proof of claim by first community bank

8/3/2019 Proof of Claim by First Community Bank

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B 10 (Official Form 10) (04110)UNITED STATES BANKRUPTCY COURT Northern District of California PROOF OF CLAIMName of Debtor: Case Number:Joseph Keith and Carolyn Keith 11-12535

NOTE: This form should not be used to make a claim for an administrative expense arising after the commencement of he case. A request for payment ofanadministrative expense may be flied pursuant to 11 u.s.c. 503.Name of Creditor (the l3erson or other entity to whom the debtor owes money or property): o Check this box to indicate that thisFirst Community ank claim amends a previously filedName and address where notices should be sent: claim.

First Community Bank clo Stephanie Barber HessFriedemann Goldberg LLP Court Claim Number:420 Aviation Blvd., Suite 201 (I fknown)Santa Rosa, CA 95403Telephone number: Filed on:(707) 543-4900Name and address where payment should be sent (i f different from above): 0 Check this box if you are aware that

First Community Bank clo Mike Teeter anyone else has filed a proof of claim438 Fisrst Street relating to your claim. Attach copy ofSanta Rosa, CA 95401 statement giving particulars.Tele8hone number: 0 Check this box if you are the debtor(7 7) 636-9000 or trustee in this case.1. Amount of Claim as of Date Case Filed: $ 1,936,366.69 S. Amount of Claim Entitled to

Priority under 11 U.S.C. S07(a). I fIf all or part of your claim is secured, complete item 4 below; however, if all of your claim is unsecured, do not complete any portio n of your claim falls initem 4. one of the following categories,check the box and state theIfall or part of your claim is entitled to priority, complete item 5. amount.o Check this box if claim includes interest or other charges in addition to the principal amount of claim. Attach itemized Specify the priority of the claim.statement of interest or charges. 0 Domestic support obligations under2. Basis for Claim: Money loaned II U.S.C. 507(a){l)(A) or (a)(l)(B).(See instruction #2 on reverse side.)3. Last four digits of any number by which creditor identifies debtor: 9106 0 Wages, salaries, or commissions (upto $11,725*) eamed within 180 days

3a. Debtor may have scheduled account as: before filing of he bankruptcy(See instruction #3a on reverse side.) petition or cessation of the debtor's4. Secu red C laim (See instruction #4 on reverse side.) business, whichever is earlier - 11Check the appropriate box if your claim is secured by a lien on property or a right of setoff and provide the requested U.S.C. 507 (a)(4).information. Contributions to an employee benefit

Nature of property or right of setoff: IiReal Estate o Motor Vehicle o Other plan - II U.S.C. 507 (a)(5).Describe: o Up to $2,600* of deposits towardValue ofProperty:$ 4,405,000.00 Annual Interest Rate % purchase, lease, or rental of propertyor services for personal, family, o rAmount of arrearage and other charges as of time case filed included in secured claim, household use - 11 U.S.C. 507(a)(7).if any: $ Basis for perfection: Deed of Trust 0 Taxes or penalties owed toAmount of Secured Claim: $ 1,552,500.00 Amount Unsecured: $ 383,866.69 governmental units - 11 U.S.C. 507(a)(8).6. Credits: The amount of all payments on this claim has been credited for the purpose of making this proof of claim. 0 Other - Specify applicable paragraph7. Documents: Attach redacted copies of any documents that support the claim, such as promissory notes, purchase of 11 U.S.C. 507 (a)U.orders, invoices, itemized statements of running accounts, contracts, judgments, mortgages, and security agreements. Amount entitled to priority:You may also attach a summary. Attach redacted copies of documents providing evidence of perfection ofa security interest. You may also attach a summary. (See instruction 7 and deftnition of "redacted" on reverse side.) $DO NOT SEND ORIGINAL DOCUMENTS. ATTACHED DOCUMENTS MAYBE DESTROYED AFTER *Amounts are subject to adjustment onSCANNING. 411113 and every 3 years thereafter withIf the documents are not available, please explain: respect to cases commenced on or afterthe date ofadjustment.

IFOR COURT USE ONLYDate: I Signat ure : The person fIling this claIm must sIgn it. Sign and print name and title, if any, of the credItor or10/18/2011 other person authorized to file this claim and sta te address and telephone number I f dIfferent from the notice

address above. A t t a c h C O P Y O f P O W ~ ~ Steohanie Barber Hess Friedemann Goldbera LLP Attornevs for First Community Bank (707) 543-4900Penalty for presentmgfraudulent clazm: FIDe of up to $500,000 or Impnsonment for up to 5 years, or both. 18 U.S.C. 152 and 3571.

Case 11-12535 Claim 6 Filed 10/18/11 Desc Main Document Page 1 of 31


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9/23/2011

Loan Payoff Quoted Fo r 07/05/11Reference Numbel:':Loan Number: 91 06Customer Name: Keith JProperty Address:

501 5th St Aka 416 B StSanta Rosa Ca 95401In v Mstr/Grp: 000 0000In teres t Rate: 5.00000Loan Number:Principal Balance

Credits:Accrued Interes t

91 06Sub Total .... $

Sub Total .... $Total Payoff Amount ........................ $

1,955,103.101,955,103.10

18,736.4118,736.411,936,366.69

The accrued in te res t shown i s calculated from 09/15/11 through 07/05/11. I f theloan i s paid o ff on a da y other than the payoff date, the in teres t owing wil l bead j usted by a dai ly amount of $271. 54. This loan must be kept cUrl:'ent or a la techar'ge will be assessed. Please ca l l for an updated quote on the day you intend topayof f th i s loan for ver if icat ion of the amount as it i s subject to change.



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Borrower:

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Joseph P, KeithCarolyn G. I(eith1400 N. Outton Avenue. Suite 24Sarita Rosa. CA 95401Principal Amount: $2,000,000.00

f " l 1 , ~ : : . " , u n i t y ,=::11. BankPROMISSORY NOTE

Lender:

Interest Rate: 5.000%

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First Community BankSanta Rosa Main Office438 First Street .Santa Rosa. CA 95401Date of Note: March 22,2010

PROMISE TO PAY. Joseph P. Keith and Carolyn G. Keith ("Borrower") jointly and severally promise to pay to First Community Bank [ ~ L l ! n d e r " ) , or order, in lawful money of the United States of America, the principal amount of Two Million & '00/100 Dollars [.$2,000.000.00), togetherw i ~ h ir:'terest on the unpaid princip


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Loan No:' 9106

(.,PROMISSORY NOTE( Continued)

Insecurity. Lender in good faith believes itself insecure.

