Party Discovery: CATHAY BANK, A CALIFORNIA BANKING CORPORATION VS. RAYMOND XIANG ZHANG et al

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SUPERIOR COURT OF CALIFORNIA
COUNTY OF SAN FRANCISCO

/ Document Scanning Lead Sheet
Oct-15-2012 4:19 pm

Case Number: CGC-10-500934
Filing Date: Oct-15-2012 4:18
Filed by: VANESSA WU
Juke Box: 001 Image: 03802798
DECLARATION OF

CATHAY BANK, A CALIFORNIA BANKING CORPORATION VS. RAYMOND
XIANG ZHANG et al

001003802798

Instructions:
Please place this sheet on top of the document to be scanned.BY FAX

Michael Gerard Fletcher (State Bar No. 070849)
mfletcher@frandzel.com

Kenneth N. Russak (State Bar No. 107283)
krussak@franzel.com

Hanna B. Raanan (State Bar No. 261014)
hraanan@frandzel.com

FRANDZEL ROBINS BLOOM & CSATO, L.C.

6500 Wilshire Boulevard
Seventeenth Floor

Los Angeles, California 90048-4920
Telephone: (323) 852-1000
Facsimile: (323) 651-2577

Attorneys for Plaintiff and Cross-Defendant
CATHAY BANK

a

it it
San Francisco © County Sunerior Cou!

CLEHKUT ! rey
By: JAN

SUPERIOR COURT OF CALIFORNIA

COUNTY OF SAN FRANCISCO

CATHAY BANK, a California banking
corporation,

Plaintiff,
v.

RAYMOND XIANG KAI ZHANG, aka
RAYMOND KAI ZHANG, aka RAYMOND
ZHANG, aka XIANG KAI ZHANG, aka
XIANG ZHANG, aka ZHANG XIANG, an
individual; CINDY ZHANG, an individual;
DONG YING QUI, an individual; XIANG
KAI, LLC; a California limited liability
company; RAY KAI, LLC , a California
limited liability company; ZHANGS, LLC, a
California limited liability company; and
DOES 1 through 200, inclusive,

Defendants.

AND RELATED CROSS-ACTIONS

1093139.1 | 023000-0790

CASE NO. CGC-10-500934

DECLARATION OF HANNA B. RAANAN
IN SUPPORT OF PLAINTIFF AND
CROSS-DEFENDANT CATHAY BANK'S
OPPOSITION TO DEFENDANTS'
MOTION TO COMPEL FURTHER
RESPONSES TO REQUESTS FOR
PRODUCTION OF DOCUMENTS AND
FOR SANCTIONS IN THE AMOUNT OF
$4,666.50

[Filed concurrently with Opposition to Motion
to Compel Further Responses, and Separate
Statement of Disputed Discovery]

Date: October 26, 2012

Time: 9:00 a.m.

Dept.: 302
400 McAllister Street
San Francisco, CA 94102

DECLARATION OF HANNA B. RAANAN IN SUPPORT OF PLAINTIFF AND CROSS-DEFENDANT CATHAY
BANK'S OPPOSITION TO DEFENDANTS' MOTION TO COMPEL FURTHER RESPONSES TO REQUEST FOR
PRODUCTION OF DOCUMENTS AND FOR SANCTIONSoe YN A HR WN

10

@ e

I, Hanna B. Raanan, hereby state and declare as follows:

1. Tam an attorney licensed to practice law in California. I am an associate of
Frandzel Robins Bloom & Csato, L.C. attorneys for Plaintiff and Cross-defendant Cathay Bank
("Cathay"). I am submitting this declaration in support of the Bank's Opposition to Defendants'
Motion to Compel Further Responses to Form Interrogatories, Set One and For Sanctions
("Motion"). I have personal knowledge of the matters set forth in this declaration and I could and
would testify competently thereto if called upon to do so

2. On or about July 5, 2012, I received requests for production of documents
propounded by Defendant Raymond Zhang to Cathay Bank. On or about August 7, 2012, Cathay
Bank responded to the requests for production of documents. Attached hereto as Exhibit 1 is a
true and correct copy of the Bank's Responses and Objections to Requests for Production of
Documents served on August 7, 2012.

3. On or about August 23, 2012, pursuant to agreement between the parties, Cathay
Bank produced approximately 7,500 pages of non-privileged, non-confidential documents
responsive to the requests. On or about September 24, 2012, Cathay Bank

4, I was the attorney principally responsible for preparing Cathay's Responses and all
of the responses and objections were properly asserted based on information available to Cathay at
the time the Response was prepared. Kenneth N. Russak is the partner in my firm responsible for
supervising me on this case. He reviewed the responses and the Opposition to the Motion to
Compel.

5. On August 20, 2012, I received a letter from counsel for the Defendant regarding
Cathay's responses to all discovery, including the special interrogatories. 1 responded to the
August 20, 2012 letter on August 29, 2012.

6. Following my response, I did not receive an phone calls or follow-up letters to
discuss the Bank's responses to the special interrogatories.

7. I bill my time to Cathay at a rate of $221.00 per hour. Mr. Russak bills his time to

Cathay at a rate of $382.50 per hour. I have spent a total of ten (7) hours preparing the Response

1093139.1 | 02300-0790

DECLARATION OF HANNA B. RAANAN IN SUPPORT OF PLAINTIFF AND CROSS-DEFENDANT CATHAY

BANK'S OPPOSITION TO DEFENDANTS' MOTION TO COMPEL FURTHER RESPONSES TO REQUEST FOR
PRODUCTION OF DOCUMENTS AND FOR SANCTIONSFRANDZEL ROBINS BLOOM & CsaTo, L.C.
6500 WILSHIRE BOULEVARD. | 7TH FLOOR,
LOS ANGELES. CALIFORNIA 90048-4920

