C~)STRUCTION LOAN AGREEf;'""yNT

Transcription

1 C~)STRUCTON LOAN AGREEf;'""yNT ~ " Borrower: MssCom, LLC, an Oregon Lmted Lablty Company c/o Commercal Concepts, nc., 411 East Cascade, Sute 224 Ssters, OR Lender: FRST REGONAL BANK Century Cty 1801 Century Park East Los Angeles, CA (310) THS CONSTRUCTON LOAN AGREEMENT dated July 9, 2007, s made and executed between MssCom, LLC, an Oregon Lmted Lablty Company ("BorrOWer") and FRST REGONAL BANK"("Lender") on the followng terms and condtons. Borrower has appled 10 Lender for one or more loans for purposes of constructng the mprovements on the R,eal Property descrbed b~low. Lender s wllng to lend the loan amount to Borrower solely under the terms and condtons specfed n ths Agreement and n the Related Documents, to each of whch Borrower agrees. Borrower understands and agrees that: (A) n grantng, renewng, or,extendng any Loan, Lender s relyng upon Borrower's representatons, warrantes, and agreements as set forth n ths Agreement, and (B) all such Loans shall be and reman subject to the terms and condtons of ths Agreement. TERM. Ths Agreement shall be effectve as of July 9, 2007, and shall contnue n full force and effect untl such tme as all of Borrower's Loans n favor of Lender have been pad n full, ncludng prncpal, nterest, costs, expenses, attorneys' fees, and other fees and ch,arges, or untl February 1, LOAN. The Loan shall be n an amount not to exceed the prncpal sum of U.S. $36,200, and shall bear nterest on so much of the prncpal sum as shall be advanced pursuant to the terms of ths Agreement and the Related Documents. The Loan shall bear nterest on each Advance from the date of the Advance n accordance wth the terms of the Note. Borrower shall use the Loan Funds solely for the payment of: (A) the costs of constructng the mprovements and equppng the Project n accordance wth the Constructon Contract; (B) other 'costs and expenses ncurred or to be ncurred n connecton wth the constructon of the mprovements' as Lender n ts sole dscreton shall approve; and (C) f permtted by Lender, nterest due under the Note, ncludng all expenses and all loan and commtment fees descrbed n ths Agreement. The Loan amount shall be subject at all lmes to all maxmum lmts and condtons set forth n ths Agreement or n any of the Related Documents, ncludng wthout lmtaton', any lmts relatng to loan to value ratos and acquston and Project costs. ' PROJECT DESCRPTON. The word Project" as used n ths Agreement means the constructon and completon of all mprovements contemplated by ths Agreement, ncludng wthout lmtaton the erecton of the buldng or structure on the Real Property dentfed to ths Agreement by Borrower and Lender, nstallaton of equpment and fxtures, landscapng, and all other work necessary to make the Project usable and complete for the ntended purposes. The Project ncludes the followng work: The proposed mprovements wll consst of a sx-story, concrete & masonry condomnum buldng havng a gross buldng area of 191,775 sq. H., ncluded 89 resdental condos along wth 37,655 sq. H. of rental commercal space on the basement & frst floor levels, :known as "The Merdan" and located at 777 Commercal Street SE, Salem, Oregon The word "Property" as used n ths Agreement means the Real Property together wth all mprovements, all equpment, fxtures, and otl1er artcles of personal property now or.'subsequently attached or affxed to the Real Property, together wth all accessons, pars, and addtons to, all replacements of, and all substtutons for any of such property, and au proceeds (ncludng nsurance proceeds and refunds of premums) from any sale or other dspo~ton of such property. The real estate descrbed below consttutes the Real Property as used n ths Agreement. The real estate legally descrbed as: See Exhbt "A", whch s attached hereto and made a part hereof as f fully set forth heren. ts address s commonly known as: Real Property located at 777 Commercal Street, S. E., Salem, OR FEES AND EXPENSES. Whether or not the Project shall be consummated, Borrower shall assume and pay upon demand all out-of-pocket expenses ncurred by Lender n connecton wth the preparaton of loan documents and the makng of the Loan, ncludng wthout lmtaton the followng: (A) all closng costs, loan fees, and dsbursements; (8) all expenses of Lender's leg(l.\ counsel; and (C) all ttle examnaton fees, ttle nsurance premums, apprasal fees, survey costs, requred fees, and flng and recordng fees. NO CONSTRUCTON PROR TO RECORDNG OF SECURTY DOCUMENT. Borrower wll not permt any work or materals to be furnshed n connecton wth the Project untl (A) Borrower has sgned the Related Documents; (B) Lender's mortgage or deed of trust and other Securty nterests n the ~roperty have been duly recorded and perfected; (C) Lender has been provded evdence, satsfactory to Lender, that Borrower has obtaned all nsurance requred under ths Agreement or any Related Documents and that Lender's Hens on the Property and mprovements are vald perfected frst lens, subject only to such exceptons, f any, acceptable to Lender. REPRESENTATONS AND WARRANTES. Borrower represents and warrants to Lender, as of the date of ths Agreement, as of the date of each dsbursement of loan proceeds, as of the date of any renewal, extenson or modfcaton of any Loan, and at all tmes any ndebtedness exsts: Organzaton. Borrower s a lmted lablty company whch s, and at all tmes shall be, duly organzed, valdly exstng, 'and n good standng under and by vrtue of the laws of the State of Oregon. Borrower s duly authorzed to transact busness n all other slates n whch Borrower s dong busness, havng obtaned all necessary flngs, governmental lcenses and approvals for each state n whch Borrower s dong busness. Specfcally, Borrower s, and at all tmes shall be, duly qualfed as a foregn lmted lablty company n all states n whch the falure to so qualfy would,have a materal adverse effect on ts busness or fnancal condton. Borrower has the full power and authorty to own ts propertes and to ransact the busness n whch t s presently engaged or presently proposes to engage. Borrower mantans an offce at t/o Commercal Concepts, nc., 411 East Cascade, Sute 224, Ssters, OR Unless Borrower has desgnated otherwse n wrtng, the prncpal offce s the offce at whch Borrower keeps ts books and records ncludng ts records concernng the Collateral. Borrower wll notfy Lender pror to any change n the locaton of Borrower's state of organzaton or any change n Borrower's name. Borrower shall do all thngs oecessary to preserve and to keep n full force and effect ts exstence, rghts and prvleges, and shall comply wth all regulatons, rules, ordnances, statutes, orders and decrees of any governmental or quas-governmental authorty or court applcable to Borrower and Borrower's busness actvtes. Assumed Busness Names. Borrower has fled or recorded all documents or flngs requred by law relatng to all assumed busness names used by Borrower, Excludng the name of Borrower, the followng s a complete lst of all assumed busness names under whch Borrower does busness: Borrower MssCom, LLC, an Oregon Lmted Lablty Company Assumed Busness Name The Merdan Flng Locaton Oregon Secretary of State Date Exhbt A - Page 1

2 CQSTRUCTON LOAN AGREEM'J,. 1! Borrower: MssCom,LLC, an Oregon Umtted lablty Company Clo Commerc:lal Concepts, nc., 411 East Cascade, SUte 224 Ssters; OR Lender: FRST REGONAL BANK CenlUey Cty 1801 Century Parle East.Los Angeles:, CA 900&7 (310) THS CONSTRUCTON LOAN AGREEMENT dated JUly 9, 2007, s made and executed between MssCOm, LLC, 8n Oregon umued Uabllty Company ("Borrower' and FRST REGONAL BANK ("Lender ) on the followng terms and condtons. Borrower has appled to Lender for one or more toms for purpgse$ of conslrucung the mprovements on the Real Property descrbed below. Lender s wllng to lend the loan UOUnt to Borrower solely under the terms and condluons specfed n ths Agreement md n the Relaled Documents, to each of Whch Borrower agrees. Borrower undersrands and agrees that: (A) n grantng, renewrng, or extendng any Loan, Lender s relyng upon Borrower's representatons, warranues, and agreements ls set forth n ths Agreement, and (B) all such Loans shalf be and reman subect to the terms and conduons of ths Agreement. TERM. Ths Agreement shah be effectve as of July 9, 2007, and shal conllnue n ful force and effect unll such lme as all of Borrower's loans n favor of Lender have been pad n M, l'cudng prncpal, nterest, costs, expenses, attorneys' fees, Md o!f1er fees and charges, or untll February 1, LOAN. The Loan shah be n an amount not to exceed!he prncpal sum of u.s. $36,200, and shad bear nl9rest on so much of the prncpal sum as shah be advanced pursuant to the fecms of ths Agreement and the Related Documents. The Loan shall bear nterest on each Advance from the date of the Advance n accordance wth the lerms of the Nole. Borrower shag use the Loan Funds solely for the payment of: (A the costs of oonstrucng the mprovements and equppng!he Project n accordance Wth the Constructon Contract; (B) other cos1s and expenses ocurred or to be ncurred n connecton wth the conslructon of the mprovemenls as Lender n ts so/e' dscreton shall approve~ and (e) f permltled by Lender, nterest due under tha Noe, ncludng al expenses and all loan and commlment rees descrbed n ths Agreement. The loan amount shall be subject at all lmes to all maxmum mts and condtfons set lorth n ths Agreement or n any of the Related Documents, ncludng wthout rh11taton, any lmts relatng to loan to value rallos and acquston and Pro/eet costs.. PROJECT DESCRPTON. The word "Pr()/ec" as used n hs Agreement means the consfruchon and cornpleuon of almprovemenfs contemplated by tts Agreement, nclud"119 wthout lmtaton the ereellon of the buudng or sfrucure on the Real Property ldenffled to ths Agreement by Borrower and l.ellder, nstallalon of equpment and fxtures, landscapng, and au other work nec:essay to make the Pro/ect usable and complete for the ntended p!tposes. The Project ncludes the followng wolle: The.. proposed mprovements wn consst of a slx-gtory, concrete & masonry condomnum buldng havng a gross buldng area of 181,775 sq. n., ncluded 89 resdenua condos along Wth 37,655 sq. ft. of rental commercal space on the basement & frst floor levels, known as "The MerldlllC'l" and located at 777 Commercal street SE, Salem, Oregon The word "Property" as used n thls Agreement means the Real Property together wlh ad mprovements. au equpment, fxtures, and other artcles of personal property now or subsequently alfached or affxed to the Re41 Properly, together wth all accessons, pars, and addlhons to, ad replacements of, and ad substtutons for any of such properly, and au proceeds ~ncludng nsurance proceeds and refunds of premums) from any sale or other dlsposluon 01 such properly. The real estate descrbed below consthutes the Real Property 11$ used n ths Agreement. The real estate legally descrtbed as: See Exhbt "A", Whch s auached hereto and made a part hereof as f fully set forth heren. ts address s commonly knowr as: Real Property Jocated at m Commercal Street, S. E.. Salem, OR FEES AND EXPENSES. Whether or not the Project shall be consummated, Borrower shall assume and pay upon demand au o~t expenses n:urred by lander n connacllon wth the prep.arauon of loan documents and the makng of the Loan, ncludng wthout Hmlta60n the followng: (A) a~ c!osfng costs, loan fees, and dsbursements; (8) all expenses of Lender's legal counsel; and (C) an ttle examlnauon fees,. tde nsurance premums, apprasal fees, SM\'eY costs, requred rees, and flng and recordng lees. NO CONSTRUCTON PROR TO RECORDNG OF SECURTY DOCUMENT. Borrower wll not permt any work or materals to be furnshed n connecllon whh the Project untb (A) Borrower has sgned the Related Documents; (B) Lender's mortgage or deed of trust and other Seounly nterests n \he Property haye been duly recorded and perfected; (C) Lander has been provded evdence, satsfactory 10 Lender, that Borrower has obtaned al/nsurance requred under ths Agreement or any Related Documents alld that Lender's lens on the property and l1)provements are vald perfec!ed fst Eens, subject only to such exceptons, f any, acceptable to Lender. REPRESENTAnoNS AND WARRANTES. Borrower represents and warrants to Lender, as of the date of ths Agreement, as of the date of each cfsbursement of loan proceeds, as of the date of any renewal, extenson or modffcatlon of any Loan, and at an lmes any ndebtedness exsts: organzaton. Borrowar s a lmted Dabllty company whch s, and at all tmes shalt be, duly organzed, valdly exlsng, 'and n good standng under and by vfrtue of the laws of the State of Oragon. Borrower s d~ authotzbd to lransact busness n at other states n whch Borrower s dong busness, ha'jng ob1alned ar necessary fnngs, governmental lcenses and approvals for each stale n whch Borrower s dong busness. SpeclfcaRy, Borrower s, and at au tmes shall be, dtq qualfted as a for'elgn mted labnty company n a states n whch the falure to so quarlfy would have materal adversa efact on ts busness or fnancal condlllon. Borrower has the full power and authorty to own ts propsf1les and to lransact the busness n whch t s presenuy engaged or presendy proposes to angage. Bexmwer mantans an offce al clo Commercal Concepts, nc., 411 East Cascade, Sute 224, Sslers, OR Unless Borrower has desgnated olherwlse n wrlng. the prncpal offce s the offce at whch Borrower keeps ts books and records ncludng ts reeord$ concernng the CoaeraL BorrOW9C wrl no6fy Lender pror to any change n (he locaton of Borrower's state of organlzallon or any change n Borrower's name. Borrower shaft do all thngs necessary to presarw and to keep n full folce and effect ts exstence, rghts and prvleges, lld shat Comply wth ar regulalons, rules, ordnances, statutes, orders and decrees of any governmental or quasl-govemmenlal authdl1ty or court appcabe to BorrOW9C and Borrower's busness actvlles. AssUmed Busness Names. Borrower has fled or recortfed ar documents or Rngs requred by law relatng to all assumed buslnass names used by E!orroW9C. Excud"mg the name of Borrower, the forowng s a coropate lst of ar assumed busness names under whch Borrower does busness: BClmlWer Assumed Busness Name Flng localon Dale MlssCom, LLC, an Oregon Tbe Merdan Oregon SecretarY of State. 09: lmted Lablty ComlHlny \!: ' ' 1!. \.. j. r' r : 1, Exhbt A - Page 2

