixth. “Legal Requirements” means all laws, statutes, codes, ordinances, orders, judgments, decrees, injunctions, rules, regulations, permits, licenses, authorizations, directions and requirements of, and agreements with, all governments, departments, commissions, boards, courts, authorities, agencies, officials and officers, foreseen or unforeseen, ordinary or extraordinary, and any restrictions or agreements of record, including without limitation the Regulatory Agreement, which now or at any time hereafter may be applicable to the Premises or any part thereof, or any of the adjoining sidewalks, vaults and vault space, if any, streets or rights-of-way, or any use or condition of the Premises or any part thereof or any Persons from time to time employed thereon or occupants thereof or any activity thereat or business conducted therefrom; including, but without limiting the generality of the foregoing, all zoning, building, land use, noise abatement, occupational health and safety and other governmental requirements relating to health, safety, welfare and environn~~tal protection. “Lien” or “lien” means any interest in the Granted Property or any part thereof or any right therein, including without limitation any of the Project Revenues and proceeds therefrom, securing an obligation owed to, or claimed by, any Person, whether such interest is based on the common law, statute or contract, and including but not limited to the lien and security interest lien arising from a deed of trust, mortgage, deed to secure debt, encumbrance, pledge, conditional sale or trust receipt or a lease, consignment or bailment for security purposes; and the term “Lien” or “lien” shall also include any and all reservations, exceptions, encroachments, easements, rights of way, covenants, conditions, restrictions, leases and other title exceptions and encumbrances affecting the Granted Property or any part thereof or any interest therein. “Loan” means the loan of the proceeds of the Bonds for the benefit of the Grantor as evidenced by the Grantor’s obligations under the Loan Agreement and the Note. “Mechanic’s Liens” is defined in Section 3 hereof. -9- “Net Proceeds” is defined in Section 11 hereof. “Note” means the Secured Note in the form attached hereto as Exhibit A as executed and delivered by the Grantor (together with all extensions, renewals and replacements thereof). “Obsolete Collateral” is defined in Section 17(a) hereof. “Operating Expenses” means all costs and expenses of owning, operating, maintaining, repairing, replacing and leasing the Premises, including without limitation Taxes and Premiums and debt service on any indebtedness other than under the Loan Agreement and the Note. “Permitted Encumbrances” means as of any particular time: (a) Zoning laws and use regulations and other similar reservations, rights and restrictions then applicable to the Premises and which are not violated by the Premises or the use thereof; (b) The rights reserved to or vested in any municipality or public authority by the terms of any right, power, permit or provision of law to terminate such right, power or permit, or to purchase, condemn, appropriate, recapture or designate a purchaser of the Premises or any part thereof; (c) Any Liens for Taxes and any Mechanic’s Liens, which are not, in the case of Taxes, delinquent and, in the case of Mechanic’s Liens, due and payable, in all cases, or the amount or validity of which is being contested in accordance with the provisions of this Deed of Trust respecting the contest of such Lien; (d) The First Deed of Trust Documents; (e) The rights of tenants (as tenants only) under Leases; (f) The Second Deed of Trust Documents and other liens securing obligations of the Grantor to, or approved in writing by, the Surety from time to time, which are junior and subordinate to the lien of this Deed of Trust and the Second Deed of Trust; (g) Utility and other easements and liens affecting the Land and the Improvements provided they do not underlie or interfere with the use of existing Improvements; (h) The Regulatory Agreement; and (i) Any other matter specifically described as a Permitted Encumbrance on Exhibit B attached hereto. -lO- “Person” or “person” means natural persons, firms, partnerships, associations, corporations, trusts and public bodies. “Personal Property” is defined in Granting Clause Fifth. “Premises” is defined in Granting Clause Sixth. “Premiums” is defined in Section 8 hereof. “Prohibited Transfer” is defined in Section 17 hereof. “Project” means the Premises described herein and financed in part from the proceeds of the Prior Bonds. “Project Revenues” is defined in Granting Clause Seventh hereof. “Property Manager” is defined in the Second Deed of Trust. “Regulatory Agreement” means the Regulatory Agreement and Declaration of Restrictive Covenants dated as of April 1, 1985 by and among the Commission, the Prior Trustee, and the Developer as amended by that certain Amendment No. 1 to Regulatory Agreement dated as of [DATE], 1994. “Reimbursement Agreement” means the Reimbursement Agreement dated as of [DATE], 1994 between the Grantor and the Surety, as amended and supplemented. “Restoration” is defined in Section 9(d) hereof. “Second Deed of Trust” means the Second Deed of Trust and Security Agreement with Assignment of Leases and Rents dated as of [DATE], 1994 from the Grantor to or for the benefit of the Surety to secure the obligations of the Grantor to the Surety under the Reimbursement Agreement, as the same may be amended and supplemented from time to time in accordance with the terms thereof. “Second Deed of Trust Documents” means collectively, the Second Deed of Trust and the Reimbursement Agreement, and all financing and continuation statements filed to perfect the liens and security interests granted thereby and all other documents, instruments and agreements executed and delivered by the Grantor to evidence or secure the obligations under the Reimbursement Agreement (other than the First Deed of Trust Documents) as such documents, instruments and agreements may be amended or supplemented from time to time. “Security Trustee” is defined in the first paragraph of this Deed of Trust. P “State” shall mean the State of California. -ll- “Surety” means Continental Casualty Company, an Illinois insurance company, and its successors and assigns. “Surety Bond” means the Surety Bond No. 1667165-A issued by the Surety in connection with the Bonds and all replacements, amendments, renewals and extensions thereof by the Surety. “Tax and Insurance Deposits” is defined in Section 8(a) hereof. “Taxes” is defined in Section 4 hereof. “Trustee” means First Trust of California, National Association, as Trustee under the Indenture and any successor trustee serving as such pursuant to the provisions of the Indenture, and any separate or co-trustee serving as such thereunder. SECTION 2. PAYMENT OF INDEBTEDNESS; PERFDRMAN~E OF COVENANTS, MAINTENANCE, REPAIR, COMPLIANCE WITH LAW, USE, ETC. (a) The Grantor shall (i) pay the Indebtedness Hereby Secured when due; (ii) duly and punctually perform and observe all of the covenants and conditions to be performed or observed by the Grantor as provided in the Note and the other First Deed of Trust Documents, and as provided in the Second Deed of Trust Documents. (b) The Grantor shall have the privilege of making prepayments on the principal of the Note (in addition to the required payments thereunder) in accordance with the terms and conditions set forth therein and in the Loan Agreement, but not otherwise. (c) Each and all of the terms, provisions, representations, warranties, conditions, covenants and agreements set forth in the Loan Agreement and in the other First Deed of Trust Documents are incorporated herein by reference to the same extent as though each and all of said terms, provisions, representations, warranties, conditions, covenants and agreements were fully set out herein. If any conflict or inconsistency arises between the provisions of this Deed of Trust or any other instrument or document pertaining to the Bonds and the Loan Agreement or the Indenture, the provisions of the Loan Agreement and the Indenture shall control unless otherwise specifically set forth herein. (d) The Grantor shall (i) keep the Premises in good condition and repair, free from waste; (ii) pay all operating costs and expenses of the Premises when due; (iii) observe and comply with all Legal Requirements applicable to all or any portion of the Premises, or the use and occupancy thereof or activities thereat (subject to the right of the Grantor to contest the enforceability or applicability of any such Legal Requirements in good faith and at its expense by appropriate proceedings which shall not subject the Grantor, the Trustee or the Beneficiaries to any risk of civil or criminal liability and which shall operate during the pendency thereof to prevent the imposition or foreclosure of any Lien upon, or any interference with the availability, use or occupancy of, the Granted Property or any part thereof), and observe and comply with any conditions and requirements necessary to -12- preserve and extend any and all rights, licenses, permits (including without limitation zoning variances, special exceptions and nonconforming uses), privileges, franchises and concessions that are applicable to all or any portion of the Premises or the use and occupancy thereof; (iv) refrain from any action and correct any condition known to the Grantor which would increase the risk of fire or other hazard to the Premises or any portion thereof; and (v) cause the Premises to be managed in a competent and professional manner. (e) Without the prior written consent of the Beneficiaries, the Grantor shall not cause, suffer or permit (i) any material alteration of the Premises, except as required by any applicable Legal Requirement; (ii) any change in the intended use or occupancy of the Premises for which the Improvements were constructed, including without limitation any change which would knowingly increase any fire or other hazard; (iii) any transfer of interests in the Grantor prohibited by Section 17; (iv) any zoning reclassification with respect to the Premises; (v) any material modification of the licenses, permits, privileges, franchises, covenants, conditions or declarations of use applicable to the Premises; (vi) any sale, alienation or further encumbrance of the Granted Property or any portion thereof or interest therein, except as expressly permitted by Section 17 hereof or (vii) any other event or condition to exist which would cause the Grantor to be in default under the Regulatory Agreement, the First Deed of Trust Documents or the Second Deed of Trust Documents. SECTION 3. LIENS, CONTEST AND DEFENSE OF TITLE. (a) Prohibition. Except for Permitted Encumbrances, subject to Section 3(b) and Section 4 hereof and unless otherwise consented to in writing by the Beneficiaries, the Grantor shall not create or suffer or permit any Lien to attach to or be filed against the Granted Property, or any part thereof or interest therein, or any other rights and properties conveyed, mortgaged, transferred and granted hereunder or under the other First Deed of Trust Documents or the Indenture, whether such Lien is on a parity, inferior or superior to the Lien of this Deed of Trust and the other First Deed of Trust Documents, including Liens for labor or materials with respect to the Premises and any “Stop Notice” (as described in Section 3 156, et seq. of the California Civil Code, as amended) or other claim of Lien against construction funds (which Liens for labor or materials, Stop Notices and claims of liens against construction funds are herein referred to as “Mechanic’s Liens”). (b) Contest of Mechanics’ Liens Claims. Notwithstanding paragraph (a) of this Section, the Grantor, or any Person obligated to the Grantor to do so, may in good faith and with reasonable diligence contest the validity or amount of any Mechanic’s Liens or any Stop Notice and defer payment and discharge thereof during the pendency of such contest, provided that: (i) such contest shall have the effect of preventing the sale or forfeiture of the Granted Property, or any part thereof or any interest therein, to satisfy such Mechanic’s Liens or any Stop Notice, and shall not result in a forfeiture or impairment of the Lien of this Deed of Trust and (ii) within 30 days after the Grantor has been notified of the filing of any such Mechanic’s Liens or any Stop Notice, the Grantor shall have notified the Beneficiaries in writing of the Grantor’s intention to contest such Mechanic’s Liens or any Stop Notice, or to cause such other Person to contest such Mechanic’s Liens or any Stop -13- _- Notice, and shall have obtained a title insurance endorsement over such Mechanic’s Liens or any Stop Notice, in form and substance satisfactory to the Beneficiaries, insuring the Beneficiaries against loss or damage by reason of such Mechanic’s Liens or any Stop Notice; provided that in lieu of such title insurance endorsement (1) the Grantor shall deposit and keep on deposit with the Trustee or the Surety (or such other depositary as may be designated by the Surety) a sum of money sufficient, in the judgment of the Beneficiaries to pay in full such Mechanic’s Liens or any Stop Notice and all interest thereon or (2) the Grantor shall deposit with, or as directed by, the Beneficiaries a Mechanic’s Lien release bond as provided in Section 3143 of the California Civil Code in form and substance satisfactory to the Beneficiaries. Any such deposits are to be held without any allowance of interest and may be used at the direction or with the consent, of the Beneficiaries in the Beneficiaries’ sole discretion to protect the priority of this Deed of Trust and the Second Deed of Trust. In case the Grantor shall fail to maintain such title insurance, deposit or bond, or to prosecute or cause the prosecution of such contest with reasonable diligence, or to pay or cause to be paid the amount of the Mechanic’s Lien or any Stop Notice, plus any interest finally determined to be due upon the conclusion of such contest; then the Beneficiaries may, at the Beneficiaries’ option, cause the proceeds of any such bond and any securities and/or monies then on deposit with the Trustee or the Surety (or other depositary designated by the Surety) to be liquidated and applied in payment of or on account of such Mechanic’s Liens or any Stop Notice, or that part thereof then unpaid, together with all interest thereon according to any written bill, notice or statement without inquiring into the amount, validity or enforceability thereof. If the amount of money so deposited together with the proceeds of any such bond shall be insufficient for the payment in full of such Mechanic’s Liens or any Stop Notice, together with all interest thereon, then the Grantor shall forthwith, upon demand, deposit with the Trustee or the Surety (or other depositary designated by the Surety) the sum which shall be necessary to make such payment in full. If a Mechanic’s Lien claim or any Stop Notice Claim is ultimately resolved in the claimant’s favor, then the moneys so deposited shall be applied in full payment of such Mechanic’s Lien or any Stop Notice or that part thereof then unpaid, together with all interest thereon (provided the Grantor is not then in Default hereunder) when the Trustee, the Surety or other Person holding such moneys has been furnished with satisfactory evidence of the amount of payment to be made. Any excess moneys remaining on deposit with the Trustee or the Surety (or other depositary) shall be paid to the Grantor provided the Grantor is not then in Default hereunder. (c) Defense of Title. If the lien and security interest of the Security Trustee and/or the Beneficiaries on, in or to the Granted Property, or any part thereof, shall be endangered or attacked, directly or indirectly, the Grantor shall immediately notify the Beneficiaries and shall appear in and defend any action or proceeding purporting to affect the Granted Property, or any part thereof, and shall file and prosecute such proceedings and take all actions necessary to preserve and protect such title, lien and security interest on, in and to the Granted Property. If the Grantor fails to do so, the Beneficiaries are hereby authorized, at the Grantor’s expense but without obligation to do so, to take all necessary and proper steps, in the sole discretion of the Beneficiaries, for the defense of such title or interest, including the employment of counsel, the prosecution or defense of litigation and the compromise or discharge of claims made against such title or interest in the Granted -14- Property. In such an event the Grantor will indemnify and hold the Beneficiaries harmless from and against any reasonable loss, cost, damage, liability or expense incurred by them in protecting their interests hereunder (including all court costs and reasonable attorneys’ fees and expenses). If the Security Trustee and/or the Beneficiaries are made a party to any action affecting this Deed of Trust or the title to all or any portion of the Granted Property, the Grantor agrees that the Beneficiaries may, at their option (but without any obligation to do so), defend such action. If the Beneficiaries elect to defend, all reasonable court costs and reasonable expenses, including reasonable attorneys’ fees and costs of evidence of title to the Granted Property, shall become part of the Indebtedness Hereby Secured and shall be payable