(323) 852-1000

oo BM NIN DH RB BW NY —

BN Pe My YPN NN NY Be Be ew Be ee ee
orn vr FF &Y® NF SHO wMe AAA RBH =

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to Separate Statement and the Opposition to the Motion. | anticipate spending two (2) hours to
review the Defendant's reply to the Opposition. Kenneth N. Russak spent four hours (1) hour
reviewing the Response to Separate Statement and the Opposition to the Motion. | anticipate eight
(8) hours for Mr. Russak to travel to and from San Francisco for the hearing on this Motion and
the hearing on the Motion to Compel Further Responses to Special Interrogatories and two (2)
hours to prepare for the hearing on the Motion. Because the hearings on the two Motions are to be
held on the same day and time, | have split the total travel time between the two cases (with four
hours spent on this Motion and four hours spent on the Motion to Compel Further Responses to
Special Interrogatories). In spite of the time it will take to travel to the hearing, Cathay expects to
spend two hours actually appearing at the hearing on the Motion. In total, my firm anticipates
billing sixteen (16) hours and total fees in the amount of $4,666.50 as a result of responding to the
Motion. Cathay requests monetary sanctions in the full amount of the fees incurred, $4,666.50, or
a lesser amount deemed by the Court to be reasonable in light of the circumstances. Cathay
requests that sanctions awarded be payable by the Defendant within thirty (30) days of the order
on this Motion.

8. The monetary sanctions requested by Cathay are reasonable because the Defendant
had no justification for bringing the Motion, as shown by the Plaintiff's Response to Separate
Statement of Disputed Discovery, and Cathay had to spend substantial time opposing the Motion
and anticipates spending substantial time appearing for the hearing on the Motion to Compel.

I declare under penalty of perjury under the laws of the State of California that the

foregoing is true and correct and that this declaration was executed this 904 y of October, 2012,

at Los Angeles, California.
Yar iowa
Ké B. RAANAN

1093139.1 | 02300-0790 2

DECLARATION OF HANNA B. RAANAN IN SUPPORT OF PLAINTIFF AND CROSS-DEFENDANT CATHAY

BANK'S OPPOSITION TO DEFENDANTS' MOTION TO COMPEL FURTHER RESPONSES TO REQUEST FOR
PRODUCTION OF DOCUMENTS AND FOR SANCTIONSEXHIBIT 1Michael Gerard Fletcher (State Bar No. 070849)
Kenneth N. Russak (State Bar No. 107283)
Hanna Raanan (State Bar No. 261014)

FRANDZEL ROBINS BLOOM & CSATO, L.C.

6500 Wilshire Boulevard
Seventeenth Floor

Los Angeles, California 90048-4920
Telephone: (323) 852-1000
Facsimile: (323) 651-2577

Attorneys for Plaintiff and Cross-defendant
CATHAY BANK

SUPERIOR COURT OF CALIFORNIA
COUNTY OF SAN FRANCISCO

CATHAY BANK, a California banking
corporation,

Plaintiff,
v.
RAYMOND XIANG KAI ZHANG, et al.,

Defendants.

RAYMOND ZHANG, an individual; CINDY

ZHANG, an individual; and ZHANGS, LLC, a

California limited liability company,
Cross-Complainants,

v.

CATHAY BANK, a California banking
corporation; and DOES 201-230, inclusive,

Cross-Defendants.

CASE NO. CGC-10-500934

PLAINTIFF AND CROSS-DEFENDANT
CATHAY BANK'S OBJECTIONS AND
RESPONSES TO DEFENDANTS FIRST
SET OF REQUESTS FOR PRODUCTION
OF DOCUMENTS

PROPOUNDING PARTY: RAYMOND ZHANG, CINDY ZHANG, ZHANGS, LLC., RAI

KAI, LLC.

RESPONDING PARTY: CATHAY BANK
845743.2 | 023000-0790

100163-006

PLAINTIFF CATHAY BANK'S OBJECTIONS AND RESPONSES TO DEFENDANTS' FIRST SET OF
REQUESTS FOR PRODUCTION OF DOCUMENTS,FRANDZEL ROBINS BLOOM & CSATO, L.C.
6500 WILSHIRE BOULEVARD, 174 FLOOR
Los ANGELES, CALIFORN'A 90048-4920
(223) 652-1000

@  and Cathay Beak, 8 California banking corporation,
as Beneficiary ('Lender” or “Reneficiaty"), whnse acktress appears ibiove.

For the purpose of securing the fill anai fimely payment of the ladebtedaess and the fill end thmcly performance and
discharga uf the Indeblednens and Obligations of Bexronwer to Leader andi tha Ob izations herexender of Tumi 10 Lender,
Trostos does hereby GRANT, BARGAIN, SELL. ‘AND CONVEY enta Trades th Mostra Proper. wih poor
nao und sight of entry, subjoc only to the Pronitied Bacambsances, 10240 and to hold tie Morigaged Propesty wo

and set fer unto Trosten, ecting 0s both a Trustee gtd agent for Leodor under the tens hereof,a soexuity interest in amd
tw allot Trusor’s righe, tisk ond inerrest in, to snd uader the Persoeal Proparty, Fixtures, Lessa, Reiats and Moctgaged
Property (tothe exiest charactorized ss personal peoperty) ta secure the full ead risioly peymect of ths Indcbaedncas and.
the full and tinely performance aod discharge of the Ohtigations,

“Trostos agpecs to execute snd detiver andor authorizes Lender to excoate anor Fic and record, from time to tioon, such

Farther bestromonts, ochading botnet licaited ta, Scraniy Agreement, Assigaments, end UCC Finenciog Stassmant,
tba reqpested by Lender ta cantina the Ben of is Denlot Toston etteatorsectead Mangas ay.