3 1NSTRUCTON LOAN AGREEME ~ \~.J (Contnued) _/ Page 2 Authorzaton. Borrower's executon, delvery, and performance of ths Agreement and all the Related Documents have been duly authorzed by au necessary acton by Borrower and do not conflct wth, result n a volaton of, or consttute a default under (1) any provson of (al Borrower's artcles of organzaton or membershp agreements, or (b) any agreement or other nstrument bndng upon Borrower or (2) any law, governmental regulaton, court decree, or order applcable to Borrower or to Borrower's propertes. Fnancal nformaton. Each of Borrower's fnancal statements suppled to Lender truly and completely dsclosed Borrower's fnancal condton as of the date of the statement, and there has been no materal adverse change n Borrower's fnancal condton subsequent to the date of the most recent fnancal statement suppled to Lender. Borrower has no materal contngent oblgatons except as dsclosed n such fnancal statements. Legal Effect. Ths Agreement consttutes, and any nstrument or agreement Borrower s requred to gve under ths Agreement when delvered wll consttute legal, vald, and bndng oblgatons of Borrower enforceable aganst Borrower n accordance wth ther respectve terms. Propertes. Except as contemplated by ths Agreement or as prevously dsclosed n Borrower's fnancal statements or n wrtng to Lender and as accepted by Lender, and except for property tax lens for taxes not presently due and payable, Borrower owns and has good ttle to all of Borrower's propertes free and clear of all Securty nterests, and has not executed any securty documents or fnancng statements relatng to such propertes. All of Borrower's propertes are ttled n Borrower's legal name, and Borrower has not used or fled a fnancng statement under any other name for at least the last fve (5) years. Hazardous Substances. Except as dsclosed to and acknowledged by Lender n wrtng, Borrower represents and warrants that: (1) Durng the perod of Borrower's ownershp of the Collateral, there has been no use, generaton, manufacture, storage, treatment, dsposal, release or threatened release of any Hazardous Substance by any person on, under, about or from any of the Collateral. (2) Borrower has no knowledge of, or reason to beleve that there has been (a) any breach or volaton of any Envronmental Laws; (b) any use, generaton, manufacture, storage, treatment, dsposal, release or threatened retease of any Hazardous Substance on, under, about or from the Collateral by any pror owners or occupants of any of the Collateral; or (c) any actual or threatened ltgaton or clams of any knd by any person relatng to such matters. (3) Nether Borrower nor any tenant, oontractor, agent or other authorzed user of any of the Collateral shall use, generate, manufacture, store, treat, dspose of or release any Hazardous Substance on, under, about or from any of the Collateral; and any such actvty shall be conducted n complance wth all applcable federal, state, and local laws, regulatons, and ordnances, ncludng wthout lmtaton all Envronmental Laws. Borrower authorzes Lender and ts agents to enter upon the Collateral to make such nspectons and tests as Lender may deem approprate to determne complance of the Collateral wth ths secton of the Agreement. Any nspectons 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 responsblty or lablty on the part of Lender to Borrower or to any other person. The representatons and warrantes contaned heren are based on Borrower's due dlgence n nvestgatng the Collateral for hazardous waste and Hazardous Substances. Borrower hereby (1) releases and waves any future clams aganst Lender for ndemnty or contrbuton n the event Borrower becomes lable for cleanup or other costs under any such laws, and (2) agrees to ndemnfy, delend, and hold harmless Lender aganst any and all clams, losses, labltes, damages, penaltes, and expenses whch Lender may drectly or ndrectly sustan or suffer resultng from a breach of ths secton of the Agreement or as a consequence of any use, generaton, manufacture, storage, dsposal, release or threatened release! of a hazardous waste or substance on the Collateral. The provsons of ths secton of the Agreement, ncludng the oblgaton to ndemnfy and defend, shall survve the payment of the ndebtedness and the termnaton, expraton or satsfacton of ths Agreement and shall not be affected by Lender's acquston of any nterest n any of the Collateral, whether by foreclosure or otherwse. Ltgaton and Clams. No ltgaton, clam, nvestgaton, admnstratve -proceedng or smlar acton (ncludng those for unpad taxes) aganst Borrower s pendng or threatened, and no other event has occurred whch may materally adversely affect Borrower's fnancal condton or propertes, other than ltgaton, clams, or other events, f any, that have been dsclosed to and acknowledged by Lender n wrtng. Taxes. To the best of Borrower's knowledge, all of Borrower's tax returns and reports that are or were requred to be fled, have been fled, and all laxes, assessments and other governmental charges have been pad n full, except those presently beng or to be contested by Borrower n good fath n the ordnary course of busness and for whch adequate reserves have been provded. Len Prorty. Unless otherwse prevously dsclosed to Lender n wrtng, Borrower has not entered rto or granted any Securty Agreements, or permtted the flng or attachment of any Securty tnterests on or affechng any of the Collateral drectly or ndrectly seourng repayment of Borrower's Loan and Note, that would be pror or that may n any way be superor to Lender's Securty nterests and rghts n and to such Collateral. Bndng Effect. Ths Agreement, the Note, all Securty Agreements (f any), and all Related Documents are bndng upon the sgners thereof, as well as upon ther successors, representatves and assgns, and are legally enforceable n accordance wth ther respectve terms. Tlle to Property. Borrower has, or on the date of frst dsbursement of Loan proceeds wll have, good and marketable ttle to the Collateral free and clear of all defects, lens, and encumbrances, exceptng only lens for taxes, assessments, or governmental charges or leves not yet delnquent or payable wthout penalty or nterest, and such lens and encumbrances as may be approved n wrtng by the Lender. The Collateral s contguous to publcly dedcated streets, roads, or hghways provdng access to the Collateral. project Costs. The total cost for the Project shall not exceed $47,538, The Project costs are;! true and accurate estmate~ of the costs necessary to complete the mprovements n a good and work!l1anlke manner accordng to the Plans and SpeCfcatons presented by Borrower to Lender, and Borrower shall take all steps necessary to prevent the actual cost of the mprovements from exceedng the Project costs. Utlty Servces. All utlty servces approprate to the use of the Project after completon of constructon are avalable at the boundares of the Collateral. Assessment of Property. The Collateral s and wll contnue to be assessed and taxed as an ndependent parcel by all governmental authortes. Complance Wth Governng Authortes. Borrower has examned and s famlar wth all the easements, covenants, condtons, restrctons, reservatons, buldng laws, regulatons, zonng ordnances, and federal, state, and local requrements affectng the Project. The Project wll at all lmes and n all respects conform to and comply wth the ~equrements of such easements; covenants, condtons, restrctons, reservatons, buldng laws, regulatons, zonng ordnances, and federal, state, and local requrements. Survval of Representatons and Warrantes. Borrower understands and agrees that n extendng Loan Advances, Lender s relyng on all representatons, warrantes, and covenants made by Borrower n ths Agreement or n any certfcate or other nstrument delvered by Borrower to Lender under ths Agreement or the Related Documents. Borrower further agrees that regardless of any nvestgaton made by Lender, all such representatons, warrantes and covenants wll survve the extenson of Loan Advances and delvery to Lender of the Related Documents, shall be contnung n nature, shall be deemed made and redated by Borrower-at the tme each Loan Advance s made, and shall reman n full force and effect untl such tme as Borrower's ndebtedness shall be pad n full, or untl ths Agreement shall be termnated n the manner provded above, whchever.s the last to occur.. - CONDTONS PRECEDENT TO EACH ADVANCE. Lender's oblgaton-to make the ntal Advance and each subsequeflt Advance under- ths Agreement shall be subject to the fulfllment to Lender's satsfacton of all of the condtons set forth n ths Agreement and n the Related Documents. Exhbt A - Page 3

4 QNSTRUCTON LOAN AGREEMENT) (Contnued) Page 2 AuthorlZaUon. Borrower's executon, delvery, and perrormance of ths Agreement and all the Related Documents have been duly authorl2ed by an necessary acton by Borrower and do not conflct wllh, result n a ";oalon of, or consttute a default under (1) any proson of (a) Borrower's artcles of organzaton or membershp agreements, or (b) any agreement or other ns!rument bndng upon Borrower or (2) any' law, governmental regulaton, court decree, or order apprlcable to Borrower or to Borrower's propertes.. Flruclallnformaton. Each of Borrower's nanclal statements suppled to lender truly and completely dsclosed Borrower's fnancal COlcfdon as of he date of the statement, and there has been no materal adverse change n Borrower's fnancal condton subsequent to the dale of the most recent 8nanclal statement suppled to lender. Borrower has no materal conlngent oblgatons except S dsclosed n such fnancal statements. Legal Effect Ths Agreement conslllutes, and any ns!rument or agreement Borrower s requred to gve under ths Agreement when derrere<! wr consttute legal, vald, and bndng oblgatons of Borrower enforceable aganst Borrower n accordancawlh ther respectve terms.. Propertes. Except as contemplated by ths Agreement or as prevously dsclosed n Borrower's fnancal statements or n wrtng to Lender and as accepted by Lander, and except for property tax Rens for taxes not presently due and payable, Borrower owns and has good Ue to au of Borrower's proper1les free and clear of aa Securty nterests, and has not executed any securty documents or fnancng statements retatng 10 such propertes. AJ of Borrower's propertes are thed n Bcrrcwer's legal name, and Borrower has not used or fled a fnancng' statement under any other name for at least the last lve (5) years. Hazardous Substances. Except as dsclosed 10 and acknowledged by Lender n wrtng, Borrower represents and warrants that: (1) Durng the perod of Borrower's ownershp of the Collateral, there has been no use, generaton, manufacture, storage. treatment, dsposal, release or threatened release of any Hazardous SUbstance by any person on, under. about or from any of!he Collateral. (2) BOlYower has no knowledge of. or reason to behave hat there has been (a) any breach Dr vlolallon of any Envronmental Laws; (b) any use, generaton, manufacture, storage. treatment, dsposal, release or threatened release of any Hazardous Substance on. under, about or from the Collateral by any pror owners or cccupanls of any of the CoRa!era; or (c) any actual or threatened flgaton or clams of any knd by any person relatng to such mattels. (3) Nether Borrower nor any tenant. conlractor, agent Dr other authorzed user of any of the CoUatera shak use, generate, manufaclure, store, treat, dspose of or release any Hazardous Substance on, under, aboul or from any of the Cclfateral; and any suoh aotvty shall be condueted fn complance wth an applcable federal, state. and local laws, regutaftons, and ordnances, ncludng wthout mltatlon aa Envronmental Laws. Borrower authorzes Lender and ls agents to enter upon he Collateral to make such nspectons and tests as lender may deem approprate to determlne complance of the Collateral wth ths secton of the Agreement Any nspectons or tests made by Lender shall be at Borrower's expense and fer Lender's purposes only and shall not be conslued to create any responsblty or lablty on the part of Lender to Borrower or to any other person. The representaftons and warrantes contaned heren are based on Borrower's due dflgence n nvesugaung the Collateral for hazardous waste and Hazardous Substances. Borrower hereby (1) releases and waves any future olalms aganst Lender for ndemnty or contrbuton n the event Borrower becomes lable for cleanup or ether costs under any such laws, and (2) agrees to ndemnfy, defend, and hold harmless Lender aganst any and aa clams, losses, labllles. damages, penalues, and expenses whch lender may' drectly or ndreclly sustan or suffer resulllng from breach of ths sechon of the Agreement or as a consequence of any use, generaton, manufacture, storage, dsposal, release or threatened release of hazardous wasle or subslance on the Collateral. The provsons of ths secon of the Agreement. ncludng the obllgauon to ndemnlfy and defend, shaft survye the payment of!he ndebledness and he termnaton, expraton or salsfacllon of ths Agreement and shall not be affected by Lender's acquston or any tnlerest n any oflhe CoRateral, whether by foreclosure or otherwse. Ullgalon anc1 Clalms. No Utgatlon, clam, nll9stlgatlon, admnstratve proceedng or smlar acuon (ncludng those for unpad taxes) aganst Borrower s pendng or threatened, and no other event has oceurred whch may materally adversely affect Borrower's fnancal concfdlon or propertfes, other than galloo, clams, or other events, f any,!hat have been dsclosed to and acknowledged by Lender n wrtng, TtlXes. To ths best of Borrower's knowledge, all of Borrower's lax relurns and reports that are or were requred to be fled, have been fled, and all axas, assessments and other governmental charges have been pad n full, except those presently beng or 10 be contested by Borrower n goad fath n the ordnary course of busness and for whch adequate re5eve$ have been prollded. Uen Prlorl(y. Unless otherwse prevously dsclosed to lender n wrhng, BOrrower has net entered nto or grented any Securty Agreements, or permhled the flng or alfachment of any Securty nletess on or aflecllng any of the Cotaleral drectly or ndrecdy securlng repayment of Borrower's Loan and Note, that would be pror or that may n any way be supgror to Lender's Securty nterests and rghts n and to such Collateral. 61ndlng Effect. 'ljlls f'.greement. the Note, all Securty Agreements (jf any). and all Related Documents are bndng upon the sgners thereof, as well as upon ther successors, representatves and assgns, and are legally enforceable n accordance wth ther respectve terms. TUe to Property. Borrower has. or on the date of frst dsbursement of Loan proceads.wld haw, good and marketable te to the CoDateral free and clear of defecb, ens, and encumbrances, elcceptng only lens for taxes, assessments, or governmental oharges or leves not yet defnquent or payable whhoul penaty or nterest. and such lens and encumbrances-as may be approved n wrtng by the Lander. The Col.ateral s con1guous to publcly dedcated streels, roads, 01' hghways provdng access to the Collateral. project Costs. The tota1 cost fer!he Project shal not exceed $47,538, The Proect coss are!rue and accurate estmates of le costs necessary to complete the mprcyemenls n a good and workmanlka manner accordng to!he Plar\$ and Specfcatons presented by Borrower to Lender, and B~er shall take all steps necessary 10 prevent the actual cost of the mprovements from exceedng the Project costs. Ullty Servces. /oj! utjty servces approprate to the use of the Project after completon of conslruclon ara av!ll1ab1e at the boundares of the Cotateral. Assessment of Property. The Collateral s and w! conlnue to be assessed and taxed as an ndependent parcel byar governmental authortes. COmplance Wth Governng Authortes. Borrower has examfned and s famrar wth all the easements, covenants, condtons, resbctclls, reservallons, buldng laws, regulatons,.zonng ordnances, and federal, state, and local requlremenls affectng!he Project. The Project wll at an tmes and n a respec:s conform to and comply wth the requrements of such easemenls, covenants, condlons, restrlclons, reservauons, buddng laws, regula6ons, zonng ordnances, and federal, stale, and local raqulremenls. Survval of Representatons and Warrantes. Borrower undflfslands and agrees that n extendng Loan Advances, Lender s relyng on ao repmsentalons, warranlles, and covenants made by Borrow«n ths Agreement or n any certfcate or other ns!njment denvered by Borrower 10 lender under ths Agreement or the Related Documents. Borrower further agrees that regardless of any tnvestfgalon made by lendet', an such representatons. warranles and covenants wm sulvlve the extenson of Loan Advances and delvery to Lender of the Related Documents, shall be conjnulng n nature, shau be deemed made and redaled by Borrower allhe tma each Loan Advance s made, and shall reman n full force and etfect unl sucfllme as Borrower's ndebtedness shal be pad n full, or unl thts Agreement shal be lermlnated n the manner provded above, whchever s the last to occur. CONDmONS PRECEDENT TO EACH ADVANCE..enc:lers oblgalon to make the ntal Advance and each subsequent Advance under ths Agceem6nt shall be $Ubject to!he fulllllmenlo Lender's saljsfacllon of an of the condffons set fo1h n ths Agreement and n the Related Documents.! \; t o ~~.!.!.!..j. j:,' r r,. ' } '!:' ~.. \. r' ". Exhbt A - Page 4

5 , l""))nstructon LOAN AGREEMf-),..,. J (Contnued) / Page :3 equty Funds. Borrower shall provde evdence of equty funds totalng $11,338, pror to the ntal advance from the Loan Fund, Lender may, at Lender's opton, requre that the equty funds be deposted wth Lender as a porton of the Loan Fund, whch funds shall be dsbursed pror to any Loan proceeds. Approval of Contractors, Subcontractors, and Materalmen. Lender shall have approved a lst of all contractors employed n connecton wth he constructon of the mprovements, showng the name, address, and telephone number of each contractor, a general descrpton of the nature of the work to be done, the labor and materals to be suppled, the names of materalmen, "f known, and the approxmate dollar value of the labor, Work, or materals wth respect to each contractor or materalman. Lender shall have the rght to communcate wth any person to verty the facts dsclosed by the lst or by any applcaton for any Advance, or for any other purpose. Plans, Specfcatons, and Permts. Lender shall have receved and accepted a complete set of wrtten Plans and Specfcatons settng forth all mprovements for the Project, and Borrower shall have furnshed to Lender copes of all permts and requste approvals of any governmental body necessary for the constructon and use of the Project. Archtect's and Constructon Contracts. Borrower shall have furnshed n form and substance satsfactory to Lender an executed copy of the Archtect's Contract and an executed copy of the Constructon Contract. Related and Support Documents. Borrower sha,1 provde to Lender n form satsfactory to Lender the followng support documents for the Loan: Assgnment of Archtect's Contract, Assgnment of Constructon Contract and Completon Guaranty. BUdget and Schedule of Estmated Advances. Lender shall have approved detaled budget and cash now projectons of total Project costs and a schedule of the estmated amount and tme of dsbursements.of each Advance. Borrower's Authorzaton. Borrower shall have provded n form and substance satsfactory to Lender properly- certfed resolutons, duly authorzng the consummaton of the Project and duly authorzng the executon and delvery of ths Agreement, the Note and the Related Documents. n addton, Borrower shall have provded such other resolutons, authorzatons, documents and nstruments as Lender or ts counsel, n ther sole dscreton, may requre. Bond. f requested by Lender, Borrower shall have furnshed a performance and payment bond n an amount equal to 100% of the amount of the Constructon Contract, as well as a materalmen's and mechancs' payment bond, wth such rders and supplements as Lender may requre, each n form and substance satsfactory to Lender, namng the General Contractor as prncpal and Lender as an addtonal oblgee. Any requred bonds and the contracts whch they cover must be duly recorded or fled n accordance wth Calforna Cvl Code Secton 3235, f requred by Lender. Apprasal. f requred by Lender, an apprasal shall be prepared for the Property, at Borrower's expense, whch n form and substance shall be satsfactory to Lender, n Lender's sole dscreton, ncludng applcable regulatory requrements. Plans and Specfcatons. f requested by Lender, Borrower shall have assgned to Lender on Lender's forms the Plans and Specfcatons for the Project. Envronmental Report. f requested by Lender, Borrower shall have furnshed to Lender, at Borrower's expense, an envronmental report and certfcate on the Property n form and substance satsfactory to Lender, prepared by an engneer or other expert satsfactory to Lender statng that he Property comples wlth all applc!lble provsons and requrements of the "Hazardous Substances paragraph set forth n ths Agreement. Sol Report. f requested by Lender, Borrower shall have furnshed to Lender, at Borrower's expenses, a.sol report for the Property n form and substance satsfactory to Lender, prepared by a regstered engneer sallsfactory to Lender statng that the Property s free from sol or other geologlcal condtons tha would preclude ts use or development as contemplated wthout extra expense for precautonary, correctve or remedal measures.. Survey. f requested by Lender, Borrower shall have furnshed to Lender a survey of recent date, prepared and certfed by a qualfed surveyor and provdng that the mprovements, f constructed n accordance wth the Plans and Specfcatons, shall le wholly wthn the boundares of the Collateral wthout encroachment or volaton of any zonng ordnances, buldng codes or regulatons, or setback requrements, togelher wth such other nformaton as Lender n ts sole dscreton may requre. Zonng. Borrower shall have furnshed evdence satsfactory to Lender hat the Collateral s duly and valdly zoned for the constructon, mantenance, and operaton of the Project. Ttle nsurance. Borrower shall have provded to Lender an ALTA Lender's extended coverage polcy of tlle nsurance wth such endorsements as Lender may requre, ssued by a ttle nsurance company acceptable to Lender and n a form, amount, and content satsfactory to Lender, nsurng or agreeng to nsure that Lender's securty agreement or other securty document on the Property s or wll be upon recordaton a vald frst lm on the Property free and clear of all defects, lens, encumbrances, and exceptons except those as specfcally accepted by Lender n wrtng. f requested by Lender, Borrower shall provde to Lender, at Borrower's expense, a foundaton endorsement (CLTA or ts equvalent) to the ttle polcy upon the.completon of each foundaton for the mprovements, showng no encroachments, and upon completon an endorsement whch nsures the len-free completon of the mprovements (CLTA 101 seres, as requred by Lender). Specfcally, Borrower shall provde to Lender the followng tlle nswance endorsements: Comprehensve (Restrctons, Encroachments and Mnerals) - Form 100 (ALTA g), 116 (22 endorsement) (OTRO No. 64),103.7,111.5,8.1, (OTRO No. 66) Take out Endorsements ssued 75 day len perod after recordng of the "Notce of Completon", Survey nsurance. Unless waved by Lender n wrtng, Borrower shall have delvered to Lender the followng nsurance polces or evdence thereof: (a) an all rsks course of constructon nsurance polcy (bulder's rsk), wth extended coverage coverng the mprovements ssued n an amount and by a company acceptable to Lender, contanng a loss payable or other endorsement satsfactory to Lender nsurng Lender as mortgagee, logether wth such other endorsements as' may be requred by Lender, ncludng stpulatons that coverages wll not be cancelled or dmnshed wthout at least thrty (30) days pror wrtten notce to Lender; (b) owners and General Contractor general lablty nsurance, publc lablty and workmen's compensaton nsurance; (c) flood nsurance f requred by Lender or applcable law; and (d) all other nsurance requred by ths Agreement or by the Related Documents. Workers' Compensaton Coverage. Provde to Lender proof of the General Contractor's complance wth. all applcable workers' compensaton laws and regulatons wth regard to all work performed on the Project. payment of Fees and Expenses. Borrower shall have pad to Lender all fees, charges, and other expenses whch are then due and payable as specfed n ths Agreement or any Related Document. Satsfactory Constructon. All work usually done at the stage of constructon for whch dsbursement s requested shall have been done n a good and workmanlke manner and all materals and fxtures usually furnshed and nstalled at that stage of constructon shall have been furnshed and nstalled, all n complance wth the Plans and Specfcatons. Borrower shall also have furnshed to Lender such proofs as Lender may requre to establsh the progress of the work, complance wth applcable laws, freedom of the Property from lens, and the bass for the requested - dsbursement. Exhbt A - Page 5