by the Grantor immediately upon demand with interest thereon at the Increased Rate from the date advanced by the Beneficiaries until paid in full. SECTION 4. PAYMEWTANDCONTF3TOFTAXEX (a) Payment. Whether or not assessed against the Grantor, the Grantor shall pay or cause to be paid when due and before any penalty attaches, all general and special taxes, assessments, water charges, sewer charges, and other fees, taxes, charges and assessments of every kind and nature whatsoever levied or assessed against the Granted Property, or any part thereof, or any interest therein, including without limitation any income or revenue of the Grantor, or any obligation or instrument secured hereby, including without limitation any tax referred to in Section 5(a) hereof, and all installments thereof (“Taxes”), on or before the date such Taxes are due; and the Grantor shall furnish to the Beneficiaries receipts evidencing the payment of such Taxes in full before the date the same are delinquent. The Grantor shall discharge any claim or Lien relating to Taxes (except that any inchoate Lien for Taxes not then due and payable, or payable in installments, shall be paid and discharged when due) upon the Granted Property, other then Permitted Encumbrances. (b) Contest. Notwithstanding paragraph (a) of this Section, the Grantor may, in good faith and with reasonable diligence, contest or cause to be contested the validity or amount of any such Taxes, provided that: (i) such contest shall prevent the collection of the Taxes so contested and the sale or forfeiture of the Granted Property, or any part thereof, or interest therein, to satisfy the same and shall not result in a forfeiture or impairment of the Lien of this Deed of Trust; (ii) the Grantor shall have notified the Beneficiaries in writing of the Grantor’s intention to contest such Taxes before any increase by interest, penalties, or costs; and (iii) the Grantor shall have deposited or caused to be deposited with the Trustee or the Surety (or other depositary designated by the Surety) a sum of money or other security acceptable to the Beneficiaries which, when added to the moneys or other security, if any, deposited with the Trustee or the Surety (or other depositary designated by the Surety) pursuant to Section 8 hereof, shall be sufficient, in the Beneficiaries’ sole judgment, to pay in full such contested Taxes and all penalties and interest which are or might become due thereon. If the Grantor fails to prosecute such contest with reasonable diligence or fails to maintain sufficient funds on deposit as hereinabove provided, the Beneficiaries may, at their option, cause the liquidation of any securities and the application of the moneys then on deposit with the Trustee or the Surety (or other depositary), in payment of, or on account of, such Taxes, or any portion thereof then unpaid, including all penalties and interest thereon according to any written bill, notice or statement, without -15 inquiry as to the amount, validity or enforceability thereof. If the amount of money and any such security so deposited shall (in the Beneficiaries’ sole judgment) at any time be insufficient for the payment in full of such Taxes, together with all penalties and interest which are or might become due thereon, the Grantor shall forthwith, upon demand, either deposit with the Trustee or the Surety (or other depositary designated by the Surety) a sum which, when added to the funds then on deposit, shall (in the Beneficiaries’ sole judgment) be sufficient to make such payment in full, or, if the Trustee or the Surety (or other depositary) has applied funds so deposited on account of such Taxes, restore such deposit to an amount satisfactory to the Beneficiaries. Provided that the Grantor is not then in Default hereunder, after final disposition of such contest and upon the Grantor’s written request and delivery to the Beneficiaries of an official bill for such Taxes, the Beneficiaries shall cause the Trustee or the Surety (or other depository) to liquidate any securities and apply the moneys, if any, then on deposit hereunder to the payment of such Taxes or that part thereof then unpaid, together with all penalties and interest thereon. The balance, if any, in excess of the amount required to be on deposit with the Trustee or the Surety (or other depositary) under Section 8 hereof, shall be refunded to the Grantor provided no Default shall exist hereunder. SECTION 5. DEED OF TRUST TAXES. (a) If, by the laws of the United States of America, or of any state or municipality having jurisdiction over the Beneficiaries, the Trustee, the Grantor or the Granted Property, any tax is imposed or becomes due in respect of the issuance of the Bonds, the Note or this Deed of Trust or any of the other First Deed of Trust Documents, or any Liens on the Granted Property created thereby, then the Grantor shall pay such tax in the manner required by such law. (b) Nothing in this Section 5 or Section 4 hereof shall require the Grantor to pay any income, franchise, excise or similar tax imposed upon the Beneficiaries, excepting only such income, franchise, excise or similar tax which may be levied against the income of the Beneficiaries as a complete or partial substitute for Taxes required to be paid by the Grantor hereunder. SECTION 6. INSURANCE COVERAGE. (a) To the extent not already being maintained in accordance with the provisions of the Second Deed of Trust and unless the Beneficiaries shall waive any or all of the following insurance coverages, the Grantor at its sole expense shall continuously (unless otherwise indicated) maintain in force the following described policies of insurance (the “Znsurance Policies”) with respect to the Premises hereunder: (i) All-risk property insurance against loss and/or damage due to perils, including but not limited to perils such as fire, windstorm, smoke, lightning, explosion, riot, hail, vandalism, malicious mischief, collapse, and other perils not customarily excluded from an “all-risk” policy in amounts not less than the full -16- replacement value of the Premises from time to time and bearing an agreed amount endorsement. (ii) Comprehensive general public liability insurance protecting against death, bodily injury and property damage, in the combined amount of $l,OOO,OOO, including coverage for contractual liability, personal injury and broad form property damage providing coverage for all explosion, collapse and underground (XCU) hazards, independent contractors and subcontractors, products/completed operations, all in said amount. Products/completed operations coverage shall be provided for a period of at least two (2) years after the date construction was completed at the required limit of liability. (iii) Flood insurance if the Project is located in an area designated as a special flood hazard area pursuant to the Flood Disaster Protection Act of 1973, as amended, or other applicable law with such insurance to be at least the amount available under the National Flood Insurance Program and if available under policies issued by other sources then in such additional amounts as the Beneficiaries may reasonably require. (iv) All-risk builder’s risk coverage for the full completed replacement value of the Premises during the period prior to completion of any Restoration. (v) Statutory workers’ compensation coverage during the period prior to the completion of any Restoration. (vi) Employer’s liability coverage in the amount of not less than $1,000,000 during the period prior to the completion of any Restoration. (vii) Loss of rents insurance in an amount which the Surety may reasonably require. (viii) Umbrella excess liability coverage providing “following form” coverage over the insurance coverages required by clauses (ii) and (vi) of this Section 6(a) in the aggregate amount of $10,000,000. (ix) Such other insurance coverages, customary for prudent owners of properties similar to the Premises, as the Beneficiaries may reasonably require. (b) The Grantor hereby assigns to the Beneficiaries the proceeds of any Insurance Policies as security for the payment of the Indebtedness Hereby Secured and the performance of the obligations of the Grantor hereunder and under the Loan Agreement and the Reimbursement Agreement, but subject to the provisions of the Second Deed of Trust Documents. -17- - SECTION 7. INSURANCE Poucr~s. (a) All Insurance Policies shall be maintained in accordance with the requirements of this Deed of Trust and the Second Deed of Trust. All insurance described in Section 6 shall name the Grantor as the insured. (b) The insurance described in clauses (ii), (v), (vi) and (viii) and, if appropriate, (ix) of Section 6(a) must name the Beneficiaries as additional insureds. The insurance described in clauses (i), (iii), (iv), (vii) and (ix) of Section 6(a) must insure the interest of the Beneficiaries in the Project as mortgagee and secured parties; must contain a waiver of the right of subrogation satisfactory to the Beneficiaries and a provision that the interest of the Beneficiaries shall not be invalidated by any act or omission of the Grantor or owner of the Premises, or any part thereof; and must include a standard non-contributory mortgagee loss payable clause in favor of the Beneficiaries, as their interests may appear. (c) Each insurer must be an authorized insurer in the state where the Project is located with an A.M. Best Rating of Class A XII or better. (d) All insurance premiums shall be paid in advance and duplicate originals of certificates of insurance evidencing insurance coverage required by this Deed of Trust with premiums prepaid (accompanied by paid premium receipts) shall be delivered to the Beneficiaries at the time the Bonds are issued and thereafter, in the case of Insurance Policies about to expire, not less than 30 days prior to such expiration date. (e) Acceptance by the Beneficiaries of any Insurance Policies shall not be deemed a representation by the Trustee or the Beneficiaries as to the adequacy of coverage of such Insurance Policies or the solvency of the insurer. (f) If the Grantor fails to procure, pay the premium for, or deliver to the Beneficiaries any of the Insurance Policies or renewals as required herein, the Beneficiaries may elect, but shall not be obligated, to effect such insurance and pay the premiums therefor. The Grantor shall pay to the Beneficiary which makes any such premium payment, on demand, any premiums so paid with interest thereon, at the Increased Rate, from the time of the advance for such payment, and said advance and interest shall be part of the Indebtedness Hereby Secured. - (g) In the event of the foreclosure of this Deed of Trust, or other transfer of title to the Premises, or any part thereof, by non-judicial foreclosure sale or deed in lieu of foreclosure, the purchaser of the Premises, or such part thereof, shall succeed to all of the Grantor’s rights, including any rights to unexpired insurance and unearned or returnable premiums, in and to all Insurance Policies required by this Section and Section 6 hereof, subject to limitations on assignment of blanket policies, and limited to such rights as relate to the Premises or such part thereof. If the Beneficiaries or either of them shall acquire title to the Premises, or any part thereof, in any manner, the Beneficiaries or either of them so acquiring title shall thereupon (as between the Grantor and such Beneficiary or Beneficiaries) become the sole and absolute owner of the Insurance Policies and all proceeds -1% payable under the Insurance Policies with respect to the Premises, or such part thereof, required by this Section, with the sole right to collect and retain all unearned or returnable premiums thereon with respect to the Premises, or such part thereof, if any. SECTION 8. RESERVEACCOUNTS. (a) Upon the written direction of the Beneficiaries and to assure the payment of Taxes and of all premiums for Insurance Policies required to be maintained hereunder (“Premiums”), as and when the same shall become due and payable, the Grantor shall, at any time when not obligated to maintain reserves for the payment of Taxes and Premiums under the Second Deed of Trust, deposit with the Trustee or the Surety (or such other depositary as the Surety shall direct) on the tenth (10th) day of each and every calendar month, commencing in the month following the issuance of such written direction an amount equal to one-twelfth of the Taxes and Premiums to become due upon or with respect to the Premises between one and thirteen (13) months after the date of such deposit; provided that for the first such deposit, the Grantor shall deposit an amount which, when added to the aggregate amount of monthly deposits to be made hereunder with respect to Taxes and Premiums to become due and payable within thirteen months after such first deposit, will provide (without interest) a sufficient fund to pay such Taxes and Premiums one month prior to the date when they are due and payable. The amounts of such deposits (herein generally called “Tax and Insurance Deposits”) shall be based upon the Beneficiaries’ estimate as to the amount of Taxes and Premiums to become due within said thirteen (13) month period. The Grantor shall promptly upon the demand of the Beneficiaries make such additional Tax and Insurance Deposits as the Beneficiaries may from time to time require due to (i) failure of the Beneficiaries to require, or failure of the Grantor to make, Tax and Insurance Deposits in previous months, (ii) under-estimation of the amounts of Taxes and/or Premiums, (iii) the particular due dates and amounts of Taxes and/or Premiums, or (iv) application of the Tax and Insurance Deposits pursuant to Section 8(c) hereof. All Tax and Insurance Deposits made with the Trustee shall be held in a special Tax and Insurance Premium Reserve Account created under Section 5.05 of the Indenture and such moneys may be invested as provided in the Indenture. Any Tax and Insurance Deposits made with the Surety or a depository other than the Trustee shall not be invested unless otherwise agreed by the Surety or other depositary, the Grantor and the Beneficiaries and, if invested, any investment earnings shall be applied first to the payment of such depository’s fees and expenses with any balance being distributed to the Grantor so long as no Default exists hereunder and such investments must comply with the representatives, warranties and agreements of the Grantor in Section 2.05 of the Loan Agreement, if and to the extent applicable thereto. (b) Upon presentation to the Beneficiaries by the Grantor of proper bills for the payment of Taxes and Premiums when due, the Beneficiaries will cause the Trustee or the Surety (or other depositary under this Section 8) to pay such Taxes and Premiums out of the Tax and Insurance Deposits, if any, then held by the Trustee or the Surety (or other depositary) or, upon presentation of receipted bills therefor, to reimburse the Grantor for such payments made by the Grantor, provided no Default shall then exist hereunder. If the total Tax and Insurance Deposits on hand shall not be sufficient to pay all of the Taxes and -19- Premiums when the same shall become due, then, unless otherwise provided for under the Second Deed of Trust, the Grantor shall pay to the Trustee or Surety (or other depositary) on demand by the Beneficiaries the amount necessary to make up the deficiency. Notwithstanding anything herein contained to the contrary, the Beneficiaries, or their respective successors and assigns, shall not be obligated to apply or cause any Tax and Insurance Deposits to be applied to the payment of any Taxes or Premiums unless and until the Grantor presents a written requisition accompanied by proper bills for the payment of Taxes or Premiums which are then due and for the payment of which such Tax and Insurance Deposits were made and provided that no Default shall exist hereunder. (c) Upon the occurrence of any Default under this Deed of Trust, the Beneficiaries may, at their option, without being required so to do, apply or cause the Trustee or the Surety (or other depositary) to apply any Tax and Insurance Deposits on hand to the payment of any of the Indebtedness Hereby Secured or to pay or perform any obligations of the Grantor which shall then be in default hereunder, in such amounts, order and manner as the Beneficiaries in their sole discretion may elect. When the Indebtedness Hereby Secured has been fully paid, any remaining Tax and Insurance Deposits held by the Trustee, the Surety or another depositary designated by the Surety hereunder, shall be paid to the Grantor if no Default shall then exist, or to the grantee or purchaser of the Premises following any judicial foreclosure or non-judicial foreclosure sale or conveyance by deed in lieu of foreclosure. All Tax and Insurance Deposits and any other moneys on deposit pursuant to the terms of this Deed of Trust or any other First Deed of Trust Documents for the payment of Taxes or Premiums are hereby pledged as additional security for the Indebtedness Hereby Secured, and shall be held irrevocably by the Trustee or the Surety (or other depositary) to be applied for the purposes for which made or otherwise as herein provided, and shall not be subject to the direction or control of the Grantor. (d) The provisions of this Deed of Trust are for the benefit of the Grantor and the Beneficiaries. No provision of this Deed of Trust shall be construed as creating in any Person other than the Grantor and the Beneficiaries