1 ‘© Cathsy Bask 2005
Loan No.: 128300029

ew

“AdOD GalsLLYAD

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as to Parcel J; Rai Kai, LLC, a California limited Lfebility company, an te Parcel [1

PLAINTIFF 00004a

m
Trustor further irrevocably grants, transfers and assigns to Lender the Rents, Such assignment of Rents is to be effective to 4
‘create a present security imerest in existing and fixture Rents of the Mortgaged Property pursuant to California Civil Code my
§2938. tet
TO MAINTAIN AND PROTECT THE SECURITY OF THIS DEED OF TRUST, TO SECURE THE FULL AND G *
TIMELY PERFORMANCE BY TRUSTOR OF EACH AND EVERY OBLIGATION, COVENANT AND
AGREEMENT OF TRUSTOR UNDER THE LOAN DOCUMENTS AND AS ADDITIONAL CONSIDERATION oO
FOR THE INDEBTEDNESS AND OBLIGATIONS EVIDENCED BY THE LOAN DOCUMENTS, TRUSTOR oO
HEREBY COVENANTS, REPRESENTS AND AGREES AS FOLLOWS: 3
1. DEFINITIONS,

For purposes of this Deed of Trust, each ofthe following terms in bold type
text of this Deed of Trust) shall have the following respective meanings:

1.1. “Access Laws” has the meaning sct forth in Section 27 hereof.
12, "Attorneys" Fees” shall include any and all attorneys! fees (including the reasonable costs and expenses of
Lender's in-house legal counsel), paralegal and law clerk fees inchuding without limitation foes for advice,
negotiation, consultation, arbitration and litigation atthe pretrial, trial and appellate levels, and sttomeys? costs
and expenses incurred or paid by Lender in protecting its interest in the Mottgaged Property and enforcing its
tights hereunder.

13. “Borrower” shall mean Ray Kal LUC, a Califorata lnlted liability company, the payor of the Note,

whose address is 598 London Street, San Francisco, California 94112,

14. “Casualty Loan Termination Date” hes the meaning set forth in Section 7.3.2 hereof.

1.5, “Closing Date” has the ‘Tneaning set forth in Section 2.2 hereof.

1.6. “Collateral” has the meaning sct forth in Section 21 hereof.

1.2. “Continuing Guaranty” means thavthose certain continuing guaranty(ies) of even date herewith to be
executed by the following:

N/A

1.8. “Condemnation” has the meaning set forth in Section 8 hereof.

1.9. “Debt Service” shall mean the principal, interest, fees and expenses payable pursuant to the Note.
1,10, “Default Rate” means the Default Interest Rate as defined in the Note.

111, “Environmental Laws”, means and includes any Governmental Requirements pertaining to health, industriat
hygiene, or the environment, including without limitation, the Comprehensive
Compensation, and Lisbility Act of 1980 ("CERCLA") as amended, 42 U.S.C. Section 9601 es seq., the
Resource Conservation and Recovery Act of 1976. ("RCRA"), 42 U.S.C. Sections 6901 et 5¢q., the Hazardous:
Materials Transportation Act, 49 U.S.C. Sections 1801 et seq., the Federal Water Pollution Control Act, 33
US. Sections 1251 et seq the Clean Air Act, 42 U.S.C. Sections 7401 et seq, the Toxic Subsimees Corton

(which shall not be in bold type in the

Act, the California Expedited
and the Porter-Cologne Water Quality Control Act, Water Code §§13000,-et seq,

1.12.“Equipment” means all machinery, furnishings, equipment, Fixtures (including without fimitation afl heating,
airconditioning, plumbing, lighting, communications and elevator fixtures), inventory andarticles of personal

2 © Cathay Bank 2005
‘Loan No.: 128300029 .

PLAINTIFF 00002Property and accessions thereof and renewals, replacements thereof and substitutions therefore (including
without limitation alarm systems, beds, burcaus, chiffonniers, chests, chairs, desks, lamps, mirrors, bookcases,
tables, drapes, draperies and drapery rods and brackets, awnings, curtains, shades, venctian blinds, screens,
paintings, hangings, pictures, divans, couches, luggage carts, luggage racks, stools, sofas, chinaware, linens,
pillows, blankets, glassware, food cans, cookware, dry cleaning facilities, dining room wagons, keys or other
entry systems, bars, bar fixtures, liquor and other drink dispensers, icemakers, radios, clock radios, television
sets, intercom and paging equipment, electric and electronic equiprnent, dictating equipment, private clephone
systems, medical equipment, potted plants, heating, lighting and plumbing fixtures, fire prevention and
extinguishing apparatus, cooling and air-conditioning systems, elevators, escalators, fittings, plants, apparatus,
‘Stoves, ranges, refrigerators, laundry machines, tools, machinery, engines, dynamos, motors, boilers,

Improvements, or appurtenant thereto, or
enjoyment and occupancy of the Land and the
Improvements,

1.13."Escrow Holder” means Fidelity National Title Company.
1.14,"Event of Default” has the meaning set forth in Section 46 hereof.

1.15." Expenses” means the aggregate of the following items actually incurred by Trustor, whether or not peid,
during the period for which the NOI is to be calculated: (i) Impositions and other charges: (ji) sales, use and
personal property taxes; (it) wages, salaries, pension costs and all fringe and other employer-rclated benefits
and expenses; (iv) Insurance Premiums; (v) the cost Of utilities, and all other administrative, management,
ownership, operating, leasing and maintenance expenses incurred in connection with the operation of the.
Mortgaged Property; (vi) the cost of necessary repair of existing improvements on the Morigaged Property
with repairs of like kind and quality or such kind or quality that is necessary to maintsin the Mortgaged
Property to the same standards as competitive Properties of similar size and location to the M
Property; and (vii) the cost of any other maintenance materials, HVAC repairs, pans and supplies, and
equipment, .

1.16.°Full Insurabfe Value” has the meaning set forth in Section 7.9 hereof.

1.17."Fixtures” means all right, ttle, and interest of Trustor, in and to all materials, supplies, ‘equipment, apparatus
and other items now or hereafter attached to, installed on or in the Land or the Improvements, all or which in
some fashion are deemed tobe fixtures to the Land or Improvements under the laws ofthe Stata of California,
including the California Uniform Commercial Code. The term “Fixtures” shall include, without limitation, all
items of Personal Property to the extent that the same may be deemed Fixtures under Governmental
Requirements.