(Page 2

Cure Provisions. If any default, other than a default in payment is curable and if Borrower has no t been given a notice of a breach of thesame provision of this Note within the preceding twelve (12) months, it may be cured if Borrower, after Lender sends written notice toBorrower demanding cure of such default: (1) cures the default within ten (10) days; or (2) ifthe cure requires more than tim (10) days,immediately initiates steps which Lender deems in Lender's sale discretion to be sufficient to cure the default and thereafter continues andcompletes all reasonable and necessary steps sufficien t to produce compliance as soon as reasonably practical.L.ENDER'S RIGHTS. Upon default, L.ender may declare the entire unpaid principal balance under this Note and all accrued unpaid interestimmediately due, and then Borrower will pay that amount.ATTORNEYS' FEES; EXPENSES. Lender may hire or pay someone else to help col lect this Note i f Borrower does not pay. Borrower WIll payLender that amount. This includes, subject to any limits under applicable law, l.ender's attorneys' fees and Lender's legal expenses, whether ornot there is a lawsuit, including attorneys' fees, expenses for bankruptcy proceedings (including efforts to modify or vacate any automatic stayor injunction), and appeals. Borrower also will pay any court costs, in addition to all other sums provided by law.JURY WAIVER. To the extent permitted by applicable law, Lender and Borrower hereby waive the right to any jury trial in any action,pr'occeding, or counterclaim brought by either Lende.r or Borrower against the other.GOVERNING LAW. This Note will be governed by federal law applicable to Lender and, to the extent not preempted by federal law, the laws ofthe Sta.te of California without regard to its conflicts of law provisions. This Note has been accepted by Lender in the State of California.CH.OICE OF VENUE. If there is a lawsuit, Borrower agrees upon l.ender's request to submit to the jurisdictioM of the courts of Sonoma County,State of Californiil.DISJ-iONOR!,D ITEJVI FEE. Borrower will pay a fee to Lender of $18.00 if Borrower makes a payment on Borrower's loan and the check orp r ~ a u t ~ c i f i z e d charge with which Borrower pays is later dishonored. .RIGH1' OF'SETOFF. To the extent permitted by applicable law, L.ender reserves a right of setoff in all Borrower's accounts with Lender (whetherchecking, savings, 0,. some other account). This includes all accounts Borrower holds jointly with someone else arid all accounts Borrower mayopen in the future . However, this does not include any IRA or Keogh accounts, or any trust apcounts for which setoff would be prohibited bylaw. Borrower authorizes Lender, to the extent permitted by applicable law, to charge or setoff all sums owing'on' the indebtedness against anyand ,all such ac.coi.mts, and, at Lender's option, to administratively freeze all such accounts to allow L.end.er to pr'otect Lender's charge and setoffr i g h ' ~ provided i,n this pa rag raph . ' .COLLATERAL. Bor rower acknowledges this Note is secured by the following collateral described '10 the security instrument listed herein: aDeedof Trust dated February 14, 2007 recorded February 16, 2007 as instrument number 2007018722, to a trustee in favor of Lender on realproperty located in Sonoma County, State of California. That agreement contains the following due on sille provision: l:.ender may, at Lender'sQPtion" declare immediately due and payable all sums secured by the Deed of Trust upon the sale or transfer, without Lender's prior writtenconsent, of C!II or any part of the RealProperty, Qr any interest in the Real Property. A "sale or trans fer" means the conveyance of Real ProPertyor. any right, title or interest in the Real Property; whether legal, beneficial or equitable; whether voluntary or involuntary; whether by outrightsale, deed, installment sale contract, land contract, contract for deed, leasehold interest with a te rm 'greater than tfiree (3) years, lease-optioncontract, or by sale, assignment, or transfer of any beneficial interest in or to any land trust holding title to the Real Property, or by any othermethQd of conveyance of an interest in the Real Property. However, this option shall no t be exerCised by Lender if such exercise is prohibitedby applicable law.ARBITRATION. Lender and Bor rower agree that all disputes, claims and controversies between them whether individual, joint, or class innature. arising from this Note or otherwise, including without limitation contract and tort disputes. shall be arbitrated pursuant to the financialservices rules of Endispute. Inc d/b/a J.A.M.S.lENDISPUTE or its successor in effect at the time the claim is filed. upon reque.st of either party.No act to take or 'dispose of any coUateral securing this Note shall constitute a waiver of this arbitration agreement or be prohibited by thisarbitration agreement.. This includes. withou t limitation. obtaining injunctive relief or a temporary restraining order; invoking a power of saleunder any deed of trust or mortgage; obtaining a writ of attachment or imposition of a receiver; or exerCising any rights relating to personalproperty. including taking or dispOSing of such property with or without judicial process pursuant Article 9 of the Uniform Commercial Code.Any disputes, claims, or controversies concerning the lawfulness or reasonableness of any act. or exercise of any right. concerning anycollateral securing this Note, including any claim to rescind. reform. or otherwise modify any agreement relating to the collateral securing thisNote, shall also be arbitrated, provided however that no arbitrator shall have the right or the power to enjoin or restrain any act of any party.Borrower and Lender agree that in the event of al1 action for judicial foreclosure pursuant to California Code of Civil Procedure Section 726, orany similar provision in any other state. the commencement of such an action will not constitute a waiver of the right to arbitrate and the courtshall refer to arbitration as much of such action, including counterclaims. as lawfully may be referred to arbitration. Judgment upon any awardrendered by any arbitrator may be entered in any court having jurisdiction. Nothing in this Note shall preclude any party from seeking equitablerelief from a court of competent jurisdiction. The statute of limitations. estoppel, waiver. laches, and similar doctrines which would otherwisebe applicable in an action brought by a party shall be applicable in any arbitration proceeding. and the commencement of an arbitrationproceeding shall be deemed the commencement of an action for these purposes.. The Federal Arbi trat ion Act shall apply to the construction,interpretation, and enforcement of this arbitration provision.DAMAGE CA DESTRUCTION OF IMPROVEMENTS. If the Improvements or any part thereof are damaged or destroyed i>I natural disaster, fire,or by other means, Borrower shall promptly restore the Improvements to their prior condition. Lender shall not be obligated to make any furtherdisbursements of Loan proceeds until such restoration is completed to Lender's satisfaction: Any insurance proceeds by reason of such damageor destruction that are received by Lender will be available to Borrower upon presentation of bills COVering any labor and material used inrestoration provided, in Lender's sale opinion, that sufficient funds are available to complete that restoration.INTEREST DEFAULT AMENDED. The paragraph titled INTEREST AFTER DEFAULT is amended as follows. If an event of default has not beencured during the cure period, Lender may charge the default rate of interest.PAYMENT ADJUSTMENTS. The initial monthly payment on this loan is based upon an amortization schedule of thirty (30) years.SLiCCESSOR INTERESTS. The terms of this Note shall be binding upon Borrower, .and upon Borrower's h ~ i r s , personal representatives,successors and assigns, and shall inure to the benefit of Lender and its successors and assigns. . 'GENERAl. PROVISIONS, If any part of this Note cannot be enforced, this fact will not affect the rest of the Note.. lender may delay or forgoenforcing any of its rights or remedies under this Note without losing them Each Borrower understands and agrees that, with or without noticeto Borrower, Lender may with respect to any other Borrower (a) make one or more additional secured or unsecured loans or otherwise extendadditional credit; (b) alter, compromise, renew, extend, accelerate, or otherwise change one or more timE1s the time for payment or other termsof any indebtedness, including increases and decreases of the rate of interest on the indebtedness; (c) exchange, enforce, waive, subordinate,fail or decide not to perfect, and release any security, with or without the substitution of new collateral; (d) apply such security and direct theorder or manner of sale thereof, including without limitation, any non-judiCial sale permitted by the terms of the controllir}g security agreements,



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Loan No: 9106 PROMISSORY NOTE(Continued)

(Page 3

as Lender in its discretion may determine; (e) release, substitute, agree not to sue, or deal with anyone or more of Borrower's sureties,endorsers, or: other guarantors on any terms or in any manner Lender may choose; and (f) determine how, when and what application ofpayments and credits shall be made on any other indebtedness owing by such other Borrower. Borrower and any other person who signs,guarantees or endorses this Note, to the extent allowed by law, waive any applicable statute of limitations, presentment, demand for payment,and notice of dishonor. Upon any change in the terms of this Note, and unless otherwise expressly stated in writing, no party who signs thisNote, whether as maker, guarantor, accommodation maker or endorser, shall be released from liability. All such parties agree tha t Lender mayrenew or extend (repeatedly and for any length of time) this loan or release any party or guarantor or collateral; or impair, fail to realize upon orperfect L.ender's security interest in the collateral; and take any other action deemed necessary by Lender without the consent of or notice toanyone. All such parties also agree that Lender may modify this loan without the consent of or notice to anyone other than the party withwhom the modification is made. The obligations under this NQte are joint and several"PRIOR TO SIGNING THIS NOTE, EACH BORROWER READ AND UNDERSTOOD ALL THE PROVISIONS OF THIS NOTE. EACH BORROWERAGREES TO THE TERMS OF THE NOTE.BORROWER ACKNOWLEDGES RECEIPT OF A COMPLETED COpy OF THIS PROMISSORY NOTE.BORROWER: ~ a < ~ arolyn eith

L A S E ~ PAO L i ! l I I d ~ 64 9 10.(lO2 Copt H.,Ien4'ln,noia/ $olulW\$ 11'10 1997' 2010 Alll\ichil Ro..,w6. . CA. H:\HARlANO\CFI\LPL\D20FC TFH500 PR'S



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ADDENDUM TO LOAN DOCUMENTS

This Addendum ("Addendum"), dated as of _ ~ l s l J ,2010, modifies andamends the Loan Documents (as defined below) that e v i d e ~ d comprise the$2,000,000 loan (the "Loan") ofFirst Community Bank ("Lender") to Joseph P. Keithand Carolyn G. Keith ("Borrower").The "Loan Documents" are comprised of (1) a Promissory Note, a Business LoanAgreemerit, Trust Certificates, a Notice of Insurance Requirements, a Hazard InsuranceDisclosure, a Disbursement Request and Authorization, an Agreement to ProvideInsurance and other related documents executed by Borrower on even date herewith inconnection with the Loan; (2) a Commercial Guaranty executed by Russell B. Flynn("Guarantor") on even date herewith guarantying the Loan; and (3) a Deed ofTrustsecuring the Loan with real property pledged by trustors Joseph P. Keith and Carolyn G.Keith, as trustees of the Jospeh P. Keith and Carolyn G. Keith Trust, and by trustorRussell B. Flynn, as trustee of the Russell B. Flynn Trust dated November 20, 1987("Trustors ").The Lender, Borrower, Trustors and Guarantor hereby agree thatLender shall

have no right to declare a nonmonetary event of default under the Loan Documents dueto ~ h e insolvency of the Borrower, or, due to the Borrower's breach ofa "Negative" Covenant," as defined in the Business Loan Agreement.The terms of this Addendum amend and replace any conflicting provisions in theLoan Documents.

First Community BankB Y : ~ z P - . Name: ~ ~ ~ pC.T i t 1 e : ~ e . . r ; k d Russell B. Flynn

Russell B. Flynn, trustee of the RussellRussell B. Flynn Trust dated November 20,1987 .

{00093958 DOC;v I}

Joseph P. K,eith

a rc l ,} KeithU&, ... ~ d v Joseph . Keith, trustee of the JosephP. Keith and Carolyn G. Keith Trust

arol G. Keith, trustee of theJoseph P. Keith and Carolyn G.



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This Addendum ("Addendum"), dated as of J 3/ 2010, modifies andamends the Loan Documents (as defined below) that evidence and comprise the$2,000,000 loan (the "Loan") of First Community Bank ("Lender") to Joseph P. Keithand Carolyn G. Keith ("Borrower").The "Loan Documents" are comprised of(1) a Promissory Note, a Business LoanAgreement, Trust Certificates, a Notice oflnsuranceRequirements, a Hazard InsuranceDisclosure, a Disbursement Request and Authorization, an Agreement to ProvideInsurance and other related documents executedby Borrower on even date herewith inconnection with the Loan; (2) a Commercial Guaranty executed by Russell B. Flynn("Guarantor") on even date herewith guarantying the Loan; and (3) a D ~ e d ofTrustsecuring the Loan with real property pledged by trustors Joseph P. Keith and Carolyn G.Keith, as trustees ofthe Jospeh P. Keith and Carolyn G. Keith Trust, and by trustorRussell B. Flynn, as trustee of the Russell B. Flynn Trust dated November 20, 1987("Trustors").The Lender, Borrower, Trustors and Guarantor hereby agree that Lender shallhave no right to declare a non-monetary event of default under the Loan Documents dueto the insolvency of he Borrower, or, due to the Borrower's breach of a "NegativeCovenant," as defined in the Business Loan Agreement.The terms of his Addendum amend and replace any conflicting provisions in theLoan Documents.

