8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 OR 15(d) of

The Securities Exchange Act of 1934

Date of Report (Date of earliest event reported) August 3, 2009

Quest Software, Inc.

(Exact name of registrant as specified in its charter)

Delaware	000-26937	33-0231678
(State or other jurisdiction of incorporation)	(Commission File Number)	(IRS Employer Identification No.)

5 Polaris Way, Aliso Viejo, California	92656
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code (949) 754-8000

Not Applicable

(Former name or former address, if changed since last report.)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 1.01 Entry into a Material Definitive Agreement.

On August 3, 2009, Quest Software, Inc. (the “Company”) entered into a Loan and Security Agreement (the “Loan Agreement”) with Mutual of Omaha Bank (the “Lender”) whereby the Company has borrowed from the Lender an aggregate principal amount of $34,000,000 (the “Loan”). In connection with the Loan Agreement, the Company and the Lender concurrently entered into a Promissory Note (the “Note”) secured by a senior, first priority Deed of Trust (the “Deed of Trust”) covering the Company’s real property at its headquarters in Aliso Viejo, California, as well as an Environmental Certification and Indemnity Agreement (the “Environmental Indemnity”). The Company intends to use the proceeds from the Loan for working capital and other general corporate purposes.

The Loan matures in five years, during which time the Company will make equal monthly principal and interest payments at a 7.03% interest rate on a fixed rate, 25-year amortization schedule. The Loan Agreement imposes certain covenants on the Company, including a covenant requiring the Company to maintain a Debt Service Coverage Ratio (as defined in the Loan Agreement) of at least 5.0 to 1.0. Events of default include, among other things, payment defaults, breaches of covenants and bankruptcy events. In the case of a continuing event of default, the Lender may accelerate the payment of all unpaid principal and interest amounts, increase the then-current interest rate by 5% and foreclose on the real estate collateral. The Note provides full recourse against the Company. The Company will incur fees for prepayment of the Loan within the first three years.

The foregoing description of the Loan is only a summary, does not purport to be complete, and is qualified in its entirety by the full text of the Loan Agreement, Note, Deed of Trust, and Environmental Agreement, copies of which are filed as Exhibits 10.1, 10.2, 10.3 and 10.4, respectively, hereto and incorporated by reference herein.

Item 2.03 Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.

The information set forth in Item 1.01 above is incorporated by reference into this Item 2.03.

Item 9.01 Financial Statements and Exhibits.

(d) Exhibits.

10.1 Loan and Security Agreement, dated as of August 3, 2009, between Quest Software, Inc. as Borrower and Mutual of Omaha Bank as Lender.

10.2 Secured Promissory Note, dated as of August 3, 2009, from Quest Software, Inc. as Maker to Mutual of Omaha Bank as Payee.

10.3 Deed of Trust, Security Agreement, Assignment of Rents and Leases, and Fixture Filing, dated as of August 3, 2009, by and among Quest Software, Inc. as Trustor, Mutual of Omaha Bank as Beneficiary, and Fidelity National Title Company as Trustee.

10.4 Environmental Certification and Indemnity Agreement, dated as of August 3, 2009, by Quest Software, Inc. as Obligor in favor of Mutual of Omaha Bank as Lender.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	QUEST SOFTWARE, INC.
Date: August 7, 2009
	By:	/s/    David P. Cramer
		David P. Cramer
		Vice President, General Counsel & Secretary

EXHIBIT INDEX

Exhibit Number	Exhibit Title or Description
10.1	Loan and Security Agreement, dated as of August 3, 2009, between Quest Software, Inc. as Borrower and Mutual of Omaha Bank as Lender.
10.2	Secured Promissory Note, dated as of August 3, 2009, from Quest Software, Inc. as Maker to Mutual of Omaha Bank as Payee.
10.3	Deed of Trust, Security Agreement, Assignment of Rents and Leases, and Fixture Filing, dated as of August 3, 2009, by and among Quest Software, Inc. as Trustor, Mutual of Omaha Bank as Beneficiary, and Fidelity National Title Company as Trustee.
10.4	Environmental Certification and Indemnity Agreement, dated as of August 3, 2009, by Quest Software, Inc. as Obligor in favor of Mutual of Omaha Bank as Lender.

EX-10.1

Exhibit 10.1

LOAN AND SECURITY AGREEMENT

(Quest Software – Polaris Way – Loan No. 3700038-001)

Agreement Date:	August 3, 2009
Borrower:	Quest Software, Inc., a Delaware corporation
Borrower’s Address:	Quest Software, Inc.
	5 Polaris Way
	Aliso Viejo, CA 92656
	Attention: David Cramer
Lender:	Mutual of Omaha Bank, a federally chartered thrift
	Loan No. 3700038-001
Lender’s Address:	4657 MacArthur Court, Suite 1480
	Newport Beach, CA 92660
	Attention: James S. Knight and Jeff Barnett
Property:	One three-story approximate 78,072 square foot office building and one four-story approximate 90,630 square foot office building, located on approximately 7.47 acres of real property at 4 & 5 Polaris Way, Aliso Viejo, California, as legally described on Exhibit “A”, and all appurtenances thereto.

This Loan and Security Agreement (“Agreement”) is entered into as of the Agreement Date between Borrower and Lender.

FACTUAL BACKGROUND

A. This Agreement evidences a $34,000,000 loan (the “Loan”) made by Lender to Borrower.

B. The Loan is evidenced by the Note. The Note is secured by the Deed of Trust covering the Property and various other documents described as part of the Loan Documents below. The Note is fully recourse to Borrower.

C. Capitalized terms used in this Agreement will have the meanings established in Section 1 below unless otherwise defined on the cover page, in this Factual Background section, or in the text of this Agreement.

AGREEMENT

For valuable consideration, the receipt and sufficiency of which are acknowledged, Lender and Borrower agree as follows:

1. Definitions.

As used in this Agreement, the following terms will have the meanings established below:

1.1 “Agreement” means this Loan and Security Agreement and all exhibits attached to this Agreement, as the Agreement may be modified and amended from time to time.

1.1 “Anti-Terrorism Laws” means any present or future laws relating to terrorism or money laundering, including Executive Order No. 13224 (effective September 24, 2001), the US Patriot Act, the laws comprising or implementing the Bank Secrecy Act, and the laws administered by the Office of Foreign Assets Control (“OFAC”).

1.2 “Banking Day” means any day other than a Saturday or Sunday in which banks are open for business in Newport Beach, California.

1.3 “Blocked Person” means any Person: (i) listed in the annex to, or is otherwise subject to the provisions of, Executive Order No. 13224; (ii) owned or controlled by, or acting for or on behalf of, any Person that is listed in the annex to, or is otherwise subject to the provisions of, Executive Order No. 13224; (iii) with which any Lender is prohibited from dealing or otherwise engaging in any transaction by any Anti-Terrorism Law; (iv) that commits, threatens or conspires to commit or supports “terrorism” as defined in Executive Order No. 13224; or (v) that is named a “specially designated national or “blocked person” on the most current list published by OFAC or other similar list.

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1.4 “Borrower’s Affiliates” means: (i) a spouse of any of Borrower’s Affiliates; (ii) any relative (by blood, adoption, or marriage) of any of Borrower’s Affiliates within the third degree; (iii) any member, director, or officer of Borrower or any of Borrower’s Affiliates; (iv) any corporation, partnership, limited liability company, trust, unincorporated association, joint venture, organization, or other business or legal entity of which Borrower or any of Borrower’s Affiliates are a member, partner, principal, trustee, director, or officer; and (v) any other Person directly or indirectly controlling, controlled by, or under direct or indirect common control with Borrower or any of Borrower’s Affiliates.

1.5 “Company Prepared Financial Statements” means those balance sheets, income statements, cash flow statements (sometimes called flow of funds statements or statements of changes in financial position), and other financial statements internally prepared by the Borrower (on a consolidated basis), based on GAAP that fairly represent (in the opinion of the Lender), in all material aspects, the financial condition of the Borrower. Each Company Prepared Financial Statement must be certified as true and correct by an Authorized Person.

1.6 “County” means the county in which the Land is located, which is the County of Orange, State of California, and all applicable agencies, departments, commissions, councils, boards, and committees.

1.7 “Deed of Trust” means the Deed of Trust, Security Agreement, Assignment of Rents and Leases, and Fixture Filing of even date granted by Borrower, as Trustor, in favor of Lender, as beneficiary.

1.8 “Financial Information” means all financial statements and other financial information required of Borrower under the Loan Documents.

1.9 “Financing Statement” means a UCC-1 financing statement(s) executed by Borrower, as debtor, in favor of Lender as secured party, to be filed in the Office of the Secretary of State of Delaware, and to the extent Lender determines it necessary, to be filed in the official records of the County.

1.10 “GAAP” means generally accepted accounting principles in the United States of America, as in effect from time to time, that are consistently applied and free of material misrepresentation, set forth in: (i) the opinions and pronouncements of the Accounting Principles Board and the American Institute of Certified Public Accountants; (ii) the statements and pronouncements of the Financial Accounting Standards Board; and (iii) other statements by any other entity as may be in general use by significant segments of the accounting profession that are applicable in the circumstances as of the date of determination.

1.11 “Governmental Authorities” means any applicable local, municipal, county, state, or federal agency, board, commission, council, department, committee, or similar governmental arm having jurisdiction over the Property, Borrower, or Borrower’s activities.

1.12 “Land” means the approximate 7.47 net acres of land located in the City of Aliso Viejo, California, as more particularly described in Exhibit “A”.

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1.13 “Loan Amount” means the total amount of principal, interest, and other charges, fees, and required payments that are due and payable from time to time by Borrower under the Loan Documents.

1.14 “Loan Closing Date” means the date upon which Borrower has satisfied all conditions to the funding and closing of the Loan, as described in the Loan Documents.

1.15 “Loan Documents” means, collectively, this Agreement, Note, and Financing Statement, together with all of their exhibits and schedules and all other documents that evidence, secure, or otherwise pertain to the Loan, as any or all may be modified, supplemented, extended, restated, or amended in accordance with their terms.

1.16 “Loan Fee” means a fee payable by Borrower to Lender concurrent with the initial funding of the Loan on the Loan Closing Date in immediately available funds in the amount of $85,000.00.

1.17 “Loan-to-Value Ratio” means the ratio of the aggregate committed amount of the Loan to the as-is market value of the Property.

1.18 “Material Adverse Effect” means any fact, event, or circumstance that, alone or when taken with other events or conditions occurring or existing concurrently with the event or condition: (i) has or is reasonably expected to have a material adverse effect on or materially impairs the ability of Borrower to pay and perform its obligations under the Loan Documents; (ii) materially impairs the ability of Lender to enforce its rights and remedies under any Loan Documents; or (iii) has or is reasonably expected to have any material adverse effect on the Property, the liens in favor Lender or the priority of the liens in favor Lender.

1.19 “Maturity Date” has the meaning established in the Note.

1.20 “Net Income” means the net income of Borrower as determined under GAAP.

1.21 “Note” means the Secured Promissory Note executed as of the Agreement Date by Borrower and payable to Lender (as amended, supplemented, extended, restated, or otherwise amended from time to time).

1.22 “Obligations” means all of the duties and obligations, whether payment or performance, of Borrower to Lender under the Loan Documents.

1.23 “Permitted Liens” means (i) those exceptions set forth in the Title Policy, (ii) any purchase money liens on any Personal Property incurred in the ordinary course of Borrower’s business, and (iii) any other liens that have been approved in writing by Lender.

1.24 “Person” means any individual, corporation, partnership, limited liability company, trust, unincorporated association, joint venture, organization, business, or other legal entity, and any government or any governmental agency or political subdivision.

1.25 “Personal Property” means all personal property of Borrower, both tangible and intangible, listed in the granting clauses of the Deed of Trust, whether owned as of the Agreement

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Date or later acquired by Borrower, and all replacements, substitutions, renewals, products, proceeds, accessions, and related actions.

1.26 “Requirements” means all existing and future laws, regulations, orders, building codes, restrictions, requirements, agreements, and commitments of all applicable parties and Governmental Authorities applicable to the use and ownership of the Property.

1.27 “Title Company” means Fidelity National Title Company, or any other title company, agency, and underwriter approved by Lender and Borrower.

1.28 “Title Policy” or “Title Policies” means any title insurance coverages, including a lender’s policy of title insurance required by Lender to insure any insurable interests under the Loan and Loan Documents.

2. Disbursement of Loan Proceeds and Repayment of Loan.

2.1 Loan Disbursement Procedure Generally. Subject to the terms and conditions of this Agreement, Lender will disburse to Borrower the proceeds of the Loan on the Loan Closing Date. Prior to the Loan Closing Date, Borrower has paid to Lender the required Loan Fee.

2.2 Repayment Generally. Borrower will make monthly payments as required under the terms of the Note.

3. Covenants of the Borrower.

3.1 Permits, Licenses and Approvals. Borrower will properly obtain, comply with, and keep in effect all permits, licenses, and approvals that are required to be obtained from any Governmental Authorities in order to occupy, operate, and otherwise manage the Property.

3.2 Site Visits. Lender and its agents and representatives will have the right, at any reasonable time at its own risk, to enter and visit the Property for the purposes of performing an appraisal, or any other reasonable investigation. Lender also will have the right to examine, copy, and audit the books, records, accounting data, and other documents of Borrower and its contractors relative to the Property. Lender is under no duty to visit the Property or to examine any books or records. Any site visit, observation, or examination by Lender will be solely for the purpose of protecting Lender’s rights and interests. No site visit, observation, or examination by Lender will impose any liability on Lender or result in a waiver of any default of Borrower.

3.3 Protection Against Lien Claims. Borrower will promptly pay, post one or more payment bonds to cover or avoid any mechanic’s liens or otherwise discharge all claims and liens for labor done and materials and services furnished to the Property. Lender may require Borrower to post one or more payment bonds to cover or avoid any mechanic’s liens. Borrower agrees to indemnify Lender for, from, and against all claims of any contractor, subcontractor, material supplier, or other lien claimant.

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3.4 Insurance. Borrower, at its expense, will obtain and deliver to Lender policies of insurance providing the following:

(a) Policies of insurance evidencing bodily injury, death or property damage liability coverages in amounts not less than $2,000,000 (combined single limit), and an excess/umbrella liability coverage in an amount not less than $5,000,000 will be in effect with respect to Borrower. The policies must be written on an occurrence basis so as to provide blanket contractual liability, broad form property damage coverage, and coverage for products and completed operations.

(b) “Special Cause of Loss” insurance on the Property in an amount not less than the full insurable value on a replacement cost basis of the insured Property and related personal property.

(c) If applicable, evidence of worker’s compensation insurance coverage satisfactory to Lender.

(d) If all or any part of the Property lies within a “special flood hazard area” as designated on maps prepared by the Department of Housing and Urban Development, a National Flood Insurance Association standard flood insurance policy, plus insurance from a private insurance carrier if necessary, for the duration of the Loan in the amount of the full insurable value of the Property.

(e) The other insurance as Lender may reasonably require including, without limitation, errors and omissions insurance with respect to the contractors, architects and engineers, and rent abatement and/or business loss.

(f) All insurance policies will: (i) be issued by an insurance company having a rating of “A” VII or better by A.M. Best Co., in Best’s Rating Guide; (ii) name Lender as an additional insured on all liability insurance and as mortgagee and loss payee on all casualty insurance; (iii) provide that Lender is to receive 30 days written notice prior to non-renewal or cancellation; (iv) be evidenced by a certificate of insurance to be held by Lender; and (v) be in form and amounts reasonably acceptable to Lender.

3.5 Debt Service Coverage Ratio. At all times, the Debt Service Coverage Ratio shall not be permitted to drop below 5.0 to 1.0. The term “Debt Service Coverage Ratio” means EBITDA divided by Contractual Debt Service, calculated on each calendar quarter afterward based on an aggregate four quarter rolling basis. The term “EBITDA” means, for any period, the Net Income of Borrower for the applicable period, determined in accordance with GAAP plus interest expense, income tax expense, amortization expense, depreciation expense, but, in each case, only to the extent considered in the determination of Net Income; provided that, so long as the credit facilities funded pursuant to that Credit Agreement dated February 17, 2009, between Borrower, certain lenders signatory thereto, and Wells Fargo Foothill, LLC, as arranger and administrative agent (the “WF Credit Agreement”), remain outstanding, the term EBITDA will have the meaning established in the WF Credit Agreement. The term “Contractual Debt Service” means all debt payment obligations (principal, interest, and other charges) on the Loan.

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3.6 Estoppels. Borrower agrees to use its commercially reasonable efforts (which shall exclude any requirement to expend funds other than a nominal fee and reasonable legal fees) to obtain an estoppel certificate, in a form satisfactory to Lender in Lender’s reasonable discretion, from (a) Aliso Viejo Community Association, a California non-profit public benefit corporation, or its successor, with respect to Declaration of Covenants, Conditions and Restrictions for Aliso Viejo Community Association dated April 1, 1982, and recorded April 6, 1982, at Instrument No. 82-118353 in the office of the county recorder of Orange County, California, as amended, and (b) Shea Homes Limited Partnership, a California limited partnership doing business as Mission Viejo Company, or its successor, with respect to that certain Grant Deed dated December 18, 1997, and recorded December 19, 1997, at Instrument No. 19970653373 in the office of the county recorder of Orange County, California.

3.7 Payment of Expenses. Borrower will pay Lender’s out of pocket costs and expenses reasonably incurred in connection with the making, disbursement, and administration of the Loan, as well as any revisions, extensions, renewals, or “workouts” of the Loan, and in the exercise of any of Lender’s rights or remedies under this Agreement, except to the extent prohibited by law. The costs and expenses include charges for title insurance (including endorsements), filing, recording and escrow charges, fees for appraisal and appraisal review, architectural and engineering review, construction services and environmental services, inspections, mortgage taxes, legal fees and expenses of Lender’s counsel, and any other fees and costs for services, regardless of whether the services are furnished by Lender’s employees or agents or independent contractors. Borrower acknowledges that amounts payable under this section are not included in any loan fees for the Loan. All the sums incurred by Lender and not immediately reimbursed by Borrower will be considered an additional loan to Borrower bearing interest at the Default Rate provided in the Note.

3.8 Financial and Other Information of Borrower. Borrower will keep true and correct financial books and records, using GAAP. Borrower will provide to Lender all of the following:

(a) Within 45 days after each calendar quarter or within 15 days after filing, as applicable, quarterly Company Prepared Financial Statements or Form 10-Q Securities and Exchange Commission (“SEC”) filing, of Borrower.

(b) Within 120 days after each fiscal year or within 15 days after filing, as applicable, annual CPA audited financial statements or Form 10-K SEC filing, of Borrower prepared on a consolidated and consolidating basis.

(c) Within 45 days after each calendar quarter, a quarterly compliance certificate, including all back-up calculations, signed and certified by chief financial officer or chief accounting officer for and on behalf of Borrower, evidencing compliance or non-compliance with the financial covenants described in this Loan Agreement and confirming, to the knowledge of Borrower’s applicable Representative Officers (defined below) without any duty of inquiry, whether there is any Event of Default or event, that, with the giving of notice or the passage of time, or both, would constitute an Event of Default. As used herein, the “Representative Officers” means any two representatives of Borrower holding the following positions in Borrower: (a) Senior Vice President and

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Chief Financial Officer, (b) Vice President, General Counsel and Secretary, (c) Vice President, Corporate Controller, (d) Vice President, Finance Operations, and (e) Senior Manager, Assistant Treasurer.

If Borrower requests an extension of time for the filing of any SEC required filings, Borrower agrees to promptly notify Lender of the same in writing.