6 ~. :) CONSTRUCTON LOAN AGREEMENl (Contnued) Page 3 Equty Funds. Borrower shah provde evdence of equly funds totalng $11s338,371'oo pror 10 the ntal advance from lhe Loan Fund. Lender may, al Lender's opton, requre that the equty funds be deposted wth Lender as a porton af the Loan Fund, whch funds shall be dsbursed pror to any Loan proceeds. Approval of Conlractors, Subcontractors, and Malerlalmen. Lender shal have approved a lst of an contractors employed n col)ne<:uon wth the constructon of the mprovements, showfng thg name, address, and telephone number of each conlractor, a general descrpton of the nature of the work to be done, the labor and materals to be suppled,!he names of materalmen, f known. and the approxmate dollar value of lhe labor, work, or materals wth respect to each contractor or materalman. Lender shan have the rght 10 communcate whh any person to verfy the facts dlsclosed by the lst or by any applcaton for any Advance, or for any other purpose. PlanS, SpeclflcaUons. and Permts. lender shah have receved and accepted a complete set of Wrtten Plans and Specfcatons selng forth all mprovements for lhe Project, and Borrower shall have furnshed to lender copes of all permts and requste approvals of any govemmenlal body necessary for the constructon and use of the Project. Archtect's and Constructon Contracts. Borrower shall have furnshed n form and substance satsfactory to Lender an executed copy of the Archtect's Contract and an executed copy of the Constructon Contracl Related and Support Documents. Borrower shan provde to Lender n form sahsfactory to Lender!he. follown~ suppor! documents for the loan: Assgnment of Archtect's Contract, Assgnment of Construclon Contract and Completon Guaranty. Budget and Schedule of Esllmated Advances. Lender shalllave approved delaned budget and cash flow projectons of tolal.project costs and a schedule of the estmated amount and Ume of dsbursements of each Advance. Borrower's AuthortaUon. Borrower G1a11 have provtded n farm and substance sahsfactory to LendQf properly car1lfed resoluuons. duly authorzng-the consummaton of the Project and duly aulhorlzlng the executon and delvery of ths Agreement, the Note and the Related Documenls. n addton, Borrower shall have provtded such other" resolulons, authorzahons, documents and nstruments as Lender or ts counsel, n ther sole dscreton, may requre. Bond. f requested by Lender, Borrower shan have furnshed a performance and payment bond n an amount equ.1lto 100% of the amount of the ConslnJctlon Contract, as we as a materalmen's and mechancs' payment bond, whh such rders and supplements as lender may requre.. each. n form and substance satlsfacloly to Lemler, namng lhe General Contractor as prncpal and Lender as an addtonal oblgee. Any requred bonds and!he contracts whch they cover must be duly. recorded or fled n accordance wth caufornla Cvl Code SecHon 3235, f requred by lender. Apprasal. f requred by Lender, an apprasal shaw be prepared for the Properly, at Borrower's expense, whch n form and substance shall be satsfactory to Lender, n Lender's sole dscreton, ncludng apptcable regulatory requrements. Plans and SpeclflcaUons. f requested by Lender, Borrower shall have assl"ned to Lender cn Lender's foons the Plans and Speclflcatons for the Project. Envlronmenlal Report. f requested by Lender, BOTower shall have furnshed to Lender, at BOTower's expense, an envronmental report and cerflfcale on the Property n form and subslance sahsfaetory 10 Lender, prepared by an engneer or other expert sarsfaetory to Lender slahng that the Property compfes. wth a applcable provsons and requrements of the "Hazardous Substances" paragraph set forth n ths Agreement. SoD Report. f requested by Lender, Borrower shan have furnshed to lender, at Borrower's expenses, a soh report for the Property n form and substance satsfactory to Lender, prepared by. reglsfered engneer satsfactoly to Lender stalng that the Property s free from sol or olher geologcal condltfons that would preclude ts use or development 8.$ contemplated wthout extra expense for precautonary, correctve or remedal measures. Survey. f requested by Lender, Borrower shall have furnshed to lender a survey of recent date. prepared and car1lfled by a qualfed surveyor.and provdlng that the mprovements, f constructed n accordance wth the Plans and SpecltcaHons, shall le whody wlthln the boundares of the Collateral whotlt encroachment or volaton of any zonng ordnances, buhdlng codes or regulatons, or setback. requrements, together wth such other nformaton as Lender n ls sole dscreton may requre. Zonng. Borrower shall have furnshed evdence satsfaclory to Lender that the Colateml s duly and valdly zoned for the constructon, mantenance, and operaton of the Prcject. nle nsurance. Borrower shah have provded 10 Lender an ALTA Lender's extended coverage po/cy of ttle nsurance wth such endorsements as lender may requre, ssued by a ttle nsurance company acceptable to Lender and n a form, amount, and content satsfactory to Lender, nsurng or agreeng to nsure that Lender's S6C1.rty agreement or other securty document on the Property s or wh be upon recordallon a vald ~rst en on the Property free and clear of aft defects. lens, encumbrances. and exceptons except those as specfcally accepted by lender n wmtng. f requested by Lender. Borrower shall provde to Lender, at Borrower's expense, a foundaton endorsement (CLTA or ts equvalent) to the tde polcy upon he completon of each foundahon for the mprovements, showng no encroachments, and upon completon an endorsement whch nsures lhe raen-free completon of thg mprcvements (elta 101 seres, as requred by Lender). Specfcally, Borrower shall provtde to lender the followng tlle nsurance endorsements: Comprehensve (Restrctons, Encroachments and Mnerals) - Form 100 (ALTA 9),116 (22 endorsement), 1D2.5 (OTRO No. 64), 103.7,111.5, U, (OTRO No. 66) Toke out Endorsements ssued 75 day len perod after recordng of lhe "Nollce of Complellon", Survey nsurance. Unless waved by Lender n wrtng, Borrower shall have delvered to Lender the fouowlng nsurance pollcles or evdence thereof: <a) an all rsks course of constructfon nsurance polcy (bulder's rsk), whh extended coverage coverng the mprovements ssued n an amount and by a company acceptable to Lender. contanng a loss payable or other endorsement satsfactory 10 Lender nsurng lenc!er as mortgagee, 10get1er wth such other endorsements as may be requred by Lender, ncludng stpulatons that coverages wn nof be cancelled or dmnshed wthout at leasl thrty (SO) days pror wrtten notce to lender; (b). owners and General Conlraclor general lablty nsurance, publc lablty and workmen's compensaton nsurance; (c) flood nsurance f requred by Lender or applcable law; and (d) all other nsurance requred by ths Agreement or by the Related Documens. Wor1<ers' Compensaton Coverage. Provfde to Lender proof of the General Contractor's complance wth all applcable workers' compensaton laws and regulatons wth regard to all work performed on the Project. payment of Fees and Expenses. Borrower shall have pad to Lender all fees, charges, and other expenses whch are then due and payabfe as specfed n ths Agreement or any Related Document.. Satlsfact9tY Constructon. Aft work Suany done at the stage of conslrucllon for whch cfls~ursement s requested shall have been done n a good anlf wodananllke manner and a materals and fxtures usually furnshed and lns1alled at \hal stage af constructon shall have been furnshed and nstalled, aft n complance wth the Plans and Specl!lcalons. Borrower shall also have furnshed to lender such proofs as Lender may requre to establsh the progress of the work, complance wllh applcable laws, freedom of the Properly from lens, and the bass for the requasled. dlsbu~menl.! \ J.! ~ - r'! J.~ Exhbt A - Page 6

7 '-YNSTRUCTON LOAN AGREEMP-Y- '.. (Contnued) '. Page 4 Certfcaton. Borrower shall have furnshed to Lender a certfcaton by an engneer, archtect, or other qualfed nspector acceptable to Lender that the constructon of the mprovements has compled and wll contnue to comply wth all applcable statutes, ordnances, codes, regulatons, and smlar requrements. len Wavers. Borrower shall have obtaned and attached to each applcaton for an Advance, ncludng the Advance to cover fnal payment to the General Contractor, executed acknowledgments of payments of all sums due and releases of mechanc's and materalmen's lens, satsfactory to Lender, from any party havng len rghts, whch acknowledgments of payment and releases of lens shall cover all work, labor. equpment, materals done, suppled, performed, or furnshed pror to such applcaton for an Advance. No Event of Default. There shall not exst at the tme of any Advance a condton whch would consttute an Event of Default under ths Agreement or under any Related Document.. DSBURSEMENT OF LOAN FUNDS. The followng provsons relate to the dsbursement of funds from the Loan Fund. Applcaton for Advances. Borrower shall apply for Advances from the Loan Fund accordng to the followng dsbursement schedule: n accordance wth the provsons of Lender's Dsbursement P.rocedures attached as Exhbt "6". Each applcaton shall be stated on a standard UA payment request form or other form approved by Lender, executed by Borrower, and supported by such evdence as Lender shall reasonably requre. Borrower shall apply only for dsbursement wth respect to work actually done by he General Contractor and for materals and equpment actually ncorporated nto the Project. Each applcaton for an Advance shall be deemed a certfcaton of Borrower that as of the date of such applcaton, all representatons and warrantes contaned n the Agreement are true and correct, and that Borrower s n complance wth all of the provsons of ths Agreement. Loan to Value. Unless waved by Lender n wrtng, the rato of the amount of the Loan to the Value of the Property as completed shall not exceed %. Payments. At the sole opton of Lender, Advances may be pad n the jont names of Borrower and the General Contractor, subcontractor(s), or suppler(s) n payment of sums due under the Constructon Contract. At ts sole opton, Lender may dreclly pay the General Conlraclor and any subcontractors or other partes the sums due under the Constructon Contract. Borrower apponts Lender as ts attorney-n-fact to make such payments. Ths power shall be deemed coupled wth an nterest, shall be rrevocable, and shall survve an Event of Default under ths Agreement. Projected Cost Overruns. f Lender at any tme determnes n ls sole dscreton that the amount n the Loan Fund s nsuffcent, or wll be nsuffcent, to complete fully and to pay for the Project, then wthn ten (10) days after recept of a wrhen request from Lender, Borrower shall depost n the Loan Fund an amount equal to the defcency as determned by Lender. The judgment and determnaton of Lender under ths secton shall be fnal and conclusve. Any such amounts deposted by, Borrower shall be dsbursed pror to any Loan proceeds. Fnal Payment to General Contractor. Upon completon of the Project and fulfllment of the Constructon Contract to the satsfacton of Lender and provded suffcent Loan Funds are avalable, Lender shall make an Advance to cover the fnal payment due to the General Contractor upon delvery to Lender of endorsements to the ALTA tue nsurance polcy followng the postng of the completon notce, as provded under applcable law. Constructon shall not be deemed complete for purposes of fnal dsbursement unless and untl Lender shall have receved all of the followng: (1) Evdence satsfactory to Lender that all work under the Constructon Contract requrng nspecton by any governmental authorty wth jursdcton has been duly nspected and approved by such authorty, that a certfcate of occupancy has been ssued, and that all partes 'performng work have been pad, or wll be pad, for such work; (2) A certfcaton by an engneer, archtect, or other qlalfed nspector acceptable to. Lender that the mprovements have been completed substantally n accordance wth the Plans and Specfcatons and the ConstTucton Contract, that drect connecton has been made to all utltes set forth n the Plans.and Specfcatons, and that the Project s ready for occupancy; and (3) Acceptance of the completed mprovements by Lender and Borrower. Constructon Default. f Borrower fals n any respect to comply wth the provsons of ths Agreement or f constructon ceases before completon regardless of the reason, Lender, at ts opton, may refuse to make further Advances, may accelerate the ndebtedness under the terms of the Note, and wthout thereby mparng any of ts rghts, powers, or prvleges, may enter nto possesson of the constructon ste and perform or cause to be performed any and all work and labor necessary to complete the mprovements, substantally n accordance wth the Plans and Specfcatons. Damage or Deslructon. f any of the Collateral or mprovements s damaged or destroyed by casualty of any nature, wthn sxty (60) days thereafter Borrower shall restore the Collateral and mprovements to the condton n whch they were before such damage or destructon wth lunds other than those n the Loan Fund. Lender shall not be oblgated to make dsbursements under ths Agreement unl such restoraton has been accomplshed. Adequate Securty. When any event occurs that Lender determnes may endanger completon of the Project or the fulfllment of any condton or covenant n ths Agreement, Lender may requre Borrower to furnsh, wthn ten (10) days after delvery of a wrhen request, adequate securty to elmnate, reauce, or ndemnfy Lender aganst, such danger. n addton, upon such occurrence, Lender n ts sole dscreton may advance funds or agree to undertake to advance funds to any party to elmnate, reduce, or ndemnfy Lender aganst, such danger or to complete the Project. All sums pad by Lender pursuant to such agreements or undertakngs shalf be for Borrower's account and shall be wthout prejudce to Borrower's rghts, f any, to receve such funds from the party to whom pad. All sums expended by Lender n the exercse of ts opton to complete the Project or protect Lender's nterests shall be payable to Lender on demand together wth nterest from the date of the Advance at the rate applcable to the Loan. n addton, any Advance of funds under ths Agreement, ncludng wthout lmtaton drect dsbursements to the General Contractor or other partes n payment of sums due under the Constructon Contract, shall be deemed to have been expended by or on behalf of Borrower and to have been secured by Lender's Deed of Trust, f any, on he Collateral.. CESSATON OF ADVANCES. f Lender has made any commtment 10 make any Loan to Borrower, whether under ths Agreement or under any other agreement, Lender shall have no oblgaton to make Loan Advances or to dsburse Loan proceeds f:' (A) Borrower or any Guarantor s n default under the terms of ths Agreement or any of the Related Documents or any other agreement that Borrower or any Guarantor has wth Lender; (B) Borrower or any Guarantor des, becomes ncompetent or becomes nsolvent, fles a petton n bankruptcy or smlar proceedngs, or s adjudged a bankrupt; (C) there occurs a materal adverse change n Borrower's fnancal condton, n the fnancal condton of any Guarantor, or n the value of any COllateral securng any Loan; or (D) any Guarantor seeks, clams or otherwse ahempts to lmt, modfy or revoke such Guarantor's guaranty of the Loan or any other loan wth Lender; or (E) Lender n good fath deems tself nsecure, even though no Event of Default shall have occurred. LMTATON OF RESPONSBLTY. The makng of any Advance by Lender shall not consttute or be nterpreted as ether (A) an approval or acceptance by Lender of the work done through the date of the Advance, or (B) a representaton or ndemnty by Lender to any party aganst any defcency or defect n the work or aganst any breach of any contract. nspectons and approvals of the Plans and Specfcatons; the mprovements, the workmanshp and materals used n the mprovements, and the exercse of any other rght of nspecton, approval, or nqury granted to Lender n ths Agreement are acknowledged 10 be solely for he protecton of Lender's nterests, and under no crcumsances shal hey be consrued to mpose '. Exhbt A - Page 7