First Community Bank Joseph P. KeithBy: ____________________Name: -----------------Title: ____________ Carolyn G. Keith

{00093958.DOC;vl}

Joseph P. Keith, trustee of the JosephP. Keith and Carolyn G. Keith Trust

Carolyn G. Keith, trustee of heJoseph P. Keith and Carolyn G._ _ : : : : ~ __ :.K::e::;::ith. Trust



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Borrower:

(FirstCommunity

./ Bank

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BUSINESS LOAN AGREEMENT

Joseph P. KeithCarolyn G. Keith1400 N. Dutton Avenue, Suite 24Santa Rosa. CA 95401

Lender: First Community BankSanta Rosa Main Office438 First StreetSanta Rosa. CA 95.401THIS BUSINESS LOAN AGREEMENT dated March 22. 2010. is made and exec.uted between Joseph P. Keith and CarolynG. Keith ("Borrower")and First Community Bank ("Lender ") on the following terms and conditions. Borrower has received prior commercialloaris from Lender or hasapplied to Lender for a commercial loan or loans or other financial accommodations. including those which may be described on any exhibit orschedule attached to this Agreement..Borrower understands a!,d agrees that: (A)' in granting. renewing. or extending any Loan; Lender isrelying upon Borrower's representations. warranties. and agreements as set forth in this Agreement; (8) the granting. renewing. or extendingof. any Loan by Lender at all times shall be subject to Lender's sole judgment and discretion; and (C) all such Loans shailbe and remain subjectto the terms and conditions of this Agreement,TERM,. This Agreement shall be effective as of March 22, 2010, and shall continue in full force an.d effect until such time as all of Borrower'sLoans in .failor -of Lender have been paid in full, inCluding principal, interest, costs, expenses, attorneys; fees, and other fees and charges, oruntil February 15, 2015.A D V A ~ _ C E __ AUrH6Rlr.Y. The. f,allowing. person or persons ar.e authorized to request advances .and . authorize payments .under the. Joan_ .untilLende', receives from Borrower, at Lender's address shown above, written notice of revocation of such authori ty: Joseph P. Keith, Individually;and Carolyn G. Keith, Individually.CONDITIONS PRECEDENT TO EACH ADVANCE. Lender's obligat ion to make the initial Advance and each subsequent Advance under thisAgreement shall be subject to the fulfillment to l.ender's satisfaction of all of the conditions set forth in this Agreement anq in the RelatedDocuments.

Loan Documents. Borrower shall provide to Lender the following documents f.or the Loan: (1) the Note; (2) Security Agreementsgranting to l.ender security interests in the Collateral; (3) financing statements and all other documents perfecting Lender's SecurityInterests; (4) evidence of insurance as required below; (5) guaranties; (61 together with all such Related Documents as lender mayrequire for the Loan; all in form and substance satisfactory to Lender and Lender's counsel.Payment of Fees and Expenses. Borrower shall have paid to Lender all fees, charges, and other expenses which are then due and payableas specified in this Agreement or any Related Document.Representations and Warranties. The representations and warranties set forth in this Agreement, in the Related Documents, and in anydocument or certificate delivered to Lender under this Agreement are true and correct.No Event of Default. Th,ere shall not exist at the time of any Advance a condition which would constitute an Event of Default under thisAgreement or under any Related Document.

REPRESENTATIONS AND WARRANTIES. Borrower represents and warrants to Lender, as of the date of this Agreement; as of the date of eachdisbursement of loan proceeds, as of the date of any renewal, extension or modification of any Loan, and at all times any Indebtedness exists:Business Activities . Joseph P. Keith maintains an office at 1400 N. Dutton Avenue, Suite 24, Santa Rosa, CA 95401. Unless Joseph P.Keith has designated otherwise in writing, the principal office is the office at which Joseph P. Keith keeps its books and records includingits records concern ing the Collateral. Joseph P. Keith will notify Lender prior to any change in the location of Joseph P. Keith's prinCipaloffice address or any change in Joseph P. Keith's name Joseph P. Keith shall do all things necessary to comply with all regulations, rules,ordinances, statutes, orders and decrees of any governmental or quasi-governmental authority or court applicable to Joseph P. Keith andJoseph P. Keith's business activities.Carolyn G. Keith maintains an office at 1400 N. Dutton Avenue. Suite 24, Santa Rosa, CA 95401. Unless Carolyn G. Keith hasdesignated otherwise in writing, the prinCipal office is the office at which Carolyn G. Keith keeps its books and records including its recordsconcerning the Collateral_ Carolyn G. Keith will notify Lender prior to any change in the location of Carolyn G. Keith's principal officeaddress or any change in Carolyn G .Keith's name.. Carolyn G. Keith shall do all things necessary to comply with all regulations, rules,ordinances, statutes, orders and decrees of any governmental or quasi-governmental authority or court applicable to Carolyn G. Keith andCarolyn G. Keith's buSiness activities.Assumed Business Names. Borrower has filed or recorded all documents or filings required by law relating to all assumed business namesused by Borrower. Excluding the name of Borrower, the following is a complete list of all assumed business names under which Borrowerdoes business: None.Authorization. Borrower' s execution, delivery, and performance of this Agreement and all the Related Documents do not confl ict wi th,result in a violation of, or constitute a default under (1) any provision of any agreement or other instrument binding upon Borrower or (2)any law, governmental regulation, court decree, or order applicable to Borrower or to Borrower's properties.Financial Information.. Each of Borrower's financial statements supplied to Lender truly and completely disclosed Borrower's financialcondition as of the date of the statement, and there has been no material adverse change in Borrower's financial condition subsequent tothe date of the most recent financial statement supplied to Lender. Borrower has no material contingent obligations except as disclosed insuch financial statements.Legal Effect. This Agreement constitutes, and any instrument or agreement Borrower is required to give under this Agreement whendelivered will constitute legal, valid, and binding obligations of Borrower enforceable against Borrower in accordance with their respectiveterms.Properties. Except as contemplated by this Agreement or as previously disclosed in Borrower's financial statements or in writing to Lenderand as accepted by Lender, and except for property tax liens for taxes not presently due and payable, Borrower owns and has good title to



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loan No: 9106BUSINESS LOAN AGREEMENT(Continued)

t' .I

Page 2all of Borrower's properties free and clear of all Security Interests, and has not executed any security documents or financing statementsrelating to such properties. All of Borrower's properties are titled in Borrower's legal name, and Borrower has not used or filed a financingstatement under any other name for at least the last five (5) years.Hazardous Substances, Except as disclosed to and acknowledged by Lender in writing , Borrower represents and warrams that: (1) Duringthe period of ~ o r r o w e r ' s 'ownership of the Collateral, there has been no yse, generation, manufacture, storage, treatment, disposal, releaseor ttlreatened release of any Hazardous Substance by any person on, under, about or from any of the Collateral. (2) Borrower has noknowledge of, or reason t'O believe that there has been (a) any breach or violation of any E n v i ~ o n m e n t a l Laws; (b) any use, generation,manufacture, storage, treatment, disposal, release or threatened release of any Hazardous Substance on, under, about or from theCollateral by any prior owners or occupants of any of the Collateral; or (c) any actual or threatened litigation or claims of any kind I?y anyperson relating to such matters. (3) Neither Borrower nor any tenant, contractor, agent or other authorized user of any of the Collateralshall use, generate, manufacture, store, treat, dispose of or release any Hazardous Substance on, under, about or from any of theCollateral; and any such activity shall be conducted in compliance with all applicable federal, state, and local Jaws, regulations, andordinances, including without limitation all Environmental Laws Borrower authorizes Lender and its agents to enter upon the Collateral tomake such inspections and tests as Lender may deem appropriate to determine compliance of the Collateral with this section of theAgreement. Any inspections or tests made by Lender shall be at Borrower's expense and for Lender's purposes only and shall not becQnstrued to create any responsibility or liability on the part of Lender to Borrower or to any other person. The representations andwarranties contained herein are based on Borrower's due diligence in investigating the Collateral for hazardous waste and HazardousSubstances. . .Borrower hereby (1) releases and waives any future claims against Lender for indemnity or contribution in the eventBorrower becomes liable for cleanup or other costs under any such laws, and (2) agrees to indemnify, defend, and hold harmless Lenderagain.st any and all claims, losses, liabilities, damages, penalties, and expenses which Lender may directly or indirectly sustain or sufferresulting fro.m a breach of this section of the Agreement or as a consequence of any use, generation, manufacture, storage, disposal,release or threatened release of a hazardous waste or substance on the Collateral. The provisions of this section of the Agreement,including the obligation to indemnify and defend, shall survive the payment of the Indebtedness and the termination, expiration orsatisfaction of this' Agreement and shall not be affected by lender's acquisition of any interest in any of the Collateral, whether byforeclosure or otherwise .litigation and Claims. No litigation, claim, investigation, administrative proceeding or similar action (including those for unpaid taxes)against Borrower is pending or threatened, and no other event has occurred which may materially adversely affect Borrower's financialcondition or properties, other than litigation, claims, or other events, if any, that have been disclosed to and acknowledged by Lender inwriting.Taxes. To the best of Borrower's knc;>wledge, all of Borrower's tax returns and reports that are or were required to be filed, have beenfiled, and ali'taxes, assessments and other governmental charges have been paid in full, except those presently being or to be contested byBorrower in good faith in the ordinary course of business and for which adequate reserves have been provided.Lien Priority, Unless otherwise previously disclosed to Lender in writing, Borrower has not entered into or granted any SecurityAgreements, or permitted the filing or attachment of any Security Interests on or affecting any of the Collateral directly or indirectlysecuring repayment of Borrower's Loan and Note, that would be prior or that may in any way be superior to Lender's Security Interests andrights in and to such Collateral.Binding Effect. This Agreement, the Note, all Security Agreements (if .any), and all Related Documents are binding upon the signersthereof, as well as upon their' succe'ssors, representatives and assigns, and are legally enforceable in accordance with their respectiveterms.