any rights in and to the Tax and Insurance Deposits, if any, held hereunder or any rights to have the Tax and Insurance Deposits applied to the payment of Taxes and Premiums. The Beneficiaries shall have no obligation or duty to any Person to collect Tax and Insurance Deposits and may waive or postpone any requirement to make such Tax and Insurance Deposits in whole or in part at any time and from time to time. (e) Notwithstanding the foregoing, so long as the Grantor is a wholly owned subsidiary of the Surety, no deposits shall be required to be made by the Grantor under this Section 8. SECTION 9. CASUALTYL~~~;PROC~DS~FINSIJRAN~E. (a) The Grantor will give the Beneficiaries prompt written notice of any loss or - damage to the Premises, or any part thereof, by fire or other casualty. -2o- (b) In case of loss or damage covered by any of the Insurance Policies, the Grantor is hereby authorized to settle and adjust any claim under such Insurance Policies with the consent of the Beneficiaries so long as no Default exists hereunder, otherwise during the existence of any Default the Benefkiaries (and after the entry of a decree of foreclosure, or a sale or transfer pursuant thereto or in lieu thereof, the decree creditor or such purchaser or transferee, as the case may be) are hereby authorized (but shall have no obligation) to settle and adjust any claim under such Insurance Policies without the consent of the Grantor; provided that the Beneficiaries shall, and are hereby authorized to, collect and receipt for any and all proceeds payable under such Insurance Policies (“Insurance Proceeds”); excepting, however, Insurance Proceeds which are to be collected and received by the Beneficiaries under the Second Deed of Trust. All costs, fees and expenses incurred by the Beneficiaries in the adjustment and collection of any such Insurance Proceeds (including without limitation reasonable attorneys fees and expenses) shall be so much additional Indebtedness Hereby Secured, and shall be reimbursed to the Beneficiaries upon demand or may be paid and deducted by the Beneficiaries from such Insurance Proceeds prior to any other application thereof. Each insurance company which has issued an Insurance Policy covering any loss or damage to the Premises (including without limitation loss of rents or business interruption coverage) is hereby authorized and directed to make payment for all losses covered by an Insurance Policy to the Beneficiaries alone, and not to the Beneficiaries and the Grantor jointly. (c) In the event any insurance company fails to disburse directly and solely to the Beneficiaries, but disburses instead either solely to the Grantor or to the Grantor and the Beneficiaries jointly, the Grantor shall receive such Insurance Proceeds in trust for the benefit of the Beneficiaries, and shall immediately endorse and transfer the Insurance Proceeds to the Beneficiaries, upon demand. If the Grantor shall fail or refuse to endorse and transfer such Insurance Proceeds to the Beneficiaries or upon demand, as aforesaid, the Surety or the Trustee as assignee of the Commission may execute such endorsements or transfer for and in the name of the Grantor and the Grantor hereby irrevocably appoints the Beneficiaries as agents and attorneys-in-fact of the Grantor with full power and authority (which power is coupled with an interest and irrevocable) and full right of substitution to so endorse and transfer such Insurance Proceeds. (d) All Insurance Proceeds shall be applied to the payment of the Indebtedness Hereby Secured or the restoration, repair, replacement or rebuilding of the Premises, as provided herein and in Section 11 hereof (“Restoration”) as provided herein and in Section 11 hereof, except that any surplus proceeds may be disbursed as provided in Section 11 (b)(v). (e) So long as any Indebtedness Hereby Secured shall be outstanding and unpaid, and whether or not Insurance Proceeds are sufficient or available therefor (unless no Event of Default shall exist hereunder and the Grantor elects to prepay the Loan in full and redeem all the Bonds pursuant to Section 1 l(b)(i) hereof), the Grantor shall promptly commence and complete with all reasonable diligence the Restoration of the Premises as nearly as possible to the same value, condition and character which existed immediately prior to such loss or damage in accordance with plans and specifications approved by the Beneficiaries -21- (“Restoration Plans”) and in compliance with all applicable Legal Requirements. Any Restoration shall be effected in accordance with procedures to be first submitted to and approved by the Beneficiaries as provided in Section 11 hereof. The Grantor shall pay all costs of such Restoration, to the extent not paid from Net Proceeds available therefor pursuant to the Second Deed of Trust and/or Section 11 hereof. SECTION 10. CONDEMNATIONAND EMINENTDOMAIN. ,-- (a) Any and all awards (the “Awards”) heretofore or hereafter made or to be made to the Grantor (or any subsequent owner of the Premises, or any part thereof), by any governmental or other lawful authority for the taking, by condemnation or eminent domain, of all or any part of the Premises (including any award from the United States government at any time after the allowance of a claim therefor, the ascertainment of the amount thereto, and the issuance of a warrant for payment thereof), are hereby assigned by the Grantor to the Beneficiaries, which Awards the Beneficiaries are hereby authorized to collect and receive from the condemnation authorities; excepting, however, Awards which are to be collected and received by the Beneficiary under the Second Deed of Trust. The Beneficiaries are hereby authorized (but shall have no obligation) to appear in and prosecute in their own names or in the name of the Grantor any action or proceeding to enforce any such cause of action and to make any compromise or settlement in connection therewith which is approved by the Beneficiaries, and to give appropriate receipts and acquittances therefor in the name and on behalf of the Grantor; provided that so long as no Event of Default shall exist hereunder the Grantor shall be authorized to enforce, compromise and settle any such cause of action with the consent of the Beneficiaries and they shall not make any compromise or settlement unless joined in by the Grantor. The Grantor shall give the Beneficiaries immediate notice of the actual or threatened commencement of any condemnation or eminent domain proceedings affecting all or any part of the Premises and shall deliver to the Beneficiaries copies of any and all papers served in connection with any such proceedings. All costs, fees and expenses incurred by the Beneficiaries in the adjustment and collection of any such Awards (including without limitation reasonable attorneys’ fees and expenses) shall be so much additional Indebtedness Hereby Secured, and shall be reimbursed to the Beneficiaries upon demand or may be paid and deducted by the Beneficiaries from any Award prior to any other application thereof. The Grantor further agrees to make, execute, and deliver to the Beneficiaries, at any time upon request, free, clear, and discharged of any encumbrance of any kind whatsoever (other than Permitted Encumbrances), any and all further assignments and other instruments deemed necessary by the Beneficiaries for the purpose of validly and sufficiently assigning all Awards and other compensation heretofore and hereafter made to the Grantor for any taking, either permanent or temporary, under any such proceeding. As long as no Event of Default shall exist and be continuing hereunder, all Awards made for any temporary requisitioning of the Premises or any portion thereof (a “Temporary Taking”), subject to the rights of the Beneficiary under the Second Deed of Trust, shall be applied as received to the payment of the Indebtedness Hereby Secured as the same becomes due and payable or held and applied to the payment or performance of the Grantor’s other obligations hereunder at such time and in such amounts and manner as the Beneficiaries shall approve or direct. -22- (b) Except as provided in the preceding paragraph in the case of a Temporary Taking and in Section 11 hereof, the proceeds of any such Awards shall be applied to the prepayment of the Indebtedness Hereby Secured or to the Restoration of the Premises as provided herein and in Section 11 hereof, except that any surplus proceeds may be disbursed as provided in Section 1 l(b)(v) hereof. (c) So long as any Indebtedness Hereby Secured shall be outstanding and unpaid, and whether or not Awards are sufficient or available therefor, the Grantor shall promptly commence and complete with all reasonable diligence the Restoration of the portion of the Premises not so taken as nearly as possible to the same value, condition and character, which existed immediately prior to such taking in compliance with all applicable Legal Requirements. Any Restoration of the Premises shall be effected in accordance with Restoration Plans to be first submitted to and approved by the Beneficiaries as provided in Section 11 hereof. The Grantor shall pay all costs of such Restoration to the extent not paid from Net Proceeds available therefor pursuant to the Second Deed of Trust and/or Section 11 hereof. SECTION 11. DISBURSEMENT OF INSURANCE PRoCEEDs AND AWARDS. (a) All Insurance Proceeds and/or Awards received by the Beneficiaries as provided in Section 9 or Section 10 hereof may, at the discretion of the Beneficiaries, after payment or reimbursement therefrom of all costs, fees and expenses (including without limitation reasonable attorneys’ fees and expenses) incurred by the Beneficiaries (and by the Beneficiary under the Second Deed of Trust) in the adjustment and collection thereof (the “Net Proceeds”), be deposited with the Trustee or the Surety (or such other depositary as may be designated by the Surety) and applied as provided in this Section unless required to be deposited with the Surety (or a depositary designated by the Surety) under the Second Deed of Trust. The provisions of the Second Deed of Trust shall be controlling as to the deposit and application of Insurance Proceeds or Awards. (b) If any Insurance Proceeds or Awards are to be deposited with the Trustee or the Surety (or other depositary designated by the Surety) hereunder, the following shall be applicable thereto: (i) If no Event of Default shall exist hereunder, the Grantor may elect to prepay the Loan and redeem the Bonds in whole or, with the prior written consent of the Beneficiaries, in part, from such Net Proceeds or a portion thereof, in accordance with the provisions of the Loan Agreement and the Indenture. (ii) If and so long as no Event of Default shall exist hereunder (including, without limitation thereof, failure of the Grantor to furnish sufficient funds, or assurances satisfactory to the Beneficiaries with respect to the availability of sufficient funds within 120 days after the receipt of Net Proceeds, which failure itself shall constitute an Event of Default hereunder) and the Grantor has not elected to prepay the Loan and redeem the Bonds in full, any and all Net Proceeds which are not applied to the payment of the Indebtedness Hereby Secured pursuant to Section 1 l(b)(i) shall -23- be applied to pay or reimburse the Grantor for the payment of the costs, fees and expenses incurred for the Restoration of the Premises as required under Section 9 or Section 10 hereof and such Net Proceeds shall be disbursed from time to time under the terms of a construction escrow agreement in form and substance satisfactory to the Beneficiaries. (iii) If the Grantor shall fail to furnish sufficient funds (or assurances satisfactory to the Beneficiaries with respect to the availability of sufficient funds) within 120 days after the receipt of such Net Proceeds, or if any other Event of Default shall occur hereunder at any time (whether before or after the commencement of such Restoration) all or any portion of the Indebtedness Hereby Secured may be declared to be immediately due and payable and such Net Proceeds then held by the Trustee, the Surety or other depository hereunder may be applied, at the option and in the sole discretion of the Beneficiaries, to the payment or prepayment of the Indebtedness Hereby Secured in whole or in part or to the payment and performance of such obligations of the Grantor as may then be in Default hereunder (including without limitation to complete the Restoration of the Premises), all in such amounts, order and manner as the Beneficiaries shall determine in their sole discretion. (iv) Without the prior written consent of the Beneficiaries, no payment made prior to the final completion of the Restoration of the Premises in accordance with the approved Restoration Plans shall exceed 95% of the value of the work performed from time to time, as such value shall be determined by the Beneficiaries in their sole and exclusive judgment. (v) So long as no Event of Default shall exist hereunder, any surplus which may remain out of such Net Proceeds after payment of all costs, fees and expenses of such Restoration shall either be applied to the payment or prepayment of principal of or interest on the Loan, and/or the operating expenses of the Premises at the direction or with the consent of the Beneficiaries. (vi) Any Net Proceeds held by the Trustee, the Surety or another depository designated by the Surety pending disbursement may be invested at the written direction of the Grantor, so long as no Default exists hereunder, and otherwise (if the Beneficiaries in their sole discretion, but without any obligation to do so, elect to direct investments) at the direction of the Beneficiaries, in Eligible Investments and otherwise in accordance with the applicable requirements of the Indenture, and all investment earnings shall be deemed to be a part of the Net Proceeds to be deposited with and held by the Trustee, the Surety or other depository designated by the Beneficiaries and disbursed in accordance with the foregoing provisions. (vii) The Beneficiaries may waive any or all of the requirements of Section 1 l(b)(ii) above in their sole discretion. -24- - SECTION 12. Pwmwhmm 0F NOTE AND REDEMPTION OF BONDS. <- In the event the Beneficiaries elect to apply all or any portion of the Net Proceeds to the prepayment of the Loan and the redemption of Bonds in accordance with this Deed of Trust, the Grantor will, upon demand by the Beneficiaries, give any and all notices and exercise any and all options and elections necessary to effect such prepayment and redemption; and the Beneficiaries are hereby appointed the agents and attorneys-in-fact of the Grantor with full power and authority (which power is coupled with an interest) to give any and all such notices and to exercise any and all such options and elections which may be required in connection with such application of funds to such prepayment and which the Grantor shall fail or refuse to give or exercise upon demand, in the name and on behalf of the Grantor, including the notices and certifications required in connection with a prepayment of the Loan and redemption of the Bonds under the Loan Agreement and the Indenture. SECTION 13. ASSIGNMENT OF LEASES AND OF RENTS. (a) The Grantor hereby absolutely and unconditionally assigns and transfers to the Beneficiaries all Project Revenues, whether now due or hereafter becoming due. The Grantor hereby irrevocably appoints the Beneficiaries its agents and attorneys-in-fact, in its name and stead (with or without taking possession of the Premises as provided in Section 20 hereof) to rent, lease or let all or any portion of the Premises to any party or parties at such rental and upon such terms as the Beneficiaries shall, in their sole discretion (subject to the requirements of the Regulatory Agreement to the extent then in effect and applicable) determine, and hereby authorizes the Beneficiaries to collect all Project Revenues arising from or accruing at any time hereafter, and all now due or that may hereafter become due under each and every one of the Leases, written or oral, or other tenancy existing, or which may hereafter exist on the Premises, with the same rights and powers and subject to the same immunities, exoneration of liability and rights of recourse and indemnity as the Beneficiaries would have upon taking possession pursuant to the provisions of Section 20 hereof, and the Grantor hereby directs each tenant of the Premises to pay all Project Revenues for which such tenant is liable directly to the Beneficiaries; provided, however, that until terminated and revoked as hereinafter provided, the Grantor shall have the privilege and is hereby granted a revocable license to enter into, amend, modify and terminate Leases as provided in Section 20 hereof and to collect the Project Revenues as they become due and payable. Upon the Beneficiaries’ sending a notice to the Grantor of the occurrence of any Event of Default hereunder, the privilege and license hereby granted to the Grantor to enter into, amend, modify and terminate Leases and to collect the Project Revenues shall automatically cease, terminate and be revoked (except as otherwise expressly provided in such notice), and the Beneficiaries at their option (but without any obligation to do so) may elect, by notice in writing to the Grantor, to thereafter exercise the rights and powers granted herein and collect all Project Revenues as they become due and payable either directly