3.9 Notices. Borrower will promptly notify Lender in writing of:

(a) Any litigation affecting Borrower where the amount claimed is $5,000,000 or more, or any litigation affecting the Property where the amount claimed is $1,000,000 or more.

(b) Any written communication that Borrower may receive from any Governmental Authorities giving notice of any claim or assertion that the Property fails in any material respect to comply with any of the Requirements or any other applicable governmental law.

(c) Upon the occurrence of a Material Adverse Effect.

3.10 Performance of Acts. Upon request by Lender, Borrower will perform all acts that may be necessary or advisable to perfect any lien or security interest provided for in the Loan Documents or to carry out the intent of the Loan Documents.

3.11 Negative Covenants. Without Lender’s prior written consent, Borrower will not:

(a) engage in any business activities substantially different from Borrower’s present business;

(b) liquidate or dissolve Borrower’s business; or

(c) allow liens on the Property other than Permitted Liens and liens in favor of Lender.

3.12 Appraisals. Borrower agrees that Lender shall have the option from time to time during the term of the Loan to order an appraisal of the Property from an appraiser selected by Lender, and Borrower, agrees to cooperate with Lender and Lender’s appraiser in connection with such appraisal(s), including, without limitation, providing access to the Property and disclosing information requested by Lender and/or Lender’s appraiser. The appraisals will comply with all federal and state standards for appraisals and otherwise will be satisfactory to Lender in all material respects. Borrower shall pay the reasonable out of pocket costs of up to two appraisals during the term of the Loan.

3.13 Subordination of Indebtedness Owing to Affiliates. Borrower will cause all liens, security interests, and other charges on the Property to be fully subordinated in all aspects to the Obligations pursuant to written agreements satisfactory to Lender.

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4. Representations and Warranties.

4.1 Borrower. Borrower covenants that each representation and warranty established below is true, accurate, and correct in all respects as of the date of this Agreement (and will remain so at all times until the Maturity Date):

(a) Borrower is a duly formed and validly existing corporation under the laws of, and in good standing with, the State of Delaware. Borrower is duly registered to do business in the state where the Property is located. Borrower has complied in all material respects with any and all laws and regulations concerning its organization, existence, and the transaction of its business.

(b) Borrower is authorized to execute, deliver, and perform under the Loan Documents. The Loan Documents have been validly executed and delivered by Borrower and are valid and binding obligations of Borrower that are enforceable in accordance with their terms.

(c) To Borrower’s knowledge, Borrower is not in violation of any law, regulation, or ordinance, or any order of any court or Governmental Authority. No provision or obligation of Borrower contained in any of the Loan Documents violates any of the Requirements, any other applicable law, regulation, or ordinance, or any order or ruling of any court or Governmental Authority. No provision or obligation conflicts with, or constitutes a breach or default under, any agreement binding or regulating the Property.

(d) Except as previously disclosed in SEC filings, (i) there are no litigation, claims, actions, proceedings, or investigations pending against Borrower or affecting the Property, and (ii) to the best of Borrower’s knowledge, there has been no written threat of any litigation, claim, action, proceeding, or investigation against Borrower or affecting the Property.

(e) All financial information that has been and will be delivered to Lender, including all information relating to the financial condition of Borrower, or the Property, fairly and accurately represents the financial condition being reported on. All the information was prepared in accordance with GAAP, unless otherwise noted. There has been no material adverse change in any financial condition reported at any time to Lender.

(f) All reports, documents, instruments, information, and forms of evidence that have been delivered to Lender concerning the Loan or required by the Loan Documents are accurate, correct, and sufficiently complete in all material respects to give Lender true and accurate knowledge of their subject matter. None of them contains any material misrepresentation or omission.

(g) Borrower has filed and will continue to file all required state, federal, and local income tax returns or obtained extensions, and has paid and will pay all taxes that

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are due and payable (including all applicable transaction privilege taxes). Borrower knows of no basis for any additional assessment of taxes.

(h) Borrower is not a “foreign person” within the meaning of Section 1445(f)(3) of the Internal Revenue Code of 1986, as amended from time to time.

(i) To Borrower’s knowledge: (i) the Property complies with the Requirements of all Governmental Authorities related to the Americans with Disabilities Act (or similar state, county, or local law); (ii) there are no underground storage tanks located on the Property; (iii) Borrower has no ongoing financial liability or performance obligations under any judgment or edict issued by any environmental control board of any Governmental Authority; (iv) the Property is physically and legally separated for lot split, subdivision, and tax purposes from any adjoining or nearby property owned by Borrower or Borrower’s Affiliates.

(j) Neither Borrower nor its subsidiaries, affiliates, or any person or entity constituting a guarantor (called, collectively, the “Credit Parties”): (i) is in violation of any Anti-Terrorism Law; (ii) engages in or conspires to engage in any transaction that evades or avoids (or has the purpose of evading or avoiding) or attempts to violate any Anti-Terrorism Law; (iii) is a Blocked Person or is controlled by a Blocked Person; or (iv) is providing or will provide material, financial, or technical support or other services to or in support of acts of terrorism of a Blocked Person. Further, no Credit Party or any of its agents acting in any capacity in connection with the transactions contemplated by this Agreement, conducts any business or engages in making or receiving any contribution of funds, goods, or services to or for the benefit of any Blocked Person or deals in or otherwise engages in any transaction related to any property or interest in any property blocked by any Anti-Terrorism Law.

5. Conditions Precedent to Closing.

5.1 Borrower Delivery Terms. The following will be conditions precedent to Lender’s obligations to close the Loan, unless otherwise waived in writing by Lender:

(a) Borrower will deliver to Lender the Financial Information, certified as being true, correct, and complete in all material respects by an authorized officer of the Borrower.

(b) Borrower will provide at Borrower’s cost and expense, all organizational documents requested by Lender in its sole and exclusive discretion.

(c) The Loan-to-Value Ratio does not exceed 70%.

(d) Borrower will provide evidence of the insurance required above.

(e) Borrower has provided to Lender evidence that all taxes and assessments levied against or affecting the Property have been paid current, including but not limited to any property owner’s association charges.

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(f) Borrower will have provided to Lender evidence satisfactory to Lender in its sole and absolute discretion that the Property is properly zoned for its intended use and that any and all zoning stipulations have been complied with by Borrower.

(g) Lender will have received, reviewed, and approved, in Lender’s sole and absolute discretion, environmental reports and other due diligence investigations in form and content acceptable to Lender.

(h) Lender will have received, reviewed, and approved, in Lender’s sole and absolute discretion, an appraisal of the Property in form and content acceptable to Lender in its sole and absolute discretion showing that the Loan-to-Value limitations established in this Agreement will be met.

(i) Borrower has paid to Lender, in immediately available funds, all fees and costs called for under this Agreement.

(j) Borrower has delivered to Lender any other item reasonably deemed necessary to Lender, and has fulfilled any other condition reasonably required by Lender.

(k) All of Borrower’s representations and warranties established in the Loan Documents will be true and correct in all material respects.

(l) The Title Company has issued, or committed to issue, the Title Policy underwritten by the Title Company in an amount not less than the amount of the sum of the Loan and insuring the lien of the Deed of Trust to be a first priority lien on the Property, subject only to the exceptions and conditions to title as Lender has approved in its sole discretion.

(m) No Event of Default exists nor any event exists that, with the giving of notice or the passage of time, or both, would constitute an Event of Default.

5.2 Loan Documents. By no later than the Loan Closing Date, Borrower will have executed or obtained the execution of, and delivered to Lender, all applicable documents and instruments in form and content required by Lender and its counsel, including, without limitation, the following Loan Documents, and any and all other the documentation reasonably required by Lender:

(a) This Agreement;

(b) The Note;

(c) The Deed of Trust;

(d) The Financing Statement, one for filing with the Delaware Secretary of State and, to the extent Lender determines it necessary, one for recordation in the official records of the County;

(e) Loan Certificate of Borrower; and

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(f) Those legal opinions as may be required of Borrower for enforceability, authority, formation, and similar matters.

6. Default and Remedies.

6.1 Events of Default. Each of the following will be a default under this Agreement (each, an “Event of Default”):

(a) Borrower fails to pay any monetary amount under any Loan Document within 10 days after the date the payment is due, or if there is not specified due date then within 10 days after written notice from Lender.

(b) Borrower fails to comply with any non-monetary covenant contained in this Agreement or any other Loan Document and does not cure that failure within 20 days after written notice from Lender; however, if the failure or neglect of performance is not capable of being cured within the 20-day period, the failure or neglect will not constitute an Event of Default if Borrower promptly commences remedial measures and diligently and continually proceeds with the remedial measures until the failure or neglect is completely cured. No cure period can extend beyond 30 days following the initial written notice to the Borrower.

(c) Borrower becomes insolvent or the subject of any bankruptcy or other voluntary or involuntary proceeding, in or out of court, for the adjustment of debtor-creditor relationships (“Insolvency Proceeding”).

(d) Borrower dissolves, terminates, or liquidates.

(e) Any representation or warranty made or given in any of the Loan Documents proves to be false or misleading in any material adverse respect and the matter is not cured within 20 days’ notice from the Lender; however, if the breach is not capable of being cured within the 20-day period, the breach will not constitute an Event of Default if Borrower promptly commences remedial measures and diligently and continually proceeds with remedial measures until the breach is completely cured (but no cure period can extend beyond 30 days following the initial written notice to the Borrower).

(f) Under any of the Loan Documents, an Event of Default (as defined in the particular Loan Document) occurs.

(g) Lender fails to have an enforceable first lien on or security interest in any property given as security for the Loan (except as otherwise agreed by Lender in writing).

6.2 Remedies.

(a) If an Event of Default occurs, Lender may exercise any right or remedy that it has under any of the Loan Documents or that is otherwise available at law or in equity or by statute. All of Lender’s rights and remedies will be cumulative. If any

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Event of Default occurs, Lender’s obligation to lend under the Loan Documents will automatically terminate. No disbursement of funds by Lender will cure any default of Borrower, unless Lender agrees otherwise in writing in each instance.

(b) If Borrower becomes the subject of any Insolvency Proceeding, all of Borrower’s obligations under the Loan Documents will automatically become immediately due and payable upon the filing of the petition commencing the proceeding, all without notice of default, presentment, demand for payment, protest, notice of nonpayment or dishonor, or other notices or demands of any kind or character. Upon the occurrence of any other Event of Default, all of Borrower’s obligations under the Loan Documents may become immediately due and payable without additional notice of default, presentment, demand for payment, protest, notice of nonpayment or dishonor, or other additional notices or demands of any kind or character, all at Lender’s option, exercisable in its sole discretion.

(c) Also, upon any Event of Default, Lender will have the right in its sole discretion to enter and take possession of the Property, whether in person, by agent or by court-appointed receiver. If Lender exercises any of the rights or remedies provided in this clause (c), Lender’s exercise will not make Lender, or cause Lender to be deemed to be, a member, partner, or joint venturer of Borrower.

7. Intentionally Omitted.

8. Miscellaneous Provisions.

8.1 No Waiver; Consents. Each waiver by Lender must be in writing, and no waiver will be construed as a continuing waiver. No waiver will be implied from Lender’s delay in exercising or failure to exercise any right or remedy against Borrower or any security. Consent by Lender to any act or omission by Borrower will not be construed as a consent to any other or subsequent act or omission or as a waiver of the requirement for Lender’s consent to be obtained in any future or other instance. All rights and remedies of Lender are cumulative.

8.2 Purpose and Effect of Lender Approval. Lender’s approval of any matter in connection with the Loan will be for the sole purpose of protecting Lender’s security and rights. No Lender approval will result in a waiver of any default of Borrower. Lender’s approval will not be a representation of any kind with regard to the matter being approved.

8.3 No Commitment to Increase Loan. Borrower acknowledges that no action by Lender will in any manner commit or obligate Lender to increase the amount of the Loan.

8.4 No Third Parties Benefited. This Agreement is made and entered into for the sole protection and benefit of Lender and Borrower and their permitted successors and assigns. No trust fund is created by this Agreement, and no other persons or entities will have any right of action under this Agreement or any right to the Loan funds.

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8.5 Joint and Several Liability. If Borrower consists of more than one person or entity, each will be jointly and severally liable to Lender for the faithful performance of this Agreement.

8.6 Notices. To be effective, all required or permitted communications, notices, approvals, consents, and demands of any kind of either party must be made in writing, and must be delivered by personal service, by United States registered or certified mail (postage prepaid, return receipt requested), by telecopy facsimile, or by overnight express delivery to parties at the addresses and/or telecopy numbers identified on the cover page of this Agreement. All notices delivered in this manner will be deemed received on the date of delivery or telecopy, if sent by hand-delivery or telecopy, or on the next business day after deposit with a recognized overnight express delivery service, or on the third day after deposit with the United States certified or registered mail. Either party may change its address by giving the other party written notice of its new address in the manner established above.

8.7 Authority to File Notices. Borrower irrevocably appoints Lender as its attorney-in-fact, with full power of substitution, to file for record, at Borrower’s cost and expense and in Borrower’s name, any notices of completion, notices of cessation of labor, or any other notices that Lender in its sole discretion may consider necessary or desirable to protect its security, if Borrower fails to do so. The appointment granted in this Section 8.7 will be deemed to be a power coupled with an interest.

8.8 Actions. Lender will have the right, but not the obligation, to commence, appear in, and defend any action or proceeding that might affect its security or its rights, duties, or liabilities relating to the Loan, the Property, or any of the Loan Documents. Borrower will pay promptly on demand all of Lender’s reasonable out-of-pocket costs, expenses, and legal fees and expenses of Lender’s counsel incurred in those actions or proceedings.

8.9 Attorneys’ Fees. Borrower will promptly pay to Lender, upon demand, with interest at the Default Rate, reasonable attorneys’ fees and all costs and other expenses paid or incurred by Lender in enforcing or exercising its rights or remedies created by, connected with or provided for in this Agreement or any of the other Loan Documents, and payment will be secured by the Deed of Trust. If at any time Borrower fails, refuses, or neglects to do any of the things in this Agreement provided to be done by Borrower, Lender will have the right, but not the obligation, to do the same but at the expense and for the account of Borrower. The amount of any monies so expended or obligations so incurred by Lender, together with interest thereon at the Default Rate, will be repaid to Lender immediately upon written demand for payment and will be secured by the Deed of Trust. Whenever Borrower is obligated to pay or reimburse Lender for any attorney fees, those fees will include the allocated costs for services of in-house counsel.

8.10 Indemnification. To the fullest extent permitted by law, Borrower agrees to protect, indemnify, defend and save harmless Lender, its directors, officers, agents, and employees for, from, and against any and all loss, cost, claim, demand, liability, expense, or damage of any kind or nature, including reasonable legal fees and expenses on account of any matter arising out of this Agreement or any of the other Loan Documents or in connection with the Loan, except those matters caused by the Lender’s gross negligence or willful misconduct.

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Upon receiving knowledge of any suit, claim, or demand asserted by a third party that Lender believes is covered by this indemnity, Lender will give Borrower notice of the matter and an opportunity to defend it, at Borrower’s sole cost and expense, with legal counsel satisfactory to Lender. Lender also may require Borrower to so defend the matter. The obligations on the part of Borrower under this Section 8.10 will survive the closing of the Loan and the repayment of the Loan.

8.11 Governing Law and Jurisdiction. This Agreement and the Loan Documents will be governed by, and construed in accordance with, the laws of the State of California. Borrower submits to jurisdiction and venue in Orange County, California, and agrees that any and all litigation or arbitration proceedings will be maintained in Orange County, California. Without limiting the generality of the foregoing, Borrower waives and agrees not to assert by way of motion, defense, or otherwise in the suit, action, or proceeding, any claim that any Borrower is not personally subject to the jurisdiction of the courts of the State of California, Orange County, and the United State District Court for the State of California, that the suit, action, or proceeding is brought in an inconvenient forum, or that the venue of the suit, action, or proceeding is improper.

8.12 Successors and Assigns; Participations. The terms of this Agreement will bind and benefit the heirs, personal representatives, successors, and assigns of the parties; however, Borrower may not assign this Agreement any funds from the Loan or assign or delegate any of its rights or obligations, without the prior written consent of Lender in each instance. Lender, in its sole discretion, may sell or assign participations or other interests in all or part of the Loan on the terms and subject to the conditions of the Loan Documents, all without notice to or the consent of Borrower. Also, without notice to or the consent of Borrower, Lender may disclose to any actual or prospective purchaser of any securities issued or to be issued by Lender, and to any actual or prospective purchaser or assignee of any participation or other interest in the Loan or any other loans made by Lender to Borrower (whether under this Agreement or otherwise), any financial or other information, data, or material in Lender’s possession relating to Borrower, the Loan, or the Property.

8.13 Relationships With Other Lender Customers. From time to time, Lender may have business relationships with Borrower’s customers, suppliers, contractors, members, tenants, partners, shareholders, officers, or directors, or with businesses offering products or services similar to those of Borrower, or with persons seeking to invest in, borrow from, or lend to Borrower. Borrower agrees that Lender may extend credit to the parties and may take any action it may deem necessary to collect the credit, regardless of the effect that the extension or collection of credit may have on Borrower’s financial condition or operations. Borrower further agrees that Lender is not obligated to disclose to Borrower any information concerning any other Lender customer.

8.14 Disclosure to Title Company. Without notice to or the consent of Borrower, Lender may disclose to any title insurance company that insures any interest of Lender under the Title Policy (whether as primary insurer, coinsurer, or reinsurer) any information, data, or material in Lender’s possession relating to Borrower, the Loan, the Loan Documents, or the Property that may be normally and customarily required for the insurance or endorsements or other title purposes.

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8.15 Improvement District. Borrower will not (or permit Tenant to) consent to, vote in favor of, or directly or indirectly advocate or assist in the incorporation of any part of the Property into any improvement or community facilities district, special assessment district, or other district without Lender’s prior written consent in each instance.

8.16 Restriction on Personal Property. Other than in the case of replacements with as good or better like property in the ordinary course of Borrower’s business, Borrower will not sell, convey, or otherwise transfer or dispose of its interest in any personal property in which Lender has a security interest, or contract to do any of the foregoing, without the prior written consent of Lender in each instance.

8.17 Severability. The invalidity or unenforceability of any one or more provisions of this Agreement will in no way affect any other provision. If any court of competent jurisdiction determines any provision of this Agreement or any of the other Loan Documents to be invalid, illegal, or unenforceable, that portion either will be modified to the minimum extent necessary to make its application valid and enforceable in a manner consistent with the Loan Documents or will be deemed severed from the rest, and the rest will remain in full force and effect as though the invalid, illegal, or unenforceable portion had never been a part of the Loan Documents.

8.18 Interpretation. Whenever the context requires, all words used in the singular will be construed to have been used in the plural, and vice versa, and each gender will include any other gender. The captions of the sections of this Agreement are for convenience only and do not define or limit any terms or provisions. The word “include(s)” means “include(s), without limitation,” and the word “including” means “including, but not limited to.” No listing of specific instances, items, or matters in any way limits the scope or generality of any language of this Agreement.

8.19 Amendments. This Agreement may not be modified or amended except by a written agreement signed by the parties.

8.20 Counterparts. This Agreement may be executed in any number of original or telecopy counterparts, each of which will be effective on delivery and all of which together will constitute one binding agreement of the parties to the Agreement. Any signature page of this Agreement may be detached from any executed counterpart of this Agreement without impairing the legal effect of any signatures and may be attached to another counterpart of this Agreement that is identical in form to the document signed (but that has attached to it one or more additional signature pages).

8.21 Language of Agreement. The language of this Agreement will be construed as a whole according to its fair meaning, and not strictly for or against any party.