{.18."Goveromental Authority” means any and all courts, boards, agencies, commissions, offices or authorities of

any nature whatsoever for any governmental unit (federal, state, county, district, municipal, city or otherwise)
‘whether now or hereafter in existence.

1.19."Governmental Requirements” means any and all laws, statutes, codes, ordinances, regulations, enactments,
decrees, judgments and orders of any Governmental Authority,

3 ‘© Cathay Bank 2005
Loan No.; 128300029

AdOD QaisLLyad

PLAINTIFF 00003{.20."Guarantor” means collectively the Continuing Guarantors.
1.21."Guaranty” means collectively the Continuing Guaranties.

1.22. “Hazardous Substance” shall mean and include: (i) those substances included within the definitions of
“hazardous substances,” “hazardous materials,” “toxic substances," or “solid waste” in CERCLA, RCRA, and
the Hazardous Materials Transportation Act, 49 U.S.C. Section 1801, et seq., and in the regulations
promulgated pursuant to said laws; (ii) those substances defined as "hazardous wastes” in Section 25117 ofthe
California Health & Safety Code, and in the regulations promulgated pursuant to said laws; (iii) those
‘substances defined as "hazardous substances” in Section 2929.5 of the California Civil Code; (iv) those
‘substances listed in the United States Department of Transportation Table (49 CFR 172.101 and amendments
thereto); (v) those substances defined as “medical wastes” in the Medical Waste Management Act, Chapter 6.1
of the California Health & Safety Code; (vi) asbestos containing materials; (vii) polychlorinated biphenyl; (vili)
underground storage tanks, whether empty, filled or partially filled with any substance; (ix) petroleum and
petroleum products, including crude oil or any fraction thereof, natural gas, natural gas tiquids, liquefied
natural gas, or synthetic gas usable for fuel, or any mixture thereof and (x) such other substances, materials and
wastes which are or become regulated under applicable local, state or federal law, or which are classified as
hazardous or toxic under any Governmental Requirements or which, even if not so regulated, are known to
Pose a hazard to the health and safety of the occupants of the Mortgaged Property or of real property adjacent
to the Mortgaged Property.

1.23.“Imnpositions™ means all real estate and personal property taxes, water, gas, sewer, electricity and other utility
rates and charges; charges imposed pursuant to any subdivision, planned unit development or condominium
declaration or restrictions; charges for any casement, license or agrecment maintained for the benefit of the
Mortgaged Property, and all other taxes, charges and assessments and any interest, costs or penalties with
respect thereto of any kind and nature whatsoever which at any time prior to or after the execution hereof may

be assessed, levied or imposed upon the Mortgaged Property or the ownership, use, occupancy or enjoyment
thereof.

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1.24.“Improvements” means any and all buildings, structures, improvements, fixtures and appurtefiances now and
hereafter placed on the Mortgaged Property, including, without limitation, all apparatus and equipment,
whether or not physically affixed to the land or any building, used to provide or supply ait-cooling, air
conditioning, heat, gas, water, light, power, reftigeration, ventilation, laundry, drying, dish washing, garbage
disposal or other services; and all elevators, escalators and related machinery and equipment, fire prevention
and extinguishing apparatus, security and access control apparatus, partitions, ducts, compressors, plumbing,
ovens, refrigerators, dishwashers, disposals, washers, dryers, awnings, storm windows, slorm doors, screens,
blinds, shades, curtains and curtain rods, mirrors, cabinets, paneling, rags, attached floor coverings, furniture,
pictures, antennas, pools and spas and poo! and spa operation and maintenance equipment and apparatus, trees
and plants located on the Mortgaged Property, all of which, including replacements and additions thereto, shall
conclusively be deemed to be alixed to and be part of the Mortgaged Property conveyed to Trustee hereunder,

1.25."Indebtedness” means the principal of, interest on and all other amounts and payments due from Borrower
pursuant to or evidenced by the following:

1.25.1, The Note (including, without limitation, the prepayment premium, late payment and other charges
payable thereunder);

1.25.2, This Deed of Trust and all other Loan Documents;

1.25.3, All funds hereafter advanced by Lender to or for the bonefit of Borrower and/or Trustor pursuant to
any provision of any of the Loan Documents;

1.25.4, Any past or future loans or amounts advanced by Lender to Borrower when evidenced by a written
instrament or document which specifically recites that the Indebtedness and Obligations evidenced

4 © Cathay Bank 2005
Loan No.: 128300029

PLAINTIFF 00004thereby are secured by the terms of this Deed of Trust, including, but not limited to, funds advanced to
protect the security or priority of this Deed of Trust; and

1.25.5, Any amendment, modification, extension, rearrangement, restatement, renewal, substitution or
replacement of any of the foregoing.

1.26."Insurance Premiams” has the meaning set forth in Section 7.5 hereof.

1.27.""lotangibles” means, without limitation, all accounts, deposit accounts with Lender or its assigns, escrows,
documents, instruments, chattel paper, claims, deposits and general intangibles, as such terms are defined in the
Uniform Commercial Code, and all contract rights, franchises, books, records, appraisals, erchitects and
‘enginccring plans, specifications, environmental and other reports relating to the Land, trademarks, trade
names, servicemarks, logos, copyrights, goodwill, symbols, permits, licenses (to the extent assignable),
approvals, actions, tenant’ or guest lists, correspondence with present and prospective purchasers, tenants,
‘guests and suppliers, advertising materials and telephone exchange numbers as identified in such materials,
refunds of real estate taxes and assessments and causes of action which now or hereafter relate to, ere derived
from or are used in connection with the Project, or the use, operation, maintenance, occupancy or enjoyment
thereof or the conduct of any business or activities thereon,

1.28. “Land” means the real estate or any interest therein described in Exhibit “A” attached hereto and made a part
hereof, together with all Improvements and Fixtures end all rights, titles, and interests appurtenant thereto.