AFFiRMATIVE COVENANTS, Borrower covenants and agrees with Lender that, so long as this Agreement remains in effect, Borrower will:Notices of Claims and Litigation, Promptly inform Lender in writing of (1) all material adverse changes in Borrower's financial condition,and (2) all existing and all threatened litigation, claims. investigations, administrative proceedings or similar actions affecting Borrower orany Guarantor which could materially affect the financial condition of Borrower or the financial condition of any Guarantor.Financial Records. Maintain its books and records in accordance with GAAP, applied on a consistent basis, and permit Lender to examineand audit Borrower's books and records at all reasonable times.Financial Statements. Furnish Lender with such financial statements and other related information at such frequencies and in such detail asl.ender may reasonably reques tAdditional Information. Furnish such additional information and statements, as Lender may request from time to time.Insurance, Maintain fire and other risk insurance, public liability insurance. and such other insurance as Lender may require with respect toBorrower's properties and operations, in form. amounts, coverages and with insurance companies acceptable to Lender. Borrower, uponrequest of Lender, will deliver to Lender from time to time the policies or certificates of insl:Jrance in form satisfactory to Lender. includingstipulations that coverages will not be cancelled or diminished without at least thirty (30) days prior written notice to Lender, Eachinsurance policy also shall include an endorsement providing that coverage in favor of Lender will not be impaired in any way by any act,omission or default of Borrower or any other person. In connection with all policies covering assets in which Lender holds or is offered asecurity interest for the Loans, Borrower will provide Lender with such lender'S loss payable or other endorsements as Lender may require.Insurance R.eports. Furnish to Lender, upon request of Lender. reports on each existing insurance policy showing such information asLender may reasonably request, including without limitation the following: (1) the name of the insurer; (2) the risks insured; (3) theamount of the policy; (4) the properties insured; (5) the then current property values on the basis of which insurance has been obtained.and the manner of determining those values; and (6) the expiration date of the policy In addition, upon request of Lender (however notmore often than annually). Borrower will have an independent appraiser satisfactory to Lender determine, as applicable, the actual cashvalue or replacement cost of any Collateral. The cost of such appraisal shall be paid by BorrowerGuaranties. Prior to disbursement of any Loan proceeds, furnish executed guaranties of the Loans in favor of Lender, executed by theguarantor named below, on Lender's forms, and in the amount and under the conditions set forth in those guaranties

Name of GuarantorRussell B. Flynn

Amount$ 2. 000,000.00

Other Agreements. Comply with all terms and conditions of all other agreements, whether now or hereafter existing, between Borrowerand any other party and notify Lender immediately in writing of any default in connection with any other such agreements.Loan Proceeds. Use all Loan proceeds solely fo r Bo rrower's business operations, unless specifically consented to the contrary by Lender inwriting,



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Loan No: 91 06BUSINESS LOAN AGREEMENT( Continued) Page 3

Taxes, Charges and Liens. Pay and discharge when due all of its indebtedness and obligations, including without limitation all assessments,taxes, governmental charges, levies and liens, of every kind and nature, imposed upon Borrower or its properties, income, or profits, priorto the date on which penalties' would attach, and all lawful claims that, if unpaid, might become a lien or charge upon any of Borrower'sproperties, income, or profits . Provided however, Borrower wil l not be required to pay and discharge any such assessment, tax, charge,levy, lien or claim so long as (1) the legality of the same shall be contested in good faith by appropriate proceedings, and (2) Borrowershall have established on Borrower's books adequate reserves with respect to such contested assessment, tax, charge, levy, lien, or claimin accordance with GAAP.Performance, Perform and comply, in a timely manner, with all terms, conditions, and provisions set forth in this Agreement, in the RelatedDocuments, and in all other instruments and agreements between Borrower and Lender. Borrower shall notify Lender immediately inwriting of any default in connection with any agreement.Operations, Maintain executive and management personnel with substantially the same qualifications and experience as the presentexecutive and management personnel; provide written notice to Lender of any change in executive and management personnel; conduct itsbusiness affairs in a reasonable and prudent manner.Environmental Studies, Promptly conduct and complete, at Borrower's expense, all such investigations, studies, samplings and testings asmay be requested by Lender or any governmental authority relative to any substance, or any waste or byproduct of any substance definedas tox ic or a hazardous substance under applicable federal, state, or local law, rule, regulation, order or direc tive, at or affecting anyproperty or any facility owned, leased or used by Borrower.Compliance with Governmental Requirements. Comply with all laws, ordinances, and regulations, now or hereafter in effect, of allgovernmental authorities applicable to the conduct of Borrower's properties, businesses and operations, and to the use or occupancy of theCollateral, including without limitation, the Americans With Disabilities Act. Borrower may contest in good faith any such law, ordinance,or regulation and witl1.hold compliance during any proceeding, including appropriate appeals, so long as Borrower has notified Lender inwriting prior to doi[lg so ~ n d so long as, in Lender's sole opinion', Lender'S interests in the Collateral are not jeopardized.. Lender mayrequire Bor rower to post adequate security or a surety bond, reasonably satisfactory to Lender, to protect Lender's interestI n s p ~ . c t i o n , Permit employees or agents of Lender at any reasonable time to inspect any and all Collateral for the Loan or Loans andSorjdWer's o.ther prOPerties ~ n q .tp e x ~ l ' T ) i n e . or qUdlt Sor.rower's books, accovnts, .andrec.orc!s ~ n c j to !Tla.Ke . cQpies C!nd m.emoranda ofBorrower 's books, accounts, and records: If BorrOWer now or at any time hereafter maintains any records (including without limitationcomputer generated records and computer software programs for the generation of such records) in the possession of a third party,Borrower, upon request of Lender, shall noti fy such party to permit Lender free access to such records at all reasonable times and toprovide Lender with copies of any records it may request, all at Borrower's expense,Environmental Comp6ance and Repor., Borrower shall comply in all respects with any and. all Environmental Laws; not cause or permit toexist, as a result of an intentional or unintentional action or omission on Borrower's part or on the part of any third party, on propertyowned and/or occupied by Borrower, any environmental activity where damage may result to the environment, unless such environmentalactivity is pursuant to and in compliance with the conditions of a permit issued by the appropriate federal, state or local governmentalauthorities; shall furnish to lender promptly and in any event within thirty (30) days after receipt thereof a copy of any notice, summons,lien, citation, directive, letter or other communication ft'om any governmental agency or instrumentality concerning any intentional orunintentional action or omission on Borrower's part in connection with any environmental activity whether or not there is damage to theenvironment and/or other natural resources.Additional Assurances. Make, execute and deliver to Lender such promissory notes, mortgages, deeds of trust, security agreements,assignments, financing statements, instruments, documents and other agreements as Lender or its. attorneys may reasonably request toevidence and secure the loans and to perfect all Security Interests.

l..ENDER'S EXPENDITURES, If any action or proceeding is commenced that would materially affect Lender's interest in the Collateral or ifBorrower fails to comply with any provision of this Agreement or any Related Documents, including but not limited to Borrower's failure todischarge or pay when due any amounts Borrower is required to discharge or pay under this Agreement or any Related Documents, Lender onBorrower's behalf may (but shall not be obligated to) take any action that Lender deems appropriate, including but not limited to discharging orpaying all taxes, liens, security interests, encumbrances and other claims, at any time levied or placed on any Collateral and paying all costs forinsuring, maintaining and preserving any Collateral. AI such expenditures incurred or paid by Lender for such purposes will then bear interest atthe rate charged under the Note from the date incurred or paid by L.ender to the date of repayment by Borrower. All such expenses wil l becomea part of the Indebtedness and, at Lender's option, will (A) be payable on demand; (B) be added to the balance of the Note. and beapportioned among and be payable with any installment payments to become due during either (1) the term of any applicable insurance 'policy;or (2) the remaining term of the Note; or (e) be treated as a balloon payment which will be due and payable at the Note's maturity,NEGATIVE COVENANTS, Borrower covenants and agrees with Lender that while this Agreement is in effect, Borrower shall not, without theprior written consent of L.ender:

Indebtedness and Liens. (1) Except for trade debt incurred in the normal course of business and indebtedness to Lender contemplated bythis Agreement, create, incur or assume indebtedness for borrowed money, including capital leases, (2) sell, transfer, mortgage, assign,pledge, . ease, grant a security interest in, or encumber any of Borrower's assets (except as allowed as Permitted Liens), or (3) sell withrecourse any of Borrower's accounts, except to LenderContinuity of Operations. (1) Engage in any business activities substantially different than those in which Borrower is presently engaged,or (2) cease operations, liquidate, merge, transfer, acquire or consolidate with any other entity, change ownership, dissolve or transfer orsell Collateral out of the ordinary course of business.Loans, Acquisitions and Guaranties. (1) Loan, invest in or advance money or assets to any other person, enterprise or entity, (2)purchase, create or acquire any interest in any other enterprise or entity, or (3) incur any obligation as surety or guarantor other than inthe ordinary course of business.Agreements. Enter into any agreement containing any provisions which would be violated or breached by the performance of Borrower'sobligations under this Agreement or in connection herewith.