8.22 Survival. The representations, warranties, acknowledgments, and agreements established in this Agreement will survive the date of this Agreement.

8.23 Further Performance. Borrower, whenever and as often as they will be requested by Lender, will execute, acknowledge, and deliver, or cause to be executed, acknowledged, and delivered, all further instruments and documents (and to do any and all

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things) as may be reasonably requested by Lender in order to carry out the intent and purpose of this Agreement and the other Loan Documents.

8.24 Time is of the Essence. Time is of the essence in the performance of this Agreement and the other Loan Documents by Borrower, and each and every term of the Loan Documents.

8.25 Recitals; Exhibits. The facts contained in the Factual Background to this Agreement established above are true, complete, accurate, and correct and are incorporated by reference. The exhibits to this Agreement are incorporated by reference.

8.26 Integration and Relation to Loan Commitment. The Loan Documents: (i) integrate all the terms and conditions mentioned in or incidental to this Agreement; (ii) supersede all oral negotiations and prior writings with respect to their subject matter; including Lender’s loan commitment to Borrower; and (iii) are intended by the parties as the final expression of the agreement with respect to the terms and conditions established in those documents and as the complete and exclusive statement of the terms agreed to by the parties. No representation, understanding, promise, or condition will be enforceable against any party unless it is contained in the Loan Documents. If there is any conflict between the terms, conditions, and provisions of this Agreement and those of any other agreement or instrument, including any other Loan Document, the terms, conditions, and provisions of this Agreement will prevail.

8.27 Discretion. Whenever the approval or consent is required of the Lender for anything under the Loan Documents, lender may give or withhold its consent or approval in its sole, absolute, and unfettered discretion, unless the Loan Documents specifically establish a different standard for approval (e.g., good faith, reasonable, etc.).

8.28 Binding Arbitration.

(a) The parties agree, upon demand by any party, to submit to binding arbitration all claims, disputes, and controversies between or among them (and their respective employees, officers, directors, attorneys, and other agents), whether in tort, contract, or otherwise arising out of or relating to in any way this Agreement or the other Loan Documents.

(b) Any arbitration proceeding will: (i) proceed in a location in Orange County, California, selected by the American Arbitration Association (“AAA”); (ii) be governed by the Federal Arbitration Act (Title 9 of the United States Code), notwithstanding any conflicting choice of law provision in any of the documents between the parties; and (iii) be conducted by the AAA, or any other administrator as the parties mutually agree upon, in accordance with the AAA’s commercial dispute resolution procedures, unless the claim or counterclaim is at least $1,000,000 exclusive of claimed interest, arbitration fees, and costs, in which case the arbitration will be conducted in accordance with the AAA’s optional procedures for large, complex, and commercial disputes (the commercial dispute resolution procedures or the optional procedures for large, complex, and commercial disputes to be referred to, as applicable, as the “Rules”). If there is any inconsistency between the terms of this Agreement and the Rules, the

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terms and procedures established in this Agreement control. Any party who fails or refuses to submit to arbitration following a demand by any other party will bear all costs and expenses incurred by the other party in compelling arbitration of any dispute. Nothing contained in any of the Loan Documents will be deemed to be a waiver by Lender of the protections afforded to it under 12 U.S.C. § 91 or any similar applicable state law.

(c) The arbitration requirement does not limit the right of any party to (i) foreclose against real or personal property collateral; (ii) exercise self-help remedies relating to collateral or proceeds of collateral such as setoff or repossession; or (iii) obtain provisional or ancillary remedies such as replevin, injunctive relief, attachment, or the appointment of a receiver, before during or after the pendency of any arbitration proceeding. This exclusion does not constitute a waiver of the right or obligation of any party to submit any dispute to arbitration, including those arising from the exercise of the actions detailed in subsections (i), (ii), and (iii) above.

(d) Any arbitration proceeding in which the amount in controversy is $1,000,000 or less will be decided by a single arbitrator selected according to the Rules. This single arbitration will not render an award of greater than $1,000,000. Any dispute in which the amount in controversy exceeds $1,000,000 will be decided by majority vote of a panel of three arbitrators; however, all three arbitrators must actively participate in all hearings and deliberations. The arbitrator will be a neutral attorney licensed in the State of California or a neutral retired judge of the state or federal judiciary of California, in either case with a minimum of ten years experience in the substantive law applicable to the subject matter of the dispute to be arbitrated. The arbitrator will determine whether or not an issue is arbitratable and will give effect to the statutes of limitation in determining any claim. In any arbitration proceeding, the arbitrator will decide (by documents only or with a hearing at the arbitrator’s discretion) any prehearing motions that are similar to motions to dismiss for failure to state a claim or motions for summary adjudication. The arbitrator will resolve all disputes in accordance with the substantive law of California and may grant any remedy or relief that a court of the state could order or grant within the scope of the dispute and any ancillary relief as is necessary to make effective any award. The arbitrator also will have the power to award recovery of all costs and fees, to impose sanctions, and to take all other actions as the arbitrator deems necessary to the same extent a judge could pursuant to the Federal Rules of Civil Procedure, the California Rules of Civil Procedure, or other applicable law. Judgment upon the award rendered by the arbitrator may be entered in any court having jurisdiction. The institution and maintenance of an action for judicial relief or pursuit of a provisional or ancillary remedy does not constitute a waiver of the right of any party, including the plaintiff, to submit the controversy or claim to arbitration if any other party contests the action for judicial relief.

(e) In any arbitration proceeding, discovery will be permitted in accordance with the Rules. All discovery is expressly limited to matters directly relevant to the dispute being arbitrated and must be completed no later than 20 days before the hearing date and within 180 days of the filing of the dispute with the AAA. Any requests for an extension of the discovery periods, or any discovery disputes, will be subject to final determination by the arbitrator upon a showing that the request for discovery is essential

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for the party’s presentation and that no alternative means for obtaining information is available.

(f) The resolution of any dispute arising pursuant to the terms of this Agreement will be determined by a separate arbitration proceeding, and the dispute may not be consolidated with other disputes or included in any class proceeding.

(g) The arbitrator will award all costs and expenses of the arbitration proceeding.

(h) To the maximum extent practicable, the AAA, the arbitrators, and the parties agree to take all action required to conclude any arbitration proceeding within 180 days of the filing of the dispute with the AAA. No arbitrator or other party to an arbitration proceeding may disclose the existence, content, or results of the arbitration, except for disclosures of information by a party required in the ordinary course of its business or by applicable law or regulation. If more than one agreement for arbitration by or between the parties potentially applies to a dispute, the arbitration provision most directly related to the documents between the parties or the subject matter of the dispute controls. This arbitration provision will survive termination, amendment, or expiration of any of the documents or any relationship between the parties.

8.29 Jury Waiver. TO THE EXTENT PERMITTED BY LAW, THE UNDERSIGNED AND LENDER VOLUNTARILY, KNOWINGLY, IRREVOCABLY, AND UNCONDITIONALLY WAIVE ANY RIGHT TO HAVE A JURY PARTICIPATE IN RESOLVING ANY DISPUTE (WHETHER BASED UPON CONTRACT, TORT, OR OTHERWISE) BETWEEN OR AMONG THE UNDERSIGNED AND LENDER ARISING OUT OF OR IN ANY WAY RELATED TO THIS DOCUMENT OR ANY OTHER RELATED DOCUMENT OR ANY RELATIONSHIP BETWEEN LENDER AND BORROWER. THIS PROVISION IS A MATERIAL INDUCEMENT TO LENDER TO PROVIDE THE FINANCING DESCRIBED IN THIS AGREEMENT OR IN THE OTHER LOAN DOCUMENTS.

INITIALS:     SD    /    DC    /            

[SIGNATURES BEGIN ON THE NEXT PAGE]

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COUNTERPART SIGNATURE PAGE

Executed as of the Agreement Date.

“Borrower”
Quest Software, Inc., a Delaware corporation
By:	/s/ Scott Davidson
Name:	Scott Davidson
Title:	CFO
By:	/s/ David Cramer
Name:	David Cramer
Title:	VP, General Counsel

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COUNTERPART SIGNATURE PAGE

Executed as of the Agreement Date.

“Lender”
Mutual of Omaha Bank, a federally chartered thrift
By:	/s/ Jeff Barnett
Name:	Jeff Barnett
Title:	VP

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EXHIBIT “A”

TO

LOAN AND SECURITY AGREEMENT

(Quest Software – Polaris Way – Loan No. 3700038-001)

(Land/ Property)

THE LAND REFERRED TO HEREIN BELOW IS SITUATED IN THE CITY OF ALISO VIEJO, COUNTY OF ORANGE, STATE OF CALIFORNIA AND IS DESCRIBED AS FOLLOWS:

THOSE PORTIONS OF TRACT MAP NO(S). 14323 RECORDED IN BOOK 714, PAGES 49 AND 50; 14324 RECORDED IN BOOK 715, PAGES 9 AND 10; 14972 RECORDED IN BOOK 715, PAGES 11 AND 12; AND THAT PORTION OF TRACT MAP NO. 14310 RECORDED IN BOOK 670, PAGES 45 AND 46, ALL OF MISCELLANEOUS MAPS, THAT HAS BEEN ABANDONED AS INSTRUMENT NO. 1997-0652771, ALL IN THE OFFICE OF THE COUNTY RECORDER OF SAID COUNTY, MORE PARTICULARLY DESCRIBED AS FOLLOWS:

PARCEL A:

PARCELS 4 AND 5 IN THE CITY OF ALISO VIEJO, COUNTY OF ORANGE, STATE OF CALIFORNIA, AS SHOWN ON EXHIBIT “B” ATTACHED TO LOT LINE ADJUSTMENT NO. LL-97-054, RECORDED DECEMBER 19, 1997 AS INSTRUMENT NO. 19970652822 OF OFFICIAL RECORDS.

EXCEPT THEREFROM ALL PREVIOUSLY UNRESERVED MINERALS, OIL, GAS, PETROLEUM, OTHER HYDROCARBON SUBSTANCES AND ALL UNDERGROUND WATER, IN OR UNDER OR WHICH MAY BE PRODUCED FROM THE PROPERTY WHICH UNDERLIES A PLANE PARALLEL TO AND 500 FEET BELOW THE PRESENT SURFACE OF THE PROPERTY FOR THE PURPOSE OF PROSPECTING FOR, THE EXPLORATION, DEVELOPMENT, PRODUCTION, EXTRACTION AND TAKING OF SAID MINERALS, OIL, GAS, PETROLEUM, OTHER HYDROCARBON SUBSTANCES AND WATER FROM THE PROPERTY BY MEANS OF MINES, WELLS, DERRICKS OR OTHER EQUIPMENT FROM SURFACE LOCATIONS ON ADJOINING OR NEIGHBORING LAND OR LYING OUTSIDE OF THE PROPERTY, IT BEING UNDERSTOOD THAT THE OWNER OF SUCH MINERALS, OIL, GAS, PETROLEUM, OTHER HYDROCARBON SUBSTANCES AND WATER, AS SET FORTH ABOVE, SHALL HAVE NO RIGHT TO ENTER UPON THE PROPERTY OR ANY PORTION THEREOF ABOVE SAID PLANE PARALLEL TO AND 500 FEET BELOW THE PRESENT SURFACE OF THE PROPERTY FOR ANY PURPOSE WHATSOEVER, AS RESERVED BY SHEA HOMES LIMITED PARTNERSHIP IN THE DEEDS RECORDED DECEMBER 19, 1997 AS INSTRUMENT NO. 19970653373, BOTH OF OFFICIAL RECORDS.

PARCEL B:

NON-EXCLUSIVE EASEMENTS FOR PEDESTRIAN AND VEHICULAR INGRESS AND EGRESS, PARKING, UTILITIES AND OTHER MATTERS ON, OVER, UNDER OR ACROSS PORTIONS OF PARCELS 1, 2, 3, 4 AND 5 AS SHOWN ON EXHIBIT “B” ATTACHED TO LOT LINE ADJUSTMENT NO. LL 97-054, RECORDED ON DECEMBER 19, 1997 AS INSTRUMENT NO. 19970652822 OF OFFICIAL RECORDS OF ORANGE COUNTY, CALIFORNIA, AS SAID EASEMENTS ARE SET FORTH AND DEFINED IN ARTICLE 2 IN THAT CERTAIN DECLARATION OF RECIPROCAL EASEMENTS AND COVENANTS EXECUTED BY FLUOR ENTERPRISES, INC., A CALIFORNIA CORPORATION, RECORDED MARCH 31, 2004 AS INSTRUMENT NO. 2004000265241 OF OFFICIAL RECORDS OF ORANGE COUNTY, CALIFORNIA.

Assessor’s Parcel No: 623-481-52 and 53

Borrower Initials:     SD    /    DC    

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EX-10.2

Exhibit 10.2

SECURED PROMISSORY NOTE

(Mutual of Omaha Bank, Loan No. 3700038-001)

Principal Amount: $34,000,000.00 August 3, 2009

For value received, Quest Software, Inc., a Delaware corporation (“Maker”) promises to pay, in lawful money of the United States, to Mutual of Omaha Bank, a federally chartered thrift, or its order (“Payee”), at 4657 MacArthur Court, Suite 1480, Newport Beach, California 92660, Attention: James S. Knight, or at any other place as the Holder of this Secured Promissory Note (“Note”) may designate from time to time, the principal sum of Thirty-Four Million and No/100 Dollars ($34,000,000.00), which has been advanced by Payee to Maker under the concurrently executed Loan and Security Agreement (“Loan Agreement”), together with interest per annum commencing from the date of this Note at the applicable rate described below. As used in this Note, the term “Holder” will mean Payee, each Participant (as described in the Loan Agreement, to the extent of their interest), and each subsequent transferee or owner of this Note. This Note evidences a loan (the “Loan”) from Payee to Borrower, and is subject to the terms and conditions of the Loan Agreement. This Note, the Loan Agreement, and all other documents evidencing, securing, and guarantying the Loan are referred to collectively as, the “Loan Documents”.

1. Payment. Unless accelerated by Holder as a result of a default under this Note, all principal and accrued interest will be due and payable as follows:

(a) From the date of this Note (the “Effective Date”) until the Scheduled Maturity Date (as hereinafter defined), interest will accrue at the fixed rate equal to the Adjusted Treasury Rate, which is 7.03% (the “Initial Rate”). On the First Payment Date (as hereinafter defined) and continuing until the Scheduled Maturity Date, Maker will make equal monthly installment payments of principal and interest, in arrears, in an amount sufficient to fully amortize the principal balance of the Note and all accrued interest at the Initial Rate over an amortization period of 25 years.

(b) The first monthly payment will be due on the first day of the calendar month following the Effective Date (the “First Payment Date”) and then on the first day of each succeeding calendar month until the Scheduled Maturity Date. If the Effective Date is any day other than the first day of the calendar month, then interest on the principal sum outstanding for the period commencing on the Effective Date through (and including) the last day of the month in which the Effective Date occurs shall be due and payable concurrently with the payment that is due on the First Payment Date.

(c) The “Scheduled Maturity Date” is the date upon which all principal and interest is due and payable and is the date that is the 5th anniversary of the Effective Date.

(d) As used above, the term “Adjusted Treasury Rate” means a per annum interest rate equal to the greater of: (i) 6.25% per annum; or (ii) 5.0% over (in excess of) the Five Year Treasury Rate. The term “Five Year Treasury Rate” means the Five Year

Treasury Constant Maturity rate as determined by the United States Treasury and published by the Federal Reserve Board as of the date of Lender’s commitment letter.

(e) Interest will be calculated based upon a 360-day year and the actual number of days elapsed. This results in more interest than if a 365-day year were used. All amounts payable under this Note are payable in lawful money of the United States during normal business hours on a Banking Day (as such term is defined in the Loan Agreement).

2. Default. Maker will be deemed to be in default under this Note if Maker: (i) fails to make any payment required under this Note within ten (10) days after the date the payment is due, or if there is not specified due date then within 10 days after written notice from Lender; (ii) is in default (monetary or non-monetary) beyond all applicable notice and cure periods under the Deed of Trust (as defined below) or under any of the other Loan Documents. If Maker is in default under this Note, or under any other Loan Documents, the unpaid principal and accrued and unpaid interest and any other unpaid amounts and costs due will bear interest at a rate (“Default Rate”) equal to 5% greater than the applicable rate of interest then being charged under the Note. From and after the date when the principal balance of this Note is due by reason of its scheduled maturity, acceleration, default, or otherwise (the date being called the “Maturity Date”), any unpaid principal and interest and any other unpaid amounts and costs under this Note will bear interest at the Default Rate. Additionally and without limitation, all amounts owed under any judgment obtained against Maker with respect to this Note will bear interest at the Default Rate.

3. Late Charge. Without limiting Holder’s right to charge and collect interest at the Default Rate upon the occurrence of the specified events, Maker acknowledges that, if any payment required under this Note is not paid within 10 days after the date the payment is due, the Holder will incur additional costs. The exact amount of these costs is difficult and impracticable to assess. Maker acknowledges that, under the circumstances existing at the time this Note is made, the sum equal to the greater of $100.00 or five percent (5.00%) of the overdue amount is a reasonable charge, and Maker promises to pay this late charge when due. No notice of the assessment of the late charge need be given by Holder to Maker. The obligation of Maker to pay the late charge does not alter or affect the rights of the Holder to collect interest on the amounts due under this Note at the interest rates established in this Note nor does it affect or impair Holder’s other rights or remedies under this Note or any other Loan Documents.

4. Usury Limitation. Maker agrees to pay, and has contracted with Holder to pay, an effective rate of interest that, together with the interest rates described in this Note, results from the inclusion of all charges, late fees, and default interest payable by Maker that may constitute interest for the purposes of any applicable usury laws. Nothing in this Note will be construed as a violation of any usury laws that may be enacted from time to time in the State of California. If Holder receives an amount that would exceed any usury limits, all amounts that would be excessive interest will be applied as a reduction in the unpaid principal balance and, if a surplus still remains, all amounts will be remitted by Holder to Maker. To the extent that Maker is legally capable of doing so, Maker agrees that the only relevant usury laws are the relevant laws of the State of California that are in effect on the date of this Note.

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5. Acceleration. At the option of the Holder, all sums due under this Note (including all unpaid principal and interest) will become immediately due and payable without notice upon the occurrence of any default under this Note. Every party who is now or in the future may become liable for payment of this Note, and every Surety (defined below) of this Note, expressly agrees that the Note may be extended unilaterally from time to time and expressly consents to the release of all or part of the Property encumbered by the Deed of Trust.

6. Collection Costs. If any default occurs under this Note, Maker and all Sureties promise to pay all reasonable costs of collection including, without limitation, attorney fees in a reasonable amount. Without limiting the foregoing, Maker and all Sureties agree to pay all court costs and attorney fees incurred by or assessed against Holder if Holder is made a party to any litigation solely because of the existence of the indebtedness evidenced by this Note.

7. Prepayment. If this Note is prepaid in whole or in part, at any time and for any reason prior to the applicable Maturity Date, Maker agrees to pay a prepayment fee equal to: (i) one percent (1%) of the amount prepaid if said payment is received by Payee during the first two years after the Effective Date, and (ii) one half percent (.5%) of the amount prepaid if said payment is received by Payee during the third year after the Effective Date. No prepayment fee shall be payable for prepayments made after the end of the third year after the Effective Date. Maker understands that any loan fees, origination fees, or prepaid finance charges previously paid to Holder will not be refunded upon any early prepayment. Early payments will not, unless otherwise agreed by Holder, relieve Maker of its obligations to continue to make payments for each future payment period.

