Norco City Council
September 18, 2023

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execution, delivery, recordation, filing, registration, perfection or enforcement of any of the Loan Documents, including, without limitation, the Security Instrument, have been paid, and, under current Legal Requirements, the Security Instrument and the other Loan Documents have been validly executed and delivered and are enforceable in accordance with their respective terms by Lender (or any subsequent holder thereof), subject to principles of equity and bankruptcy, insolvency and other laws generally applicable to creditors’ rights and the enforcement of debtors’ obligations.

4.16 Hazardous Substances. Except as disclosed by Borrower to Lender and acknowledged by Lender in writing, Borrower represents, warrants and covenants that:
(a) During the period of Borrower’s ownership of the Property, there has been no use, generation, manufacture, storage, treatment, disposal, release or threatened release of any Hazardous Substance by any person on, under, about or from any of the Property. (b) Borrower has no knowledge of, or reason to believe that there has been (i) any breach or violation of any Environmental Laws; (ii) any use, generation, manufacture, storage, treatment, disposal, release or threatened release of any Hazardous Substance on, under, about or from the Property by any prior owners or occupants of any of the Property; or (iii) any actual or threatened litigation or claims of any kind by any parson relating to such matters. (c) Neither Borrower nor any tenant, contractor, agent or other authorized user of any of the Property shall use, generate, manufacture, store, treat, dispose of or release any Hazardous Substance under, about or from any of the Property; and any such activity shall be conducted in compliance with all applicable Federal, state, and local laws, regulations, and ordinances, including without limitation all Environmental Laws. Borrower authorizes Lender and its agents to enter upon the Property to make such inspections and tests as Lender may deem appropriate to determine compliance of the Property with this section of the Agreement. Any inspections or tests made by Lender shall be at Borrower’s expense and for Lender’s purposes only and shall not be construed to create any responsibility or liability on the part of Lender to Borrower or to any other person. The representations and warranties contained herein are based on Borrower’s due diligence in investigating the Property for hazardous waste and Hazardous Substances.

Borrower hereby: (i) releases and waives any future claims against Lender for indemnity or contribution in the event Borrower becomes liable for cleanup or other costs under any such laws; and (ii) agrees to indemnify, defend and hold harmless Lender against any and all claims, losses, liabilities, damages, penalties and expenses which Lender may directly or indirectly sustain or suffer resulting from a breach of this section of the Agreement or as a consequence of any use, generation, manufacture, storage, disposal, release or threatened release of a hazardous waste or substance on the Property. The provisions of this section of the Agreement, including the obligation to indemnify and defend, shall survive the payment of the Indebtedness and the termination, expiration or satisfaction of this Agreement and shall not be affected by Lender’s acquisition of any interest in any of the Property whether by foreclosure or otherwise.

4.17 Litigation and Claims. Except as disclosed by Borrower to Lender and acknowledged by Lender, there are no actions, suits or proceedings at law or in equity by or before any Governmental Authority or other agency now pending or threatened against or affecting Borrower or the Property.

4.18 Compliance. Borrower and the Property (including the use thereof) comply in all material respects with all applicable Legal Requirements, including, without limitation,

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building and zoning ordinances and codes. Borrower is not in default or violation of any order, writ, injunction, decree or demand of any Governmental Authority. There has not been committed by Borrower or any other Person in occupancy of or involved with the operation or use of the Property any act or omission affording any Governmental Authority the right of forfeiture as against the Property or any part thereof or any monies paid in performance of Borrower’s obligations under any of the Loan Documents. All material permits, licenses, authorizations, approvals and certificates, including certificates of completion and occupancy permits, required by law, ordinance or regulation have been obtained by Borrower or any other Person in occupancy of or involved with the operations or use of the Property and are and shall remain in full force and effect.

4.19 Utilities and Public Access. The Property has rights of access to public ways and is served by water, sewer, sanitary sewer and storm drain facilities adequate to service the Property for its intended uses. All public utilities necessary or convenient to the full use and enjoyment of the Property are located either in the public right-of-way abutting the Property (which are connected so as to serve the Property without passing over other property) or in recorded easements serving the Property and such easements are set forth in and insured by the Title Insurance Policy. All roads necessary for the use of the Property for its current purpose have been completed and dedicated to public use and accepted by all Governmental Authorities.

4.20 Taxes. To the best of Borrower’s knowledge, all of Borrower’s tax returns, and reports that are or were required to be filed, have been filed, and all taxes, assessments and other governmental charges have been paid in full, except those presently being or to be contested by Borrower in good faith in the ordinary course of business and for which adequate reserves have been provided.

4.21 No Change in Facts or Circumstances; Disclosure. All information submitted by Borrower to Lender, including all financial statements, rent rolls, reports, certificates and other documents submitted in connection with the Loan or in satisfaction of the terms thereof and all statements of fact made by Borrower in this Agreement or in any of the other Loan Documents, are accurate, complete and correct in all material respects. There has been no material adverse change in any condition, fact, circumstance or event that would make any such information inaccurate, incomplete or otherwise misleading in any material respect or that otherwise materially and adversely affects or might materially and adversely affect the use, operation or value of the Property or the business operations and/or the financial condition of Borrower. Borrower has disclosed to Lender all material facts and has not failed to disclose any material fact that could cause any information provided to Lender by Borrower or its representatives or any representation or warranty made herein to be materially false or misleading.

4.22 Full and Accurate Disclosure. No statement of fact made by Borrower in this Agreement or in any of the other Loan Documents contains any untrue statement of a material fact or omits to state any material fact necessary to make statements contained herein or therein not misleading. There is no material fact presently known to Borrower which has not been disclosed to Lender which adversely affects, nor as far as Borrower can foresee, might adversely affect, the Property or the business, operations or condition (financial or otherwise) of Borrower.

5. AFFIRMATIVE COVENANTS. From the date hereof and until payment and performance in full of all Obligations or the earlier release of the Lien of the Security Instrument (and all related obligations) in accordance with the terms of this Agreement and the other Loan Documents, Borrower hereby covenants and agrees with Lender that:

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5.1 Existence; Compliance with Legal Requirements; Use of the Property. (a) Borrower shall do or cause to be done all things necessary to preserve, renew and keep in full force and effect its existence, rights, licenses, permits and franchises and comply with all Legal Requirements applicable to Borrower and the Property. Borrower shall continue to engage in the businesses presently conducted by it to the extent necessary for the continued ownership, maintenance, management and operation of the Property. Borrower will qualify to do business and will remain in good standing under the laws of each jurisdiction as and to the extent the same are required for the ownership, maintenance, management and operation of the Property. There shall never be committed by Borrower and Borrower shall not permit any other Person in occupancy of or involved with the operation or use of the Property to commit any act or omission affording the Federal government or any state or local government the right of forfeiture against the Property or any part thereof or any monies paid in performance of Borrower’s obligations under any of the Loan Documents. Borrower hereby covenants and agrees not to commit, permit or suffer to exist any act or omission affording such right of forfeiture. Borrower shall at all times maintain, preserve and protect all trade names and preserve all the remainder of its property and/or assets used or useful in the conduct of its business and shall keep the Property in good working order and repair, and from time to time make, or cause to be made, all reasonably necessary repairs, renewals, replacements, betterments and improvements thereto, all as more fully provided in the Security Instrument.
(b) After prior notice to Lender, Borrower, at its own expense, may contest by appropriate legal proceeding promptly initiated and conducted in good faith and with due diligence, the validity of any Legal Requirement, the applicability of any Legal Requirement to Borrower or the Property or any alleged violation of any Legal Requirement, provided that: (i) no Default or Event of Default has occurred and remains uncured; (ii) such proceeding shall be permitted under and be conducted in accordance with the provisions of any instrument to which Borrower is subject and shall not constitute a default thereunder and such proceeding shall be conducted in accordance with all applicable statutes, laws and ordinances; (iii) neither the Property nor any part thereof or interest therein will be in danger of being sold, forfeited, terminated, cancelled or lost; (iv) Borrower shall upon final determination thereof, promptly comply with any such Legal Requirement determined to be valid or applicable or cure any violation of any Legal Requirement; (v) such proceeding shall suspend the enforcement of the contested Legal Requirement against Borrower and the Property; and (vi) Borrower shall furnish such security as may be required in the proceeding, or as may be requested by Lender, to insure compliance with such Legal Requirement, together with all interest and penalties payable in connection therewith. Lender may apply any such security, as necessary to cause compliance with such Legal Requirement at any time when, in the reasonable judgment of Lender, the validity, applicability or violation of such Legal Requirement is finally established or the Property (or any part thereof or interest therein) shall be in danger of being sold, forfeited, terminated, cancelled or lost.
(c) Use of the Property; Educational Programming.
(i) Commencing upon the Effective Date, Borrower shall occupy, use, and operate the Property for farming and agricultural purposes, and shall further conduct and offer to the public training and educational programs relating to farming and agriculture, including agricultural education programs on topics such as horse, chicken and other farm animal keeping, equestrian topics, composting, organic farming, etc. Ancillary uses such as small office, equipment

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storage, classes and workshops, are also permitted, subject to compliance with all Legal Requirements. All such activities shall comply with all applicable Legal Requirements. (ii) Commencing November 1, 2023, and continuing throughout the term of the Loan, Borrower shall offer not fewer than five (5) hours per month of workshops, classes, events and programs, marketed and administered through the City of Norco Community Services Department. Lender shall have the right to reasonably approve the topics and schedule for such programming and all such programming shall be free for Norco residents. The schedule of such programming will be planned on a quarterly basis, in consultation with the City’s Community Services Department. Planned programming will not be canceled or rescheduled without the prior written consent of the City.
(iii) Borrower acknowledges and agrees that the requirements of this Section 5.1(c) constitute a material inducement for Lender to make the Loan to Borrower and Borrower acknowledges and agrees that compliance with this Section 5.1(c) constitutes an Other Obligation hereunder.

5.2 Performance. Borrower shall in a timely manner, observe, perform and satisfy all of the terms, provisions, covenants and conditions of, and shall pay when due all costs, fees and expenses to the extent required under: (a) the Loan Documents executed and delivered by, or applicable to, Borrower; and (b) all other instruments and agreements between Borrower and Lender.

5.3 Financial Records. Borrower shall keep and maintain, in accordance with industry standards, applied on a consistent basis, proper and accurate books, records and accounts reflecting all of the financial affairs of Borrower and all items of income and expense in connection with the operation of the Property. Lender shall have the right from time to time at all times during normal business hours upon reasonable notice to examine such books, records and accounts at the office of Borrower or any other Person maintaining such books, records and accounts and to make such copies or extracts thereof as Lender shall desire. During the continuance of an Event of Default, Borrower shall pay any costs and expenses incurred by Lender to examine Borrower’s accounting records with respect to the Property, as Lender shall determine to be necessary or appropriate in the protection of Lender’s interest.

5.4 Financial Reporting; Other Reports.
(a) Financial Statements. Borrower shall deliver, or cause to be delivered, to Lender annually, by no later than ninety (90) days following the end of each calendar year, Borrower’s annual financial statements with real estate schedules, in accordance with GAAP or such other accounting basis acceptable to Lender, all in a form reasonably satisfactory to Lender. (b) Tax Returns. Borrower shall deliver, or cause to be delivered, to Lender, as soon as available, but in no event more than thirty (30) days after the date of filing of such tax return with the applicable authority, Federal, state and other governmental tax returns of Borrower.
(c) Rent Rolls and Operating Statements. Borrower shall furnish, or cause to be furnished, to Lender annually, within ninety (90) days following the end of each calendar

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year, a complete copy of the operating statements for the Property, including rent rolls, if any, prepared in a format acceptable to Lender.
(d) Other Reports. Borrower shall promptly furnish such additional information and statements required by this Agreement and the other Loan Documents as well as any other information and statements regarding Borrower or the Property that Lender may reasonably request from time to time.

5.5 Insurance. Borrower shall keep the Property insured at all times by financially sound and reputable insurers, to such extent and against such risks, and maintain liability and such other insurance, as is more fully provided in this Agreement and the other Loan Documents.

Borrower shall furnish to Lender, upon request of Lender, reports on each existing insurance policy showing such information as Lender may reasonably request, including without limitation the following: (a) the name of the insurer; (b) the risks insured; (c) the amount of the policy; (d) the properties and/or assets insured; (e) the then current property and/or asset values on the basis of which insurance has been obtained, and the manner of determining those values; and (f) the expiration date of the policy.

5.6 Title to the Property. Borrower will warrant and defend: (a) the title to the Property and every part thereof, subject only to Liens permitted hereunder (including Permitted Liens); and (b) the validity and priority of the Lien of the Security Instrument, subject only to Liens permitted hereunder (including Permitted Liens), in each case against the claims of all Persons whomsoever. Borrower shall reimburse Lender for any losses, costs, damages or expenses (including attorneys’ fees and court costs) incurred by Lender if an interest in the Property, other than as permitted hereunder, is claimed by another Person.

5.7 No Leases. Borrower shall not enter into any Leases with respect to the Property without the prior written consent of Lender, which consent may be granted or withheld in Lender’s sole and absolute discretion. In the event Lender consents to a Lease, Borrower shall not modify or amend (or consent to or permit any modification or amendment) to any such Lease without the prior written consent of Lender, which consent may be granted or withheld in Lender’s sole and absolute discretion. Notwithstanding the prohibition set forth in this Section 5.7, any Lease executed after the date hereof, including all renewals, shall: (i) be executed on a form of lease approved by Lender; and (ii) provide that they are subordinate to any deed of trust encumbering the Property and that the lessee agrees to attorn to the beneficiary under such deed of trust or any purchaser at a sale by foreclosure or power of sale.

5.8 Cooperation. Borrower shall cooperate fully with Lender with respect to any proceedings before any court, board or other Governmental Authority that may in any way affect the rights of Lender hereunder or any rights obtained by Lender under any of the other Loan Documents and, in connection therewith, permit Lender, at its election, to participate in any such proceedings.

Borrower shall also cooperate with Lender in obtaining for Lender the benefits of any Condemnation proceeds or insurance proceeds lawfully or equitably payable in connection with the Property, and Lender shall be reimbursed by Borrower for any expenses incurred in connection therewith (including attorneys’ fees and disbursements, and the payment by Borrower of the expense of an appraisal on behalf of Lender in case of casualty or Condemnation affecting the Property or any part thereof) from such Condemnation proceeds or insurance proceeds, as applicable.

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5.9 Loan Proceeds. Borrower shall use the proceeds of the Loan received by it on the Closing Date only for the purposes set forth in Section 2.1.

5.10 Taxes, Charges and Liens. Borrower shall pay and discharge when due all of its indebtedness and obligations, including without limitation all assessments, taxes, governmental charges, levies and liens, of every kind and nature, imposed upon Borrower or its properties, assets, income, or profits, prior to the date on which penalties would attach, and all lawful claims that, if unpaid, might become a lien or charge upon any of Borrower’s properties, assets, income or profits; provided however, that Borrower will not be required to pay and discharge any such assessment, tax, charge, levy, lien or claim so long as: (a) the legality of the same shall be contested in good faith by appropriate proceedings; and (b) Borrower shall have established on Borrower’s books adequate reserves with respect to such contested assessment, tax, charge, levy, lien, or claim in accordance with GAAP.

5.11 Operations. Borrower shall at all times maintain executive and management personnel with substantially the same qualifications and experience as the present executive and management personnel, shall provide written notice to Lender of any change in executive and management personnel and shall conduct its business affairs in a reasonable and prudent manner.

5.12 Environmental Studies. Borrower shall promptly conduct and complete, at Borrower’s expense, all such investigations, studies, samplings and testings as may be requested by Lender or any Governmental Authority relative to any substance, or any waste or by-product of any substance defined as such or a hazardous substance under applicable Federal, state, or local law, rule, regulation, order or directive, at or affecting any property or any facility owned, leased or used by Borrower.

5.13 Inspection. Borrower shall permit agents, representatives and employees of Lender to inspect the Property or any part thereof at reasonable hours upon reasonable advance notice.

5.14 Notice of Default; Notice of Material Adverse Change. Borrower shall promptly advise Lender of any material adverse change in Borrower’s condition, financial or otherwise, or of the occurrence of any Default or Event of Default.

5.15 Notices of Claims and Litigation. Borrower shall give prompt written notice to Lender of any litigation or governmental proceedings pending or threatened against Borrower which might materially and adversely affect Borrower’s condition (financial or otherwise) or business or the Property.

5.16 Compliance Certificates. Unless waived in writing by Lender, Borrower shall provide Lender at least annually, with a certificate executed by Borrower’s chief financial officer, or other officer or person acceptable to Lender, certifying that the representations and warranties set forth in this Agreement are true and correct as of the date of the certificate and further certifying that, as of the date of the certificate, no Default or Event of Default exists under this Agreement or any of the other Loan Documents.

5.17 Environmental Compliance and Reports. Borrower shall comply in all respects with any and all Environmental Laws; not cause or permit to exist, as a result of an intentional or unintentional action or omission on Borrower’s part or on the part of any third party,

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on property owned and/or occupied by Borrower, any environmental activity where damage may result to the environment, unless such environmental activity is pursuant to and in compliance with the conditions of a permit issued by the appropriate Federal, state or local governmental authorities; shall furnish to Lender promptly and in any event within thirty (30) days after receipt thereof a copy of any notice, summons, lien, citation, directive, letter or other communication from any governmental agency or instrumentality concerning any intentional or unintentional action or omission on Borrower’s part in connection with any environmental activity whether or not there is damage to the environment and/or other natural resources.

5.18 Enforcement Costs. If: (a) the Security Instrument is foreclosed in whole or in part or put into the hands of an attorney for collection, suit, action or foreclosure; (b) there occurs the foreclosure of any mortgage prior to or subsequent to the Security Instrument in which proceeding Lender is made a party; or (c) there occurs a bankruptcy, insolvency, rehabilitation or other similar proceeding in respect of Borrower or any of its constituent Persons or an assignment by Borrower or any of its constituent Persons for the benefit of its creditors, Borrower, on behalf of itself and its successors and assigns, agrees that it/they shall be chargeable with and shall pay all costs of collection and defense incurred by Lender or Borrower in connection therewith and in connection with any appellate proceeding or post-judgment action involved therein, together with all required service or use taxes.

5.19 Obligation to Subordinate Debt. Borrower agrees that all present indebtedness, obligations and liabilities of Borrower, whether or not secured by the Property (other than Liens in favor of Lender) shall be fully subordinate and junior to Borrower’s Obligations under this Agreement and the other Loan Documents. In furtherance of the foregoing, Borrower shall do and execute all and such further lawful and reasonable acts, conveyances and assurances for the better and more effective carrying out of the intent and purpose of this paragraph as Lender shall reasonably require from time to time.

5.20 Additional Assurances. Borrower shall, at Borrower’s sole cost and expense:
(a) furnish to Lender all instruments, documents, boundary surveys, footing or foundation surveys, certificates, plans and specifications, appraisals, title and other insurance reports and agreements, and each and every other document, certificate, agreement and instrument required to be furnished by Borrower pursuant to the terms of the Loan Documents or which are reasonably requested by Lender in connection therewith; (b) execute and deliver to Lender such documents, instruments, certificates, assignments and other writings, and do such other acts necessary or desirable, to evidence, preserve and/or protect the collateral at any time securing or intended to secure the Obligations under the Loan Documents, as Lender may reasonably require; and (c) do and execute all and such further lawful and reasonable acts, conveyances and assurances for the better and more effective carrying out of the intents and purposes of this Agreement and the other Loan Documents, as Lender shall reasonably require from time to time.

6. NEGATIVE COVENANTS. From the date hereof until payment and performance in full of the Obligations or the earlier release of the Lien of the Security Instrument in accordance with the terms of this Agreement and the other Loan Documents, Borrower covenants and agrees with Lender that it will not do, directly or indirectly, any of the following without the express written consent of Lender (which consent, unless otherwise specified below, may be conditioned, withheld or delayed in the sole and absolute discretion of Lender):

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6.1 Subordinate Financing Prohibition. Borrower shall not incur any additional indebtedness or allow any additional deeds of trust, mortgages, liens or other encumbrances on the Property without the prior written consent of Lender, which may be withheld in Lender’s sole and absolute discretion.

6.2 Reserved.

6.3 Dissolution. Borrower shall not: (a) to the fullest extent permitted by applicable law, engage in any dissolution, liquidation, consolidation or merger with or into any other business entity; (b) engage in any business activity not related to the ownership and operation of the Property; (c) transfer, lease or sell, in one transaction or any combination of transactions, the assets or all or substantially all of the properties or assets of Borrower except to the extent permitted by the Loan Documents; or (d) modify, amend, waive or terminate its organizational documents or its qualification and good standing in any jurisdiction.

6.4 Loans, Acquisitions and Guaranties. Borrower shall not: (a) loan, invest in or advance money or assets to any other Person, enterprise or entity; (b) purchase, create or acquire any interest in any other enterprise or entity; or (c) incur any obligation as surety or guarantor other than in the ordinary course of business.

6.5 No Debt Cancellation. Borrower shall not cancel or otherwise forgive or release any claim or debt owed to Borrower by any Person, except for adequate consideration and in the ordinary course of Borrower’s business.

6.6 Agreements. Borrower shall not enter into any agreement containing any provisions which would be violated or breached by the performance of Borrower’s Obligations under this Agreement or in connection herewith.

6.7 Unauthorized Transfers. Borrower understands that in making the Loan evidenced by the Note, Lender is relying to a material extent upon the business expertise and net worth of Borrower and upon the continuing interest which Borrower has in the Property.

Accordingly, in the event that Borrower, without the prior written consent of Lender, directly or indirectly, voluntarily or involuntarily, sells, assigns, transfers, disposes of any interest, or enters into a Lease without Lender’s prior written consent (collectively, a “Transfer”) in the Property whether by outright sale, deed, installment sale contract, land contract, contract for deed, ground lease or any other leases (other than Leases entered into in accordance herewith), lease-option contract, or by sale, assignment, or transfer of any beneficial interest in or to any land trust holding title to the Property, or by any other method of conveyance of an interest in the Property, then the same shall be deemed to increase the risk of Lender, and Lender may then, or at any time thereafter, declare all principal, accrued and unpaid interest and all other charges and fees under the Note immediately due and payable, and may exercise all rights and remedies provided in the Loan Documents. A Transfer shall include, but not be limited to: (a) an installment sales agreement wherein Borrower agrees to sell the Property, or any part thereof, for a price to be paid in installments; (b) an agreement by Borrower leasing all or substantially all of the Property for other than actual occupancy by a space tenant thereunder, or a sale, assignment or other transfer of, or the grant of a Security Interest in, Borrower’s right, title and interest in and to any Leases or any Rents; (c) if Borrower is a corporation, any merger, consolidation or sale or pledge of such corporation’s stock or the creation or issuance of new stock; (d) if Borrower is a limited or general partnership or joint venture, any merger or consolidation or the change, removal, resignation or addition of a general partner or the sale or pledge of the

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partnership interest of any general partner, or any limited partner, or any profits or proceeds relating to such partnership interest, or the creation or issuance of new general partnership interests or new limited partnership interests; (e) if Borrower is a limited liability company, any merger or consolidation or the change, removal, resignation or addition of a managing member or non-member manager (or if no managing member, any member) or the sale or pledge of the limited liability company interest of a member or any profits or proceeds relating to such limited liability company interest, or the sale or pledge of limited liability company interests or the creation or issuance of new limited liability company interests; or (f) if Borrower is a trust or nominee trust, any merger, consolidation or the sale or pledge of the legal or beneficial interest in Borrower or the creation or issuance of new legal or beneficial interests.