CESSATION OF ADVANCES . If Lender has made any commitment to make any Loan to Borrower, whether under this Agreement or under anyother agreement, Lender shall have no obligation to make Loan Advances or to disburse Loan proceeds if: (A) Borrower or any Guarantor is indefault under the terms of this Agreement or any of the Related Documents or any other agreement that Borrower or any Guarantor has withLender; (B) Borrower or any Guarantor dies, becomes incompetent or becomes insolvent, files a petition in bankruptcy or similar proceedings,or is adjudged a bankrupt; (C) there occurs a material adverse change in Borrower's financial condition, in the financial condition of anyGuarantor, or in the value of any Collateral securing any Loan; or (D) any Guarantor seeks, claims or otherwise attempts to limit, modify orrevoke such Guarantor's guaranty of the Loan or any other loan with Lender; or (E) Lender in good faith deems itself insecure, even though no



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i,BUSINESS LOAN AGREEMENTLoan No 9106 . (Continued) Page 4

Event of Default shall have occurred.RIGHT OF SETOFF. To the extent permitted by applicable law, Lender reserves a right of setoff in all Borrower's accounts with Lender (whetherchec!:

Payment Default. Borrower fails to make any payment when due under the Loan.Other Defaults. Borrower fails to comply with or to perform any other term, obligation, covenant or condition contained in this Agreementor in any of the .Related Documents or to comply with or to perform any term, obligation, covenant or condition contained in any otheragreement between Lender and Borrower .Default in Favor of Third Parties, Borrower or any Grantor defaults under any loan, extension of credit, s'ecurity agreement, purchase orsales agreement, or any other agreement, in favor of any other creditor or person that may materially affect any of Borrower's or anyGrantor's property or Borrower's or any Grantor's ability to repay the Loans or perform their respective obligations under this Agreement orany of the Related Documents.False Statements . Any warranty, representation or statement made or furnished to Lender by Borrower or on Borrower's behalf under thisAgreement or the Related Documents is .false or misleading in any material respect, either now or at the time made or furnished or becomesfalse or misleading at any time thereafter.Death or Insolvency. The death of Borrower or the dissolution or termination of Borrower's existence as a going business, the insolvencyof B'orrower', thE) appointment of a receiver for any part of Borrower's property, any assignment for the benefit of creditors, any type ofcreditor workout, or the commencement of any proceeding under any bankruptcy or insolvency laws by or against Borrower,Defective C o l I ~ t e r a l i z a t i o " . This Agreement or any of the Related Documents ceal!es to be in full force and effect (including failure of anycollateral docurrent to. ~ r e a i : e a valid and perfected security interest or lien) at any time and for any reason. 'Creditor or Forfeiture Proceedings. Commencement of foreclosure or forfeiture proceedings, whether by judicial proceeding, self-help,repossession or any other method i by any creditor of Borrower or by any governmental agency against any collateral securing the Loan.This includes a garnishment of any of Borrower's accounts, including deposit accounts, with Lender,. However, this Event of Default shallnot apply if there is a good faith dispute by Borrower as to the validity or reasonablE!ness of the claim which is the ba.sis of the creditor orforfeiture proceeding and if Borrower gives Lender written notice of the creditor or forfeiture proceeding arid deposits with Lender monies ora surety bond for the creditor or forfeiture proceeding, in an amount determined by Lender, in its sole discretion, as being an adequatereserve or bond for the dispute.Events Affecting Guarantor. Any of the preceding events occurs with respect to any Guarantor of any of the Indebtedness or anyGuarantor dies or becomes incompetent, or revokes or disputes the validity of, or liability under, any Guaranty of the IndebtednessAdverse Change.. A material adverse change occurs in Borrower's financial condition, or Lender believes the prospect of payment orperformance of the Loan is impaired,.Insecurity. Lender in good faith believes it self insecureRight to Cure. If any default, other than a default on Indebtedness, is curable and if Borrower or Grantor, as the case may be, has not beengiven a notice of a similar default within the preceding twelve (12) months, it may be cured if Borrower or Grantor, as the case may be,after Lender sends w r i t ~ e n notice to Borrower or Grantor, as the case may be, demanding cure of such default: (1) cure the default withinten (10) days; or (2) if the cure requires more than ten (10) days, immediately initiate steps which Lender deems in Lender's solediscretion to be sufficient to cure the default and thereafter continue and complete all reasonable and necessary steps sufficient to producecompliance as soon as reasonably practical,

EFFECT OF AN EVENT OF DEFAULT. If any Event of Default shall occur, except where otherWise provided in this Agreement or the RelatedDocuments, all commitments and obligations of Lender under this Agreement or the Related Documents or any other agreement immediately willterminate (including any obligation to make further L.oan Advances or disbursements), and, at Lender's option, all Indebtedness immediately willbecome due and payable, .all without notice of any kind to Borrower, except that in the case of an Event of Default of the type described in the"Insolvency" subsection above, such acceleration shall be automatic and not optional. In addition, L.ender shall have all the rights and remediesprovided in the Related Documents or available at law, in equity, or otherwise. Except as may be prohibited by applicable law, all of Lender'srights and remedies shall be cumulative and may be exercised singularly or cpncurrently . Election by Lender to pursue any remedy shall notexclude pursuit of any other remedy, and an election to make expenditures or to take action to perform an obligation of Borrower or of anyGrantor shall not affect Len?er's right to declare a default and to exercise its rights and remedies.DAMAGE OR DESTRUCTION OF IMPROVEMENTS. If the Improvements or any part t ~ e r e o f are damaged or destroyed by natural disaster, fire,or by other means, Borrower shall prompt ly restore the Improvements to their prior condition. l.ender shall not be obligated to make any furtherdisbursements of Loan proceeds until such restoration is completed to Lender's satisfaction. Any insurance proceeds by reason of such damageor destruction that are received by Lender win be available to Borrower upon presentation of bills covering any labor and material used inrestoration provided, in Lender's sole opinion, that sufficient funds are available to complete that restoration.EXH,BIT A - FINANCIAL COVENANTS. An exhibit , titled "Exhibit A . Financial Covenants," is attached to this Agreement and by this referenceis made a part of this Agreement just as if all the provisions, terms and conditions of the Exhibit had been fully set forth in this Agreement.MISCELLANEOUS PROVISIONS. The fol lowing miscellaneous provisions are is part of this Agreement:

Amendments . This Agreement, together with any Related Documents, constitutes the entire understanding and agreement of the partiesas to the matters set forth in this Agreement. No alteration of or amendment to this Agreement shall be effective unless given in writingand signed by the party or parties sought to be charged or bound by the alteration or amendment.Arbit ration. Lender and Borrower agree that all disputes, claims and controversies between them whether individual, joint, or class innature, arising from this Agreement or otherwise, including without limitation contract and tort disputes. shall be arbitrated pursuant to thefinancial services rules of Endispute, Inc., cllb/a J.A.M.S./ENDISPU'TE or its successor in effect at the time the claim is filed, upon requestof either party. No act to take or dispose of any Collateral shall constitute a waiver of this arbitration agreement or be prohibited by thisarbitration agree!l1ent. this includes, without limitation, obtaining injunctive relief or a temporary restraining order; invoking a power of saleunder any deed of trust or mortgage; obtaining a writ of attachment or imposition of a receiver; or. exercising any rights relating to personalproperty, includirig taking or dispOSing of such property with or without judicial process pursuant Article 9 of the Uniform Commercial Code.,