8. Governing Law. This Note is governed by, and is to be construed in accordance with, the laws of the State of California. Any action brought to enforce, construe, or interpret any provision of this Note must be commenced or maintained in the Superior Court of the State of California, Orange County or, if the Superior Court lacks or declines jurisdiction, in the United States District Court for the District of California. All parties irrevocably consent to this jurisdiction and venue and agree not to transfer or remove any action commenced in accordance with this provision of the Note.

9. Waivers. Maker and all sureties, guarantors, endorsers, and accommodation parties (each a “Surety”) of this Note or any obligation under this Note each: (i) agree that the liability for payment under this Note is joint and several; (ii) waive all formalities in connection with collection on this Note, to the fullest extent permitted by law, including demand, presentment, notice of dishonor, diligence in collection, notice of protest, and notice of nonpayment; and (iii) waive all homestead and exemption rights, if applicable, affecting the full collection of this Note. Maker and each Surety agree to all renewals, modifications, extensions, partial payments, discharges, releases, or substitutions of security of or for this Note that are made before or after the Maturity Date, all of which may be made without prejudice to the rights of the Holder under this Note.

10. Sureties. In addition, each Surety waives and agrees not to assert: (i) any right to require Holder to proceed against Maker or any other Surety, to proceed against or exhaust any security for the Note, to pursue any other remedy available to Holder, or to pursue any remedy in any particular order or manner; (ii) the benefits of any legal or equitable doctrine or principle of

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marshalling; (iii) notice of the existence, creation, or incurring of new or additional indebtedness of Maker to Holder; (iv) to the fullest extent permitted by law, the benefits of any statutory provision limiting the liability of a surety; (v) any defense arising by reason of any disability or other defense of Maker or by reason of the cessation from any cause whatsoever (other than payment in full) of the liability of Maker for payment of the Note; and (vi) to the fullest extent permitted by law, the benefits of any statutory provision limiting the right of Holder to recover a deficiency judgment, or to otherwise proceed against any person or entity obligated for payment of the Note, after any foreclosure or trustee’s sale of any security for the Note. Until payment in full of the Note, no Surety will have any right of subrogation and each waives any right to enforce any remedy that Holder now has, or may have in the future, against Maker or any other Surety, and waives any benefit of, and any right to participate in, any security now or in the future held by Holder.

11. Preferential Payment. Maker agrees that, to the extent Maker or any Surety makes any payment to Holder in connection with the indebtedness evidenced by this Note and all or any part of the payment is subsequently invalidated, declared to be fraudulent or preferential, set aside, or required to be repaid by Holder or paid over to a trustee, receiver, or any other entity, whether under any bankruptcy act or otherwise (any payment of this type being referred to as a “Preferential Payment”), the indebtedness of Maker under this Note will continue or will be reinstated, as the case may be, and, to the extent of the payment or repayment by Holder, the indebtedness evidenced by this Note or part of this Note intended to be satisfied by the Preferential Payment will be revived and continued in full force and effect as if the Preferential Payment had not been made.

12. Application of Payments. Any check, draft, money order, or other instrument given in payment of all or any portion of this Note may be accepted by Holder and handled for collection, but the acceptance of the check, draft, money order, or other instrument will not constitute payment under the Note or diminish any of Holder’s rights under the Note unless and until actual cash proceeds are unconditionally received by Holder and applied to the indebtedness evidenced by this Note. Unless a default under this Note has occurred and is continuing, all payments made by Maker under this Note will be applied: (i) first, to late charges, costs of collection or enforcement, and similar amounts due, if any, under the Note, or any other Loan Documents; (ii) second, to interest that is due and payable under this Note; and (iii) third, the remainder to principal due and payable under this Note. If a default under this Note has occurred and is continuing, all payments made by Maker under this Note will be applied to the sums due under this Note, or any other Loan Documents in any order or combination that Holder may determine, in its sole discretion.

13. Cumulative Rights. The rights and remedies of the Holder under this Note are intended to be cumulative and concurrent and may be pursued singularly, successively, or together against Maker and/or each and every Surety, or any of them. If there is more than one Maker, the obligations and covenants of each Maker will be joint and several. Failure of the Holder to exercise any right or option under this Note will not constitute a waiver of Holder’s right to exercise its rights or options in the event of a subsequent default or in the event of the continuance of any existing default.

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14. Time for Performance. Time is of the strictest essence in the payment and performance by Maker under this Note.

15. Security. This Note is secured by a senior and first priority Deed of Trust, Security Agreement, Assignment of Rents and Leases, and Fixture Filing (“Deed of Trust”) in favor of Fidelity National Title Company, as trustee, encumbering certain real property located in Orange County, California (“Property”).

[THE REMAINDER OF THIS PAGE IS LEFT BLANK.

SIGNATURES FOLLOW ON THE NEXT PAGE.]

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This Note is made and entered into as of the date set forth at the beginning of this Note.

“Maker”
Quest Software, Inc., a Delaware corporation
By:	/s/ Scott Davidson
Name:	Scott Davidson
Title:	CFO
By:	/s/ David Cramer
Name:	David Cramer
Title:	VP, General Counsel & Secretary

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EX-10.3

Exhibit 10.3

WHEN RECORDED MAIL TO:

Kutak Rock LLP

8601 North Scottsdale Road, Suite 300

Scottsdale, Arizona 85253

Attention: Lynn T. Ziolko, Esq.

DEED OF TRUST, SECURITY AGREEMENT,

ASSIGNMENT OF RENTS AND LEASES, AND FIXTURE FILING

(CALIFORNIA)

THIS DEED OF TRUST ALSO CONSTITUTES AND IS FILED AS A FIXTURE FILING UNDER THE CALIFORNIA UNIFORM COMMERCIAL CODE.

This Deed of Trust, Security Agreement, Assignment of Rents and Leases, and Fixture Filing (“Deed of Trust”) is made as of August 3, 2009 (“Execution Date”), by and among Quest Software, Inc., a Delaware corporation, as “Trustor”, the successor by merger to Quest Software, Inc., a Delaware corporation, whose mailing address is 5 Polaris Way, Aliso Viejo, CA 92656; (ii) Mutual of Omaha Bank, a federally chartered thrift, as “Beneficiary”, whose mailing address is 4657 MacArthur Court, Suite 1480, Newport Beach, CA 92660; and (iii) Fidelity National Title Company, a California corporation, as “Trustee”, whose mailing address is 1737 North First Street, Suite 100, San Jose, CA 95112.

PRELIMINARY STATEMENT

Trustor holds fee title interest in the real property situated in the County of Orange, State of California, more particularly described on the attached Exhibit “A” (referred to interchangeably as either the “Real Property” or the “Premises”).

GRANTING CLAUSES

1. Grant in Trust. Trustor irrevocably grants, conveys, and transfers to Trustee, its successors and assigns, in trust, pursuant to this Deed of Trust and California law, with power of sale and right of entry and possession, all of Trustor’s right, title, and interest in and to the Premises. The Premises are conveyed by Trustor in trust together with all present and future tenements, hereditaments, rights, rights-of-way, easements, privileges, licenses, benefits, and appurtenances that belong to the Premises or are necessary for the operation of the Premises (all as part of the premises conveyed), which will include, but is not limited to, the following property:

(a) All buildings, improvements, fixtures, and equipment (whether or not annexed to the Premises) now or in the future located on, used in connection with, or intended to be used in connection with the Premises including, without limiting the generality of the foregoing, all machinery, materials, appliances, and fixtures for generating or distributing air, water, heat, electricity, light, or fuel refrigeration, for ventilating, cooling, or sanitary purposes, for the exclusion of vermin or insects, and for the removal of dust, refuse, or garbage, all wall safes, engines, machinery, boilers, furnaces, oil burners, coolers, refrigeration plants, motors, cabinets, shelving, lockers, partitions, doors, vaults, elevators, sprinkling systems, irrigating systems, awnings, window shades, shutters, venetian blinds, light fixtures, fire hoses, fire brackets, fire boxes, fire sprinklers, alarm systems, drapery rods, brackets, screens, floor tile, linoleum, carpets, plumbing, water systems, power systems, incinerators, communication systems, appliances, built-in furniture, and built-in bars, and all other installations and appliances on the Premises (and all substitutions and replacements for all of the foregoing). All of the items described in this subparagraph are declared to be part of the real property and are called collectively the “Improvements”;

(b) Oil, gas, soil, and/or mineral rights including, without limitation, any related royalties;

(c) All water and water rights (whether riparian, appropriative, or otherwise and whether or not appurtenant to the Premises) which now relate to or in the future may relate to or be used in connection with the Premises;

(d) All shares of stock evidencing any water rights;

(e) All privileges and other rights that are now or in the future may become appurtenant to the Premises including, without limitation, all of Trustor’s right, title, and interest in and to all streets, roads, easements, rights-of-way, and public places, whether opened or proposed or public or private;

(f) All rents, issues, lease payments, incomes, profits, revenues, bonuses, rights, and benefits (collectively, the “Rents”) from or under any and all existing and future leases, tenancies, or other use and occupancy agreements created on all or any part of the Premises with the right to receive and apply the Rents to the Obligations;

(g) All current and future judgments, awards of damages, and settlements made as a result of any Condemnation or made as a result of any damage (whether caused by a taking or otherwise) to the Premises or the Improvements or any part of or interest in the Premises, including any award for change of grade or width of streets;

(h) All right, title, and interest of Trustor in and to any insurance proceeds payable to Trustor with respect to all or any portion of the Premises, including, without limitation, the Trust Property;

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(i) All monetary deposits that Trustor has given to any public or private utility with respect to utility services furnished to the Premises;

(j) All funds, accounts, instruments, documents, general intangibles (including trademarks, trade names, and symbols) permits, licenses, franchises, certificates, and other rights and privileges obtained with respect to the Premises;

(k) All proceeds of the conversion, voluntary or involuntary, of any of the foregoing into cash or liquidated claims;

(l) All reversion and remainder interests arising out of ownership of the Trust Property;

(m) All present and future licenses, permits, approvals, and agreements from or with any governmental, quasi-governmental, or private entity relevant to the zoning, subdivision, development, construction, improvement, sale, lease, or other disposition of all or part of the Premises or Improvements;

(n) All present and future plans, specifications, drawings, surveys, appraisals, reports, and studies regarding the Premises;

(o) All management, maintenance, construction, purchase, sale, or service contracts related to the Premises or its operation;

(p) All present and future rights of Trustor under or with respect to any declaration of covenants, conditions, and/or restrictions imposing rights or responsibilities on the Premises or its owner, including any development rights, declarant rights, or special declarant rights of Trustor under any declaration of covenants, conditions, and/or restrictions;

(q) All rights of Trustor in and to any present or future contracts, agreements, guarantees, options, deposits, refunds, credits, retentions, surety bonds, or any other considerations which relate in any way to the ownership, development, improvement, leasing, sale, or other disposition of the Premises or Improvements; and

(r) Without limiting any of the foregoing, all present and future equipment, inventory, general intangibles, accounts, chattel papers, instruments, royalties, contract rights, and documents necessary for the use of the Premises.

2. Additional Grants. Trustor also absolutely and irrevocably grants, assigns, transfers, and conveys to Beneficiary all rents, issues, profits, incomes, damages, royalties, revenues, and benefits now or in the future due and payable arising in connection with the Trust Property, together with the right to collect these items for the purposes and upon the terms and conditions established in this Deed of Trust. Trustor acknowledges that certain of the descriptions of items in the preceding paragraphs may be duplicative and redundant, but Trustor

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acknowledges that it is the agreement and intent of Trustor that the descriptions are to be construed as cumulative and not limiting.

3. Warranty of Title. All real, personal, intangible, and other property granted, conveyed, and transferred to Trustee under this Deed of Trust is referred to as the “Trust Property”. Trustor warrants that it has marketable fee simple title to the Premises, subject only to those non-standard exceptions set forth in the lender’s policy of title insurance issued to Beneficiary in connection with the recordation of this Deed of Trust (“Approved Title Exceptions”). Trustor warrants that its title to the Trust Property is and will remain lien free and unencumbered, except for the Approved Title Exceptions. Trustor agrees to warrant and defend title to the Trust Property for the benefit of Beneficiary against all claims whatsoever, except the Approved Title Exceptions and those matters consented to in writing by Beneficiary. Trustor warrants that this Deed of Trust is and will remain a valid and enforceable first lien on the Premises, subject only to the Approved Title Exceptions. Trustor agrees that any greater title to the Trust Property that Trustor may acquire during the term of this Deed of Trust will be subject to this Deed of Trust.

4. Secured Obligations. Trustor has executed and delivered this Deed of Trust for the purpose of securing (collectively, the “Obligations”):

(a) Payment of the indebtedness evidenced by that certain Promissory Note Secured by Deed of Trust dated concurrent with the Execution Date, and any renewals, extensions, substitutions, modifications, or amendments, in the stated and original principal sum of $34,000,000.00 executed by Trustor and delivered to Beneficiary (“Note”), together with all interest, late charges, prepayment fees, additional interest, collection costs, fees, and expenses as provided in the Note.

(b) The prompt and complete payment and performance obligations of Borrower under the Loan and Security Agreement dated concurrent with the Execution Date (the “Loan Agreement”).

(c) Payment of all amounts specified in this Deed of Trust that Trustor has agreed to or is required to pay.

(d) Payment and performance of all obligations of Trustor to Beneficiary under any interest rate swap contract executed in connection with the loan described in the Loan Agreement.

(e) Prompt and complete performance and observance of each and every covenant, obligation, or agreement of Trustor contained in this Deed of Trust or contained in any other document or instrument given by Trustor to further evidence or secure the indebtedness represented by the Note (“Additional Documents”). The Note, the Loan Agreement, Deed of Trust, and the Additional Documents are called collectively the “Loan Documents”.

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(f) Payment of any additional sums (and accrued interest) that may be loaned or advanced by Beneficiary to Trustor, evidenced by the Note or any other promissory note or notes executed by Trustor reciting that they are secured by this Deed of Trust, including future loans, advances, and obligations.

5. Taxes. Trustor will pay: (i) before delinquent, all taxes, general and special assessments, and improvement district assessments of every type or nature affecting the Trust Property; (ii) all rents or charges payable under any lease affecting the Trust Property; (iii) all adverse claims, liens, charges, and encumbrances which now are or in the future may be or appear to be a lien on the Trust Property; (iv) all charges for water, water delivery, gas, electricity, sewers, waste removal; (v) all repairs; and (vi) all assessments due on any water stock. If any real estate taxes or general, special, or improvement district assessments (collectively, “Taxes and Assessments”) are not separately assessed to the Trust Property but include other property owned or not owned by Trustor, Trustor agrees that it will promptly apply for and complete the separation of the Trust Property from all other property for the purpose of all Taxes and Assessments. If Trustor does not promptly complete the separation, Beneficiary may exercise all remedies available under this Deed of Trust including the right to advance all monies necessary to pay all or any portion of the Taxes and Assessments. All money so advanced will be secured by the lien of this Deed of Trust.

6. Insurance.

(a) Trustor will carry continuously the insurance with regard to the Trust Property as is required by the terms of the Loan Documents. Unless and until Beneficiary elects to receive the impound payments referred to in Paragraph 37 of this Deed of Trust, Trustor agrees to pay the premiums on the insurance, when due and prior to delinquency, and to furnish proof of the payment to Beneficiary not less than 30 days prior to the expiration date of the insurance.

(b) If any loss or damage occurs to any portion of the Trust Property, Trustor will promptly give notice to Beneficiary, and Trustor will make proper proof of loss. If not made by Trustor, Beneficiary may make a proof of loss. Beneficiary may require that the payment for the loss be paid directly to Beneficiary only and not jointly to Trustor and Beneficiary. Beneficiary may, at its option, apply the insurance proceeds to the reduction of the Obligations or may apply the insurance proceeds to the restoration or repair of the property damaged.

7. Repairs and Waste. Trustor will keep the Trust Property in good condition and repair and will not commit or permit waste. Trustor will not remove or demolish, nor commence or continue any grading or construction of, nor alter the design or structural character of, any Improvements comprising part of the Trust Property, without the written consent of Beneficiary (whose consent will be given or withheld at Beneficiary’s sole discretion). Trustor will keep all Improvements comprising part of the Trust Property free of termites, dry rot, fungus, beetles, and all other harmful or destructive insects. Trustor will keep all plants, trees, and shrubs comprising part of the Trust Property neatly pruned and in good condition. Trustor will to keep the Trust

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Property free of rubbish and other unsightly or unhealthful conditions and will not in any way change or restrict the use of the Trust Property without the prior written consent of Beneficiary, whose consent will be given or withheld in Beneficiary’s sole discretion. Beneficiary and its agents and/or its employees may, at any time or from time to time, without notice to Trustor, and without liability to Trustor (or any entity claiming any rights through Trustor) for trespass, abuse of access, or otherwise, enter and inspect or protect the Trust Property in the manner and to the extent as Beneficiary may deem desirable in its sole discretion.

8. Improvements. Trustor will complete promptly any improvements that may be commenced in a good and workmanlike manner in conformity with plans and specifications approved by Beneficiary. Trustor, with reasonable diligence, will repair and restore any portions of the Trust Property that may be damaged or destroyed whether any insurance proceeds against the cause of the damage or destruction are collected or not. Trustor will pay when due all claims for work performed or materials furnished, or both, on or in connection with the Trust Property, and will pay, discharge, or cause to be removed, all mechanic’s, artisan’s, laborer’s, or materialmen’s charges, liens, claims of liens, or encumbrances upon the Trust Property. Prior to the commencement of any construction, grading, demolition, or other act or omission by Trustor that might give rise to any materialmen, mechanics, or similar lien or security interest in or against the Trust Property, if any, Trustor will deliver to Beneficiary all completion, construction, surety, or other bonds issued by a company acceptable to Beneficiary as Beneficiary may elect or deem appropriate to fully ensure completion of the grading, construction, demolition, or other act, and protect Beneficiary and the Trust Property against any liens.

9. Defense. Unless otherwise requested by Beneficiary in writing, Trustor will appear in and prosecute or defend any action or proceeding that may affect the priority of this Deed of Trust or the security of the Beneficiary or the Trust Property, and Trustor will pay all reasonable costs, expenses (including, without limitation, the cost of searching title), and attorney fees incurred in the action or proceeding. Beneficiary, at its option, may appear in and defend any action or proceeding purporting to affect the priority of this Deed of Trust or the Trust Property or the rights or powers of Beneficiary. Beneficiary, at its option, may pay, purchase, contest, or compromise any adverse claim, encumbrance, charge, or lien which, in the good faith judgment of Beneficiary, appears to be prior or superior to the lien of this Deed of Trust or which otherwise may affect this Deed of Trust or the Trust Property, without affecting any duty, obligation, or liability of Trustor under this Deed of Trust or under any other document or instrument given by Trustor to evidence or otherwise secure the indebtedness secured by this Deed of Trust, and without subjecting Beneficiary to any liability to Trustor on account of the payment, purchase, contest, or compromise. All amounts paid, suffered, or incurred by Beneficiary in exercising the authority granted in this Paragraph (including, without limitation, attorney fees in a reasonable amount) will be payments immediately repayable by Trustor pursuant to Paragraph 8 below.

10. Compliance. Trustor will comply with all laws, ordinances, regulations, covenants, conditions, and restrictions affecting the Trust Property and will not suffer or permit any act to be done in or upon the Trust Property in violation of the foregoing.

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11. Performance. If Trustor fails to do so, Beneficiary, without demand or notice and as it, in its sole judgment, may consider necessary or advisable, and without obligation to do so, may do any or all things required of Trustor by any of the provisions of this Deed of Trust and incur and pay expenses in connection with the performance (e.g., pay taxes, release liens, etc.). All expenses or charges incurred by Beneficiary in the performance of any matters under this Paragraph 11 will be considered to be payments that are immediately repayable under Paragraph 12 below.