or by a receiver appointed by a court, in addition to any other rights and remedies provided for herein, without regard to the adequacy of the security for the Indebtedness Hereby Secured and without bringing any action or proceeding, or filing or recording any notice of default or election to foreclose this Deed of Trust or to sell the Granted Property or any part thereof. -25- (b) The collection and acceptance of all or any portion of the Project Revenues by the Beneficiaries shall not constitute a waiver of any other right which the Beneficiaries may have under this Deed of Trust or applicable law. The Beneficiaries’ failure to collect any such Project Revenues shall not in any manner affect their subsequent enforcement of their right to collect the same. The Beneficiaries’ receipt and application of such Project Revenues under this paragraph after the execution and delivery of a declaration of default and demand for sale upon the occurrence or during the continuance of any Event of Default, or during the pendency of a non-judicial foreclosure sale or judicial foreclosure proceedings hereunder, shall not cure such Event of Default or affect such foreclosure, sale or other proceeding. (c) Notwithstanding anything to the contrary contained in this Deed of Trust, the Grantor specifically acknowledges that the assignment of Project Revenues set forth herein constitutes an absolute assignment and not an assignment as additional security. If there is an inconsistency or conflict between the terms of this Section and the remaining terms of this Deed of Trust, this Section shall be deemed controlling. (d) Upon delivery of a demand for Project Revenues by the Beneficiaries to any lessee or tenant of the Premises, such lessee or tenant is authorized to pay to the Beneficiaries the Project Revenues for which it is obligated without liability on the part of such lessee or tenant to make any inquiry as to whether or not such demand is made in compliance with this Deed of Trust or the application of such Project Revenues. ,--- (e) The Grantor shall execute and deliver to the Beneficiaries such further documents as they may require to effectuate or confirm the assignment of the Project Revenues set forth herein. From time to time, the Grantor will furnish the Beneficiaries with executed copies of each of the Leases and with estoppel letters and attornment agreements, if requested, from each tenant under any Lease of commercial space, which estoppel letters and attornment agreements, if requested, shall be in a form and substance satisfactory to the Beneficiaries and shall be delivered within 30 days after their written demand therefor. SECTION 14. REPRESENTATIONS, WARRANTIES AND COVENANTS REGARDING LEASES, PROJECT REVENUES AND FINANCING DOCUMENTS. (a) The Grantor represents, warrants, covenants and agrees that: (i) The Grantor or its agent is and will be the lessor or landlord (“landlord”) under the Leases and will through its agent perform all material covenants and agreements of the landlord thereunder; (ii) Without the Beneficiaries’ prior written consent, the Grantor will not transfer, sell, assign, pledge, encumber or grant a security interest in any of the Leases or the Project Revenues, except pursuant to this First Deed of Trust and the Second Deed of Trust, or in connection with a sale of the Premises approved by the Beneficiaries; -26- (iii) The Grantor will not cause, suffer or permit any Lease to be entered into except in compliance with the provisions of the Regulatory Agreement; and (iv) The Grantor shall not permit any Lease to become subordinate to any Lien other than the Lien of the First Deed of Trust Documents and the Second Deed of Trust Documents and Liens consented to in writing by the Beneficiaries. (b) Nothing herein contained shall be construed as constituting the Beneficiaries as “mortgagees in possession” in the absence of the taking of actual possession of the Premises by the Beneficiaries pursuant to the powers granted herein, and no liability shall be asserted or enforced against the Beneficiaries all such liability being expressly waived and released by the Grantor, to the extent permitted by law. The Beneficiaries shall not at any time (regardless of any exercise by the Beneficiaries, or rights of the Beneficiaries to exercise, any powers herein conferred) be obligated to perform or discharge, nor do the Beneficiaries hereby undertake to perform or discharge, any obligation, duty or liability under any Leases relating to the Premises. (c) The Grantor further specifically and irrevocably authorizes and instructs each and every present and future lessee or tenant under any Lease to pay all unpaid rental agreed upon in any Lease to the Beneficiaries upon receipt of demand from the Beneficiaries so to pay the same, without any inquiry as to whether or not such demand is made in compliance with the provisions of this Deed of Trust or the application of any amount so paid. The Grantor further agrees to execute and deliver immediately upon the request of the Beneficiaries, all such further assurances and assignments concerning the Leases or the Premises or the Project Revenues as the Beneficiaries shall from time to time reasonably require. (d) The Beneficiaries have not received or been transferred any security deposit with respect to any Lease, and will assume no responsibility for any such security deposit until such time as any security deposit (specified as such with specific reference to the Lease pursuant to which deposited) may be transferred to the Beneficiaries and accepted by them by notice to the tenant under said Lease. (e) It is understood and agreed that the provisions set forth in this Section shall be deemed a special remedy given to the Beneficiaries, and shall not be deemed exclusive of any of the remedies granted hereunder or under any of the other Financing Documents but shall be deemed an additional remedy and shall be cumulative with the remedies therein and elsewhere granted the Beneficiaries, all of which remedies shall be enforceable concurrently or successively. No exercise by the Beneficiaries of any of their rights hereunder shall cure, waive or affect any Default hereunder or any default under any of the other Financing Documents. No inaction or partial exercise of rights by the Beneficiaries shall be construed as a waiver of any of its rights and remedies, and no waiver by the Beneficiaries of any such rights and remedies shall be construed as a waiver by the Beneficiaries of any of their other rights and remedies. -27- (f) The Grantor represents, warrants, covenants and agrees that it will pay and perform all obligations when due under, and will observe and comply with all covenants, conditions, restrictions and agreements contained in, the other First Deed of Trust Documents, all in accordance with their respective terms. SECTION 15. BENEFICIARIES’ F%RFCIRMANCE OF GRANTOR’S OBLIGATIONS. (a) If any Event of Default shall have occurred hereunder, the Beneficiaries, either directly or by a receiver appointed by a court and before or after acceleration of the Indebtedness Hereby Secured or the institution of proceedings for the judicial or non-judicial foreclosure or sale of the Granted Property, or any portion thereof, but without any obligation to do so and without notice to or demand upon the Grantor, except as otherwise required by the provisions hereof, and without releasing the Grantor from any such obligation or waiving any other rights or remedies of the Beneficiaries under this Deed of Trust or any other First Deed of Trust Document, may make any payment or perform any act which the Grantor is required to make or perform hereunder or under any of the other First Deed of Trust Documents (whether or not the Grantor is personally liable therefor) in any form and manner deemed expedient to the Beneficiaries, including without limitation the right to enter into possession of the Premises, or any portion thereof, and to take any action (including without limitation the release of any information regarding the Premises, the Grantor and the obligations secured hereby) which the Beneficiaries deem necessary or desirable in connection therewith at the cost and expense of the Grantor. The Beneficiaries, in addition to any rights or powers granted or conferred under the First Deed of Trust Documents (but without any obligation to do so), may rent, operate, and manage the Premises, or any part thereof, and complete any Restoration, repair, replacement, construction, equipping or other work at the Premises and pay the costs and expenses thereof, including management fees and other operating costs and expenses, of every kind and nature in connection therewith, so that the Premises shall be operational and usable for their intended purposes. All moneys paid, and all reasonable expenses paid or incurred in connection therewith, including but not limited to costs of surveys, evidence of title, court costs and reasonable attorneys’ fees and expenses and other moneys advanced by the Beneficiaries to complete any Restoration, repair, replacement, construction, equipping or other work of the Premises, to protect the Premises and the Lien hereof, to rent, operate and manage the Premises or to pay any such operating costs and expenses thereof or to keep the Premises operational and usable for their intended purposes shall be so much additional Indebtedness Hereby Secured, whether or not as a result thereof the Indebtedness Hereby Secured shall exceed the face amount of the Note, and shall become immediately due and payable on demand, and with interest thereon at the Increased Rate specified in the Reimbursement Agreement. (b) Inaction of the Beneficiaries shall never be considered as a waiver of any right accruing to any of them on account of any Default nor shall the provisions of this Section or any exercise by the Beneficiaries of any rights hereunder prevent any Default from constituting an Event of Default. -28- (c) The Beneficiaries, in making any payment hereby authorized (i) relating to Taxes, may do so according to any written bill, notice, statement or estimate, without inquiry into the amount, validity or enforceability of any tax, assessment, sale, forfeiture, tax lien or title or claim thereof; (ii) in connection with the purchase, discharge, compromise or settlement of any Lien, may do so without inquiry as to the amount, validity or enforceability of any claim for Lien which may be asserted; or (iii) in connection with the completion of any Restoration, repair, replacement, construction, equipping or other work at the Premises or the payment of operating costs and expenses thereof, may do so according to any written bill, notice, invoice, statement or estimate, without inquiry into the amount, validity or enforceability thereof. The Beneficiaries may make payments in such amounts and to such Persons as the Beneficiaries may deem appropriate in their sole discretion. (d) Nothing contained herein shall be construed to require the Beneficiaries to advance or expend moneys for any purpose mentioned herein, or for any other purpose. SECTION 16. SECURITY AGREEMENT. (a) This Deed of Trust is also a security agreement and financing statement under the Uniform Commercial Code of California (the “Uniform Commercial Code”) with respect to the Collateral, including without limitation any Personal Property included in the Granting Clauses of this Deed of Trust which may not be deemed to be affixed to the Land or Improvements or may not constitute a “$W.4re” within the meaning of Section 9-313 of the Uniform Commercial Code, and all replacements or substitutions for and additions to such Collateral, and the proceeds thereof, and that a security interest in and to the Collateral is hereby granted to the Beneficiaries, as secured party, and the Collateral and all of the Grantor’s right, title and interest therein is hereby assigned to the Beneficiaries, all to secure payment of the Indebtedness Hereby Secured. This Deed of Trust also constitutes a fixture filing under the Uniform Commercial Code. All of the terms, provisions, conditions and agreements contained in this Deed of Trust pertain and apply to the Collateral as fully and to the same extent as to any other property comprising the Granted Property; and the following provisions of this Section shall not limit the applicability of any other provisions of this Deed of Trust but shall be in addition thereto. (b) The names and addresses of the Grantor, as debtor, and of the Beneficiaries, as secured parties, for purposes of the Uniform Commercial Code are set forth in Section 38 hereof. (c) The Grantor is and will be the true and lawful owner of the Collateral, subject to no Liens other than the Lien hereof and Permitted Encumbrances. (d) The Collateral will be kept at the Land, will be used by the Grantor solely for business purposes, and, except for Obsolete Collateral, will not be removed therefrom without the consent of the Beneficiaries. The Personal Property constituting the Collateral may be affixed to the Land or the Improvements but will not be affixed to any other real estate. -29- (e) No financing statement (other than financing statements with respect to Permitted Encumbrances) covering any of the Collateral or any proceeds thereof is (or will at any time be) on file in any public office. The Grantor will at its own cost and expense, upon demand, furnish to the Beneficiaries such further information and will execute and deliver to the Beneficiaries such financing statements, continuation statements and other documents in a form satisfactory to the Beneficiaries and will do all such acts and things as the Beneficiaries may at any time or from time to time request or as may be necessary or appropriate to establish and maintain a perfected security interest in the Collateral as security for the Indebtedness Hereby Secured, subject only to Permitted Encumbrances, and the Grantor will pay any fee, tax, charge or other cost of filing or recording such financing statements, continuation statements or other documents, in all public offices wherever filing or recording is deemed by the Beneficiaries to be necessary or desirable. (f) The Beneficiaries shall have with respect to the Collateral all the rights and remedies of a secured party under the Uniform Commercial Code upon the occurrence of an Event of Default hereunder, including without limitation, the right to take immediate and exclusive possession of the Collateral, or any part thereof. SECTION 17. l3ESTRICTIONSON'l'I&4NSFER. (a) The Grantor shall not create, effect, contract for, consent to or suffer or permit any Prohibited Transfer as defined in this Section. Any conveyance, sale, assignment, transfer, creation of a Lien or other encumbrance or alienation (or any agreement to do any of the foregoing) of any of the following properties, rights or interests which is made, or attempted to be made, without the prior written consent of the Beneficiaries (provided, however, that so long as there is no Event of Default as defined under the Indenture, the Surety shall be the sole party to grant such written consent except as provided in Section 8.11 of the Indenture) shall constitute a “Prohibited Transfer” in each case whether any such conveyance, sale, assignment, transfer, Lien, encumbrance or alienation is effected directly, indirectly, voluntarily or involuntarily, by operation of law or otherwise: (i) The Granted Property or any part thereof or interest therein, excepting only (A) Permitted Encumbrances, (B) sales or other dispositions of Fixtures and Personal Property no longer useful in connection with the operation of the Premises (herein called “Obsolete Collateral”), provided that prior to the sale or other disposition thereof, such Obsolete Collateral has been replaced by Fixtures and Personal Property of substantially equal value and utility which is subject to the Lien hereof with the same priority as with respect to the Obsolete Collateral, (C) the application of Project Revenues, and Net Proceeds in accordance with the provisions of this Deed of Trust or the Second Deed of Trust, (D) sales or other dispositions of all or any part of the Granted Property approved by the Surety and (E) the entering into and the amendment, modification and termination of Leases (as provided in Section 13 hereof) and other contracts and agreements from time to time with respect to the Premises in the ordinary course of, and pursuant to the reasonable requirements of, the operation, management and leasing of the Premises and provided that any such contracts and agreements, unless approved by the Surety, are with Persons other than -3o- Affiliates and (except for Leases) terminable upon not more than thirty (30) days notice without penalty or premium. (ii) Any interest in the Grantor, unless approved by the Surety (which approval shall not be unreasonably withheld), with notice of such approval by the Surety to the Commission. (b) The Grantor agrees that making any oil, gas, water, or other mineral lease with respect to all or any part of the Premises, or the sale or conveyance of any water, oil, gas, or other mineral interest or the right to explore for the same under, through, or upon the Premises would impair the value of the Granted Property as security for payment of the Indebtedness Hereby Secured. The Grantor shall have no right, power, or authority to lease all or any part of the Premises for oil, gas, water, or other mineral purposes, or to grant, assign, or convey any