8 , ~NSTRUCTON LOAN AGREEMEN;J (Contnued) P~ge 4 Certfcaton. Borrower shall have furnshed to Lender a certfcaton by an engneer. arcf1jtec!. or other qualled nspector acceptable to Lender that the conslruclon of the mprovements has compled and wll conlnue to comply wth all applcable statutes. ordnances. codes. regualons, and smlar requrements. Len Wavers. Botrower shal have oolalned and attached to each applcaton for an Advance, ncludng the Advance to cover na payment to ha General Con1ractor, executed acknowfedgments of payments of all sums due and releases of mechanc's and materalmen's lens, satsfactory to Lender. from any party havng len rghts, whch acl<nowtedgments of payment and releases of Hens shar cover ar work, labor. equpment, materals done, suppled, pedormed. or furnshed pror 10 such applcallon for an Advance. No Event 0" Default. There shall not exst at the tme of any Advance a candlhon whch would consttute an Even of Default under ths Agreement or uncler any Related Document DSBURSEMENT OF LOAN FUNDS. The followng provsons relate to the dsbursement of funds from the Loan Fund. Applcaton for Advances. Borrower shall apply for Advances from \be Loan Fund accorrng to the follow!ng dsbursement schedule: n accordance wth he provsons of Lender's Dsbursement P.rocedures attached as Exhlblt "B". Each apprlca60n shall be sated on a standard AlA payment request form or other form approved by Lender, executed by Borrower, and supported by such evdence as Lender shall reasonably requre. Borrower shall apply only for dsbursement w!h respect to work actually done by the General Contractor and for materals and equpment actually ncorporafed nto the Project. Each applcaton for an AdVance shall be deemed a cerllllcaton of Borrower that as of the date of such applcaton, an representatons and warrantes contaned n the Agreement are true and' correct. and that Borrower s n compfance wth all of!he provsons of!hs Agreement. Loan to Value. Unless walved by Lender n wrtng, the ra60 of the amount of the Loan 10 the Value of the Property as completed shall nol exceed %. Payments. At the sole opton of Lender, Advances may be pad n the jont names of Borrower and the General Contractor. subconrraclor(s), or suppller(s) n payment of $U11$ due under the Constructon Contract. At ts sole opton, Lender may drecuy pay the General Contractor and any $Ubconlraclors or other par1es the sums due under!he Cons!rucl!on Contract. Borrower apponts Lender as ts ahomey-./n-fact to make such payments. Ths power shar be de8med coupled wth an nterest, shall be rrevocable, am1"shal! survve an Event of Defaull under"lhs Agreement. ProJected Cost Overruns. f Lender at any lme detemnes n ls sole dscreton that the amount n the Loan Fund s nsuffcent, or wd be nsuffcent, to complete fully and to pay for the Project, then wthn ten (10) days after recept of a wrtten requesl from Lender. Borrower sl1a11 deposlt n the Loan Fund an amount equal to the tfefclency as determned by Lender. The Judgment and determnaton of Lender under ths secton shall be fnal and conclusve. Any such amounts deposted by BorrowS( shah be dsbursed pror to any Loan proceeds. Fnal Payment to General Contractor. Upon completon of the Project and fulfllment of the Constructon Contract to the sa6sfaclon 01 Lander and provded suffcent Loan Funds are avalable. Lender shall make an Advance 10 cover the fnal payment due 10 the General Contraclor upon delvary 10 Lender of endorsements to the A. TA ttle nsurance poflcy folqwlng he postng of the completon notce, as provded under appdcable law. Conslruclon shall nat be deemed complete for purposes of fnal dsbursement unless and unlll Lender shall have recel/ed all of the foowfng: (1) Evdence satsfactory to Lender that a work under the Constructon Contract requrng nspechon by any governmental authorty whh. jursdlcl10n has been duty nspected and approved by such authorty, that a cerlfcate of occupancy has been ssued, and that all partes performng work have been pad. or wll be pad. for such work; (2) A certlcahon by an engneer, archtect, or other qualfed nspector acceptable to-lender lhat the mprovements have been completed substanually n accordance wth the Plans and Specflcallons and the Constructon Contract. that drect connecton has been made 10 aft utlllles set forth n tha Plans and Speclflcatfons, and that the Project s ready for occupancy; and (3) Acceptance of the completed mprovements by Lander and Borrower. ConstruCton DefaulL f Borrower falls n any respect to comply wth the provsons of ths Agreement or f construc1on ceases before completon regardless of the reason, Lender, at ts opton, may refuse to make further Advances, may acce!erale the ndebtedness under the terms of the Nate.l.nd wthout thereby mparng any of ls rghts, powers, or prvleges. may eoter nlo possesson of the constructon ste and perform or cause to be performed any and an work and labor necessaty 10 complete the mprovements. substantally n accordance wh the Plans and SpecflCSllons. Damage or Destructon. f any of the Collateral or mprovements s damaged or deslwyed by casualty of any nature. whhln sxty (GO) days thereafter Borrower shall restore \ha Collateral and mprovements to the condton n whch they were before such damage or destructon wth funds other than those n the Loan Fund. Lender shad not be oblgatecl to make dsbursements unds( ths Agreement untn such restoralon has been accomplshed. Adequate Securty. When any event occurs that Lender determnes may endanger complehon of the Project or the fulfllment of any condton or covenant n ths Agreement, Lender may requre Borrower to furnsh, wthn ten (10) days allar delver( of a wrtten request, adequate securty to elmnate. reduce, or ndemnfy Lender aganst, such danger. n addton. upon such occurrence, LendS( n ls sole dscrellon may advance funds or agree 10 undertake to advance funds to any party to elmnate, reduce, C( ndemnfy" Lender aganst. such danger C( to complete the Project. All sums pad by Lender pursuant to sucl1 agreements or Undertakngs shall be for Borrowec's acoount and shan be wthout prejudce to Borrower's rghts. f any, to receve such funds from!he party to whom pad. All sums expended by Lender n the ~e of ts opllon to complete the Project or prolact Lender's lnleresls shad be payable to Lender on demand together wth nterest from the dale of the Advance at the rate applcable to the Loan. n addton, any Advance of funds under ths Agreement, llcudng wthout Umta60n drect dsbursements \0 the General Contra.ctor Of other partes n payment of sums dug under the Constructon Contract, shad be deemed to have been expetlded by or cn behalf of Borrower and to have been secured by Lender's Deed of Trust, f any, on the Collateral. CESSATON OF ADVANCES. f Lender has made any commtment to make any Loan to Borrower, whether under ths Agreement or under any ather ag-eement, Lender shaa have no oblgaon 10 make Loan AdVances or to dsburse Loan proceeds f: (A) BO/TOwer or any Guaranlor s n defauh uader!he terms of ths Agreement or any of the Rea!ad Documents or any other agreement that Borrower or any Guarantor has wth Lender; (8) Borrower or any Guarantor des, becomes ncompetent or becomes nsolven~ fles a petton n bankruptcy or smlar proceedngs, or s adjudged a bankrupt: (C)!here occurs a materal adverse change n Borrower's fnancal condlon, n the fnancal condton of any Guarantor, or n the value of art( Collateral securng any Loan; C( (0) any Guarantor seeks, clams or otherwse allempts \0 Dmlt, modfy or revoke such Guarantor's guaranty of the uan or any other loan wth Lender, or (E) Lender n Good fath deems lself nsecure. even though ng Event of Default shan have occurred. U".TATON OF RESPONSBLTY. The rne.kno of any Advance by Lender shall not consttute or be nterpreted S ether CA) an approval or acceptance by Lander of \he work done through the cala of the Advance. or (6) a represenlallon or ndemnty by Lender \0 any party aganst any defcency or defect n the worlt Of aganst arrt breach of any conlracl n~peclons and approvals of the Plans and-specfcahons,!he mprovements, ts workmanshp and materals used n the mprovements, and the exercse of any other rght of nspecton, approval. or oquky granted fo Lender n \ts Agreement are acknowledged to be solely for \he protecton of Lender's nterests, and under no crcumstances shall \bey be construed fa mpose. :,,.!. f" j......'.,. Exhbt A - Page 8

9 , ", '''lnstructon LOAN AGREEME,~ '._' (Contnued), " ) PageS any responsblty or lablty of any nature whatsoever on Lender to any party. Nether Borrower nor any contractor, subcontractor, materalman, laborer, or any other person shall rely, or have any rght to rely, upon Lender's determnaton of the approprateness of any Advance. No dsbursement or approval by Lender shall consttute a representaton by Lender as to the nature of the Project, ts constructon, or ts ntended use for Borrower or for any other person, nor shall t consttute an ndemnty by Lender to Borrower or to any other person aganst any defcency or defects n \he Project or aganst any breach of any contract. AFFRMATVE COVENANTS. Borrower covenants and agrees wth Lender that" so long as ths Agreement remans n effect, Borrower wll: NOlces of Clams and Ltgaton. Promptly nform Lender n wrtng of (1) all materal adverse changes n Borrower's fnancal condton, and (2) all exstng and all threatened ltgaton, clams, nvestgatons, admnstratve proceedngs or smlar actons affectng Borrower or any Guarantor whch could materally affect the fnancal condton of Borrower or the fnancal condton of any Guarantor. Fnancal Records. Mantan ts books and records n accordance wth GMP, appled on a consstent bass, and permt Lender to examne and audt Borrower's books and records at all reasonable tmes. Fnancal Statements. Furnsh Lender wth such fnancal statements and other related nformaton at such frequences and n such detal as Lender may reasonably request. Addtonal nformaton. Furnsh such addtonat nformaton and statements, lsts of assets and labltes, agngs of recevables and payables, nventory schedules, budgets, forecasts, tax returns, and other reports wth respect to Borrower's fnancal condton and busness operatons as Lender may request from tme to tme. Other Agreements. Comply wth all terms and condlons of all other agreements, whether now or hereafter exstng, between Borrower and any other party and notfy Lender mmedately n wrtng of any default n connecton wth any olher such agreements. nsurance. Mantan fre and other rsk nsurance, hal, federal crop nsurance, publc lablty nsurance, and such other nsurance as Lender may requre wth respect to Borrower's propertes and operatons, n form, amounts, coverages and wth nsurance companes acceptable to Lender. Borrower, upon request of Lender, wll delver to Lender from tme to lme the polces or certfcates of nsurance n form satsfaclory to Lender, ncludng stpulatons that coverages wll not be cancelled or dmnshed wthout at least thrty (30) days pror wrtten notce to Lender. Each nsurance polcy also shall nclude an endorsement provdng that coverage n favor of Lender wll not be mpared n any way by any act, omsson or default of Borrower or any other person. n connecton wth all polces coverng assets n whch L~nder holds or s offered a securtly nterest for the Loans, Borrower wll provde Lender wth such lender's loss payable or other endorsements as Lender may requre. nsurance Reports. Furnsh to Lender, upon request of Lender, reports on each exstng nsurance polcy showng such nformaton as Lender may reasonably request, ncludng wthout lmtaton the followng: (1) the name of the nsurer; (2) the rsks nsured; (3) the amount of the polcy; (4) the propertes nsured; (5) the then current property values on the bass of whch nsurance has been obtaned, and the manner of determnng those values; and (6) the expraton date. of the polcy. n addt.on, upon request of Lender (however not more often than annually), Borrower wll have an ndependent appraser satsfactory to Lender determne, as applcable, the actual cash value or replacement cost of any Collateral. The cost of such apprasal shall be pad by Borrower. GUarantes. Pror 10 dsbursement of any Loan proceeds, furnsh executed guarantes of the Loans n favor of Lender, executed by the guarantors named below, on Lender's forms, and n the amounts and under the condtons set forth n those guarantes. Names of Guarantors DAN L. BERREY DAN & FRAN BERREY LVNG TRUST, dated October 26, 1992, and amended on March 12,1997, and October 26, 2006 MCHAEL LlU L1U LVNG TRUST, dated September 30~ 2005 and restated on January 24, 2007 PAULR. WULF CHER C. WULF PAUL R. WULF REVOCABLE LVNG TRUST, dated January 15, 1991 and restated on December 1, 2004 CHER C. WULF REVOCABLE LVNG TRUST, dated January 15, 1991 and restated on December " 2004 ROBERT COOLEY NGRD COOLEY Amounts Unlmted Unlmted % of all ndebtedness or $7,240,000.00, whchever s less % of all ndebtedness or $7,240,000.00, whchever s less % of all ndebtedness or $7,240,000.00, whchever s less % of all ndebtedness or $7,240,000.00, whchever s less % of all ndebtedness or $7,240,000.00, whchever s less % of all ndebtedness or $7,240,000.00, whchever s less % of all ndebtedness or $7,240, whchever s less % of all ndebtedness or $7,240;000.00, whchever s less Loan Fees. Charges and Expenses. Whether or not the Project s completed, Borrower also shall pay upon demand all out-of-pocket expenses ncurred by Lender n connecton wth the preparaton of loan documents and the makng of the Loan, ncludng, wthout lmtaton, all closng costs, fees, and dsbursements, all expenses of Lender's legal counsel, and all ttle examnaton fees, ttle nsurance premums, apprasal fees, survey costs, requred fees, and flng and recordng fees. Loan Proceeds. Use the Loan Funds solely for payment of blls and expenses drectly related to the Project Taxes. Charges and Lens. Pay and dscharge when due all of ts ndebtedness and oblgatons, ncludng wthout lmtaton all assessments, taxes, governmental charges, leves and lens, of every knd and nature, mposed upon Borrower or ts propertes, ncome, or profts, pror to the date on whch penaltes would attach, and all lawful clams that, f unpad, mght become a len or charge upon any of Borrower's propertes, ncome, or profts. Performance. Perform and comply, n a tmely manner, wth all terms, condtons, and provsons set forth n ths Agreement, n the Related Documents, and n all other nstruments and agreements between Borrower and Lender. Borrower shall notfy Lender mmedately n wrtng of any default n connecton wth any agreement. nspecton. Permt employees or agents of Lender at any reasonable tme to nspect any and all Collateral for the Loan or Loans and Borrower's other propertes and to examne or audt Borrower's books, accounts, and records and to make copes and memoranda of Borrower'S books, accounts, and records. f Borrower now or at any tme hereafter mantans any records (ncludng wthout mt:j.lon computer generated records and computer software programs for the generaton of such records) n the possesson of a thrd party. Borrower, upon request of Lender-, shall notfy such party to permt Lender free access to such records at all reasonable tmes and to provde Lender wth copes of any records t may, -request, all at Borrower's expense.. Companee Certfcates. Unless waved n wrtng by Lender, provde Lender at least annually, wth a certfcate executed by Borrower's chef Exhbt A - Page 9 )