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(Loan No: ' 9106

/ 'l,BUSINESS LOAN AGREEMENT( Continued) Page 5

Any disputes, claims; or controversies concerning the lawfulness or reasonableness of any act, or exercise of any right, concerning anyCollateral, including any claim to rescind, reform, or otherwise modify any agreement relating to the Collateral, shall also be arbitrated,provided however that no arbitrator shan have the right or the power to enjoin or restrain any act of any party. B o r r o w e ~ and Lender agreethat in the event of an action for judicial foreclosure pursuant to California Code of Civil Procedure Section 726, or any similar provision inany other state. the commencement of such an action will no t constitute a waiver of the right to arbitrate and the court shall refer toarbitration as much of such action, Including counterclaims, as lawfully may be referred to arbitration. Judgment upon any award renderedby any arbitrator may be entered in any court having jurisdiction. Nothing in this Agreement shall preclude any party from seeking equitablerelief from a court of competent jurisdiction. The statute of limitations, estoppel, waiver, laches, and similar doctrines which wouldotherwise be applicable in an action brought by a party shall be applicable in any arbitration proceeding, and the commencement of anarbitration proceeding shall be deemed the commencement of an action for these purposes. The Federal Arbitration Ac t shall apply to theconstruction. interpretation, and enforcement of this arbitration provision.Attorneys' Fees: Expenses. Borrower agrees to pay upon demand all of Lender's costs and expenses. including Lender's attorneys' feesand L.ender's legal expenses, incurred in connection with the enforcement of this Agreement Lender may hire or pay someone else to helpenforce this Agreement, and Borrower shall pay the costs and expenses of such enforcement. Costs and expenses include L.ender'sattorneys' fees and legal expenses whether or no t there is a lawsuit, including attorneys' fees and legal expenses for bankruptcyproceedings (including efforts to modify or vacate any automatic stay or injunction). appeals, and any anticipated post-judgment collectionservice.s. Borrower also shall pay all court costs and such additional fees as may be directed by the courtCaption Headings. Caption headings in this Agreement are for convenience purposes only and are not to be used to interpret or define theprovisions of this Agreement.Consent to loan Participation. Borrower agrees and consents to Lender's sale or transfer. whether now or later, of one or moreparticipation interests in the Loan to one or more purchasers, whether related or unrelated to L.ender. Lender may provide. without anylimitation whatsoever. to anyone or more purchasers, or potential purchasers, any information or knowledge Lender may have aboutBorrower or about any other matter relating to the Loan, and Borrower hereby waives any rights to privacy Borrower may have with respectto such matters Borrower additionally waives any and all notices of sale of participation interests, as well as all notices of any repurchaseof such participation interests. Borrower also agrees that the purchasers of any such participation interests will be considered as theabsolute owners of such interests in the Loan and will have all the rights granted under the participation agreement or agreementsgoverning the sale of such participation interests, Borrower further waives all rights of offset or counterclaim that it may have now or lateragainst L.ender or againSt any purchaser of such a participation interest and unconditionally agrees that either Lender or such purchaser mayenforce Borrower's obligation under the Loan irrespective of the failure or insolvency of any holder of any interest in the Loan. Borrowerfurther agrees that the purchaser of any such participation interests may enforce its interests irrespective of any personal claims ordefenses that Borrower may have against Lender,Governing Law. This Agreement will be governed by federal law applicable to L.ender and, to the extent no t preempted by federal law. thelaws of the State of California without regard to its conflicts of law provisions. This Agreement has been accepted by Lender in the Stateof California.Choice of Venue. If there is a lawsuit, Borrower agrees upon Lender's request to submit to the jurisdiction of the courts of SonomaCounty, State of California, .Joint and Several Liabil ity. All obligations of Borrower under this Agreement shall be joint and several, and all references to Borrower shallmean each and every Borrower. This means that each Borrower signing below is responsible for all obligations in ~ h i s AgreementNo Waiver by Lender. L.ender shall not be deemed to have waived any rights under this Agreement unless such waiver is given in writingand signed by Lender.. No delay or omission on the part of Lender in exercising any right shall operate as a waiver of such right or anyo ~ h e r right A waiver by .Lender of a provision of this Agr'eement shall no t prejudice or constitute a waiver of Lender'S right otherwise todemand strict compliance with that provision or any other provision of this Agreement, No prior waiver by Lender, nor any course ofdealing between Lender and Borrower, or between Lender and any Grantor, shall constitute a waiver of any of Lender's rights or of any ofBorrower's or any Grantor's obligations as to any future transactions. Whenever the consent of Lender is required under this Agreement,the granting of such consent by Lender in any instance shall not constitute continuing consent to subsequent instances where such consentis required and in all cases such consent may be granted or withheld in the sole discretion of L.enderNotices . Any notice required to be given under this Agreement shall be given in writing, and shall be effective when actually delivered,when actually received by telefacsimile (unless otherwise required by law), when deposited with a nationally recognized overnight courier,or, if mailed, when deposited in the United States mail, as first class, certif ied or registered mail postage prepaid, directed to the addressesshown near the beginning of this Agreement Any party may change its address for notices under this Agreement by giving formal writtennotice to the other parties, specifying that the purpose of the notice is to change the party' s address" For notice purposes, Borroweragrees to keep Lender informed at all times of Borrower 's current address, Unless otherwise provided or required by law, if there is morethan one Borrower, any notice given by Lender to any Borrower is deemed to be notice given to all Borrowers,SeverabiUty. If a court of competent jurisdiction finds any provision of this Agreement to be illegal, invalid, or unenforceable as to anyperson or circumstance, that finding shall no t make the offending provision illegal, invalid, or unenforceable as to any other person orcircumstance If feasible, the offending provision shall be considered modified so that it becomes legal, valid and enforceable. If theoffending provision cannot be sci modified, it shall be considered deleted from this Agreement Unless otherwise required by law, theillegality, invalidity, or unenforceability of any provision of this Agreement shall not affect the legality, validity or enforceability of any otherprovision of this Agreement .Successors and Assigns. All covenants and agreements by or on behalf of Borrower contained in this Agreement or any RelatedDocuments shall bind Borrower's successors and assigns and shall inure to the benefit of Lender and its successors and assigns Borrowershall not, however, have the right to assign Borrower's rights under this Agreement or any interest therein, without the prior writtenconsent of LenderSurvival of Representations and Warranties.. Borrower understands and agrees that in making the L.oan, Lender is relying on allrepresentations, warranties, and covenants made by Borrower in this Agreement or in any certificate or other instrument delivered byBorrower to Lender under this Agreement or the Related Documents" Borrower fur ther agrees that regardless of any investigation made byLender, all such representations, warranties and covenants will survive the making of the Loan and delivery to Lender of the RelatedDocuments, shall be continuing in nature, and shall remain in full force and effect until such time as Borrower's Indebtedness shall be paidin full, or until this Agreement shall be terminated in the manner provided above, whichever is the last to occur,Time is of the Essence. Time is of the essence in the performance of this AgreementWaive Jury. To the extent permitted by applicable law. all parties to this Agreement hereby waive the right to any jury trial in any action,proceeding, or counterclaim brought by any party against any other party,Case 11-12535 Claim 6 Filed 10/18/11 Desc Main Document Page 12 of 31


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(Loan No: 91 06 BUSINESS LOAN AGREEMENT(Continued)

,.

Page 6DEFINITIONS.. The following capitalized words and terms shall have the following meanings when used in this Agreement. Unless specificallystated to the contrary, all references to dollar amountsshall mean amounts in lawful money of the United States of America. Words and termsusedin the singular shall'include the plural, and the plural shall include the singular, as the context may require. Words and terms not otherwisedefined in this Agreement shall have the meanings attributed to such terms in the Uniform Commercial Code. Accounting words and terms nototherwise defined in this Agreement shall have the meanings assigned to them in accordance with generally accepted accounting principles as ineffect on 'the date of this Agreement:

Advance. The wor d "Advance" means a disbursement of Loan funds made, or to be made, to Borrower or on Borrower's behalf on a lineo'f credit or multiple a ~ v a n c e basis urider the terms and conditions of this Agreement.Agreem.ent. The word" Agreement" means this Business L.oan Agreement, as this Business Loan Agreement may be amended or modifiedfrom time to time, together with all exhibits and schedules attached to this Business Loan Agreement from time to time.Borrower. The word "Borrower" means Joseph P. Keith and Carolyn G. Keith and includes all cO"signers and comakers signing the Noteand all their successors and assigns.Collateral. The word "Collateral" means all property and assets granted as collateral security for a Loan, whether real or personal property,whetper granted directly or indirectly, whether granted now or in the future, and whether granted in the form of a security interest,m'ortgage, collateral mortgage, deed of trust, assignment, pledge, crop pledge, chattel mortgage, collateral chattel mortgage, chattel trust,factor's lien, equipment trust, conditional sale, trust receipt, lien, charge, lien or title retention contract, lease or consignment intended as asecurity device, or any other secu rity or lien interest whatsoever, whether created by law, contract, or otherwise.Environmental Laws. The words "Environmental Laws" mean any and all state, federal and local statutes, regulations and ordinancesrelating to the protection of human health or the environment, including without limitation the Comprehensive Environmental Response,Compensation, and Liability Act of 1980, as amended, 42 U.SC Section 9601, et seq. ("CERCLA"), the Superfund Amendments andReauthorization Act of 1986, Pub. L. No. 99-499 ("SARA'), the Hazardous Materials Transportation Act, 49 U.S.C. Section 1801, et seq . ,the Resource Conservation and Recovery Act, 42 U.S C Section 6901, et seq., Chapters 6 5 through 7.7 of Division 20 of the CaliforniaHealth and Safety Code, Section 25100, et seq., or other applicable state or federal laws, rules, or regulations adopted pursuant thereto.Event of Default. The words "Event of Default" mean any of the events of default set forth in this Agreement in the default section of thisAgreemerit.GAAP. The word "GAAP" means generally accepted accounting principles.Grantor. 'The word "Grantor" means each and all of the persons or entities granting a Security Interest in any Collateral for the Loan,including without limitation all Borrowers granting such a Security InterestGuarantor. The word "Guarantor" means any guarantor, surety, or accommodation party of any or all of the Loan.Guaranty. The word "Guaranty" means the guaranty from Guarantor to Lender, including without limitation a guaranty of all or part of theNote.Hazardous Substances. The words "H azardous Substances" mean materials that , because of their quantity, concentration or physical,chemical or infectious characteristics, may cause or pose a present or potential hazard to human health or the environment whenimproperly used, treated, stored, disposed of, generated, manufactured, transported or otherwise handled. The words "HazardousSubstances" are used in their very broadest sense and include without limitation any and all hazardous or toxic substances, materials orwaste as defined by or listed under the Environmental Laws. The term"Hazardous Substances" also includes, without limitation, petroleumand petroleum by-products or any fraction thereof and asbestos.Indebtedness. The word "Indebtedness" means the indebtedness evidenced by the Note or Related Documents, including all principal andinterest together with all other indebtedness and costs and expenses for which Borrower is responsible under this Agreement or under anyof the Related Documentsl.ender. The word "Lender" means First Community Bank, its successors and assignsLoan. The word "Loan" means any and all loans and financial accommodations from Lender to Borrower whether now or hereafterexisting, and however evidenced, including without limitation those loans and financial accommodations described herein or described onany exhibit or schedule attached to this Agreement from time to time.Note. The word "Note" means the Note executed by Joseph P. Keith and Carolyn G. Keith in the principal amount of $2,000,000.00 datedMarch 22, 2010, together with all renewals of, extensions of, modifications of, refinancings of, consolidations of, and substitutions for thenote or credit agreement.Permitted Liens. The words "Permitted Liens" mean (1) liens and security interests securing Indebtedness owed by Borrower to L.ender;(2) liens for taxes, assessments, or similar charges either not yet due or being contested in good faith; (3) liens of materialmen,mechanics, warehousemen, or carriers, or other like liens arising in the ordinary course of business and securing obligations which are notyet delinquent; (4) purchase money liens or purchase money security interests upon or in any property acquired or held by Borrower in theordinary course of business to secure indebtedness outstanding on the date of this Agreement or permitted to be incurred under theparagraph of this Agreement titled "Indebtedness and Liens"; (5) liens and security interests which, as of the date of this Agreement,have been disclosed to and approved by the l.ender in writing; and (6) those liens and security interests which in the aggregate constitutean immaterial and insignificant monetary amount with respect to the net value of Borrower's assetsRelated Documents. The words "Related Documents' mean all promissory notes, credit agreements, loan agreements, environmentalagreements, guaranties, security agreements, mortgages, deeds of trust, security deeds, collateral mortgages, and all other instruments,agreements and documents, whether now or hereafter existing, executed in connection with the Loan.Security Agreement. The words ."Security Agreement" mean and include without limitation any agreements, promises, covenants,arrangements, understandings or other agreements, whether created by law, contract, or otherwise, evidencing, governing, representing, orc r e a t i n ~ a Security InterestSecurity Interest. The words "Security Interest" mean, without limitation, any and all types of collateral security, present and future,whether in the form of a lien, charge, encumbrance, mortgage, deed of trust, security deed, assignment, pledge, crop pledge, chattelmortgage, collateral chattel mortgage, chattel trust, factor's lien, equipment trust, conditional sale, trust receipt, lien or title retentioncontract, lease or consignment intended as a security device, or any other security or lien interest whatsoever whether created by law,contract, or otherwise.