water, oil, gas, or other mineral interest of any nature, or the right to explore for oil, gas, water, and other minerals, without first obtaining the Beneficiaries’ prior written consent, which consent if granted may be subject to such conditions as the Beneficiaries may determine in their sole discretion, and shall not be valid until recorded. Whether or not the Beneficiaries consents to such lease or grant of the water, mineral, oil, or gas rights, the Beneficiaries shall, at the Beneficiaries’ option, receive the entire consideration to be paid for such lease or grant of the water, mineral, oil, or gas rights, and apply such consideration to the payment or performance of the Grantor’s obligations hereunder and under the other First Deed of Trust Documents, including without limitation to the payment or prepayment of the Indebtedness Hereby Secured in such amount, order and manner as the Beneficiaries shall determine in their sole discretion; provided, however, that the acceptance of such consideration shall in no way impair the Lien of this Deed of Trust on the entire Granted Property and all rights therein, and all water, oil, gas, and other mineral rights, including any such rights covered by any such consent, shall remain subject to this Deed of Trust. (c) Any Prohibited Transfer shall be void and of no effect and the Beneficiaries may, without notice, declare the same to be an Event of Default, declare the Note and the Indebtedness Hereby Secured immediately due and payable, and exercise all of its rights and remedies hereunder and at law or in equity. In the event of a conflict between the provisions of this Section 17 and the provisions of the Loan Agreement, the Indenture, the Regulatory Agreement or any other First Mortgage Document, the provisions of this Section 17 shall control. SECTION 18. EVENTSOFDEFAULT,REMEDIES. (a) Any one or more of the following events shall constitute an Event of Default under this Deed of Trust: (i) If any default shall occur in the due and punctual payment or deposit of moneys required under the Note or this Deed of Trust as and when the same is due and payable; or -31- (ii) If any Event of Default shall occur under and as defined in the Loan Agreement, the Reimbursement Agreement or the Second Deed of Trust; or (iii) If any default shall occur in the due and punctual performance of, or compliance with any of the terms, covenants, conditions or agreements contained herein (other than as described in the preceding clauses (i) and (ii) of this paragraph (a) of Section 18) and the continuance of such default for thirty (30) days after written notice thereof shall be given to the Grantor by the Beneficiaries or the Trustee; or (iv) If any representation or warranty made by the Grantor in any of the Financing Documents or in any certificate, statement, notice, demand or request made or delivered by the Grantor pursuant to or in connection with this Deed of Trust or any other Financing Documents shall prove to be untrue or incorrect in any material respect. (b) Upon the occurrence of any Event of Default hereunder and subject to the provisions of the Intercreditor Agreement and of Section 40 hereof, the Beneficiaries are hereby authorized and empowered, at their option and without affecting the Lien hereby created or the priority of said Lien or any other right of the Beneficiaries hereunder or under any other Financing Document, to do any or all of the following without notice to or demand upon the Grantor or any party liable for the Indebtedness Hereby Secured or having an interest in the Granted Property (except as otherwise required by law): (i) To declare, without further notice, all Indebtedness Hereby Secured to be immediately due and payable with interest thereon at the Increased Rate without presentment, demand, protest or notice of any kind, all of which are hereby expressly waived by the Grantor; (ii) To institute judicial proceedings for the sale of the Granted Property, or portions thereof, under this Deed of Trust and the other First Deed of Trust Documents, or any of them, or to foreclose this Deed of Trust (including foreclosing the Grantor’s equity of redemption) or for the appointment of a receiver as provided herein or therein and under the laws of the State; (iii) To institute non-judicial foreclosure proceedings under the power of sale contained herein and to deliver to the Trustee a written declaration of default and demand for the sale of the Granted Property or portions thereof under this Deed of Trust and the other First Deed of Trust Documents, or any of them, as provided herein or therein and under the laws of the State; ,- (iv) To deliver to the Security Trustee a written declaration of default and demand for sale and a written notice of default and election to sell, which shall each contain such recitals as may be required by law; and in accordance with the laws and statutes of the State of California, including without limitation Sections 2924, 2924b and 2924c of the California Civil Code, as amended; -32- (v) To exercise any right, power or remedy provided by this Deed of Trust and the other First Deed of Trust Documents, or any of them, or by law or in equity or by any other document or instrument regulating, evidencing, securing or guarantying any of the Indebtedness Hereby Secured; (vi) To enter upon the Premises, expel the Grantor and, if the Beneficiaries elect, all Persons claiming by, through or under the Grantor, and collect the Project Revenues; and (vii) To do and perform all such acts and deeds and institute such legal proceedings or other proceedings, in the name of the Grantor or the Beneficiaries, as the Beneficiaries may deem necessary or desirable, in their sole discretion, shall determine, for the purpose of protecting the Granted Property and the Beneficiaries’ interest therein and preserving the value and the efficiency of the tax-exempt financing applicable to the Project. The Grantor shall immediately reimburse the Beneficiaries for all sums paid by them pursuant to or as authorized by the Indenture, the Loan Agreement, the Regulatory Agreement, this Deed of Trust and the other First Deed of Trust Documents. The Beneficiaries are hereby expressly authorized by the Grantor to pay and to advance moneys to pay or perform any obligation of the Grantor with respect to which any Default may exist hereunder or under any other Loan Document without regard to the expiration of any applicable grace period thereunder, and the Grantor shall pay and reimburse the Beneficiaries for all sums expended or obligations incurred by the Beneficiaries in effecting such payment or performance, together with interest thereon at the Increased Rate from and including the date such payment or advance is made, and to and including the date the Beneficiaries shall be fully paid and reimbursed therefor. SECTION 19. FORECXOSUREANDSALE. (a) Upon the occurrence of any Event of Default and subject to the provisions of the Intercreditor Agreement and Section 40 hereof, if the Beneficiaries elect to cause the exercise of the power of sale hereunder, the Beneficiaries shall cause such notice of default and intention to sell as may be required by law to be filed for record and delivered to any Person entitled by law to receive it. After the lapse of such time as may then be required by law following recordation of the notice of default and intention to sell, and after notice of sale has been given as then required by law, the Beneficiaries, without demand upon the Grantor, may cause the Granted Property (or all or any portion thereof which the Beneficiaries shall have the power to sell under the laws of the State) to be sold at the time and place fixed by the Security Trustee in the notice of sale, either in separate parcels or as a whole, and in such order as the Beneficiaries in their sole discretion may determine, at public auction to the highest bidder for cash in lawful money of the United States, payable at the time of such sale. The Security Trustee may postpone or adjourn the sale of all or a portion of the Granted Property by public announcement at such time and place of sale and, from time to time thereafter, may postpone or adjourn such sale by public announcement at the time and place fixed by the preceding postponement. Such party may reset such sale at a -33- - later date without additional publication unless otherwise required by law. At any such public sale, the Security Trustee shall execute and deliver to the purchaser a deed of conveyance of the Granted Property or any part of the Granted Property in fee simple, without covenant or warranty, express or implied. The Grantor hereby constitutes and appoints the Security Trustee, the agent and attorney-in-fact of the Grantor to make such sale and conveyance, and thereby to divest the Grantor of all right, title and equity that the Grantor may have in and to the Granted Property and to vest the same in the purchaser or purchasers at such sale or sales, and all the acts and doings of said agent and attorney-in-fact are hereby ratified and confirmed. The aforesaid power of sale and agency hereby granted are coupled with an interest and are irrevocable by death or otherwise, are granted as cumulative of the other remedies provided hereby or by law for collection of the Indebtedness Hereby Secured and shall not be exhausted by one exercise thereof and may be exercised until full payment of all of the Indebtedness Hereby Secured. The Trustee shall apply the proceeds of such sale after deducting all costs, fees and expenses of the Beneficiaries and the Security Trustee with respect thereto, including but not limited to reasonable attorneys’ fees and expenses, to the payment of the Indebtedness Hereby Secured and the other obligations of the Grantor in such amounts, order and manner as the Beneficiaries shall determine pursuant to Section 22 hereof and, if there are any proceeds remaining, the Security Trustee shall distribute them to the Person legally entitled to receive them. The Grantor shall surrender possession of the Granted Property or portion thereof so sold to the purchasers thereof immediately and without demand. The recitals in the trustee’s deed of any matters, proceedings, and facts shall be conclusive proof of their truthfulness and regularity. Any Person, including the Grantor or the Beneficiaries (as further provided in Section 19(h) below), or any of them may be the purchaser at any such sale. Until the Beneficiaries shall cause a non-judicial foreclosure sale to be completed hereunder, no action of the Beneficiaries based upon the provisions contained herein shall constitute an election of remedies which would preclude the Beneficiaries from pursuing judicial foreclosure or to enforce any of the covenants and agreements hereof or of the Note or any Loan Document. (b) In addition to any other remedies provided for hereby and subject to the provisions of the Intercreditor Agreement and Section 40 hereof, the Beneficiaries shall have the rights of a secured party and the Grantor shall have the rights of a debtor under the Uniform Commercial Code of the State with respect to the Collateral upon the occurrence of any Event of Default hereunder. If the Beneficiaries so elect, they may sell the Personal Property and other Collateral covered by this Deed of Trust at one or more separate sales in any manner permitted by the Uniform Commercial Code of the State, and one or more exercises of the powers herein granted shall not extinguish or exhaust such powers, until the entire Granted Property is sold or the Indebtedness Hereby Secured is paid in full. Any requirements for reasonable notice under the Uniform Commercial Code shall be met if such notice is mailed, by certified United States mail or the equivalent, postage prepaid, to the address of the Grantor set forth in Section 38 hereof at least twenty (20) days before the time of sale or other disposition. Any such sale may be held as part of and in conjunction with any foreclosure sale of the other properties and rights constituting the Granted Property in order that the Granted Property, including the Collateral, may be sold as a single parcel if the Beneficiaries so elect in their sole discretion. The Grantor hereby agrees that if the Beneficiaries demand or attempt to take possession of the Collateral or any -34- - portion thereof in exercise of their rights and remedies hereunder or under any other First Deed of Trust Document, the Grantor will promptly turn over and deliver possession thereof to the Beneficiaries, and the Grantor authorizes, to the extent the Grantor may now or hereafter lawfully grant such authority, the Beneficiaries, their employees and agents, and potential bidders or purchasers to enter upon the Premises or any other office, building or property where the Collateral or any portion thereof may at the time be located (or believed to be located) and the Beneficiaries may (i) remove the same therefrom or render the same inoperable (with or without removal from such location), (ii) repair, operate, use or manage the Collateral or any portion thereof, (iii) maintain, repair or store the Collateral or any portion thereof, (iv) view, inspect and prepare the Collateral or any portion thereof for sale, lease or disposition, (v) sell, lease, dispose of or consume the same or bid thereon, or (vi) incorporate the Collateral or any portion thereof into the Land or the Improvements or Fixtures and sell, convey or transfer the same. (c) Subject to the provisions of the Intercreditor Agreement and Section 40 hereof, the Beneficiaries may also collect or continue to collect, as provided in Section 13 hereof, all Project Revenues, and apply such collections to pay or perform the Grantor’s obligations hereunder and under the other First Deed of Trust Documents, the Regulatory Agreement and the Second Deed of Trust Documents in such amounts, order and manner as the Beneficiaries in their sole discretion shall determine. (d) Subject to the provisions of the Intercreditor Agreement and Section 40 hereof, the Beneficiaries may apply to any court, state or federal, for specific performance of the First Deed of Trust Documents including without limitation the Regulatory Agreement, for an injunction against any violation, for the appointment of a receiver to take over and operate the Premises in accordance with the terms of this Deed of Trust and the other First Deed of Trust Documents and Regulatory Agreement, for the enforcement of any of the covenants and agreements contained herein or of the Note or any Loan Document, or for such other equitable relief as may be appropriate. (e) In any judicial or non-judicial proceeding for the sale of the Granted Property or the foreclosure of the lien hereof, there shall be allowed and included as additional Indebtedness Hereby Secured, all expenditures and expenses which may be paid or incurred by or on behalf of the Beneficiaries for attorneys’ fees, appraiser’s fees, accountant’s fees, fees of other professionals, outlays for documentary and expert evidence, stenographer’s charges, publication costs, and costs (which may be estimated as to items to be expended after entry of the decree) of procuring all such abstracts of title, title searches and examinations, title insurance policies, environmental audits and surveys, and similar data and assurance with respect to the Granted Property as the Beneficiaries may deem reasonably necessary either to prosecute such proceedings for foreclosure and sale or any suit or to evidence to bidders at sales which may be had by the Beneficiaries and/or the Security Trustee or pursuant to such decree the true conditions of the title to or the value of the Granted Property. All expenditures and expenses of the nature mentioned herein, and such other expenses and fees as may be incurred in the protection of the Granted Property, including the collection of the Project Revenues and the maintenance of the Lien and security interest of this Deed of Trust, including the fees and expenses of any attorney employed by -35 the Beneficiaries in any litigation or proceedings affecting this Deed of Trust, the Note, the Loan Agreement, the Reimbursement Agreement, or any of the other First Deed of Trust Documents or the Granted Property, including probate and bankruptcy proceedings, out of court workouts, or in preparation of the commencement or defense of any proceedings or threatened suit or proceeding or otherwise in dealing specifically therewith, shall be so much additional Indebtedness Hereby Secured and shall be immediately due and payable by the Grantor, with interest thereon at the Increased Rate until paid. (f) After sale of the Granted Property, or any portion thereof, the Grantor will be divested of any and all interest and claim thereto, including any interest or claim to all Insurance Policies as provided in Section 7, bonds, loan commitments and other intangible property covered hereby. Additionally, with respect to the Granted Property, after a sale of all or any portion thereof, the Grantor will be considered a tenant at sufferance of the purchaser of the same, and said purchaser shall be entitled to immediate possession thereof, and if the Grantor shall fail to vacate the Granted Property immediately, the purchaser may and shall have the right, without further notice to the Grantor, to file an action in forcible entry and detainer, which action shall lie against the Grantor or its assigns or legal representatives, as a tenant at sufferance. This remedy is cumulative of