7. INSURANCE; CASUALTY; CONDEMNATION.

7.1 Required Insurance. Borrower shall maintain during the entire term of the Loan, comprehensive general liability coverage and such other coverages requested by Lender, by carrier(s), in amounts and in form at all times satisfactory to Lender, which carrier(s), amounts and form shall not be changed without the prior written consent of Lender. All such policies of insurance shall be issued by insurers qualified under the laws of the state in which the Property is located, duly authorized and licensed to transact business in such state and reflecting a General Policy Rating of A:VIII or better in A.M. Best’s Key Rating Guide (“Required Rating”). Borrower shall maintain all coverages on the Property as are required by Lender at the closing of the Loan, and all other coverages as may be deemed necessary by Lender from time to time during the term of the Loan.

Any failure by Lender to insist on full compliance with all of the above insurance requirements at closing does not constitute a waiver of Lender’s right to subsequently require full compliance with these requirements. All policies required hereunder and/or under the Security Instrument shall be indicated by evidence of insurance on the Acord 28 (or similar) form of certificate (as such form may be updated and renamed from time to time), naming Lender as additional insured as to the liability insurance and first mortgagee/loss payee as to the property insurance. All such policies shall contain a provision that such policies will not be canceled or materially amended, which terms shall include any reduction in the scope or limits of coverage, without at least thirty (30) days’ prior written notice to Lender (or ten (10) days in the case of non-payment). At least two (2) days prior to the expiration of each such policy, Borrower shall furnish Lender with evidence satisfactory to Lender of the payment of the premium for and the reissuance of a policy continuing insurance in force as required by the Security Instrument.

7.2 Lender’s Right to Cure. Unless Borrower provides Lender with evidence of the insurance coverage required by the Security Instrument, or in the event that Borrower otherwise fails to provide, maintain and keep in force or deliver and furnish to Lender the policies of insurance required hereunder or under the Security Instrument, Lender may purchase insurance at Borrower’s expense to protect Lender’s interests in the Property and to maintain the insurance required by the Security Instrument. This insurance may, but need not, protect Borrower’s interests. The coverage purchased by Lender may not pay any claim made by Borrower or any claim that is made against Borrower in connection with the Property or any required insurance policy. Borrower may later cancel any insurance purchased by Lender, but only after providing Lender with evidence that Borrower has obtained insurance as required by the Security Instrument. If Lender purchases insurance for the Property or insurance otherwise required by the Security Instrument, Borrower will be responsible for the costs of that insurance, including interest and other charges imposed by Lender in connection with the placement of the insurance, until the effective date of the cancellation or

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expiration of the insurance. The costs of the insurance may be added to the Indebtedness. The costs of the insurance may be more than the cost of insurance Borrower is able to obtain on its own.

7.3 Delivery of Policies; Payment of Premiums. At the request of Lender, Borrower shall deposit with Lender, in monthly installments, an amount equal to one twelfth (1/12) of the estimated aggregate annual insurance premiums on all policies of insurance required by the Security Instrument; provided, however that Lender shall make no such request for monthly deposits unless and until such time (if ever) as an Event of Default has occurred, whereupon Lender shall at any and all times thereafter have the right to require such monthly deposits by Borrower, whether or not the Event of Default has been cured. Borrower further agrees, upon Lender’s instruction, following an Event of Default, to cause all bills, statements or other documents relating to the foregoing insurance premiums to be sent or mailed directly to Lender. Upon receipt of such bills, statements or other documents, and providing Borrower has deposited sufficient funds with Lender pursuant to this section, Lender shall pay such amounts as may be due thereunder out of the funds so deposited with Lender. If at any time and for any reason the funds deposited with Lender are or will be insufficient to pay such amounts as may then or subsequently be due, Lender shall notify Borrower and Borrower shall immediately deposit an amount equal to such deficiency with Lender.

Notwithstanding the foregoing, nothing contained herein shall cause Lender to be deemed a trustee of said funds or to be obligated to pay any amounts in excess of the amount of funds deposited with Lender pursuant to this section. Lender may commingle said reserve with its own funds and Borrower shall be entitled to no interest thereon.

7.4 Damages and Insurance and Condemnation Proceeds.
(a) Collateral Assignment. Borrower hereby absolutely and irrevocably assigns to Lender, and authorizes the payor to pay to Lender, the following claims, causes of action, awards, payments and rights to payment of Borrower: (i) all awards of damages and all other compensation payable directly or indirectly because of a Condemnation, proposed Condemnation or taking for public or private use which affects all or part of the Property or any interest in it; (ii) all other awards, claims and causes of action arising out of any warranty affecting all or any part of the Property, or for damage or injury to or decrease in value of all or part of the Property or any interest in it; (iii) all proceeds of any insurance policies payable because of loss sustained to all or part of the Property; and (iv) all interest which may accrue on any of the foregoing. (b) Notification. Borrower shall immediately notify Lender in writing if:
(i) any damage occurs or any injury or loss is sustained in any amount in excess of $10,000.00 to all or part of the Property, or any action or proceeding relating to any such damage, injury or loss is commenced; or (ii) any offer is made, or any action or proceeding is commenced, which relates to any actual or proposed Condemnation or taking of all or part of the Property. If Lender chooses to do so, it may in its own name appear in or prosecute any action or proceeding to enforce any cause of action based on warranty, or for damage, injury or loss to all or part of the Property and it may make any compromise or settlement of the action or proceeding. Lender, if it so chooses, may participate in any action or proceeding relating to Condemnation or taking of all or part of the Property, and may join Borrower in adjusting any loss covered by insurance. (c) Application of Proceeds. All proceeds of these assigned claims, other property and rights which Borrower may receive or be entitled to shall be paid to Lender. In each instance, Lender shall apply those proceeds first toward reimbursement of all of Lender’s costs and expenses of recovering the proceeds.

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7.5 Use of Proceeds by Borrower.
(a) Restoration. If, in any instance, each and all of the following conditions are satisfied in Lender’s reasonable judgment, Lender shall permit Borrower to use the balance of the proceeds assigned and deposited with Lender under the preceding Section 7.4 (“Net Claims Proceeds”) to pay costs of repairing or reconstructing the Property in the manner described below:
(i) The plans and specifications, cost breakdown, projected construction costs, construction contract, construction schedule, contractor and payment and performance bonds for the work of repair or reconstruction must all be reasonably acceptable to Lender.
(ii) Lender must receive evidence satisfactory to it that after repair or reconstruction and the completion of construction, the outstanding balance of all Obligations will not exceed seventy percent (70%) of the value of the Property. (iii) The Net Claims Proceeds must be sufficient in Lender’s determination to pay for the total cost of repair or reconstruction, including all associated development costs and interest projected to be payable on the Obligations until the repair or reconstruction is complete; or Borrower must provide its own funds in an amount equal to the difference between the Net Claims Proceeds and a reasonable estimate, made by Borrower and found acceptable by Lender, of the total cost of repair or reconstruction. (iv) No Event of Default shall have occurred and be continuing. (b) Application by Lender. If the foregoing conditions are met, Lender shall hold the Net Claims Proceeds in an interest bearing account and shall disburse them to Borrower to pay costs of repair or reconstruction, on such terms and subject to such conditions as are reasonably established by Lender to govern disbursement of funds, including without limitation providing evidence of costs, percentage completion of repair or reconstruction, application of payments and satisfaction of mechanics’ liens. However, if Lender determines that the foregoing conditions are met and the Net Claims Proceeds exceed the costs of repair and reconstruction of the Property or if Lender determines that one or more of the foregoing conditions are not satisfied, then Lender shall apply the Net Claims Proceeds contained in the interest bearing account to pay or prepay (without a prepayment premium) some or all of the Obligations in such order and proportions as Lender in its sole, absolute and unfettered discretion may choose. (c) Waivers. Borrower hereby specifically, unconditionally and irrevocably waives all rights of a property owner granted under California Code of Civil Procedure §1265.225(a), which provides for allocation of Condemnation proceeds between a property owner and a lien holder, and any other law or successor statute of similar import. (d) Duty to Restore. Nothing herein contained shall be deemed to excuse Borrower from repairing or maintaining the Property as provided herein or restoring all damage or destruction to the Property, regardless of whether or not there are insurance proceeds available or whether any such proceeds are sufficient in amount, and the application or release by Lender of any insurance proceeds shall not cure or waive any default or notice of default under this Agreement or invalidate any act done pursuant to such notice.

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7.6 Assignment of Insurance Policies Upon Foreclosure. In the event of foreclosure of the Security Instrument or other transfer of title or assignment of the Property in extinguishment, in whole or in part, of the debt secured hereby, all right, title and interest of Borrower in and to all policies of insurance required by the Security Instrument shall inure to the benefit of and pass to the successor in interest of Borrower, or the purchaser or grantee of the Property.

7.7 Subrogation; Waiver of Offset.
(a) Indemnification. If Lender is made a party defendant to any litigation concerning this Agreement or the Property or any part thereof or interest therein, or the occupancy thereof by Borrower, then Borrower shall indemnify, defend and hold Lender harmless from all liability by reason of said litigation (other than to the extent arising from Lender’s gross negligence or willful misconduct), including attorneys’ fees and expenses incurred by Lender in any such litigation, whether or not any such litigation is prosecuted to judgment. If Lender commences an action against Borrower to enforce any of the terms hereof or because of the breach by Borrower of any of the terms hereof, or for the recovery of any sum secured hereby, Borrower shall pay to Lender attorneys’ fees and expenses, and the right to such attorneys’ fees and expenses shall be deemed to have accrued on the commencement of such action, and shall be enforceable whether or not such action is prosecuted to judgment. If Borrower breaches any provision of this Agreement, Lender may employ an attorney or attorneys to protect its rights hereunder and, in the event of such employment following any breach by Borrower, Borrower shall pay Lender attorneys’ fees and expenses incurred by Lender, whether or not an action is actually commenced against Borrower by reason of breach. Notwithstanding the foregoing, if an action is actually commenced by either party and such action proceeds to final judgment in favor of Borrower, then: (i) Borrower shall have no obligation to pay Lender’s attorneys’ fees and expenses; and (ii) Lender shall pay Borrower attorneys’ fees and expenses incurred by Borrower in connection with such action. (b) Waiver. Borrower waives any and all right to claim or recover against Lender, its officers, employees, agents and representatives, for loss of or damage to Borrower, the Property, Borrower’s other property or the property of others under Borrower’s control from any cause insured against or required to be insured against by the provisions of the Security Instrument, other than arising solely out of Lender’s or its agent’s gross negligence or willful misconduct.
(c) Payment. All sums payable by Borrower hereunder or under the other Loan Documents shall be paid without notice (except as expressly provided herein), demand, counterclaim, setoff, deduction or defense and without abatement, suspension, deferment, diminution or reduction, and the obligations and liabilities of Borrower hereunder or under the other Loan Documents shall in no way be released, discharged or otherwise affected (except as expressly provided herein) by reason of: (i) any damage to or destruction of, or any Condemnation or similar taking of, the Property or any part thereof; (ii) any restriction or prevention of or interference with any use of the Property or any part thereof; (iii) any title defect or encumbrance or any eviction from the Property or the Property or any part thereof by title paramount or otherwise; (iv) any bankruptcy, insolvency, reorganization, composition, adjustment, dissolution, liquidation or other like proceeding relating to Lender or Borrower, or any action taken with respect to the Security Instrument by any trustee or receiver of Lender or Borrower, or by any court, in any such proceeding; (v) any claim which Borrower has or might have against Lender; or (vi) any other occurrence whatsoever, whether similar or dissimilar to the foregoing, whether or not Borrower shall have notice or knowledge of any

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of the foregoing. Except as expressly provided herein, Borrower waives all rights now or hereafter conferred by statute or otherwise to any abatement, suspension, deferment, diminution or reduction of any sum secured hereby and payable by Borrower.

8. LENDER’S EXPENDITURES. If any action or proceeding is commenced that would materially affect Lender’s interest in the Property or if Borrower fails to comply with any provision of the Loan Documents, including but not limited to Borrower’s failure to discharge or pay when due any amounts Borrower is required to discharge or pay under this Agreement or any Loan Documents, Lender on Borrower’s behalf may (but shall not be obligated to) take any action that Lender deems appropriate, including but not limited to discharging or paying all taxes, liens, Security Interests, encumbrances and other claims, at any time levied or placed on any Property and paying all costs for insuring, maintaining and preserving any Property. All such expenditures incurred or paid by Lender for such purposes will then bear interest at the rate charged under the Note from the date incurred or paid by Lender to the date of repayment by Borrower. All such expenses will become a part of the Indebtedness and, at Lender’s option, will: (a) be payable on demand; (b) be added to the balance of the Note and be apportioned among and be payable with any installment payments to become due during either: (i) the term of any applicable insurance policy; or (ii) the remaining term of the Note; or (c) be treated as a balloon payment which will be due and payable at the Note’s maturity.

9. ADDITIONAL REQUIREMENTS.

9.1 Appraisals. If deemed necessary by Lender or if required by law, at any time during the term of the Loan, Lender shall have the right to order appraisals of the Property, prepared by an independent M.A.I. (or equivalent) appraiser selected by Lender in its sole and absolute discretion, which appraisals shall comply with all Federal and state standards for appraisals and shall be satisfactory to Lender in all respects in its sole and absolute discretion. Borrower shall pay for the cost and expense of the appraisal (and review thereof).

9.2 Collateral Security.
(a) Security Interest. As additional security for the obligations of Borrower under the Loan Documents, Borrower does hereby assign, pledge and grant to Lender security interest in the Collateral. Borrower agrees to execute and cause to be filed the UCC-1 Financing Statement in form and substance satisfactory to the Lender. (b) Covenants and Representations Concerning Collateral. With respect to all of the Collateral, Borrower covenants, warrants and represents that:
(i) No UCC-1 financing statement covering any of the Collateral is on file in any State public office or land or financing records except for financing statements in favor of Lender or holders of Permitted Liens and Borrower is the legal and beneficial owner of all of the Collateral, free and clear of all Liens, except for Permitted Liens. (ii) The security interest granted Lender hereunder shall constitute a valid attached, perfected and first priority security interest upon the Collateral. Borrower shall not grant or otherwise permit any other Lien to be created or remain on any Collateral thereon except for Permitted Liens.

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(iii) Borrower shall maintain the Collateral in good order and condition, ordinary wear and tear excepted, and will use, operate and maintain the Collateral in compliance with all laws, regulations and ordinances and in compliance with all applicable insurance requirements and regulations. Borrower will promptly notify Lender in writing of any litigation involving or affecting the Collateral which Borrower knows or has reason to believe is pending or threatened. Borrower will promptly pay when due all taxes and all transportation, storage, warehousing and other such charges and fees affecting or arising out of or relating to the Collateral and shall defend the Collateral, at Borrower’s expense, against all claims and demands of any persons claiming any interest in the Collateral adverse to Borrower or Lender. (iv) Borrower shall not file any amendments, correction statements or termination statements concerning the Collateral without the prior written consent of Lender; provided, that upon Borrower’s repayment in full of all Obligations hereunder and the termination of the Loan, any and all Liens in favor of Lender with respect to the Collateral shall be deemed automatically terminated, and Lender shall authorize Borrower to file any termination statements with respect to any outstanding Liens concerning such Collateral.

9.3 Put – Option Agreement. Concurrently with the recording of the Security Interest, the Borrower and Lender shall enter into the Put – Option Agreement and cause the Put – Option Agreement to be recorded against the Real Property in the official records of Riverside County, California. Borrower acknowledges and agrees that the Put – Option Agreement restricts Borrower’s ability to obtain financing secured by the Real Property or to sell or lease the Real Property during the term of the Put – Option Agreement, which extends past the Maturity Date.

Borrower further acknowledges and agrees that Borrower’s execution and delivery of the Put – Option Agreement and compliance with the terms of the Put – Option Agreement constitute a material inducement for Lender to make the Loan to Borrower and Borrower acknowledges and agrees that compliance with the Put – Option Agreement constitutes an Other Obligation hereunder.

10. DEFAULT.

10.1 Events of Default. Each of the following events shall constitute an event of default hereunder (each, an “Event of Default”):
(a) Payment Default. Borrower fails to make any payment when due under this Agreement or under any of the other Loan Documents. (b) Other Defaults. Borrower fails to comply with or to perform any other term, obligation, covenant or condition contained in this Agreement, including but not limited to Section 9, or any of the other Loan Documents which is not cured within thirty (30) days after notice from Lender.
(c) Loan Document Defaults. The occurrence of a default or “Event of Default” under the Note, the Security Instrument or any of the other Loan Documents, beyond any applicable cure periods contained therein, if any, whether as to Borrower or the Property, or if any other such event shall occur or condition shall exist, if the effect of such event or condition is to accelerate the maturity of any portion of the Indebtedness or to permit Lender to accelerate the maturity of all or any portion of the Indebtedness.

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(d) Lease Defaults. The occurrence of a default by Borrower, in its capacity as landlord, under a Lease, beyond any applicable cure periods contained therein. (e) False Statements. Any financial statement, report or certificate made or delivered to Lender by Borrower is not materially true and complete, or any representation or warranty made or delivered to Lender by Borrower is not materially true and correct. (f) Bankruptcy or Insolvency. A receiver, liquidator or trustee shall be appointed for Borrower, or Borrower shall be adjudicated a bankrupt or insolvent, or if any petition for bankruptcy, reorganization or arrangement pursuant to Federal bankruptcy law, or any similar Federal or state law, shall be filed by or against, consented to, or acquiesced in by, Borrower, or any proceeding for the dissolution or liquidation of Borrower shall be instituted; provided, however, that if such appointment, adjudication, petition or proceeding was involuntary and not consented to by Borrower, then the same shall constitute an Event of Default only upon the same not being discharged, stayed or dismissed within thirty (30) days. (g) Assignment for Benefit of Creditors. Borrower shall make an assignment for the benefit of creditors.
(h) Defective Collateralization. This Agreement, the Note, the Security Instrument or any of the other Loan Documents ceases to be in full force and effect (including failure of any collateral document to create a valid and perfected security interest or lien) at any time and for any reason.
(i) Creditor or Forfeiture Proceedings. Any Person commences foreclosure or forfeiture proceedings, whether by judicial proceeding, self-help, repossession or any other method, by any creditor of Borrower or by any governmental agency against any collateral owned by Borrower that secures any loan or other obligation of Borrower. This includes a garnishment of any of Borrower’s accounts, including deposit accounts, with Lender. However, this Event of Default shall not apply if there is a good faith dispute by Borrower as to the validity or reasonableness of the claim which is the basis of the creditor or forfeiture proceeding and if Borrower gives Lender written notice of the creditor or forfeiture proceeding and deposits with Lender monies or a surety bond for the creditor or forfeiture proceeding, in an amount determined by Lender, in its sole and absolute discretion, as being an adequate reserve or bond for the dispute. (j) Adverse Change. A material adverse change occurs in Borrower’s financial condition or the condition of the Property, and such change reduces Borrower’s financial condition or the value of the Property, as applicable, to less than the condition or value, as applicable, as of the Closing Date.
(k) Events Affecting Managers or Members. Any of the preceding events occurs with respect to any of the managers or members of Borrower.

10.2 Remedies.
(a) Generally. Upon the occurrence of an Event of Default, all or any one or more of the rights, powers, privileges and other remedies available to Lender against Borrower under this Agreement or any of the other Loan Documents or at law or in equity may be exercised by Lender at any time and from time to time, whether or not all or any of the Indebtedness

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shall be declared due and payable, and whether or not Lender shall have commenced any foreclosure proceeding or other action for the enforcement of its rights and remedies under any of the Loan Documents. Any such actions taken by Lender shall be cumulative and concurrent and may be pursued independently, singularly, successively, together or otherwise, at such time and in such order as Lender may determine in its sole and absolute discretion, to the fullest extent permitted by law, without impairing or otherwise affecting the other rights and remedies of Lender permitted by law, equity or contract or as set forth herein or in the other Loan Documents. No delay or omission to exercise any remedy, right or power accruing upon an Event of Default shall impair any such remedy, right or power or shall be construed as a waiver thereof, but any such remedy, right or power may be exercised from time to time and as often as may be deemed expedient. A waiver of one Default or Event of Default with respect to Borrower shall not be construed to be a waiver of any subsequent Default or Event of Default by Borrower or to impair any remedy, right or power consequent thereon.
(b) Right to Accelerate. Without limiting the generality of the foregoing, upon the occurrence of a Default or Event of Default hereunder, Lender may, at its election, declare the entire balance of principal and interest due under the Note and the other Loan Documents immediately due and payable, together with all costs of collection and all expenses incurred in connection with protection of, or realization on, the Property. If Borrower fails to pay all amounts due within thirty (30) days after the Note becomes due in full, whether by acceleration (upon Default or otherwise), by the occurrence of the Maturity Date or otherwise, the Outstanding Principal Balance, accrued interest and costs incurred shall thereafter bear interest until paid at a rate equal to the Default Rate. Time is of the essence for the payment and performance of all Obligations under this Agreement and the Loan Documents.

11. MISCELLANEOUS PROVISIONS.

11.1 Notices. All notices, requests and demands to be made hereunder to the parties hereto shall be in writing (at the addresses set forth below) and shall be given by any of the following means: (a) personal service; (b) electronic communication, whether by telex, telegram or facsimile (if confirmed in writing sent by certified first class mail, return receipt requested); (c) certified first class mail, return receipt requested; or (d) a nationally recognized overnight service.

Such addresses may be changed by notice to the other parties given in the same manner as provided above. Any notice, demand or request sent pursuant to either clause (a) or clause (b) hereof shall be deemed received one (1) Business Day after personal service or one (1) Business Day after delivery by electronic means, if sent pursuant to clause (c) shall be deemed received three (3) Business Days following deposit in the mail and if sent pursuant to clause (d) shall be deemed received one (1) Business Day following deposit with the overnight service.

TO LENDER:

City of Norco
2870 Clark Avenue
Norco, California 92860
Attn: Lori Sassoon, City Manager
Email: [email protected]
With A Copy To:
(Which Shall Not Constitute Notice)
Stradling Yocca Carlson & Rauth
660 Newport Center Drive, Suite 1600
Newport Beach, California 92660
Attn: Vanessa S. Legbandt, Esq.

Email: [email protected]

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TO BORROWER:

Five Keys Schools and Programs
Attn:

Email:

11.2 Further Assurances. At Lender’s request and at Borrower’s expense, Borrower shall execute, acknowledge and deliver all other instruments and perform all other acts necessary, desirable or proper to carry out the purposes of the Loan Documents or to perfect and preserve any liens created by the Loan Documents.

11.3 Not Assignable. Neither this Agreement nor any rights of Borrower to receive any sums, proceeds or disbursements under this Agreement or under the Note may be assigned, pledged, hypothecated or otherwise encumbered by Borrower, without the prior written consent of Lender, which consent may be granted or withheld by Lender in its sole and absolute discretion. Subject to the foregoing restrictions, this Agreement shall inure to the benefit of Lender, Borrower and their respective successors and assigns, and shall bind Lender and Borrower and their respective permitted heirs, executors, administrators, successors and assigns.