12. Advances or Payments. Trustor will pay to Trustee and Beneficiary, respectively, promptly and upon demand, all sums of money that Beneficiary or Trustee may have advanced or paid pursuant to, or resulting from, any of the provisions of this Deed of Trust. All of these amounts must be paid with interest from the time of the advance or payment until paid at the applicable rate established in the Note.

13. Default. Any of the following events will constitute an “Event of Default” under this Deed of Trust.

(a) Failure to pay any other sum payable under this Deed of Trust within 10 days after the applicable due date, whether payable to Beneficiary or otherwise.

(b) Any failure or neglect of Trustor to perform or observe any non-monetary obligation, covenant, or agreement in this Deed of Trust, if the failure or neglect continues to exist for 20 days following written notice to Trustor of the failure or neglect; however, if Beneficiary deems the failure or neglect to be of the nature that waiting for the expiration of the 20-day period would materially impair Beneficiary’s security under this Deed of Trust, the failure or neglect will immediately constitute an Event of Default. Also, if the failure or neglect of performance is not capable of being cured within the 20-day period, the failure or neglect will not constitute an Event of Default if Trustor promptly commences remedial measures and diligently and continually proceeds with the remedial measures until the failure or neglect are completely cured, which, in any case, may not extend beyond 30 days following the initial written notice to the Trustor.

(c) Upon the filing or levy of any execution, attachment, tax levy, writ, or lien against the Trust Property that is not be released, stayed, bonded, insured against in favor of Beneficiary, satisfied, or vacated within 10 days after the filing or levy.

(d) Upon the abandonment of all or any part of the Trust Property.

(e) Upon any Event of Default under any of the Loan Documents.

(f) Upon the recordation or filing of any mechanics’ or materialmen’s lien, attachment, garnishment, replevin, execution, or other statutory or judicial lien against all or any portion of the Trust Property that is not discharged, satisfied, or bonded over to Beneficiary’s satisfaction.

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(g) Upon any Prohibited Transfer, as defined below.

14. Remedies. Upon the occurrence of an Event of Default the Beneficiary may, at the Beneficiary’s sole option exercised in the Beneficiary’s sole discretion, pursue any one or more of the following remedies:

(a) Declare all or any portion of the Obligations to be due and payable, and, upon Beneficiary’s declaration, all applicable Obligations, will become due and payable without any presentment, demand, protest or notice of any kind except as otherwise provided in this Deed of Trust;

(b) Either in person or by agent, with or without bringing any action or proceeding, or by a receiver appointed by a court, and without regard to the adequacy of its security, enter upon and take possession of all or any part of the Trust Property and do any acts which it deems necessary or desirable to preserve the value, marketability or rentability of all or any part of the Trust Property increase the income from the Trust Property or protect the security of the Trust Property and, with or without taking possession of the Trust Property, take any action described in this Deed of Trust, sue for or otherwise collect the rents, issues and profits of the Trust Property, including those past due and unpaid, and apply those amounts, less costs and expenses of operation and collection including reasonable attorneys’ fees, upon any Obligations, all in any order as the Beneficiary may determine. The entering upon and taking possession of the Trust Property, the taking of any action described in this Deed of Trust, the collection of the rents, issues and profits and the application of the rents, issues, and profits as established above, will not cure or waive any default or notice of default or invalidate any act done in response to the default or pursuant to the notice of default and, notwithstanding the continuance in possession of the Trust Property or the collection, receipt and application of rents, issues or profits, the Beneficiary will be entitled to exercise every right provided for in any of the Loan Documents or by law upon occurrence of any Event of Default, including the right to exercise the power of sale conferred by this Deed of Trust;

(c) Foreclose the lien of this Deed of Trust against all or part of the Trust Property by foreclosure sale in accordance with the laws of California as follows:

(i) Upon the happening of an Event of Default, either concurrently with, or independently of, exercise of Beneficiary’s right to foreclose judicially, Beneficiary may elect to cause all or any part of the Trust Property to be sold at a private foreclosure sale as follows:

(A) Beneficiary may proceed as if all of the Trust Property were real property, or may elect to treat any of the Trust Property that consists of a right in action or that is property that in the opinion of Beneficiary can be severed from the Land or Improvements without causing structural damage as though the same were personal Trust Property, and dispose of it as property

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subject to the Uniform Commercial Code of the State of California (“UCC”), treating the remainder of the Trust Property as real property.

(B) Beneficiary may cause any sale or other disposition to be conducted immediately following the expiration of any cure period specified in this Deed of Trust, or immediately upon the expiration of any redemption or reinstatement period required by law, or Beneficiary may delay any sale or other disposition for any period of time as Beneficiary deems to be in its best interest. Should Beneficiary desire that more than one sale or other disposition be conducted, Beneficiary may, at its option, cause it to be conducted simultaneously or successively, on the same day or at different days or times and in any order as Beneficiary may deem to be in its best interests.

(ii) As to any part of the Trust Property that is subject to the UCC:

(A) If Beneficiary elects to cause any of the Trust Property which is subject to the UCC to be disposed of or sold, Beneficiary may at its discretion dispose of any applicable part of the Trust Property in any order or manner permitted by the UCC, or in accordance with any other remedy provided by applicable law, regardless of whether the property is located on or about the Premises. Any disposition may be conducted by an employee or agent of Beneficiary or Trustee. Trustor and Beneficiary will be eligible to purchase any part or all of the sale property at any such disposition, which may be either public or private as Beneficiary may elect. Beneficiary will also have the rights and remedies of a secured party under the UCC or otherwise available at law or in equity.

(B) Under the power of sale granted by this Deed of Trust, Beneficiary may, in its discretion and without regard to the adequacy of its security, elect to proceed against any or all of the Trust Property (including personal property and fixtures) in any manner permitted under Section 9501(4)(a) of the UCC; and if the Beneficiary elects to proceed in the manner permitted under Section 9501(4)(a)(ii) of the UCC, the power of sale will be exercisable with respect to all or any of the Trust Property (whether constituting personal property or Improvements covered by this Deed of Trust, as designated by Beneficiary, and the Trustee is authorized and empowered to conduct any sale of any Real Trust Property (including personal property and fixtures) in accordance with the procedures applicable to the sale of real property.

(C) Where the Trust Property consists of real property and personal property, any reinstatement of the obligation secured by this Deed of Trust following default and an election by Beneficiary to accelerate the maturity of the obligation (which reinstatement is made by the Trustor or any

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other person or entity permitted to exercise the right of reinstatement under Section 2924c of the California Civil Code or any successor statute), will not prohibit, in accordance with the terms of California Commercial Code Section 9501(4)(c)(iii), Beneficiary from conducting a sale or other disposition of any personal property or fixtures or from otherwise proceeding against or continuing to proceed against any personal property or fixtures in any manner permitted by the UCC. No reinstatement will invalidate, rescind, or otherwise affect any sale, disposition, or other proceeding held, conducted, or instituted with respect to any personal property or fixtures prior to the reinstatement or pending at the time of the reinstatement. Any sums paid to Beneficiary in effecting any reinstatement pursuant to Section 2924c of the California Civil Code will be applied to the secured obligation and to the Beneficiary’s and Trustee’s reasonable costs and expenses in the manner required by Section 2924c.

(D) Expenses of retaking, holding, preparing for sale, selling, or the like will be borne by the Trustor and will include all attorney fees, costs and expenses incurred by Beneficiary or Trustee, and will not be limited to amounts provided as recoverable by statute. The Trustor, upon demand of Beneficiary, will assemble all property and make it available to Beneficiary at the Project site, a place which Beneficiary and the Trustor deem to be reasonable. Beneficiary will give the Trustor at least five days’ prior written notice of the time and place of any public sale or other disposition of the property or of the time of or after which any private sale or other intended disposition is to be made, and if any notice is sent to the Trustor, the Trustor acknowledges that it will constitute reasonable notice to the Trustor.

(iii) If Beneficiary elects to sell all or part of the Trust Property, Beneficiary or Trustee will give notice of default and election to sell as may then be required by applicable law. Thereafter, upon the expiration of any applicable time and the giving of notice, and without the necessity of any demand on the Trustor, Trustee, at the time and place specified in the notice of sale, will sell all or any portion of the Trust Property specified by Beneficiary, at public auction to the highest bidder for cash in lawful money of the United States, payable at time of sale. Trustee may, and upon request of Beneficiary will, from time to time, postpone any sale by public announcement at the time and place noticed or fixed by the previous postponement. If the property consists of several lots or parcels, Beneficiary may designate the order in which the lots or parcels will be offered for sale or sold. The Trustor expressly waives its right to direct the order of sale.

(iv) The acknowledgment of the receipt of the purchase money contained in any deed or instrument of conveyance will be sufficient to discharge the grantee from all obligations to see to the proper application of the consideration given. The purchaser at any sale may disaffirm any easement granted or rental or lease contract made in violation of any provision of this Deed of Trust, and may take

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immediate possession of the Trust Property free from, and despite the terms of, the grant of easement and rental or lease contract.

(v) If the Trust Property consists of several lots, parcels or items of property, Beneficiary may, in its discretion, designate the order in which the lots, parcels or items will be offered for sale or sold or elect to sell all lots, parcels or items through a single sale, or through two or more successive sales, or in any other manner Beneficiary deems in its best interest. If Beneficiary desires that more than one sale or other disposition of the Trust Property be conducted, Beneficiary may, at its option, cause the sales to be conducted simultaneously, or successively, on the same day, or at different days or times and in any order as Beneficiary may deem to be in its best interests, and no sale will terminate or otherwise affect the lien of this Deed of Trust on any unsold part of the Trust Property until the Obligations have been fully paid. If Beneficiary elects to dispose of the Trust Property through more than one sale, the Trustor agrees to pay the costs and expenses of each sale and/or of any judicial proceedings where the sale is made, including reasonable compensation to Trustee and Beneficiary, their agents and counsel, and to pay all expenses, liabilities and advances made or incurred by Trustee with the sale or sales, together with interest on all advances made by Trustee at the Default Rate. Any person (including the Trustor, Trustee or Beneficiary) may purchase at any sale, and Beneficiary will have the right to purchase at any sale by crediting upon the bid price the amount of all or any part of the Obligations, as specified below. Beneficiary, upon any purchase, will acquire good title to the properties so purchased, free of the lien of this Deed of Trust and free of all rights of redemption in the Trustor and free of all liens and encumbrances subordinate to this Deed of Trust. Upon any sale, the Trustee will execute and deliver to the purchaser or purchasers a deed or deeds conveying the property so sold, but without any covenant or warranty whatsoever, express or implied, whereupon the purchaser or purchasers will be let into immediate possession. The recitals in any deed or deeds of fact, such as default, the giving of notice of default, and notice of sale, and other facts affecting the regularity or validity of sale or disposition, will be conclusive proof of the truth of the facts and any deed or deeds will be conclusive against all persons as to these facts.

(vi) Nothing in this Deed of Trust dealing with foreclosure procedures or specifying particular actions to be taken by Beneficiary or by Trustee or any similar officer in connection with a foreclosure sale will be deemed to contradict or add to the requirements and procedures now or in the future specified by California law, and any inconsistency will be resolved in favor of California law applicable at the time of foreclosure.

(vii) Trustee covenants faithfully to perform and fulfill the trusts created by this Deed of Trust; and, to the extent permissible by law, waives any statutory fee and agrees to accept instead reasonable compensation for any services rendered.

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(viii) Upon any sale made under this Deed of Trust, whether made under the power of sale or by virtue of judicial proceedings or of a judgment or decree of foreclosure and sale, Beneficiary may bid for and acquire all or part of the Trust Property and, in lieu of paying cash, may make settlement for the purchase price by crediting upon the indebtedness or other sums secured by this Deed of Trust the net sales price after deducting the expenses of sale and the costs of the action and any other sums that Trustee or Beneficiary is authorized to deduct under this Deed of Trust. If it does so, this Deed of Trust, the Note and other documents evidencing the Obligations will be presented to the person or persons conducting the sale so that the amount so used or applied may be credited to the Obligations; and

(d) Exercise any other rights or remedies that may now or in the future be available to the Beneficiary under this Deed of Trust or the other Loan Documents or pursuant to applicable law or in equity.

15. Power of Sale. If the Beneficiary elects to sell the Trustor’s interest in the Trust Property by exercise of the power of sale contained in this Deed of Trust, the Beneficiary will notify the Trustee in the manner then required by law.

(a) Upon receipt of written notice from the Beneficiary and at the direction of the Beneficiary, the Trustee will cause to be given, recorded, published, and delivered all notices of default and/or notices of sale as may then be required by law and/or by this Deed of Trust. The Trustee will, only at the direction of the Beneficiary and without demand on the Trustor, after any time as may then be required by law after notice of default and/or notice of sale having been given as required by law, sell the Trust Property at the time and place of sale fixed in the notice of sale, either as a whole, or in separate lots or parcels or items as the Beneficiary will deem expedient, and in any order as it may determine, at public auction to the highest bidder for cash in lawful money of the United States payable at the time of sale, or as otherwise may then be required by law. The Trustee will deliver to the purchaser or purchasers of the Trust Property its good and sufficient deed or deeds conveying the property so sold, but without any covenant or warranty, express, or implied. The recitals in the deed of any matters or facts will be conclusive proof of the truthfulness of the facts. Any person, including, without limitation, the Trustor, the Trustee or the Beneficiary, may purchase at the sale. The Beneficiary may “credit bid” all or any portion of the Obligations at the sale.

(b) As may be permitted by law, after deducting all costs, fees, and expenses of the Trustee and of this Trust, including without limitation costs of evidence of title in connection with sale and any attorneys’ fees and expenses incurred by the Trustee, the Trustee will apply the proceeds of sale: (i) first, to payment of all costs, fees and expenses, including attorneys’ fees and expenses incurred by the Beneficiary in exercising the power of sale or foreclosing this Deed of Trust; and (ii) second, to satisfaction of the Obligations.

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(c) The Trustee may in the manner provided by law postpone sale of all or any portion of the Trust Property.

16. Remedies Not Exclusive. The Beneficiary will be entitled to enforce payment and performance of any Obligations and to exercise all rights and powers under this Deed of Trust, any Loan Documents, or any laws now or in the future in force, notwithstanding some or all of the Obligations which may now or in the future be otherwise secured, whether by mortgage, deed of trust, pledge, lien, assignment. Or otherwise. Neither the acceptance of this Deed of Trust nor its enforcement, whether by court action or pursuant to the power of sale or other powers contained in this Deed of Trust, will prejudice or in any manner affect the Beneficiary’s right to realize upon or enforce any other security now or in the future held by the Beneficiary. Beneficiary will be entitled to enforce this Deed of Trust and any other security now or in the future held by the Beneficiary in any order and manner as it may in its absolute discretion determine. No remedy conferred upon or reserved to the Beneficiary by this Deed of Trust is intended to be exclusive of any other remedy given under this Deed of Trust or now or in the future existing at law or in equity or by statute. Every power or remedy given by any of the Loan Documents to the Beneficiary, or to which the Beneficiary may be otherwise entitled, may be exercised, concurrently or independently, from time to time and as often as may be deemed expedient by the Beneficiary. The Beneficiary may pursue inconsistent remedies. The acceptance by the Beneficiary of any sum after the amounts are due will not constitute a waiver of the right either to require prompt payment, when due, of all other sums secured by this Deed of Trust or to declare a default as provided under this Deed of Trust. The acceptance by the Beneficiary of any sum in an amount less than the sum then due will be deemed an acceptance on account only and only on the condition (whether expressed or not) that Beneficiary’s acceptance will not constitute a waiver of the obligation of the Trustor to pay the entire sum then due. Any failure of the Trustor to pay the entire sum then due will be and continue to be an Event of Default notwithstanding any acceptance of any lesser amount on account. Until all of the amounts due under this Deed of Trust or any of the other Loan Documents are paid in full, the Beneficiary and Trustee, notwithstanding either of their acceptance of any amounts on account or any future amounts on account, are entitled to exercise any and all rights described in this Deed of Trust, and none of those rights will be impaired or eliminated by any acceptance of any amounts on account. Consent by the Beneficiary to any action or inaction of the Trustor which is subject to consent or approval of the Beneficiary will not be deemed a waiver of the right to require the consent or approval to future or successive actions or inactions.

17. Possession of Trust Estate. If a trustee’s sale or foreclosure sale is held under this Deed of Trust and, after the time of sale, the Trustor occupies all or any part of the portion of the Trust Property so sold, the Trustor will immediately become the tenant of the purchaser at the sale, the tenancy will be a tenancy from day to day, terminable at the will of either tenant or landlord, at a reasonable rental per day based upon the value of the portion of the Trust Property so occupied. All rental to be due and payable daily to the purchaser. An action of unlawful detainer will be available if the tenant holds over after a demand in writing for possession of the Trust Property. This Deed of Trust or any trustee’s deed executed and/or delivered in connection with any trustee’s sale or foreclosure will constitute a lease and agreement under which the

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tenant’s possession arose and continued. Nothing contained in this Deed of Trust will be construed to constitute the Beneficiary as a “mortgagee in possession” in the absence of its taking actual possession of the Trust Property pursuant to the powers granted in this Deed of Trust.

18. Assignment of Rents. All of the existing and future leases and all rights to the Trust Property (or any part) assigned absolutely to Beneficiary as further security for the payment of the indebtedness and performance of the Obligations. To enforce Beneficiary’s rights under this Deed of Trust, Trustor also assigns to Beneficiary all rights to exercise any landlord liens and any other remedial rights to which a landlord may be entitled under California law. When requested by Beneficiary from time to time, and within the time as Beneficiary may reasonably require, Trustor will execute, deliver, and record, and will cause any lessee, tenant, or occupant (collectively, a “Tenant”) of Trustor designated by Beneficiary to execute, deliver, and record separate lease assignments covering any or all of the leases that may affect any part or all of the Trust Property. All separate lease assignments will be in a form as Beneficiary, in its sole discretion, may require. Without limiting the generality of the foregoing, Beneficiary may require any Tenant to subordinate the Tenant’s rights to the lien of this Deed of Trust. In no event will Beneficiary be required to give non-disturbance or similar commitments to any Tenant. Upon the occurrence of an Event of Default, Trustor authorizes and directs the Tenants of the Trust Property to make, upon written notice from Beneficiary, all payments required under any leases directly to the Beneficiary as they become due. Trustor relieves all Tenants from any liability to Trustor by reason of any payments being made to Beneficiary. Beneficiary may apply all rents collected by Beneficiary in any manner Beneficiary elects, in its sole discretion. Provided that no Event of Default will have occurred, Trustor will be entitled to collect and use all rents and/or payments.