any and all remedies the purchaser may have hereunder or otherwise. (g) The foreclosure of this Deed of Trust and the sale or sales of less than the whole of the Granted Property shall not exhaust the power of sale or right to foreclose hereunder and the lien and security interests herein granted, and the Beneficiaries and/or the Security Trustee are specifically empowered to institute successive foreclosures and/or sales hereunder until the whole of the Granted Property shall be sold. If the proceeds of any such sale of less than the whole of the Granted Property shall be less than the aggregate of the Indebtedness Hereby Secured and the expenses of such proceedings, this Deed of Trust and the lien and security interest hereof shall remain in full force and effect as to the unsold portion of the Granted Property just as though no sale had been made. The Grantor shall never have any right to require the sale or sales of less than the whole of the Granted Property, or to require the marshalling thereof. The Beneficiaries shall have the right, at their sole election, to sell or cause the Security Trustee to sell less than the whole of the Granted Property. If an Event of Default occurs hereunder, the Beneficiaries shall have the option to proceed as if under a full foreclosure, conducting the sale as herein provided without declaring the entire Indebtedness Hereby Secured due. If the sale is made because of a default in the payment of a portion of the Indebtedness Hereby Secured, such sale may be made subject to the unmatured portion of the Indebtedness Hereby Secured; and such sale, if so made, shall not in any manner affect the unmatured part of the Indebtedness Hereby Secured but as to such unmatured part, this Deed of Trust shall remain in full force and effect as though no sale had been made under the provisions of this Deed of Trust. Any number of sales may be made hereunder without exhausting the lien and security interests of this Deed of Trust for any unmatured part of the Indebtedness Hereby Secured. (h) The Beneficiaries shall have the right to become the purchaser at any sale of the Granted Property hereunder (or any part thereof) and shall have the right to have credited -36- on the amount of its bid therefor all (or any part of) of the Indebtedness Hereby Secured held by it as of the date of such sale. (i) In case any proceeding taken by the Beneficiaries on account of any Default under this Deed of Trust shall have been discontinued or determined adversely to the Beneficiaries, then in every case the Grantor and the Beneficiaries shall be restored to their former positions and rights hereunder, respectively, and all rights, remedies and powers of the Grantor and the Beneficiaries shall continue as though no such proceeding had been taken. (j) The Beneficiaries at their option, are hereby authorized to foreclose this Deed of Trust subject to the rights of any tenants of the Premises, and the failure to make any such tenants parties to any such foreclosure proceedings and to foreclose their rights will not be, nor be asserted to be by the Grantor as, a defense to any proceedings instituted to collect the Indebtedness Hereby Secured. (k) In the case of any receivership, insolvency, bankruptcy, reorganization, arrangement, adjustment, composition or other proceedings affecting the Grantor, its Affiliates, its creditors or its property, the Beneficiaries, to the extent permitted by law, shall be entitled to file such proofs of claim and other documents as may be necessary or advisable in order to have the claims allowed in such proceedings for the entire amount of the Indebtedness Hereby Secured at the date of the institution of such proceedings and for any additional amount of the Indebtedness Hereby Secured after such date, including without limitation interest post-petition at the Increased Rate. (1) If an Event of Default shall have occurred, the Beneficiaries, in addition to and not in abrogation of the rights covered under this Section 19, either with or without entry or taking possession as herein provided or otherwise, may proceed by a suit or suits in law or in equity or by any other appropriate proceeding or remedy (i) to enforce payment of the Note or the performance of any term, covenant, condition, or agreement of this Deed of Trust and the other First Deed of Trust Documents or any other right, and (ii) to pursue any other remedy available to them, all as the Beneficiaries in their sole discretion shall elect. (m) If the Indebtedness Hereby Secured is now or hereafter further secured by any chattel mortgages, pledges, contracts of guaranty, assignments of lease, or other security instruments, the Beneficiaries at their option may exhaust the remedies granted under any of said security instruments either concurrently or independently, and in such order and manner as the Beneficiaries may determine without waiving, impairing, prejudicing or otherwise affecting in any manner any lien, right, power or remedy of the Security Trustee and the Beneficiaries hereunder and under the other First Deed of Trust Documents. SECTION 20. RIGHT OF POSSESSION. - (a) Upon the occurrence of any Event of Default, the Grantor shall, forthwith upon demand of the Beneficiaries and whether or not the Indebtedness Hereby Secured shall be -37- declared or become due, surrender the Granted Property to the Beneficiaries, and the Beneficiaries shall be entitled either directly or by a receiver appointed by a court, without notice to or demand upon the Grantor or any party liable for the Indebtedness Hereby Secured or the other obligations secured hereby or having an interest in the Granted Property, without regard to the adequacy of the security for the Indebtedness Hereby Secured or the other obligations secured hereby, without bringing any action or proceeding, and without having given or recorded a notice of default and election to sell, to enter into and take possession of the Granted Property or any part thereof, together with all documents, books, records, papers, and accounts of the Grantor or the then owner of the Granted Property relating thereto, and exclude the Grantor, and any agents and servants thereof wholly therefrom and at their option do any or all of the following, in the name and on behalf of the Grantor or such owner, or in their own name, as the case may be: (i) hold, operate, manage, and control all or any part of the Granted Property and conduct the business, if any, thereof, either personally or by its agents, with full power to use such measures, legal or equitable, as in its discretion may be deemed proper or necessary to enforce the payment or security of the Project Revenues, including without limitation actions for recovery of rent, actions in forcible detainer, and actions in distress for rent, all without notice to the Grantor; (ii) to the extent permitted by law, cancel or terminate any Lease or sublease of all or any part of the Premises; (iii) extend or modify any then existing Leases and make new Leases of all or any part of the Premises, which extensions, modifications, and new Leases may provide for terms to expire, or for options to lessees to extend or renew terms to expire, beyond the maturity date of the Loan evidenced by the Note or the term of the Surety Bond and the issuance of a deed or deeds to a purchaser or purchasers at a foreclosure sale, it being understood and agreed that any such Leases, and the options or other such provisions to be contained therein, shall be binding upon the Grantor, all Persons whose interests in the Premises are subject to the lien hereof, and the purchaser or purchasers at any foreclosure sale, notwithstanding any redemption from sale, discharge of the Indebtedness Hereby Secured, satisfaction of any foreclosure decree, or issuance of any certificate of sale or deed to any such purchaser; (iv) make all necessary or proper repairs, renewals, replacements, alterations, additions, betterments, and improvements in connection with the Premises as may seem judicious to the Beneficiaries, insure and reinsure the Property and all risks incidental to the possession, operation, and management thereof, and to receive all rents, issues, profits, revenues and other income and proceeds therefrom; (v) do all acts respecting the Granted Property as the Beneficiaries (or such receiver) may deem appropriate or necessary to preserve its value; (vi) apply the Project Revenues, after allowing a reasonable fee for the collection thereof and for the management of the Premises, and any other funds in the -38- possession of the Beneficiaries (or such receiver), after deducting the expenses of maintenance and operation of the Premises which may be incurred by Beneficiaries, to the payment and performance of the obligations of the Grantor secured hereby, including without limitation the payment of Taxes, Premiums and other charges applicable to the Granted Property, or in reduction of the Indebtedness Hereby Secured in such amounts, order and manner as the Beneficiaries may in their sole discretion determine; and (vii) exercise all rights, do all things and take any other actions that the Grantor is permitted to exercise, do or take under any Financing Documents. (b) Nothing herein contained shall be construed as constituting the Beneficiaries as “mortgagees in possession*’ in the absence of the actual taking of possession of the Premises. (c) If the Beneficiaries elect to seek the appointment of a receiver upon an Event of Default under this Deed of Trust, the Grantor hereby irrevocably, unconditionally and expressly consents to the appointment of a receiver without regard to the adequacy of the security for the Indebtedness Hereby Secured or the other obligations secured hereby; it being acknowledged and agreed that the Beneficiaries and their successors and assigns shall have the right to sue for specific performance of this Deed of Trust, the Regulatory Agreement and the First Deed of Trust Documents and to otherwise seek equitable relief for the enforcement of the obligations and undertakings of the Grantor hereunder and thereunder, including without limitation obtaining an injunction against any violation of the Regulatory Agreement and the other First Deed of Trust Documents or the appointment of a receiver to take over and operate the Premises in accordance with the terms of the Regulatory Agreement and the First Deed of Trust Documents, since the injury arising from a default thereunder would not be compensable by monetary damages and the remedies at law would be inadequate to assure the exemption of interest on the Bonds from Federal income taxation or the fulfillment of the public purposes of the Commission in providing the financing for the Project. SECTION 2 1. RECEIVER. -_ (a) The Beneficiaries shall have the right, with the irrevocable consent of the Grantor hereby given and evidenced by the execution of this Deed of Trust, to obtain the appointment of a receiver for the Granted Property. Such appointment may be made at any time after the occurrence of any Event of Default and before or after sale, without notice, without regard to solvency or insolvency of the Grantor at the time of application for such receiver, and without regard to the then value of the Granted Property or whether the same shall be then occupied as a homestead or not; and, to the extent permitted by applicable law, the Beneficiaries hereunder or any employee or agent thereof may be appointed as such receiver. Such receiver shall have the power to enter upon and take possession of the Premises and to collect the rents, issues, profits, revenues and other income and proceeds of the Premises from and after the occurrence of any Event of Default and during the pendency of any foreclosure suit or period between the date a notice of default is recorded and the non-judicial foreclosure sale, and in case of a sale and deficiency, during the full statutory -39- period of redemption, if any, whether there be a redemption or not, as well as during any further times when the Grantor, except for the intervention of such receiver, would be entitled to collection of such rents, issues, profits, revenues and other income and proceeds. Such receiver shall have all other powers which may be necessary or are usual in such cases for the protection, possession, control, management and operation of the Granted Property and the tax-exempt financing applicable to the Project, including without limitation the right to remove existing and appoint substitute parties with whom the Grantor has contracted (after obtaining any consents required by the Financing Documents) and to negotiate with such parties and the right to make any and all elections or decisions and take any action which the Grantor is authorized to make or to take under the Financing Documents. (b) The court may, from time to time, authorize the receiver to apply the net income from the Granted Property in payment in whole or in part of: (i) the Indebtedness Hereby Secured or the indebtedness secured by a decree foreclosing this Deed of Trust, or any tax, special assessment, or other lien which may be or become superior to the lien hereof or of such decree, provided such application is made prior to the sale or foreclosure hereof, (ii) the payment or performance of any other obligation secured hereby, or (iii) the deficiency in case of a sale and deficiency. (c) The receiver so appointed by a court of competent jurisdiction shall be empowered to issue receiver’s certificates for funds advanced by the Beneficiaries for the purpose of protecting the value of the Granted Property as security for the Indebtedness Hereby Secured and completing any Restoration, repair, replacement, construction or other work at the Project. The amounts evidenced by receiver’s certificates shall bear interest at the Increased Rate and may be added to the cost of redemption if the owners of the Granted Property, the Grantor, or a junior lien holder redeems at or prior to a non-judicial foreclosure sale or within the time, if any, permitted by law from a judicial foreclosure. SECTION 22. F'ROC!EEDSOF%LE. The proceeds of any foreclosure or sale of the Granted Property, or any portion thereof, whether through judicial foreclosure or a non-judicial foreclosure sale, shall be distributed and applied in the following order of priority or in such other or different order of priority as the Beneficiaries shall in their sole discretion direct: First, on account of all costs and expenses incident to the foreclosure or other proceedings for the recovery thereof, including all such items as are mentioned in Sections 19, 20 and 21 hereof; Second, provided that the Surety is not in default under the Surety Bond, to the payment and performance of the other obligations of the Grantor secured hereby, including without limitation all other items which, under the terms hereof, constitute Indebtedness Hereby Secured additional to the principal and interest evidenced by or due under the Note, with interest thereon at the Increased Rate, in such amounts, order and manner as the Beneficiaries shall determine in their sole discretion; -4o- Third, to the interest remaining unpaid upon the Note; Fourth, to principal remaining unpaid upon the Note; Fifth, to the payment of any indebtedness outstanding and unpaid under the Second Deed of Trust after the application of such proceeds as provided in the Second priority specified above; and Sixth, to pay the balance, if any remaining, to the Person legally entitled to receive the same. SECTION 23. INSURANCE DURING FORECLOSURE. (a) In case of an insured loss after a notice of default has been recorded or proceedings for foreclosure or sale hereunder have been instituted, the proceeds of any Insurance Policy, if not applied to Restoration of the Premises, as aforesaid, shall be applied to the payment of the Indebtedness Hereby Secured in the same manner as the other proceeds under Section 22 hereof, and the balance, if any, shall be paid as the court may direct or, in the event of a non-judicial foreclosure sale, to the purchaser or other Person legally entitled thereto. (b) In the case of foreclosure of this Deed of Trust through judicial proceeding and the sale of the Granted Property in connection with such foreclosure or the sale of the Granted Property pursuant to any other remedy provided by herein or by applicable law, the court, in its decree, may provide that the mortgagee’s clause attached to each of the casualty Insurance Policies may be canceled and that the decree creditor may cause a new loss clause to be attached to each of said casualty Insurance Policies making the loss thereunder payable to said decree creditors; and any such foreclosure decree may further provide that in case of one or more redemptions under said decree, pursuant to the statutes in such case made and provided, then in every such case, each and every successive redemptor may cause the preceding loss clause attached to each casualty Insurance Policy to be canceled and a new loss payable clause to be attached thereto, making the loss thereunder payable to such redemptor. (c) In the event of a non-judicial foreclosure sale or other transfer of the Granted Property in extinguishment of the Indebtedness Hereby Secured, the Beneficiaries and the Security Trustee are hereby authorized, without the consent of the Grantor, to assign any and all Insurance Policies to the purchaser at the sale, or to take such other steps as the Beneficiaries may deem advisable to cause the interest