11.4 Consent to Loan Participation. Lender may at any time sell or grant participations in, or otherwise dispose of in anyway, all or any part of the Loan. Lender shall provide Borrower with notice of any such participations or dispositions. Borrower shall, on Lender’s request, sign and deliver such further instruments as may in Lender’s reasonable opinion be necessary or advisable to effect such disposition, including, without limitation, new notes to be issued in exchange for any note(s) required under this Agreement. If Lender does elect to sell participations in the Loan, Lender may forward to each participant and prospective participant all documents and information related to the Loan in Lender’s possession, including, without limitation, all financial statements, whether furnished by Borrower or otherwise. Except as may be required by any rule, law or regulation of any Governmental Authority that is adopted after the date hereof, all recipients of participations must be affiliated with Lender, unless a change in control of Lender occurs, in which case the foregoing restrictions shall not apply.

11.5 Waiver of Right of Trial by Jury; Judicial Reference. BORROWER

HEREBY WAIVES TO THE FULLEST EXTENT PERMITTED BY LAW, THE RIGHT TO

TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM, WHETHER IN

CONTRACT, TORT OR OTHERWISE, RELATING DIRECTLY OR INDIRECTLY TO THE

LOAN EVIDENCED BY THE NOTE, THIS AGREEMENT AND ANY SECURITY

INSTRUMENT OR ANY ACTS OR OMISSIONS OF LENDER, ITS OFFICERS, EMPLOYEES, DIRECTORS OR AGENTS IN CONNECTION THEREWITH. IF ANY LEGAL PROCEEDING

IS FILED IN A COURT AND THE PRECEDING JURY WAIVER IS NOT ENFORCEABLE IN

SUCH ACTION OR PROCEEDING, BORROWER AND LENDER AGREE THAT SUCH

DISPUTE WILL BE DETERMINED BY A GENERAL REFERENCE PROCEEDING IN ACCORDANCE WITH CALIFORNIA CODE OF CIVIL PROCEDURE SECTIONS 638 THROUGH 645.1, WITH THE EXCEPTION OF: (a) NON-JUDICIAL FORECLOSURE OF ANY SECURITY INTERESTS IN REAL OR PERSONAL PROPERTY; (b) EXERCISE OF SELF-HELP REMEDIES (INCLUDING, WITHOUT LIMITATION, SET-OFF); (c) APPOINTMENT OF A RECEIVER; AND (d) TEMPORARY, PROVISIONAL OR ANCILLARY REMEDIES

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(INCLUDING, WITHOUT LIMITATION, WRITS OF ATTACHMENT, WRITS OF POSSESSION, TEMPORARY RESTRAINING ORDERS OR PRELIMINARY INJUNCTIONS).

THIS AGREEMENT DOES NOT LIMIT THE RIGHT OF ANY PARTY TO EXERCISE OR OPPOSE ANY OF THE RIGHTS AND REMEDIES DESCRIBED IN CLAUSES (a) - (d), AND

ANY SUCH EXERCISE OR OPPOSITION DOES NOT WAIVE THE RIGHT OF ANY PARTY TO A REFERENCE PROCEEDING PURSUANT TO THIS AGREEMENT. THE PARTIES

INTEND THIS GENERAL REFERENCE AGREEMENT TO BE SPECIFICALLY

ENFORCEABLE IN ACCORDANCE WITH CALIFORNIA CODE OF CIVIL PROCEDURE SECTION 638. UPON THE WRITTEN REQUEST OF ANY PARTY, THE PARTIES SHALL

SELECT A SINGLE REFEREE, WHO SHALL BE A RETIRED JUDGE OR JUSTICE, AND THE MATTER WILL BE DECIDED BY THE REFEREE, NOT A JURY. IF THE PARTIES DO NOT AGREE UPON A REFEREE WITHIN TEN (10) DAYS OF SUCH WRITTEN REQUEST, THEN

ANY PARTY MAY REQUEST THE COURT TO APPOINT A REFEREE PURSUANT TO CALIFORNIA CODE OF CIVIL PROCEDURE SECTION 640(b). A REQUEST FOR

APPOINTMENT OF A REFEREE MAY BE HEARD ON AN EX PARTE OR EXPEDITED

BASIS, AND THE PARTIES AGREE THAT IRREPARABLE HARM WOULD RESULT IF EX PARTE RELIEF IS NOT GRANTED. ALL PROCEEDINGS AND HEARINGS CONDUCTED

BEFORE THE REFEREE, EXCEPT FOR TRIAL, SHALL BE CONDUCTED WITHOUT A

COURT REPORTER, EXCEPT THAT, IF ANY PARTY SO REQUESTS, A COURT REPORTER

WILL BE USED AND THE TRANSCRIPT WILL BE PROVIDED TO ALL PARTIES AT THE REQUESTING PARTY’S EXPENSE. THE REFEREE’S FEES SHALL ULTIMATELY BE BORNE BY THE PARTY WHO DOES NOT PREVAIL, AS DETERMINED BY THE REFEREE.

THE REFEREE MAY REQUIRE ONE OR MORE PREHEARING CONFERENCES. THE

PARTIES HERETO SHALL BE ENTITLED TO DISCOVERY, AND THE REFEREE SHALL

OVERSEE DISCOVERY IN ACCORDANCE WITH THE RULES OF DISCOVERY, AND MAY

ENFORCE ALL DISCOVERY ORDERS IN THE SAME MANNER AS ANY TRIAL COURT JUDGE IN PROCEEDINGS AT LAW IN THE STATE OF CALIFORNIA. THE REFEREE

SHALL APPLY THE RULES OF EVIDENCE APPLICABLE TO PROCEEDINGS AT LAW IN

THE STATE OF CALIFORNIA AND SHALL DETERMINE ALL ISSUES IN ACCORDANCE WITH APPLICABLE STATE AND FEDERAL LAW. THE REFEREE SHALL BE

EMPOWERED TO ENTER EQUITABLE AS WELL AS LEGAL RELIEF AND RULE ON ANY

MOTION WHICH WOULD BE AUTHORIZED IN A TRIAL, INCLUDING, WITHOUT LIMITATION, MOTIONS FOR DEFAULT JUDGMENT OR SUMMARY JUDGMENT. THE

REFEREE SHALL REPORT HIS DECISION, WHICH REPORT SHALL ALSO INCLUDE FINDINGS OF FACT AND CONCLUSIONS OF LAW.

11.6 Integration and Interpretation. This Agreement and the other Loan Documents contain the entire agreement of the parties hereto and thereto in respect of the transactions contemplated hereby and thereby, and all prior agreements among or between such parties, whether oral or written. Any reference to the Property in any of the Loan Documents shall include all or any portion thereof. Any reference to the Loan Documents themselves in any of the Loan Documents shall include all amendments, renewals or extensions approved by Lender.

11.7 Miscellaneous. Wherever pursuant to this Agreement: (a) Lender exercises any right given to it to approve or disapprove; (b) any arrangement or term is to be satisfactory to Lender; or (c) any other decision or determination is to be made by Lender, the decision of Lender to approve or disapprove, all decisions that arrangements or terms are satisfactory or not satisfactory and all other decisions and determinations made by Lender, shall be in the sole and absolute discretion of Lender and shall be final and conclusive, except as may be otherwise expressly and

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specifically provided herein. Whenever this Agreement provides that Lender’s consent is required prior to any act or inaction by Borrower or any other party, Lender may withhold, delay or condition its consent in its sole and absolute discretion, except as may be otherwise expressly and specifically provided herein. Further, Lender’s consent shall be valid only if such consent is expressed in writing.

11.8 Amendments. No modification, amendment, extension, discharge, termination or waiver of any provision of this Agreement, or of the Note, or of any of the other Loan Documents, nor consent to any departure by Borrower therefrom, shall in any event be effective unless the same shall be in a writing signed by the party against whom enforcement is sought, and then such waiver or consent shall be effective only in the specific instance, and for the purpose, for which given. Except as otherwise expressly provided herein, no notice to, or demand on Borrower shall entitle Borrower to any other or future notice or demand in the same, similar or other circumstances.

11.9 Delay Not a Waiver. Neither any failure nor any delay on the part of Lender in insisting upon strict performance of any term, condition, covenant or agreement, or exercising any right, power, remedy or privilege hereunder, or under the Note or under any of the other Loan Documents, or under any other instrument given as security therefor, shall operate as or constitute a waiver thereof, nor shall a single or partial exercise thereof preclude any other future exercise, or the exercise of any other right, power, remedy or privilege. In particular, and not by way of limitation, by accepting payment after the due date of any amount payable under this Agreement, the Note or any of the other Loan Documents, Lender shall not be deemed to have waived any right either to require prompt payment when due of all other amounts due under this Agreement, the Note or any of the other Loan Documents, or to declare a default for failure to effect prompt payment of any such other amount.

11.10 Severability. If any provision of the Loan Documents is determined by a court of competent jurisdiction to be invalid, illegal or unenforceable, that portion shall be deemed severed from the Loan Documents, and all remaining parts shall continue in full force as though the invalid, illegal or unenforceable portion had never been part of the Loan Documents.

11.11 Principles of Construction. All references to sections and schedules are to sections and schedules in or to this Agreement unless otherwise specified. All uses of the word “including” shall mean “including, without limitation” unless the context shall indicate otherwise.

Unless otherwise specified, the words “hereof,” “herein” and “hereunder” and words of similar import when used in this Agreement shall refer to this Agreement as a whole and not to any particular provision of this Agreement. Unless otherwise specified, all meanings attributed to defined terms herein shall be equally applicable to both the singular and plural forms of the terms so defined.

11.12 Supplement to Loan Documents. The provisions of this Agreement are not intended to supersede the provisions of any of the other Loan Documents, but shall be construed as supplemental thereto.

11.13 Caption Headings. All headings appearing in any of the Loan Documents are for convenience only and shall be disregarded in construing the Loan Documents.

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11.14 Construction. Lender and Borrower have each been represented by legal counsel in the negotiation and drafting of this Agreement and the other Loan Documents.

Accordingly, neither this Agreement or any of the other Loan Documents shall be strictly construed against either Lender or Borrower, and the rules of construction of contracts resolving any ambiguities against the drafting party shall not apply.

11.15 Survival of Representations and Warranties. Borrower agrees that all of the representations and warranties of Borrower set forth in this Agreement and in the other Loan Documents shall survive for so long as any amount remains owing by Borrower to Lender under this Agreement or any of the other Loan Documents. All representations, warranties, covenants and agreements made in this Agreement or in any of the other Loan Documents by Borrower shall be deemed to have been relied upon by Lender notwithstanding any investigation heretofore or hereafter made by Lender or on its behalf.

11.16 Attorneys’ Fees; Expenses. In the event of litigation between the Lender and Borrower to enforce the terms of this Agreement, each party shall pay its own attorneys’ fees and costs.

11.17 Preferences. Lender shall have the continuing and exclusive right to apply or reverse and reapply any and all payments by Borrower to any portion of the Indebtedness. To the extent that Borrower makes a payment or payments to Lender, which payment or proceeds or any part thereof are subsequently invalidated, declared to be fraudulent or preferential, set aside or required to be repaid to a trustee, receiver or any other party under any bankruptcy law, state or Federal law, common law or equitable cause, then, to the extent of such payment or proceeds received, the Obligations hereunder or part thereof intended to be satisfied shall be revived and continue in full force and effect, as if such payment or proceeds had not been received by Lender.

11.18 Waiver of Notice. Borrower hereby expressly waives, and shall not be entitled to, any notices of any nature whatsoever from Lender except with respect to matters for which this Agreement or the other Loan Documents specifically and expressly provide for the giving of notice by Lender to Borrower and except with respect to matters for which Borrower is not, pursuant to applicable Legal Requirements, permitted to waive the giving of notice.

11.19 Duplicate Originals; Counterparts. This Agreement, and any of the other Loan Documents, may be executed in any number of duplicate originals and each duplicate original shall be deemed to be an original. This Agreement, and any of the other Loan Documents, may be executed in several counterparts, each of which counterparts shall be deemed an original instrument and all of which together shall constitute a single agreement. The failure of any party hereto to execute this Agreement, or any counterpart hereof, shall not relieve the other signatories from their obligations hereunder.

11.20 Time Is of the Essence. Time is of the essence in connection with all Obligations of Borrower under this Agreement and under each of the other Loan Documents.

11.21 Choice of Venue. If there is a lawsuit, Borrower agrees upon Lender’s request to submit to the jurisdiction of the courts of Riverside County, State of California.

11.22 Governing Law. This Agreement shall be governed by and construed under the internal laws of the State of California, except to the extent that Federal law applies.

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34 4855-4474-2269v6/200760-0007
IN WITNESS WHEREOF, this Property Acquisition Loan Agreement is executed by Borrower and Lender and is effective as of the date first written above.

BORROWER:

FIVE KEYS SCHOOLS AND PROGRAMS,
a California nonprofit public benefit corporation,
By:

Its:

Name:

LENDER:

CITY OF NORCO,
a California municipal corporation and chartered city
By:

Robin Grundmeyer, Mayor
ATTEST:

Dana Roa, City Clerk

A-1
4855-4474-2269v6/200760-0007

EXHIBIT A
(Fees and Expenses)
[Good Standing $136.20]
[UCC filing $39.00]
Legal Fees and Expenses – Actual fees and expenses incurred.

Escrow and Title Fees and Expenses – Actual fees and expenses incurred

B-1
4855-4474-2269v6/200760-0007

EXHIBIT B
(Legal Description of Real Property)

THE LAND REFERRED TO HEREIN BELOW IS SITUATED IN THE CITY OF NORCO, IN

THE COUNTY OF RIVERSIDE, STATE OF CALIFORNIA, AND IS DESCRIBED AS FOLLOWS:

Lot 8 of Block 40 of Norco Farms Tract #3, in the City of Norco, County of Riverside, State of California, as shown by Map on file in Book 12, Page 33, of Maps, records of Riverside County.

Except the Southerly 165.00 feet.

APN: 133-080-010

Stradling Draft of 9/6/23
4884-3173-5165v4/200760-0007

RECORDING REQUESTED BY
AND WHEN RECORDED MAIL TO:

City of Norco
2870 Clark Avenue
Norco, California 92860
Attn: Lori Sassoon, City Manager
Space Above For Recorder’s Use

DEED OF TRUST, ASSIGNMENT OF RENTS,

SECURITY AGREEMENT AND FIXTURE FILING

THIS DEED OF TRUST, ASSIGNMENT OF RENTS, SECURITY AGREEMENT AND FIXTURE FILING (“Deed of Trust”) is made as of __________, 2023 by and among FIVE KEYS SCHOOLS AND PROGRAMS, a California nonprofit public benefit corporation, (“Trustor”), whose place of business is _____________, __________, California _______; and CITY OF NORCO, a California municipal corporation and chartered city (sometimes referred to herein as “Beneficiary” and “Trustee”), whose place of business is 2870 Clark Avenue, Norco, California 92860.

Beneficiary wishes to secure (i) the prompt payment of that certain Promissory Note (“Note”), in the principal amount of [ONE MILLION AND NO/100 DOLLARS ($1,000,000.00)], executed by Trustor in favor of Beneficiary of even date herewith, which Note evidences a loan payable to the order of Beneficiary (the “Loan”), together with all interest thereon in accordance with the terms of the Note, as well as the prompt payment of any additional indebtedness accruing to Beneficiary on account of any future payments, advances or expenditures made by Beneficiary pursuant to the Note, this Deed of Trust, that certain Property Acquisition Loan Agreement of even date herewith (“Property Acquisition Loan Agreement”), or the other Loan Documents (as such term is defined in the Note), and (ii) the prompt performance of each and every covenant, condition, and agreement now or hereafter arising contained in the Loan Documents of Trustor. All payment obligations of Trustor under the Loan Documents are hereinafter sometimes collectively referred to as the “Indebtedness” and all other obligations of Trustor under the Loan Documents are hereinafter sometimes collectively referred to as the “Obligations.” ARTICLE 1

GRANT IN TRUST AND SECURED OBLIGATIONS

1.1 Grant in Trust. For good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Trustor hereby irrevocably and unconditionally grants, transfers, conveys and assigns to Trustee, IN TRUST, WITH POWER OF SALE, for the benefit and security of Beneficiary, all estate, right, title and interest which Trustor now has or may later acquire in and to the following property (all or any part of which, or interest therein, as the context may require, may be referred to herein as the “Property”):

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(a) That certain real property located at 4208 California Avenue, Norco, California 92860 (Assessor’s Parcel Number 133-080-010, as more particularly described on Exhibit A attached hereto and incorporated herein by this reference (“Land”); (b) any and all buildings, structures and improvements now or hereafter erected on the Land (“Improvements”), and Trustor’s right, title and interest in and to all other improvements that may now or hereafter be constructed upon the Land, including, but not limited to, the fixtures, attachments, appliances, equipment, machinery and other articles attached to the Improvements;
(c) all right, title and interest of Trustor in and to all leases, subleases, subtenancies, licenses, occupancy agreements and concessions covering the Land or the Improvements or any portion thereof or space therein now or hereafter existing, and all right, title and interest of Trustor under the same, including, without limitation, all cash or security deposits, advance rentals and deposits or payments of similar nature (“Leases”); (d) all rents, issues, profits, royalties, revenues, income and other proceeds and benefits derived from the Land or the Improvements;
(e) all right, title and interest of Trustor in and to all options to purchase or lease the Land or any portion or interest of or in the Land, and any greater estate in the Land owned or hereafter acquired;
(f) any and all interests, estate or other claims, both in law and in equity, which Trustor now has or may hereafter acquire in the Land;
(g) all right, title and interest of Trustor in any and all easements, parking rights, rights-of-way and rights used primarily in connection with the Land and Improvements or as a means of access thereto, and all tenements, hereditaments and appurtenances thereof and thereto, and all water rights and shares of stock evidencing the same;
(h) all right, title and interest of Trustor, now owned or hereafter acquired, in and to any land lying within the right of way of any street, open or proposed, adjoining the Land, and any and all sidewalks, alleys and strips and gores of land adjacent to or used primarily in connection with the Land;
(i) any and all building permits, land use entitlements, development rights, sewer capacity, licenses, map approvals, trip generation rights, density allocations and other rights or approvals relating to or authorizing the development of the Land; (j) all rights to the payment of money, accounts (as defined in the California Uniform Commercial Code), accounts receivable, reserves, deferred payments, refunds, cost savings, payments and deposits, whether now or later to be received from third parties or deposited by Trustor with third parties (including all utility deposits), contract rights (including any and all guaranties and warranties relating to the construction of the Improvements, and the manufacture and installation of fixtures and other personal property), rights as declarant under any declaration of covenants, conditions and restrictions encumbering the Land, development and use rights, governmental permits and licenses, applications, architectural and engineering plans, specifications and drawings, as-built drawings, chattel paper, instruments, documents, notes, drafts and letters of credit in each case which

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arise from or relate to construction on the Land or to any business now or later to be conducted on it, or to the Land and Improvements generally, including the operation and leasing thereof; (k) all books and records of Trustor pertaining to the Land, the Improvements, and all of the other Property, including computer-readable media and any computer hardware or software necessary to access and process such media;
(l) all proceeds, including all claims to and demands for them, of the voluntary or involuntary conversion of any of the Land, Improvements or of the foregoing collateral into cash or liquidated claims, including proceeds of all present and future fire, hazard or casualty insurance policies and all condemnation awards or payments now or later to be made by any public body or decree by any court of competent jurisdiction for any taking or in connection with any condemnation or eminent domain proceeding, and all causes of action and their proceeds for any damage or injury to the Land, Improvements or the other Property described above or any part of them, or breach of warranty in connection with the construction of the Improvements, including causes of action arising in tort, contract, fraud or concealment of a material fact; (m) all refunds, rebates, reimbursements, reserves, deferred payments, deposits, cost savings, subsidy payments, credits, waivers and payments, whether in cash or in kind, due from or payable by any federal, state, municipal or other governmental or quasi-governmental agency, authority or district (each, a “Government Agency”) relating to any or all of the Property or arising out of the satisfaction of any conditions imposed upon or the obtaining of any approvals for the development, ownership, occupancy, use or operation of the Property; (n) all refunds, rebates, reimbursements, credits and payments of any kind due from or payable by any Government Agency for any taxes, special taxes, assessments, or similar governmental or quasi-governmental charges or levies imposed upon Trustor with respect to the Property or upon any and all of the Property itself or arising out of the satisfaction of any conditions imposed upon or the obtaining of any approvals for the development, ownership, occupancy, use or operation of the Property;
(o) all documents of Trustor, presently existing or hereafter arising, including all documents as defined in the California Uniform Commercial Code, as amended, arising from or issued or prepared in connection with Trustor’s ownership, construction, development, sale, lease, operation or use of the Property, the Land, or the Improvements, and all documentation and supporting information related to any of the foregoing, all rents, profits and issues thereof, and all proceeds thereof;
(p) all instruments of Trustor, presently existing or hereafter arising, including all instruments as defined in the California Uniform Commercial Code, as amended, arising from or issued or prepared in connection with Trustor’s ownership, construction, development, sale, lease, operation or use of the Property, the Land, or the Improvements, and all documentation and supporting information related to any of the foregoing, all rents, profits and issues thereof, and all proceeds thereof; and
(q) all proceeds of, additions and accretions to, substitutions and replacements for, and changes in, any of the foregoing.

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Notwithstanding anything to the contrary contained herein, if the Land is or will be located in an area designated by the Administrator of the Federal Emergency Management Agency as a special flood hazard area, those portions of the Property which constitute personal property shall be limited to only those items specifically covered (currently or hereafter) by Coverage A of the standard flood insurance policy issued in accordance with the National Flood Insurance Program or under equivalent coverage similarly issued by a private insurer to satisfy the National Flood Insurance Act (as amended).

1.2 Secured Obligations. Trustor makes the foregoing grant, conveyance, transfer and assignment in trust, and grants the security interest set forth in 2.1, for the purpose of securing the following obligations (collectively, “Secured Obligations”), in any order of priority as Beneficiary may choose:
(a) Trustor’s payment of indebtedness in the total principal amount of ] ONE MILLION AND NO/100 DOLLARS ($1,000,000.00)], with interest thereon, evidenced by the Note, signed by Trustor, which has been delivered to and is payable to the order of Beneficiary, and which by this reference is hereby made a part hereof, and any and all modifications, extensions and renewals thereof and substitutions therefor;
(b) Trustor’s performance of all Indebtedness under all of the Loan Documents; (c) Trustor’s performance of all Obligations under all of the Loan Documents; (d) payment of all sums advanced by Beneficiary to protect the Property as permitted herein, with interest thereon at the rate per annum in effect from time to time under the Note;
(e) payment of all other sums, with interest thereon, which may hereafter be loaned to Trustor, or its successors or assigns by Beneficiary, when evidenced by a promissory note or notes reciting that the same are secured by this Deed of Trust; and (f) payment and performance of all modifications, amendments, extensions and renewals, however evidenced, of any of the Secured Obligations. (g) All initially capitalized terms not otherwise defined herein shall have the same meanings as in the Property Acquisition Loan Agreement.