1.29."*Lease(s)” means any and all leases, subleases, licenses, concessions or other agreements (written or verbal,
now or hereaficr in effect) which grant a possessory interest in and to, or the right to extract, mine, reside in,
sell or use the Mortgaged Property, and all other agreements, including, but not limited to, utility contracts,
maintenance agreements and service contracts, which in any way relate to the use, occupancy, ‘operation,
maintenance, enjoyment, or ownership of the Mortgaged Property, save and except any and all leases,
subleases or other agreements pursuant to which ‘Trustor is granted a possessory interest in the Land.

1.30.""Legat Requirement(s)” means, collectively, (a) any and all present and future judicial decisions, statutes,
rulings, rules, regulations, permits, certificates or ordinances of any Governmental Authority in sny way
upplicable to Trustor, any guarantor (with respect to the Indebtedness or the Morigaged Property) or the
Mortgaged Property, including, but not limited to, those respecting the ownership, use, occupancy, possession,
operation, maintenance, alteration, repair, or reconstruction thereof, (b) Trustor’s or guarantor’s presently or
subsequently effective bylaws and articles of incorporation, or any instruments establishing any partnership,
limited partnership, joint venture, trust, limited liability company, or other form of business association (if
either, both or all, by any of same), (c) any andall Leases and other contracts (written or oral) of any nature to
which Trustor or any guarantor may be bound, and (d) any and all restrictions, reservations, conditions,
‘easements or other covenants or agreements now or hereafter of record affecting the Mortgaged Property.

1.31."Lendee” shall mean and include the named Lender herein and the owner and holder (including a pledgec) of

any Note, Indebtedness or Obligations secured hereby, whether or not named as Lender hercin, and the heirs,
legatees, devisees, administrators, executors, successors and assigns of any such person.

1.32.“Loan” means the extensions of credit made by Lender to Borrower pursuant to the terms of the Loan
Documents.

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1.33."Loan Documents” means, collectively, this Deed of Trust, the Note, and all other instruments and agreements,
required to be executed by Borrower, Trustor or any Guarantor in connection with the Loan.

1.34.“LTV Ratio” means, an amount equal to N/A percent (N/A%) of the fair market value of the Mortgaged
Property, as determined from time to time by an appraiser sclected by Lender.

1.35."Maturity Date” means the Maturity Date as such term is defined in the Note.

5 © Cathay Bank 2005
Loan No.: 128300029

PLAINTIFF 000051.36. “Mortgaged Property” means the Land, Improvements, Fixtures, Personal Property, Leases and Rents,
together with:

th:

1.36.1. all ight, tile and interest including any claim or demand or demand inlaw or equity) which Frustor

1,36,2.

1363,

1.36.4,

1.36.5.

1,36.6.

now has or may hereafter acquire in or to such Mortgaged Property; all easements, rights, privileges,
thereto, either at law or in equity, in Possession or expectancy, now or hereafter. acquired; all crops

Pertaining to such water or water rights, ‘ownership of which affects such Mongaged Property; all
‘minerals, oil, gas, and other hydrocarbon substances and rights thereto in, on, under, or upon such
Mortgaged Property, all as-extracted collateral and timber to be cu, and a royalties and profits from

all intangible property and rights relating to the aforesaid Mortgaged Property orthe operation thereof’
‘or used in connection therewith including, without imitation, permits, licenses, plans, specifications,

construction contracts, subcontracts, bids, deposits for utility services installations, refunds due
Trustor,

all of the right, title and interest of Trustor in and to the land lying in the bed of any street, road,
highway or avenue in front of or adjoining the Land;

hereinafter provided; and Trustor hereby covenants and agrees to and with Lender, upon request by
Lender, ‘to make, execute and deliver, at Trustor’s expense, any and all assignments and other

all certificates of deposit of Trustor in the possession of Lender and all bank accounts of Trustor with
Lender, and the proceeds therefrom and all deposits of Trustor with any governmental entity and/or
Pubic uility company which relates tothe ownership of the Mortgaged Property,

6 : © Cathay Bank 2005 -

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PLAINTIFF1.36.7. any and all proceeds of any insurance policies covering the Mortgaged Property, whether or notsuch
insurance policies were required by Lender as a condition of making the loan secured by this Deed of

the same and to give proper receipts and acquittances therefor, and to apply the same as hereinafter
Provided; and Trustor hereby covenants and agrees to and with Lender, upon request by Lender, to
make, execute and deliver, at Trustor’s expense, any and all assignments and other instruments
sufficient for the purpose of assigning the aforesaid proceeds to Lender fre, clear and discharged of
any and all encumbrances of any kind or nature whatsoever;

136.8. ifthe Mortgaged Property includes a leasehold estate, all of Twustor's right, ttle and interest in and to
the tease (the “Lease") more particularly described in Exhibit A attached hereto including, without
limitation, the right to surrender, terminate, cancel, waive, change, supplement, grant subleases of,
alter or amend the Lease;

1.36.9. sll plans and specifications for the Impi

1.36.10. all trade names, trademarks, symbols and service marks and goodwill associated therewith and any and
all state and federal applications and registrations thereof now or hereafter used in connection with the
Use or operation of the Mortgaged Property;

1.36.11. all tax refunds, bills, notes, inventories and accounts and charges receivable, credits, claims, securities
and documents ofall kinds, and all instruments, contract: Fights, general intangibles, and all bondsand
Seposits (including any bond required) and all proceeds and products thereof;

1.36.12, all money or other personal property of Trustor (including, without Himitation, any instrument, deposit
account, gencral intangible or chattel paper, as defined in Anticle 9 of the California Uniform
Commercial Code) heretofore or hereafter delivered to, deposited with or which otherwise comes into
possession of Lender;

1.36.13. all accounts, contract rights, chattel paper, documents, instruments, books, records, claims against third
Parties, monies, securities, drafts, notes, proceeds and other items relating to the foregoing;