of such purchaser to be protected by any of the Insurance Policies without credit or allowance to the Grantor for prepaid premiums thereon, subject to the provisions of Section 7 hereof. -4l- SECTION 24. WAIVER OF RIGHTS. (a) To the full extent permitted by law, the Grantor, for itself and all Persons claiming by, through or under the Grantor, hereby covenants and agrees that it will not at any time insist upon or plead, or in any manner whatsoever claim or take any advantage of, any stay, exemption, redemption or extension law or any so called “Moratorium Law” now or at any time hereafter in force, nor claim, take or insist upon any benefit or advantage of or from any law now or hereafter in force providing for the valuation, appraisement or marshalling of the Granted Property, or any part thereof, prior to any sale or sales thereof to be made pursuant to any provisions herein contained, or any power granted to the Security Trustee and the Beneficiaries, or to any decree, judgment or order of any court of competent jurisdiction. The Grantor, for itself and all Persons claiming by, through or under the Grantor, hereby fully and absolutely waives and releases all rights and claims the Grantor may have in and to the Granted Property as a homestead exemption or other exemption under and by virtue of any act of the State of California now existing or which may hereafter be passed in relation thereto. (b) The Grantor acknowledges the nature of the Surety’s absolute and unconditional obligation under the Surety Bond and that the Lien of this Deed of Trust attaches to secure any amounts due and owing to the Surety from the Grantor under the Reimbursement Agreement from the date of the issuance of the Surety Bond. The Grantor hereby waives any and all rights it may have which, if exercised, might adversely affect the priority of the Lien of this Deed of Trust or limit the maximum amount of Indebtedness Hereby Secured. SECTION 25. RIGHTS CUMULATIVE. (a) Each right, power and remedy herein conferred upon the Security Trustee and the Beneficiaries is cumulative and in addition to every other right, power or remedy, express or implied, now or hereafter provided by law or in equity or in any Financing Document, and each and every right, power, and remedy herein set forth or otherwise so existing may be exercised from time to time as often and in such order as may be deemed expedient by the Beneficiaries. (b) The Beneficiaries and the Security Trustee shall be entitled to enforce 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 Financing Document or other agreement or any laws now or hereafter in force, notwithstanding that some or all of the said indebtedness and obligations secured hereby, may now or hereafter be otherwise secured, whether by deed to secure debt, mortgage, pledge, lien, assignment or otherwise. Neither the acceptance of this Deed of Trust nor its enforcement, whether by court action or non-judicial foreclosure sale or pursuant to the power of sale or other powers herein contained, shall prejudice or in any manner affect the right of the Security Trustee and the Beneficiaries to realize upon or enforce any other security now or hereafter held by the Security Trustee or the Beneficiaries, it being agreed that the Security Trustee and the Beneficiaries shall be entitled to enforce this Deed of Trust and any other security now or hereafter held by the Security Trustee and the Beneficiaries in such order and manner as the -42- Beneficiaries may in their absolute discretion determine. No remedy herein conferred upon or reserved to the Security Trustee or the Beneficiaries is intended to be exclusive of any other remedy herein or by law provided or permitted, but each shall be cumulative and shall be in addition to every other remedy given hereunder or now or hereafter existing at law or in equity or by statute. Every power or remedy given by any of the Financing Documents to the Security Trustee or the Beneficiaries or to which they may be otherwise entitled may be exercised, concurrently or independently, from time to time and as often as may be deemed expedient by the Beneficiaries and the Beneficiaries may pursue or cause the Security Trustee to pursue inconsistent remedies. (c) By accepting payment of any sums secured by this Deed of Trust after the due date thereof, by accepting performance of any of the Grantor’s obligations hereunder or under any other Financing Documents after such performance is due, or by making any payment or performing any act on behalf of the Grantor which the Grantor was obligated but failed to perform or pay, the Beneficiaries shall not waive, nor be deemed to have waived, their rights to require payment when due of all sums secured hereby and the due, punctual and complete performance of the Grantor’s obligations under this Deed of Trust and the other First Deed of Trust Documents and the other Financing Documents. No waiver or modification of any of the terms of this Deed of Trust shall be binding on the Beneficiaries unless set forth in writing signed by the Beneficiaries and any such waiver by the Beneficiaries of any Default by the Grantor under this Deed of Trust shall not constitute a waiver of any other Default under the same or any other provision hereof. If the Beneficiaries hold any additional security for any of the obligations secured hereby, they may pursue their rights or remedies with respect to such security at their option either before, contemporaneously with, or after a sale of the Granted Property. (d) No act or omission by the Security Trustee or the Beneficiaries shall release, discharge, modify, change or otherwise affect the liability under this Deed of Trust or any other Financing Document, or any other obligation of the Grantor, or any subsequent purchaser of the Granted Property or any part thereof, or any maker, co-signer, endorser, surety or guarantor, or preclude the Security Trustee and the Beneficiaries from exercising any rights, powers or privileges herein granted or intended to be granted in the event of any Default or Event of Default then made or of any subsequent Default or Event of Default, or alter the security interest or lien of this Deed of Trust except as expressly provided in an instrument or instruments executed by the Beneficiaries. The exercise of one right, power or remedy shall not be a waiver of the right to exercise at the same time or thereafter any other right, power or remedy; and no delay or omission of the Security Trustee or the Beneficiaries in the exercise of any right, power or remedy accruing hereunder or arising otherwise shall impair any such right, power or remedy, or be construed to be a waiver of any Default or acquiescence therein. Except as otherwise specifically required herein or by applicable law, notice of the exercise of any right, remedy or power granted to the Security Trustee or the Beneficiaries by this Deed of Trust is not required to be given. (e) All rights, remedies and power provided by Section 18 through Section 25 hereof may be exercised only to the extent that the exercise thereof does not violate any applicable provision of law in the State, and all the provisions of Section 18 through -43- Section 25 are intended to be subject to all applicable mandatory provisions of law which may be controlling in the premises and to be limited to the extent necessary so that they will not render this Deed of Trust invalid, unenforceable or not entitled to be recorded, registered or filed under the provisions of any applicable law. SECTION 26. SUCCESSORS AND ASSIGNS. (a) This Deed of Trust and each and every covenant, agreement and other provision hereof shall be binding upon the Grantor and its successors and assigns (including, without limitation, each and every record owner from time to time of the Granted Property or any other Person having an interest therein and all Persons claiming by, through or under the Grantor and its successors and assigns), and shall inure to the benefit of the Beneficiaries and their respective successors and assigns. Wherever the Commission is referred to herein, such reference shall be deemed to include the Trustee as the holder from time to time of the Note and assignee of the Commission under the Indenture, whether so expressed or not; and the Trustee as such holder from time to time of the Note, subject to the provisions of Section 40 hereof and the Intercreditor Agreement, shall have and enjoy all of the rights, privileges, powers, options and benefits afforded hereby and hereunder, and may enforce all and each of the terms and provisions hereof as fully and to the same extent and with the same effect as if Trustee as the holder of the Note, from time to time, were herein by name specifically granted such rights, privileges, powers, options and benefits and was herein by name designated by the Commission. - (b) All of the covenants of this Deed of Trust shall run with the Land and be binding on any successor owners of the Land. In the event that the ownership of Premises or any portion thereof becomes vested in a Person or Persons other than the Grantor, the Beneficiaries may, without notice to the Grantor, deal with such successor or successors in interest of the Grantor with reference to this Deed of Trust and the other Financing Documents, and the Indebtedness Hereby Secured, in the same manner as with the Grantor without in any way releasing or discharging the Grantor from its obligations hereunder. The Grantor will give immediate written notice to the Beneficiaries of any conveyance, transfer or change of ownership of the Premises, but nothing in this Section shall vary or negate the provisions of Section 17 hereof. (c) No successor to the rights, titles, interests, duties, discretion and options of the Security Trustee or any Beneficiary hereunder shall have any liability for any acts or omissions of any prior Security Trustee or Beneficiary. SECTION 27. EFFECT• FEXTENSIONSANDAMENDMENTS. (a) If the payment of the Indebtedness Hereby Secured, or any part thereof, be extended or varied, or if any part of the security or guaranties therefor be released, all Persons now or at any time hereafter liable therefor, or interested in the Granted Property, shall be held to assent to such extension, variation or release, and their liability, and the lien, and all provisions hereof, shall continue in full force and effect: the right of recourse against -44- all such Persons being expressly reserved by the Security Trustee and the Beneficiaries, notwithstanding any such extension, variation or release. (b) Any Person taking a junior deed to secure debt, or other lien upon the Granted Property or any part thereof or any interest therein, shall take the said lien subject to the rights of the Beneficiaries to make future advances as provided in Section 28 hereof, and to amend, modify, extend or release the Note, this Deed of Trust or any other document or instrument evidencing, securing or guaranteeing the Indebtedness Hereby Secured, in each and every case without obtaining the consent of the holder of such junior lien and without the lien of this Deed of Trust losing its priority over the rights of any such junior lien. The provisions of this Section shall not in any way vary or negate the provisions of Section 17 hereof. SECTION 28. FUTUREADVANCES. At all times, this Deed of Trust secures as part of the Indebtedness Hereby Secured the payment of any and all loan commissions, service charges, liquidated damages, attorney’s fees, expenses and advances due to or made or incurred by the Beneficiaries in connection with the Indebtedness Hereby Secured, all in accordance with the Note, this Deed of Trust and the other First Deed of Trust Documents and the Reimbursement Agreement, subject to any express limitation set forth herein on the aggregate outstanding balance of the Indebtedness Hereby Secured. SECTION 29. EXECUTION OFSEPARATESECURITYAGREEMENTS,FINANCING STATEMENTS,ETC.;ESTOPPELLE-WER. (a) The Grantor will do, execute, acknowledge and deliver or cause to be done, executed, acknowledged and delivered all such further acts, conveyances, notes, deeds to secure debt, security agreements, financing statements and assurances as the Beneficiaries shall require for better assuring, conveying, mortgaging, assigning and confirming unto the Security Trustee and/or the Beneficiaries all property and rights conveyed, granted, mortgaged or pledged hereby or property and rights intended so to be, whether now owned by the Grantor or hereafter acquired. Without limitation of the foregoing, the Grantor will assign to the Beneficiaries, upon request, as further security for the Indebtedness Hereby Secured, its interest in all agreements, contracts, licenses and permits affecting the Premises, such assignments to be made by instruments in form and substance satisfactory to the Beneficiaries; provided, however, that no such assignment shall be construed as a consent by the Beneficiaries or the Trustee to any agreement, contract, license or permit or to impose upon the Commission, the Trustee or the Surety any obligations with respect thereto. (b) From time to time, the Grantor will furnish within ten (10) days after request from any Beneficiaries a written and duly acknowledged statement of the amount due under the Note, the Reimbursement Agreement and this Deed of Trust and whether any alleged offsets or defenses exist against the Indebtedness Hereby Secured. -45- SECTION 30. SUBROGATION. If any part of the Indebtedness Hereby Secured is used directly or indirectly to pay off, discharge or satisfy, in whole or in part, any prior lien or encumbrance upon the Granted Property or any part thereof, then the Beneficiaries advancing the moneys to make such payment shall be subrogated to the rights of the holder thereof in and to such other lien or encumbrance and any additional security held by such holder, and shall have the benefit of the priority of the same. SECTION 3 1. INTERPRETATION OF AGREEMENT. Should any provision of this Deed of Trust require interpretation or construction in any judicial, administrative, or other proceeding or circumstance, it is agreed that the parties hereto intend that the court, administrative body, or other entity interpreting or construing the same shall not apply a presumption that the provisions hereof shall be more strictly construed against one party by reason of the rule of construction that a document is to be construed more strictly against the party who itself or through its agent or attorney prepared the same, it being agreed that the agents and attorneys of both parties hereto have fully participated in the preparation of all provisions of this Deed of Trust, including, without limitation, all Exhibits attached to this Deed of Trust. SECTION 32. GOVERNING LAW; INVALIDITY OF CERTAIN PROVISIONS. (a) This Deed of Trust shall be construed and enforced according to the laws of the State of California, without reference to the conflicts of law principles of that State. (b) If the Lien of this Deed of Trust is invalid or unenforceable as to any part of the Indebtedness Hereby Secured, or if the Lien is invalid or unenforceable as to any part of the Granted Property, the unsecured or partially secured portion of the debt shall be completely paid prior to the payment of the remaining and secured or partially secured portion of the debt, and all payments made on the debt, whether voluntary or under foreclosure or other enforcement action or procedure, shall be considered to have been first paid on and applied to the full payment of that portion of the debt which is not secured or not fully secured by the Lien of this Deed of Trust. (c) The whole or partial invalidity, illegality or unenforceability of any provision hereof at any time, whether under the terms of then applicable law or otherwise, shall not affect (i) in the case of partial invalidity, illegality or unenforceability, the validity, legality or enforceability of such provision at such time except to the extent of such partial invalidity, illegality or unenforceability, or (ii) the validity, legality or enforceability of such provision at any other time or of any other provision hereof at that or any other time. -46- -L SECTION 33. LOAN LEGAL. The Grantor declares, represents, warrants, certifies and agrees that the proceeds of the Loan evidenced by the Note will be used solely for the purposes specified in the Loan Agreement and the Act, and that the Loan and all interest, fees, charges and other payments made or required to be made with respect thereto under the Note and the other First Deed of Trust Documents does not violate any usury or other law of the State of California. The Loan is a business loan and to the best of knowledge and belief of the Grantor is an exempted transaction under the Truth in Lending Act, 12 U.S Section 1601 et seq., and does not, and when disbursed did not and will not, violate the provisions of the usury, consumer credit or other laws of any state which may have jurisdiction. SECTION 34. INSPEC~~N OF PREMISES AND RECORDS. The Beneficiaries and their respective representatives and agents shall have the right to inspect the Premises and all books, records and documents relating thereto at all reasonable times, and access thereto, subject to the rights of tenants pursuant to Leases the form of which have been approved by the Beneficiaries, shall be permitted for that purpose. The Grantor shall keep and maintain full and correct books and records showing in detail the income and expenses of the Premises and, within ten (10) days after demand therefor by the Beneficiaries shall permit them or their respective agents to examine such books and records and all supporting vouchers and data at any time and from time to time on request at its offices at the address hereinafter identified or at such other location as may be mutually agreed upon. SECTION 35. FINANCIAL STATEMENTS. Within ten (10) days after request therefor, the Grantor shall provide the Beneficiaries with copies of such financial statements, certifications and reports as may be required by the Reimbursement Agreement or the Second Deed of Trust. SECTION 36. TIME IS OF THE ESSENCE. Time is of the essence of this Deed of Trust and the other First Deed of Trust Documents. SECTION 37. 