ARTICLE 2

ASSIGNMENT OF RENTS

2.1 Assignment. Trustor hereby presently, absolutely and irrevocably grants, sells, assigns, transfers and sets over to Beneficiary all of the rents, issues, profits, revenue, royalties, income, proceeds, earnings and other benefits, including, without limitation, all prepaid rents (collectively, “Rents”) derived from any lease, sublease, license, franchise, occupancy or other agreement now existing or hereafter created and affecting all or any portion of the Trustor’s interest in the Property or the use or occupancy thereof (collectively, “Leases”), together with all of Trustor’s right, title and interest in: (a) the Leases and all security deposits and other security now or hereafter held by Trustor as security for the performance of the obligations of the tenants thereunder (collectively, “Tenants”); (b) all insurance proceeds with respect to the Leases including, without

5 4884-3173-5165v4/200760-0007
limitation, rental loss coverage and business interruption coverage; (c) all judgments and settlements of claims in favor of Trustor arising from the Leases, and all rights, claims and causes of action under any legal proceeding, including, without limitation, any bankruptcy, reorganization or insolvency proceeding, or otherwise, arising from the Leases; and (d) all reciprocal easement agreements, operating covenants, and covenants, conditions and restrictions relating to the Leases or the operation of the Property (collectively, the “Property Documents”). As used herein, the term “Leases” shall include all guaranties, modifications, amendments, extensions and renewals of the Leases and all rights and privileges incident thereto. As used herein, the term “Tenants” shall include any guarantors of any or all of the Tenants’ obligations under the Leases.

The assignment set forth in this Article 2 is intended by Trustor and Beneficiary to create and shall be construed to create an absolute present assignment to Beneficiary of all of Trustor’s right, title and interest in the Rents, the Leases and the Property Documents and shall not be deemed to create a security interest therein for the payment of any indebtedness or the performance of any obligations of Trustor under the Loan Documents. Beneficiary at all times, independent of Trustor, shall have the standing and the right to specifically enforce, by injunction or otherwise, all or any provisions in the Leases and the Property Documents as though Beneficiary originally was a party thereto. Trustor and Beneficiary further agree that, during the term of this Deed of Trust, the Rents shall not constitute property of Trustor (or of any estate of Trustor) within the meaning of 11 U.S.C. §541, as amended from time to time. By its acceptance of this Deed of Trust and so long as an Event of Default shall not have occurred, Beneficiary hereby grants to Trustor a revocable license to enforce the Leases and the Property Documents, to operate, maintain, repair and restore the Property in accordance with the Loan Documents, to collect and hold the Rents, to apply the Rents as a trust fund to be applied to the payment of the costs and expenses incurred in connection with the development, operation, maintenance, repair and restoration of the Property and to the Loan, and to distribute the balance of collected Rents, if any, to Trustor, in each case in accordance with the terms of the Loan Documents. The license granted Trustor shall not affect or diminish Beneficiary’s rights hereunder, but shall be interpreted to give Trustor certain concurrent rights with Beneficiary.

2.2 Revocation of License. From and after the occurrence of an Event of Default under the Property Acquisition Loan Agreement, Beneficiary shall have the right to revoke the license granted to Trustor in Section 2.1 by giving written notice of such revocation to Trustor without the necessity of Beneficiary taking control of the Property in person, by agent or by a court-appointed receiver. Upon such revocation, Trustor shall promptly deliver to Beneficiary all Rents then held by Trustor.

2.3 Collection By Beneficiary. From and after the occurrence of an Event of Default, Beneficiary shall have the right to collect all or any portion of the Rents, including, without limitation, all Rents accrued and unpaid as of such date, directly or through a court-appointed receiver, together with, without limitation, the right to:
(a) Give notice to the Tenants in accordance with the provisions of Section 2.4 hereof and, with or without taking possession of the Property, to demand that all Rents, including, without limitation, all Rents accrued and unpaid as of such date, under the Leases thereafter be paid to Beneficiary without deduction or offset;
(b) Enter into possession of the Property, to assume control with respect to, and to pay all expenses incurred in connection with, the development, operation, maintenance, repair or restoration of the Property, to enforce all or any provisions in the Leases and Property Documents

6 4884-3173-5165v4/200760-0007
and to collect all Rents due thereunder, to apply all Rents received by Beneficiary as provided in Section 2.5 hereof, to amend, modify, extend, renew and terminate any or all Leases, to execute new Leases and to do all other acts which Beneficiary shall determine, in its sole discretion, to be necessary or desirable to carry out the purposes of this Article 2; and (c) Specifically enforce the provisions of this Article 2 and to use all other measures, legal and equitable, deemed by Beneficiary necessary or proper to enforce Article 2 and to collect the Rents.

Trustor hereby appoints Beneficiary its true and lawful attorney-in-fact, effective upon an Event of Default, with full power of substitution, to, in Beneficiary’s own name and capacity, or in the name and capacity of Trustor, demand, collect, receive and give complete acquittances for any and all Rents, and at Beneficiary’s discretion to file any claim or take any other action or proceeding and make any settlement of any claims, either in its own name or in the name of Trustor, which Beneficiary may deem necessary or desirable in order to collect and enforce the payment of the Rents. THIS POWER OF ATTORNEY IS COUPLED WITH AN INTEREST AND MAY NOT BE REVOKED BY TRUSTOR UNTIL ALL OF TRUSTOR’S OBLIGATIONS TO BENEFICIARY UNDER THE LOAN DOCUMENTS ARE FULLY PAID AND SATISFIED.

2.4 Protection of Tenants. Trustor and Beneficiary agree that all of the Tenants shall be bound by and required to comply with the provisions of Article 2. In connection therewith, Trustor and Beneficiary further agree as follows:
(a) If requested by Beneficiary, Trustor shall: (i) notify each Tenant of the existence of this Deed of Trust and the rights and obligations of Trustor and Beneficiary under this Article 2; and (ii) obtain such Tenant’s agreement to be bound by and comply with the provisions of this Article 2.
(b) All Leases hereafter executed with respect to the Property or any portion thereof shall contain a reference to the assignment set forth in this Article 2 and shall state that such Tenant shall be bound by and shall comply with the provisions hereof. (c) From and after the occurrence of an Event of Default, Beneficiary may, at its option, send any Tenant a notice that: (i) an Event of Default has occurred and Beneficiary has revoked Trustor’s license to collect the Rents; (ii) Beneficiary has elected to exercise its rights under this Article 2; and (iii) such Tenant is thereby directed to thereafter make all payments of Rent, including, without limitation, all Rents accrued and unpaid as of such date, and to perform all obligations under its Lease to or for the benefit of Beneficiary or such party as Beneficiary shall direct.
(d) Upon receipt of any such notice from Beneficiary, each Tenant is hereby instructed by Trustor and Beneficiary to comply with the provisions of such notice, to make all payments of Rent, including, without limitation, all Rents accrued and unpaid as of such date, and to perform all obligations under the Lease to and for the benefit of Beneficiary or such party as Beneficiary shall direct. Such notice and direction shall remain effective until the first to occur of:
(i) the receipt by such Tenant of a subsequent notice from Beneficiary directing another method of payment of the Rents, (ii) the appointment of a receiver, in which event such Tenant shall thereafter make payments of Rent and perform all obligations under the Leases as may be directed by such

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receiver, or (iii) the issuance of an order of a court of competent jurisdiction terminating the assignment set forth in this Article 2 or otherwise directing another method of payment of the Rents. (e) Each Tenant who receives a notice from Beneficiary pursuant to Article 2 shall be entitled to rely upon such notice and shall not be required to investigate or determine the validity or accuracy of such notice or the validity or enforceability of the assignment set forth in this Article 2. Trustor hereby indemnifies and agrees to defend and hold each Tenant harmless from and against any and all expenses, loss, claims, damage or liability arising out of the Tenant’s compliance with such notice or performance of the obligations under the Lease by the Tenant made in good faith in reliance on and pursuant to such notice.
(f) Neither the payment of Rent to Beneficiary pursuant to any such notice nor the performance of the obligations under any Lease to or for the benefit of Beneficiary or such party as Beneficiary directs, nor the enforcement by Beneficiary of any provision in any Lease or Property Document shall cause Beneficiary to assume or be bound by the provisions of any Lease or Property Document.
(g) The provisions of this Section 2.4 are expressly made for the benefit of and shall be binding on and enforceable by each Tenant under the Leases.

2.5 Application of Rents; Security Deposits. All Rents received by Beneficiary pursuant to this Article 2 shall be applied by Beneficiary, in its sole discretion and in the order it elects, to any of the following:
(a) the costs and expenses of collection of the Rents, including, without limitation, attorneys’ fees and costs;
(b) the costs and expenses incurred in connection with the development, operation, ownership, maintenance, repair or restoration of the Property; (c) the establishment of reasonable reserves for working capital and for anticipated or projected costs and expenses, including, without limitation, capital improvements which may be reasonably necessary or desirable or which may be required by law; and (d) the payment of any indebtedness then owing by Trustor to Beneficiary.

Trustor further agrees that all Rents received by Beneficiary from any Tenant may be allocated first, if Beneficiary so elects, to the payment of all current obligations of such Tenant under its Lease and not to amounts which may be accrued and unpaid as of the date of revocation of Trustor’s license to collect such Rents. Beneficiary may, but shall have no obligation to, pursue any Tenant for the payment of Rent which may be due under its Lease with respect to any period prior to the exercise of Beneficiary’s right to revoke Trustor’s license under this Article 2 or which may become due thereafter. Notwithstanding anything to the contrary contained herein, Beneficiary shall not be liable to any Tenant for the payment or return of any security deposit under any Lease unless and to the extent that such security deposit has been paid to and received by Beneficiary and Trustor hereby indemnifies and agrees to defend and hold Beneficiary and its successors, assigns, agents, affiliates and subsidiaries harmless from and against any and all expenses (including attorneys’ fees and costs), loss, claims, damage or liability arising out of any claim by a Tenant with respect thereto; provided that such indemnity shall not extend to expenses, loss, claims, damage or liability arising,

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with respect to each indemnified party, from such indemnified party’s gross negligence or willful misconduct. Trustor further agrees that the collection of Rents by Beneficiary and the application of such Rents by Beneficiary to the costs, expenses and obligations referred to in this Section 2.5 shall not cure or waive any Event of Default or invalidate any act (including, but not limited to, any sale of all or any portion of the Property or any property now or hereafter securing the Loan) done in response to or as a result of such Event of Default.

2.6 Indemnity. Trustor hereby indemnifies and agrees to defend and hold Beneficiary and its successors, assigns, agents, affiliates and subsidiaries harmless from all expenses (including attorneys’ fees and costs), loss, claims, damage or liability which such parties may incur under any of the Leases or Property Documents or under or by reason of the assignment set forth in this Article 2 or by reason of any alleged obligation or undertaking on Beneficiary’s part to perform or discharge any covenants or agreements contained in any of the Leases or Property Documents; provided that such indemnity shall not extend to expenses, loss, claims, damage or liability arising, with respect to each indemnified party, from such indemnified party’s gross negligence or willful misconduct.

2.7 Priority of Assignment; Further Assurances. Trustor hereby represents and warrants that the assignment set forth in this Article 2 is a first priority assignment and that no other assignments of all or any portion of the Rents or the Leases or the Property Documents exist or remain outstanding. Trustor agrees to take such actions and, within ten (10) days after Beneficiary’s request, to execute, deliver and record such documents as may be reasonably necessary to evidence such assignment, to establish the priority thereof and to carry out the intent and purpose hereof. If requested by Beneficiary, Trustor shall, within ten (10) days after Beneficiary’s request, execute and deliver to Beneficiary a specific assignment of any Lease now or hereafter affecting all or any portion of the Property, in form and substance reasonably satisfactory to Beneficiary, and Trustor shall, within twenty (20) days after Beneficiary’s request, execute and deliver to Beneficiary, and cause the Tenants under the Leases, and any other party to, or guarantor of, the Leases, to execute and deliver to Beneficiary, nondisturbance and attornment agreements and/or estoppel certificates, in form and substance reasonably satisfactory to Beneficiary.

2.8 No Responsibility for Trustor’s Obligations. Notwithstanding the absolute, unconditional, present nature of the assignment set forth in this Article 2, nothing contained herein shall operate or be construed to obligate Beneficiary or any of its affiliates to perform any of the terms, covenants and conditions contained in any Lease or the Property Documents or otherwise to impose any obligation upon Beneficiary or any of its affiliates with respect to any Lease or the Property Documents, including, without limitation, any obligation arising out of any covenant of quiet enjoyment in any Lease in the event the Tenant under such Lease is joined as a party in any foreclosure action and the estate of such Tenant is thereby terminated. Prior to actual entry into and taking possession of the Property by Beneficiary, the assignment set forth in this Article 2 shall not operate to place upon Beneficiary or any of its affiliates any responsibility for the development, operation, control, maintenance, repair or restoration of the Property or any portion thereof, and the execution of this Deed of Trust by Trustor shall constitute conclusive evidence that all responsibility therefor is and shall be that of Trustor.

2.9 Termination of Assignment. A full and complete release and reconveyance of this Deed of Trust shall operate as a full and complete release of all of Beneficiary’s rights and interest under this Section. Upon the recordation of such full and complete release and reconveyance, the assignment set forth in this Article 2 shall thereafter be void and of no further effect.

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2.10 Covenants Running With the Land. Trustor’s covenants hereunder and the provisions of Section 2.4 shall be deemed covenants running with the land and shall be binding upon all Tenants, subtenants, licensees, other occupants of the Property and the assignees of same.

ARTICLE 3

GRANT OF SECURITY INTEREST

3.1 Fixture Filing. This Deed of Trust constitutes a financing statement filed as a fixture filing pursuant to § 9402(6) of the California Uniform Commercial Code, as amended or recodified from time to time, covering any Property which is now or may later become fixtures attached to the Land or the Improvements. This filing is to be recorded in the real estate records of the county where the Property is located. In that connection, the following information is provided:

Name of Debtor: Trustor
Address of Debtor: See page 1 hereof
Name of Secured Party: Beneficiary
Address of Secured party: See page 1 hereof
ARTICLE 4

RIGHTS AND DUTIES OF THE PARTIES

4.1 Representations and Warranties of Trustor. Trustor represents, warrants and covenants that, except as previously disclosed to Beneficiary in a writing making reference to this warranty:
(a) Trustor is a nonprofit, public benefit corporation, duly formed, organized and existing under the laws of California. The execution and delivery of the Loan Documents and the performance of the obligations thereunder do not conflict with any provision of Trustor’s Articles of Incorporation, Bylaws, or any other agreements governing Trustor, and have been duly authorized by all necessary action of its partners.
(b) Trustor lawfully possesses and holds fee simple title to the Land and Improvements as of the date this Deed of Trust is recorded. (c) Trustor has or will have good title to all Property including the Land and Improvements.
(d) Trustor has the full and unlimited power, right and authority to encumber the Property and Trustor has the full and unlimited power, right and authority to assign the Rents. (e) This Deed of Trust creates a first priority lien on the Property. (f) The Property includes all property and rights which may be reasonably necessary or desirable to promote the present and any reasonably future beneficial use and enjoyment of the Land and Improvements.
(g) Trustor owns the Personal Property, and any other Property which under applicable law is personal property, free and clear of any security agreements, reservations of title or conditional sales contracts and there is no financing statement affecting such Personal Property on file in any public office.

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(h) The execution and delivery of the Loan Documents, the payment of the Indebtedness, and the performance of the Obligations do not violate any law or conflict with any agreement by which Trustor is bound, or any court order by which Trustor is bound. No consent or approval of any governmental authority or any third party is required for the execution or delivery of the Loan Documents, the payment of Indebtedness, and the performance of the Obligations. The Loan Documents constitute the legal, valid and binding obligations of Trustor enforceable against Trustor in accordance with their respective terms, subject only to applicable bankruptcy, insolvency and similar laws affecting rights of creditors generally, and subject, as to enforceability, to general principles of equity (regardless of whether enforcement is sought in a proceeding in equity or at law). (i) All permits, licenses, authorizations, approvals, and certificates, including certificates of completion and occupancy permits, required by law, ordinance or regulation have been obtained and are and shall remain in full force and effect. Trustor and the use and occupancy of the Land and all improvements thereon are and shall remain in compliance with all laws, regulations and ordinances, including without limitation, all restrictive covenants of record and zoning and building laws.
(j) The Property has parking and other amenities necessary for the operation of the business currently conducted thereon which are adequate in relation to the premises and location on which the Property is located.
(k) The Property is a contiguous parcel and a separate tax parcel, and there are no delinquent taxes or other outstanding charges adversely affecting the Property. (l) To the best of Trustor’s knowledge, no action, omission, misrepresentation, negligence, fraud or similar occurrence has taken place on the part of any person that would reasonably be expected to result in the failure or impairment of full and timely coverage under any insurance policies providing coverage for the Property. (m) None of Trustor or any other holder of a direct or indirect legal or beneficial interest in Trustor is or will be, held, directly or indirectly, by a “foreign corporation,” “foreign partnership,” “foreign trust,” “foreign estate,” “foreign person,” “affiliate” of a “foreign person” or a “United States intermediary” of a “foreign person” within the meaning of IRC Sections 897 and 1445, the Foreign Investments in Real Property Tax Act of 1980, the International Investment and Trade in Services Survey Act, the Agricultural Foreign Investment Disclosure Act of 1978, the regulations promulgated pursuant to such acts or any amendments to such acts. (n) Trustor is not insolvent, and there has been no (i) assignment made for the benefit of the creditors of Trustor, (ii) appointment of a receiver for Trustor or for the assets or properties of Trustor, or (iii) any bankruptcy, reorganization, or liquidation proceeding instituted by or against Trustor.
(o) All information in the application for the Loan submitted to Beneficiary (the “Loan Application”) and in all financial statements, reports, certificates and other documents submitted in connection with the Loan Application or in satisfaction of the terms thereof furnished by Trustor and, to the best knowledge of Trustor, those prepared and furnished by a third party on behalf of Trustor, are accurate, complete and correct in all material respects. There has been no material adverse change in the representations made or information heretofore supplied by or on behalf of Trustor in connection with the Loan or the Loan Application as to Trustor or the Property. There has

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been no adverse change in any condition, fact, circumstance or event that would make any such representations or information inaccurate, incomplete or otherwise misleading. (p) There is no litigation, arbitration, condemnation proceeding or other proceeding or governmental investigation pending or, to the best knowledge of Trustor, threatened against or relating to Trustor or the Property and there are no outstanding judgment(s) against or relating to Trustor. Trustor has not (A) had any property foreclosed upon, (B) given a deed in lieu of foreclosure, or (C) been involved in any criminal proceedings where Trustor was the defendant.

Trustor has not defaulted on any loan or other indebtedness. (q) The proceeds evidenced by the Note will be used by Trustor solely and exclusively for proper business purposes and will not be used for the purchase or carrying of registered equity securities within the purview and operation of any regulation issued by the Board of Governors of the Federal Reserve System or for the purpose of releasing or retiring any indebtedness which was originally incurred for any such purpose.
(r) Trustor has filed all federal, state, county, municipal, and city income and other tax returns required to have been filed by them and have paid all taxes and related liabilities which have become due pursuant to such returns or pursuant to any assessments received by them.

Trustor does not know of any basis for any additional assessment in respect to any such taxes and related liabilities for prior years.
(s) Trustor covenants that if at any time the United States of America, any State thereof or any subdivision of any such State shall require revenue or other stamps to be affixed to the Note or this Deed of Trust, or impose any other tax or charge on the same, Trustor will pay for the same, with interest and penalties thereon, if any.
(t) As of the date hereof, Trustor has no valid offset, defense, counterclaim, abatement or right to rescission with respect to any of the Loan Documents. (u) Trustor represents and covenants that it is not and will not become a person (individually, a “Prohibited Person” and collectively “Prohibited Persons”) listed on the Specially Designated Nationals and Blocked Persons List maintained by the Office of Foreign Asset Control, U.S. Department of the Treasury (the “OFAC List”) or otherwise subject to any other prohibitions or restriction imposed by laws, rules, regulations or executive orders, including Executive Order No. 13224, administered by OFAC (collectively the “OFAC Rules”). Trustor represents and covenants that it also (i) is not and will not become owned or controlled by a Prohibited Person, (ii) is not acting and will not act for or on behalf of a Prohibited Person, (iii) is not otherwise associated with and will not become associated with a Prohibited Person, (iv) is not providing and will not provide any material, financial or technological support for or financial or other service to or in support of acts of terrorism or a Prohibited Person. Trustor will not transfer any interest in Trustor to or enter into a lease with a Prohibited Person. Trustor shall immediately notify Beneficiary if Trustor has knowledge that any guarantor, manager, member, partner, shareholder or beneficial owner of Trustor is or becomes a Prohibited Person or (A) is indicted on or (B) arraigned and held over on charges involving money laundering or predicate crimes to money laundering. Trustor will not enter into any lease or any other transaction or undertake any activities related to the Loan in violation of the federal Bank Secrecy Act, as amended (“BSA”), 31 U.S.C. §5311, et seq. or any federal or state laws, rules, regulations or executive orders, including, but not limited to, 18 U.S.C. §§1956, 1957 and 1960, prohibiting money laundering and terrorist financing (collectively

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“Anti-Money Laundering Laws”). Trustor shall (a) not use or permit the use of any proceeds of the Loan in any way that will violate either the OFAC Rules or Anti-Money Laundering Laws, (b) comply and cause all of its subsidiaries to comply with applicable OFAC Rules and Anti-Money Laundering Laws, (c) provide information as Beneficiary may require from time to time to permit Beneficiary to satisfy its obligations under the OFAC Rules and(or) the Anti-Money Laundering Laws and (d) not engage in or conspire to engage in any transaction that evades or avoids, or has the purpose of evading or avoiding, or attempts to violate, any of the foregoing. (v) Trustor’s place of business, or its chief executive office if it has more than one place of business, is located at the address specified on page 1 hereof. (w) The transaction evidenced by this Deed of Trust, the Loan Documents, and the Obligations is for Trustor’s nonprofit purposes, including farming, agricultural, animal raising, and related educational purposes and not for personal, residential, household, or consumer purposes.

Except as otherwise provided herein, each and all of the representations, covenants and obligations of Trustor shall survive the execution and delivery of the Loan Documents and shall continue in full force and effect until the Indebtedness is paid in full.

4.2 Payment and Performance of Secured Obligations. Trustor shall pay when due the principal of and the interest on the indebtedness evidenced by the Note, charges, fees and all other sums as provided in the Loan Documents, and the principal of and interest on any future advances secured by this Deed of Trust. Trustor shall promptly perform each other Secured Obligation in accordance with its terms.

4.3 Maintenance, Repair, Alterations. Trustor shall keep, or cause the Tenants to keep, the Property in good condition and repair, and shall not remove, demolish or substantially alter (except such alterations as may be required by laws, ordinances or regulations) any of the Improvements; shall complete promptly and in good and workmanlike manner any building or other improvement which may be constructed on the Land and promptly restore in like manner any Improvements which may be damaged or destroyed, and shall pay when due all claims for labor performed and materials furnished therefor, subject to the right to contest the same in good faith and, to the extent applicable, in accordance with Section 4.20 hereof; shall comply with all laws, ordinances, regulations, covenants, conditions and restrictions now or hereafter affecting the Property, or any part thereof, or requiring any alterations or improvements; shall not commit or permit any waste or deterioration of the Property (other than ordinary wear and tear); shall keep and maintain abutting grounds, sidewalks, roads, parking and landscape areas in good and neat order and repair; shall comply with the provisions of applicable leases; and shall not commit, suffer or permit any act to be done in or upon the Property in violation of any law, ordinance or regulation.