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("Loan No: 91 06 BUSINESS LOAN AGREEMENT(Continued) Page7

BORROWER ACKNOWLEDGES HAVING READ ALL THE PROVISIONS OF THIS BUSINESS LOAN AGREEMENT AND BORROWER AGREES TOITS TERMS. THIS BUSINESS LOAN AGREEMENT IS DATED MARCH 22. 2010.BORROWER:

FIRST COMMUNITY BANK

B y , ~ ! t ~ - - . - - -



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(, (EXHIBIT A FINANCIAL COVENANTS

Borrower: Joseph P. Keith, Carolyn G. Keith and Russel B.Flynn1400 N. Dutton Avenue, Suite 24Santa Rosa, CA 95401

Lender: First Community BankSanta Rosa Main Office438 First StreetSanta Rosa, CA 95401This EXHIBIT A FINANCIAL COVENANTS is attached to and by this reference is made a part of the Busines's Loan Agreement, dated March22, 2010, and executed in connection with a loan or other financial accommodations between FIRST COMMUNITY BANK and Joseph P. Keith,Carolyn G. Keith and Russell B. Flynn.BORROWER AGREES 'TO PROVIDE:ANNUALAnnual Property Operating Statement and Rent Roll: On or before March 31 st, Borrower shall provide Lender with an updated propertyoperating statement and rent roll. The information shall be in form and SUbstance satisfactory to Lender:GUARANTORAnnual .Financial Stat.ement and Tax Return: Immediately upon filing or before October 20th, Gurantor shall provide Lender with an updatedpersonal financial statement on Lender form and a complete copy of Guarantor's current year Federal Income Tax return and supportingschedules as requested by Lender. The information shall be in form and substance satisfactory to LenderBORROWER FURTHER COVENANTS AND AGREES, at all times while the loan is In place, and in accordance with generally accepted accountingprin.ciple.s conSistently ,!pplled, to:Borrower agrees to provide copies of leases within 30 days of execution.COUNTERPARTS. This Agreement may be exe.cuted In tw o or more counterparts, each of which shall be deemed an original, but all of which,collectively, shall constitute one and the same instrument..Tj.ns EXHIBIT A . ANANCIAL COVENANTS IS EXECUTED ON MARCH 22, 2010.BORROWER:

X Russell B. Flynn, GuarantorLENDER:



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.. -- ..__ ..-..........__ . _ ..-.. _ .._- .._....._ ._ - - - - -

( cEXHIBIT A - FINANCIAL COVENANTS

Borrower: Joseph P. Keith, Carolyn G" Keith and Russell B.Flynn1400 N. Dutton Avenue, Suite 24Santa Rosa, CA 95401Lender: Firs t Community BankSanta Rosa Main Office

438 Fl'st StreetSanta Rosa, CA 95401

This EXHIBIT A FINANCIAL COVENANTS is attached to and by this reference is made a part of the Business Loan Agreement, dated March22, 2 010, and executed in connection with a loan or other financial accommodations between FIRST COMMUNITY BANK and Joseph P. Keith,Carolyn G. Keith and RusseU B. Flynn.BORROWER AGREES TO PROVIDE:ANNUALAnnual Property Operating Statement and Rent Roll: On or before March 31 st , Borrower shall provide L.ender with an updated propertyoperating statement and rent roU. The information shall be in form and subs ance satisfactory to Lender;GUARANTORAnnual Financial S t a t ~ m e n t and Tax Return: Immediately upon filing or before October 20th, Gurantor shall provide Lender with an updatedpersonal financial statement on Lender form and a complete copy of Guarantor's current year Federal ,Income Tax return and supportingschedules as requested by Lender. The information shall be in form and subs ance satisfactory to LenderBORROWER FURTHER COVENANTS AND AGREES, at all times while the loan is in place, and in accordance with generally accepted accountingprin.ciple.s i:9nsistently a p p l i e ~ , to:Borrower agrees to provide copies of eases within 30 days of execu ion.COUNTERPARTS. This Agreement may be executed In tw o or mol'e counterpar s, each of which shan be deemed an Original, but all of which,collectively, shall cons itute one and the same instrument.THIS EXHIBIT A - FINANCIAL COVENANTS IS EXECUTED ON MARCH 22, 2010.BORROWER:

X' J ~ o s ~ e ~ p ~ h ~ P ~ . " K ~ e ~ i t h ~ - - - - - - - - - - - - - - - - - - - - - - - - - - -

X carolyn G ~ e i t h .-----.-.----.-...----- ...- . - - . - . - - - - -

LENDER:

FIRST COMMUNrry BANK

By: ~ A ~ u ~ t h ~ o - n z ~ ~ e ~ d ~ S ~ i g ~ n ~ e ~ r - - - - - - - - - - - - - - - - - - - - - - - - -



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( \,ADDENDUM TO LOAN DOCUMENTS

This Addendum ("Addendum"), dated as of _"3/'51 I 2010, modifies andamends the Loan Documents (as defined below) that e v i d e ~ comprise the$2,000,000 loan (the "Loan") of First Community Bank (,'Lender") to Joseph P. Keithand Carolyn G. Keith ("Borrower").

The "Loan Documents" are comprised of (1) a PromissoryNote, a Business LoanAgreement, Trust Certificates, a Notice ofInsurance Requirements, a Hazard InsuranceDisclosure, a Disbursement Request and Authorization, an Agreement to ProvideInsurance and other related documents executed by BorTower on even date herewith inconnection with the Loan; (2) a Commercial Guaranty executed by Russell B. Flynn("Guarantor") on even date herewith guarantying the Loan; and (3) a Deed ofTrustsecuring the Loan with real property pledged by trustors Joseph P. Keith and Carolyn G.Keith, as trustees of the Jospeh P. Keith and Carolyn G. Keith Trust, and by trustorRussell B. Flynn, as trustee of he Russell B. Flynn Trust dated November 20, 1987("Trustors").The Lender, Borrower, Trustors and Guarantor hereby agree that Lender shallhave no right to declare a non-monetary event of default under the Loan Documents dueto the insolvency of the Borrower, or, due to the Borrower's breach of a "Negative

.. Covenant," as defined in the Business Loan Agreement.The terms of this Addendum amend and replace any conflicting provisions in theLoan Documents.

First Community Bank.By: ~ Z , i J = __Name: - t ~ ~ K. ~ t - Title:.= - ~ . r ; / e , v r Russell B .Flynn

Russell B. Flynn, trustee of the RussellRussell B. Flynn Trust dated November 20,1987

{00093958DOC;vl}

Joseph P. KeithL(J:tC2 -'.c . < ~ Joseph . Keith, trustee of the JosephP. Keith and Carolyn G.Keith Trust

cf:::fl G. K ~ i t h , trustee Ofth. -Joseph P. Keith and Carolyn G.



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. /(\

ADDENDUM TO LOAN DOCUMENTSThis Addendum ("Addendum''), dated as of J hI, 010, modifies andamends the Loan Documents (as defmed below) that evidence and comprise the$2,000,000 loan (the "Loan'') of First Community Bank (''Lender'') to Joseph P. Keithand Carolyn G. Keith ("Borrower").The "Loan Documents" are comprised of (1) a Promissory Note, a Business LoanAgreement, Trus t Certifi.cates, aNotice of Insurance Requirements, a Hazard InsuranceDisclosure, a Disbursement Request and Authorization, an Agreement to ProvideInsurance and other related documents executed by Borrower on even date herewith inconnection with the Loan; (2) a Commercial Guaranty executed by Russell B. Flynn("Guarantor") on even date herewith guarantying the Loan; and (3) a Deed ofTrustsecuring the Loan with real property pledged by trustors Joseph P. Keith and Carolyn G.

Keith, as trustees of the Jospeh P. Keith and Carolyn G. Keith Trust, and by trustorRussell B. Flynn, as trustee of he Russell B. Flynn Trust dated November 20, 1987(''Trustors'').The Lender, Borrower, Trustors and Guarantor hereby agree that Lender shallhave no right to declare a non-monetary event ofdefault under the Loan Documents dueto the insolvency of the Borrower, or, due to the Borrower's breach of a "NegativeCovenant," as defined in the Business Loan Agreement.The terms of his Addendum amend and replace any conflicting provisions in theLoan Documents.