10 :l'~ CONSTRUCTON LOAN AGREEMENT' (Contnued) Page 5 any responsbhty or lablty of any nature whatsoever on Lender 10 any party. Nether Borrower nor any contractor. subconltactor. materalman, laborer, or any other person shau rely, or have any rght 10 rely, upon Lender's delennlnalon of lhe approprateness of any Advance. No dsbuls.ement or approval by Lender shan consttute a representaton by Lender as to the nalura of the Project, ls consltucton. or ts ntended use for Borrower or for any other person, nor shallt consttute an ndemnty by Lender to Borrower or to any other person agansl any defcency or derects n the Project or aganst any breach of any conlracl AFFRMA lve COVENANTS. Borrower covenants and agrees wth Lender lhat, so long as ths Agreement remans n effect, Borrower wll: NoUces of Clams and Ulgatlon. PrompUy nform Lender n wrtng of (1) 'all materal adverse changes n Borrower's fnancal condhon, and (2) all exsung and an threatened lgahon, clams, nvestgatons, admnstratve proceedngs or slmuar actons affeclng Borrower or any Guarantor Wh[ch could materahy affect the fnancal condton of Borrower or the fnancal concfllon of any Guarantor. Roancla[ Records. Mantan ts bool<s and records n accordance wth GAMJ, appled on a consstent bass, and permt Lender 10 examne and audt Borrower's books and records at an reasonable tmes. Fnancal Statements. Furnsh Lender wth such foancla[ statements and other related nformaton at such frequences and n such detal as Lender may reasonably request.'. Addtonal nformaton. Furnsh such addtonal nformal/on and statements, lsls of assets and labltes. agngs of recevables and payables, nventory schedules, budgets, forecasts, tax returns. and ether reports wth respect to Borrower's fnancal condton and busness operatons as Lender may request from lme to lme.. Other Agreements. Comply wth allerrns and condtons of au other agreements, whether now or hereaffer exstng. between Borrower and any other party and notfy Lender mmedately n wrtng of any default n conneclon whh any other such agreements. nsurance. Mantan fre and other rsk nsurance, hau, fedeml crop nsuraoob, publc [lablfty nsurance, and such other nsurance as Lender may requre Wth respect to Borrower's properlles and operalons, n fonn, amounts, coverages and wllh nsurance companes acceptable to Lender. Borrower, Upon request of Lender, Wll delver 10 Lender from tme 10 tme the pollcles or certlca!as of nsurance n form satsfactory to Lender, ncludng stpulatons that coverag~ wla not be cancelled or dmnshed whflout at least thrty (30) days pror wrtten nohce to Lender. Each nsurancepollcy also shal[ oolude an endorsement provdlrg'lhat coverage n favor of Lender wn not be [mpalred n any way by any act. omsson or default of Borrower or any other person. tn connecton wth a1[ polces coverlng assets n whch Lender holds or s offered a securty nterest for the Loans, Borrower wd provde Lender w.th such lender's loss payable or other endorsements as Lender may requre. nsurance Reports. Furnsh to Lender, pon request of Lender, reports on each exfstng nsurance polcy showng such nformauon as Lender may reasonably request, noludlng wthout Umtaton the followng: (1) the name of the nsurer; (2) the rsks nsured; (3) \he amount of he polcy; (4) \he propertes nsured (5) the then current property values on the bass of whch nsurance has been obtaned, and the manner of determnng those values and (6) the expraton dale of the polcy. n add~on, upon reqllest of Lender (however not more cften than annually). Borrower Wll have an ndependent apprafser satsfactory to Lender determne, as applcable, the actual cash value or replacement cost of any Collateral. The cost of such apprasal shall be pad by Borrower.. Guaranlles.. Pror 10 dsbursement of any Loan proceeds, kmsl executed guarantes of \he Loans n favor of Lender, executed by the guarantors named balow, on Lender's forms, and n the amounts and unde" the condtons set forth n those guarantes. Names of Guarantors DAN L. BERREY DAN & FRAN BERREY UVNG TRUST. dated October 26, 1m and emended on March end October MCHAEL UU ~ UnUmHed Unlmted % of allnclebledness or $7,240, whchever s less. UU UVlNG TRUST, dated September % of all ndebtedness or $7,240,000.00, whchever s less 2005 and restated on January PAULR.WUlF % of alllnclebtedness or $1,240,000.00, Whchever s less CHER C. Wt.F % of all ndebledness or $7,240,000.00, whchever s less PAU.. R. WULF REVOCABLE UVNG % of all ndebtedness or $7,240,000.00, whchever s less TRUST, dated January 15, 1991 and restated on December 1, 2004 CHER C. wu.f REVOCABLE LMNG TRUST. daled January 1S, 1991 Md restated on December 1, 2004 ROBERT COO..EY % of allnclebledness or $7,240,000.00, whchever s less % of ellndebledness or $7,240,000.00, whchever s less NGRD COOLEY 2O.ooo'lG of all ndebtedness or $7,240,000.00, whchever s less loan Fees, Charges and Expell$e$. Whether or nolthe Proleclls completed, Borrower also shall pay upon demand an out-of-pocket expenses nculted by Lender n connecton wth the preparaton of loan documents and the makng of the Loan, ncludng, wthout Umtaton, a closng costs, fees, and cflsbulsements, all expenses of Lender'a legal counsel, and an UUe examnaton fees, ttle nsurance premums, apprasal fees, survey costs, requred fees, and flng and recordng fees. Loan ProceedS. Use the loan Funds solely for payment of bts and expenses drectly related to the Project. TOXes, Charges and Uens. Pay and dscharge when due all of ts ndebtedness and oblgatons, ncludng wthout lmtaton all assessments; taxes, governmenla[ charges, leves and lens, of every knd and nature, mposed upon Borrower or ts properhes, ncome, or profts, pror to the date on whch penaltes would attach, and all lawful clams that, f U1pad, mght become a Hen or charge upon any of Borrowers propertes, ncome, or profts. PerformllllCe. Perfonn and comply, n a tmely manner, wth an terms, condtons, and provsons set forth n!hs Agreement, n the Related Documents, and n au oher nstruments and agreements between Borrower and Lender. Borrower shaa nofy Lender mmedately n Wltlng of any default n connecton wth any agreemenl nspecton. Pennlt employees or agents of Lender at any reasonable lme to nspect any and an Q)lateml for lhe loan or Loans and Borrower's other propertes and 10 examne or audt Borrower's books. accounts, and records and e make copes and memoranda of Borrower's books, accounts, and. records. f Borrower now or at any lme hereafter mantans any records Qncludlng wthout fmltallon computer generated records and complller softwara programs for the generaton of such records) n the possesson of!l thrd party, Borrower, lpon request of Lender, shaft notfy such party to permt Lender free a.cces~ to such records at au reasonable lmes am 10 provde Lender wth coplel! of any records may request, au at Borrower's expense. Compllance CertlfClltes. Unless waved n wrtng by L.ender, provde Lender at ~t annually, wth e. cer!flcate executed by Borrower's ch.lef \ ' f' Exhbt A - Page 10

11 '''"lnstructon LOAN AGREEME /l, ",(Contnued) " ' Page 6 fnancal offcer, or other offcer or person acceptable to Lender, certfyng that the representatons and warrantes set forth n ths Agreement are true and correct as of the date of the certfcate and further certfyng that, as of the date of the certfcate, no Event of Default exsts under ths Agreement. ' Constructon of the Project. Commence constructon of the Project no later than August 9, 2007, and cause the mprovements to be constructed and equpped n a dlgent and orderly manner and n strct accordance wth the Plans and Specfcatons approved by Lender, the Constructon Contract, and all applcable laws, ordnances, codes, regulatons, and rghts of adjonng or concurrent property owners. Borrower agrees to complete the Project for purposes of fnal payment to the General Contractor on or before February 1, 2009, regardless of the reason for any delay. Defects. Upon demand of Lender, promptly correct any defect n the mprovements or any departure from the Plans and Specfcatons not approved by Lender n wrtng before further work shall be done upon the porton of the mprovements affected. Project Clams and Ltgaton. Promptly nform Lender of (1) all materal adverse changes n the fnancal condton of the General Contractor; (2) any ltgaton and clams, actual or threatened, affectng the Project or the General Contractor, whch could materally affect the successful completon of the Project or the ablty of the General Contractor to complete the Project as agreed; and (3) any condton or event whch.consttutes a breach or default under any of the Related Documents or any contract related to the Project. Payment of Clams and Removal of Lens. (1) Cause all clams for lallor done and materals and servces furnshed n connecton wth the mprovements to be fully pad and dscharged n a tmely manner, (2) dlgently fle or procure the flng of a vald notce of completon of the mprovements, or such comparable document as may be permtted under applcable len laws, (3) dlgently fle or procure the flng of a notce of 'cessaton, or such comparable document as may be permtted under applcable len laws, upon the happenng of cessaton of labor on the lmprovements for a contnuous perod of thrty (30) days or more, and (4) take all reasonable steps necessary to remove all clams of lens aganst the Collateral, the mprovements or any part of the Collateral or mprovements, or any rghts or nterests appurtenant to the Collateral or mprovements. Upon Lender's request, Borrower shall make such demands or clams upon or aganst laborers, materalmen, subcontractors, or other persons who have furnshed or clam to have furnshed labor, servces, or materals n connecton wth the mprovements, whch demands or clams shall under the laws of the State of Calforna requre dlgent assertons of len clams upon penalty of loss or waver thereof. Borrower shall, wthn ten (10) days after the flng of any clam of len that s dsputed or contested by Borrower, record or cause the General Contractor for he constructon of the mprovements to record n the approprate governmental offce, a surety bond pursuant to Calforna law suffcent to release the clam of len and, wthn fve (5) days of Lender's demand, make sutable provson by depost of funds wth Lender n an amount satsfactory to Lender or by bond satsfactory to Lender for the possblty that the contest wll be unsuccessful. f Borrower fals to remove any len on the Collateral or mprovements or provde a bond or depost pursuant to ths provson, Lender may pay such len, or may contest the valdty of the len, and Borrower shall pay all costs and expenses of such contest, ncludng Lender'S reasonable attorneys' fees. Taxes and Clams. Pay and dscharge when due all of Borrower's ndebtedness, oblgatons, and clams that, f unpad, mght become a len or charge upon the Collateral or mprovements; provded, however, that Borrower shall not be requred to pay and dscharge any such ndebtedness, oblgahon, or clam so long as (1) ts legalty shall be contested n good fath by approprate proceedngs, (2) the ndebtedness, oblgaton, or clam does not become a len or charge upon the Collateral or mprovements, and (3) Borrower shall have establshed on ts books, adequate reserves wth respect to the amount contested n accordance wth GMP. f the ndebtedness, oblgaton, or clam does become a len,pr charge upon the Collateral or mprovements, Borrower shall remove the len or charge as provded n the precedng paragraph.,envlronmentat Studes. Promptly conduct and complete, at Borrower's expense, all such nvestgatons, studes, samplngs and teshngs,as may be requested by Lender or any governmental authorty relatve to any substance, or any waste or by-product of any substance defned as toxc or a hazardous substance under applcable federal, state, or local law; rule, regulaton, order or drectve, at or affectng any property or any faclty owned, leased or used by Borrower. Addtonal Assurances. Make, execute and delver to Lender such promssory notes, mortgages, deeds of trust, securty agreements, assgnments, fnancng statements, nstruments, documents and other agreements as Lender or ts attorneys may reasonably request to evdence and secure the Loans and to perfect ~ Securty tnterests n the Collateral and mprovements. LENDER'S EXPENDTURES. f any acton or proceedng s commenced that would materally affect Lender'S nterest n,the Collateral or f Borrower fals"lo comply, wth any provson of ths Agreement or any Related Documents, ncludng 'but not lmted to Borrower's fadure to dscharge or pay when due any amounts Borrower, s requred to dscharge or pay under ths Agreement or any Related Documents, Lender on Borrower's behalf may (but shall not be oblgated to) take any acton that Lender deems approprate, ncludng but not lmted to dschargng or payng all taxes, lens, securty nteresls, encumbrances and other clams, at any tme leved or placed on any Collateral and payng all costs for nsurng, mantanng and preservng any Collateral. All such expendtures ncurred or pad by Lender for such purposes wll then bear nterest at the rate charged under the Note from the date ncurred or pad by Lender to the date of repayment by Borrower. All such expenses wll become a par of the ndebtedness and, at Lender's opton, wll (A) be payable on demand; (8) be added to the balance of the Note and be apportoned among and be payable wth any nstallment payments to become due durng ether (1) the term of any applcable nsurance polcy; or (2) the remanng term of the Note; or (C) be treated as a balloon payment whch wll be due and payable at the Note's maturty. NEGATVE COVENANTS. Borrower covenants and agrees wth Lender that whle ths Agreement s n 'effect, Borrower shall not, wthout the pror wrhen consent of Lender: ' ndebtedness and Lens. (1) Except for trade debt ncurred n the normal course of busness and ndebtedness to Lender contemplated by ths Agreement, create, ncur or assume ndebtedness for borrowed money, ncludng captal leases, (2) sell, transfer, mortgage, assgn, pledge, lease, grant a securty nterest n, or encumber any of Borrower's assets (except as allowed as Permtted Lens), or (3) sell wth recourse any of Borrower's accounts, except to Lender. Contnuty of Operatons. (1) Engage n any busness actvtes substantally dfferent than those n Whch Borrower s presently engaged, (2) cease operatons, lqudate, merge, transfer, acqure or consoldate wth any other entty, change ts name, dssolve or transfer or sell Collateral out of the ordnary course of busness, or (3) make any dstrbulon wth respect to any captal account, whether by reducton of captal or otherwse. Loans, Acqustons and Guarantes. (1) Loan, nvest n or advance money or assets to any other person, enterprse or entty, (2) purchase, create or acqure any nterest n any other enterprse or entty, or (3) ncur any oblgaton as surety or guarantor other than n the ordnary course of busness. Modfcatol') of Contract. Make or permt to be made any modfcaton of the Constructon Contract. lens. Create or allow to be created any len or charge upon the Collateral or the mprovements. Agreements. Borrower wll not enter nto any agreement contanng any provsons whch would be volated or breached by the performance of Borrower's oblgatons under ths Agreement or n connecton herewth. GENERAL PROJECT PROVSONS. The followng provsons relate to the constructon and completon' of the Project: Change Orders. All requests for changes n the Plans and Specfcatons, other than mnor changes nvolvng no extra cost, must be n wrtng, Exhbt A - Page 11