4.4 Management of the Property. If at any time the Property is managed other than by Trustor, or by an entity controlled by Trustor, Beneficiary shall have the right in its sole discretion to approve the selection of such management, and Trustor shall submit the proposed management contract, and such other information about the manager as Beneficiary requests, to Beneficiary for its review and approval, in Beneficiary’s sole discretion, at least ten (10) days prior to Trustor’s signing and entering into the management contract. If at any time when the Property is being managed other than by Trustor or an entity controlled by Trustor, and Beneficiary determines in its sole discretion that the management is not satisfactory for the protection of the Property, Beneficiary shall have the right to require Trustor to change such management so as to be satisfactory to Beneficiary.

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4.5 Required Insurance.
(a) Trustor shall keep the Improvements insured, and shall maintain during the entire term of this Deed of Trust, comprehensive general liability coverage and such other coverages requested by Beneficiary, by carrier(s), in amounts and in form at all times satisfactory to Beneficiary, which carrier(s), amounts and form shall not be changed without the prior written consent of Beneficiary. All such policies of insurance shall be issued by insurers qualified under the laws of the state in which the Land is located, duly authorized and licensed to transact business in such state and reflecting a General Policy Rating of A: VIII or better in A.M. Best’s Key Rating Guide (the “Required Rating”). Trustor shall maintain all coverages on the Property as are required by Beneficiary at the closing of the Loan, and all other coverages as may be deemed necessary by Beneficiary from time to time during the term of the Loan. Any failure by Beneficiary to insist on full compliance with all of the above insurance requirements at closing does not constitute a waiver of Beneficiary’s right to subsequently require full compliance with these requirements. All policies required hereunder shall be indicated by evidence of insurance on the Acord 28 (or similar) form of certificate (as such form may be updated and renamed from time to time), naming Beneficiary as additional insured as to the liability insurance and first mortgagee/loss payee as to the property insurance. All such policies shall contain a provision that such policies will not be canceled or materially amended, which terms shall include any reduction in the scope or limits of coverage, without at least thirty (30) days’ prior written notice to Beneficiary (or ten (10) days in the case of non-payment). At least two (2) days prior to the expiration of each such policy, Trustor shall furnish Beneficiary with evidence satisfactory to Beneficiary of the payment of the premium for and the re-issuance of a policy continuing insurance in force as required by this Deed of Trust. (b) Unless Trustor provides Beneficiary with evidence of the insurance coverage required by this Deed of Trust, or in the event that Trustor otherwise fails to provide, maintain and keep in force or deliver and furnish to Beneficiary the policies of insurance required hereunder, Beneficiary may purchase insurance at Trustor’s expense to protect Beneficiary’s interests in the Property and to maintain the insurance required by this Deed of Trust. This insurance may, but need not, protect Trustor’s interests. The coverage purchased by Beneficiary may not pay any claim made by Trustor or any claim that is made against Trustor in connection with the Property or any required insurance policy. Trustor may later cancel any insurance purchased by Beneficiary, but only after providing Beneficiary with evidence that Trustor has obtained insurance as required by this Deed of Trust. If Beneficiary purchases insurance for the Property or insurance otherwise required by this Deed of Trust, Trustor will be responsible for the costs of that insurance, including interest and other charges imposed by Beneficiary in connection with the placement of the insurance, until the effective date of the cancellation or expiration of the insurance. The costs of the insurance may be added to the Indebtedness. The costs of the insurance may be more than the cost of insurance Trustor is able to obtain on its own.

4.6 Delivery of Policies; Payment of Premiums. At the request of Beneficiary, Trustor shall deposit with Beneficiary, in monthly installments, an amount equal to one-twelfth (1/12) of the estimated aggregate annual insurance premiums on all policies of insurance required by this Deed of Trust; provided, however that Beneficiary shall make no such request for monthly deposits unless and until such time (if ever) as an Event of Default (as defined in Section 6.1 below) has occurred, whereupon Beneficiary shall at any and all times thereafter have the right to require such monthly deposits by Trustor, whether or not the Event of Default has been cured. Trustor further agrees, upon Beneficiary’s instruction, following an Event of Default, to cause all bills, statements or other documents relating to the foregoing insurance premiums to be sent or mailed directly to Beneficiary.

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Upon receipt of such bills, statements or other documents, and providing Trustor has deposited sufficient funds with Beneficiary pursuant to this Section, Beneficiary shall pay such amounts as may be due thereunder out of the funds so deposited with Beneficiary. If at any time and for any reason the funds deposited with Beneficiary are or will be insufficient to pay such amounts as may then or subsequently be due, Beneficiary shall notify Trustor and Trustor shall immediately deposit an amount equal to such deficiency with Beneficiary. Notwithstanding the foregoing, nothing contained herein shall cause Beneficiary to be deemed a trustee of said funds or to be obligated to pay any amounts in excess of the amount of funds deposited with Beneficiary pursuant to this Section.

Beneficiary may commingle said reserve with its own funds and Trustor shall be entitled to no interest thereon.

4.7 Damages and Insurance and Condemnation Proceeds.
(a) Trustor hereby absolutely and irrevocably assigns to Beneficiary, and authorizes the payor to pay to Beneficiary, the following claims, causes of action, awards, payments and rights to payment: (i) all awards of damages and all other compensation payable directly or indirectly because of a condemnation, proposed condemnation or taking for public or private use which affects all or part of the Property or any interest in it; (ii) all other awards, claims and causes of action arising out of any warranty affecting all or any part of the Property, or for damage or injury to or decrease in value of all or part of the Property or any interest in it; (iii) all proceeds of any insurance policies payable because of loss sustained to all or part of the Property; and (iv) all interest which may accrue on any of the foregoing.
(b) Trustor shall immediately notify Beneficiary in writing if: (i) any damage occurs or any injury or loss is sustained in any amount in excess of $10,000.00 to all or part of the Property, or any action or proceeding relating to any such damage, injury or loss is commenced; or (ii) any offer is made, or any action or proceeding is commenced, which relates to any actual or proposed condemnation or taking of all or part of the Property. If Beneficiary chooses to do so, it may in its own name appear in or prosecute any action or proceeding to enforce any cause of action based on warranty, or for damage, injury or loss to all or part of the Property, and it may make any compromise or settlement of the action or proceeding. Beneficiary, if it so chooses, may participate in any action or proceeding relating to condemnation or taking of all or part of the Property, and may join Trustor in adjusting any loss covered by insurance. (c) All proceeds of these assigned claims, other property and rights which Trustor may receive or be entitled to shall be paid to Beneficiary. In each instance, Beneficiary shall apply those proceeds first toward reimbursement of all of Beneficiary’s costs and expenses of recovering the proceeds, including attorneys’ fees.

4.8 Use of Proceeds by Trustor.
(a) If, in any instance, each and all of the following conditions are satisfied in Beneficiary’s reasonable judgment, Beneficiary shall permit Trustor to use the balance of the proceeds assigned and deposited with Beneficiary under the preceding Section 4.7 (“Net Claims Proceeds”) to pay costs of repairing or reconstructing the Property in the manner described below:
(i) The plans and specifications, cost breakdown, projected construction costs, construction contract, construction schedule, contractor and payment and performance bonds for the work of repair or reconstruction must all be reasonably acceptable to Beneficiary.

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(ii) Beneficiary must receive evidence satisfactory to it that after repair or reconstruction and the completion of construction, the outstanding balance of all Secured Obligations will not exceed seventy percent (70%) of the value of the Property. (iii) The Net Claims Proceeds must be sufficient in Beneficiary’s determination to pay for the total cost of repair or reconstruction, including all associated development costs and interest projected to be payable on the Secured Obligations until the repair or reconstruction is complete; or Trustor must provide its own funds in an amount equal to the difference between the Net Claims Proceeds and a reasonable estimate, made by Trustor and found acceptable by Beneficiary, of the total cost of repair or reconstruction. (iv) No Event of Default shall have occurred and be continuing. (b) If the foregoing conditions are met, Beneficiary shall hold the Net Claims Proceeds in an interest-bearing account and shall disburse them to Trustor to pay costs of repair or reconstruction, on such terms and subject to such conditions as are reasonably established by Beneficiary to govern disbursement of funds, including without limitation providing evidence of costs, percentage completion of repair or reconstruction, application of payments and satisfaction of mechanics’ liens. However, if Beneficiary determines that the foregoing conditions are met and the Net Claims Proceeds exceed the costs of repair and reconstruction of the Property or if Beneficiary determines that one or more of the foregoing conditions are not satisfied, then Beneficiary shall apply the Net Claims Proceeds contained in the interest bearing account to pay or prepay (without premium) some or all of the Secured Obligations in such order and proportions as Beneficiary in its sole, absolute and unfettered discretion may choose.
(c) Trustor hereby specifically, unconditionally and irrevocably waives all rights of a property owner granted under California Code of Civil Procedure §1265.225(a), which provides for allocation of condemnation proceeds between a property owner and a lien holder, and any other law or successor statute of similar import.
(d) Nothing herein contained shall be deemed to excuse Trustor from repairing or maintaining the Property as provided in Section 4.3 hereof or restoring all damage or destruction to the Improvements, regardless of whether or not there are insurance proceeds available or whether any such proceeds are sufficient in amount, and the application or release by Beneficiary of any insurance proceeds shall not cure or waive any default or notice of default under this Deed of Trust or invalidate any act done pursuant to such notice.

4.9 Assignment of Insurance Policies Upon Foreclosure. In the event of foreclosure of this Deed of Trust or other transfer of title or assignment of the Property in extinguishment, in whole or in part, of the debt secured hereby, all right, title and interest of Trustor in and to all policies of insurance required by this Deed of Trust shall inure to the benefit of and pass to the successor in interest of Trustor, or the purchaser or grantee of the Property.

4.10 Subrogation; Waiver of Offset.
(a) If Beneficiary is made a party defendant to any litigation concerning this Deed of Trust or the Property or any part thereof or interest therein, or the occupancy thereof by Trustor, then Trustor shall indemnify, defend and hold Beneficiary harmless from all liability by reason of said litigation (other than to the extent arising from Beneficiary’s gross negligence or

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willful misconduct), including attorneys’ fees and expenses incurred by Beneficiary in any such litigation, whether or not any such litigation is prosecuted to judgment. If Beneficiary commences an action against Trustor to enforce any of the terms hereof or because of the breach by Trustor of any of the terms hereof, or for the recovery of any sum secured hereby, Trustor shall pay to Beneficiary attorneys’ fees and expenses, and the right to such attorneys’ fees and expenses shall be deemed to have accrued on the commencement of such action, and shall be enforceable whether or not such action is prosecuted to judgment. If Trustor breaches any term of this Deed of Trust, Beneficiary may employ an attorney or attorneys to protect its rights hereunder and, in the event of such employment following any breach by Trustor, Trustor shall pay Beneficiary attorneys’ fees and expenses incurred by Beneficiary, whether or not an action is actually commenced against Trustor by reason of breach. Notwithstanding the foregoing, if an action is actually commenced by either party and such action proceeds to final judgment in favor of Trustor, then (i) Trustor shall have no obligation to pay Beneficiary’s attorneys’ fees and expenses, and (ii) Beneficiary shall pay Trustor attorneys’ fees and expenses incurred by Trustor in connection with such action. (b) Trustor waives any and all right to claim or recover against Beneficiary, its officers, employees, agents and representatives, for loss of or damage to Trustor, the Property, Trustor’s other property or the property of others under Trustor’s control from any cause insured against or required to be insured against by the provisions of this Deed of Trust, other than as a result of Beneficiary’s gross negligence or willful misconduct. (c) All sums payable by Trustor hereunder shall be paid without notice (except as expressly provided herein), demand, counterclaim, setoff, deduction or defense and without abatement, suspension, deferment, diminution or reduction, and the obligations and liabilities of Trustor hereunder shall in no way be released, discharged or otherwise affected (except as expressly provided herein) by reason of: (i) any damage to or destruction of, or any condemnation or similar taking of, the Property or any part thereof; (ii) any restriction or prevention of or interference with any use of the Property or any part thereof; (iii) any title defect or encumbrance or any eviction from the Land or the Improvements or any part thereof by title paramount or otherwise; (iv) any bankruptcy, insolvency, reorganization, composition, adjustment, dissolution, liquidation or other like proceeding relating to Beneficiary or Trustor, or any action taken with respect to this Deed of Trust by any trustee or receiver of Beneficiary or Trustor, or by any court, in any such proceeding; (v) any claim which Trustor has or might have against Beneficiary; or (vi) any other occurrence whatsoever, whether similar or dissimilar to the foregoing, whether or not Trustor shall have notice or knowledge of any of the foregoing. Except as expressly provided herein, Trustor waives all rights now or hereafter conferred by statute or otherwise to any abatement, suspension, deferment, diminution or reduction of any sum secured hereby and payable by Trustor.

4.11 Taxes and Impositions.
(a) Trustor shall pay, prior to delinquency, all real property taxes and assessments, general and special, and all other taxes and assessments of any kind or nature whatsoever, including, without limitation, non-governmental levies or assessments such as maintenance charges, owner association dues or charges or fees, levies or charges resulting from covenants, conditions and restrictions affecting the Property, which are assessed or imposed upon the Property, or become due and payable, and which create, may create or appear to create a lien upon the Property, or any part thereof, or upon any personal property, equipment or other facility used in the operation or maintenance thereof (all of which taxes, assessments and other governmental and non-governmental charges of like nature are hereinafter referred to as “Impositions”); provided,

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however, that if, by law, any such Imposition is payable, or may at the option of the taxpayer be paid, in installments, Trustor may pay the same, together with any accrued interest on the unpaid balance of such Imposition, in installments as the same become due and before any fine, penalty, interest or cost may be added thereto for the nonpayment of any such installment and interest. (b) If at any time after the date hereof there shall be assessed or imposed: (i) a tax or assessment on the Property in lieu of or in addition to the Impositions payable by Trustor pursuant to the preceding Subsection (a); or (ii) a license fee, tax or assessment imposed on Beneficiary and measured by or based in whole or in part upon the amount of the outstanding obligations secured hereby, then all such taxes, assessments or fees shall be deemed to be included within the term “Impositions” as herein defined, and Trustor shall pay and discharge the same as herein provided with respect to the payment of Impositions or, at the option of Beneficiary, all obligations secured hereby, together with all accrued interest thereon, shall immediately become due and payable. Anything to the contrary herein notwithstanding, Trustor shall have no obligation to pay any franchise, estate, inheritance, income, excess profits or similar tax levied on Beneficiary or on the obligations secured hereby.
(c) Subject to the provisions of Subsection (d) below, Trustor covenants to furnish Beneficiary upon request, within thirty (30) days after the date upon which any such Imposition would result in delinquency by Trustor, official receipts of the appropriate taxing authority, or other proof satisfactory to Beneficiary, evidencing the payments thereof. (d) Trustor shall have the right to contest or object to the amount or validity of any such Imposition by appropriate legal proceedings, but this shall not be deemed or construed as in any way relieving, modifying or extending Trustor’s covenant to pay any such Imposition at the time and in the manner provided in this Section 4.11, unless Trustor has given prior written notice to Beneficiary of Trustor’s intent to so contest or object to an Imposition, and unless: (i) Trustor shall furnish a good and sufficient bond satisfactory to Beneficiary; or (ii) Trustor shall have provided a good and sufficient undertaking as may be required or permitted by law to accomplish a stay of such proceedings.
(e) At the request of Beneficiary, Trustor shall pay to Beneficiary, on the day monthly installments of principal and(or) interest are payable by Trustor under the Note, until the Note is paid in full, an amount equal to one-twelfth (1/12th) of the annual Impositions estimated by Beneficiary as necessary to pay the installment of taxes next due on the Property; provided, however that Beneficiary shall make no such request for monthly deposits unless and until such time (if ever) as an Event of Default (as defined in Section 6.1 below) has occurred, whereupon Beneficiary shall at any and all times thereafter have the right to require such monthly deposits by Trustor, whether or not the Event of Default has been cured. In such event, Trustor further agrees to cause all bills, statements or other documents relating to Impositions to be sent or mailed directly to Beneficiary.

Upon receipt of such bills, statements or other documents, and providing Trustor has deposited sufficient funds with Beneficiary pursuant to this Section, Beneficiary shall pay such amounts as may be due thereunder out of the funds so deposited with Beneficiary. If at any time and for any reason the funds deposited with Beneficiary are or will be insufficient to pay such amounts as may then or subsequently be due, Beneficiary shall notify Trustor and Trustor shall immediately deposit an amount equal to such deficiency with Beneficiary. Notwithstanding the foregoing, nothing contained herein shall cause Beneficiary to be deemed a trustee of said funds or to be obligated to pay any amounts in excess of the amount of funds deposited with Beneficiary pursuant to this Section.

Beneficiary shall not be obliged to pay or allow any interest on any sums held by Beneficiary

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pending disbursement or application hereunder, and Beneficiary may impound or reserve for future payment of Impositions such portion of such payments as Beneficiary may in its reasonable discretion deem proper, applying the balance to the principal of or interest on the Secured Obligations. If Trustor fails to deposit with Beneficiary (exclusive of that portion of said payments which has been applied by Beneficiary on the principal of or interest on the indebtedness secured by the Loan Documents) sums sufficient to fully pay such Impositions at least fifteen (15) days before delinquency thereof, Beneficiary may, at Beneficiary’s election, but without any obligation so to do, advance any amounts required to make up the deficiency, which advances, if any, shall be secured hereby and shall be repayable to Beneficiary as herein elsewhere provided, or, at the option of Beneficiary, the latter may, without making any advance whatever, apply any sums held by it upon any obligation of the Trustor secured hereby. If any Event of Default occurs or exists on the part of Trustor in the payment or performance of any of Trustor’s obligations under the terms of the Loan Documents, Beneficiary may, at any time and at Beneficiary’s option, apply any sums or amounts in its hands received pursuant hereto, or as rents or income of the Property or otherwise, upon any indebtedness or obligation of Trustor secured hereby in such manner and order as Beneficiary may elect. The receipt, use or application of any such sums paid by Trustor to Beneficiary hereunder shall not be construed to affect the maturity of any indebtedness secured by this Deed of Trust or any of the rights or powers of Beneficiary or Trustee under the terms of the Loan Documents or any of the obligations of Trustor under any of the Loan Documents. (f) Trustor covenants and agrees to use best efforts to prevent the joint assessment of the real and personal property, or any other procedure whereby the lien of the real property taxes and the lien of the personal property taxes shall be assessed, levied or charged to the Property as a single lien.

4.12 Utilities and Assessments. Trustor shall pay when due all utility charges which are incurred by Trustor for the benefit of the Property or which may become a charge or lien against the Property for gas, electricity, water or sewer services furnished to the Property and all other assessments or charges of a similar nature affecting the Property or any portion thereof, public or private (and including without limitation all homeowners association dues and assessments), whether or not such taxes, assessments or charges are liens on the Property.

4.13 Actions Affecting Property. Trustor shall appear in and contest any action or proceeding purporting to affect the security hereof or the rights or powers of Beneficiary or Trustee; and Trustor shall pay all costs and expenses, including cost of evidence of title and attorneys’ fees, in any such action or proceeding in which Beneficiary or Trustee may appear.

4.14 Actions by Trustee and(or) Beneficiary to Preserve Property. If Trustor or any other party obligated under the Loan Documents in favor of Beneficiary, fails to make any payment or to do any act as and in the manner provided in any of the Loan Documents, Beneficiary and(or) Trustee, each in its own absolute and unfettered discretion, without obligation so to do upon five (5) days prior written notice to Trustor, except such notice shall not be required where the delay resulting from the provisions of such notice could have a material adverse effect on the Property or the Beneficiary’s interests therein, and without releasing Trustor, or any other party obligated under the Loan Documents in favor of Beneficiary, from any obligation, may make or do the same in such manner and to such extent as either may deem necessary to protect the security hereof. In connection therewith (without limiting their general powers), Beneficiary and(or) Trustee shall have and are hereby given the right, but not the obligation, (i) upon prior notice to Trustor, to enter upon and take possession of the Property; (ii) upon prior notice to Trustor, to make additions, alterations, repairs

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and improvements to the Property which they or either of them may consider necessary or proper to keep the Property in good condition and repair; (iii) upon prior notice to Trustor, to appear and participate in any action or proceeding affecting or which may affect the security hereof or the rights or powers of Beneficiary or Trustee; (iv) upon prior notice to Trustor, to pay, purchase, contest or compromise any encumbrance, claim, charge, lien or debt which in the judgment of either may affect or appears to affect the security of this Deed of Trust or be prior or superior hereto; and (v) in exercising such powers, to pay necessary expenses, including employment of counsel or other necessary or desirable consultants. Trustor shall, immediately upon demand therefor by Beneficiary, pay all costs and expenses incurred by Beneficiary in connection with the exercise by Beneficiary of the foregoing rights, including, without limitation, costs of evidence of title, court costs, appraisals, surveys and attorneys’ fees.

4.15 Survival of Warranties. Trustor shall fully and faithfully satisfy and perform the obligations of Trustor contained in any of the Loan Documents. All representations, warranties and covenants of Trustor contained therein or incorporated by reference shall survive the close of escrow and funding of the loan evidenced by the Note, and shall remain continuing obligations, warranties and representations of Trustor during any time when any portion of the obligations secured by this Deed of Trust remain outstanding.

4.16 Additional Security. In the event Beneficiary at any time holds additional security for any of the obligations secured hereby, Beneficiary may after an Event of Default (as defined in Section 6.1 below) enforce the sale thereof or otherwise realize upon the same, at its option, either before or concurrently herewith or after a sale is made hereunder.

4.17 Appointment of Successor Trustee. Trustor shall pay to Trustee reasonable compensation and reimbursement for services and expenses in the administration of the trusts created hereunder, including attorneys’ fees, but in no event more than allowed by applicable law. Trustor hereby indemnifies Trustee and Beneficiary against all losses, claims, demands and liabilities that either may incur, suffer or sustain in the execution of the trusts created hereunder or in the performance of any act required or permitted hereunder by law. Beneficiary may, from time to time, by a written instrument executed and acknowledged by Beneficiary, mailed to Trustor and recorded in the county in which the Property is located, and by otherwise complying with the provisions of the applicable law of the State of California, substitute a successor or successors to the Trustee named herein or acting hereunder.

4.18 Successors and Assigns. This Deed of Trust applies to, inures to the benefit of and binds all parties hereto, their heirs, legatees, devisees, administrators, executors, successors and assigns. The term “Beneficiary” shall mean the owner and holder of the Note, whether or not named as Beneficiary herein.

4.19 Inspections. Beneficiary, or its agents, representatives or workmen, are authorized to enter at any reasonable time upon or in any part of the Property for the purpose of inspecting the same and for the purpose of performing any of the acts it is authorized to perform under the terms of any of the Loan Documents.

4.20 Liens. If any claim of lien is recorded which affects the Property or the Loan, Trustor shall, within twenty (20) days after such recording or service: (i) pay and discharge the same; (ii) effect the release thereof by recording or delivering to Beneficiary a surety bond in form and amount satisfactory to Beneficiary; or (iii) provide Beneficiary with other assurance (including

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appropriate title endorsements) which Beneficiary, in its sole discretion, deems to be satisfactory for the payment of such lien or bonded stop notice and for the full and continuous protection of Beneficiary from the effect thereof. If Trustor fails to remove any lien on the Property or the Loan, and fails to provide satisfactory security in lieu of removal of such lien as provided in (ii) above and fails to provide Beneficiary with the assurances as provided in (iii) above, Beneficiary may pay such lien or may contest the validity thereof, may pay all costs and expenses of contesting the same, including attorneys’ fees, and Trustor shall reimburse Beneficiary on demand for all payments made and costs and expenses incurred by Beneficiary in doing so.