First Community Bank Joseph P. KeithBy: ______ ~ - - ~ - - - - - - - -Name: --------------------Title: __ _

{00093958.DOC;vl}

Carolyn G. Keith

Joseph P. Keith, trustee of the JosephP. Keith and Carolyn G. Keith Trust

C.arolyn G. Keith, trustee oftheJoseph P. K.eith and Carolyn G.z._-:::"""'__ ....:K:.::;::eith Trust



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20010181224RECORDATION REQUESTED BY:

OFFICIAL RECORDS OFSONOMA COUNTY

NORTH AMERICAN TITLE CO. JANICE ATKINSON02/16/2007 14:02 TRD 'First Community BankSanta Rosa Main Office438 Arst Street RECORDING FEE: 13 PGS43,,00Santa Rosa, CA 95401 PAID

WHEN RECORDED MAi l TO:First Community Bank438 First StreetSanta Rosa, CA 95401, SEND TAX NOTICES TO:Joseph P. Keith and Carolyn G. Keith. Trustees of TheJoseph P. Keith and Carolyn G. Keith Trust under theprovisions of a trust agreement dated April 17. 1991Russell B. Flynn, Trustee of Russell B. Flynn Trus t 'Dated NOvember 20, 1987 under the provisions of atrust agreement dated November 20.198']4450 Grange RoadSimtaRosa, CA 95404

DEED OF TRUStVariable Interest Rate

Revolving line of Credit

,__ ,...__ _ __ _ FOR RECORDER'S USE ONLY

THIS DEED OF TRUST is dated February 14,2007, among Joseph P. Keith and Carolyn G. Keith, Trustees ofThe Joseph P. Keith and Carolyn G. Keith Trust c i a t ~ d April 17, 1991. as to an undivided 50% interest andRussell B ~ F l y n n , Trustee of the Russell B. Flynn Trust Dated l\Iovember 20, 1987, amended July 6, 1 S90,February 29,1992, August 25,1994, May 14, 1996, November 25, 1996, June 24, 1997 ~ n d November 23,1998,' as to an undivided 50% interest, whose address is 4450 Grange Road; Santa Rosa; CA 95404("Trustor"); First Community Bank, whose address is Santa Rosa Main Office, 43 8 First Street, SantaRosa, CA95401 (referred to below sometimes as "lender" and sometimes as "BenefiCiary"); imd North American TitleCompany, whose address is 2755 Mendocino Avenue, Santa Rosa, CA 95403 (referred to ,below as"Trustee").CONVEYANCE ~ N D GRANT'. For valuabl!l consideration, Trustor irrevocably grants, tral1sfers al]d assigns to Trustee, in trust, with powerof sale, for the benefit of Lender as Beneficiary, all of Trustor's right, title, and interest, in and to the following, d e s c r i ~ d real property.together with all existirig or subseq'uently erected qr affixed buildings. improvements and fixtures; all easements'; rights of way, andappurtenances; all water. water rights and ditch rights (including stock jn utilities with ditch or irrigation'rights); and all other tights.royalties. arid profits reJating to the real property. iricluding without limitation all minerals, oil. gas, geothermal and similar matters, (the"Real Property") located in Sonoma County, State of C ~ l i f o r n i a : '

See Exhibit A, which is attached to this Deed of Trust and made a part of this Deed of Trust as if fully setforth herein.

The Real Property or its address is commonly known as 501 5th Street, Santa Rosa, CA 95401. TheAssessor's Parcel Number for the Real Property is 010-045-005.REVOLVING LINE OF CREDIT. This Deed of Trust secures the Indebtedness including, without limitation; a revolving line of credit, whichobligates Lender to make advances to Borrower so long as Borrower complies with all the terms of the Note. Notwithstanding the amountoutstanding at any particular time, this Deea of Trust secures the total amount of the Note. The unpaid balance of the revolving line ofcredit under the Note may at certa in times be Zero Dollars ($0.00). A zero balance does not affect Lender's agreement to make advancesto Borrower under the, Note. Therefore, Lender's interest under this Deed of Trust will remain in ftlll forclI and effect notwithstanding azero balance on the Note.Trustor presently assigns to Lender (also known as Beneficiary n this Deed of Trust) all of Trustor"s right, title. and interest in and to allpresent and future leases of the Property and all Rents from the Property; This is an absolute assigiunent of Rents made in connectionwith an obligation secured by real property pursuant to California Civil Code Section 2938, 'I n addition, Trustor grants to Lender a UniformComm'erclal Code security i r i t e r ~ s t n the Personal Property and Rents, 'THIS DEED OF TRUST', INCLUDING THE ASSIGNMENT OF RENTS AND THE SECURITY INTEREST' IN THE RENTS AND PERSONALPROPERTY, IS GIVEN TO SECURE IA) PAYMENT OF THE INDEBTEDNESS AND IB) PERFORMANCE OF ANY AND ALL OBLIGATIONSUNDER THE NOTE, THE RELATED DOCUMENTS, AND THIS DEED OF TRUST. THIS DEED OF TRU'ST IS GIVEN AND ACCEPTED ON THEFOLLOWING TERMS: 'TRUSTOR'S REPRESENTATIONS AND ,WARRANTIES. Trustor warrants that: (a) this Deed of Trust is executed at Borrower's request andnot at the request of Lender; (b) Trustor has the fun power, right, and authority to enter into this Deed of Trust and to hypothecate theProperty; (c) the ,provisions of this Deed of Trust do not conflict witA. or result n a default under any agreement or other instrument



20/31

I"

Loan No 0303 DEED OF TRUST(Continued) Page 2binding upon Trustor and do not result in a violation of any law, regulation, court decree or order applicable to Trustor; (dl Trustor hasestablished adequate means of obtaining from Borrower on a continuing basis information about Borrower's financial condition; and (e)Lender has made no representation to Trustor about Borrower (including without limitation the creditworthiness of Borrower).TRUSTOR'S WAIVERS. Except as prohibited by applicable law, Trustor waives any right to require Lender to (a) make any presentment,protest, demand, or notice of any kind, including notice of change of any terms of repayment of the Indebtedness, default by Borrower orany other guarBl1tor or surety, any action or nonaction taken by Borrower, Lender, or any other guarantor or surety of Borrower, or thecreation of new or additional Indebtedness; (b) proceed against any person, including Borrower, before proceeding against Trustor; (c)proceed against any collateral for the Indebtedness, including Borrower's collateral, before proceeding against Trustor; (d) apply anypayments or proceeds received against the Indebtedness in any order; (e) give notice of the terms, time, and place of any sale of anycollateral pursuant to the Uniform Commercial Code or any other law governing such s,ale; (f) disclose any information about'theIndebtedness, Borrower, any collateral, or any other guarantor or surety, or about any action or nonaction of Lender; or (g) pursue anyremedy or course of action in Lender's power whatsoever,Trustor also waives any and all rights or defenses arising by reason of (h) any disability or either defense of Borrower, any other guarantoror surety or any other person; (j) the cessation from any cause whatsoever, other than payment in full, of the Indebtedness; (il thea p p l i c ~ t i o n of p r o c ~ d s o'f the Indebtedness py Borrower for purposes other than the purposes understood and intended by Trustor andLender; (k) any act of omission or commission by Lender which directly or indirectly results in or contributes to the discharge of Borroweror any other guarantor or surety, or the Indebtedness, or the loss or release of any collateral by operation of law or otherwise; (II anystatute of limitations in any action wider this Deed of Trust or on the Indebtedness; or (m) any modification or change in terms of theIndebtedness, whatsoever, including without limitation, the renewal, extension, acceleration, or other change in the time payment Cif theIndebtedness is due and any change in the interest rate" ' ,Trustor waives aU rights and defenses arising out of an election of remedies by Lender, even though that election of remedies, such asnon-judicial foreclosure with respect to security for a guaranteed obligation, has destroyed T rustor's rights of subrogation andreimbursement against Borrower by'the operation of S e ~ i o n 580d of the CaHornla Code of Civil Procedure, or otherwise,Trustor waives all rights and defenses that Trustor may have because Borrower's obligation is s ~ c u r e d by real property, This meansamong oth,er t h i n g s ~ (1) Lender may collect from Trustor without first foreclosing on any real or personal property collateral pledged byBorrower, (2) IfLet:lder forecloses on'any'real property collateral pledged by Borrower: (A) The amount cif Borrower's o b ~ g a t i o n may bereduced only by the price for which the collateral Is sold at the foreclosure sale, even if the collateral is worth more than the sale price. (B)Lender may collect from Trustor even if Lender, by foreclosing on the real property collateral, has destroyed any right T'rustor may have tocollect from Borrower: This is an unconditional and irrevocable waiver of any rights and defenses Trustor may have because Borrower'sobligation is secured by real.property. These rights and defenses include, but are not limited to, any rights and 'defenses based uponSection 580a, 580b, 5 ~ O d , or 726 of the COde of Civil Procedl.!re,T:rustor understands and agrees that the foregoing waivers are unconditional and irrevocable waivers of substantive rights and defenses towhich Trustor might otherwise be entitled under state and'federal law. The rights and d e f ~ n s e s waived include, without limitation, thoseprovided by California laws of suretyship and, guaranty, anti .deficiency laws, and the Uniform Commercial Code. Trustor acknowledgesthat Trustor has provided these waivers of rights and defenses with the intention that they be fully relied upon by Lender, Trustor furtherunderstands and agrees that this Deed of Trust is a separate and Independent contract between Trustor and Lender, given for full andample consideration, and is enforceable on i ts own terms. Until all hidebtedness is paid in full, Trustor waives any right to enforce anyremedy Trustor may have against Borrower's or any other guarantor, surety, or other' person, and further, Trustor waives any right toparticipate in any collateraf for the Indebtedness now or hereafter hElld by Lender" ' 'PAYMENT ANpPERFORMANCE. Except as otherwise provided in this Deed of Trust, Borrower shall pay to L e n ~ r all Indebtednesssecured by this Deed of Trust as it becomes due, and Borrower and Trustor shall perform all thElir respective obigations under the Note,this Deed of Trust, and the Related Documents.P O S S E ~ S l O N A