12 'J.'J CONSTRUCTON LOAN AGREEMENT (Contnued) page 6 &nancal offcer, 01' other offcer 01' person acceptable to Umder, cerlfyng that the representatons and warranles set forth n ths Agreement are true and correct as of the dale of the certfcate and further certfyng that, as of the dale' of the certfcate, no Event of Default exsts under ths Agreement. ConstrucUon 01 the ProJect. Commence conslnjclon of the Project no latel' than August 9, 2007, and causa the mprovemens to be constructed tnd equpped n a dflgent and orderly manner and n sfrcl accordance wllh the Plans and Specfca.Hons approved by Lender, the ConslrllClon Contract, and aft applcable laws, ordnances, codes, regulatons, and rghts of adonng or concurrent property owners. Borrower agees to complefe the Project for purposes of fnal payment to the Generat Contractor on 01' before February 1, 2009, regardless of the reason for any delay. " Defecfs. Upon demand of lender, promplfy correct any defect n the mprovements 01' any departure from the Plans and Speclcafons not approved by Lender n wrtng before further work shall be done upon the porton of the mprovements affected. Project Clams and UfgaUon. PrompHy nform Lender of (l) all matertal adverse changes n the fnancal condton of the General Contractor; (2) any ltgaton and clams, actual 01' threatened, affectng the Project or the General Contractor, whch could materlajly affect the successful completon of the Project or lhe abllhy of the General Contractor to complete the ProJect as agreed; and (3) any conddon 01' event.whch consttutes a breach or default undar any of the Related Documents or aert contract related to the ProJect. Payment of Clams and Removal of Uens. (l) Cause an clams for labor done and materals and servces furnshed n connecdon wth lhe mprovements 10 be fully pad and cflscharged n a tmely manner, (2) dlgently fle or procure the ffng of a yard notce of completon of the mprovements, or such comparable document as may be permlhed under applcable len laws, (3) dtgently fle or procure the flng ot a notce of cessaton, 01' SUCh comparable documenl as may be permtted under applcable en laws, upon the happenng of cessaton of labor on the. mprovements for a contnuous perod of thrty (30) days or more, and (4) lake all reasonable steps necessary to remove all clams of ens aganst the Collateral, the mprovements 01' any part of the ColateraJ or mprovements, or any rghts or nterests appurtenant to the Collalefal or mprovemants. Upon lender's request, Borrower shall make such demands 01' clalms upon or aganst laborers, materalmen, subconlrac!ofs, 01' other persons who have furnshed or clam to have hlrnlshed labor, sences, 01' materlals n connecton wth the mprovements, whch demands or clams shah under the laws of the State of Calforna requre dlgent assertons of Hen clams upon penalty of loss 01' wavef' thereof. Borrower shan, wthn fen (10) days after the flng of any cfajm. of. len that s dsputed or con!ested by Borrower, record or cause the General Contractor lor the constructon of the mprovemenls to record n the approprtate governmenfaj offce, a surety bond pursuant to Calforna law suffcent 10 release the clam of len and, wthn lve (5) days of Lender's demand, make sutable provson by depost of funds wth Lender n an amount satsfactory to Lender or by bond satsfactory to Lender fol' the possblty that the contest wll be unsuccessful. f Borrower falls to remove any len on the Collateral or mprovements or provde a bond Of depost pursuant to ths prollson, Lender may pay such Hen, or may contest the valdty of the fen, and Borrower shall pay all c:oss and expenses of suet! contest, ncludng Lender's reasonable altol'neys' fees. Taxes end Clams. Pay and dlscharge when due all of Borrower's ndebtedness, oblga50ns, and clams that, f unpad, mght become a len or charge upon tha Coaaters! 01' mprovements: provded, however, that Borrower shall not be requred 10 pay and dscharge any such ndebtedness, oblgaton, 01' clam so long as (1) ls legalty shan be contested n good fath by approprate proceedngs, (2) the nd~tedness, Oblgaton, Of clam does not become a len or chalge upon the Collateral 01' mprovements, and (3) Borrower snal have establshed on ts books adequate res9m1s wth respect to the amount contested n accordance wth GAM>. f the ndebtedness, oblgaton, Qr clam does became a Sen 01' charge upon the Collalel1ll or mprovements, Borrower shall remove the rlbn or charge as provded n the precedng paragraph. Envronmental Studes. Promplly conduct and complete, at Borrower's expense, all such nvestgatons, studes, sampfngs and lestngs as may be requested by Lender or any govemmenlal authorhy relatve to any substance, or any waste or by-product of any substance defned as toxc or a hazardous substance under applcable federal, state, or local law, rule, regulaton, order Of dreclve, at or affectng any property 01' any faclty owned, leased or used by Borrower. Addtonal Assurances. Make, execute and delver to lender such promssory notes, mortgages, deeds of trust, secunly agreements, assgnments, fnancng statements, nstruments, documents and other agreements as Lender or ls attorneys may reasol'!ably request to evdence and secuu the Loans and to perfect all Securty nterests n the Collateral and mprovements. LENDER'S EXPENDTURES. f any acton or proceedng s commenced tha would materally affect lenelee's nterest n the Collateral 01' f Barrower falls 10 comply wlh any provson of ths Agreement or any Relaled Documents, ncluamg but nolllmted to Borrower's falure 10 dscharge or pay when duel any amounts Borrower s requred 'to dscharge or pay under ths Agreement or any Relafed Documens, Lender on Borrower's behalf may (but shall not be oblgated fo) lake any actfon that Lender deems approprate, ncludng but nol. nmlted to dschargng 01' payng all tdces, Dens,!!eQurty nterests, encumbrances and olher clams, at any tme leved or placed on any Collateral and payng all costs for nsurtng, malntalnlng and preselvng any Collaterat. All such expendfures nctmted or pad by Lender 101' such purposes wllhen bear nteresl at the rate charged under the Note from the dale ncurred or pad by Lender to the date of repayment by Borrower. All such expenses wn become a part of the ndebtednoss and, at Lender's opton. w. (A) be payable on demand; (8) be added to the balance of the Note and be apportoned among and be payable wth any nstahment payments to become due durng ether (1) the term of any appcable nsurance polcy; or (2) the remanng ferm of the Note; 01' (C) be treafed as a bancon payment whch wlt be due and payable at the Note's maturtty. 'NEGATVE COVENANTS. Borrower covenants and agrees wth Lender tha whle ths Agreement s n effect, Bon:ower shall not, wthout the pror wcltten consent of Lender: ndebtednes$ and Uens. (1) Except for trade debt ncurred n the normal course of busness and ndebtedness to Lender contemplated by hls Agreemenl, create, ncur or assume ndebtedness fol' borrowed money, ncludng captal leases, (2) sell, transfer, mortgage, assgn, pledge, lease, grant a securty nterest n, 01' encumber any of Borrower's assets (except as arowed as Permtted Uens), or (3) sell wth recourse any of Borrower's accounts, except to Lender... Conllnulty of Operalloll$. (1) Engage n any busness aclm6es substantally dfferent than those n whch Borrower s presenhy'engaged, (2) cease operatons,. Uquclate, merge, transfer, acqure or consoldate wth any other entty, change ts name, dssolve or transfer or sell Collateral out of the ordnary course of busness, or (3) make any dlslnbulon wth respect to any cap\faj account, whether /,ly reducton of caplaj 01' otherwse. Loans, AcqulslUons and Guaranlfes. (1) Loan, nveslln or advance money or assets to any pther person, enterprse 01' entty; (2) purchase, create or acqure any nterest n any other enterprse or enoty, or {3l ncur any obrlgallon as surety or guarantor other than n the ordnary course of busness. Modfcatlon of ConlracL Make or permt to be macle any modllcaton of the Constructon Contract. Uens. Create or allow 10 be crealsd any Hen or charge upon the CoUatera 01' the mprovements. Agreements. Borrower wu not enter nto any agreement contanng any provsons Whch would be volated or breached by the performance of Borrower's oblgatons under ths Agreement or n connecton herewlh. GENERAL PROJECT PROVSONS. The follownq provsons relate 10 the constructon and completon of the Project: Change Orders. AS requests for c~nges n the Plans and Specfcatons, other than mnor changes nvolvng no extra cost, must be n wrlffng, 1- r! \. l. F j' : t t, 1-.' r Exhbt A - Page 12

13 .~NSTRUCTON LOAN AGREEME.-:-..:) "- (Contnued).. Page 1 Sgned by Borrower and the archtect, and delvered to Lender for ts approval. Borrower wll not permt the performance of any work pursuant to any change order or modfcaton of the Constructon Contract or any subcontract wthout the wrtten approval of Lender. Borrower wll obtan any requred permts or authorzatons from governmental authortes havng jursdcton before approvng or requestng a new change order. Purchase of Materats; Condtonat Sales Contracts. No materals, equpment, fxtures, or artcles of personal property placed n or ncorporated nto the Project shall be purchased or nstalled under any Securty Agreement or other agreement whereby the seller reserves or purports to reserve ttle or the rght of removal or repossesson, or the rght to consder such tems as personal property after ther ncorporaton nto the Project, unless otherwse authorzed by Lender n wrtng.. lender's Rght of Entry and nspecton. Lender and ts agents shall have at all tmes the rght of entry and free access to the Property and the rtght to nspect all work done, labor performed, and materals furnshed wth respect to the Project. Lender shall have unrestrcted access to and the rght to copy all records, accountng. books, contracts, subcontracts, blls, statements, vouchers, and supportng documents of Borrower relatng n any way to the Project.. Lender's Rgh to Stop Work. f Lender n good fath determnes that any work or materals do not conform to the approved Plans and SpeCfcatons or sound buldng practces, or otherwse depart from any of the requrements of ths Agreement, Lender may requre the work to be stopped and wthhold dsbursements untl the matter s corrected. n such event, Borrower wll promptly correct the work to Lender's satsfachon. No such acton by Lender wll affect Borrower's oblgaton to complete the mprovements on or before the Completon Date. Lender s under no duty to supervse or nspect the constructon or examne any books and records. Any nspecton or examnaton by Lender s for the Sale purpose. of protectng Lender's securty and preservng Lender's rghts under ths Agreement. No default of Borrower wll be waved by any nspecton by Lender. n no event wll any nspecton by Lender be a representaton that there has been or wll be complance wth the Plans and Specfcatons or that the constructon s free from defectve materals or workmanshp. ndemnty. Borrower shall ndemnfy, defend, and hold Lender harmless from any and all clams asserted aganst Lender or the Property by any person, entty, or governmental body, or arsng oul of or n connecton wth the Property, mprovements, or Project. Lender shall be enttled to appear n any proceedngs to defend tself aganst such clams, and all costs and expenses attorneys' fees ncurred by Lender n connecton wth such defense shall be pad by Borrower to Lender. Lender shall, n ts sole dscreton, be entlled to settle or compromse any asserted clams aganst t, and such settlement shall be bndng upon Borrower for purposes of ths ndemnfcaton. All amounts pad by Lender under ths paragraph shall be secured by Lender's securty agreement or Deed of Trust, f any, on the Property, shall be deemed an addlonal prncpal Advance under the Loan, payable upon demand, and shall bear nterest at the rate applc<able to the Loan.. Publcty. Lender may dsplay a sgn at the constructon ste nformng the publc that Lender s the constructon lender for the Project. Lender may obtan pther publcty n connecton wth the Project through press releases and partcpaton n ground-breakng and openng ceremones and smlar events. Actons. Lender shall have the rght to commence, appear n, or defend any acton or proceedng purportng to affect the rghts, dutes, or labltes of the partes to ths Agreement, or the dsbursement of funds from the Loan Fund. n connecton wth ths rght, Lender may ncur and pay reasonable costs, expenses and attorneys' fees. Borrower covenants to pay to Lender on demand all such expenses, together wth nterest!rom the date Lender ncurs the expense at the rate specfed n the Note, and Lender s authorzed to dsburse funds from the Loan Fund for such purposes. DEFAULT. Each of the followng shall consttute an Event of Default under ths Agreement: Payment Default. Borrower fals to make any payment when due under the Loan. Other Defaults. Borrower fals to comply wth or to perform any other term, oblgaton, covenant or condton contaned n ths Agreement or n Bny of the Related Documents or to comply wth or to perform any term, obngaton, covenant or condton contaned n any other agreement between Lender and Borrower. Envronmental Default. Falure of any party to comply wth or perform when due any term, oblgaton, covenant or condton contaned n any envronmental agreement executed n connecton wth any Loan. Default n Favor of Thrd Partes. Borrower or any Grantor defaults under any loan, extenson of credt, securty agreement, purchase or sales agreement, or any other agreement, n favor of any other credtor or person that may materally affect any of Borrower's or any Grantor's property or Borrower's or any Grantor's ablty to repay the Loans or perform ther respectve oblgatons under ths Agreement or any of the Related Documents. False Statements. Any warranty, representaton or statement made or furnshed to Lender by Borrower or on Borrower's behalf under ths Agreement or the Related Documents s false or msleadng n any materal respect, ether now or at the tme made or furnshed or becomes false or msleadng at any tme thereafter. Death or nsolvency. The dssoluton of Borrower (regardless of whether electon to contnue s made), any member wthdraws from Borrower, or any other termnaton of Borrower's exstence as a gong busness or the death of any member, the nsolvency of Borrower, the appontment of a recever for any part of Borrower's property, any assgnment for the beneft of credtors, any type of credtor workout, or the commencement of any proceedng under any bankruptcy or nsolvency laws by or aganst Borrower. Defectve Collaterallzaton. Ths Agreement or any of the Related Documents ceases to be n full force and effect (ncludng falure of any collateral document to create a vald and perfected securty nterest or len) at any tme and for any reason. Credtor or Forfeture Proceedngs. Commencement of foreclosure or forfeture proceedngs, whether by judcal proceedng, self-help, repossesson or any other method, by any credtor of Borrower or by any governmental agency aganst any collateral securng the Loan. Ths ncludes a garnshment of any of Borrower's accounts, ncludng depost accounts, wth Lender. However, ths Event of Default shall not apply f here s a good fath dspute by Borrower as to the valdty or reasonableness of the clam whch s the bass of the credtor or forfeture proceedng and f Borrower gves Lender wrtten notce of the credtor or forfeture proceedng and deposts wth Lender mones or a surety bond for the credtor or forfeture proceedng, n an amount determned by Lender, n ts sole dscreton, as beng an adequate reserve or bond for the dspute. Breach of Constructon Contract. The mprovements are not constructed n accordance wth the Plans and Specfcatons or n accordance wth the terms of the Constructon Contract. Cessaton of Constructon. Pror to the completon of constructon of the mprovements and equppng of the Project, the constructon of the mprovements or the equppng of the Project s abandoned or work thereon ceases for a perod of more than ten (10) days fof any reason, or the mprovements are not completed for purposes of fnal payment to the General Contractor pror to February 1, 2009, regardless of the reason for he delay..' / Transfer of Property. Sale, transfer, hypothecaton, assgnment, or conveyance of the Property or the mprovements or any porton thereof or. nterest theren by Borrower or any Borrower wthout Lender's pror wrtten consent.. Condemnaton. All or any materal porton of the Collateral s condemned, sezed, or approprated wthout compensalon, and Borrower does nol Exhbt A - Page 13

14 ' '1 ',J tc>nstructon LOAN AGREEMENT" (Contnued) page 7 sgned by Borrower and the archtect, and delvered to Lender for ts approval. Borrower wll not permt the performance of any work pulsuant to any change order or modfcaton of the ConslrucHon Contract or any subcontract wthout the wrtten approval Of Lender. Borrower wll oblaln any requred permts or authorzatons from governmental authorfej> havng jursdcllon before approvng or requestng a new ohange order. Purchase of Materals; eoncfttonal Sales Conltacts. No malerals, equpment, fxtures, or artcles of personal property placed n or nco!porated nto the Project shall be purchased or nstalled under any Securty Agreement or other agreement whereby the seller reserves or purports to reserve We or the rght of removal or repossesson, or the rght 10 consder suoh tems as personal property after ther ncorporaton nto the Project. unless otherwse authorzed by Lender n wrhng. Lender's Rght of Ently and nspecton. Lender and ls agents shall have at all lmes lhe rghl of, entry and free access to the Property a.nd the rghl to nspect au work done, labor pedormed, and materals furnshed whh respeclto lhe ProJect. Lender shau have unrestrcted access to and the rght to copy all records. accounlng books, contracts, subcontracts, bdls, statements, vouchers. and supportng documents of Borrower relatng n any way to the Project Lender's Rght to Slop Work. f Lender n good fath determnes that any wqrk or materals do not contorm to the approved Plans and SpecfcaUons or sound buddng practces, or otherwse depart from any of he reqlrements of ths Agreemen~ Lender may requre he wolk to be slopped and Wthhold dsbursements unll the matter s corrected. n such event. Borrower wll prompuy COTect the work to Lender's sal5fac!on. No such achon by lender wt affect Borrower's obfgatlon to complete the mprovements on or before the Complelon Date. Lender s under no duty to supemsa or nspectlhe constructon or examne any books and records. Any nspeclon or examnaton by Lender s for the sole purpose of pro!echng Lender's securly and preservng Lender's rghts under ths Agreement. No default of Borrower wll be waved by any nspecfon by Lender. n no event wl any nspeclon by Lender be a representaton that there has been or wll be complance wth the Plans and Specfcatons or that the constructon s free from defectve materals or workmanshp. ndemnty. Borrower shallndemnfy, defend, and hold Lender harmless from any and all clams asserted aganst Lender or the Properly by any person. entlly. or governmental body. or arsng out of or n connecton Wth the Properly, mprovements. or Project. Lender shall be enttled to appear n any proceedngs to defend sef aganst such clams. and ad costs and expenses attorneys' fees ncurred by Lender n,connecton wth such defense shall be pad by Borrower to Lender. Lender shall, n ts sole alscreton, be enllled to sewe or compromse any asserted clams aganst t, and SUch settlement shad be bndng upon Borrower for purposes of ttls ndemnfcaton, JlJ amounls pad by Lender under ths, paragraph shall be secured by Lender's securty agreement or Deed of Trust, f any, on the Property, shad be deemed an addllonar prncpal,advance under the Loan, payable upon demand. and shall bear nterest at the rate applcable,10 the Loan. pubnclty. Lender may dsplay a slgn at the cons1ructon ste nfonnng the pubrk; llat Lender s the constructon lender for the Project. Lender may obtan oher publcly n connecton wth the Project through press releases and partlclpallon n ground-breakng and opetng ceremones and smlar events. ' AcUons. Lender s~ have the rfght to commence, appear n, or defend!ny aclon or proceedng purportng 10 affecl the rghts, dules, or tabllhles of the partes to ths Agreement, or!he dsbursemenl of funds from the Loan Fund. n connecllon wth ths rght, Lender may ncur and pay reasonable costs, expenses and attorneys' fees. Borrower covenants 10 pay 10 Lender on demlnd an such expenses, logether wth nterest trom the date Lander ncurs the expense at the rate specfed n the Note, and Lender s authorzed to dsburse funds from the Loan Fund for such ~~, DEFAl. T. Each of he followng shall constllute an Event of,defaut under ths Agreement: Payment Default. Borrower falls to make any paymenf when due under the Loan. Other Defaults. Borrower falls 10 comply Wth or to perform any other term, obhgauon. covenant or conadon conla/ned n ths Agreemenf or n any of the Related Documents or ~o comply wth or to perform any term, oblgaton. covenant or condton contaned n any other agreement between Lender and Borrower. envronmental Default. Falure of any party to comply wth or perfonn when due any term. obngatlon. covenant or condffon conlaned n any envrt~nmentaj agreemenf exacuted n connecuon wth any Loan. Default n Favor of Thrd Partes. Borrower or any Grantor de~ulls under any loan. extenson of credt, securty agreement, purchase or sales agreement, or any other agreement, n favor of any other credtor or person that may malerajly affect any of BOTower's or any Grantor's properly or Borrower'1 or any Grantor's ablty to repay the Loans or parfol'lt1 ther respectve oblgallons under ths Agreement or any of the Related Documenls. False S~emenls. Any warranty. representaton or statement made or furnshed to Lender by Borrower or on Borrower's behalf under ths ; Agreement or the Related Documerds s false or msleadng n any materal respect. ether now or at!he lme made,or furnshed or becomes false or msleadng at any Rme therealler. Death or nsolvency. The dlssoluuon of Borrower (regardless of whether electon to contnue s made). any member wthdraws "om Borrower, or any olher termnaton of Borrower's exstence as a gong busness or the death of any member, the nsolvency of Borrower. the appontment of a recever for any part of Borrower's properly, any assgnment fol' the beneft of credtors. any type of credtor workout, or the commencement Clf any proceedng under any bankruptcy or nsolvency laws by or aganst Borrower. Defectve CollllterallZaton. Ths Agreement or any of the Related Documents ceases to be n tub force and effect (ncludng falure of any collateral doctjment 10 create a vald and pedecled securty nterest or len) at any tme and for any reason. Credtor or Forfeture Proceedngs. Commencement or foreclosure or forfeture proceedngs, whether by Judcal proceedng, self-help, repossesson or any other melhod, by any credtor of Borrower Or by any govemmenlal agency aganst any collateral securng the Loan. Ths ncludes a garnshment of any of Borrower's accounts, ncludng depost accounls, wth Lender. However, ths Event of Default shall nol apply f there s a good fath dspute by Borrower as to the valdly or reasonableness of the clam whch s he bass of the credtor or forfeture proceedng and f Borrower gves Lender wrtten notce of!he credtor or forfeture proceedng and deposts wth Lender mones or a surely bond for the credtor or forfeture proceedng, n an amount determned by Lender, n ts sole dscreton, as beng an adequate r8s9!v9 or bond for the dspute. Breach of COl1structon Contract. The mprovements are not constructed n accofdance wllh the Plans and Specfcatons or n accordance wth the terms of the ConslruClfon Contract. Cessaton of Constructlon. Pror to the cornpleuon of conslructlon of the mprovemenls anel equppng of the Project. the consrucl!on of the mprovements or the equppng of the ProJect s abandoned 01' work thereon ceases for a perod of more than len (10) clays for any reason, or lhe mprovements are not completed for purposes of fnal paymenf 10 the General Contractor pror to February t, 2009, regardless,of the reason for he delay. transfer of Property. Sale, transfer. hypothecaton, assgnment, 01' conveyance of the Property or the mprovemenls or any porton thereof or. nterest theren by Borrower or any Borrower wthout Lender's pror wrft{en consent. Condemnaton. Al or any materal porton of the Collateral s condemned. sezed, or appropratod wthout compensaton. and Borrower does, not!! \ '!, '\ t! j... F' t '~ ' r " l Exhbt A - Page 14