4.21 Trustee’s Power. Trustee may, at any time or from time to time, without liability therefor and without notice, upon written request of Beneficiary and presentation of this Deed of Trust and the Note secured hereby for endorsement, and without affecting the personal liability of any person for payment of the indebtedness secured hereby or the effect of this Deed of Trust upon the remainder of said Property: (i) reconvey any part of said Property; (ii) consent in writing to the making of any map or plat thereof; (iii) join in granting any easement thereon; or (iv) join in any extension agreement or any agreement subordinating the lien or charge hereof.

4.22 Beneficiary’s Power. Beneficiary, without affecting the liability of any other person liable for the payment of any obligation herein mentioned, and without affecting the lien or charge of this Deed of Trust upon any portion of the Land not then or theretofore released as security for the full amount of all unpaid obligations, may from time to time and without notice: (i) release any person so liable; (ii) extend the maturity or alter any of the terms of any such obligation; (iii) grant other indulgences; (iv) release or reconvey, or cause to be released or reconveyed at any time at Beneficiary’s option, any parcel, portion or all of the Property; (v) take or release any other additional security for any obligation herein mentioned; (vi) make compositions or other arrangements with debtors in relation thereto; or (vii) advance additional funds to protect the security hereof and pay or discharge the obligations of Trustor hereunder or under the Loan Documents, and all amounts so advanced, with interest thereon at the rate per annum in effect from time to time under the Note, shall be secured hereby.

4.23 Trade Names. At the request of Beneficiary, Trustor shall execute a certificate in form satisfactory to Beneficiary listing the trade names under which Trustor operates or intends to operate the Property, and representing and warranting that Trustor does business under no other trade names with respect to the Property. Trustor shall immediately notify Beneficiary in writing of any change in said trade names and Beneficiary may file one or more financing statements and such other documents as Beneficiary may from time to time require to perfect or continue the perfection of Beneficiary’s security interest in any Property to reflect the change in trade name.

4.24 Reconveyance by Trustee. Upon written request of Beneficiary stating that all sums secured hereby have been paid, and upon surrender of this Deed of Trust and the Note to Trustee for cancellation and retention and upon payment by Trustor of Trustee’s fees, Trustee shall reconvey to Trustor, or the person or persons legally entitled thereto, without warranty, any portion of the Property then held hereunder. The recitals in such reconveyance of any matters or facts shall be conclusive proof of the truthfulness thereof. The grantee in any reconveyance may be described as “the person or persons legally entitled thereto.”

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ARTICLE 5

ADDITIONAL COVENANTS

5.1 Acceleration on Sale.
(a) Trustor understands that in making the loan evidenced by the Note, Beneficiary is relying upon the continuing interest which Trustor has in the Property. Accordingly, except as expressly provided herein or in any of the Loan Documents to the contrary, in the event that Trustor, without the prior written consent of Beneficiary, directly or indirectly, voluntarily or involuntarily, sells, assigns, transfers, disposes of or sublets or agrees to sell, assign, transfer, dispose of or sublet all or any portion of or any interest in the Property whether by outright sale, deed, installment sale contract, land contract, contract for deed, ground lease or any other leases, lease-option contract, or by sale, assignment or sublease, or transfers of any beneficial interest in or to any land trust holding title to the Property, or by any other method of conveyance of an interest in the Property, or, subject to Section 6.7 of the Property Acquisition Loan Agreement, in the event that any direct and(or) indirect owner of Trustor sells, assigns, transfers or disposes of any interest in Trustor, then the same shall be deemed to increase the risk of Beneficiary, and Beneficiary may then, or at any time thereafter, declare all principal, accrued and unpaid interest and all other charges and fees under the Note immediately due and payable, and may exercise all rights and remedies provided in the Loan Documents.
(b) Beneficiary may condition its consent to a sale or transfer for which consent is required hereunder upon the fulfillment of certain requirements in Beneficiary’s sole and absolute discretion, including, without limitation, an increase in the interest rates under the Note and(or) the requirement for additional guarantors of the Loan.

5.2 Acceleration on Insolvency of Trustor. In the event (i) Trustor fails to pay its debts generally as they come due or files any petition or action for relief under any bankruptcy, reorganization, insolvency or moratorium law, or any other law or laws for the relief of, or relating to, debtors; (ii) an involuntary petition is filed against Trustor under any bankruptcy or similar statute and such petition is not set aside or withdrawn or is still in effect within thirty (30) days from the date of such filing (or such longer period as is reasonably necessary, provided Trustor promptly commences, and diligently and continuously pursues thereafter, its efforts to have the petition set aside or withdrawn); (iii) a custodian, receiver or trustee (or other similar official) is appointed to take possession, custody or control of any of the properties of Trustor; or (iv) the Property becomes subject to the jurisdiction of a Federal Bankruptcy Court or successor to that court, or any similar state court; (v) Trustor makes a general assignment for the benefit of Trustor’s creditors; or (vi) any portion of Trustor’s assets is attached, executed upon or judicially seized in any manner, and such seizure is not discharged within thirty (30) days, then Beneficiary at its option and to the extent permitted by applicable law may, without prior notice, declare all sums secured by this Deed of Trust, irrespective of their stated due date(s), immediately due and payable and may exercise all rights and remedies provided in this Deed of Trust.

5.3 Further Encumbrance Prohibited. Trustor covenants not to execute any deed of trust, security agreement, assignment of leases and rents or other agreement granting a lien (except the liens granted to Beneficiary and Trustee by the Loan Documents) in the Property or take or fail to take any other action which would result in a lien against the interest of Trustor in the Property without the prior written consent of Beneficiary.

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ARTICLE 6
DEFAULT; REMEDIES

6.1 Events of Default. Each of the following events shall constitute an event of default by Trustor hereunder (each, an “Event of Default”):
(a) Trustor fails to pay when due any of the Indebtedness, including any payment due under the Note;
(b) The occurrence of a default or an “Event of Default” under any other Loan Documents beyond any applicable notice and cure period; (c) Trustor fails to comply with or to perform any other term, obligation, covenant or condition contained in this Deed of Trust or any of the other Loan Documents which is not cured within fifteen (15) days after notice from Beneficiary; (d) The occurrence of a default by Trustor, in its capacity as landlord under a Tenant Lease (as defined in the Property Acquisition Loan Agreement), beyond any applicable notice and cure periods contained therein;
(e) Any financial statement, report, or certificate made or delivered to Beneficiary by Trustor is not materially true and complete, or any representation or warranty made or delivered to Beneficiary by Trustor is not materially true and correct; or (f) Seizure or forfeiture of the Property, or any portion thereof, or Trustor’s interest therein, resulting from criminal wrongdoing or other unlawful action of Trustor, its affiliates, or any tenant in the Property under any federal, state or local law.

6.2 Acceleration Upon Default; Additional Remedies. At any time after any Event of Default, Beneficiary may declare all indebtedness secured hereby to be due and payable and the same shall thereupon become due and payable without any presentment, demand, protest or notice of any kind. Thereafter, Beneficiary may:
(a) Either in person or by agent, with or without bringing any action or proceeding, or by a receiver appointed by a court and without regard to the adequacy of its security, enter upon and take possession of the Property, or any part thereof, in its own name or in the name of Trustee, and do any acts which it deems necessary or desirable to preserve the value, marketability or rentability of the Property, or part thereof or interest therein, increase the income therefrom or protect the security hereof and, with or without taking possession of the Property, sue for or otherwise collect the rents, issues and profits thereof, including those past due and unpaid, and apply the same, less costs and expenses of operation and collection (including attorneys’ fees) upon any indebtedness secured hereby, all in such order as Beneficiary may determine. The entering upon and taking possession of the Property, the collection of such rents, issues and profits, and the application thereof as aforesaid, shall not cure or waive any default or notice of default hereunder or invalidate any act done in response to such default or pursuant to such notice of default and, notwithstanding the continuance in possession of the Property or the collection, receipt and application of rents, issues or profits, Trustee or Beneficiary shall be entitled to exercise every right provided for in any of the Loan Documents or by law upon the occurrence of any Event of Default, including the right to exercise the power of sale.

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(b) Commence an action to foreclose this Deed of Trust as a mortgage, appoint a receiver, and(or) specifically enforce any of the covenants hereof. (c) Exercise any or all of the remedies available to a secured party under the California Uniform Commercial Code.
(d) Deliver to Trustee a written declaration of default and demand for sale, and a written notice of default and election to cause Trustor’s interest in the Property to be sold, which notice Trustee or Beneficiary shall cause to be duly filed for record in the official records of the county in which the Property is located.

6.3 Foreclosure by Power of Sale. If Beneficiary elects to foreclose by exercise of power of sale under Section 6.2(d), Beneficiary shall notify Trustee and shall deposit with Trustee this Deed of Trust and the Note and such receipts and evidence of expenditures made and secured hereby as Trustee may require.
(a) Upon receipt of such notice from Beneficiary, Trustee shall cause to be recorded, published and delivered to Trustor such notice of default and election to sell as then required by law and by this Deed of Trust. Trustee shall, without demand on Trustor, after lapse of such time as may then be required by law and after recordation of such notice of default and after notice of sale having been given as required by law, sell the Property at the time and place of sale fixed by it in said notice of sale, either as a whole, or in separate lots or parcels or items as Trustee shall deem expedient, and in such order as it may determine, at public auction to the highest bidder for cash in lawful money of the United States payable at the time of sale. Trustee shall deliver to such purchaser or purchasers thereof its good and sufficient deed or deeds conveying the property so sold, but without any covenant or warranty, express or implied. The recitals in such deed of any matters or facts shall be conclusive proof of the truthfulness thereof. Any person, including, without limitation, Trustor, Trustee or Beneficiary, may purchase at such sale and Trustor hereby covenants to warrant and defend the title of such purchaser or purchasers. (b) After deducting all costs, fees and expenses of Trustee and of this Deed of Trust, including costs of evidence of title in connection with sale, Trustee shall apply the proceeds of sale first to payment of all sums expended under the terms hereof, not then repaid, with accrued interest at the rate per annum in effect from time to time under the Note, then to payment of all other Secured Obligations, and the remainder, if any, to the person or persons legally entitled thereto. (c) Trustee may postpone the sale of all or any portion of the Property by public announcement at such time and place of sale, and from time to time thereafter may postpone such sale by public announcement at the time fixed by the preceding postponement or subsequently noticed sale, and without further notice make such sale at the time fixed by the last postponement, or may, in its discretion, give a new notice of sale.
(d) The power of sale under this Deed of Trust shall not be exhausted by any one or more sales (or attempts to sell) as to all or any portion of the Property remaining unsold, but shall continue unimpaired until all of the Property has been sold by exercise of the power of sale herein contained and all indebtedness of Trustor to Beneficiary under the Deed of Trust, the Note or other Loan Documents has been paid in full.

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6.4 Appointment of Receiver. If an Event of Default has occurred and is continuing, Beneficiary as a matter of right and without notice to Trustor or anyone claiming under Trustor, and without regard to the then value of the Property or the interest of Trustor therein, shall have the right to apply, by ex parte motion or otherwise, to any court having jurisdiction to appoint a receiver or receivers of the Property, and Trustor hereby irrevocably consents to such appointment and waives notice of any application therefor. Any such receiver or receivers shall have all the usual powers and duties of receivers in like or similar cases, including, without limitation, taking immediate possession, custody and control of the Property, securing, operating, managing, controlling and conducting the Property, caring for, preserving and maintaining the Property, and incurring any costs and expenses necessary for such purposes. Any such receiver or receivers shall also have all the powers and duties of Beneficiary in case of entry as provided in Section 6.2(a) above. Any such receiver or receivers shall continue in such capacity and exercise all such powers until the date of confirmation of sale of the Property unless such receivership is sooner terminated.

6.5 Remedies Not Exclusive. Trustee and Beneficiary, and each of them, shall be entitled to enforce payment and performance of any of the Secured Obligations and to exercise all rights and powers under this Deed of Trust or under any Loan Document or other agreement or any laws now or hereafter in force, notwithstanding that some or all of the Secured Obligations may now or hereafter be otherwise secured, whether by mortgage, deed of trust, pledge, lien, assignment or otherwise. Neither the acceptance of this Deed of Trust nor its enforcement, whether by court action or pursuant to the power of sale or other powers herein contained, shall prejudice or in any manner affect Trustee’s or Beneficiary’s right to realize upon or enforce any other security now or hereafter held by Trustee or Beneficiary, it being agreed that Trustee and Beneficiary, and each of them, shall be entitled to enforce this Deed of Trust and any other security now or hereafter held by Beneficiary or Trustee in such order and manner as they or either of them may in their absolute discretion determine. No remedy herein conferred upon or reserved to Trustee or Beneficiary is intended to be exclusive of any other remedy 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 Loan Documents to Trustee or Beneficiary, or to which either of them may be otherwise entitled, may be exercised, concurrently or independently, from time to time and as often as may be deemed expedient by Trustee or Beneficiary, and either of them may pursue inconsistent remedies.

6.6 Request for Notice. In accordance with California Civil Code §2924b, Trustor hereby requests copy of any notice of default and that any notice of sale hereunder be mailed to it at the address set forth in the first Section of this Deed of Trust.

ARTICLE 7

MISCELLANEOUS

7.1 Governing Law. This Deed of Trust shall be governed by the laws of the State of California. In the event that any provision or clause of any of the Loan Documents conflicts with applicable laws, such conflicts shall not affect other provisions of such Loan Documents which can be given effect without the conflicting provision, and to this end the provisions of the Loan Documents are declared to be severable. This instrument cannot be waived, changed, discharged or terminated orally, but only by an instrument in writing signed by the party against whom enforcement of any waiver, change, discharge or termination is sought.

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7.2 Trustor Waiver of Rights. To the extent permitted under applicable law, Trustor waives: (i) the benefit of all laws now existing or that hereafter may be enacted providing for any appraisement before sale of any portion of the Property; (ii) any applicable statute of limitations; and (iii) the benefit of all laws that may hereafter be enacted in any way extending the time for the enforcement of the collection of the Note or the debt evidenced thereby or creating or extending a period of redemption from any sale made in collecting said debt. To the full extent Trustor may do so, Trustor agrees that Trustor will not at any time insist upon, plead, claim or take the benefit or advantage of any law now or hereafter in force providing for any appraisement, valuation, stay, extension or redemption, and Trustor, for Trustor, Trustor’s heirs, devisees, representatives, successors and assigns, and for any and all persons ever claiming any interest in the Property, to the extent permitted by law, hereby waives and releases all rights of redemption, valuation, appraisement, stay of execution, notice of election to mature or declare due the whole of the secured indebtedness and marshaling in the event of foreclosure of the liens hereby created. If any law referred to in this Section 7.2 and now in force, of which Trustor, Trustor’s heirs, devisees, representatives, successors and assigns or other person might take advantage despite this Section 7.2, shall hereafter be repealed or cease to be in force, such law shall not thereafter be deemed to preclude the application of this Section 7.2.

7.3 Statements of Trustor. Trustor, within ten (10) days after request by Beneficiary, shall furnish to Beneficiary a written statement stating the unpaid principal of and interest on the Note and any other amounts secured by this Deed of Trust, and stating whether any offset or defense exists against such principal and interest.

7.4 Notices. Whenever Beneficiary, Trustor or Trustee desire to give or serve any notice, demand, request or other communication with respect to this Deed of Trust, each such notice, demand, request or other communication shall be in writing and shall be effective only if the same is delivered by personal service or mailed by registered mail, postage prepaid, return receipt requested, addressed to the address set forth at the beginning of this Deed of Trust. Any party may at any time change its address for such notices by delivering or mailing to the other parties hereto, as aforesaid, a notice of such change.

7.5 Attorneys’ Fees. If Beneficiary refers this Deed of Trust or any of the other Loan Documents to an attorney to enforce, construe or defend the same, or as a consequence of any Event of Default as defined in this Deed of Trust, with or without the filing of any legal action or proceeding, Trustor shall pay to Beneficiary, immediately upon demand, the amount of all attorneys’ fees and costs incurred by Beneficiary in connection therewith, together with interest thereon from the date of such demand at the rate of interest applicable to the principal balance of the Note. The reference to “attorneys’ fees” in this Section 7.5, elsewhere in this Deed of Trust and in all of the other Loan Documents shall include, without limitation, fees charged by Beneficiary for the services furnished by attorneys who are in its employ, at rates not exceeding those that would be charged by outside attorneys for comparable services.

7.6 Waiver of Right to Trial by Jury; Judicial Reference. TO TRUSTOR HEREBY

WAIVES TO THE FULLEST EXTENT PERMITTED BY LAW, THE RIGHT TO TRIAL BY

JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM, WHETHER IN CONTRACT,

TORT OR OTHERWISE, RELATING DIRECTLY OR INDIRECTLY TO THE LOAN

EVIDENCED BY THE NOTE, THIS DEED OF TRUST AND ANY SECURITY INSTRUMENT

OR ANY ACTS OR OMISSIONS OF LENDER, ITS OFFICERS, EMPLOYEES, DIRECTORS OR AGENTS IN CONNECTION THEREWITH. IF ANY LEGAL PROCEEDING IS FILED IN A

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COURT AND THE PRECEDING JURY WAIVER IS NOT ENFORCEABLE IN SUCH ACTION

OR PROCEEDING, TRUSTOR AND LENDER AGREE THAT SUCH DISPUTE WILL BE

DETERMINED BY A GENERAL REFERENCE PROCEEDING IN ACCORDANCE WITH CALIFORNIA CODE OF CIVIL PROCEDURE SECTIONS 638 THROUGH 645.1, WITH THE EXCEPTION OF: (I) NON-JUDICIAL FORECLOSURE OF ANY SECURITY INTERESTS IN

REAL OR PERSONAL PROPERTY, (II) EXERCISE OF SELF-HELP REMEDIES (INCLUDING,

WITHOUT LIMITATION, SET-OFF), (III) APPOINTMENT OF A RECEIVER, AND (IV) TEMPORARY, PROVISIONAL OR ANCILLARY REMEDIES (INCLUDING, WITHOUT

LIMITATION, WRITS OF ATTACHMENT, WRITS OF POSSESSION, TEMPORARY RESTRAINING ORDERS OR PRELIMINARY INJUNCTIONS). THIS DEED OF TRUST DOES

NOT LIMIT THE RIGHT OF ANY PARTY TO EXERCISE OR OPPOSE ANY OF THE RIGHTS

AND REMEDIES DESCRIBED IN CLAUSES (I) - (IV) AND ANY SUCH EXERCISE OR

OPPOSITION DOES NOT WAIVE THE RIGHT OF ANY PARTY TO A REFERENCE PROCEEDING PURSUANT TO THIS DEED OF TRUST. THE PARTIES INTEND THIS

GENERAL REFERENCE AGREEMENT TO BE SPECIFICALLY ENFORCEABLE IN ACCORDANCE WITH CALIFORNIA CODE OF CIVIL PROCEDURE SECTION 638. UPON

THE WRITTEN REQUEST OF ANY PARTY, THE PARTIES SHALL SELECT A SINGLE

REFEREE, WHO SHALL BE A RETIRED JUDGE OR JUSTICE, AND THE MATTER WILL BE DECIDED BY THE REFEREE, NOT A JURY. IF THE PARTIES DO NOT AGREE UPON A REFEREE WITHIN TEN (10) DAYS OF SUCH WRITTEN REQUEST, THEN, ANY PARTY

MAY REQUEST THE COURT TO APPOINT A REFEREE PURSUANT TO CALIFORNIA CODE OF CIVIL PROCEDURE SECTION 640(B). A REQUEST FOR APPOINTMENT OF A

REFEREE MAY BE HEARD ON AN EX PARTE OR EXPEDITED BASIS, AND THE PARTIES

AGREE THAT IRREPARABLE HARM WOULD RESULT IF EX PARTE RELIEF IS NOT GRANTED. ALL PROCEEDINGS AND HEARINGS CONDUCTED BEFORE THE REFEREE,

EXCEPT FOR TRIAL, SHALL BE CONDUCTED WITHOUT A COURT REPORTER, EXCEPT

WHEN ANY PARTY SO REQUESTS, A COURT REPORTER WILL BE USED AND THE TRANSCRIPT WILL BE PROVIDED TO ALL PARTIES AT THE REQUESTING PARTY’S EXPENSE. THE REFEREE’S FEES SHALL ULTIMATELY BE BORNE BY THE PARTY WHO DOES NOT PREVAIL, AS DETERMINED BY THE REFEREE. THE REFEREE MAY REQUIRE ONE OR MORE PREHEARING CONFERENCES. THE PARTIES HERETO SHALL

BE ENTITLED TO DISCOVERY, AND THE REFEREE SHALL OVERSEE DISCOVERY IN

ACCORDANCE WITH THE RULES OF DISCOVERY, AND MAY ENFORCE ALL

DISCOVERY ORDERS IN THE SAME MANNER AS ANY TRIAL COURT JUDGE IN PROCEEDINGS AT LAW IN THE STATE OF CALIFORNIA. THE REFEREE SHALL APPLY

THE RULES OF EVIDENCE APPLICABLE TO PROCEEDINGS AT LAW IN THE STATE OF

CALIFORNIA AND SHALL DETERMINE ALL ISSUES IN ACCORDANCE WITH APPLICABLE STATE AND FEDERAL LAW. THE REFEREE SHALL BE EMPOWERED TO

ENTER EQUITABLE AS WELL AS LEGAL RELIEF AND RULE ON ANY MOTION WHICH

WOULD BE AUTHORIZED IN A TRIAL, INCLUDING, WITHOUT LIMITATION, MOTIONS FOR DEFAULT JUDGMENT OR SUMMARY JUDGMENT. THE REFEREE SHALL REPORT

HIS DECISION, WHICH REPORT SHALL ALSO INCLUDE FINDINGS OF FACT AND CONCLUSIONS OF LAW.

7.7 Acceptance by Trustee. Trustee accepts this Trust when this Deed of Trust, duly executed and acknowledged, is made a public record as provided by law.

7.8 Captions. The captions or headings at the beginning of each Section hereof are for the convenience of the parties and are not a part of this Deed of Trust.

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7.9 Invalidity of Certain Provisions. If the lien of this Deed of Trust is invalid or unenforceable as to any part of the debt, or if the lien is invalid or unenforceable as to any part of the 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. If any provision of the Loan Documents shall be deemed void or unenforceable, it shall not affect the validity of the remaining provisions thereof which shall be considered severable.

7.10 Subrogation. To the extent that proceeds of the Note or advances under this Deed of Trust are used to pay any outstanding lien, charge or prior encumbrance against the Property, such proceeds or advances have been or will be advanced by Beneficiary at Trustor’s request and Beneficiary shall be subrogated to any and all rights and liens held by any owner or holder of such outstanding liens, charges and prior encumbrances, irrespective of whether said liens, charges or encumbrances are released.

7.11 No Merger. If both the lessor’s and lessee’s estates under any lease or any portion thereof which constitutes a part of the Property shall at any time become vested in one owner, this Deed of Trust and the lien created hereby shall not be destroyed or terminated by application of the doctrine of merger and, in such event, Beneficiary shall continue to have and enjoy all of the rights and privileges of Beneficiary as to the separate estates. In addition, upon the foreclosure of the lien created by this Deed of Trust on the Property pursuant to the provisions hereof, any leases or subleases then existing and created by Trustor shall not be destroyed or terminated by application of the law of merger or as a matter of law or as a result of such foreclosure unless Beneficiary or any purchaser at any such foreclosure sale shall so elect. No act by or on behalf of Beneficiary or any such purchaser shall constitute a termination of any lease or sublease unless Beneficiary or such purchaser shall give written notice thereof to such tenant or subtenant.