1.36.14, to the extent not covered in clause 1.36.9 ‘above, all plans and specifications for the: Improvements; all
contracts and subcontracts relating to the Improvements, all soils reports, ‘enginecring reports,
environmental reports, Jand planning maps, drawings, construction contracts, notes, drafts,
cngincering and architectural drawings, letters of credit, bonds, surety bonds, any other intangible
Tights, relating to the Land and Improvements, surveys and other: reports, exhibits, or plans used or to
be used in connection with the construction, planning, operation, or maintenance of the Land and
Improvements and all amendments and modifications ‘thereof, all deposits (including tenants’ security
deposits; provided, however, if Lender ‘acquires possession or control af the tenants’: ‘security deposits,
Lender shalt use the tenants’ security deposit only for such purposes as are permitted by Governmental

7 © Cathay Bank 2005

Loan No.: 128300029

AdOD GSISLLYAO

PLAINTIFF 00007Requirements), funds, accounts, contractrights, instruments, documents, general intangibles| (including,

trademarks, service marks, trade names, and symbols used in connection therewith), and notes or

chattel paper arising from or in connection with the Land and other Mortgaged Property; all permnits,

licenses, certificates, and other rights and privileges obtained in connection with the Land and

Property; all proceeds arising from or by virtue of the sale, lease, grant of option or other

. disposition of all or eny part of the Mortgaged Property (consent to same not granted or tobe implied
hereby):

1.36.15. all construction, supply, engineering, and architectural contracts executed and to be executed by
‘Trustor for the construction of the Improvements; and

1.36.16. all proceeds of any of the foregoing,

‘Asused in this Deed of Trust, the term "Mortgaged Property” is expressly defined as meaning all or, where the
‘context permits or requires, ay portion of the above and all or, where the context permits or requires, any
interest therein.

1.37.“NOT" means the gross income derived from the operation of the Mortgaged Property, less Expenses. NOI
shall be based on Rents and such other income, including any rent loss, business interruption or business
income insurance proceeds, vending or concession income, late fees, forfeited security deposits and other
miscellaneous tenant charges, that are actually eamed and Expenses actually ineurred during the period for
which the NOI is being calculated, as set forth on operating statements satisfactory to Lender, NOI shall be
calculated in accordance with generally accepted accounting principles and practices applied an a consistent
basis, and, if applicable, based on the Uniform System of Accounts.

1.38. “Note” means the Promissory Note payable by Borrower to the order of Lender in the principal amount of
Seven Million Two Hundred Thirty Eight Thousand and No/100 Dollars ($7,238,000.00), evidencing the
‘Loan, in such form as is acceptable to Lender. together with any and all rearrangements, extensions, renewals,
substitutions, replacements, modifications, restatements and amendments thereof or thereto,

1.39.“Obiigation(s)” means any and all of the covenants, warranties, representations and other obligations (other

than to repay the Indebtedness) made or undertaken by Borrower and/or Trustor to Lender or Trustee as set

forth in the Loan Documents; any lease, sublease or other agreement pursuant to which Trustor is granted a

. possessory interest in the Land; each obligation, covenant and agreement of Borrower and/or Trustor contained

in the Loan Documents, or any other document executed by Borrower and/or Trustor in connection with the

Indebtedness and Obligations secured hereby (except that any Guaranty by Trustor of the Borrower's Loan is

not secured by this Deed of Trust), whether set forth therein or incorporated therein by reference; each and

every monetary provision of all covenants, conditions and restrictions, if any, pertaining to the Mortgaged

Property and upon written request of Lender, the enforcement by Trustor of any covenant by third parties to

pay maintenance or other charges, if the same bave not been paid or valid legal steps taken to enforce such

payment within ninety (90) days after such written request is made; if the Mortgaged Property consists of or

includes a Jeaschold estate, each obligation, covenant and agrecment of Trustor arising under, or contained in,

the instrument(s) creating any such Jeaschold; all agreements of Trustor to pay fees and charges to Lender

whether or not herein set forth; and charges, es allowed by law, when such charges are made for any statement
regarding the obligation secured hereby.

1.40.“Permitted Encumbrance(s)” means, at ony particular time, (a) liens for taxes, assessments or governmental
charges not then due and payable or not then delinquent, (b) liens, easements, encumbrances, and restrictions
on the Mortgaged Property which are allowed by Lender to appear in Schedule B, Parts | and I! of the Title
Policy, and (c) liens in favor of or consented to in writing by Lender.

1.41.“Person” shall mean and include natural persons, corporations, partnerships, unincorporated associations,
joint ventures, limited Hiability companies, trusts, banks, Governmental Authorities and any other form of

AdOD CalsLLYAD

8 © Cathay Bank 2005
Loan No.: 128300029

PLAINTIFF 00008legal entity.

1.42.“Personal Property” means all of the right, title and interest of Trustor in and to all tangible and intangiblo
personal property, whether now owned or hereafter acquired by Trustor, including, but not limited to, water
rrights (to the extont such may constitute personal propeity), all Equipment, inventory, goods, consumer goods,
‘accounts, chattel paper, instruments, money, general intangibles, documents, minerals, crops, and timber (as
those terms are defined in the California Commercial Code) and which are now or at any time hereafter located
on, attached to, installed, placed, used on, in connection with or is acquired for such attachment, installation,
placement, or use on the Land, the Improvements, Fixtures, or on other goods located on the Land or
Improvements, together with all additions, accessions, accessories, amendments, and modifications thereto,
‘extensions, renewals, and enlargements and proceeds thereof, substitutions therefor, and income and profits
therefrom. The Personal Property includes, but is not limited to, all goods, machinery, tools, Equipment
Gncluding fire sprinklers and alarm systems), building materials, office air conditioning, heating, refrigerating,
electronic monitoring, entertainment, recreational, maintenance, exclusion ‘of vermin or insects, dust removal,
refuse or garbage equipment, vehicular maintenance and repair equipment and all other equipment of every
kind, office furniture (Including tables, chairs, planters, desks, sofas, shelves, lockers and cabinets), wall safes,
furnishings, appliances (including ice boxes, refrigerators, fans, water heaters and incincrators), rugs, carpets
and other floor coverings, draperies and drapery rods and brackets, awnings, window shades, venetian blinds,
curtains, and other window coverings, lamps, chandeliers and other lighting fixtures, office maintenance and
‘other supplies, loan commitments, financing arrangements, bonds, construction contracts, leases, tenants’
security deposits, licenses, permits, sales contracts, option contracts, lease contracts, insurance poticies and the
proceeds therefrom, plans and specifications, surveys; books and records, funds, bank deposits and all other
intangible personal propesty. Personal Property shall also include any other portion or items of the Mortgaged
Property, which constitute personal property under the California Commercial Code.