15 ~oall No: ~NSTRUCTON ~OAN AGREEME.~... - (Contnued). ) Page 8 wthn thrty (30) days after such condemnaton, sezure, or appropraton, ntate and dlgently prosecute approprate acton to contest n good fath the valdty of such condemnaton, sezure, or appropraton.. :vents Affectng Guarantor. Any of the precedng evenls occurs wth respect to any Guarantor of any of the ndebtedness or any GUarantor des or becomes ncompetent, or revokes or dsputes the valdty of, or lablty under, any Guaranty of the ndebtedness. n the event of a death,. lender, at ts opton, may, but shall not be requred to, permt the Guarantor's estate to assume uncondtonally the oblgatons arsng under the guaranty n a manner satsfactory to Lender, and, n dong so, cure any Event of Default. AdVerse Change. A materal adverse change occurs n Borrower's fnancal condton, or Lender beleves the prospect of payment or performance of the Loan s mpared. nsecurty. Lender n good fath beleves tself nsecure. Rght to Cure. f any default, other than a default on ndebtedness, s curable and f Borrower or Grantor, as the case may be, has not been gven a notce of a smlar default wthn the precedng twelve (12) months, t may be cured f Borrower cr Grantor, as the case may be, after recevng wrhen notce from Lender demandng cure of such default: (1) cure the default wthn thrty (30) days; or (2) f the cure requres more than thrty (30) days, mmedately ntate steps whch Lender deems n Lender's sole dscreton to be suffcent to cure!!he default and thereafterconlnue and complete all reasonable and necessary steps suffcent to produce complance.as soon as reasonably practcal. EFFECT OF AN EVENT OF DEFAUL Tj REMEDES. Upon the occurrence of any Event of Default and at any tme thereafter, Lender may, at ts opton, but wthout any oblgaton to do so, and n addton to any other rght Lender wthout notce to Borrower may have, do anyone or more of the followng wthout notce to Borrower: (a) Cancel ths Agreement; (b) nsttute approprate proceedngs to enforce the performance of ths Agreement; (c) Wthhold further dsbursement of Loan Funds; (d) Expend funds necessary to remedy the default; (e) Take possesson of the Property and contnue conslructon of the Project; (f) Accelerate maturty of the Note and/or ndebtedness and demand payment of all sums due under the Note and/or ndebtedness; (g) Brng an acton on the Note and/or ndebtedness; (h) Foreclose Lender's securty agreement or Deed of Trust, f any, on the Property n any manner avalable under law; and () Exercse any other rght or remedy whch t has under the Note or Related Documents, or whch s otherwse avalable at law or n e~uty or by statute. COMPLETON OF MPROVEMENTS BY LENDER. f Lender takes possesson of the Collateral, t may take any and all actons necessary n ts judgment to complete constructon of the mprovements, ncludng but not lmted to makng changes n the Plans and Specfcatons, work, or materals and enterng nto, modfyng or termnatng any contractual arrangements, subject to Lender's rght at any tme to dscontnue any work wthout lablty. f Lender elects to complete the mprovements, t wll not assume any lablty to Borrower or to any other'person for completng the mprovements or for the manner or qualty of constructon of the mprovements, and Borrower expressly waves any such lablty. Borrower rrevocably apponts Lender as ts atlorney-n-fact, wth full power of substtuton, to complete the mprovements, at Lender's opton, ether n Borrower's name or n ts own name. n any event, all sums expended by Lender n completng the constructon of the mprovements wll be consdered to have been dsbursed to Borrower and wll be secured by the Collateral for the Loan. Any such sums that cause the prncpal amount of the Loan to exceed the face amount of the Note wll be consdered to be an addtonal Loan to Borrower, bearng nterest at the Note rate and beng secured by the Collateral. For these purposes, Borrower assgns to Lender all of ts rght, ttle and nterest n and to the Project Documents; however Lender wll not have any oblgaton under the Project Documents unless Lender expressly hereafter agrees to assume such oblgatons n wrtng. Lender wll have the rght to exercse any rghts of Borrower under the Project Documents upon the occurrence of an Event of Default. Except as may be prohbted by applcable law, all of Lender's rghts and remedes, whether evdenced by ths Agreement or by any other wrtng, shall be cumulatve and mal' be exercsed sngularly or concurrently. ADDTONAL DOCUMENTS. Borrower shall provde lender wth the followng addtonal documents: Artcles of Organl:zaton and Company Resolutons. Borrower has provded or wll provde Lender wth a certfed copy of Borrower's Artcles of Organzaton, together wth a certfed copy of resolutons properly adopted by the members of the company, under whch the members authorzed one or more desgnated members or employees to execute ths Agreement, the Note and any and all Securty Agreements drectly or ndrectly securng repayment of the same, and to consummate the borrowngs and other transactons as contemplated under ths Agreement, and to consent. to the remedes followng any default by Borrower as provded n ths Agreement and n any Securty Agreements.. Opnon of Counsel. When requred by Lender, Borrower has provded or wll provde Lender wth an opnon of Borrower's counsel certfyng to and that: (1) Borrower's Note, any Securty Agreements and ths Agreement consttute vald and bndng oblgatons on Borrower's part that are enforceable n accordance wth ther respectve terms; (2) Borrower s valdly exstng and n good standng; (3) Borrower has authorty to enter nto ths Agreement and to consummate the transactons contemplated under ths Agreementj and (4) such other matters as may have been requested by Lender or by Lender'S counsel. NTEREST RESERVE. Borrower authorzes Lender to set asde a total of $3,088, of the Prncpal Amount as an nterest reserve rlnterest Reservej. All nterest payments shall be pad from the nterest Reserve. Lender may automatcally deduct accrued unpad nterest from the nterest Reserve. nlerest wll accrue, as descrbed n the Note, on amounts deducted from the nterest Reserve. n the event the nterest due under the Note exceeds the nterest Reserve, Borrower wll pay accrued unpad nlerest when due accordng to the terms of the Note or replensh the nterest Reserve Fund wth suffcent funds as requred by Lender. Borrower may not use any porton of the nterest Reserve Fund for. the payment of the costs of constructng the mprovements or equppng the Project. Upon maturty, Lender wll not advance or dsburse the remanng nterest Reserve, f any, to Borrower. The prncpal due upon maturty wll not nclude any remanng nterest Reserve. COST BREAKDOWN. All dsbursements shall be based upon a detaled breakdown of the costs of constructon of the mprovements and any fnancng or development costs for whch Borrower mght request dsbursement. The ntal cost breakdown, as approved by Lender, s attached as Exhbt "C1" and Exhbt "C2". Dsbursements need not be made by Lender unless and untl the revsed cost breakdown s approved. Lender reserves the rght to approve or dsapprove any revsed cost breakdown n ts sole dlscreaton. e authorzed to request advances and authorze payments. under the lne of ve, wrtten notce of revocaton of ther authorty: PAMELA LOVEGREN X JE~N~NmF~E~R~M~Y~E~R~S~.----~ NDEMNTY. f any work or materals are furnshed on the project pror to Lender's Deed of Trust and other securty nterest n the property beng duly recorded or perfected, before Lender wll be oblgated to make any advances of loan proceeds, Borrower must make adequate ndemnty arrangemenls wth the ttle company nsurng Lender's Deed of.trust ncludng dsclosure to the' ttle company that the work of mprovement has commenced pror to such recordaton or perfecton, and ttle company must ssue ts commtment to nsure the len of the Lender's Deed of Trust notwnhstandng such pror commencement of the work of mprovement. MEcHANC LEN NDEMNTY. Borrower agrees to hold and save Lender harmless from and aganst any and all damage caused or charges by reason of mechancs' lens or stop noces, or oher labltes, ncludng attorney's fees and expenses of every knd and nature whch Lender mght sustan or Exhbt A - Page 15

16 ' QNSTRUCTON LOAN AGREEMENT') (Contnued) P8ge 8 Wthn thrty (30) days after such condemnaton, sezure, or appropraton, nlhale and dlqenhy prosecute approprate acton 10 contest n good fath the valcfrty of such condemnaton, sezure, or approptalon. " Events Affectng Guarantor. Any of the precedng events occurs wth respect to any Guarantor of any of the ndebtedness or any Guarantor des or becomes ncompetent, or revokes or dsputes the valdty of, orlabulty under, any Guaranty of the ndebtedness. n the event of a death, lender, at ts op6on, may, but shad not be requred 10, permt the Guarantor's estate to assume unconadonany the oblgatons arsng under the guaranty n a manner sahsfactory to Lender, and, n dong so, cure any Event of Default. Adverse Change. A materlal adverse change occurs n Borrower's fnancal condton, or Lender berleves the prospect of payment or perfoll11anca of the Loan s mpared. nsecurty. Lender n good fallh beleves tself nsecure. Rght to CUre. f any default, other than a default on ndebtedness, s curable and f Borrower or Grantor, as the case may be, has not been gven a notce of a smlar defaull Wthn the precedng twelve (12) months, t may be cured f Borrower or Grantor, as the case may be, after recevng wrllen notce from Lender demanamg cure of such default: (1) cure the default Wthn thfrty (30) days: er (2) H the cure requres more llan thrty (30) days, mmedately nlllate steps whch Lender deems n Lender's sole dscreton to be suffcent to cure the default and hereafter contnue and complete an reasonable and nbc9ssary steps suffcent 10 produce complance as soon as reasonably praccaj. EfFECT OF AN EVENT OF DEFALLT; REMEDES. Upon the occurrence of any Event of Deraurt and at any lme thereafter, 'Lender may, at ls opflon, but wthout any oblgaton to do so, and n addton to any other rght Lender wthout notce 10 Borrower may have, do anyone or more of the fonowng w1hout notce to Borrower: (a) Canoel ths Agreement; (b) lnsllule approprate proceedngs to enforce the pooormance of ths Agreement; (e) Wlhhold further dsbursement of Loan Funds: (d) Expend funds necessary 10 remedy he defaull; (e) Take possesson of the Property and conllnue construclon of the Projecl;(f} Accelerate maturtty of the Nole and/or ndebtedness and demand payment of ad sums due under the Nole and/or ndebtedness; (g) Brng an acton on the Nole andfor ndebtedness: (h) Foreclose Lender's securty agreement or Deed of Trust, f any, on the Property n any manner avalable under law; and () Exercse any other rght or remedy whch t has under the Note or Related Documents, or whch s otherwse avahable at law or n equty or by statute. COMPLETON OF MPROVEMENTS BY LENDER. f Lander takes possesson of the Collateral, t may take any and all achons necessary n ts judgment to complele consfrucuon of the mprovements,lncudng but not 6mted 10 makng changes n the Plans and Speclfca!ons, work, or materals and enterng nto, nodlcylng or tennnalng any contractual arrangements, subject to Lender's rghl at any lme to dlscontnu& any work wthout llabuty. f Lender elects to complete the mprovements, t Wn nol assume any Uablaty to Borrower or to any other person for complellng the mprovements or for the manner or qualty of constructon Qf the mprovements, and Borrower expressly waves any such lablty. Borrower rrevocably apponts Lender as /1$ alorney-n-fact, Wth full power of substtuton, 10 complete the mprovements, at Lender's opllon, ether n Borrower's name or n ls own nams. n any event. all sums expended by Lender n completng \he cons!rucllon of the mprovements Wll be consdered to have been dsbursed to Borrower and wll be secured by the COllateral for the Loan. Any such sums that cause the prncpal amount of the Loan 10 exceed the face amount of the Note wll be consdered to be an addllonal Loan to Borrower, bearng nterest at the Note rate and beng secured by the Collateral. For these purposes, B«rower asslgns to Lender all of ts rght, tle and nterest n and to the Project Documents; however Lander wll nol have any obugallon under the Pro/eCl Documents unless Lender expressly hereafter agrees to assume such obllgahons n wrtng. lender wll have the rght to exercse any rghts of Bcxrower under the Project Documents upon the oecurrenee of an Event 01 Default. Excepl as may be prohbted by apphcable law, ll Qf Lender's rghts and remealbs, whether evdenced by ths Agreement or by any other wrtng, shall be cumulatve and may be exercsed sngularly or concunenlly. ADDTONAL DOCUMENTS. Borrower shar provde Lender wth the fohowlng addlonal documents: Artcles of OrganlzaUon and Company Resolutrons. Borrower has provded or wl1l provde Lender wth a certfed copy of Borrower's Mcles of OrganlzaUon, together wtt a cerhfed copy of resolullons propery adopted by the members of the company, under whch the members authorzed one or more desgnated members or employees to execute ths Agreement, lle Note and any and a/ SecurHy Agreements dreclly or ndrecuy securng repayment of the same, and 10 consummate the borrowngs and other transactons as conlemplaled under ths Agreement, and 10 consent to the remedes followng any defaull by Borrower as provded n ths Agreement and n any Securty Agreements. Opnon of Counsel. When requred by Lender, Borrower has provlded or wll provde lender Wth an opnon of Borrower's counsel certfyng to and lhal: (1) Borrower's Note. a!ly~urfly Agreements and ths Agreement consttute vald and bndng oblgatons on Borrower's part that are enforceable n accordance wth tfer raspacuve terms: (2) Borrower 1$ vaodly exstng and n good standng; (3) Borrower has aulhorlly to enter nto ths Agreement and to consummate the transacllons contemplated under ths Agreement; and (4) such other matters as may have been requested by Lender or by Lander's counsel. NTEREST RESERVE. Borrower authorzes Lender to set asde a total of $3,088, of the Prncpal Amount as an nterest reserve f1nletest ~. All nterest payments shad be j"jad from the nterest Reserve. Lander may automatfcally deduct ~ccrued unpad nterest from the nterest Reserve. nterest wll accrue, as descrbed n the Note, on amounts deducted from the nlerest Reserve. n lhe event the nterest clue under the Note exceeds lle nterest Reserve, Borrower Wll pay accrued unpad nterest When due accordng 10 the terms of!he Note or replensh the n!erest Reserve Fund wth suffcent funds as requred by Lander. Borrower may nol use any porton of the nterest Reserve Fund for too payment of the costs of consfruclng the mprovements or equppng the Projecl. Upon malurty, Lender wlt not advance or dsburse he remanng nlerest Reserve, f any, to,,barower. The prncpal due upon maturty wul not nclude any remanng nterest Reserve. COST B~OWN. AD dsbursements shall be ba~ upon a detaled breakdown of the cosls of constructon of the mprovements and any fnancng or development costs for Whch Borrower mlghl request dsbursement. The nllal cost breakdown, as approved by Lender, s attached as Exhjbt "01" and exhbt "C2". Dsbursements need not be made by Lender unless and untl the revsed cosl breakdown s approved. Lender reserves the rghlto approve or dsapprove any rellsed cost breakdown n ls sole dscrealon. AN/>RCE AUTHORTY. Anyone (1) of he fonowng ersons currenu are authorzed 10 requesl advances and authorze payments under the 6na of unl Lender!ves from Borrower, at Lender's ad ess sho ove, wnlten nolce of revocaton of ther authorty: \, ~~~~~~~----- f.!, }. } ",, ", NDEMNTY. f any work or maleals are furnshed on the feet pror 10 lender's Deed of Trust and other securty nlarest n the properly belng duly recorded or perfected, before Lender Wll be obfgate 10 make any advances of loan proceeds, Borrower must make adequate ndemnty anangements wth the Ue company nsurng Lender's Deed of Trust ncludng dsclosure,to the lue company. that the wqfk of mprovement has CQ1lefc:ed pror to such recodauon or pe!fectlon, and flle company must ssue ts commtment 10 nsure the len of the Lender's Deed of Trust,no\'o'tUlstandng such prer commencement of the work otmprovement. ' MECHANC UENlNDEMN/Tv. Borrower agrees to hold and save Lender harmless from lnd aganst any and au damage caused er charges by reason of llechancs' lens or stop nolces, or other Uablllles, ncludng attorney's fees and expenses or every knd and nature whch Lender mght sustan or Exhbt A - Page 16