04~~10~s AND PRONOUNS. The captions and headings of the various Sections of this Deed of Trust are for convenience only, and are not to be construed as confining or limiting in any way the scope or intent of the provisions hereof. Whenever the context requires or permits, the singular shall include the plural, the plural shall include the singular, and the masculine, feminine and neuter shall be freely interchangeable. -47- - SECTION 38. NOTICES. Any notice, demand or other communication required or permitted hereunder shall be in writing and shall be deemed to have been given if and when personally delivered, or, if sent by private courier or overnight mail service, shall be deemed to have been given if and when received (unless the addressee refuses to accept delivery, in which case it shall be deemed to have been given when fist presented to the addressee for acceptance) or on the third Business Day after being deposited in United States registered or certified mail, postage prepaid return receipt requested. Any such notice, demand or other communication shall be addressed to a party at its address set forth below or to such other address the party to receive such notice may have designated to all other parties by notice in accordance herewith: ta> (1) If to the Beneficiaries: Carlsbad Housing and Redevelopment Commission (2) tb) If to the Grantor: Attention: , California and Continental Casualty Company CNA Plaza Chicago, Illinois 60685 Attention: Senior Vice President and General Counsel with copies to: Continental Casualty Company CNA Plaza Chicago, Illinois 60685 Attention: Corporate Secretary Seascape Apartments, Inc. c/o Continental Casualty Company CNA Plaza Chicago, Illinois 60685 Attention: Vice President -48- cc> td) with copies to: Continental Casualty Company CNA Plaza Chicago, Illinois 60685 Attention: Corporate Secretary If to the Security Trustee: , California If to the Trustee: First Trust of California, National Association 101 California Street Suite 1150 San Francisco, California 94111 Attention: Multi-Family Housing SECTION 39. LIMITED RECOURSE PROVISIONS. Notwithstanding any provisions of this Deed of Trust, any other First Deed of Trust Documents or any Second Deed of Trust Documents to the contrary, in any action commenced to enforce the obligations of the Grantor created or arising hereunder the judgment shall not be enforceable personally against the Grantor, its successors or assigns (or against any affiliate, subsidiary or corporate parent of the Grantor) or against any assets of the Grantor or its successors or assigns (or against the assets of any affiliate, subsidiary or corporate parent of the Grantor), except for the Granted Property and all rents, issues, profits, proceeds, revenues, Insurance Proceeds and Awards and other income and proceeds from the Granted Property; provided that nothing herein shall release, impair or otherwise affect the validity and enforceability of the Note, the Loan Agreement and the Reimbursement Agreement or the lien, validity and enforceability of this Deed of Trust and the other First Deed of Trust Documents against the Granted Property including without limitation the right of the Beneficiaries to accelerate the Note and declare the entire Indebtedness Hereby Secured to be immediately due and payable upon the occurrence of any Event of Default hereunder. SECTION 40. RELATIONSHIP OF SURETY, COMMISSION AND TRUSTEE. (a) Immediately upon execution hereof, the Commission will assign and transfer all of its rights, powers and interests hereunder to the Trustee under the Indenture; and the Commission, the Trustee and the Surety will enter into the Intercreditor Agreement with -49- respect to the exercise of certain rights, powers and remedies hereunder and under the other Financing Documents. The Commission and the Trustee by its acceptance of the assignment of the Commission’s rights, powers and interests hereunder, agree that so long as the Surety Bond is in effect with respect to the Bonds and no Event of Default (as defined in the Indenture) shall have occurred and be continuing under the Indenture, the Surety as a Beneficiary hereunder shall have the sole right hereunder to grant or withhold consents and approvals (including, without limitation, the right to grant consents under Section 17 hereof), to grant or withhold waivers, to send notices, to exercise discretion, to waive non-performance or require performance of the covenants and agreements set forth herein and to otherwise elect or exercise any rights, powers or remedies hereunder as if the Surety were the sole Beneficiary hereunder. Until such time as the Grantor shall receive written notice from the Commission or the Trustee that an Event of Default shall have occurred under the Indenture, the Grantor is authorized to rely upon all such consents, approvals, waivers, notices and exercises of rights, powers and remedies hereunder taken by the Surety alone without the necessity of obtaining confirmation thereof from the Commission or the Trustee; it being understood and agreed that the Trustee shall have no power or authority to exercise any rights, powers or remedies hereunder pursuant to the Assignment except with the prior written consent or at the direction of the Surety, unless an Event of Default shall have occurred and be continuing under the Indenture or the rights and interests of the Surety shall be terminated under the Intercreditor Agreement. (b) The Commission and the Trustee, subject to the provisions of the Intercreditor Agreement, will execute any documents and take or refrain from taking all actions which the Commission or the Trustee is required or entitled to execute or take or refrain from taking hereunder in accordance with the request and instructions of the Surety provided that the Surety shall pay (subject to the Surety’s right to reimbursement thereof under Section 22 hereof) any and all costs and expenses incurred or to be incurred in connection therewith as provided in the Intercreditor Agreement. The Surety shall not be liable for any act or omission of the Commission or the Trustee hereunder unless taken with its consent or at its direction and the Commission and the Trustee shall not be liable for any act or omission of the Surety hereunder. The Grantor hereby waives and releases the Commission and the Trustee from any liability for any action or omission committed by the Surety while the Surety shall be the Beneficiary hereunder pursuant to the terms herein. The Grantor has accepted and agreed to the provisions of the Intercreditor Agreement and the Grantor agrees to comply with and to be bound by any approval, consent, direction, notice, waiver or other action taken by the Surety acting alone pursuant to this Section 40 and the Intercreditor Agreement. SECTION 4 1. OTHER REMEDIES. ,c This Deed of Trust and the other First Deed of Trust Documents shall be construed together as a single instrument and in any case in which the Security Trustee or the Beneficiaries are authorized to proceed in the manner set forth herein, the Security Trustee or the Beneficiaries may, at their sole option and in lieu of proceeding as set forth herein, proceed as to the Granted Property in accordance with their rights and remedies in respect to the Granted Property under any one or all of the First Deed of Trust Documents. Any -5o- and all remedies herein expressly conferred upon the Security Trustee and/or the Beneficiaries shall be deemed cumulative with, and not exclusive of, any other remedy conferred hereby or by law or equity or under the Financing Documents on the Security Trustee and/or the Beneficiaries, and the exercise of any one remedy shall not preclude the exercise of any other. Except as otherwise specifically required herein, notice of the exercise of any right, remedy or power granted to the Security Trustee and/or the Beneficiaries by this Deed of Trust is not required to be given. SECTION 42. AFTER-ACQUIRED PROPERTY. All property of every kind acquired by the Grantor after the date hereof which, by the terms hereof, is required or intended to be subjected to the lien of this Deed of Trust, including without limitation all extensions, improvements, betterments, renewals, substitutes and replacements of, and all additions and appurtenances to, the Premises or any part thereof shall, immediately upon its acquisition and without any further conveyance, assignment or transfer, become a part of the Premises and of the Granted Property, and shall be subject to the lien of this Deed of Trust as fully and completely, and with the same effect, as if now owned by the Grantor and conveyed and granted hereby. Nevertheless, the Grantor will do all such further acts, and execute, acknowledge, and deliver all such further conveyances, mortgages, deeds to secure debt, security agreements, financing and continuation statements and instruments and assurances as the Beneficiaries may reasonably require in order to confirm the lien and security interest granted by this Deed of Trust on the Granted Property, including any such after-acquired property, and the Grantor shall pay all fees for preparing, filing or recording such instruments. SECTION 43. NON-MERGER PROVISION. It is the intention of the parties hereto, and the effect of this Deed of Trust, that the rights, title, interests, privileges and powers hereby and herein granted, created and conveyed not merge with the rights, title, interests, privileges and powers granted, created and conveyed by and in that certain subordinate Second Deed of Trust, but rather that such rights, title, interests, privileges and powers remain separate and distinct. SECTION 44. REPLACEMENTOFNOTE. Upon receipt of evidence reasonably satisfactory to the Grantor of the loss, theft, destruction or mutilation of the Note, and in the case of any such loss, theft or destruction, upon delivery of an indemnity agreement reasonably satisfactory to the Grantor or, in the case of any such mutilation, upon surrender and cancellation of the Note, the Grantor will execute and deliver, in lieu thereof, a replacement Note, identical in form and substance to the Note and dated as of the date of the Note and upon such execution and delivery all references in this Deed of Trust to the Note shall be deemed to refer to such replacement Note. -51- SECTION 45. BENEFIT OF DEED OF TRUST. Nothing in the Deed of Trust expressed or implied is intended or shall be construed to give to any Person other than the Grantor, the Security Trustee and the Beneficiaries any legal or equitable right, remedy or claim under or in respect of the Note or this Deed of Trust or any provision therein or herein contained, and all such provisions are and shall be held to be for the sole and exclusive benefit of the Grantor, the Security Trustee and the Beneficiaries. SECTION 46. F3XEIWIONOFMONEYBYSECURITY~USTEE. All money received by the Security Trustee shall, until used or applied as herein provided, be held in trust for the purposes for which they were received and shall be segregated from all other money and the Security Trustee shall be under no liability for interest on any monies received by it hereunder. SECTIONED. SUCCESSORSECURI'IY~USTEE. The Beneficiaries may, at any time, by instrument in writing, appoint a successor or successors to, or discharge and appoint a new Security Trustee in the place of, any Security Trustee named herein or acting hereunder, which instrument, executed and acknowledged by the Beneficiaries, and recorded in the office of the County Recorder of the county or counties wherein said property is situated, shall be conclusive proof of the proper substitution of such successor or successors or new Security Trustee, who shall have all the estate powers, duties, rights and privileges of the predecessor Security Trustee. -52- IN WITNESS WHEREOF, the Grantor has caused this Deed of Trust to be duly executed and delivered as of the day and year first above written. SEASCAPE APARTMENTS, INC., an Illinois corporation Its Attorney-In-Fact Printed Name: David B. Lehman Address: Seascape Apartments, Inc. CNA Plaza Chicago, Illinois 60685 Attention: Vice President -53- Receipt and acceptance of the foregoing First Deed of Trust and Security Agreement with Assignment of Leases and Rents is hereby acknowledged by the Beneficiaries and the Security Trustee as of , 1994. BENEFICIARIES: CARLSBAD HOUSING AND REDEVELOPMENT COMMISSION By: Title: Printed Name: Address: , California wfw ATTEST: BY Title: Printed Name: -54- CONTINENTALCASUALTYCOMPANY Title: Attorney-In-Fact Printed Name: Address: Continental Casualty Company CNA Plaza Chicago, Illinois 60685 Attention: Senior Vice President and General Counsel sECURITYTRUSTEE: as Security Trustee , ATTEST: Title: Printed Name: BY Title: Printed Name: -55- - STATE OF ILLINOIS ) > COUNTY OF COOK ) On this day of in the year 1994, before me, , a notary public in and for the State of Illinois, personally appeared known to me to be the person who executed the within instrument on behalf of Seascape Apartments, Inc. as its Attorney-in-Fact and acknowledged to me that such corporation executed the same. IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official seal the day and the year in this certificate first above written. My Commission Expires: Notary Public STATEOFCALIFORNIA ) > ss CO~NTYOFSANDIEGO > On this day of in the year 1994, before me, , a notary public in and for the State of California, personally appeared and , known to me to be the and the of Carlsbad Housing and Redevelopment Commission and known to me to be the persons who executed the within instrument on behalf of said public corporation and acknowledged to me that such public corporation executed the same. IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official seal the day and the year in this certificate first above written. Notary Public My Commission Expires: STATE OF ILLINOIS COUNTY OF COOK ) 1 ss ) On this day of in the year 1994, before me, , a notary public in and for the State of Illinois, personally appeared known to me to be the person who executed the within instrument on behalf of Continental Casualty Company as its Attorney-in-Fact and acknowledged to me that such corporation executed the same. IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official seal the day and the year in this certificate first above written. Notary Public My Commission Expires: STATEOF 1 1 ss COUNTYOF 1 On this of day in the year 1994, before me, a notary public in and for the State of personally appeared , known to me to be the per-ion who executed the within instrument on behalf of _ as its and acknowledged to me that such corporation executed the same. IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official seal the day and the year in this certificate first above written. Notary Public My Commission Expires: EXHIBIT A FORMOFSECUREDNOTE EXHIBIT B LEGALDESCRIPTION OFLAND AND PERMITTED ENCUMBRANCES Description of Land: The Land referred to herein is situated in the State of California, City of Carlsbad and County of San Diego, and is described as follows: Lots 100 and 101 of CARLSBAD TRACT NO. 73-23, in the City of Carlsbad, County of San Diego, State of California, according to Map thereof No. 808 1, filed in the Office of County Recorder of San Diego County, February 28, 1975. Excepting all crude, oil, petroleum, gas, brea, asphaltum and all kindred substances and other minerals in and under said land, but without the right to enter upon the surface of said land above a depth of 500.00 feet to explore for or extract same, as reserved in a Deed recorded August 27, 1969 as File No. 157186 and that Deed recorded August 27, 1969 as File No. 157190. both of Official Records. - Also excepting all oil, oil rights, mineral rights, natural gas rights and other hydrocarbons by whatsoever name known, together with all geothermal steam and steam power that may be within or under the parcel of land hereinafter described, together with the perpetual right of drilling, mining, exploring and operating therefor and storing in and removing the same from said land, or any other land, including the right to whipstock or directionally drill and mine from lands other than those hereinafter described, oil or gas well, tunnels and shafts into, through or across the subsurface of the land hereinafter described and to bottom such whipstocked or directionally drilled wells, tunnels and shafts under and beneath or beyond the exterior limits thereof, and to redrill, retunnel, equip, maintain, repair, deepen and operate such wells or mines, without however the right to drill, mine, store, explore and operate through or on the surface or the upper 500 feet of the subsurface of the land herein described. PERMITTEDENCUMBRANCES B-l