1.43,“Pollcles” has the meaning set forth in Section 7.4 hereof.

1.44.“Rents” means all of the rents, issues, revenues, income, proceeds, royalties, profits, license fees, prepaid
monicipal and utility fees, bonds and other benefits to which Trustor or any other record title owner of the
Mortgeged Property may now or hereafter be entitled from or which are derived from the Mortgaged Property,
including without limitation sale proceeds of the Mortgaged Property and any room or space sales or rentals
from the Mortgaged Property and other benefits paid or payable for using, leasing, licensing, possessing,
‘operating from or in, residing in, selling, mining, extracting or otherwise enjoying or using the Mortgaged
Property.

1.45."Tax and Insurance Escrow Fund” has the meaning set forth in Section 14.1 hereof.

AdOD CGAISILYSD

1,46."Tenants” means all tenants, subtenants. licensees or other occupants under any leases of the Mortgaged

Property. .

1,47."Title Policy” means that certain ALTA Leiider’s policy of title insurance (Loan Policy (6/17/06) ALTA
‘Additional Coverage form of Lendet’s Title Policy or equivalent) to be issued to Lender by the title company
identified in the escrow instructions for the Loan upon the recordation of this Deed of Trust.

1.48,“Trustor” shall mean and include the named Trustor herein and the owners of the Mortgaged Property,
whether or not named as Trustor herein, and subject to the provisions of Section 24 of this Deed of Trust, the
heirs, legatees, devisees, administrators, executors, successors and interest to the Mortgaged Property and
assigns of any such person. See also Section 53 hereof. °

1.49.“Uniform Commercial Code” means the Uniform Commercial Code, as adopted and enacted by the State
of California.

1.50.“Water Rights” means and includes all water rights of whatever kind or character, surface or underground,
appropriative, decreed, or vested, which are appurtenant to’ the Mortgaged Property or otherwise used or useful
in connection with the intended development of the Mortgaged Property.

9 © Cathay Bank 2005
‘Loan No.: 128300029

PLAINTIFF 00009Capitatized terms not otherwise defined herein shall have the meanings ascribed to them in the Note.

2. LOAN CLOSING; DISBURSEMENTS: FEES,

2.1. Lenders? obligation to make the Loan and the remainder of Lender's obligations under this Deed of Trust and
the othcr Loan Documents shall be subject to the satisfaction of the conditions precedent set forth in the Loan
Documents and the delivery of the Loan Documents, cach duly executed (and acknowledged as applicable) by
the appropriate partics thereto.

2.2. Allloan fees and the expenses of Lender relative to documenting and negotiating the Loan, including without
fimitation Lender's Attomeys’ Fees, are due and earned upon delivery of Loan Documents to Borrower, which
represents the commitment of Lender to make the Loan, If such fees and expenses are not otherwise paid, on
the Closing Date, Escrow Holder shall disburse nny Loan funds held by Escrow Holder, less the loan fee set
forth in the Loan Documents and all other fees and costs to be paid by Borrower pursuant to tho terms of the
‘Loan Documents. “Closing Date" shall mean the date of recordation of this Deed of Trust and the satisfaction
ofall of the conditions precedent set forth inthe Loan Documents, Notwithstanding the foregoing, interest on
the Loan shall accrue from the date Lender first funds any portion of the Loan to Escrow Holder, Borrower or
‘other third party.

23. Trustor and Lender are currently the pasties to that certain first priority Deed of Trust on the Mortgaged
Property dated July 31, 2006 and recorded on August 7, 2006 in Book J198 at Page 31 of Official Records of
the City and County of San Francisco (“First Deed of Trust”). To the extend the following duties and
obligations of Trustor, including but not limited to insurance requirements, rights to condemnation and
insurance proceeds, taxes, repair and maintenance and providing financial statements, in this Deed of Trust
conflict with the terms and conditions of the First Deed of Trust, Trustor shall only be required to comply with
the terms and conditions of the First Deed of Trust covering such conflicting duties and obligations, Ifthe First
Deed of Trust is reconveyed, Trustor shall then be bound by and comply with the duties, covenants,
representations and conditions of this Deed of Trust.

"3. INCORPORATION OF COVENANTS; CONDITIONS AND AGREEMENTS, Allthe covenants, conditions

‘and agrocments contained in the Note, this Deed of Trust and the other Loan Documents hereby are made a part
hereof to the same-extent and with the same force as if fully set forth herein,

4. WARRANTY OF TITLE,

‘Trustor represents and warrants that Trustor has good, marketable and insurable title to the Mortgaged Property and
has the full power, authority and right to execute, deliver and perform its Obligations under this Decd of Trust and to
encumber, mortgage, give, grant, bargain, sell, alienate, convey, confirm, pledge, assign, hypothecate and grant a
security interest in the Morigaged Property and that it owns the Mortgaged Property free and clear of all liens,
encumbrances end charges whatsoever except for those exceptions approved by Lender and shown in the title
insurance policy insuring the lien of this Dood of Tnsst, and that this Deed of Trust is and will remain a valid and
enforceuble first lien on and security interest in the Mortgaged Property, subject only to the Permitted Exceptions.
‘Trustor shall forever warrant, defend and preserve such title and the validity and priority of the lien of this Deed of
‘Trust and shall forever warrant and defend such title, validity and priority to Lender against the claims of all persons
whomsoever, as long as the Indebtedness remains unpaid,

5. R E OF THE Mi AGED.

‘Trustor will: (a) keep the Mortgaged Property in good.condition and repair; (b) not substantially alter, remove or
demolish the Mortgaged Property or any Improvements thereon, except when incident ta the replacement of Fixtures
and Equipment with items of like kind; (c) restore and repair the equivelent of its original condition, all or any part
of the Mortgaged Property which may be damaged or destroyed, including, but not limited to, damage from termites
and dry rot, soil subsidence and construction defects, whether or not insurance proceeds are available to cover any