17 r"jnstructon l:oan AGREEME' :\, '.- (Contnued).. ) Page 9 ncur under or by reason or n consequence of acceptng the repayment of the ndebtedness pror to completon of mprovements and/or recordaton of a Notce of Completon for the Project. Borrower further agrees that the Lender s hereby granted the rght to rely upon ths provson and Borrower wll be lable hereunder regardless of any changes n ownershp,' ttle or nterest n the Project, the Property or the works of mprovement and notwthstandng the satsfacton of the ndebtedness, the reconveyance of any Collateral, ncludng, but not lmted to, the Deed of Trust, securng the ndebtedness. DSCLoSURE OREGON LAW. UNDER OREGON LAW, MOST AGREEMENTS, PROMSES AND COMMTMENTS MADE BY LENDER CONCERNNG LOANS AND OTHER CREDT EXTENSONS WHCH ARE NOT FOR PERSONAL FAMLY OR HOUSEHOLD PURPOSES OR SECURED SOLELY BY THE BORROWER'S RESDENCE MUST BE N WRTNG, EXPRESS CONSDERATON AND BE SGNED BY LENDER TO BE ENFORCEABLE. MSCaLANEOUS PROVtSONS. The followng mscellaneous provsons are a part of ths Agreement: Amendments. Ths Agreement, together wth any Related Documents, consttutes the entre understandng and agreement of the partes as to the matters set forth n ths Agreement. No alteraton of or amendment to ths Agreement shall be effectve unless gven n wrtng and sgned by the party or partes sought to be charged or bound by the alteraton or amendment. Attorneys' Fees; Expenses. Borrower agrees to pay upon demand all of Lender's costs and expenses, ncludng Lender's attorneys' fees and lender's legal expenses, ncurred n connecton wth the enforcement of ths Agreement. Lender may hre or pay someone else to help enforce ths Agreement, and Borrower shall pay the costs and expe!nses of such enforcement. Costs and expenses nclude Lender's attorneys' fees and legal expenses whether or not there s a lawsut, ncludng attorneys' fees and legal expenses for bankruptcy proceedngs (ncludng efforts to modfy or vacate any automatc stay or njuncton), appeals, and any antcpated post-judgment collecton servces. Borrower also shall pay all court costs and such addtonal fees as may be drected by the court. Authorty to Fle. Notces.' Borrower apponts and desgnates Lender as ts attorney-n-fac:;t to fle for the record any notce that Lender deems necessary to protect ts nterest under ths Agreement. Ths power shall be deemed coupled wth an nterest and shall be rrevocable whle any Sum or performance remans due and owng under any of the Related Documents. Cap110n Headngs. Capton headngs n ths Agreement are for convenence purposes only and are not to be used to nterpret or defne the provsons of ths Agreement. Governng Law. Ths Agreement wll be.governed by federal law applcable to Lender and, to the extent not preempted by federal law, the laws of the State of Calforna w1hout regard to ts conflcts of law provsons. Ths Agreemen1 has been accepted by Lender n he State of Calforna.. ndemnfcaton of Lender. Borrower agrees to ndemnfy, to defend and to save and hold.lender harmless from any and all clams, suts, oblgatons, damages, losses, costs and expenses (ncludng, wthout lmtaton, Lender's attorneys' fees, as well as Lender's archtect's and engneerng fees), demands, labltes, penaltes, fnes and forfetures of any nature whatsoever that may be asserted aganst or ncurred by Lender, ts offcers, drectors, employees, and agents arsng out of, relatng to, or n any manner occasoned by ths Agreement and the exercse of the rghts and remedes granted Lender under ths. The foregong ndemnty provsons shall s.urvve the cancellaton of ths Agreement as to all matters arsng or accrung pror to such cancellaton and the foregong ndemnty shall survve n the event that Lender elects to exercse any of he remedes as provded under ths Agreement followng default hereunder. Consent to Loan Partcpaton. Borrower agrees and consents to Lender's sale or transfer, whether now or later, of one or more partcpaton nterests n the Loan to one or more purchasers, whether related or unrelated to Lender. Lender may provde, wthout any lmtaton whatsoever, to anyone or more purchasers, or potental purchasers, any nformaton or knowledge Lender may have about Borrower or ab.out any other matter relatng to the Loan, and Borrower hereby waves any rghts to prvacy Borrower may have wth respect to such matters. Borrower addtonally waves any and all notces of sale of partcpaton nterests, as well as all notces of any repurchase of such partcpaton nterests. Borrower also agrees that the purchasers of any such partcpaton nterests wll be consdered as the absolute owners of such nterests n the Loan and wll have all the rghts granted under the partcpaton agreement or agreements governng the sale of such partcpaton nterests. Borrower further waves all rghts of 'offset or counterclam that t may have now or later aganst Lender or aganst any purchaser of such a partcpaton nterest and uncondtonally agrees that ether Lender or such purchaser may enforce Borrower's oblgaton under the Loan rrespectve of he falure or nsolvency of any holder of any nterest n the Loan. Borrower further agrees that the purchaser of any such partcpaton nterests may enforce ts nterests rrespectve of any personal clams or defenses that Borrower may have aganst Lender. No Waver by Lender. Lender shall not be deemed to have waved any rghts under ths Agreement unless such waver s gven n wrtng and sgned by Lender. No delay or omsson on the part of Lender n exercsng any rght shall operate as a waver of such rght or any other rght. A waver by Lender of a provson of ths Agreement shall not prejudce or consttute a waver of Lender's rght otherwse to demand strct complance wth that provson or any other provson of ths Agreement. No pror waver by Lender, nor any course of dealng between Lender and Borrower, or between Lender and any Grantor, shall consttute a waver of any of Lender's rghts or of any of Borrower's or any Grantor's oblgatons as to any future transactons. Whenever the consent of Lender s requred under ths Agreement, the grantng of such consent by Lender n any nstance shall not consttute contnung consent to subsequent nstances where such consent s requred and.n all cases such consent may be granted or wthheld n the sole dscreton of Lender. Severablty. f a court of competent jursdcton fnds any provson of ths Agreement to be llegal, nvald, or unenforceable as to any crcumstance, that fndng shall not make the offendng provson llegal, nvald, or unenforceable as to any other crcumstance. f feasble, the offendng provson shall be consdered modfed so that t becomes leg/1.l, vald and enforceable. f the offendng provson cannot be so modfed, t shall be consdered deleted from ths Agreement. Unless otherwse requred by law, the llegalty, nvaldty, or unenforceablty of any provson of ths Agreement shall not affect the legalty, valdty or enforceablty of any other provson of ths Agreement. Successors and Assgns. All covenants and agreements by or on behalf of Borrower contaned n ths Agreement or any Related Documents shall bnd Borrower's successors and assgns and shall nure to the beneft of Lender and ts successors and assgns. Borrower shall not, however, have the rght to assgn Borrower's rghts under ths Agreement or any nterest theren, wthout the pror wrtten consent of Lender. Survval of Representatons and Warrantes. Borrower understands and agrees that n extendng Loan Advances, Lender s relyng on all representatons, warrantes, and covenants made by Borrower n ths Agreement or n any certfcate or other nstrument delvered by Borrower to Le.nder under ths Agreement or the Related Documents. Borrower further agrees that regardless of any nvestgaton made by Lender, all such representatons, warrantes and covenants wll survve the extenson of Loan Advances and delvery to Lender of the Related Documents, shall be contnung n nature, shall be deemed made and redated by Borrower at the tme each Loan Advance s made, and shall reman n full force and effect unul such tme as Borrower's ndebtedness shall be pad n full, or untl ths Agreement shall be termnated n the manner provded above, whchever s the last to occur. Tme s of the Essence. Tme s of the essence n the performance of ths Agreement. Wave Jury. To the extent permhed by applcatle law, all partes to ths Agreement herely wave the rght to any JUry tral n any acton, proceedng, or counterclam brought by any party aganst any other party. Exhbt A - Page 17

18 loan No: '\ ' \ONSTRUCTON LOAN "" AGREEMENl "/')" ~-~'>;:~" 1'0 (Contnued) Page 9 l1cur under or by reason or n consequence of acceptng the repayment of the ndebtedness pror to completon of mprovements and/or recordaton of a Notce of Completon for the Prolect. " Borrower further agrees that the lender s hereby granted the rght to rely upon ths provson and Borrower w" be lable hereunder regardless of any Changes n ownershp, ttle or nterest n the Project, the Property or the works of mprovement and notwthstandng the salsfacuon of the ndebtedness, the reconveyance of any Collateral, ncludng, but not lmted to, the Deed 01 Trust, securng the ndebledness. DSCLOSURE OREGON LAW. UNDER OREGON LAW, MOST AGREEMENTS, PROMSES AND COMMTMENTS MADE BY LENDER CONCERNNG loans AND OTHER CREDT EXTENSONS WHCH ARE NOT FOR PERSONAL FAMLY OR HOUSEHOlD PURPOSES OR SECURED SOLELY BY lle BORROWER'S RESDENCE MUST BE N WRTNG, EXPRESS CONSDERATON AND BE SGNED BY LENDER TO BE ENFORCEABLE. " MSCBl.ANEOUS PROVSONS. The followng mscellaneous provsons are a part of hls Agreement: Amendmenls. Ths Agreement, together wth any Related Documents, consttutes the enlte understandng and agreement of the partes as to the matters set forth n ths Agreement No aera.on of or amendment 10 ths Agreement shall be effectve unless gven n wrtng and sgned by the perty or partes sought to be charged or bound by the alteraton or amendment. Attomeys' Fees; Expenses. Borrower agrees to pay upon demand all of Lender's costs and expenses, ncludng Lender's allorneys' fees and Lander's legal expenses, ncurred n connecton wth the enforcement of hs Agreement. Lel(er may hre or pay someone else 10 help enforce ths Agreement, and Borrower shall pay the costs and expenses of such enforcement. Costs and expenses nclude Lender's attorneys' fees and legar expenses whether Of not there s a lawsut, ncludng attorneys' fees and legal expenses for ban<ruplcy proceedngs Qncludhg efforts to modfy or vacate any automalc slay or njuncton), appeals, and any antcpated posl-judgmenl collecton servces. Borrower also shall pay all court costs and suoh addtonal fees as may be drected by he court. Authorty 10 Fle Nollces. Borrower apponts and desgnates Lender as ts ahorney-ln-/act to fle for the record any nolce lhat Lender deems necessary to protecllts nterest under ths Agreement. Ths power shall b!3 deemed coupled wth an nterest and shall be rrevocable whle any sum or perfonnance remans due and owng under any of he Related DocUments. capton Helldlngs. Capton headlngs n ths Agreement are for convenence purposes only and are not to be used to nterpret or deflne the provsons of ths Agreement Governng Law. Ths Agreement wll be governed by federal law eppllcable to Lender and, to the extent not preempted by fedemlllm', the laws of the Stale of Calforna Wthout regard to ts conflcts Of law provlslons. Ths Agreement lus been accepted by Lender n the state or Calforna. ndemnlflcatlon of Lender. Borrower agrees to ndemnfy, to defend and to save and hold Lender harmless from any and all clams, suts, obfgalons, damages, losses, costs and expenses Qncludng. wthout fmltatlon. lender's attorneys' fees, as well as Lender's archtect's and" engneerng fees), demands, (abules, penaltes, fnes and forfetures of any nature whatsoever that may be asserted aganst or ncurred by Lender, ls offcers, drectors, employees, and agents arsng out of, relalng to; or n any manner occasoned by ths Agreement and the exercse of the rghts and remecle$ granted Lender under ths. The foregong ndemnty provsons shaa survve the canceuaton of ths Agreement as to all matters arsng or accrung pror to such cancellalon anelthe foregong ndemnty shall survve n the event that Lender elecl$ 10 exercse any of the remed"1es as provded under ths Agreement fonowng default hereunder. Con$9fl1 to L~n 'Partcpaton. Borrower agrees and oonsents to Lender's sale or transfer, whether now or later, of one Of more partcpaton "nterests n the Loan \0 one or more purchasers, whether related or unrelated to Lender. Lender may provde, wthoul any lmtaton whatsoever. 10 any one or more purchasers, or potental purchasers, any nformalon or knowledge Lender may have about Borrower or aboul any other maher relatng 10 the Loan, allcl Borrower hereby waves any rghts to prvacy Borrower may" have wth respect to such matters. Borrower addlhonal1y waves any and all nofces of sale of partclpauon nterests, as well as au notces of any repurchase of such pactlcfpaton kllecests. SOlOWer also agrees that the purchasers of any such paruclpaflon nlerests wlll be consdered as the absolute owners of such n\eress n the loan and wlo have all the rghts granted under the partclpadon agreement or agreements governng the sale of such partc!palon nterests. Borrower further waves all rghts 01 offset or counterclam that t may have now or later aganst Lender or aganst any purchaser of such a partclpatlon nterest and uncondtonaly agrees that ether lender or such purchaser may enforce Borrower's oblgaton under the Loan rtespecve of the falure ~ R$OlVency of any holder of any nterest n the" Loan. Borrower further agrees that the purchaser of any such partcpaton nleresls may enforce ts nterests Jrrespeotva of any personal clams or defenses that Borrower may have aganst Lender. No Waver by Lender. Lender shall not be deemed to have waved any rghts Under"ths Agreement unless such wavllr s gvet n wrlhng and sgned by lender. No delay or omlsslqn on the part of Lender n exerclslnll any rght sha operate as a waver of such rght or ally other rlghl A waver by lender of a provson of ths Agreement shall not prejudlce or consllufe a waver of Lender's rght otherwse to demand strel complance w1ll that provson or any olher provson of ths Agreement. No pror waver by Lender, nor any course of dealng between Lender and Borrower, or between Lender and any Grantor, shall consllufs a waver of any of Lender's rghts or of any of Borrowers or any Granlor's obrlqlrlons as to any future transactons. Whenever the consent of Lender s requred under hls Agreement, the granlng of such collsent by Lender n any nstance shall not constute conunulng"consent to subsequent nslances where such coosent s requred and.1n an cases such consent may be gran\ed or wthheld n the sole d'lscrelon of Lender. " Severablty. f a court of competent Jursdclfon fnds any' provson of ths Agreement to be llegal, nvald, or unenflxceable as to any crcumstance, tha fndng shan not make tle offendng provson llegal, nvald, or unenforceable as 10 any other crcumstance. f feasble, the" offendng prcllfslcln shall be consdered modfed so that t becomes lega~ vard and enforceable. llhe Offendng provson cannot be so modlled," t shall be consdered deleted from ths Agreement. Unless otherwse requred by taw, the llegalty, nvaldty. or unenforceabluty of any provson of ths Agreement shah nol affect the legalty, valdty or enforceabry of any other provson of ths Agreemenl Successors and Assgns. AU covenants and agreements by or on behalf of Borrower confaned n ths Agreement or any Related Documents shag bnd Borrower's successors and assgns and shall nure to the beneft of Lsoder and ts successors and assgns. Borrower shal not. however, have the rghl to assgn Borrower's rfghts under ths Agreement or any nterest theren, wthout the pror wrllen consent of Lender. Survval of Representatons and Warrantes. Borrower underslands and agrees that n extendng Loan Advances, Lender s relyng on all representalons, warrantes, and covenants made by Borrower n ths Agreement or n any C91lcate or other nstrument delvered by Borrower to Le.nder under ths Agreement or the Rerated Documents. Borrower further agrees that regardless of eny nveslgallon made by lender, all such representalons, warrantes and covenanls w" survve the extenson of Loan Advances and delvery to Lender of the Related Documents, shal be conunufrg n nature, shall be deemed made anel redated by Borrower at the tme each Loan Advance s made, and shall reman n full ferce and effecl untl such lme as Borrower's ndebtednes5 shad be pad n fur, or untl ths Agreement shah be termnated n the manner prollfded above, whchever s the last to occur. Tme s of the Essence. Tme s of the essence n the performance of ths Agreement. " Wave Jury. To the extent permtted by "appllcabre law, all partes to ths Agreement hereby"w8fve the rght to any lury tral n any achon, proceedng, or counterclam brought by any patty aganst any other party. r \ " " " j \ r Exhbt A - Page 18