7.12 Non-Waiver. The acceptance by Beneficiary of any sum after the same is due shall not constitute a waiver of the right either to require prompt payment when due of all other sums hereby secured or to declare a default as herein provided. The acceptance by Beneficiary of any sum in an amount less than the sum then due shall be deemed an acceptance on account only and upon the condition that it shall not constitute a waiver of the obligation of Trustor to pay the entire sum then due, and Trustor’s failure to pay said entire sum then due shall be and continue to be a default notwithstanding such acceptance of such amount on account, as aforesaid, and Beneficiary or Trustee shall be at all times thereafter and until the entire sum then due shall have been paid, and notwithstanding the acceptance by Beneficiary thereafter of further sums on account, or otherwise, entitled to exercise all rights in this instrument conferred upon them, or either of them, upon the occurrence of a default, and the right to proceed with a sale under any notice of default, and election to sell, shall in no way be impaired, whether any of such amounts are received prior or subsequent to such notice. Consent by Beneficiary to any transaction or action of Trustor which is subject to consent or approval of Beneficiary hereunder shall not be deemed a waiver of the right to require such consent or approval to future or successive transactions or actions. At any time and from time to time, without liability therefor and without notice, and without releasing or otherwise affecting the liability of any person for payment of any indebtedness hereby secured: (i) Beneficiary at its sole, absolute and unfettered discretion may extend the time for, or release any person now or hereafter liable for, payment of any or all such indebtedness, or accept or release additional security therefor, or subordinate the lien or charge hereof; or (ii) Trustee, upon written request of Beneficiary and

28 4884-3173-5165v4/200760-0007
presentation of the Note and any additional note(s) and this Deed of Trust for endorsement, may reconvey any part of said Property, consent to the making of any map or plat thereof, join in granting any easement thereof, or join in any such agreement of extension or subordination.

7.13 Time is of the Essence. Time is of the essence in connection with all obligations of Trustor under this Deed of Trust.

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4884-3173-5165v4/200760-0007
IN WITNESS WHEREOF, this Deed of Trust has been executed by Trustor and is effective as of the date first written above.

TRUSTOR:

FIVE KEYS SCHOOLS AND PROGRAMS,
a California nonprofit public benefit corporation,
By:

Its:

Name:

4884-3173-5165v4/200760-0007
A notary public or other officer completing this certificate verifies only the identity of the individuals who signed the document, to which this certificate is attached, and not the truthfulness, accuracy, or validity of that document.

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

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

WITNESS my hand and official seal.
_____________________________
Signature of Notary Public

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4884-3173-5165v4/200760-0007

EXHIBIT A
(Legal Description)

THE LAND REFERRED TO HEREIN BELOW IS SITUATED IN THE CITY OF NORCO, IN

THE COUNTY OF RIVERSIDE, STATE OF CALIFORNIA, AND IS DESCRIBED AS FOLLOWS:

Lot 8 of Block 40 of Norco Farms Tract #3, in the City of Norco, County of Riverside, State of California, as shown by Map on file in Book 12, Page 33, of Maps, records of Riverside County.

Except the Southerly 165.00 feet.

APN: 133-080-010

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RECORDING REQUESTED BY AND
WHEN RECORDED MAIL TO:

City of Norco
2870 Clark Avenue
Norco, California 92860
Attn: Lori Sassoon, the City Manager
[Space above for recorder.]
This document is exempt from the payment of a recording fee pursuant to Government Code Section 27383.

PUT – OPTION AGREEMENT
This PUT – OPTION AGREEMENT (this “Agreement”) is entered into as of ______________, 2023 (the “Effective Date”), by and between the CITY OF NORCO, a California municipal corporation and chartered city (the “City”) and [FIVE KEYS SCHOOLS AND PROGRAMS, a California nonprofit public benefit corporation] (the “Owner”).

R E C I T A L S
A. The Owner and the City have executed a Property Acquisition Loan Agreement (the “Loan Agreement”), dated as of ___________, 2023, pursuant to which the City loaned an amount equal to [$1,000,000] (the “Loan”) to the Owner to finance Owner’s purchase of the real property and improvements located at 4208 California Avenue, Norco, California, APN No. 133-080-010, and consisting of a 2.38 acre parcel of land, together with a 728 square foot residential building and other ancillary improvements (the “Property”). The Property is legally described in Exhibit A, and attached hereto and incorporated herein by reference. For purposes of this Agreement, the Property shall be deemed to include any and all improvements now or hereafter located on the Property.

B. To support the Owner’s charitable, non-profit uses at the Property as described in the Loan Agreement, which the City has determined will provide significant benefits to the residents of the City and the community, the City provided the Loan to Owner at an interest rate of 0%, which over the 5 year Loan term provides a financial benefit to Owner of at least $338,000 in interest cost savings.

C. The Owner desires to have the ability, on or before the Maturity Date of the Loan set forth in the Loan Agreement (the “Put Right Period”), to require the City to purchase fee title to the Property from the Owner (the “Owner’s Put Right”) and in exchange forgive the remaining outstanding balance due on the Loan, all subject to the terms and conditions set forth herein.

D. If the Owner does not exercise the Owner’s Put Right, then, commencing on the earlier to occur of (i) payment in full of the Loan or (ii) the Maturity Date, and continuing until the

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fifteenth (15th) anniversary of the Maturity Date (the “Option Period”) the Owner desires to grant to the City an option to purchase the Property (the “City’s Option”) upon the terms and conditions set forth in this Agreement.

E. Initially capitalized terms used herein but not defined in this Agreement have the meanings set forth in the Loan Agreement.

F. The foregoing Recitals are true and correct and constitute a substantive part of this Agreement.

NOW, THEREFORE, in consideration of the foregoing, and the mutual covenants and conditions contained herein, the parties hereto agree as follows:

1. Owner’s Put Right.
(a) Grant of Owner’s Put Right; Purchase Price. The City hereby grants to the Owner the Owner’s Put Right, on the terms and conditions set forth in this Agreement, including satisfaction (or waiver by the City) of the Conditions Precedent set forth in Section 4. The Owner may exercise the Owner’s Put Right at any time during the Put Right Period by delivering a written notice to the City stating that the Owner desires to exercise the Owner’s Put Right (the “Owner’s Put Right Notice”). The Owner must deliver the Owner’s Put Right Notice to the City not fewer than 75 days prior to the Maturity Date to enable the City to conduct its due diligence of the Property and close escrow for the conveyance of title to the Property from the Owner to the City on or prior to the Maturity Date.
(b) Owner’s Put Right Purchase Price. The purchase price payable by the City to the Owner under the Owner’s Put Right shall be the sum of the following (i) the outstanding unpaid balance of the Loan, plus (ii) any fees, costs, or other amounts due from the Owner to the City under the Loan Agreement or any other Loan Document (as defined in the Loan Agreement). (c) Term. The term of effectiveness of the Owner’s Put Right is the Put Right Period defined in the Recitals.

2. City’s Option.
(a) Grant of City’s Option. (i) The Owner hereby grants the City’s Option to the City, on the terms and conditions set forth in this Agreement, including satisfaction (or waiver by the City) of the Conditions Precedent set forth in Section 4. During the entire Option Period, the Owner shall not Transfer (defined in the Loan Agreement) the Property without first delivering a notice to the City that the Owner desires to sell the Property (the “Owner’s Transfer Notice”). The Owner’s Transfer Notice shall be accompanied by an appraisal of the fair market value of the Property (taking into account the then-existing zoning and entitlements applicable to the Property), prepared by an MAI appraiser. The City shall not have the right to exercise the City’s Option until and unless the Owner delivers the Owner’s Transfer Notice to the City. (ii) Upon receipt of the Owner’s Transfer Notice, the City shall have [30 days] to deliver a notice to the Owner exercising the City’s Option (a “City Election Notice”) or declining to exercise the City’s Option (a “City Rejection Notice”). If the City disputes the fair market value of the Property as set forth in the Owner’s appraisal, the City shall indicate in the City

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Election Notice that the City intends to obtain an independent appraisal of the Property pursuant to Section 2(c), below, to determine the Appraised Value (defined below) of the property for purposes of this Agreement, and the parties shall thereafter promptly comply with the provisions of Section 2(c) below. If the City does not dispute the Owner’s appraisal of the Property’s fair market value set forth in the Owner’s Transfer Notice, the City Election Notice shall so state and the appraised fair market value of the Property stated in the Owner’s Transfer Notice shall constitute the “Appraised Value” of the Property for purposes of this Agreement.
(iii) The City shall have 30 days following the determination of the Appraised Value of the Property pursuant to the process described in Section 2(c), below, to deliver a written notice to the Owner either confirming or revoking the City Election Notice. A notice confirming the City Election Notice shall be deemed to constitute, and shall supersede, such City Election Notice for all purposes of this Agreement including the calculation of time periods set forth herein. A notice revoking the City Election Notice shall be deemed to constitute a City Rejection Notice.
(iv) If the City sends a City Election Notice to the Owner, then the City shall have the right to conduct its due diligence investigations and title review as provided in Section 3 below and the parties shall proceed with the Closing as provided in Section 5 below, subject to satisfaction (or waiver by the City) of the Conditions Precedent set forth in Section 4. (v) If the City sends a City Rejection Notice to Owner, then the Owner shall have the right, for one year following Owner’s receipt of the City Rejection Notice, to Transfer the Property to a third party at a purchase price equal to or greater than the Appraised Value of the Property. If the Owner desires to Transfer the Property (i) more than one year following the date of the City Rejection Notice or (ii) at a purchase price less than the Appraised Value of the Property, then Owner must first offer the Property to the City again by delivering to the City a new Owner’s Transfer Notice stating the new proposed purchase price and the City shall have the right to exercise or decline to exercise the City’s Option again pursuant to the terms of this Agreement (treating the new proposed purchase price stated in the new Owner’s Transfer Notice as the Appraised Value). (b) City’s Option Purchase Price. The purchase price payable by the City to the Owner under the City’s Option shall be (i) the Appraised Value of the Property, less (ii) $338,000, reduced by 1/15 of such amount during each year of the Option Period. (c) Determination of Appraised Value. The City shall have the right to obtain an independent fair market value appraisal of the Property, prepared by an MAI appraiser. The City shall promptly notify the Owner of its selected appraiser and shall deliver a written and signed copy of the City’s appraisal report to the Owner. The “Appraised Value” of the Property shall equal to the average of the Owner’s appraisal and the City’s appraisal; provided, however, if the difference between the two appraisals exceeds 10% of the lower appraisal, the two appraisers shall immediately select a third MAI appraiser and in the event of their failure to do so, the presiding judge of the Superior Court of Riverside County shall upon request of either party appoint the third appraiser.

Any valuation then agreed upon by a majority of the three appraisers shall be accepted as the final and conclusive “Appraised Value” for purposes of this Agreement. Should a majority of the three appraisers not be able to agree upon the fair market value, then the average of the three appraisal reports shall become the “Appraised Value” for the Property and be binding and conclusive upon the Owner and the City. Each party will receive a written and signed copy of the third appraiser’s report.

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The expenses and cost of the third appraiser and any cost incurred to obtain said third appraisal shall be divided equally between the Owner and the City.
(d) Term. The term of effectiveness of the City’s Option is the Option Period defined in the Recitals. The City’s Option shall remain in full force and effect during the Option Period, notwithstanding that the City may have delivered one or more City Rejection Notices to Owner, until and unless the Owner conveys fee title to the Property to a third party following receipt of a City Rejection Notice, all in accordance with the terms of this Agreement.

3. City’s Due Diligence Review. The City shall have not less than [60 days] following City’s receipt of an Owner’s Put Right Notice or Owner’s receipt of a City Election Notice (each referred to herein as a “Notice”), to conduct due diligence investigations relating to the condition of title to the Property and the physical condition of the Property. (a) Title Review. The Owner shall cause a preliminary title report (the “Title Report”) to be prepared by First American Title Insurance Company or another title insurance company mutually acceptable to the City and Owner (the “Title Company”) and delivered to City within ten days following delivery of a Notice to City. (b) Site Investigation. Owner shall provide City and City’s employees, agents, representatives, consultants and contractors, as applicable, with access to the Property during normal business hours for the purpose of conducting such site investigations as City deems appropriate. In connection with the exercise of Owner’s Put Right (but not City’s Option), at the City’s request Owner shall bear the cost of an inspection of the structures located at the Property and a Phase 1 environmental assessment report, up to a total cost of $_______ (increased by 3% per year). In connection with the exercise of City’s Option, City shall pay City’s costs to conduct site investigations at the Property. The City shall indemnify, defend, and hold harmless the Owner and its officers, directors, shareholders, partners, employees, agents, and representatives from and against all claims, liabilities, or damages caused by the City’s activities with respect to or arising out of such testing, inspection, or investigatory activity on the Property.

4. Conditions Precedent to Closing. The City’s obligation to purchase the Property from the Owner pursuant to the Owner’s Put Right, if exercised by the Owner, or the City’s Option, if exercised by the City, is subject to satisfaction of each of the conditions precedent set forth in this Section 4 (collectively, the “Conditions Precedent”) or waiver of such conditions by the City, in the City’s sole and absolute discretion.
(a) No Default. Owner shall not be in default and there shall be no continuing Event of Default by Owner under the Loan Agreement or any other Loan Document. (b) Condition of Title; Title Policy. The City shall have approved the condition of title as reflected in the Title Report (as it may be modified by the Title Company pursuant to comments from the City and/or actions by Owner to clear title encumbrances or liens). The Title Company shall have committed in writing to issue an ALTA 2006 Owner’s policy of title insurance for the Property concurrently with the Closing, in the amount of the purchase price (in the case of the Owner’s Put Right) or Appraised Value (in the case of the City’s Option), showing the City as fee owner of the Property, subject only to exceptions reasonably acceptable to the City and with endorsements reasonably requested by the City (the “Title Policy”). Any exceptions shown on the Title Report created on or after the Effective Date of this Agreement shall be removed by the Owner

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at its sole cost and expense prior to the Closing unless such exception(s) is(are) accepted by the City in its sole and absolute discretion; provided, however, that the City shall accept the following exceptions to title: (i) current taxes not yet delinquent, (ii) matters affecting title existing on the Effective Date of this Agreement, (iii) liens and encumbrances in favor of the City of Norco, and (iv) matters shown as printed exceptions in the standard form ALTA owner’s policy of title insurance. In no event shall the City be required to purchase the Property subject to any monetary liens or encumbrances.
(c) Condition of the Property. The City shall be satisfied that the physical condition of the Property, including all buildings and structures thereon, is in at least as good a condition as the condition of the Property on the Effective Date of this Agreement. The Property shall be in compliance with all then-applicable Legal Requirements (defined in the Loan Agreement), including all applicable provisions of the City’s municipal code, building code, and zoning code.

The Property shall be free of contamination by any Hazardous Substances (defined in the Loan Agreement).
(d) Owner’s Representations and Warranties. Owner’s representations and warranties set forth herein and in the Loan Agreement shall be true and correct in all material respects as of the Closing Date.

5. Escrow and Completion of Sale.
(a) Escrow. Within five (5) days after delivery of the Put Right Notice to the City or the delivery of the City’s Exercise Notice to Owner, as applicable, or as soon thereafter as reasonably practicable, an escrow shall be opened with First American Title Insurance Company, or another an escrow company mutually acceptable to the City and the Owner (the “Escrow Agent”) for the conveyance of the Property to the City.
(b) Deposits into Escrow. The City shall deposit the purchase price determined in accordance with Section 1(b) or Section 2(b) above, as applicable, with the Escrow Agent not later than one (1) Business Day prior to the anticipated Closing Date. In the case of a sale pursuant to the Owner’s Put Right, the Owner shall pay all escrow fees, documentary transfer taxes, recording fees and any other costs and expenses of the escrow. In the case of a sale pursuant to the City’s Option, the parties shall each be responsible for one-half of the escrow fees, documentary transfer taxes, recording fees and any other costs and expenses of the escrow. In connection with any Closing hereunder, the Owner shall be solely responsible for paying the cost of the Title Policy. (c) Closing. Escrow shall close promptly after City notifies the Escrow Agent and Owner that the Conditions Precedent have been satisfied (or waived by City). As used herein, the Owner’s conveyance of fee title to the Property to the City is referred to as the “Closing” and the date on which the Closing occurs is referred to as the “Closing Date.”

6. Termination. This Agreement shall terminate on the earlier to occur of (a) the Closing for the sale of the Property by the Owner to the City, (b) the conveyance by the Owner to a third party as permitted by Section 2(a)(iv) above; or (c) the expiration of the City’s Option Period.

Following the expiration or termination of this Agreement, upon receipt of the written request of the Owner, the City shall cause a quitclaim deed terminating or releasing any and all rights the City may have to acquire the Property pursuant to this Agreement to be recorded in the Official Records of Riverside County, California.

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7. Assignment and Nomination. The City shall not assign its interest hereunder without the approval of the Owner, which may be given or withheld in the Owner’s sole and absolute discretion; provided that the City may nominate another person or entity to acquire the Property and the identity of such nominee shall not be subject to the approval of the Owner.

8. Title. Following the Effective Date of this Agreement, the Owner shall not cause or permit any lien, easement, encumbrance or other exception to title to be recorded against the Property except: (a) the liens, encumbrances, and security interests created by the Loan Documents; (b) all liens, encumbrances, and other matters disclosed in the City’s lender’s policy of title insurance issued to the City on or about the Effective Date of this Agreement pursuant to the Loan Agreement; (c) liens or encumbrances, if any, for taxes and assessments imposed by any governmental agency or authority not yet due or delinquent, and (d) such other title and survey exceptions as City has approved or may approve in writing in City’s sole discretion.

8. Representations and Warranties of the Owner. The Owner hereby represents, warrants and covenants to the City as follows, which representations and warranties shall survive the exercise of the Option and the Close of Escrow:
(a) that this Agreement and the other documents to be executed by the Owner hereunder, upon execution and delivery thereof by the Owner, will have been duly entered into by the Owner, and will constitute legal, valid and binding obligations of the Owner; (b) neither this Agreement, nor anything provided to be done under this Agreement, violates or shall violate any contract, document, understanding, agreement or instrument to which the Owner is a party or by which it is bound; and (c) the Owner shall pay, prior to delinquency, any and all real property taxes and assessments which affect the Property.

The Owner agrees to indemnify, protect, defend, and hold the City and the Property harmless from and against any damage, claim, liability, or expense of any kind whatsoever (including, without limitation, reasonable attorneys’ fees and fees of expert witnesses) arising from or in connection with any breach of the foregoing representations, warranties and covenants. Such representations and warranties of the Owner shall be true and correct on and as of the Effective Date of this Agreement and on and as of the Closing Date.

9. Representations and Warranties of the City. The City hereby represents and warrants and covenants to the Owner, as follows, which representations and warranties shall survive the Close of Escrow:
(a) that this Agreement and the other documents to be executed by the City hereunder, upon execution and delivery thereof by the City, will have been duly entered into by the City, and will constitute legal, valid and binding obligations of the City, and (b) neither this Agreement, nor anything provided to be done under this Agreement, violates or shall violate any contract, document, understanding, agreement or instrument to which the City is a party or by which it is bound.

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The City agrees to indemnify, protect, defend, and hold the Owner harmless from and against any damage, claim, liability, or expense of any kind whatsoever (including, without limitation, reasonable attorneys’ fees and fees of expert witnesses) arising from or in connection with any breach of the foregoing representations, warranties and covenants. Such representations and warranties of the City shall be true and correct on and as of the Effective Date of this Agreement and on and as of the Closing Date.

10. General Provisions.

10.1 Paragraph Headings. The paragraph headings used in this Agreement are for purposes of convenience only. They shall not be construed to limit or extend the meaning of any part of this Agreement.

10.2 Notices. Any notice, demand, approval, consent, or other communication required or desired to be given under this Agreement shall be in writing and shall be either personally served, sent by telecopy, mailed in the United States mails, certified, return receipt requested, postage prepaid, or sent by other commercially acceptable means, addressed to the party to be served with the copies indicated below, at the last address given by that party to the other under the provisions of this section. All communications shall be deemed delivered at the earlier of actual receipt, the next Business Day after deposit with Federal Express or other overnight delivery service or two (2) Business Days following mailing as aforesaid, or if telecopied, when sent, provided a copy is mailed or delivered as provided herein:

To the Owner: Five Keys Schools and Programs
Attention:

Email:

To the City: City of Norco
2870 Clark Avenue
Norco, California 92860
Attn: Lori Sassoon, City Manager
Email:

Copy to: Stradling Yocca Carlson & Rauth
660 Newport Center Drive, Suite 1600
Newport Beach, California 92660
Attention: Vanessa S. Legbandt, Esq.

Email:

10.3 Binding Effect. The terms, covenants and conditions of this Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors, assigns and transferees.

10.4 Entire Agreement. This Agreement sets forth the entire agreement between the parties hereto respecting the Owner’s Put Right and the City’s Option, and supersedes all prior negotiations and agreements, written or oral, concerning or relating to the subject matter of this Agreement.

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10.5 California Law. This Agreement shall be governed by the laws of the State of California and any question arising hereunder shall be construed or determined according to such laws.

10.6 Time of the Essence. Time is of the essence of each and every provision of this Agreement.

10.7 Counterparts. This Agreement may be signed by the parties hereto in duplicate counterparts which together shall constitute one and the same agreement between the parties and shall become effective at such time as both of the parties shall have signed such counterparts.

10.8 Attorneys’ Fees. In the event of litigation between the City and Owner to enforce the terms of this Agreement, each party shall pay its own attorneys’ fees and costs.

10.9 Computation of Time. All periods of time referred to in this Agreement shall include all Saturdays, Sundays and state or national holidays, unless the period of time is specified as Business Days, provided that if the date or last date to perform any act or give any notice with respect to this Agreement shall fall on a day that is not a Business Day, such act or notice may be timely performed or given on the next succeeding day which is a Business Day. As used herein, “Business Day” shall mean any day other than a Saturday, Sunday or any other day on which the City is not open for business.
[Signature block begins on following page.]

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IN WITNESS WHEREOF, this Agreement is executed by the Owner and the City as of the Effective Date hereof.

OWNER:

FIVE KEYS SCHOOLS AND PROGRAMS,
a California nonprofit public benefit corporation,
By:

Its:

Name:

CITY:

CITY OF NORCO,
a California municipal corporation and chartered city
By:

Robin Grundmeyer, Mayor
ATTEST:

Dana Roa, City Clerk

EXHIBIT A
4878-2945-0110v2/200760-0007

EXHIBIT A

LEGAL DESCRIPTION

THE LAND REFERRED TO HEREIN BELOW IS SITUATED IN THE CITY OF NORCO, IN

THE COUNTY OF RIVERSIDE, STATE OF CALIFORNIA, AND IS DESCRIBED AS FOLLOWS:

Lot 8 of Block 40 of Norco Farms Tract #3, in the City of Norco, County of Riverside, State of California, as shown by Map on file in Book 12, Page 33, of Maps, records of Riverside County.

Except the Southerly 165.00 feet.