10 © Cathay Bank 2005
‘Loan No.: 128300029

AdOD GaIsILYaD

PLAINTIFF 00010f part of the cost of such restoration and repair and regardless of whether Trustor is permitted to use any of the
7 insurance proceeds to be used for restoration pursuant to Section 8 hereof; (d) pay when due all claims for labor
performed and materials furnished in connection with the Mortgaged Property and not permit any mechanic's or
/ materialman’s lien to arise against the Mortgaged Property or suffer loss of liability under such mechanic's lien
/ claims; (e) comply with all Governmental Requirements affecting the Morigaged Property or requiring that any
/ alterations, repairs, replacements, or improvements be made thereon; (f) not commit or permit waste on or to the
Mortgaged Property, or commit, suffer or permit any act or violation of Governmental Requirements to occur upon
the Mortgaged Property; (g) not abandon the Mortgaged Property; (h) cultivate, invigate, fertitize, fumigate and
prune; (i) if required by Lender, provide for management ‘satisfactory to Lender undcr a management contract
approved by Lender: (j) notify the Lender in writing of any condition at and/or on the Mortgaged Property which
may have a significant and measurable effect on its market value; (k) if required by Lender, provide for on-site
security at the Mortgaged Property af such times of day that ae satisfactory to Lender; and (1) if the Mortgaged
Property is rental property, generally operate and maintain the Mortgaged Property in stich manner as to realize the
‘maximum rental potential thereof and do all other things which the character or use of the Mortgaged Property may
Teasonably render necessary to maintain the Mortgaged Property in the same condition (reasonable wear and tear
expected) as it was at the date of this Deed of Trust.

6. USE OF MORTGAGED PROPERTY.
Unless otherwise required by Governmental Requirements or unless Lender otherwise consents in writing, Trustor
willnot allow changes in the use of the Mortgaged Property from that which is contemplated by Trustor and Lender
atthe time of excoution of this Deed of Trust, as specified in the loan application and other documents executed by
‘Trastor in connection with obtaining the Loan secured hereby. Trustor wil! not initiate or acquiesce in a change in
the zoning classification of the Mortgaged Property without Lender's prior written consent,

7. INSURANCE.

7.1. Casvalty Insurance. Trustor shall at all times keep the Mortgaged Property insured for the benefit of Trustee
and Lender as follows, notwithstanding Governmental Requirements which may detrimentally affect Trustor's
ability to obtain or may materially increase the cost of such insurance coverage:

7.1.1. Against damage or loss by fire and such other hazards (including lightning, windstorm, hail, explosion,
Flot, riot attending a strike, civil commotion, terrorism, vandalism, malicious mischief, aircraft, vehicle
and smoke) as are covered by the broadest form of extended coverage endorsement as is available from
time to time, in an amount not less than the lesser of the principal amount of the Loan or the Full
Insurable Value (as defined in subsection 7.9 below) of tho Mortgaged Property insured, with a
deductible amount not to exceed an amount satisfactory to Lender (however Lender may not require such
insurance in an amount excceding the Full Insurable ‘Value 2s a condition of receiving or maintaining this
Loan);

7.1.2. Rent or business interruption or use and occupancy insurance on such basis and in such amounts end with
such deductibles as shall be satisfactory to Lender; .

7.1.3. Against damage or loss by flood ifthe Land is located in an area idemified by the Secretary of Housing
and Urban ‘or any successor thereto or other appropriate authority (governmental or private)
as an area having special flood hazards and in which flood insurance has been made available under the
Nations! Flood Insurance Act of 1968 or the Flood Disaster Protection Act of 1973, as amended,
modified, supplemented or replaced from time to timo, on such basis and in such amounts as shall be
required by Lender;

7.14, Against damage or loss from (a) sprinkler system leakage and (b) boilers, boiler tanks, heating and air
conditioning equipment, pressure vessels, auxiliary piping and similar apparatus, on such basis and in
such amounts as shall be required by Lender;

n ‘© Cathay Bank 2005
Loan No.: 128300029 .

+

AdOD G3ISLLYAD

PLAINTIFF 00011WAS. During the period of any alteration, construction, or replacement of the Improvements, or any substantial
portion thercof, a Builder’s All Risk policy with extended coverage with course of construction and
completed value endorsements, for an amount at Yeast equal to the Full Insurable Value of the
Improvements, and workers” ‘compensation, in statutory amounts, with provision for replacement with the

. coverage described in subsection 7.1, abovo, without gaps or lapsed coverage, for any completed portion

" of the Improvements; and

7.1.6. Against damage or loss by carthquake, in an amount and with a deductible, satisfactory to ‘Lender, ifsuch
insurance is required by Lender in the exercise of its business judgment in light of the commercial real
estate practices existing at the time the insurance is issued and in the County where the Land is located.

7.2, Liability Insurance. Trustor shall procure and maintain workers’ compensation for Trustor’s employees and
comprehensive general liability insurance covering Trustor, Trustee and Lender egainst claims for bodily injury
or death or Mortgaged Property damage occurring in, upan or about or resulting from the Mortgaged Property,
cor any strect, drive, sidewalk, curb or passageway adjacent thereto, in standard form and with such insurance
company or companies and in the amount of not fess than One Million Dollars and No/100 Dollars

(51,000,000) per occurrence and Two Million and No/100 Dollars ($2,000,000.00) of General Aggregate
Amount, or such greater amounts as provided for in the Lender's instructions to the Escrow Holder, which

insurance shall include completed operations, product liability and blanket contractual liability coverage which
| insures contractual liability under the indemnifications set forth in this Deed of Trust and the Loan Documents
(but such coverage or the amount thereof shall in no way limit such indemnification).

| 7.3. Other Insurance. ‘Trustor shall procure and maintain such other insurance or such additi