19. Receiver. Upon the occurrence of an Event of Default, Beneficiary, in addition to all rights and remedies available at law and/or under this Deed of Trust, will be entitled, at any time and without notice and without regard to the adequacy of any security, to enter upon and take possession of the Trust Property (or any part). Trustor will upon demand peaceably surrender possession of the Trust Property to Beneficiary or the receiver. Beneficiary’s entry may be made by Beneficiary’s agents, attorneys, or employees or by a court-appointed receiver. Beneficiary, in its name and/or in the name of Trustor, may operate and maintain all or any portion of the Trust Property to the extent Beneficiary deems advisable, and Trustor agrees that Beneficiary will be entitled to do and perform any acts that Beneficiary may deem necessary or proper to conserve the value of the Trust Property, including the ability to sue for and otherwise collect and receive all rents, issues, and profits (including those past due and unpaid as well as those later accruing) and the ability to rent or lease the Trust Property (or any portion) to persons on terms and conditions approved by Beneficiary in its sole discretion. Trustor further agrees that Beneficiary also may take possession of and use any and all personal property contained in the Trust Property or used by Trustor in the rental or leasing of the Trust Property (or any part). Beneficiary may apply all rents, issues, and profits collected or received by it to the payment of costs and expenses incurred in the operation of the Trust Property or to protect and preserve its security, or Beneficiary may permit any part of all of these moneys to be released by Beneficiary

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at its sole option. The expense (including receivers’ fees, if any, and compensation to any agent appointed by Beneficiary, and attorney fees, costs, and disbursements) incurred in taking possession and effecting collection or attempting to take possession and effecting collection, will be deemed an expense of this Deed of Trust to be paid by Trustor and secured by this Deed of Trust. Neither the entering upon and taking possession of the Trust Property, nor the collection of rents, issues, and profits, nor the application or release of these amounts will cure or waive any default or notice of sale or invalidate any act done pursuant to the notice of sale. In dealing with the Trust Property or any related personal property as a beneficiary in possession, Beneficiary will be without any liability, charge, or obligation to Trustor other than for willful misconduct, and all losses, costs, and expenses incurred by Beneficiary will be advances repayable as established in Paragraph 12 above. Trustor specifically agrees that the appointment of a receiver may be sought and pursued concurrently with the exercise of any other remedies of Beneficiary, including exercise of Trustee’s power of sale.

20. Condemnation.

(a) All judgments, awards of damages, and settlements made as a result of each of the following (collectively, a “Condemnation”) are assigned to and will be paid to Beneficiary: (i) any condemnation or other proceeding for public use (or any sale in lieu of condemnation); (ii) any private trespass to the Trust Property; and (iii) any eminent domain proceeding. Beneficiary will have the right, but not the obligation, to participate in any proceedings, and Trustor will not settle or otherwise resolve any proceedings or execute or deliver any deed without the prior written consent of Beneficiary, whose consent will not be unreasonably withheld.

(b) If the Condemnation affects less than substantially all of the Trust Property and further provided that legal access to the Trust Property has not been affected or impaired (“Partial Condemnation”), the proceeds of any judgment, award, or settlement will be held, applied, and disbursed by Beneficiary to the restoration of the Trust Property if requested by Trustor. If Trustor does not make this request within 10 days of the Partial Condemnation, the proceeds will be applied in satisfaction of any amounts secured by this Deed of Trust. Prior to any disbursement pursuant to the preceding sentence, Trustor, at its cost, must supply Beneficiary with a current ALTA survey of the Trust Property indicating the area lost, an updated appraisal for the Trust Property showing an appraised value acceptable to Beneficiary, and any endorsement or update to Beneficiary’s lender’s policy of title insurance.

(c) If a Condemnation other than a partial Condemnation, Beneficiary will be solely entitled to any award, judgment, or settlement, and Trustor agrees to immediately deliver to Beneficiary all proceeds of any award, judgment, or settlement that may be received by Trustor. Beneficiary, at its option, may apply any proceeds to the satisfaction of any amounts secured by this Deed of Trust. Neither the application nor the release of any proceeds will cure or waive any default or notice of sale or invalidate any act done pursuant to the notice of sale.

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(d) TRUSTOR HEREBY UNCONDITIONALLY AND IRREVOCABLY WAIVES ALL RIGHTS IT MAY HAVE UNDER CALIFORNIA CODE OF CIVIL PROCEDURE SECTION 1265.225(a) OR ANY SUCCESSOR STATUTE PROVIDING FOR ALLOCATION OF CONDEMNATION PROCEEDS BETWEEN A PROPERTY OWNER AND A LIENHOLDER.

INITIALS:     SD    /    DC    /            

21. Bankruptcy.

(a) If any action, proceeding, application, motion or notice will be commenced or filed in respect of all or any part of the Trust Estate, in connection with any case under the Bankruptcy Code or any other applicable federal or state law relating to relief for debtors, Beneficiary will have, and is hereby granted, the right, but not the obligation, to the exclusion of Trustor exercisable upon notice from Beneficiary to Trustor, to conduct and control any litigation (including, without limitation, the right to file and prosecute any proofs of claim, complaints, motions, applications, notices and other documents) with counsel of Beneficiary’s choice. Beneficiary may proceed, in its own name or in the name of Trustor, in connection with any litigation, and Trustor agrees to execute any and all powers, authorizations, consents and other documents required by Beneficiary in connection therewith. Upon request by Beneficiary, Trustor will pay to Beneficiary, or to any other person or persons that Beneficiary may designate, all costs, expenses and liabilities (including, without limitation, attorneys’ fees and court costs) paid or incurred by Beneficiary in connection with the prosecution or conduct of any proceedings, together with interest thereon at the Default Rate from the date paid or incurred by Beneficiary until the date so paid to, or as directed by, Beneficiary. Trustor will not, without the prior written consent of Beneficiary, commence any action, suit, proceeding or case, or file any application or motion under the Bankruptcy Code or any other applicable federal or state law relating to relief for debtors.

(b) Trustor will promptly after obtaining knowledge of a petition under the Bankruptcy Code, notify Beneficiary of any filing of a petition under the Bankruptcy Code. Trustor will give written notice of the filing to Beneficiary, establishing any information available to Trustor as to the date of filing, the court in which the petition was filed, and the relief sought in the filing. Trustor will promptly deliver to Beneficiary, following receipt, any and all notices, summonses, pleadings, applications, and other documents received by Trustor in connection with any petition and proceeding related to a petition under the Bankruptcy Code.

22. Modification Without Release. Without affecting the liability of Trustor, any guarantor under any of the Loan Documents, if any, or any other person (except any person expressly released by Beneficiary in writing) for payment of any indebtedness or for performance of any obligation secured by or contained in this Deed of Trust, and without affecting the rights of Beneficiary with respect to any security not expressly released in writing,

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Beneficiary, at any time and from time to time, either before or after maturity of the Note, and without notice or consent, may:

(a) Release any guarantor or other person liable for payment of all or any part of the indebtedness or for performance of any obligation;

(b) Make any agreement extending the time or otherwise altering the terms of payment of all or any part of the indebtedness, or modifying or waiving any obligation, or subordinating, modifying, or otherwise dealing with the lien or charge of this Deed of Trust;

(c) Exercise or refrain from exercising or waive any right available to Beneficiary;

(d) Accept additional security of any kind; and

(e) Release or otherwise deal with any property, real or personal, securing the indebtedness, including all or any part of the Trust Property.

23. Other Security. If the indebtedness secured by this Deed of Trust is now or in the future further secured by chattel mortgages, security interests, deeds of trust, pledges, contracts of guaranty, or other additional securities, Beneficiary may, at its option, exhaust its security under this Deed of Trust or any future security either concurrently or independently and in the order as it may determine. Beneficiary may apply any proceeds received to the amounts secured by this Deed of Trust without affecting the status of, or waiving any right to exhaust, all or any other security, and without waiving any breach or default or any right of power, whether contained in this Deed of Trust or in any other security. Trustor waives any right or privilege that it or its creditors might otherwise have to require Trustee and/or Beneficiary to proceed against the assets encumbered by this Deed of Trust or by any other security documents in any particular order or fashion under any legal or equitable doctrines or principles, and Trustor further agrees that upon a default, Trustee and/or Beneficiary may proceed to exercise any or all remedies with regard to any or all assets encumbered by this Deed of Trust or by any other security documents in the manner and order as Beneficiary in its sole discretion may determine.

24. Partial Payment. Acceptance by Beneficiary of any sum in payment, or part payment, of any indebtedness secured by this Deed of Trust after the amount is due or after the recording of a notice of sale will not constitute a waiver of the right to require prompt payment, when due, of all other sums so secured, nor will the acceptance cure or waive any remaining default or invalidate any sale held pursuant to notice of sale for any remaining default, or prejudice any of the rights of Beneficiary under this Deed of Trust.

25. Resignation. Trustee may resign by mailing or delivering notice to Beneficiary and Trustor, and Beneficiary may, at any time Beneficiary may desire, appoint another Trustee in place of Trustee or any successor. Trustor will cause this Deed of Trust to be duly recorded in the Recorder’s Office of the County in which the Trust Property is situated.

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26. Irrevocable. The trusts created by this Deed of Trust are irrevocable.

27. Water Rights. Any stock in a water, irrigation, or water storage company assigned to Beneficiary in connection with this transaction may be registered in the name of Trustee or Beneficiary as pledge, and held by either as Beneficiary may determine. Whether or not the stock is appurtenant to the Trust Property (or any part) and regardless of how the stock is registered or held, Trustor and Beneficiary agree that, if a default, Trustee may sell the stock (or any part) and any other shares of stock subject to this Deed of Trust, together with and at the time of any Trustee’s sale of the Trust Property (or any part). With respect to the sale of the stock, Trustor waives compliance with any and all statutory requirements concerning the sale of pledged property and agrees that the provisions of law and of this Deed of Trust governing the manner, notice, and conditions of a Trustee’s sale of the Trust Property apply to the sale of the stock by Trustee.

28. Mineral Rights. As additional security to Beneficiary, Trustor further assigns and transfers all damages, royalties, and revenues of every kind, nature, and description whatsoever that Trustor may be entitled to receive from any person, company, or corporation owning or having or acquiring a right to the oil, gas, or mineral rights and reservations of the Trust Property. Beneficiary will have the right to receive and apply the damages, royalties, and revenues to the indebtedness either before or after any default, and Beneficiary may demand, sue for, and recover any payments (but will not be required to do so).

29. Waivers. Trustor waives the pleading of any statute of limitations as a defense to any of the Obligations to the fullest extent permissible by law. In any action by Beneficiary to recover a deficiency judgment for any balance due under the Note after a foreclosure of this Deed of Trust or in any action to recover or compel the performance of the Obligations, Trustor acknowledges and agrees that the successful bid amount made at any judicial or non-judicial foreclosure sale, if any, will be deemed conclusively to constitute the fair market value of the Trust Property, will be binding against Trustor in any proceeding seeking to determine or contest the fair market value of the Trust Property, and will be the preferred alternative means of determining and establishing the fair market value of the Trust Property. Trustor waives any right to have the fair market value of the Trust Property determined by judge or jury in any action seeking a deficiency judgment or any action on the Obligations, including any hearing to determine fair market value.

30. Invalidity. If any one or more of the provisions of this Deed of Trust or the applicability of any provision to a specific situation are held to be invalid or unenforceable, the provision will be modified to the minimum extent necessary to make it or its application valid and enforceable, and the validity and enforceability of all other provisions of this Deed of Trust and all other applications of the provisions will not be affected.

31. Statements. Trustor will pay Beneficiary’s and/or Trustee’s reasonable charges, to the maximum amount permitted by law, for any statement regarding or relating to the Obligations that have been requested by Trustor or on its behalf.

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32. Legal. If it becomes necessary for the Beneficiary to employ legal counsel or to take legal action to collect the indebtedness, to enforce any provision, or to protect any of Beneficiary’s rights under this Deed of Trust (including any protection of Beneficiary’s rights under any proceedings under Title 11 of the United States Code), Trustor agrees to pay to Beneficiary, in addition to taxable costs of any legal proceeding or action, attorney fees in a reasonable amount and all costs of preparation and conduct of the proceedings, including costs of title searches and title policy commitments, all of which will be a lien upon the Trust Property and secured by this Deed of Trust.

33. No Offset. No offset or claim that Trustor now has or may in the future have against Beneficiary will relieve Trustor from paying installments or performing any other obligation in or secured by this Deed of Trust.

34. Corrections. Trustor will, upon request of the Trustee, promptly correct any defect or error which may be discovered in the contents of this Deed of Trust or in its execution or acknowledgment, and will execute, acknowledge, and deliver further instruments and do further acts as may be necessary or as may be reasonably requested by the Trustee or by the Beneficiary to carry out more effectively the purposes of this Deed of Trust and to perfect and maintain the lien and security interest created by this Deed of Trust.

35. Security Interest. Trustor agrees that the Obligations are further secured by security interests in all fixtures, equipment, and other property covered by the California Uniform Commercial Code, if any, that are used upon, in, or about the Trust Property (or any part) or that are used by Trustor or any other person in connection with the Trust Property. Trustor grants to Beneficiary a valid and effective security interest in all the personal property, together with all replacements, additions, and proceeds. Except for the security interest granted by Trustor under this Deed of Trust, Trustor agrees that, without the written consent of Beneficiary, no other security interest will be created under the provisions of the Uniform Commercial Code or the California Commercial Code and no lease will be entered into with respect to any goods, fixtures, equipment, appliances, or articles of personal property now attached to or used or to be attached to or used in connection with the Trust Property. Trustor agrees that all property of every nature and description covered by the lien and charge of this Deed of Trust together with all the property and interests covered by this security interest are encumbered as a unit, and upon a default by Trustor, all of the Trust Property, at Beneficiary’s option, may be foreclosed upon or sold in the same or different proceedings or at the same or different time, subject to the provisions of applicable law. The filing of any financing statement relating to any the property or rights or interests will not be construed to diminish or alter any of Beneficiary’s rights or priorities under this Deed of Trust. This Deed of Trust constitutes a financing statement and, to the extent required because portions of the Property may constitute fixtures, this Deed of Trust is to be filed in the office where a mortgage for the Premises would be recorded.

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36. Hazardous Materials.

(a) “Hazardous Materials” will mean: (i) any chemical, material, or substance defined or included in the definition of “hazardous substances,” “hazardous materials,” “toxic substances,” or words of similar import under any Hazardous Materials Laws; (ii) any oil, petroleum, flammable substances, explosives, asbestos; or (iii) any other chemical, material or substance which may or could pose a hazard to health or safety.

(b) Trustor represents and warrants that no Hazardous Materials have been, are, or will be used, generated, stored, or disposed of on, under, or about the Trust Property; and (b) the Trust Property and all past, present, and future uses of the Trust Property were, are, and will be in compliance with all relevant local, state, and federal laws, rules, regulations, policies, ordinances, court decisions, settlement orders, and consent decrees relating to the protection of the environment on, under, or about the Trust Property (collectively, the “Hazardous Materials Laws”). At Trustor’s expense, Trustor will comply with and will cause any tenants or occupants of the Trust Property to comply with the Hazardous Materials Laws. If any Hazardous Materials are found to exist on, under, or about the Trust Property, Trustor will at Trustor’s expense take all necessary and appropriate remedial action that Beneficiary or any relevant authority will require. Trustor will immediately advise Beneficiary in writing of any governmental or regulatory communications or proposed or instituted actions with regard to Hazardous Materials and the Trust Property, and will immediately provide Beneficiary with copies of any written communications to and from the authorities. Upon any default under this Deed of Trust, Beneficiary will have the right, at Trustor’s expense, to obtain or require Trustor to obtain an environmental survey or study of the Trust Property from a qualified independent environmental engineer, all to the satisfaction of Beneficiary.

(c) To induce Beneficiary to make the loan secured by this Deed of Trust, Trustor agrees to indemnify, defend, and hold Beneficiary and Trustee harmless on demand for, from, and against any liability, loss, costs, damages, and expenses (including attorney fees) which Beneficiary or Trustee may sustain in any way related to any Hazardous Materials on, under, or about the Trust Property. This indemnity will survive any foreclosure, trustee’s sale, or deed in lieu of the Trust Property, will benefit any foreclosure purchaser, and will not be subject to any otherwise applicable statutory or contractual anti-deficiency limitation or nonrecourse provision.

(d) The indemnity provided in this Deed of Trust for Hazardous Materials is intended to be in addition to, and not in lieu, limitation, or modification of, any separate environmental indemnity contained in any of the other Loan Documents.

(e) As provided in California Code of Civil Procedure Section 726.5, Beneficiary may waive its lien against the Trust Property or any portion thereof, to the extent such property is found to be environmentally impaired as defined therein, and to exercise any and all rights and remedies of an unsecured creditor against Trustor and all

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of Trustor’s assets and property for the recovery of any deficiency and any and all costs, damages, expenses, fees, penalties, fines, judgments, indemnification payments to third parties, and other out-of-pocket costs or expenses actually incurred by Beneficiary or advanced by Beneficiary, including seeking an attachment order under California Code of Civil Procedure Section 483.010. Beneficiary and Trustor each represents and warrants for itself that it has no actual knowledge of any release of any Hazardous Substance (as defined in Section 726.5) on, to or under the Trust Property. As between Beneficiary and Trustor, for purposes of California Code of Civil Procedure Section 726.5, Trustor shall have the burden of proving that Trustor or any related party (or any affiliate or agent of Trustor or any related party) did not cause or contribute to, and was not in any way negligent in permitting, any release or threatened release of the Hazardous Materials.

37. Impounds. Upon and during the continuance of an Event of Default and then only following Beneficiary’s written demand therefore, Trustor, on a monthly basis, will deposit with Beneficiary, in addition to any other required payments under the Note, an amount sufficient to enable Beneficiary to pay before delinquency all taxes, assessments, ground rents, and insurance premiums due on the Trust Property. Trustor’s installments will be equal to the estimated amounts of the payments next due (as estimated by Beneficiary in its good faith), less all installments already paid, divided by the number of months that are to elapse before one month prior to the date when the payments are due. If the amounts paid to Beneficiary under the provisions of this paragraph are insufficient to discharge the obligation of Trustor for the actual amount of the payments, Trustor will immediately pay to Beneficiary upon demand the additional sums as may be required to fully pay and discharge these items. All moneys paid may, at Beneficiary’s option: (i) be held by Beneficiary to pay taxes, assessments, ground rents, and insurance before delinquency; or (ii) be credited directly to interest and/or principal due upon the indebtedness secured by this Deed of Trust. Upon payment by Beneficiary of any taxes, assessments, ground rents, or insurance premiums, the amount paid will be added to the principal of the indebtedness secured by this Deed of Trust unless paid from the impounded funds. Deposits made under this paragraph may be commingled with Beneficiary’s general funds, and Beneficiary will have no liability to Trustor for any interest on the deposits. Nothing in this Paragraph 37 will be deemed to release Trustor from the obligation to pay taxes, assessments, ground rents, or insurance premiums to the extent these payments are in excess of those impounded by Beneficiary. All amounts deposited by Trustor under this Paragraph 37 are assigned by Trustor to Beneficiary as additional security for the Obligations.

38. Transfers.

(a) Any actual or attempted sale, transfer, assignment, encumbrance, lease, conveyance, lease with option to purchase any part, right, title, or interest in the Trust Property, whether legal or equitable, will constitute a “Transfer”.

(b) “Permitted Transfers” means (i) the transfer of shares in Trustor, and (ii) any Permitted Liens. Beneficiary’s consent is not required for Permitted Transfers.

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(c) All Transfers (other than Permitted Transfers) are subject to Beneficiary’s prior written approval, which approval may be granted or conditioned in Beneficiary’s sole and absolute discretion, and any Transfer (other than a Permitted Transfer) that is not so approved by Beneficiary will be a “Prohibited Transfer”. Except as provided below, Prohibited Transfers include the transfer of any ownership, voting, or membership interest in Trustor or its general partner.

(d) In addition to any other right or remedy available to Beneficiary, Beneficiary may void any Prohibited Transfer.

(e) If any Transfer is effected, whether or not Beneficiary consents, Beneficiary, in addition to any other remedies provided in this Deed of Trust, may require that a transfer fee be paid to Beneficiary prior to the sale, transfer, assignment, encumbrance, conveyance, or lease and may further increase the rate of interest payable on the unpaid principal balance of the Note. Consent to any one Transfer will not be deemed to be consent to any other Transfer, and no consent will constitute a commitment to subordinate the lien of this Deed of Trust to any interest created by the Transfer.

39. Authority. Trustor and each signatory who signs on the Trustor’s behalf jointly and severally represent and warrant that: (i) Trustor is a duly formed and validly existing corporation, partnership, limited partnership, or limited liability company, as applicable; (ii) Trustor has all requisite power and authority to enter into and perform under this Deed of Trust; (iii) Trustor’s execution and delivery of this Deed of Trust and its performance under this Deed of Trust will not violate Trustor’s organizational documents or any other agreement to which Trustor is a party; and (iv) this Deed of Trust and the Obligations are the valid and enforceable obligations of Trustor.

40. Change of Law. If, after the date of recordation of this Deed of Trust, the United States of America or the State of California or any other governmental entity enacts a law or regulation which: (i) changes, in any material and adverse way, the taxation of this Deed of Trust as to Beneficiary; (ii) deducts from the value of the Trust Property, for the purposes of taxation, the value of any lien on the Trust Property; or (iii) impose a tax, directly or indirectly, on Beneficiary on this Deed of Trust, the Note, or any sums due and payable under either or both, Beneficiary may declare all sums secured by this Deed of Trust to be due and payable in full within not less than 60 days. Beneficiary’s declaration must be made by written notice to Trustor. The foregoing declaration by Beneficiary will be ineffective, however, if Trustor is permitted under these laws to pay the tax and if, prior to the date of election is to be effective, Trustor does pay the tax levied or assessed.

41. Other Encumbrances. Trustor will pay or perform before delinquency all obligations under any prior or subordinate mortgage, deed of trust, agreement of sale, or any other lien or encumbrance encumbering the Property (collectively called an “Encumbrance”). Without the prior written consent of Beneficiary, Trustor will not consent to or agree to the increase in the principal amount of any Encumbrance or to any extension of time for payment of the Encumbrance. If any Encumbrance is in default for any reason, Beneficiary may cure the

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default without notice, and the cost of curing the default, with interest at the default rate of interest specified in the Note, will be considered an advance. All advances will be added to the Obligations and may be collected from Trustor upon demand at any time after the advances are made, and the holder of the Note and Deed of Trust will be subrogated to the rights of any lienholder so paid. Immediately upon receiving any knowledge or notice of any default or claimed default under any Encumbrance, Trustor will give written notice to Beneficiary and will give to Beneficiary a true copy of each and every notice, summons, legal process, legal paper, or other communication relating in any way to any Encumbrance or any default under the Encumbrance. If payment of all or any part of principal or interest secured by any Encumbrance is not be made at the time required, then, regardless of any postponement, extension, indulgence, or forgiveness that may be agreed to or acquiesced in by the holder of the Encumbrance, a sum equal to the amount of the principal will immediately become due and payable in reduction of the Obligations. If, with or without Beneficiary’s consent, the principal amount of any Encumbrance that is superior in lien priority to this Deed of Trust is increased over the amount of its unpaid principal as it exists on the date of this Deed of Trust, then, upon Beneficiary’s demand, a sum equal to the amount of the increase will immediately become due and payable in reduction of the Obligations.

42. Security Intended. Notwithstanding any provision of this Deed of Trust to the contrary, the parties intend that this document is security for the payment and performance of the Obligations and will be a “deed of trust”. If, despite that intention, a court of competent jurisdiction determines that this document does not qualify as a “trust deed” or “deed of trust”, then, ab initio, this instrument will be deemed a realty mortgage and will be enforceable as a realty mortgage, Trustor will be deemed a “mortgagor”, Beneficiary will be deemed a “mortgagee”, and Trustee will be disregarded and all references to the “Trustee” will be deemed to refer to the “mortgagee” to the extent not inconsistent with interpreting this instrument as though it were a realty mortgage. As a realty mortgage, Trustor, as mortgagor, will be deemed to have conveyed the Trust Property ab initio to the Beneficiary as mortgagee, the conveyance as a security to be void upon condition that Trustor pay and perform all its Obligations.

43. General.

(a) Upon the written request of Beneficiary stating that all of the Obligations have been paid or performed and upon surrender of this Deed of Trust to Trustee for cancellation and upon payment by Trustor of its fees, Trustee will reconvey, without warranty, the estate in the Trust Property then held by Trustee. The grantee in the reconveyance may be designated and described as the “person or persons legally entitled thereto”, or by other appropriate terms. In lieu of execution of a reconveyance by Trustee, Beneficiary may execute or release or, on behalf of Trustee, execute the reconveyance, in which case legal title will be vested in the “person or persons legally entitled thereto”. Beneficiary will not be obligated to consent to or permit any partial releases of the Trust Property.

(b) Except as provided in Paragraph 35, this Deed of Trust will inure to and bind the heirs, legatees, devisees, administrators, executors, successors, and assigns of the

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parties. This Deed of Trust will be so construed that, wherever applicable, the use of the singular number will include the plural number, the use of the plural number will include the singular number, the use of the masculine gender will include the feminine gender. The term “Beneficiary” will mean the owner and holder of the Note, and will include all successors and assigns of a beneficiary to this Deed of Trust. Any appointment of Beneficiary as attorney-in-fact for Trustor will be with full power of substitution. This Deed of Trust was prepared after negotiations by and between Trustor and Beneficiary, and Trustor waives any rule of construction that requires that this Deed of Trust be construed against Beneficiary because Beneficiary or its attorneys prepared this Deed of Trust.

(c) Unless otherwise specifically set forth in this Deed of Trust, any consent, approval, or election by Beneficiary (or the establishment of any item to the satisfaction of Beneficiary) will be deemed and construed as being given, withheld, or established at and in Beneficiary’s sole and absolute discretion.

(d) Trustor requests that a copy of any Notice of Sale under this Deed of Trust be mailed to it at its address set forth above.

(e) If the payment or performance of any provision of this Deed of Trust will require a payment in excess of that permitted by any applicable law, the obligation to be paid or performed will be reduced to the minimum extent necessary to comply with any limitation of law. By acceptance of this Deed of Trust, the Beneficiary expressly waives the right to demand any excess. The provisions of this paragraph will control every other provision of this Deed of Trust.

(f) Time is of the essence in the payment and performance of each and every provision of this Deed of Trust. No failure on the part of Beneficiary to exercise any of its rights upon any default will be construed to prejudice its rights if any other or subsequent default. No delay on the part of Beneficiary in exercising any of the rights will be construed to preclude it from their exercise at any time during the continuance of the default. Beneficiary may enforce any one or more remedies or rights under this Deed of Trust successively or concurrently at its option, and any enforcement of any one or more remedies will be not deemed to be any election against or preclusion of any other rights or remedies.

(g) Unless otherwise required by applicable law, all notices required to be given under this Deed of Trust will be in writing and will be either served personally or by U.S. certified mail, postage prepaid, return receipt requested, and addressed to Trustor, Trustee, and Beneficiary at their respective addresses first above written. These addresses may be changed by notice to the other parties given in the same manner as provided in this paragraph. Notices given by certified mail will be deemed to have been given upon their deposit in a regular receptacle of U.S. mail.

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(h) This Deed of Trust will be governed and construed in accordance with the laws of the State of California. Trustor irrevocably submits to jurisdiction and venue in the State of California. Trustor waives any defense or objection to jurisdiction or venue based on the doctrine of “forum non conveniens”, and Trustor stipulates that any state court in the State of California will have personal jurisdiction over Trustor for the purpose of litigating any dispute or controversy arising out of this Deed of Trust.

(i) The lien of this Deed of Trust is and will remain a valid first mortgage and deed of trust on the Trust Property.

(j) Trustor hereby expressly (i) waives any rights it may have under California Civil Code Section 2954.10 to prepay the Note, in whole or in part, without penalty, upon acceleration of the maturity date of the Note, and (ii) agrees that if, for any reason, a prepayment of the Note is made, whether voluntary or upon or following any acceleration of the maturity date of the Note by Beneficiary on account of any default by Trustor, including any transfer or disposition as prohibited or restricted herein, then Trustor shall be obligated to pay, concurrently therewith, as a prepayment premium, the applicable sum specified herein or in the Note. By initialing this provision in the space provided below, Trustor hereby declares that Beneficiary’s agreement to make the subject Loans at the interest rates and for the terms set forth in the Note constitutes adequate consideration, given individual weight by Trustor, for this waiver and agreement.

INITIALS:     SD    /    DC    /            

[THE REMAINDER OF THIS PAGE IS LEFT BLANK.

SIGNATURES FOLLOW ON THE NEXT PAGE.]

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Executed as of the Execution Date.

TRUSTOR:
Quest Software, Inc., a Delaware corporation
By:	/s/ Scott Davidson
Name:	Scott Davidson
Title:	CFO
By:	/s/ David Cramer
Name:	David Cramer
Title:	VP, General Counsel & Secretary

State of California	)
	)	ss.
County of Orange	)

On July 30, 2009, before me, A.O. Trent, Notary Public, personally appeared Scott Davidson, who proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument.

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

WITNESS my hand and official seal.

Signature /s/ A.O. Trent (Seal)

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State of California	)
	)	ss.
County of Orange	)

On July 30, 2009, before me, A.O. Trent, Notary Public, personally appeared David Cramer, who proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument.

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

WITNESS my hand and official seal.

Signature /s/ A.O. Trent (Seal)

EXHIBIT “A”

TO

DEED OF TRUST, SECURITY AGREEMENT,

ASSIGNMENT OF RENTS AND LEASES, AND FIXTURE FILING

(CALIFORNIA)

(Legal Description of the Premises)

THE LAND REFERRED TO HEREIN BELOW IS SITUATED IN THE CITY OF ALISO VIEJO, COUNTY OF ORANGE, STATE OF CALIFORNIA AND IS DESCRIBED AS FOLLOWS:

THOSE PORTIONS OF TRACT MAP NO(S). 14323 RECORDED IN BOOK 714, PAGES 49 AND 50; 14324 RECORDED IN BOOK 715, PAGES 9 AND 10; 14972 RECORDED IN BOOK 715, PAGES 11 AND 12; AND THAT PORTION OF TRACT MAP NO. 14310 RECORDED IN BOOK 670, PAGES 45 AND 46, ALL OF MISCELLANEOUS MAPS, THAT HAS BEEN ABANDONED AS INSTRUMENT NO. 1997-0652771, ALL IN THE OFFICE OF THE COUNTY RECORDER OF SAID COUNTY, MORE PARTICULARLY DESCRIBED AS FOLLOWS:

PARCEL A:

PARCELS 4 AND 5 IN THE CITY OF ALISO VIEJO, COUNTY OF ORANGE, STATE OF CALIFORNIA, AS SHOWN ON EXHIBIT “B” ATTACHED TO LOT LINE ADJUSTMENT NO. LL-97-054, RECORDED DECEMBER 19, 1997 AS INSTRUMENT NO. 19970652822 OF OFFICIAL RECORDS.

EXCEPT THEREFROM ALL PREVIOUSLY UNRESERVED MINERALS, OIL, GAS, PETROLEUM, OTHER HYDROCARBON SUBSTANCES AND ALL UNDERGROUND WATER, IN OR UNDER OR WHICH MAY BE PRODUCED FROM THE PROPERTY WHICH UNDERLIES A PLANE PARALLEL TO AND 500 FEET BELOW THE PRESENT SURFACE OF THE PROPERTY FOR THE PURPOSE OF PROSPECTING FOR, THE EXPLORATION, DEVELOPMENT, PRODUCTION, EXTRACTION AND TAKING OF SAID MINERALS, OIL, GAS, PETROLEUM, OTHER HYDROCARBON SUBSTANCES AND WATER FROM THE PROPERTY BY MEANS OF MINES, WELLS, DERRICKS OR OTHER EQUIPMENT FROM SURFACE LOCATIONS ON ADJOINING OR NEIGHBORING LAND OR LYING OUTSIDE OF THE PROPERTY, IT BEING UNDERSTOOD THAT THE OWNER OF SUCH MINERALS, OIL, GAS, PETROLEUM, OTHER HYDROCARBON SUBSTANCES AND WATER, AS SET FORTH ABOVE, SHALL HAVE NO RIGHT TO ENTER UPON THE PROPERTY OR ANY PORTION THEREOF ABOVE SAID PLANE PARALLEL TO AND 500 FEET BELOW THE PRESENT SURFACE OF THE PROPERTY FOR ANY PURPOSE WHATSOEVER, AS RESERVED BY SHEA HOMES LIMITED PARTNERSHIP IN THE DEEDS RECORDED DECEMBER 19, 1997 AS INSTRUMENT NO. 19970653373, BOTH OF OFFICIAL RECORDS.

PARCEL B:

NON-EXCLUSIVE EASEMENTS FOR PEDESTRIAN AND VEHICULAR INGRESS AND EGRESS, PARKING, UTILITIES AND OTHER MATTERS ON, OVER, UNDER OR ACROSS PORTIONS OF PARCELS 1, 2, 3, 4 AND 5 AS SHOWN ON EXHIBIT “B” ATTACHED TO LOT LINE ADJUSTMENT NO. LL 97-054, RECORDED ON DECEMBER 19, 1997 AS INSTRUMENT NO. 19970652822 OF OFFICIAL RECORDS OF ORANGE COUNTY, CALIFORNIA, AS SAID EASEMENTS ARE SET FORTH AND DEFINED IN ARTICLE 2 IN THAT CERTAIN DECLARATION OF RECIPROCAL EASEMENTS AND COVENANTS EXECUTED BY FLUOR ENTERPRISES, INC., A CALIFORNIA CORPORATION, RECORDED MARCH 31, 2004 AS INSTRUMENT NO. 2004000265241 OF OFFICIAL RECORDS OF ORANGE COUNTY, CALIFORNIA.

Assessor’s Parcel No: 623-481-52 and 53

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EX-10.4

Exhibit 10.4

ENVIRONMENTAL CERTIFICATION

AND INDEMNITY AGREEMENT

This Environmental Certification and Indemnity Agreement (“Agreement”) is executed as of August 3, 2009 (“Agreement Date”), by Quest Software, Inc., a Delaware corporation (“Obligor”), in favor of Mutual of Omaha Bank, a federally chartered thrift (“Lender”). This Agreement is made and given by the Obligor as a condition to, and to induce Lender to make a loan (“Loan”) described in the concurrently dated Loan and Security Agreement and evidenced by a concurrently dated Secured Promissory Note executed by Obligor, as maker, and payable to the order of Lender in the original principal face amount of $34,000,000.00. The Loan is secured by a Deed of Trust, Security Agreement, Assignment of Rents and Leases, and Fixture Filing (“Deed of Trust”) dated concurrently with this Agreement, encumbering the real and personal property as described in the Deed of Trust (collectively, the “Property”), including the land described in the attached Exhibit “A”. The term “Loan Documents,” as used in this Agreement, will have the same meaning as established in the Loan and Security Agreement dated concurrently with this Agreement between Obligor and Lender (“Loan Agreement”).

1. Definitions. As used in this Agreement:

(a) “Environmental Assessment” means a report (including all drafts) of an environmental assessment of the Property of the scope (including but not limited to the taking of soil borings and air and groundwater samples and other above and below ground testing) as Lender may request, by a consulting firm acceptable to Lender and made in accordance with Lender’s established guidelines.

(b) “Environmental Claim” means any investigative, enforcement, cleanup, removal, containment, remedial, or other private or governmental or regulatory action at any time threatened, instituted, or completed pursuant to any applicable Environmental Requirement against Obligor or against or with respect to the Property or any condition, use, or activity on the Property, including any action against Lender, and any claim at any time threatened or made by any person against Obligor or against or with respect to the Property or any condition, use, or activity on the Property, including any claim against Lender, relating to damage, contribution, cost recovery, compensation, loss, or injury resulting from or in any way arising in connection with any Hazardous Material or any Environmental Requirement, except to the extent the action is based upon the breach of an express contractual warranty made by Lender in connection with the conveyance of the Property.

(c) “Environmental Damages” means all claims, demands, liabilities (including strict liability), losses, damages (including consequential damages), liabilities, causes of action, suits, proceedings, judgments, penalties, fines, costs and expenses (including fees, costs and expenses of attorneys, consultants, contractors, experts and laboratories), of any and every kind or character, contingent or otherwise, matured or unmatured, known or unknown, foreseeable or unforeseeable, made, incurred, suffered, brought, or imposed at any time and from time to time, arising directly or indirectly in whole or in part from: (i) the presence of any Hazardous Material on the Property, or any

escape, seepage, leakage, spillage, emission, release, discharge, or disposal of any Hazardous Material on or from the Property, or the migration or release or threatened migration or release of any Hazardous Material to, from or through the Property; (ii) any act, omission, event, or circumstance existing or occurring in connection with the handling, treatment, containment, removal, storage, decontamination, clean-up, transport, or disposal of any Hazardous Material that is at any time present on the Property; (iii) the breach of any representation, warranty, covenant, or agreement contained in this Agreement; (iv) any violation of any Environmental Requirement, regardless of whether any act, omission, event, or circumstance giving rise to the violation constituted a violation at the time of the occurrence or inception of the act, omission, event, or circumstance; (v) any Environmental Claim, or the filing or imposition of any environmental lien against the Property, because of, resulting from, in connection with, or arising out of any of the preceding matters, regardless of whether caused by an Obligor or a tenant or subtenant or licensee, or a prior owner of the Property or its tenant or subtenant or licensee, or any third party. By way of example, but not limitation, Environmental Damages include: (I) injury or damage to any person, property, or natural resource occurring on or off of the Property, including but not limited to the cost of demolition and rebuilding of any improvements on real property; (II) the investigation or remediation of any the Hazardous Material or violation of Environmental Requirement, including but not limited to the preparation of any feasibility studies or reports and the performance of any cleanup, remediation, removal, response, abatement, containment, closure, restoration, monitoring, or similar work required by any Environmental Requirement or necessary to have full use and benefit of the Property as contemplated by the Loan Documents (including any of the same in connection with any foreclosure action or transfer in lieu of foreclosure); (III) all liability to pay or indemnify any person or governmental authority for costs expended in connection with any of the foregoing; (IV) the investigation and defense of any claim, whether or not the claim is ultimately defeated; and (V) the settlement of any claim or judgment.

(d) “Environmental Law” means any federal, state, or local law, statute, ordinance, code, rule, regulation, license, authorization, decision, order, injunction, decree, or rule of common law, and any judicial interpretation of any of the foregoing, that pertains to health, safety, any Hazardous Material, or the environment (including but not limited to ground or air or water or noise pollution or contamination, and underground or above ground tanks) and will include without limitation, the Solid Waste Disposal Act, 42 U.S.C. § 6901 et seq.; the Comprehensive Environmental Response, Compensation and Liability Act of 1980, 42 U.S.C. § 9601 et seq. (“CERCLA”), as amended by the Superfund Amendments and Reauthorization Act of 1986 (“SARA”); the Hazardous Materials Transportation Act, 49 U.S.C. § 1801 et seq.; the Federal Water Pollution Control Act, 33 U.S.C. § 1251 et seq.; the Clean Air Act, 42 U.S.C. § 7401 et seq.; the Toxic Substances Control Act, 15 U.S.C. § 2601 et seq.; the Safe Drinking Water Act, 42 U.S.C. § 300f et seq.; the Porter-Cologne Water Quality Control Act (California Water Code Section 13020 et seq.); the Safe Drinking Water and Toxic Enforcement Act of 1986 (California Health & Safety Code Section 25249.5 et seq.); the Hazardous Substance Account Act (California Health & Safety Code Section 25300 et seq.); the Hazardous Waste Control Act (California Health & Safety Code Section 25100 et seq.); The California Environmental Quality Act (California Public Resources Code

2

Section 2100 et seq.); and any other local, state, or federal environmental statutes, and all rules, regulations, orders, and decrees now or in the future promulgated under any of the foregoing, as any of the foregoing now exist or may be changed or amended or come into effect in the future.

(e) “Environmental Report” means that certain Phase I Environmental Site Assessment prepared by Phase One, Inc., dated March 23, 2004, referenced as Project No. 5728.

(f) “Environmental Requirement” means any Environmental Law, agreement, or restriction, including but not limited to any condition or requirement imposed by any insurance or surety company, as may now exist or may be changed or amended or come into effect in the future, pertaining to health, safety, any Hazardous Material, or the environment, including but not limited to ground or air or water or noise pollution or contamination, and underground or aboveground tanks.

(g) “Hazardous Material” means any substance, whether solid, liquid or gaseous, that is listed, defined, or regulated as a “hazardous substance”, “hazardous waste” or “solid waste”, or otherwise classified as hazardous or toxic, in or pursuant to any Environmental Requirement or that contains asbestos, radon, any polychlorinated biphenyl, urea formaldehyde foam insulation, explosive or radioactive material, or motor fuel or other petroleum hydrocarbons or that causes or poses a threat to cause a contamination or nuisance on the Property or any adjacent property or a hazard to the environment or to the health or safety of persons on the Property.

(h) “On” or “on”, when used with respect to the Property or any property adjacent to the Property, means “on, in, under, above, or about.”

2. Representations and Warranties. Obligor, after due inquiry and investigation accordance with good commercial or customary practices to determine whether contamination is present on the Property or elsewhere in connection with any activity on the Property, represents and warrants to, and covenants with, Lender, without regard to whether Lender has or in the future obtains any knowledge or report of the environmental condition of the Property, as follows:

(a) At all times that Obligor owned the Property, and, to the best of Obligor’s knowledge with respect to all other times and except as disclosed in the Environmental Report, neither the Property nor any adjacent property has ever been used for industrial or manufacturing purposes, for landfill, dumping, or other waste disposal activities or operations or for the generation, storage, use, sale, treatment, processing, recycling, or disposal of any Hazardous Material, for underground or aboveground storage tanks, or for any other use that could give rise to the release of any Hazardous Material on the Property;

(b) Except as disclosed in the Environmental Report, there is no Hazardous Material, underground or above ground storage tank (or similar vessel), sump, or well currently on the Property;

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(c) There is no Environmental Claim or any completed, pending, proposed, or threatened investigation or inquiry concerning the presence or release of any Hazardous Material on the Property or any adjacent property concerning whether any condition, use, or activity on the Property or any adjacent property is in violation of any Environmental Law;

(d) The present conditions, uses, and activities on the Property do not violate any Environmental Law and the use of the Property that Obligor (and each licensee, tenant and subtenant, if any) make and intend to make of the Property complies and will comply with all applicable Environmental Laws;

(e) Except as disclosed in the Environmental Report, the Property has never appeared on the National Priorities List, any federal or state “superfund” or “superlien” list, or any other list or database of properties maintained by any local, state, or federal agency or department showing properties that are known to contain or that are suspected of containing a Hazardous Material;

(f) Obligor has never applied for and been denied environmental impairment liability insurance coverage relating to the Property; and

(g) No Obligor, licensees, tenant, or subtenant, has obtained or is required to obtain any permit or authorization to construct, occupy, operate, use or conduct any activity on any of the Property by reason of any Environmental Law.

3. Violations. Obligor will not cause, commit, permit or allow to continue: (i) any violation of any Environmental Law by or with respect to the Property or any use of or condition or activity on the Property; or (ii) the attachment of any environmental lien to the Property. Obligor will not place, install, dispose of, or release, or cause, permit, or allow the placing, installation, disposal, spilling, leaking, dumping, or release of any Hazardous Material or storage tank (or similar vessel) on the Property and will keep the Property free of Hazardous Material.

4. Permitted Activities. Obligor may store minimal quantities of substances on the Property that technically could be considered Hazardous Material, but only to the extent that the substances are of a type and are held only in a quantity normally used in connection with the construction, occupancy, or operation of comparable buildings (such as cleaning fluids, and supplies normally used in the day to day operation of business offices), the substances are being held, stored and used in complete and strict compliance with all applicable Environmental Laws. Notwithstanding the preceding sentence, the indemnity provisions of this Agreement will always apply to the substances, and it will be and continue to be the responsibility of Obligor to take all remedial actions required under and in accordance with Section 7 of this Agreement if any unlawful release of any such substance.

5. Notice to Lender. Obligor will promptly deliver to Lender a copy of each report pertaining to the Property or to Obligor prepared by or on behalf of Obligor pursuant to any Environmental Requirement. Obligor will immediately advise Lender in writing of any Environmental Claim or of the discovery of any Hazardous Material on the Property, as soon as Obligor first obtains knowledge of the Environmental Claim, including a full description of the

4

nature and extent of the Environmental Claim and/or Hazardous Material and all relevant circumstances.

6. Site Assessments and Information. If Lender ever has a reasonable good faith belief that any Hazardous Material affects the Property, or if any Environmental Claim is made or threatened, or if an Event of Default (as that term is used and defined in the Loan Agreement) will have occurred under any of the Loan Documents, Obligor will, at their expense, provide to Lender from time to time, in each case within 30 days after Lender’s request, an Environmental Assessment made after the date of Lender’s request. Obligor will cooperate with each consulting firm making any Environmental Assessment and will supply to the consulting firm, from time to time and promptly on request, all information available to Obligor to facilitate the completion of the Environmental Assessment. If Obligor fails to furnish Lender within 10 days after Lender’s request with a copy of an agreement with an acceptable environmental consulting firm to provide the Environmental Assessment, or if Obligor fails to furnish to Lender the Environmental Assessment within 30 days after Lender’s request, Lender may cause any Environmental Assessment to be made at Obligor’s expense and risk. Lender and its designees are granted access to the Property at any time or times, upon reasonable notice (which may be written or oral), and a license that is coupled with an interest and irrevocable, to make or cause to be made the Environmental Assessments. Lender may disclose any information Lender ever has about the environmental condition or compliance of the Property to any participant and, upon an Event of Default, to any interested parties, but will be under no duty to disclose any of the information except as may be required by law. Lender will be under no duty to make any Environmental Assessment of the Property, and no Environmental Assessment prepared by or for the Lender will be interpreted as or will give rise to a representation that any Hazardous Material is or is not present on the Property, or that there has been or will be compliance with any Environmental Law, nor will Obligor or any other person be entitled to rely on any Environmental Assessment made by Lender or at Lender’s request. Lender owes no duty of care to protect Obligor or any other person against, or to inform them of, any Hazardous Material or other adverse condition affecting the Property. Any indemnified party will give Obligor reasonable notice before entering the Property.

7. Remedial Actions.

(a) If any Hazardous Material is discovered on the Property at any time and regardless of the cause: (i) Obligor will promptly at Obligor’s sole risk and expense remove, treat, and dispose of the Hazardous Material in compliance with all applicable Environmental Requirements and solely under Obligor’s (or any of their) name (or if removal is prohibited by any Environmental Requirement, take whatever action is required by any Environmental Requirement), in addition to taking the other action as is necessary to have the full use and benefit of the Property as contemplated by the Loan Documents, and provide Lender with satisfactory evidence of the foregoing; and (ii) if requested by Lender, provide to Lender within 30 days of Lender’s request a bond, letter of credit, or other financial assurance evidencing to Lender’s satisfaction that all necessary funds are readily available to pay the costs and expenses of the actions required by subparagraph (i) above and to discharge any assessments or liens established against the Property as a result of the presence of the Hazardous Material on the Property. Within 30 days after completion of the remedial actions, Obligor will obtain and deliver

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to Lender an Environmental Assessment of the Property made after the completion of the remedial actions and confirming to Lender’s satisfaction that all required remedial action has been taken and successfully completed and that there is no evidence or suspicion of any contamination or risk of contamination on the Property or any adjacent property, or of violation of any Environmental Requirement, with respect to any Hazardous Material.

(b) Lender may, but will never be obligated to, remove or cause the removal of any Hazardous Material from the Property (or if removal is prohibited by any Environmental Requirement, take or cause the taking of the other action as is required by any Environmental Requirement) if Obligor fails to promptly commence the remedial actions following discovery and thereafter diligently prosecute the remedial actions to the satisfaction of Lender (without limitation of Lender’s rights to declare a default under any of the Loan Documents and to exercise all rights and remedies available by reason of the default); Lender and its designees are granted access to the Property at any time or times, upon reasonable notice (which may be written or oral), and a license that is coupled with an interest and irrevocable, to remove or cause the removal or to take or cause the taking of any the other action.

8. Indemnity. On demand, Obligor agrees to protect, indemnify, defend, and hold harmless Lender, all trustees under the Deed of Trust (“Trustee”), any persons or entities owned or controlled by, owning or controlling, or under common control or affiliated with Lender and/or Trustee, any participants in the Loan, the directors, officers, partners, employees, and agents of any of the foregoing and the heirs, personal representatives, successors, and assigns of each of the foregoing persons or entities (each, an “Indemnified Party”) for, from, and against, and, if and to the extent paid, reimburse them on demand for, any and all Environmental Damages. Without limitation, the foregoing indemnity will apply to each Indemnified Party with respect to Environmental Damages that in whole or in part are caused by or arise out of the negligence of the (and/or any other) Indemnified Party. Upon demand by Lender, Obligor will diligently defend any Environmental Claim that affects the Property or is made or commenced against Lender, whether alone or together with Obligor or any other person, all at Obligor’s own cost and expense and by counsel to be approved by Lender in the exercise of its reasonable judgment. In the alternative, at any time Lender may elect to conduct its own defense through counsel selected by Lender and at the cost and expense of Obligor.

9. Consideration; Survival; Cumulative Rights. Obligor acknowledges that Lender has relied and will rely on the representations, warranties, covenants, and agreements in this Agreement in closing and funding the Loan and that the execution and delivery of this Agreement is an essential condition but for which Lender would not close or fund the Loan. The representations, warranties, covenants, and agreements in this Agreement will be binding upon Obligor and its successors, assigns, and legal representatives and will inure to the benefit of Lender and its successors, assigns, legal representatives, and participants in the Loan and will not terminate upon the release, foreclosure, or other termination of the Deed of Trust, but will survive the payment in full of the indebtedness secured by the Deed of Trust, foreclosure of the Deed of Trust, conveyance in lieu of foreclosure, the release and reconveyance or termination of the Deed of Trust and any and all of the other Loan Documents, any investigation by or on behalf of Lender, any bankruptcy or other debtor relief proceeding, and any other event whatsoever. Any amount to be paid under this Agreement by Obligor will be a demand

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obligation owing by Obligor (which Obligor promises to pay). Lender’s rights under this Agreement will be in addition to all rights of Lender under the Loan Documents or at law or in equity, and payments by Obligor under this Agreement will not reduce Obligor’s obligations and liabilities under any of the Loan Documents. The liability of Obligor or any other person under this Agreement will not be limited or impaired in any way by any provision in the Loan Documents or applicable law limiting Obligor’s or the other person’s liability or Lender’s recourse or rights to a deficiency judgment, or by any change, extension, release, inaccuracy, breach, or failure to perform by any party under the Loan Documents, Obligor’s (and, if applicable, the other person’s) liability under this Agreement being direct and primary and not as a guarantor or surety. Obligor assigns and irrevocably transfers to Lender any and all rights of subrogation, contribution, indemnification, reimbursement, or similar rights it may have against any other person for Environmental Damages. Nothing in this Agreement or in any other Loan Document will limit or impair any rights or remedies of Lender, Trustee, and/or any other Indemnified Party against Obligor or any other person under any Environmental Requirement or otherwise at law or in equity, including without limitation any rights of contribution or indemnification.

10. No Waiver. No delay or omission by Lender to exercise any right under this Agreement will impair any right nor will it be construed to be a waiver of any rights. No waiver of any single breach or default under this Agreement will be deemed a waiver of any other breach or default. Any waiver, consent, or approval under this Agreement must be in writing to be effective.

11. Notices. All notices, requests, consents, demands, and other communications required or which any party desires to give under this Agreement or any other Loan Document will be in writing and, unless otherwise provided in the other Loan Document, will be deemed sufficiently given or furnished if delivered in the manner and at the place established in the Loan Agreement (unless changed by similar notice in writing given by the particular party whose address is to be changed). Any notice so given will be effective when specified in the Loan Agreement. Notwithstanding the foregoing, no notice of change of address will be effective except upon actual receipt. This Section will not be construed in any way to affect or impair any waiver of notice or demand provided in any Loan Document or to require giving of notice or demand to or upon any person in any situation or for any reason.

12. Invalid Provisions. A determination that any provision of this Agreement is unenforceable or invalid will not affect the enforceability or validity of any other provision and a determination that the application of any provision of this Agreement to any person or circumstance is illegal or unenforceable will not affect the enforceability or validity of the provision as it may apply to other persons or circumstances.

13. Construction. Whenever in this Agreement the singular number is used, the same will include plural where appropriate, and vice versa; and words of any gender in this Agreement will include each other gender where appropriate. The headings in this Agreement are for convenience only and will be disregarded in the interpretation of this Agreement. Reference to “person” or “entity” means firms, associations, partnerships, joint ventures, trusts, limited liability companies, corporations, and other legal entities, including public or governmental bodies, agencies or instrumentalities, as well as natural persons.

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14. Applicable Law; Forum. This Agreement is governed by the laws of the State described in the Loan Agreement and applicable United States federal law. These laws will govern the rights and duties of the parties to this Agreement and the validity, enforcement and interpretation of this Agreement. Obligor irrevocably and unconditionally submits to the jurisdiction of any state court described in the Loan Agreement or any United States federal court, sitting in the state, over any suit, action, or proceeding arising out of or relating to this Agreement. Obligor irrevocably waives, to the fullest extent permitted by law, any objection that Obligor may now or in the future have to the laying of venue in any the court and any claim that any the court is an inconvenient forum. Obligor agrees and consents that, all methods of service or process provided for under applicable law are available to Lender in connection with any suit, action, or proceeding in any state or federal court. Nothing in this Agreement will affect the right of Lender to serve process in any manner permitted by law or limit the right of Lender to bring proceedings against Obligor in any other court or jurisdiction.

15. Modification. This Agreement may be amended only by an instrument in writing intended for that purpose executed jointly by an authorized representative of Obligor and Lender.

16. Entire Agreement. This Agreement is the final agreement between Obligor and Lender and may not be contradicted by evidence of prior, contemporaneous or subsequent oral agreements of the parties. There are no oral agreements between Obligor and Lender.

17. Counterparts. This Agreement and any amendments may be executed in any number of original or telecopy counterparts, each of which will be effective on delivery and all of which together will constitute one binding agreement of the parties. Any signature page of the Agreement may be detached from any executed counterpart of the Agreement without impairing the legal effect of any signatures and may be attached to another counterpart of the Agreement that is identical in form to the document signed (but that has attached to it one or more additional signature pages).

[The remainder of this page is intentionally left blank.

Signatures follow on the next page.]

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Executed as of the Agreement Date.

“Obligor”
Quest Software, Inc., a Delaware corporation
By:	/s/ Scott Davidson
Name:	Scott Davidson
Title:	CFO
By:	/s/ David Cramer
Name:	David Cramer
Title:	VP, General Counsel

EXHIBIT “A”

LEGAL DESCRIPTION

THE LAND REFERRED TO HEREIN BELOW IS SITUATED IN THE CITY OF ALISO VIEJO, COUNTY OF ORANGE, STATE OF CALIFORNIA AND IS DESCRIBED AS FOLLOWS:

THOSE PORTIONS OF TRACT MAP NO(S). 14323 RECORDED IN BOOK 714, PAGES 49 AND 50; 14324 RECORDED IN BOOK 715, PAGES 9 AND 10; 14972 RECORDED IN BOOK 715, PAGES 11 AND 12; AND THAT PORTION OF TRACT MAP NO. 14310 RECORDED IN BOOK 670, PAGES 45 AND 46, ALL OF MISCELLANEOUS MAPS, THAT HAS BEEN ABANDONED AS INSTRUMENT NO. 1997-0652771, ALL IN THE OFFICE OF THE COUNTY RECORDER OF SAID COUNTY, MORE PARTICULARLY DESCRIBED AS FOLLOWS:

PARCEL A:

PARCELS 4 AND 5 IN THE CITY OF ALISO VIEJO, COUNTY OF ORANGE, STATE OF CALIFORNIA, AS SHOWN ON EXHIBIT “B” ATTACHED TO LOT LINE ADJUSTMENT NO. LL-97-054, RECORDED DECEMBER 19, 1997 AS INSTRUMENT NO. 19970652822 OF OFFICIAL RECORDS.

EXCEPT THEREFROM ALL PREVIOUSLY UNRESERVED MINERALS, OIL, GAS, PETROLEUM, OTHER HYDROCARBON SUBSTANCES AND ALL UNDERGROUND WATER, IN OR UNDER OR WHICH MAY BE PRODUCED FROM THE PROPERTY WHICH UNDERLIES A PLANE PARALLEL TO AND 500 FEET BELOW THE PRESENT SURFACE OF THE PROPERTY FOR THE PURPOSE OF PROSPECTING FOR, THE EXPLORATION, DEVELOPMENT, PRODUCTION, EXTRACTION AND TAKING OF SAID MINERALS, OIL, GAS, PETROLEUM, OTHER HYDROCARBON SUBSTANCES AND WATER FROM THE PROPERTY BY MEANS OF MINES, WELLS, DERRICKS OR OTHER EQUIPMENT FROM SURFACE LOCATIONS ON ADJOINING OR NEIGHBORING LAND OR LYING OUTSIDE OF THE PROPERTY, IT BEING UNDERSTOOD THAT THE OWNER OF SUCH MINERALS, OIL, GAS, PETROLEUM, OTHER HYDROCARBON SUBSTANCES AND WATER, AS SET FORTH ABOVE, SHALL HAVE NO RIGHT TO ENTER UPON THE PROPERTY OR ANY PORTION THEREOF ABOVE SAID PLANE PARALLEL TO AND 500 FEET BELOW THE PRESENT SURFACE OF THE PROPERTY FOR ANY PURPOSE WHATSOEVER, AS RESERVED BY SHEA HOMES LIMITED PARTNERSHIP IN THE DEEDS RECORDED DECEMBER 19, 1997 AS INSTRUMENT NO. 19970653373, BOTH OF OFFICIAL RECORDS.

PARCEL B:

NON-EXCLUSIVE EASEMENTS FOR PEDESTRIAN AND VEHICULAR INGRESS AND EGRESS, PARKING, UTILITIES AND OTHER MATTERS ON, OVER, UNDER OR ACROSS PORTIONS OF PARCELS 1, 2, 3, 4 AND 5 AS SHOWN ON EXHIBIT “B” ATTACHED TO LOT LINE ADJUSTMENT NO. LL 97-054, RECORDED ON DECEMBER 19, 1997 AS INSTRUMENT NO. 19970652822 OF OFFICIAL RECORDS OF ORANGE COUNTY, CALIFORNIA, AS SAID EASEMENTS ARE SET FORTH AND DEFINED IN ARTICLE 2 IN THAT CERTAIN DECLARATION OF RECIPROCAL EASEMENTS AND COVENANTS EXECUTED BY FLUOR ENTERPRISES, INC., A CALIFORNIA CORPORATION, RECORDED MARCH 31, 2004 AS INSTRUMENT NO. 2004000265241 OF OFFICIAL RECORDS OF ORANGE COUNTY, CALIFORNIA.

Assessor’s Parcel No: 623-481-52 and 53