APN: 133-080-010

4878-2945-0110v2/200760-0007
A notary public or other officer completing this certificate verifies only the identity of the individual who signed the document to which this certificate is attached, and not the truthfulness, accuracy, or validity of that document.

STATE OF CALIFORNIA )
) ss.

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

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

WITNESS my hand and official seal

SIGNATURE OF NOTARY PUBLIC

4878-2945-0110v2/200760-0007
A notary public or other officer completing this certificate verifies only the identity of the individual who signed the document to which this certificate is attached, and not the truthfulness, accuracy, or validity of that document.

STATE OF CALIFORNIA )
) ss.

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

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

WITNESS my hand and official seal

SIGNATURE OF NOTARY PUBLIC

Stradling draft of 9/13/23
4857-3381-4397v7/200760-0007

PROMISSORY NOTE
$[1,000,000.00]
Norco, California
Date: __________, 2023
For value received, FIVE KEYS SCHOOLS AND PROGRAMS, a California nonprofit public benefit corporation (“Borrower”), promises to pay to the order of CITY OF NORCO, a California municipal corporation and chartered city (“Lender”), at 2780 Clark Avenue, Norco, California 92860, or at such other place as the holder hereof may from time to time designate in writing, in lawful money of the United States, the principal amount of [ONE MILLION AND NO/100 DOLLARS ($1,000,000.00)], with interest at the Interest Rate, and due and payable, as follows:

ARTICLE 1

DEFINITIONS
Unless otherwise defined herein, terms with initial capital letters used in this Note shall have the following meanings, whether used in the singular or the plural (all capitalized terms not otherwise defined herein shall have the same meanings as set forth in the Property Acquisition Loan Agreement):

1.1 “Business Day”: Any day other than a Saturday, Sunday or any other day on which Lender is not open for business.

1.2 “Property Acquisition Loan Agreement”: The Property Acquisition Loan Agreement of even date herewith between Borrower and Lender, and any amendments, modifications, renewals and/or extensions thereof.

1.3 “Closing Date”: As defined in the Property Acquisition Loan Agreement.

1.4 “Default Rate”: shall mean six percent (6%) per annum, compounded on a monthly basis.

1.5 “Interest Rate” shall mean zero percent (0%).

1.6 “Loan”: The loan in the principal amount of [ONE MILLION AND NO/100 DOLLARS ($1,000,000.00)] made by Lender to Borrower pursuant to this Note and the Property Acquisition Loan Agreement.

1.7 “Loan Documents”: This Note; the Property Acquisition Loan Agreement; the Security Interest, the ROFR Agreement; and any and all other documents evidencing or securing the Loan or executed in connection therewith, all dated of even date herewith, and any amendments, modifications, renewals and/or extensions thereof.

1.8 “Maturity Date”: _________, 2028, or on such earlier date as this Note becomes due and payable, whether by acceleration or otherwise. [Insert date five years from the Closing Date.]

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1.9 “Note”: This Promissory Note.

1.10 “Outstanding Principal Balance”: As of any date, the outstanding principal balance of this Note.

ARTICLE 2

ADVANCES, INTEREST AND PAYMENTS

2.1 Advances. The Loan proceeds shall be advanced on the Closing Date and shall be used for the purposes set forth in Section 2.1 the Property Acquisition Loan Agreement.

2.2 Rate of Interest. The Outstanding Principal Balance shall bear interest at the Interest Rate. If Borrower fails to pay all amounts due within thirty (30) days after this Note becomes due in full, whether by acceleration (upon default or otherwise), by the occurrence of the Maturity Date, or otherwise, the Outstanding Principal Balance, accrued interest and costs incurred shall thereafter bear interest until paid at a rate equal to the Default Rate.

2.3 Interest. Interest on the Outstanding Principal Balance shall be calculated by multiplying: (a) the actual number of days elapsed in which the calculation is being made, by (b) a daily interest rate calculated by dividing the applicable interest rate by 360 (to reflect a 360-day year), by (c) the Outstanding Principal Balance.

2.4 Payments.

2.4.1 No Periodic Payments. In the absence of a Default or Event of Default, there shall be no periodic payments on this Note prior to the Maturity Date thereof.

2.4.2 Repayment on Maturity Date. On the Maturity Date, or on such earlier date as this Note becomes due and payable, whether by acceleration or otherwise, the entire unpaid principal balance of the Loan and all accrued interest thereon, and all other sums owing to Lender hereunder and under the Loan Documents, shall be due and payable in full. Borrower acknowledges and agrees that, unless sooner paid, this Note contemplates a balloon payment of all unpaid principal of the Loan and all accrued interest thereon, and all other sums owing to Lender hereunder and under the Loan Documents, on the Maturity Date.

2.5 No Additional Fundings. This Loan is not a revolving line of credit and, to the extent that Borrower prepays principal under this Note, Borrower shall not be entitled to thereafter have said principal funded (again) to Borrower by Lender.

2.6 Late Payment Charge. Borrower acknowledges that late payment to Lender of any sums due hereunder will cause Lender to incur additional costs not contemplated hereunder, the exact amount of which will be impracticable or extremely difficult to ascertain. Such costs include, but are not limited to, processing and accounting charges. Accordingly, if any installment, payment or any other sum due from Borrower shall not be received by Lender or Lender’s designee within ten (10) calendar days after it is due, Borrower shall then pay to Lender a late payment charge equal to five percent (5%) of such overdue amount. The parties hereby agree that such late charge represents a fair and reasonable estimate of the costs Lender will incur by reason of late payment. This provision shall not, however, be construed as extending the time for payment of any amount due hereunder, and acceptance of such late charge by Lender shall in no event constitute a waiver of Borrower’s

3 4857-3381-4397v7/200760-0007
default with respect to such overdue amount nor prevent Lender from exercising any of the other rights and remedies with respect to such default.

2.7 Default Rate. If Borrower fails to timely pay any payment within thirty (30) days after it is due or upon the occurrence of any Event of Default, then Lender shall have the right but not the obligation, to increase the interest rate on the Outstanding Principal Balance of the Loan to the Default Rate. On the Business Day following the date on which Borrower pays the late payment and any then accrued and unpaid interest (including any interest calculated at the Default Rate, if applicable), then the interest rate on the Outstanding Principal Balance shall automatically (and without further action on the part of Borrower or Lender) decrease from the Default Rate to the interest rate then applicable to the Outstanding Principal Balance, as if the Default Rate of interest had not been applied to the Loan.

2.8 Method and Place of Payment. Except as otherwise specifically provided herein, all payments and prepayments under this Note shall be made to Lender not later than 4:00 P.M., California local time, on the date when due and shall be made in lawful money of the United States of America in immediately available funds at Lender’s office or as otherwise directed by Lender, and any funds received by Lender after such time shall, for all purposes hereof, be deemed to have been paid on the next succeeding Business Day.

ARTICLE 3

ADDITIONAL TERMS AND CONDITIONS

3.1 Loan Documents. This Note is evidenced by the Loan Documents.

3.2 Application of Payments. All payments received shall be applied first to accrued interest, then to principal, then to charges other than interest and principal, if any, owing hereunder, except that, after the occurrence and during the continuation of any default or Event of Default under this Note, all amounts received shall be applied in such order as Lender, in its sole and absolute discretion, may elect.

3.3 No Waiver. The acceptance by Lender of any payment under this Note after the date that such payment is due shall not constitute a waiver of the right to require prompt payment when due of future or succeeding payments or to declare a default as herein provided for any failure to so pay. The acceptance by Lender of the payment of a portion of any installment at any time that such installment is due and payable in its entirety shall neither cure nor excuse the default caused by the failure to pay the whole of such installment and shall not constitute a waiver of Lender’s right to require full payment when due of all future or succeeding installments.

3.4 Prepayment. This Note may be prepaid, in whole or in part, at any time during the term of this Note, without prepayment penalty or premium, at a prepayment price equal to the principal amount to be prepaid, plus accrued interest thereon (at the Interest Rate or Default Rate, as applicable), calculated to the date of prepayment, plus the amount of all outstanding fees, charges, and other amounts due to Lender hereunder.

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3.5 Default. Each of the following events after the expiration of any notice and/or cure period shall constitute an event of default of Borrower hereunder (each, an “Event of Default”):

3.5.1 Borrower fails to make any payment when due under this Note or under any of the other Loan Documents;

3.5.2 Borrower fails to comply with or to perform any other term, obligation, covenant or condition contained in this Note or any of the other Loan Documents, which is not cured within thirty (30) days after notice from Lender;

3.5.3 Any financial statement, report or certificate made or delivered to Lender by Borrower is not materially true and complete, or any representation or warranty made or delivered to Lender by Borrower is not materially true and correct;

3.5.4 The occurrence of a default or “Event of Default” under any of the other Loan Documents beyond any applicable notice and cure periods therein;

3.5.5 The occurrence of any breach or default by Borrower, in its capacity as landlord, under a Lease (as defined in the Property Acquisition Loan Agreement), beyond any applicable cure periods contained therein.

3.6 Acceleration Rights; Interest After Acceleration or Maturity. Upon the occurrence of a default or Event of Default hereunder, Lender may, at its election, declare the entire balance of principal and interest thereon immediately due and payable, together with all costs of collection, including attorneys’ fees and all expenses incurred in connection with protection of, or realization on, the Property. If Borrower fails to pay all amounts due within thirty (30) days after this Note becomes due in full, whether by acceleration (upon default or otherwise), by the occurrence of the Maturity Date or otherwise, the Outstanding Principal Balance, accrued interest and costs incurred shall thereafter bear interest until paid at a rate equal to the Default Rate. TIME IS OF THE ESSENCE IN THIS NOTE.

3.7 Default in Payment of Interest. Interest not paid when due shall then be added to the principal (which shall not cure the default in payment), and shall thereafter bear like interest.

3.8 Acceleration on Sale or Transfer of Property. Borrower understands that in making the Loan evidenced by this Note, Lender is relying to a material extent upon the business expertise and net worth of Borrower and upon the continuing interest which Borrower has in the Property.

Accordingly, in the event that Borrower, without the prior written consent of Lender, directly or indirectly, voluntarily or involuntarily, sells, assigns, transfers, disposes of any interest or enters into a Lease without Lender’s prior written consent (collectively, a “Transfer”) in the Property, whether by outright sale, deed, installment sale contract, land contract, contract for deed, ground lease or any other leases, lease-option contract, or by sale, assignment, or transfer of any beneficial interest in or to any land trust holding title to the Property, or by any other method of conveyance of an interest in the Property, then the same shall be deemed to increase the risk of Lender, and Lender may then, or at any time thereafter, declare all principal, accrued and unpaid interest and all other charges and fees under this Note immediately due and payable, and may exercise all rights and remedies provided in the Loan Documents. A Transfer shall include, but not be limited to: (a) an installment sales agreement wherein Borrower agrees to sell the Property, or any part thereof, for a price to be paid in installments; (b) an agreement by Borrower leasing all or substantially all of the Property for other

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than actual occupancy by a space tenant thereunder, or a sale, assignment or other transfer of, or the grant of a security interest in, Borrower’s right, title and interest in and to any Leases (as defined in the Loan Documents) or any Rents (as defined in the Loan Documents); (c) if Borrower is a corporation, any merger, consolidation or sale or pledge of such corporation’s stock or the creation or issuance of new stock; (d) if Borrower is a limited or general partnership or joint venture, any merger or consolidation or the change, removal, resignation or addition of a general partner or the sale or pledge of the partnership interest of any general partner or any profits or proceeds relating to such partnership interest, or the creation or issuance of new general partnership interests; (e) if Borrower is a limited liability company, any merger or consolidation or the change, removal, resignation or addition of a managing member or non-member manager (or if no managing member, any member) or the sale or pledge of the limited liability company interest of a member or any profits or proceeds relating to such limited liability company interest, or the sale or pledge of limited liability company interests or the creation or issuance of new limited liability company interests; or (f) if Borrower is a trust or nominee trust, any merger, consolidation or the sale or pledge of the legal or beneficial interest in Borrower or the creation or issuance of new legal or beneficial interests.

3.9 Acceleration on Insolvency of Borrower. In the event that: (a) Borrower fails to pay its debts generally as they come due or files any petition or action for relief under any bankruptcy, reorganization, insolvency or moratorium law, or any other law or laws for the relief of, or relating to, debtors; (b) an involuntary petition is filed against Borrower under any bankruptcy or similar statute and such petition is not set aside or withdrawn or is still in effect within thirty (30) days from the date of such filing; (c) a custodian, receiver or trustee (or other similar official) is appointed to take possession, custody or control of any of the properties of Borrower; (d) the Property, or any other property of Borrower, becomes subject to the jurisdiction of a Federal Bankruptcy Court or successor to that court, or any similar state court; (e) Borrower makes a general assignment for the benefit of Borrower’s creditors; or (f) any portion of Borrower’s assets is attached, executed upon or judicially seized in any manner, and such seizure is not discharged within thirty (30) days, Lender at its option and to the extent permitted by applicable law may, without prior notice, declare all sums secured by the Loan Documents, irrespective of their stated due date(s), immediately due and payable and may exercise all rights and remedies provided in the Loan Documents.

3.10 No Recourse Against Borrower. Notwithstanding anything to the contrary set forth in this Note, the City covenants that it shall not take recourse against the Borrower with respect to the failure by the Borrower to make any payment under the Loan Agreement or this Note except recourse to the Property and the Collateral, or to such other security as may from time to time be given for the payment of obligations arising out of this Loan Agreement, the Security Instrument, or any other agreement securing the obligations of the Borrower with respect to the Loan or this Note.

3.11 Further Encumbrance Prohibited. Borrower covenants not to execute any deed of trust, security agreement, assignment of leases and rents or other agreement granting a lien (except the liens granted to Lender by the Loan Documents) in the Property or take or fail to take any other action which would result in a lien against the interest of Borrower in the Property without the prior written consent of Lender.

3.12 Maintain Records; Financial Statements and Tax Returns. Borrower shall keep and maintain full and accurate accounts and records of its operations according to generally accepted accounting principles and practices for its type of business. Borrower shall provide to Lender financial statements and tax returns pursuant to the provisions and conditions of the Property Acquisition Loan Agreement. Borrower shall promptly provide to Lender all additional information,

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statements and other reports with respect to the financial condition of Borrower and the Property as Lender may request from time to time during the term of the Loan.

3.13 Notices. All notices, requests and demands to be made hereunder to the parties hereto shall be in writing (at the addresses set forth below) and shall be given by any of the following means: (a) personal service; (b) electronic communication, whether by telex, telegram or facsimile (if confirmed in writing sent by certified first class mail, return receipt requested); (c) certified first class mail, return receipt requested; or (d) a nationally recognized overnight service. Such addresses may be changed by notice to the other parties given in the same manner as provided above. Any notice, demand or request sent pursuant to either clause (a) or clause (b) hereof shall be deemed received one (1) Business Day after personal service or one (1) Business Day after delivery by electronic means, if sent pursuant to clause (c) shall be deemed received three (3) Business Days following deposit in the mail and if sent pursuant to clause (d) shall be deemed received one (1) Business Day following deposit with the overnight service.

To Lender: City of Norco
2870 Clark Avenue
Norco, California 92860
Attn: Lori Sassoon, City Manager
Email: [email protected]
With a Copy to: Stradling Yocca Carlson & Rauth
660 Newport Center Drive, Suite 1600
Newport Beach, California 92660
Attn: Vanessa S. Legbandt, Esq.

Email: [email protected]
To Borrower: Five Keys Schools and Programs
Attn:

Email:

3.14 Attorneys’ Fees. In the event of litigation between the Lender and Borrower to enforce the terms of this Agreement, each party shall pay its own attorneys’ fees and costs.

3.15 Waiver of Right of Trial by Jury; Judicial Reference. BORROWER HEREBY

WAIVES TO THE FULLEST EXTENT PERMITTED BY LAW, THE RIGHT TO TRIAL BY

JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM, WHETHER IN CONTRACT,

TORT OR OTHERWISE, RELATING DIRECTLY OR INDIRECTLY TO THE LOAN

EVIDENCED BY THIS NOTE AND ANY SECURITY INSTRUMENT OR ANY ACTS OR

OMISSIONS OF LENDER, ITS OFFICERS, EMPLOYEES, DIRECTORS OR AGENTS IN CONNECTION THEREWITH. IF ANY LEGAL PROCEEDING IS FILED IN A COURT AND

THE PRECEDING JURY WAIVER IS NOT ENFORCEABLE IN SUCH ACTION OR

PROCEEDING, BORROWER AND LENDER AGREE THAT SUCH DISPUTE WILL BE

DETERMINED BY A GENERAL REFERENCE PROCEEDING IN ACCORDANCE WITH CALIFORNIA CODE OF CIVIL PROCEDURE SECTIONS 638 THROUGH 645.1, WITH THE EXCEPTION OF: (a) NON-JUDICIAL FORECLOSURE OF ANY SECURITY INTERESTS IN REAL OR PERSONAL PROPERTY; (b) EXERCISE OF SELF-HELP REMEDIES (INCLUDING,

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WITHOUT LIMITATION, SET-OFF); (c) APPOINTMENT OF A RECEIVER; AND (d) TEMPORARY, PROVISIONAL OR ANCILLARY REMEDIES (INCLUDING, WITHOUT

LIMITATION, WRITS OF ATTACHMENT, WRITS OF POSSESSION, TEMPORARY RESTRAINING ORDERS OR PRELIMINARY INJUNCTIONS). THIS NOTE DOES NOT

LIMIT THE RIGHT OF ANY PARTY TO EXERCISE OR OPPOSE ANY OF THE RIGHTS AND REMEDIES DESCRIBED IN CLAUSES (a) - (d) AND ANY SUCH EXERCISE OR OPPOSITION

DOES NOT WAIVE THE RIGHT OF ANY PARTY TO A REFERENCE PROCEEDING PURSUANT TO THIS NOTE. THE PARTIES INTEND THIS GENERAL REFERENCE

AGREEMENT TO BE SPECIFICALLY ENFORCEABLE IN ACCORDANCE WITH CALIFORNIA CODE OF CIVIL PROCEDURE SECTION 638. UPON THE WRITTEN

REQUEST OF ANY PARTY, THE PARTIES SHALL SELECT A SINGLE REFEREE, WHO

SHALL BE A RETIRED JUDGE OR JUSTICE, AND THE MATTER WILL BE DECIDED BY THE REFEREE, NOT A JURY. IF THE PARTIES DO NOT AGREE UPON A REFEREE WITHIN TEN (10) DAYS OF SUCH WRITTEN REQUEST, THEN, ANY PARTY MAY

REQUEST THE COURT TO APPOINT A REFEREE PURSUANT TO CALIFORNIA CODE OF CIVIL PROCEDURE SECTION 640(b). A REQUEST FOR APPOINTMENT OF A REFEREE

MAY BE HEARD ON AN EX PARTE OR EXPEDITED BASIS, AND THE PARTIES AGREE THAT IRREPARABLE HARM WOULD RESULT IF EX PARTE RELIEF IS NOT GRANTED.

ALL PROCEEDINGS AND HEARINGS CONDUCTED BEFORE THE REFEREE, EXCEPT FOR

TRIAL, SHALL BE CONDUCTED WITHOUT A COURT REPORTER, EXCEPT THAT IF ANY

PARTY SO REQUESTS, A COURT REPORTER WILL BE USED AND THE TRANSCRIPT WILL BE PROVIDED TO ALL PARTIES AT THE REQUESTING PARTY’S EXPENSE. THE REFEREE’S FEES SHALL ULTIMATELY BE BORNE BY THE PARTY WHO DOES NOT PREVAIL, AS DETERMINED BY THE REFEREE. THE REFEREE MAY REQUIRE ONE OR MORE PREHEARING CONFERENCES. THE PARTIES HERETO SHALL BE ENTITLED TO

DISCOVERY, AND THE REFEREE SHALL OVERSEE DISCOVERY IN ACCORDANCE WITH

THE RULES OF DISCOVERY, AND MAY ENFORCE ALL DISCOVERY ORDERS IN THE

SAME MANNER AS ANY TRIAL COURT JUDGE IN PROCEEDINGS AT LAW IN THE STATE OF CALIFORNIA. THE REFEREE SHALL APPLY THE RULES OF EVIDENCE

APPLICABLE TO PROCEEDINGS AT LAW IN THE STATE OF CALIFORNIA AND SHALL

DETERMINE ALL ISSUES IN ACCORDANCE WITH APPLICABLE STATE AND FEDERAL LAW. THE REFEREE SHALL BE EMPOWERED TO ENTER EQUITABLE AS WELL AS

LEGAL RELIEF AND RULE ON ANY MOTION WHICH WOULD BE AUTHORIZED IN A

TRIAL, INCLUDING, WITHOUT LIMITATION, MOTIONS FOR DEFAULT JUDGMENT OR SUMMARY JUDGMENT. THE REFEREE SHALL REPORT HIS DECISION, WHICH REPORT SHALL ALSO INCLUDE FINDINGS OF FACT AND CONCLUSIONS OF LAW.

3.16 Waivers. The makers, endorsers and sureties of this Note hereby waive diligence, demand, presentment, notice of non-payment or dishonor, protest and notice of protest, and expressly agree that the time for performance of any obligation under this Note may be extended from time to time, consent to the release of any party liable hereon or herefor, consent to the acceptance or release of security for this Note, including other types of security, all without in any way affecting their liability, and waive the right to plead any and all statutes of limitations as a defense to any demand on this Note, or any guaranty thereof, or to any agreement to pay the same, to the full extent permissible by law.

3.17 Severability. If any provision of this Note is determined by a court of competent jurisdiction to be invalid, illegal or unenforceable, that portion shall be deemed severed from this

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Note, and all remaining parts shall continue in full force as though the invalid, illegal or unenforceable portion had never been part of this Note.

3.18 Usury Savings. All agreements between Borrower and Lender, now existing or hereafter arising, are hereby expressly limited so that in no event whatsoever shall the amount paid, or agreed to be paid, to Lender hereof for the use, forbearance or detention of money to be loaned hereunder or otherwise, or for the performance or payment of any covenant or obligation contained herein, exceed the maximum amount permissible under applicable law. If from any circumstance whatsoever fulfillment of any provision hereof exceeds the limit of validity prescribed by law, then, ipso facto, the obligation to be fulfilled shall be reduced to the limit of such validity, and if from any such circumstance Lender hereof shall ever receive as interest under this Note or otherwise an amount that would exceed the highest lawful rate, such amount that would be excessive interest shall be applied to the reduction of the principal amount owing hereunder (without charge for prepayment) and not to the payment of interest, or if such excessive interest exceeds the unpaid balance of principal, such excess shall be refunded to Borrower.

3.19 Headings. Headings herein are used for convenience of reference only and do not define or limit the scope of provisions of this Note.

3.20 No Oral Change. This Note, and any provisions hereof, may not be modified, amended, waived, extended, changed, discharged or terminated orally or by any act or failure to act on the part of Borrower or Lender, but only by an agreement in writing signed by the party against whom enforcement of any modification, amendment, waiver, extension, change, discharge or termination is sought.

3.21 Governing Law. This Note shall be governed by and construed under the internal laws of the State of California, except to the extent that federal law applies.

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IN WITNESS WHEREOF, this Note has been executed by Borrower and is effective as of the date first written above.

BORROWER:

FIVE KEYS SCHOOLS AND PROGRAMS,
a California nonprofit public benefit corporation,
By:

Its:

Name: