TERM LOAN AGREEMENT

RECITALS

A.    CALIFORNIA BANK & TRUST, a California banking corporation (“ Lender ”), has agreed to make a term loan in the amount of Thirty-Three Million Nine Hundred Thirty Thousand Five Hundred and No/100 Dollars ($33,930,500.00) (“ Loan ”) to DECKERS CABRILLO, LLC, a California limited liability company (“ Borrower ”).

B.    The Loan is to be evidenced by a Promissory Note Secured by Deed of Trust in the amount of Thirty-Three Million Nine Hundred Thirty Thousand Five Hundred and No/100 Dollars ($33,930,500.00), executed by Borrower in favor of Lender (“ Note ”), and is to be secured by Deed of Trust, Assignment of Leases and Rents and Security Agreement (Including Fixture Filing) of even date herewith (“ Deed of Trust ”).

C.    All obligations of Borrower under this Agreement and the Note are to be secured by a first lien Deed of Trust covering that certain real property (“ Real Property ”) improved with industrial and office buildings (“ Building(s) ”) totaling approximately 187,185 square feet and other related improvements (“ Improvements ”) located in Santa Barbara County, California, which Property is described in Exhibit “A” attached to this Agreement. The Real Property, Improvements and “ Personal Property ” (as defined below) shall be referred to collectively as the “ Property. ”

D.    Borrower shall use the Loan for working capital and such other purposes relating to Borrower’s business.

DEFINITIONS

“ Advance ” shall mean any disbursement of Loan proceeds.

“ Agreement ” shall mean this Term Loan Agreement, as the same may be amended and supplemented as hereinafter provided.

“ Appraisal ” shall mean an appraisal of the Property and the Improvements, as determined by a qualified appraiser selected by Lender, which appraisal shall be satisfactory to Lender in all respects.

“ Asset Coverage Ratio ” means, as of any date of determination, the ratio of (a) the sum of (i) 80% of the net accounts receivable of Guarantor and its Subsidiaries as of such date, plus (ii) 50% of the aggregate amount of inventory of Guarantor and its Subsidiaries, to (b) the aggregate amount of indebtedness of Guarantor and its Subsidiaries that is secured by a lien, in each case determined in accordance with GAAP on a consolidated basis.

“ Assignment of Agreements ” shall mean that certain Assignment of Agreements, Permits, Licenses and Approvals of even date herewith executed by Borrower for the benefit of Lender.

“ Borrower ” shall mean DECKERS CABRILLO, LLC , a California limited liability company.

“ Building(s) ” shall have the meaning given to such term in Recital “ C ” above.

“ Business Day ” means each day of the year other than Saturdays, Sundays, holidays, and days on which banking institutions are generally authorized or obligated by law or executive order to close in California.

“ CC&Rs ” shall mean any covenants, conditions, restrictions, maintenance agreements or reciprocal easement agreements affecting the Property.

“ Closing Conditions ” shall mean those conditions set forth in Section 1.1 which shall be satisfied on or before the Closing Date.

“ Closing Date ” shall mean the date upon which the Deed of Trust is recorded in the Official Records of the County.

“ Collateral ” shall mean all real and personal property collateral described in the Deed of Trust, the Financing Statement and the other Security Agreements.

“ County ” shall mean Santa Barbara County, California.

“ Deed of Trust ” shall mean a Deed of Trust, Assignment of Leases and Rents and Security Agreement (Including Fixture Filing) executed by Borrower, as trustor, to Title Company, as trustee, and naming Lender as beneficiary, creating a first lien on the Property, the Improvements, and all other buildings, fixtures and improvements now or hereafter owned or acquired by Borrower and situated thereon, and all rights and easements appurtenant thereto, and securing a total indebtedness equal to the Loan Amount, all in form and substance acceptable to Lender.

“ Default Interest Rate ” shall mean a rate of interest set forth in the Note.

“ Disbursement Order ” shall mean that certain Loan Disbursement Order of even date herewith, duly executed by Borrower.

“ Environmental Indemnity ” shall mean that certain unsecured Environmental Indemnity executed by Borrower and Guarantor of even date herewith.

“ Estoppel ” shall mean a tenant estoppel letter in the form required by Lender executed by Tenant.

“ Event of Default ” shall mean the occurrence of any of the events listed in Section 4.1 (and all subsections thereof) of this Agreement.

“ Financing Statement ” shall mean a UCC–1 financing statement in favor of Lender, as secured party, perfecting Lender’s security interest in the personal property portion of the Collateral now owned or hereafter acquired by Borrower, in form and substance satisfactory to Lender, to be filed in the Office of the Secretary of State of California, and in such other offices for recording or filing such statements in such jurisdictions as Lender shall desire to perfect Lender’s security interest or reflect such interest in appropriate public records.

“ First Payment Date ” shall mean the first day of the second month after the Closing Date.

“ GAAP ” shall mean the generally accepted accounting principles consistently applied throughout the periods covered by the applicable financial statements.

“ Governmental Authority ” shall mean (a) any governmental municipality or political subdivision thereof, (b) any governmental or quasi–governmental agency, authority, board, bureau, commission, department or public body, or (c) any court, administrative tribunal or public utility.

“ Guarantor ” shall mean DECKERS OUTDOOR CORPORATION , a Delaware corporation.

“ Guarantor Credit Agreement ” shall mean that certain Amended and Restated Credit Agreement dated August 10, 2012, by and among Guarantor, “Lenders” party thereto, and JPMorgan Chase Bank, as Administrative Agent, as amended by that certain Amendment No. 1 dated as of June 24, 2013, and as the same may be modified, amended, restated or replaced.

“ Guaranty ” shall mean that certain Continuing Guaranty of even date herewith executed by Guarantor for the benefit of Lender.

“ Improvements ” shall mean:

(a)    the Building(s),

(b)    any offsite improvements on the Property (including, without limitation, curbs, grading, storm and sanitary sewers, paving, sidewalks, landscaping, hardscaping, sprinklers, electric lines, gas lines, telephone lines, cable television lines, fiber optic lines, pipelines and other utilities) necessary to operate and use the Property for the purposes to which it currently being used under applicable governmental regulations,

(c)    all present and future structures, buildings, improvements and fixtures of any kind on the Real Property, and

(d)    any common area improvements constructed on the Property.

“ Interest Rate ” shall mean the rate of interest set forth in the Note.

“ Lender ” shall mean CALIFORNIA BANK & TRUST, a California banking corporation, whose address is set forth above.

“ Loan ” shall mean the term loan to be made by Lender to Borrower pursuant to this Agreement.

“ Loan Amount ” shall mean the amount not to exceed Thirty-Three Million Nine Hundred Thirty Thousand Five Hundred and No/100 Dollars ($33,930,500.00).

“ Loan Commitment ” shall mean the loan commitment from Lender to Borrower to fund the Loan in the applicable Loan Amount, as set forth herein.

“ Loan Documents ” shall mean the following documents:

(a)    This Agreement, duly executed by Borrower and Lender;

(b)    The Note, duly executed by Borrower;

(c)    The Deed of Trust, duly executed and acknowledged by Borrower, which shall be duly recorded in the Official Records of the County;

(d)    The Environmental Indemnity, duly executed by Borrower and Guarantor;

(e)    The Guaranty duly executed by Guarantor;

(f)    The Borrower’s Representations and Warranties, duly executed by Borrower;

(g)    The Financing Statement, which shall be duly filed with the California Secretary of State;

(h)    The Assignment of Agreements, duly executed by Borrower;

(i)    The Limited Liability Company Authorization, duly executed by the members of Borrower;

(j)    The Disbursement Order, duly executed by Borrower;

(k)    Intentionally omitted;

(l)    A SNDA, duly executed by Borrower and Tenant, as may be required by Lender; and

(m)    An Estoppel, duly executed by Borrower and Tenant, as may be required by Lender.

“ Loan Fee ” shall mean an amount equal to nine-tenths percent (0.90%) of the Loan Amount (i.e., $305,374.50).

“ Loan Payment Date ” means the First Payment Date and the first (1st) day of each month thereafter.

“ Loan Term ” shall mean the period commencing on the first to occur of the Initial Advance under the Loan or the Closing Date and ending on the Maturity Date.

“ Loan-to-Value Ratio ” means the ratio of (a) the outstanding principal amount of the Loan, to (b) the value of the Property per the most recent Appraisal.

“ Lot 1 ” shall mean that portion of the Property commonly known as 6649 and 6693 Hollister Ave, Goleta, California 93117, APN: 073-610-008, and the Improvements located thereon.

“ Lot 2 ” shall mean that portion of the Property commonly known as 6601 Hollister Ave, Goleta, California 93117, APN: 073-610-009, and the Improvements located thereon.

“ Lot 3 ” shall mean that portion of the Property commonly known as 250 Coromar Drive, Goleta, California 93117, APN: 073-610-010, and the Improvements located thereon.

“ Lots ” shall mean, collectively, Lot 1, Lot 2 and Lot 3.

“ Maturity Date ” shall mean: (a) July 1, 2029, the date on which the Loan becomes due and payable pursuant to its terms; or (b) such other earlier date resulting from the acceleration of all sums due and owing under the Loan, as provided in the Note and the other Loan Documents.

“ Note ” has the meaning set forth in Recital “B” above.

“ Organizational Documents ” shall mean all documents evidencing and/or relating to the formation of any Person (that is not a natural person) and the continued existence and good standing of any said Person.

“ Person ” shall mean a natural person, a partnership, a joint venture, an unincorporated association, a limited liability company, a corporation, a trust, any other legal entity, or any Governmental Authority.

“ Personal Property ” shall mean any and all personal property, goods, fixtures, equipment, inventory, appliances, furniture and furnishings, building service equipment, building materials, supplies, and all replacements thereof, and equipment; all general intangibles, accounts, cash, instruments, deposit accounts, chattel paper, letter of credit, all governmental permits relating to any construction by Lender, and all rights to carry on business under any such names or all variants thereof, and all trademarks and goodwill; and all proceeds, including insurance proceeds pursuant to said insurance policies described herein, sales proceeds (whether resulting as a consequence of sales of single or multiple units constructed on the Property or a bulk or liquidation sale of the Property or any portion thereof), or damages or settlement proceeds arising from a breach or alleged

breach of any agreement relating to the foregoing, of all or any portion of the Property, or other personal property assets now or hereafter acquired by Borrower.

“ Property ” shall mean the real property described in Exhibit “A” attached hereto plus all Improvements plus all Personal Property described herein, which property is located in the County.

“ Security Agreements ” shall mean all of the following documents:

(a)    Deed of Trust;

(b)    Borrower’s Representations and Warranties;

(c)    Financing Statement;

(d)    Assignment of Agreements; and

(e)    The SNDA and Estoppel required by Lender.

“ SNDA ” shall mean a Subordination, Attornment and Non–Disturbance Agreement executed by Tenant.

“ Sole Member ” shall mean Deckers Outdoor Corporation, a Delaware corporation, as the sole member of Borrower.

“ Tenant ” shall mean Guarantor.

“ Tenant Lease ” shall mean that certain Lease dated July 1, 2014 by and between Borrower and Tenant.

“ Title Company ” shall mean First American Title Insurance Company.

“ Title Insurance Policy ” shall mean a title insurance policy in the form of an American Land Title Association Loan Policy – 1992 extended coverage (without revision, modification or amendment) issued by the Title Company in the amount of the Loan (with direct access reinsurance in amounts, by companies and in form acceptable to Lender as Lender may require) insuring the lien of the Deed of Trust to be a first and prior lien upon Borrower’s fee interest in the Real Property and Improvements, as security for all Advances pursuant to the terms of this Agreement, subject only to such exceptions as Lender may expressly approve in writing with such title insurance endorsements as Lender may require, including without limitation CLTA Form 104.7-06, 100.19-06 and 110.1 Endorsements, ALTA Form 9.3-06, 9.6-06, 3.1-06, 22-06, 39-06, 17-06, 19-06, 28-06, 8.2-06, 14-06, 26-06 and 18.1-06 Endorsements, and any other endorsements Lender may require to insure that the Improvements shall have been constructed within the boundaries of the Real Property and in accordance with all applicable laws, covenants and restrictions.

Additional Defined Terms . With respect to Guarantor’s covenants set forth in Section 2.9 of this Agreement, the terms “Consolidated EBITDAR,” “Consolidated Interest Expense,” “Consolidated Rental Expense,” “Capital Expenditure,” “Restricted Payment,” “Subsidiaries,”

“Equity Interests” and “Commitments” shall have the meanings given in the Guarantor Credit Agreement as existing as of the date of this Agreement.

1. LOAN DISBURSEMENT .

1.1      Disbursement Conditions . The Loan shall be disbursed in accordance with the Disbursement Order executed by Borrower, and the entire Loan proceeds shall be disbursed at the Closing Date in accordance with the terms and conditions of this Agreement. Lender shall not disburse any portion of the Loan, however, unless and until Borrower has fulfilled (at Borrower’s sole cost and expense) to Lender’s satisfaction all of the following (“ Closing Conditions ”):

1.1.1      Receipt of Signed Loan Documents . Lender must receive all Loan Documents duly executed, and acknowledged where appropriate, including without limitation the Note, the Deed of Trust (which must be duly recorded), the Financing Statement (which must be duly filed and/or recorded), and this Agreement.

1.1.2      Title Insurance Requirements . If requested by Lender in its discretion, Borrower shall cause Title Company to furnish to Lender:

(a)      a preliminary title report issued by Title Company, together with all recorded exceptions pertaining to the Property, and

(b)      copies of all CC&Rs affecting the Property.

Upon recordation of the Deed of Trust, the Title Company must issue, at Borrower’s expense, a Title Insurance Policy in liability amount and form satisfactory to Lender, showing the Deed of Trust as a first lien on the Property, subject only to those exceptions approved by Lender in writing, together with any and all endorsements reasonably required by Lender pursuant to its escrow instructions.

1.1.3      Perfection of Security Interests . Lender’s security interest in all of the Collateral must be duly perfected and in a first lien position.

1.1.4      Proof of Required Insurance . Lender shall have received evidence satisfactory to Lender that Borrower has procured the insurance required under the Loan Documents. In addition, Lender shall have received evidence satisfactory to Lender that Tenant has procured the insurance required under the Loan Documents and/or the Tenant Lease.

1.1.5      Payment of Loan and Other Fees . Lender shall have received payment of the Loan Fee and all other fees due Lender from Borrower, all in the amounts set forth in the Disbursement Order, which fees shall include, without limitation, the fees of Lender’s inside and/or outside counsel, all appraisal and review appraisal expenses, all environmental expenses, and those certain closing, recording and title costs payable in connection with the Loan.

1.1.6      Due Authorization and Enforceability . Borrower shall have delivered to Lender evidence satisfactory to Lender of:

(a)      Borrower’s and Guarantor’s, as applicable, authorization and due execution of the Loan Documents, and

(b)      the enforceability of the Loan Documents against Borrower and Guarantor, as applicable.

Such evidence shall include, without limitation, any and all borrowing and/or guaranty resolutions and/or opinions of counsel as Lender may reasonably require.

1.1.7      Compliance With Legal Requirements . Borrower shall have delivered to Lender evidence satisfactory to Lender that:

(a)      Borrower has obtained and is in compliance with all permits and other governmental approvals necessary for its use of the Property;

(b)      Borrower has satisfied and is in all respects in compliance with all environmental laws, rules and regulations affecting the Property; and

(c)      Borrower has satisfied and is in all respects in compliance with all other laws, rules and regulations applicable thereto.

1.1.8      No Material Adverse Changes . Borrower shall have delivered to Lender evidence satisfactory to Lender that, since the date on which Borrower applied to Lender for the Loan:

(a)      there has been no material adverse change in the financial condition, operations, business or management of Borrower, or the Property, and

(b)      there has been no transfer of any legal or equitable interest in Borrower.

1.1.9      Organizational Documents . Lender shall have reviewed and approved for Lender’s purposes, and without any liability therefor to Borrower or any third–party, certified copies of the Organizational Documents of Borrower and any Guarantor that is not an individual.

1.1.10      Representations and Warranties Are True . Lender shall have received evidence that the representations and warranties of Borrower pursuant to this Agreement and the Borrower’s Representations and Warranties are true or correct as of the Closing Date.

1.1.11      No Event of Default . Lender shall have not received any evidence that any Event of Default has occurred as of the Closing Date.

1.1.12      Appraisal Requirements . Lender shall have received and approved of the Appraisal for the Property by an appraiser acceptable to Lender in its sole discretion, and such Appraisal shall be in form and content acceptable to Lender in its sole discretion.

1.1.13      Flood Survey . Lender shall have received and approved of a survey for the Property that shall determine the flood zone rating for the Property, and such survey shall be in form and content acceptable to Lender in its sole discretion (and, if required by Lender based on regulatory requirements to which Lender is subject, Borrower shall be required to obtain and maintain flood insurance pursuant to a policy in an amount acceptable to Lender in its discretion upon Lender’s review of said flood survey). Without limiting the foregoing, Lender acknowledges flood insurance is not required as of the Closing Date.

1.1.14      Environmental Reports . Lender shall have received and approved of a Phase I Environmental Report (which may include, at Lender’s discretion, a current soils and/or toxics report) for the Property which is acceptable to Lender. As provided in the Environmental Indemnity, Lender shall have the right at any time and from time to time during the term of the Loan to require Borrower to obtain additional soils and/or toxic studies, tests and reports with respect to the Property, and to require Borrower to take any corrective action indicated by such studies, tests and reports.

1.1.15      No Other Liens and Encumbrances . Lender shall have received evidence satisfactory to Lender that no other encumbrance is contemplated for the Property, except as disclosed on the Title Insurance Policy. Borrower expressly agrees that no junior lien of any nature against all or any portion of the Property shall be given, permitted or suffered by Borrower without Lender’s prior written consent (which consent shall be at Lender’s sole option and discretion). Upon the closing of this Loan and the payment of all prior liens against the Property (collectively “ Prior Liens ”) as set forth in the Disbursement Order, Borrower shall provide evidence in form and content satisfactory to Lender that all Prior Liens have been paid in full such that no unpaid principal, interest, late charges or other costs and expenses remain on such Prior Liens from and after the Closing Date.

1.1.16      Termination of the Loan . If the disbursement of the Loan has not been made on or before thirty (30) days after the date of this Agreement because of Borrower’s failure to satisfy said conditions or any of Lender’s other customary loan disbursement conditions, Lender shall have the right to terminate this Agreement in its sole discretion. In such event, Borrower shall immediately pay to Lender the Loan Fee referenced in this Agreement, and thereafter neither Borrower nor Lender shall have any further rights or obligations hereunder, except as provided in Sections 2.2 , 2.5 and 6.9 below.

1.1.17      Satisfaction of Additional Closing Conditions . Lender shall have received such other evidence as Lender may reasonably request to establish the consummation of the loan transaction contemplated hereby and compliance with the conditions set forth in Exhibit “B” attached hereto and made part of this Agreement.

1.2      No Waiver . Any waiver by Lender of any condition of disbursement must be expressly made in writing. The making of a disbursement prior to fulfillment of one or more conditions thereof shall not be construed as a waiver of such conditions, and Lender reserves the right to require their fulfillment. All conditions must be satisfied at the sole cost of Borrower.

2.      BORROWER’S COVENANTS .

2.1      Insurance .

2.1.1      General Liability Insurance . Borrower shall, at its expense, obtain and keep in force until full payment of the Loan a policy of commercial general liability insurance in an occurrence form providing for broad form property damage coverage, broad form contractual coverage, personal injury, bodily injury, and advertising injury coverage with employee exclusion as to each named insured deleted, and products and complete operations coverage, insuring Borrower, and naming Lender as an additional named insured, against any liability arising out of or in connection with the Loan, Lender’s activities in connection with the Loan, or the Property, or any other claim arising out of the Property or the Loan. Such insurance policy shall have:

(c)      a combined single limit for both bodily injury or death in an amount not less than One Million Dollars ($1,000,000.00);

(d)      a limit for both bodily injury or death in any one accident or occurrence or for property damage in an amount not less than One Million Dollars ($1,000,000.00); and

(e)      a limit for excess or “ umbrella ” coverage in an amount not less than Two Million Dollars ($2,000,000.00), which amounts shall be increased from time to time as reasonably required by Lender.

The policy shall insure performance by Borrower of the indemnity provisions of Section 2.5 below. The limits of said insurance shall not limit the liability of Borrower hereunder.

2.1.2      Fire Insurance . Borrower shall, at its expense, obtain and keep in force on all of the Improvements until full payment of the Loan a policy of standard “ all risk ” fire and extended coverage insurance, with vandalism and malicious mischief endorsements, to the extent of one hundred percent (100%) of full replacement value against “ all risks of physical loss ” including without limitation a guaranteed replacement cost and code compliance coverage endorsement (including without limitation earthquake coverage, to the extent required pursuant to Section 2.1.4 below, with a deductible related thereto of no more than ten percent (10%) of the replacement value of the Improvements) including boiler and machinery insurance coverage, heating, air conditioning equipment, and other equipment of such nature, and insurance against loss or damage to personal property located on the Property by fire and other hazards covered by such insurance (without any deductible clause unless approved in writing by Lender). All such insurance shall be payable to Lender under an attached Beneficiary’s Loss Payable Endorsement (Form 438 BFUNS or equivalent). Such policy shall, if required by Lender, contain an agreed value clause sufficient (as determined by Lender) to eliminate any risk of coinsurance.

2.1.3      Worker’s Compensation Insurance . If required by Lender at any time, Borrower shall, at its expense, obtain and keep in effect (or cause any contractor to procure and keep in effect), Worker’s Compensation Insurance (including employer’s liability in an amount satisfactory to Lender and if applicable, insurance covering claims of workers against employers

arising under federal law) covering all employees of Borrower and any contractor and, if required under applicable law, any subcontractor engaged in work on, or with respect to, the Property, in such amount as is reasonably satisfactory to Lender and in the minimum amount for one (1) person of not less than One Hundred Thousand Dollars ($100,000.00), and in the minimum amount for one (1) accident or occurrence of not less than Five Hundred Thousand Dollars ($500,000.00).

2.1.4      Other Insurance . Borrower shall provide such other policies of insurance as Lender may reasonably request in writing, including without limitation:

(a)      policies insuring against loss, damage or other claims relating to or arising out of loss of rents and/or other income from the Property, and/or

(b)      if required by Lender as a result of any regulation, order or similar directive from any governmental agency to which Lender is subject, and provided such insurance is available at commercially reasonable prices, earthquake insurance in such amount as required by Lender, but in no event shall the coverage be less than the full amount required by the “ Probable Maximum Loss ” or “ PML ” study for the Property. Without limiting the foregoing, Lender acknowledges earthquake insurance is not required as of the Closing Date.

2.1.5      Conditional Assignment . If requested by Lender, Borrower shall execute and deliver to Lender a conditional assignment in form and content acceptable to Lender in its sole discretion of all proceeds from any claim Borrower may have under any of the insurance policies described hereinabove. This assignment of proceeds will be conditioned on the occurrence of an “ Event of Loss ” as defined under Borrower’s insurance policies. Upon any event of loss Lender may given notice of the assignment to Borrowers insurers so that proceeds due to Borrower are paid to Lender. Upon receipt of insurance proceeds, Lender will disburse the proceeds, in the same manner as loan proceeds are disbursed by Lender under its standard construction loan documents, to Borrower for items which were the subject of the insurance claim.

2.1.6      Power of Attorney . Borrower shall, within ten (10) days following written demand from Lender to Borrower, execute and deliver to Lender a power of attorney to enable Lender to make any claim Borrower may have under any policy of insurance described hereinabove. This power of attorney may be demanded and exercised by Lender on the occurrence of an “ Event of Loss ” as defined under Borrower’s insurance policies and Borrower’s failure to make a claim or cooperate with the insurance companies covering the loss. Lender’s exercise of any rights under the Power of Attorney shall not release Borrower from any obligation to Lender or waive any right Lender may have against Borrower.

2.1.7      General . Borrower shall, at its expense, obtain and keep in force all other insurance reasonably required by Lender pursuant to this Agreement, or as required by Governmental Authorities or applicable law. Promptly following written request from Lender, Borrower shall deliver evidence satisfactory to Lender of any such other required insurance.

2.1.8      Payment . In the event Borrower fails to procure and/or maintain such insurance (including without limitation flood and/or earthquake insurance as may be required by Lender in its discretion), and the required insurance premiums shall be prepaid by Borrower no less

than five (5) days in advance of the date when such payments are due to be in compliance with this Agreement, Lender may, but is not obligated to, procure the same and Borrower shall pay to Lender during the term hereof, upon receipt of an invoice therefor, the premiums for any insurance obtained by Lender pursuant to Subsections 2.1.1, 2.1.2, 2.1.3 or 2.1.4 above. If Lender secures such insurance, Lender may, at its sole option and without notice to Borrower, any contractor, or any other party, secure such insurance solely to protect Lender’s interests and not the interests of any other party.

2.1.9      Insurance Policies . All of Borrower’s insurance shall be primary insurance written in a form satisfactory to Lender by companies licensed in California acceptable to Lender (which must be A:VII or better as rated by Best’s Insurance Reports). Borrower shall use best efforts to provide or cause Borrower’s insurance broker to provide at least thirty (30) days written notice to Lender prior to cancellation or other change to such insurance. Evidence of renewals of such policies shall be provided prior to expiration thereof. Copies of the policies shall be made available upon written request from Lender, and payment of premiums shall be made by Borrower (and evidence of the same provided to Lender upon Lender’s written request) in advance of the date when such payments are due and in any event as required to avoid any lapse in coverage needed to be in compliance with this Agreement.

2.1.10      Other Provisions . Said policy or policies, as applicable, shall combine aggregate limits for Bodily Injury, Property Damage, and Personal Injury, in the amounts specified above, that apply specifically to and can only be exhausted in connection with claims arising out of or relating to the Property. If any claim, event, or loss occurs during the policy period which will or may decrease the aggregate amount of insurance coverage available under the policy, Borrower shall immediately secure additional coverage sufficient to provide total aggregate limits at least equal to the amounts set forth above on a going forward basis. Should any part of the coverage required above be provided by “ excess ” or “ umbrella ” policies, those policies shall specifically provide that the coverage under those policies shall “ drop down ” as to both defense and indemnity obligations in the event of insolvency of the primary or underlying carrier. Such “ excess ” or “ umbrella ” policies shall also contain all the other provisions required by this Agreement.

2.2      Payment of Expenses . Promptly upon demand, from time to time in accordance with the terms and conditions of this Agreement, Borrower shall pay Lender’s out–of–pocket costs and expenses incurred in connection with the making or disbursement of the Loan or in the exercise of any of its rights or remedies under this Agreement, including but not limited to title insurance and escrow charges, appraisal fees, reappraisal and review appraisal fees, recording charges and mortgage taxes, reasonable legal fees and disbursements, costs of environmental inspections and reports, and other reasonable fees and costs for services which are not customarily performed by Lender’s salaried employees and are not specifically covered by Lender’s fees for the Loan. The provisions of this Section shall survive the termination of this Agreement and the repayment of the Loan.

2.3      Accounting; Changes in Condition . Borrower shall keep true and correct financial books and records in accordance with GAAP, and shall maintain adequate reserves for all

contingencies. To the extent not included in any public filing made by Guarantor with the Securities and Exchange Commission, Borrower shall promptly notify Lender of any material adverse change in its financial condition or in the physical condition of the Property or the Improvements.

2.4      Governmental Authorities . Borrower shall, at its sole cost, comply with the requirements and conditions of any Governmental Authority respecting the use of, and any construction, sale, lease or financing of, the Improvements, and with the terms of all applicable laws, regulations and requirements governing same.

2.5      Indemnity . Borrower agrees to defend, protect, indemnify, and hold Lender harmless from and against all liabilities, claims, demands, actions, causes of action, damages, costs and expenses (including but not limited to legal fees and disbursements) arising out of, resulting from, or in any way connected with Borrower’s use of the Property and any occurrence thereon, including but not limited to, any bodily injury or death occurring on or about the Property from whatever cause. Upon demand by Lender, Borrower shall defend any action or proceeding brought against Lender with counsel selected by Lender compensated with reasonable attorneys’ fees, or Lender may elect to conduct its own defense at the reasonable expense of Borrower. The provisions of this section shall survive the termination of this Agreement and the repayment of the Loan.

2.6      Damage and Destruction . Notwithstanding anything contained herein to the contrary, if the Improvements or any part thereof are damaged or destroyed by any means, including, without limitation, by flood, earthquake, wind, or fire, Borrower shall promptly restore the Improvements to their prior undamaged condition, and Lender shall not be obligated to make any further disbursements of the Loan unless and until:

2.6.1      Borrower presents within sixty (60) days of such damage or destruction to Lender a written plan for restoration which includes, among other things, cost estimates and schedules that in Lender’s sole opinion are satisfactory;

2.6.2      Following Lender’s approval of Borrower’s restoration plan delivered in accordance with Section 2.6.1 above, Borrower enters into, with Lender’s prior written consent, which consent shall not be unreasonably withheld, a contract with contractor(s) providing for complete restoration within three (3) months of such damage or destruction and in accordance with such restoration plan ;

2.6.3      The insurance proceeds available by reason of such damage or destruction that are received by Lender pursuant to this Section 2.6 , plus additional sums provided to Lender by Borrower for restoration purposes are at least equal to the anticipated costs of completing such construction, which anticipated costs shall include, but not be limited to, appropriate interest reserves and contingency funds reasonably required by Lender.

2.6.4      If Borrower complies with the preceding portions of this Section 2.6 , Lender shall reasonably disburse the sums specified in Subsection 2.6.3 above to Borrower on the same terms and conditions on which Lender makes disbursements of its construction loans.

2.7      Financial Reporting Requirements . Borrower shall furnish or cause to be furnished to Lender:

2.7.1      Tax Returns . If requested by Lender, as soon as available, and in any event within thirty (30) days after filing, but not later than November 15th of each year, Borrower shall furnish copies of Borrower’s federal tax returns.

2.7.2      Other Items and Information . Such other information concerning Borrower, Guarantor, the Property, and the assets, business, financial condition, operations, property, prospects and results of operations of Borrower and Guarantor as Lender reasonably requests from time to time. In this regard, promptly upon request of Lender, Borrower shall deliver to Lender counterparts and/or conditional assignments as security of any and all construction contracts, receipted invoices, bills of sale, statements, conveyances and other agreements, documents and instruments of any nature relating to the Property or under which Borrower claims title to the Property.

2.8      Negative Pledge . Borrower acknowledges and agrees that its creditworthiness and expertise in owning, managing and operating all of its assets, including without limitation the Property and any other real or personal property owned by Borrower (whether or not any such property is or will be encumbered by a Deed of Trust, financing statement, pledge agreement and/or security agreement in favor of Lender) are among the grounds upon which Lender has determined that it is protected against risk of default and, thereby, has agreed to make the Loan to Borrower. In order to ensure the continued creditworthiness and expertise of Borrower as the owner, manager and operator of said assets, and in order to grant Lender a continuing opportunity to review and evaluate the same, Borrower agrees that, except in the ordinary course of Borrower’s business, none of Borrower’s assets shall be sold, agreed to be sold, conveyed, transferred, assigned, leased or subleased (other than to an affiliate of Borrower or Guarantor), disposed of, or further encumbered, whether voluntarily, involuntarily, by operation of law, or otherwise, without the prior written

consent of Lender. Borrower expressly agrees that any violation of the above restrictions shall constitute an Event of Default and shall cause the then outstanding principal balance and interest on the Note, as well as any other sums due and owing under the Loan Documents, at the option of Lender, to immediately become due and payable.

2.9      Guarantor Covenants . Borrower shall cause Guarantor to comply with the following covenants (it being acknowledged by Lender and Borrower that certain capitalized terms used below apply collectively to both Guarantor and its Subsidiaries pursuant to the meanings given them in either this Agreement or the Guarantor Credit Agreement, as applicable):

(a)      The Asset Coverage Ratio shall not be less than or equal to 1.10 to 1.00 as of the last day of any fiscal quarter of Guarantor.

(b)      As of the last day of any fiscal quarter of Guarantor, Guarantor shall not permit the ratio of (i) Consolidated EBITDAR for the period of four fiscal quarters ending on such day to the sum of (ii) Consolidated Interest Expense for such four quarter period plus Consolidated Rental Expense for such four quarter period to be less than or equal to 2.25 to 1.00.

(c)      Guarantor shall not make or become legally obligated to make any Capital Expenditure, except for Capital Expenditures made in compliance with the Guarantor Credit Agreement (or, if the Guarantor Credit Agreement has been terminated, compliance with the Guarantor Credit Agreement most recently in effect).

(d)      Restricted Payments . Guarantor will not, and will not permit any of its Subsidiaries to, declare or make, or agree to pay or make, directly or indirectly, any Restricted Payment, except (a) Guarantor may declare and pay dividends with respect to its Equity Interests payable solely in additional shares of its common stock, (b) Subsidiaries may declare and pay dividends ratably with respect to their Equity Interests, (c) Guarantor may make Restricted Payments pursuant to and in accordance with share based compensation plans or other benefit plans for management or employees of Guarantor and its Subsidiaries and (d) Guarantor may make or declare any other Restricted Payments so long as both before and after giving effect to the making and/or declaration of any such Restricted Payment, (i) Guarantor would be in compliance with the Guarantor financial covenants set forth in subsections 2.9(a) and 2.9(b) above on a pro forma basis and (ii) Guarantor and its Subsidiaries on a consolidated basis would have an aggregate amount of cash and unused borrowing availability under the Commitments of not less than (x) $150,000,000, in the case of any such Restricted Payment to be made in the calendar quarter ending March 31, June 30, or December 31 of any calendar year, and (y) $75,000,000, in the case of any such Restricted Payment to be made in the calendar quarter ending September 30 for any calendar year.

2.10      Compliance With Financial Covenants . Compliance with the financial covenants in the above–described Section 2.9 shall be evidenced by the annual and quarterly financial statements to be provided to Lender pursuant to Section 2.7 of this Agreement. Borrower acknowledges that Borrower’s and Guarantor’s combined financial strength was a material consideration and inducement to Lender in Lender’s agreement to make the Loan to Borrower, and that any failure of Guarantor to meet the foregoing financial covenant requirements shall constitute an Event of Default hereunder and under the Note and the Security Agreements. The annual and

quarterly financial statements and Guarantor Officer’s Certificate shall include a reaffirmation of the financial representations, warranties, covenants and agreements set forth in Section 2.9 , duly executed by the reporting party. For the avoidance of doubt, Guarantor’s financial covenants, the manner in which each is determined, and Guarantor’s reporting requirement set forth in this Agreement shall exist and continue during the term of the Loan regardless of the existence or continuation of Guarantor’s Credit Agreement.

2.10.1      No Other Debts . Other than as approved by Lender in its sole discretion, there shall be no third–party debt on the Property or, other than trade debt or in connection with any Guarantor Credit Agreement, in Borrower.

2.11      Appraisals/Evaluations . If reasonably required by Lender, or if required by law, Lender shall have the right to order appraisals, appraisal reviews and/or evaluations of the Property from time to time, from an appraiser selected by Lender, which appraisal(s) shall comply with all federal and state standards for appraisals and otherwise shall be satisfactory to Lender in all respects. Notwithstanding the foregoing, Lender shall not order appraisals of the Property more than one (1) time per year unless:

2.11.1      Lender believes that a material adverse change has occurred with respect to the Property or any portion thereof, or

2.11.2      Borrower requests in writing that Lender order an appraisal of the Property, or

2.11.3      Lender is required to reappraise the Property in connection with regulatory requirements.

Borrower agrees to pay the reasonable cost and expense for all appraisals, reviews and/or evaluations thereof ordered by Lender pursuant to this section.

3.      SECURITY AGREEMENT .

3.1      Grant of Security . To secure prompt and complete performance of the obligations of Borrower under this Agreement and the other Loan Documents (“ Obligations ”), Borrower grants Lender a security interest in any and all Personal Property to the extent owned by Borrower.

3.2      Representations, Warranties and Covenants . Borrower hereby represents, warrants and covenants to Lender that:

3.2.1      Except for the security interest created hereunder, Borrower is (and, with respect to after–acquired property, will be as of the date of acquisition) the full legal and equitable owner of the Personal Property and no other person or entity has or will have any right, title, interest, lien or claim in, on, or to the Personal Property or any part thereof. Borrower, at its cost, shall defend any proceeding that may affect the title to or Lender’s security interest in any Personal Property and shall indemnify, defend, protect, and hold Lender harmless from all costs and expenses of Lender’s defense.

3.2.2      Any tangible Personal Property is (and, with respect to after–acquired property, will be as of the date of acquisition) located on the Property. Without the prior written consent of Lender, Borrower shall not cause or suffer any of such Personal Property to be removed from the Property.

3.2.3      Upon the recording of the Deed of Trust with the Santa Barbara County Recorder’s Office and the filing of the Financing Statement with the California Secretary of State describing the Personal Property, the security interest created hereunder shall constitute a first priority security interest in the Personal Property.

3.2.4      Borrower shall not change its name, identity, the state under which Borrower is registered and/or organized or Borrower’s principal place of business (if different than the state of organization) without the prior written consent of Lender ; provided, however, Borrower may (a) change the state under which Borrower is organized so long as Borrower remains qualified to do business in the state in which the Property is located, and (b) convert its form of entity from a limited liability company to a limited partnership or similar entity type, so long as Guarantor maintains direct or indirect management and ownership control of Borrower and, in either such event, provides Lender with prompt written notification of the same .

3.2.5      Borrower expressly authorizes Lender to file a financing statement, with or without Borrower’s signature, to perfect Lender’s first lien and security interest in the Personal Property (including any required continuation statements, amendment statements or other such documents necessary to perfect and continue said lien), and Borrower hereby expressly ratifies any financing statements Lender may have filed prior to the date of this Agreement.

3.3      Waiver of Rights . Borrower waives any right to require Lender to proceed first against any person or particular part of the Personal Property, or exhaust or pursue any particular remedy that may be available to Lender. Borrower waives any right of subrogation or other right to the benefit of, or any right to participate in, or direct the disposition of any of the Personal Property or any other security now or hereafter held by Lender.

3.4      Security Agreement; Fixture Filing . The Deed of Trust and this Section 3 shall constitute a security agreement under the California Uniform Commercial Code, and Lender shall have all the rights of a secured party thereunder. Pursuant to the foregoing terms and conditions, Borrower has granted to Lender a security interest in and to certain personal property, some of which may become fixtures of the Property. The Financing Statement referenced in Subsection 3.2.3 above and/or the Deed of Trust may be filed as a fixture filing.

4.      DEFAULT AND REMEDIES .

4.1      Events of Default . An Event of Default shall be deemed to have occurred upon the occurrence of any one or more of the following (after the expiration of any applicable notice and cure period):

4.1.6      Failure by Borrower to pay any monetary amount when due under any Loan Document and the expiration of ten (10) days after written notice of such failure by Lender to Borrower; or

4.1.7      Failure by Borrower or Guarantor to perform obligation not involving the payment of money, or to comply with any other term or condition applicable to Borrower or Guarantor under any Loan Document, and the expiration of thirty (30) days after written notice of such failure by Lender to Borrower or Guarantor, provided, however, that if such failure cannot be remedied by the payment of money and cannot be remedied within such 30–day period and Borrower promptly takes and diligently pursues action to remedy such failure, Borrower shall have an additional period of time, not to exceed ninety (90) days, within which Borrower may remedy such failure; or

4.1.8      Borrower fails timely to pay all loan and other fees and costs due Lender under the Loan Documents within ten (10) days following Lender’s delivery to Borrower of written demand for payment of the same; or

4.1.9      Any of the representations or warranties under this Agreement, the Borrower’s Representations And Warranties or any of the other Loan Documents is or becomes false or misleading; or

4.1.10      Any of the following events of bankruptcy, insolvency or receivership occurs:

(a)      Borrower or Guarantor has admitted in writing its inability to pay its debts generally as they come due, or at any time is generally not paying its debts as such debts become due, or has filed any petition or action for relief under any bankruptcy, reorganization, insolvency or moratorium law, or any other law or laws for the relief of, or relating to debts;

(b)      An involuntary petition has been filed under any bankruptcy or insolvency statute against Borrower or Guarantor, or a custodian, receiver or trustee has been appointed to take possession of the Property or other assets of Borrower or Guarantor, unless such petition or appointment is or has been set aside or withdrawn or ceases or has ceased to be in effect within ninety (90) days from the date of said filing or appointment; or

(c)      There is filed by or against Borrower or Guarantor a petition seeking the liquidation or dissolution of Borrower or Guarantor or the commencement of any other procedure to liquidate or dissolve Borrower or Guarantor, or there occurs any event, condition or circumstance which causes the liquidation or dissolution of Borrower or Guarantor, unless such petition or appointment is or has been set aside or withdrawn or ceases or has ceased to be in effect within ninety (90) days from the date of said filing or appointment; or

(d)      Borrower or Guarantor conceals, removes, or permits to be concealed or removed, any part of its property, with intent to hinder, delay or defraud its creditors, or makes or suffers a transfer of any of its property which may be fraudulent under any bankruptcy, fraudulent conveyance or similar law; or makes any transfer of its property to or for the benefit of a creditor at a time when other creditors similarly situated have not been paid; or suffers or permits while

insolvent, any creditor to obtain a lien upon any of its property through legal proceedings which is not vacated within ninety (90) days from the date thereof; or

(e)      Borrower or Guarantor makes a general assignment of the assets of Borrower or Guarantor for the benefit of Borrower’s or Guarantor’s creditors; or

(f)      There is any sequestration or attachment of, or any levy or execution upon all or substantially all of the Property or the Improvements, which is not released, expunged or dismissed prior to the earlier of ten (10) business days after such sequestration, attachment or execution; or

(g)      Borrower terminates or suspends its business, or otherwise disposes of a substantial part of its assets, or ceases to exist; or

(h)      Any of the above events in this subsection occur with respect to any co–maker, accommodation maker, or surety on or of the Loan.

4.1.11      The lien or security interest of the Deed of Trust shall lose validity or first priority, or any liens not approved by Lender in writing are imposed upon the Property; or

4.1.12      Any Governmental Authority takes or institutes action which, in the opinion of Lender, if adversely determined would materially and adversely affect Borrower’s or Guarantor’s financial condition or ability to repay the Loan, unless such action is dismissed or withdrawn within ninety (90) days from its occurrence; or

4.1.13      Any material adverse change in the financial condition of Borrower or Guarantor which continues for a period of sixty (60) consecutive days; or

4.1.14      Other than a Permitted Transfer, the occurrence of any prohibited transfer under Section 2.9 of the Deed of Trust, unless prior to such transfer the holder of the Note has delivered to Borrower the written consent of such holder to such transfer; or

4.1.15      A final judgment or decree for monetary damages or a monetary fine or penalty (not subject to appeal or as to which the time for appeal has expired) is entered against Borrower by any Governmental Authority, which together with the aggregate amount of all other such judgments, decrees, fines and penalties against Borrower that remain unpaid or that have not been discharged or stayed, exceeds Ten Million Dollars ($10,000,000.00), and such judgment, decree, fine or penalty is not paid, discharged or stayed within thirty (30) days after the entry thereof; or

4.1.16      Any other Event of Default occurs under any of the other Loan Documents.

4.1.17      An event of default occurs under a Guarantor Credit Agreement.

4.2      Remedies . At any time following an Event of Default, Lender may exercise any right or remedy which it has under the Deed of Trust, this Agreement or any of the other Loan Documents, or otherwise available at law or in equity or by statute, and all of Lender’s rights and

remedies shall be cumulative. At any time following an Event of Default, Lender may withhold any undisbursed loan funds in its discretion, and no disbursement of Loan funds by Lender shall cure any default of Borrower, unless Lender agrees otherwise in writing. Lender shall also have the right in its discretion to enter the Property and take any and all actions necessary in its judgment to:

4.2.1      Maintain and repair the Property and replace worn–out or damaged portions of the Property; and

4.2.2      Provide for security and protection of persons and property on the Property.

5.      REPRESENTATIONS AND WARRANTIES OF BORROWER .

5.1      Representations and Warranties of Borrower . As a material inducement to Lender to make the Loan to Borrower, Borrower has made the representations, warranties, and covenants to Lender as set forth in the Borrower’s Representations and Warranties of even date herewith by and between Borrower and Lender.

5.2      Survival . Each of said representations and warranties shall survive disbursement and the repayment of the Loan.

6.      MISCELLANEOUS .

6.1      No Waiver; Consents . Any waiver by Lender must be in writing and shall not be construed as a continuing waiver. No waiver shall be implied from any delay or failure by Lender to take action on account of any default of Borrower. Consent by Lender to any act or omission by Borrower shall not be construed to be a consent to any other or subsequent act or omission or to waive the requirement for Lender’s consent to be obtained in any future or other instance.

6.2      No Third Parties Benefited . This Agreement is made and entered into for the sole protection and benefit of Lender and Borrower and their successors and assigns. No other persons or entities shall have any right of action under this Agreement or any right to the Loan funds. Borrower hereby irrevocably and unconditionally assigns to Lender all of Borrower’s rights, title, and interest in and to the Loan funds, and Borrower further agrees that all Loan Proceeds received by Borrower shall be received by it in trust, and that the same shall be used and applied by Borrower solely in accordance with this Agreement and shall not be diverted or otherwise used in any manner.

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

6.4      Notices . All notices, requests, demands and consents to be made hereunder to the parties hereto shall be in writing and shall be delivered by hand or sent by registered mail or certified mail, postage prepaid, return receipt requested, through the United States Postal Service to the addresses shown below or such other address which the parties may provide to one another in accordance herewith. Such notices, requests, demands and consents, if sent by mail, shall be deemed

given two (2) Business Days after deposit in the United States mail, and if delivered by hand, shall be deemed given when delivered.

c/o Deckers Outdoor Corporation

Attn: Chief Financial Officer

250 Coromar Drive

Goleta, California 93117

Attn: General Counsel

250 Coromar Drive

Goleta, California 93117

620 Newport Center Drive, Suite 200

Newport Beach, California 92660

Attn: Josh C. Grushkin, Esq.

Attn: Peggy Standefer, Esq.

11622 El Camino Real, Suite 200

San Diego, California 92130

Loan Number: __________________

Attn: Brian Knapp

1900 Main Street, Suite 200

Irvine, California 92614

Loan Number: __________________

611 Anton Boulevard, Suite 1400

Costa Mesa, California 92626

Attn: Bob L Hagle

6.5      Intentionally Omitted .

6.6      Actions . Lender shall have the right, but not the obligation, to commence, appear in, and defend any action or proceeding which might affect its security or its rights, duties or liabilities relating to the Loan, the Property or Improvements, or this Agreement. To the extent Lender elects to conduct its own defense in connection with Borrower’s indemnity obligations under Section 2.5 above, Borrower shall pay promptly within thirty (30) days following demand all of Lender’s reasonable and documented out–of–pocket costs, expenses, and legal fees and disbursements incurred in such defense proceedings.

6.7      Applicable Law . This Agreement shall be deemed entered into in the State of California and shall be governed by and interpreted according to California law. This Agreement has been delivered to Lender and accepted by Lender in the State of California. If there is a lawsuit in connection with this Agreement, Borrower shall submit, at Lender’s request, to the jurisdiction of the courts of Santa Barbara County, California.

6.8      Heirs, Successors and Assigns . The terms of this Agreement shall bind and benefit the heirs, legal representatives, successors and assigns of the parties; provided, however, that Borrower may not assign this Agreement or any Loan funds, or assign or delegate any of its rights or obligations under the Loan Documents, without the prior written consent of Lender, and any proposed assignment without such consent shall be deemed void.

6.9      Attorneys’ Fees . If any action or proceeding at law or in equity, or an arbitration proceeding (collectively an “ action ”), shall be brought to recover any payment due Lender under the Loan Documents, or for or on account of any breach of or to enforce or interpret any of the terms, covenants, or conditions of this Agreement, or for the foreclosure of the lien of the Deed of Trust upon the Property and the Improvements, or if a legal controversy arises out of same without an action being brought, the prevailing party shall be entitled to recover from the other party, its reasonable attorneys’ fees and costs and expenses incurred in connection with the prosecution or defense of such action or the settlement of such controversy. “ Prevailing Party ” within the meaning of this section shall include, without limitation (a) the party who brings an action against the other after the other is in breach or default, if such action is dismissed upon the other’s payment of the sums allegedly due or upon the other’s performance of the covenants allegedly breached, or (b) the party obtains substantially the relief sought by it, whether or not such action proceeds to a hearing, a trial on the merits, or a final judgment or determination. If Lender is named as a defendant in any suit brought against Borrower in connection with or arising out of the Property, in connection with Sections 2.5 and 6.6 of this Agreement, Borrower shall pay to Lender its costs and expenses incurred in such suit, including its reasonable attorneys’ fees and costs.

6.10      Waiver of Jury Trial . TO THE MAXIMUM EXTENT PERMITTED BY APPLICABLE LAW, BORROWER AND LENDER EACH HEREBY KNOWINGLY, VOLUNTARILY, AND INTENTIONALLY WAIVE ANY RIGHT TO TRIAL BY JURY OR OF ANY CLAIM, DEMAND, ACTION, OR CAUSE OF ACTION ARISING UNDER THIS AGREEMENT OR ANY OF THE LOAN DOCUMENTS, OR IN ANY WAY CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DISCUSSIONS, DEALINGS, OR ACTIONS OF SUCH PARTIES OR EITHER OF THEM (WHETHER ORAL OR WRITTEN) WITH RESPECT THERETO, OR TO THE TRANSACTIONS RELATED THERETO, IN EACH CASE WHETHER NOW EXISTING OR HEREINAFTER ARISING, AT LAW OR IN EQUITY. EACH PARTY HEREBY CONSENTS AND AGREES THAT ANY SUCH CLAIM, DEMAND, ACTION, OR CAUSE OF ACTION SHALL BE DECIDED BY A TRIAL COURT WITHOUT A JURY, AND THAT EITHER PARTY TO THIS AGREEMENT MAY FILE AN ORIGINAL COUNTERPART OR A COPY HEREOF WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE PARTIES HERETO TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY. BORROWER ACKNOWLEDGES AND AGREES THAT IT HAS RECEIVED FULL AND SUFFICIENT CONSIDERATION FOR THIS PROVISION (AND EACH OTHER PROVISION OF THIS AGREEMENT AND EACH OTHER DOCUMENT TO WHICH IT IS A PARTY) AND THAT THIS PROVISION IS A MATERIAL INDUCEMENT FOR LENDER IN MAKING THE LOAN.

6.11      Severability . The invalidity or unenforceability of any one or more provisions of this Agreement shall in no way affect any other provisions.

6.12      Interpretation . Whenever the context requires, all words used in the singular shall be construed to have been used in the plural, and vice versa, and each gender shall 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. Time is of the essence in the performance of this Agreement by Borrower. The use of underlining in this Agreement is for convenience only, and the parties understand and agree that the presence or absence of underlining shall not be used in interpreting or construing this Agreement or any provision hereof.

6.13      Approvals . Unless expressly provided to the contrary, when an approval or election by Lender is called for under the provisions of any of the Loan Documents, such approval or disapproval or election shall be in Lender’s sole and absolute discretion.

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

6.15      Entire Agreement . The written provisions of this Agreement, and the written provisions of all of the other Loan Documents, shall represent the entire agreement between the parties respecting the subject matter thereof, and may not be contradicted by evidence of any prior or contemporaneous agreement. In the event of a conflict between the provisions of this Agreement and any of the other Loan Documents, the provisions of this Agreement shall control. All Exhibits attached hereto shall be deemed an integral part of this Agreement as though set forth in full herein.

6.16      Counterparts . This Agreement and any attached Consents or Exhibits requiring signatures may be executed in counterparts, but all counterparts shall constitute but one and the same document.

6.17      Brokers . Borrower shall indemnify and hold Lender harmless from and against any and all charges, commissions, fees, costs and/or expenses charged by any broker identified on the Disbursement Order, if any, and from and against any and all loss, damage, liability and expense, including costs and attorneys’ fees, which Lender may incur or sustain by reason of or in connection with respect to the foregoing.

6.18      Assignments, Participations and Sale . Lender shall have the right at any time to sell, assign, transfer, negotiate or grant participants in all or any part of the Loan or the Note to one or more participants. Borrower hereby acknowledges and agrees that any such disposition will give rise to a direct obligation of Borrower to each such participant.

7.      Permitted Transfer in Borrower . The transfer of not more than twenty–five percent (25%) of the membership interests in Borrower (a “ Permitted Transfer ”) shall be permitted so long as, at all times, Guarantor maintains direct or indirect management and ownership control of Borrower. Except as provided by this Section 7, any other transfers of membership interests in Borrower, or any transfer of the Property by Borrower, shall not occur without the prior written consent of Lender, which may be withheld, conditioned or delayed by Lender in its sole and absolute discretion.

8.      Permitted Releases . At the written request of Borrower, Lender shall release any of the individual Lots (i.e., Lot 1, Lot 2 or Lot 3) from the lien of the Deed of Trust, upon the satisfaction of all of the following conditions precedent:

(a)      No Event of Default shall have occurred and be continuing at the time of Borrower’s request, and no event shall have occurred and be continuing that with the giving of notice and/or the lapse of time would constitute an Event of Default.

(b)      The specific Lot requested to be released is a separate legal parcel or parcels, and release of such Lot does not violate any applicable law regarding subdivisions, parcel maps, and the division of land into lots or parcels.

(c)      Release of such Lot does not violate any requirements of any document of record covering such Lot.

(d)      Lender shall have determined that following the release of such Lot, the access to the remainder of the Lots not being released shall be adequate for the proposed use of the remainder of the Lots.

(e)      Borrower shall provide Lender, at Borrower’s sole cost and expense, with such title insurance endorsements to the Title Insurance Policy as Lender shall request, in form and substance satisfactory to Lender, which shall insure that after the release of such Lot, the Deed of Trust shall continue as a valid first position deed of trust against the remainder of the Lots covered thereby, subject only to such title exceptions as Lender shall have approved in writing.

(f)      Borrower shall have paid, or cause to be paid, to Lender all costs and expenses incurred in connection with the release of such Lot, including without limitation all recording fees, transfer and other taxes, trustee’s fees, attorney’s fees, appraisal fees, escrow fees and fees for title insurance and similar charges.

(g)      Lender shall have received a release price (“Release Price”) with respect to the Lot requested to be released equal to:

(i)      if Borrower has requested a release of Lot 1, $21,883,000;

(ii)      if Borrower has requested a release of Lot 2, $8,690,000; or

(iii)      if Borrower has requested a release of Lot 3, $3,397,000.

The Release Price, when received by Lender, shall be applied as a permanent reduction to the outstanding principal amount of the Loan.

(h)      Unless otherwise consented to in writing by Lender, which consent shall not be unreasonably withheld, conditioned or delayed, the proceeds used for the Release Price must have been obtained through a sale or refinance of the Lot requested to be released.

(i)      Lender shall have determined that the remaining unreleased Lots satisfy a Loan-to-Value Ratio (after giving effect to the Release Price) of at least seventy-five percent (75%). In connection with its determination of the Loan-to-Value Ratio, Lender shall have the right to have an Appraisal of the Property conducted at Borrower’s sole expense and with Borrower’s full cooperation.

Notwithstanding the provisions of Section 8(g) above, in the event that, subsequent to the Closing Date, Borrower further subdivides Lot 1 into two parcels, with each further subdivided parcel containing one of the two buildings located on Lot 1 as of the Closing Date, and provided such further subdivision is in a manner acceptable to Lender in its sole discretion, the “Release Price” for each of the two further subdivided lots shall be $10,941,500.

[SIGNATURES ON FOLLOWING PAGE]

IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the date written above.

LENDER

 

CALIFORNIA BANK & TRUST,

a California banking corporation

 

 

By:                             

    Brian Knapp, Vice President

 

 

BORROWER

 

DECKERS CABRILLO, LLC,

a California limited liability company

 

By:    Deckers Outdoor Corporation,

    a Delaware corporation,

    its sole member

By:                         

    Name:                         

    Title:                         

EXHIBIT “A”

LEGAL DESCRIPTION

THE LAND REFERRED TO IS IN SANTA BARBARA COUNTY, CALIFORNIA, AND IS DESCRIBED AS FOLLOWS:

LOTS 1, 2 AND 3 OF FINAL MAP NO. 32,035, IN THE CITY OF GOLETA, COUNTY OF SANTA BARBARA, STATE OF CALIFORNIA, AS PER THE MAP FILED IN BOOK 204, PAGES 54 THROUGH 57 OF MAPS, AND AMENDED BY CERTIFICATE OF CORRECTION RECORDED MAY 26, 2010, AS INSTRUMENT NO. 2010-0028009 OF OFFICIAL RECORDS, IN THE OFFICE OF THE COUNTY RECORDER OF SAID COUNTY.

APN: 073-610-008 (Lot 1), 073-610-009 (Lot 2) and 073-610-010 (Lot 3)

EXHIBIT “B”

ADDITIONAL CLOSING CONDITIONS

The obligations of Lender to make the Loan to Borrower and to perform the remainder of its obligations under the Agreement are expressly conditioned upon the receipt and approval by Lender of each of the following items and the satisfaction by Borrower of the following conditions:

1. APPLICATION . A fully completed application for the Loan on the Lender’s form.

2.     INSPECTION REPORTS . Copies of all structural, engineering, inspection and test reports made by or for Borrower.

3.     GOVERNMENTAL AUTHORIZATIONS . All authorizations, including building, permits, annexation agreements, plot plan approvals, subdivision approvals, environmental approvals (including an environmental impact report or negative declarations, if required under applicable law), sewer and water permits and zoning, and land use entitlements which are necessary for the use and occupancy of the Property in accordance with all applicable building, environmental, subdivision, land use and zoning laws and for tax assessment purposes.

4.     ORGANIZATION AND AUTHORITY DOCUMENTS . Borrower shall have submitted to Lender:

4.1    For Borrower:

4.1.1    a copy of the executed operating agreement/articles of incorporation and by–laws of said party, duly certified to be true, correct and complete in all respects,

4.1.2    a certificate issued by the California Secretary of State, certifying that said party is a limited liability company/partnership/corporation in good standing under California law,

4.1.3    a consent executed by the member(s) of said party, authorizing Sole Member to execute and deliver the Loan Documents to which Borrower is a party on behalf of Borrower.

4.2    For Sole Member:

4.2.1     copy of the executed certificate of incorporation and by–laws of said party, duly certified to be true, correct and complete in all respects,

4.2.2    a certificate issued by the Delaware Secretary of State, certifying that said party is a corporation in good standing under Delaware law,

4.2.3    a consent executed by the secretary of said party, authorizing Sole Member to execute and deliver the Loan Documents to which Borrower is a party on behalf of Borrower.

5.     UTILITIES . Evidence satisfactory to Lender, which may be in the form of letters from local utility companies or local authorities, that:

5.1    telephone service, electric power, storm sewer, sanitary sewer and water facilities are available to the Property;

5.2    such utilities are adequate to serve the Property and exist at the boundary of the Property; and

5.3    no conditions exist to affect Borrower’s right to connect into and have unlimited use of such utilities except for the payment of a normal connection charge and except for the payment of subsequent charges for such services to the utility supplier.

6.     TAXES, ETC . Evidence satisfactory to Lender that all real estate taxes, assessments, water, sewer or other charges levied or assessed against the Property, except those not yet due or payable, have been paid in full.

7.     BANKRUPTCY . Evidence satisfactory to Lender that there is not pending at the time of closing, by or against Borrower or Manager, any petition for reorganization or arrangement under any bankruptcy or insolvency law, or any other action brought under such law.

8.     FINANCIAL STATEMENTS . Current financial statements of Borrower and Guarantor in form and content acceptable to Lender.

9.     EQUITY . Evidence satisfactory to Lender that Borrower has sufficient land title equity to satisfy the LTV Requirement.

10.     CLOSING COSTS . The payment of attorneys’ fees, document review fees, appraisal fees, broker fees (if any), title insurance premiums and other closing costs incurred by Lender in connection with the closing of the Loan.

11.     LEGAL OPINION . If required by Lender, Lender’s receipt, review and approval of an opinion letter from Borrower’s counsel, which opinion shall be in form and content reasonably acceptable to Lender.

TERM LOAN AGREEMENT

By and Between

CALIFORNIA BANK & TRUST,
a California banking corporation
11622 El Camino Real, Suite 200, San Diego, California 92130

And

DECKERS CABRILLO, LLC
250 Coromar Drive, Goleta, California 93117

For a Loan in the amount of: $33,930,500

Pertaining to Real Property located in Santa Barbara County, California, as more fully described in the attached Exhibit “A”

Dated as of: July 9, 2014

CONTINUING GUARANTY AGREEMENT

This CONTINUING GUARANTY AGREEMENT (“ Guaranty ”), is entered into as of July 9, 2014, by DECKERS OUTDOOR CORPORATION , a Delaware corporation (“ Guarantor ”) in favor of CALIFORNIA BANK & TRUST , a California banking corporation (“ Lender ”).

RECITALS

A.    Deckers Cabrillo, LLC, a California limited liability company (“ Borrower ”), has agreed to borrow up to the maximum sum of Thirty-Three Million Nine Hundred Thirty Thousand Five Hundred and No/100 Dollars ($33,930,500.00) (“ Loan ”), to be evidenced by that certain Promissory Note Secured by Deed of Trust of even date herewith executed by Borrower in favor of Lender (“ Note ”).

B.    The Note is to be secured by, among other things, a Deed of Trust, Assignment of Leases and Rents and Security Agreement (Including Fixture Filing) of even date herewith (“ Deed of Trust ”). The terms and conditions of the Loan are particularly described in that certain Term Loan Agreement of even date herewith by and between Borrower and Lender (“ Loan Agreement ”). All of the documents now or in the future which evidence or relate to the Loan collectively shall be referred to as the “ Loan Documents. ” All terms not specifically defined herein shall have the meanings given to such terms in the Loan Agreement.

C.    Lender is willing to make the Loan if, among other conditions, it receives this Guaranty from Guarantor. Accordingly, Guarantor desires to enter into this Guaranty to induce Lender to make such Loan.

AGREEMENT

In consideration of the making of the Loan and of other valuable consideration, the receipt and sufficiency of which are acknowledged, Guarantor hereby certifies, represents and warrants to Bank, and agrees as follows:

1. GUARANTY . Guarantor hereby unconditionally and independently of any liability of Borrower guarantees and agrees as follows:

1.1      Unconditional Payment Guaranty . Guarantor hereby irrevocably, absolutely and unconditionally guarantees and promises to pay to or for the benefit of Lender, its successors and assigns, on demand after the occurrence or existence of an “ Event of Default ” (as defined in the Loan Agreement), in lawful money of the United States of America, the Loan and the indebtedness and obligations that may now or hereafter be owing from Borrower to Lender thereunder (whether or not Borrower has any personal liability for the payment of such indebtedness or obligations

because of the so–called “ one–action ” rule and the “ anti–deficiency ” statutes in California Code of Civil Procedure Sections 726 and 580), including not only debts voluntarily contracted, but also every debt, obligation or liability associated with the Loan, however arising, whether absolute or contingent, joint or several, matured or unmatured, direct or indirect, primary or secondary, and whether or not the same is represented by a writing, and any and all extensions, renewals or modifications of any such indebtedness or obligation, including without limitation, interest at the rate provided in the Note as the “ Default Interest Rate ”, late charges, yield maintenance payments (if any), reasonable attorneys’ fees, expenses and court costs (whether incurred in connection with any legal or equitable action, arbitration or mediation proceeding or any alternative dispute resolution forum, in any appeal proceedings or in any bankruptcy proceedings involving Borrower or any Guarantor) (all of the foregoing shall be referred to as the “ Guaranteed Obligations ”).

1.2      Lender’s Rights . If Guarantor fails to pay all such Guaranteed Obligations within fifteen (15) days following Lender’s demand, Lender may elect, without having any obligation to do so, and without further notice to Guarantor, to take any action it reasonably believes necessary to protect its interests, but with the further right to suspend or terminate such actions at any time. No such actions by Lender shall release or limit the liability of Guarantor, and Guarantor agrees to repay Lender all reasonable sums expended by it, including any reasonable sums expended in excess of the principal amount of the Loan.

1.3      No Waivers . Nothing contained in this Section 1 shall be deemed to be a waiver of any right which Lender may have under Section 506(a), 506(b), 1111(b) or any other provisions of the U.S. Bankruptcy Code, as the same may be amended from time to time, to file a claim for the full amount of the Guaranteed Obligations or to require that the Property and all other collateral for the payment and performance of all of the Loan obligations shall continue to secure the payment and performance of all of the Loan obligations in accordance with the terms of the Loan Documents.

2.      PERFORMANCE BY GUARANTOR .

2.1      If Borrower fails to perform the Guaranteed Obligations on or before the times such matters are to be done by Borrower, Guarantor shall do, at Guarantor’s expense, any such matter which Borrower has failed to do within the time periods set forth herein.

2.2      If Guarantor fails to take any such action within the time periods set forth herein, Lender may pursue any remedies at law or in equity against Guarantor, without having to proceed first against Borrower, and may itself take such action, and Guarantor shall be liable to Lender for all expenses, including reasonable attorneys’ fees incurred by Lender, and all amounts paid by Lender in taking any such action.

3.      CERTAIN RIGHTS OF LENDER . Lender may, without the consent of Guarantor, at any time and from time to time, either before or after the maturity of the Note, (a) amend with Borrower any provision of the Loan Agreement, the Note and the Deed of Trust or any other documents evidencing or securing the Loan from Lender, including any change in the interest rate therein or any change in the time or manner of payment thereunder, (b) make any agreement with Borrower for the extension, payment, compounding, compromise, discharge or release of any provision of the Loan Agreement, the Note, the Deed of Trust or any other terms thereof, without notice to or

the consent of Guarantor, and (c) without limiting the generality of the foregoing, Lender is expressly authorized to surrender to Borrower or to deal with or modify the form of, any security which Lender may at any time hold to secure the performance of any obligation hereby guaranteed, and the guaranties herein made by Guarantor shall not be impaired or affected by any of the foregoing.

4.      WAIVERS BY GUARANTOR .

4.1      Guarantor hereby waives any and all legal requirements that Lender shall institute any action or proceedings at law or in equity against Borrower or anyone else with respect to the breach of the Guaranteed Obligations or with respect to any other security held by Lender, as a condition precedent to bringing an action against Guarantor pursuant to this Guaranty. All remedies afforded to Lender by reason of this Guaranty are separate and cumulative remedies and none of such remedies, whether exercised by Lender or not, shall be deemed to be in exclusion of any one of the other remedies available to Lender, and shall not in any way limit or prejudice any other legal or equitable remedy available to Lender.

4.2      Guarantor hereby waives presentment for payment, demand, protest, notice of protest and of dishonor, notice of acceptance hereof, notices of default and all other notices now or hereafter provided by law.

4.3      Guarantor waives all right to require Lender to proceed against the Borrower or any other person, firm or corporation or to apply any security Lender may hold at any time or to pursue any judicial, nonjudicial and/or provisional remedy. Lender may proceed against Guarantor with respect to the Guaranteed Obligations without taking any action against Borrower or any other person, firm or corporation and without proceeding against or applying any security Lender holds.

4.4      Until the Guaranteed Obligations have been fully satisfied, Guarantor shall not have any right of subrogation. Guarantor waives any benefit of and any right to participate in any collateral or security held by Lender for the performance of the Guaranteed Obligations. Guarantor hereby authorizes and empowers Lender, at Lender’s sole discretion, without any notice to Guarantor whatsoever, to exercise any right or remedy which Lender may have, including without limitation judicial foreclosure, exercise of rights of power of sale, or taking of a deed or an assignment in lieu of foreclosure, as to any collateral or security in real property or personal property which Lender may hold for the performance of the Guaranteed Obligations. Guarantor shall be liable to Lender for any deficiency resulting from the exercise by Lender of any such judicial or nonjudicial remedy, even though any rights, including without limitation any rights of subrogation, contribution and/or indemnity, which the Guarantor may have against Borrower or other parties might be destroyed or dismissed by the exercise of any such judicial or nonjudicial remedy.

4.5      Guarantor specifically agrees that Guarantor shall not be released from liability hereunder by any action taken by Lender including, without limitation, a nonjudicial sale under the Deed of Trust, that would afford Borrower a defense based on California’s anti–deficiency laws, in general, and Code of Civil Procedure Section 580d, in specific. Without limiting the foregoing, Guarantor expressly understands, acknowledges and agrees as follows:

4.5.1      In the event of a nonjudicial foreclosure (through the exercise of the power of sale under the Deed of Trust): (a) Borrower would not be liable for any deficiency on the Note under California Code of Civil Procedure Section 580d, (b) Guarantor’s subrogation fights against the Borrower would thereby be destroyed, (c) Guarantor would be solely liable for any deficiency to Lender (without recourse against Borrower), and (d) Guarantor would thereby be deprived of the anti–deficiency protections of said Section 580d;

4.5.2      Were it not for Guarantor’s knowing and intentional waivers contained herein, the destruction of Guarantor’s subrogation rights and anti–deficiency protections would afford Guarantor a defense to an action against Guarantor hereunder; and

4.5.3      Notwithstanding the foregoing, Guarantor expressly waives any such defense to any action against Guarantor hereunder following a nonjudicial foreclosure sale or in any other circumstance under which Guarantor’s subrogation rights against Borrower have been destroyed.

4.6      In the event of any default hereunder, Lender may maintain an action upon this Guaranty whether or not action is brought against Borrower and whether or not Borrower is joined in any such action. Lender may maintain successive actions for other defaults, and Lender’s rights hereunder shall not be exhausted or waived, and Lender shall not be estopped to proceed against Guarantor pursuant to this Guaranty, by the exercise of any of Lender’s rights or remedies or by any such action or by any number of successive actions, until and unless the Guaranteed Obligations have been fully satisfied and each of Guarantor’s obligations hereunder has been fully performed or otherwise satisfied.

4.7      Guarantor expressly waives any and all benefits, rights and/or defenses which might otherwise be available to Guarantor under California Civil Code Sections 2787 to 2855, inclusive, and 2899, 2953 and 3433.

4.8      Guarantor expressly waives any and all benefits, rights and/or defenses which might otherwise be available to Guarantor under California Code of Civil Procedure Sections 580a, 580b, 580d and 726. In specific, but not by way of limitation, Guarantor expressly waives any and all fair value rights under California Code of Civil Procedure Section 580a as set forth in Bank of Southern California v. Dombrow, 39 Cal.App.4th 1457, 46 Cal.Rptr.2d 656 (4th Dist., Div. 1, 1995) (decertified).

4.9      Any action, whether judicial or nonjudicial or in pursuit of any provisional remedy, taken by Lender against Borrower or against any collateral or security held by Lender which shall impair or destroy any rights Guarantor may have against Borrower shall not act as a waiver or an estoppel of Lender’s rights to proceed against and initiate any action against Guarantor to enforce the terms of this Guaranty and until the Guaranteed Obligations have been fully satisfied.

4.10      Guarantor expressly waives any defense or benefits arising out of any federal or state bankruptcy, insolvency, or debtor relief laws, including without limitation under Sections 364 or 1111(b)(2) of the United States Bankruptcy Code.

4.11      Guarantor acknowledges that Guarantor has been made aware of the provisions of California Civil Code Section 2856, has read and understand the provisions of that statute, have been advised by their counsel as to the scope, purpose and effect of that statute, and based thereon, and without limiting the foregoing waivers, Guarantor agrees to waive all suretyship rights and defenses described in Civil Code Sections 2856(a)–(d). Without limiting any other waivers herein, Guarantor hereby gives the following waiver pursuant to Section 2856(d) of the California Civil Code:

“Guarantor waives all rights and defenses arising out of an election of remedies by Lender, even though that election of remedies, such as a nonjudicial foreclosure with respect to security for a guaranteed obligation, has destroyed Guarantor’s rights of subrogation and reimbursement against Borrower by the operation of Section 580d of the Code of Civil Procedure or otherwise.”

4.12      As provided in Civil Code Section 2856(c), Guarantor makes the following waivers of specific rights afforded under California law:

“Guarantor waives all rights and defenses that Guarantor may have because Borrower’s debt is secured by real property. This means, among other things:

(1)    Lender may collect from Guarantor without first foreclosing on any real or personal property collateral pledged by Borrower.

(2)    If Lender forecloses on any real property collateral pledged by Borrower:

(A)    The amount of the debt may be reduced only by the price for which that collateral is sold at the foreclosure sale, even if the collateral is worth more than the sale price.

(B)    Lender may collect from Guarantor even if Lender, by foreclosing on the real property collateral, has destroyed any right Guarantor may have to collect from Borrower.”

This is an unconditional and irrevocable waiver of any rights and defenses Guarantor may have because Borrower’s debt is secured by real property. These rights and defenses include, but are not limited to, any rights or defenses based on Section 580a, 580b, 580d, or 726 of the Code of Civil Procedure.

5.      ACKNOWLEDGMENT OF WAIVERS . Guarantor acknowledges that it has relied on the advice of its own counsel in making this Guaranty and has reviewed the waivers of rights contained herein with its counsel. Guarantor further acknowledges that it understands and accepts as a necessary part of this Guaranty the waivers of rights set forth above, after reviewing the extent and effect of the waivers in this Guaranty with its counsel.

6.      GUARANTOR’S WARRANTIES .

6.1      Guarantor warrants and acknowledges that:

6.1.1      there are no conditions precedent to the effectiveness of this Guaranty, and this Guaranty shall be in full force and effect and binding on Guarantor regardless of whether Lender obtains other collateral or any guarantees from others or takes any other action contemplated by Guarantor;

6.1.2      Guarantor has established adequate means of obtaining from sources other than Lender, on a continuing basis, financial and other information pertaining to Borrower’s financial condition and Borrower’s activities relating thereto and the status of Borrower’s performance of obligations imposed by the Loan Documents, and Guarantor agrees to keep adequately informed from such means of any facts, events or circumstances which might in any way affect Guarantor’s risks hereunder, and Lender has made no representation to Guarantor as to any such matters; and

6.1.3      the most recent financial statements of Guarantor previously delivered to Lender are true and correct in all material respects, have been prepared in a manner which fairly presents the financial condition of Guarantor as of the respective dates thereof, and no material adverse change has occurred in the financial condition of Guarantor since the respective dates thereof; and

6.1.4      Guarantor has not and will not, without prior written consent of Lender, sell, lease, assign, encumber, hypothecate, transfer or otherwise dispose of all or substantially all of Guarantor’s assets, other than in the ordinary course of Guarantor’s business.

6.1.5      Each Guarantor warrants and acknowledges a financial interest in and relationship to Borrower such that Guarantor agrees to enter into this Guaranty to induce Lender to make the Loan described in the Loan Agreement. Guarantor further warrants and acknowledges that it will receive substantial benefit from the making of such Loan.

7.      NO RELEASE . Until the Guaranteed Obligations have been fully satisfied, and until all of the terms, covenants and conditions of this Guaranty are fully performed, Guarantor shall not be released by any act or thing which might, but for this paragraph, be deemed a legal or equitable discharge of a surety (including any act by Lender which might have the effect of destroying Guarantor’s rights of subrogation against Borrower, such as in the case of foreclosure), or by reason of any waiver, extension, modification, forbearance or delay of Lender or its failure to proceed promptly or otherwise, or by reason of any further obligation or agreement between any then owner of the subject property and the then holder of the Deed of Trust, the Note and/or the Loan Agreement relating to the payment of any sum secured thereby, or to any of the other terms, covenants and conditions contained therein, and Guarantor hereby expressly waives and surrenders any defense to this liability under this Guaranty based upon any of the foregoing acts, things, agreements or waivers.

8.      NOTICES . Except as expressly provided herein to the contrary, any notice, demand or request by Lender to Guarantor shall be in writing and shall be duly given or made to Guarantor if

either delivered personally or if mailed by U.S. registered or certified mail to Borrower at the address for Borrower appearing in the Loan Agreement.

9.      TERMINATION . Notwithstanding anything herein contained, this Guaranty shall remain in full force and effect until it automatically terminates upon the earlier of:

9.1      payment in full of the amount of principal and interest then owing to Lender, or its successors or assigns, and all other sums and payments which may be or become owing under the Deed of Trust, the Note and the Loan Agreement, and

9.2      full and satisfactory performance of the Guaranteed Obligations.

10.      GOVERNING LAW . This Guaranty shall be governed by and construed in accordance with California law, without regard to conflicts of law principles.

11.      BINDING EFFECT . This Guaranty shall inure to the benefit of Lender and its successors and assigns and shall be binding upon the successors and assigns of Guarantor.

12.      JURY TRIAL WAIVER . Guarantor irrevocably waives and agrees not to assert, by way of motion, as a defense or otherwise, any right which it may have to a trial by jury in connection with any suit, action or proceeding arising out of or relating to this Guaranty, all to the fullest extent permissible under applicable law.

13.      SEVERABILITY . Every provision of this Guaranty is intended to be severable. If any term, provision, section or subsection of this Guaranty is declared to be illegal or invalid, for any reason whatsoever, by a court of competent jurisdiction, such illegality or invalidity shall not affect the other terms, provisions, sections or subsections of this Guaranty, which shall remain binding and enforceable.

14.      FEES AND EXPENSES . Guarantor agrees to pay all of the Lender’s reasonable costs and expenses, including reasonable attorneys’ fees, which may be incurred in any effort to enforce any term of this Guaranty, including all such reasonable costs and expenses which may be incurred by Lender in any legal action, reference or arbitration proceeding.

15.      FINANCIAL COVENANTS . Guarantor agrees that all of the financial reporting requirements set forth in Section 2.7 (and all subsections thereof) of the Loan Agreement and the financial covenants set forth in Section 2.9 (and all subsections thereof) of the Loan Agreement applicable to Guarantor shall be and are incorporated herein as if set forth in full, and Guarantor agrees to be bound by such reporting requirements and financial covenants, as they apply to Guarantor. In addition, Guarantor acknowledges that said reporting requirements and financial covenants are material inducements to Lender making the Loan to Borrower, and that Guarantor’s breach or default of any such requirements and covenants shall constitute a default hereunder and under the Loan Documents. Guarantor acknowledges that it shall not transfer any assets in violation of the above–described financial covenants.

16.      CURRENCY INDEMNITY . Guarantor agrees to indemnify Lender against any loss incurred by it as a result of any judgment or order being given or made for the payment of any amount due under this Guaranty and such judgment or order being expressed in a currency other than United States dollars and as a result of any variation having occurred in the rates of exchange between the date of any such amount becoming due under this Guaranty and the date of actual payment thereof. The foregoing indemnity shall constitute a separate and independent obligation of Guarantor and shall apply irrespective of any indulgence granted to Guarantor from time to time and shall continue in full force and effect notwithstanding any such judgment or order as aforesaid.

17.      SUBORDINATION OF CERTAIN INDEBTEDNESS .

17.1      As used herein, the term “ Guarantor Claims ” shall mean all debts and liabilities of Borrower to Guarantor, whether such debts and liabilities now exist or are hereafter incurred or arise, or whether the obligations of Borrower thereon be direct, contingent, primary, secondary, several, joint and several, or otherwise, and irrespective of whether such debts or liabilities be evidenced by note, contract, open account, or otherwise, and irrespective of the person or persons in whose favor such debts or liabilities may, at their inception, have been, or may hereafter be created, or the manner in which they have been or may hereafter be acquired by Guarantor. The Guarantor Claims shall include without limitation all rights and claims of Guarantor against Borrower (arising as a result of subrogation or otherwise) as a result of Guarantor’s payment of all or a portion of the Guaranteed Obligations. Upon the occurrence of an Event of Default or the occurrence of an event which would, with the giving of notice or the passage of time, or both, constitute an Event of Default, Guarantor shall not receive or collect, directly or indirectly, from Borrower or any other party any amount upon Guarantor Claims.

17.2      In the event of receivership, bankruptcy, reorganization, arrangement, debtor’s relief, or other insolvency proceedings involving Guarantor as debtor, Lender shall have the right to prove its claim in any such proceeding so as to establish its rights hereunder and receive directly from the receiver, trustee or other court custodian dividends and payments which would otherwise be payable upon Guarantor Claims. Guarantor hereby assigns such dividends and payments to Lender. Should Lender receive, for application upon the Guaranteed Obligations, any such dividend or payment which is otherwise payable to Guarantor, and which, as between Borrower and Guarantor, shall constitute a credit upon the Guarantor Claims, then upon payment to Lender in full of the Guaranteed Obligations, Guarantor shall become subrogated to the rights of Lender to the extent that such payments to Lender on the Guarantor Claims have contributed toward the liquidation of the Guaranteed Obligations, and such subrogation shall be with respect to that proportion of the Guaranteed Obligations which would have been unpaid if Lender had not received dividends or payments upon the Guarantor Claims.

17.3      In the event that, notwithstanding anything to the contrary in this Guaranty, Guarantor should receive any funds, payment, claim or distribution which is prohibited by this Guaranty, Guarantor agrees to hold in trust for Lender an amount equal to the amount of all funds, payments, claims or distributions so received, and agrees that it shall have absolutely no dominion over the amount of such funds, payments, claims or distributions so received except to pay them promptly to Lender, and Guarantor covenants promptly to pay the same to Lender.

17.4      Guarantor agrees that any liens, security interests, judgment liens, charges or other encumbrances upon Borrower’s assets securing payment of the Guarantor Claims shall be and remain inferior and subordinate to any liens, security interests, judgment liens, charges or other encumbrances upon Borrower’s assets securing payment of the Guaranteed Obligations, regardless of whether such encumbrances in favor of Guarantor or Lender presently exist or are hereafter created or attach. Without the prior written consent of Lender, Guarantor shall not (a) exercise or enforce any creditor’s right it may have against Borrower, or (b) foreclose, repossess, sequester or otherwise take steps or institute any action or proceedings (judicial or otherwise, including without limitation the commencement of, or joinder in, any liquidation, bankruptcy, rearrangement, debtor’s relief or insolvency proceeding) to enforce any liens, mortgages, deeds of trust, security interest, collateral rights, judgments or other encumbrances on assets of Borrower held by Guarantor.

17.5      If all or any portion of the Guaranteed Obligations are paid or performed, said Guaranteed Obligations shall nonetheless continue and shall remain in full force and effect in the event that all or any part of such payment or performance is avoided or recovered directly or indirectly from Lender as a preference, fraudulent transfer or otherwise under the Bankruptcy Code or other similar laws, irrespective of (a) any notice of revocation given by Guarantor prior to such avoidance or recovery, and (b) full payment and performance of all of the indebtedness and obligations evidenced and secured by the Loan Documents.

[Signature page follows]

17.6     

IN WITNESS WHEREOF, Guarantor has executed this Guaranty as of the date first above written.

DEED OF TRUST, ASSIGNMENT OF LEASES AND RENTS AND SECURITY AGREEMENT (INCLUDING FIXTURE FILING)

RECITALS

A.    This DEED OF TRUST, ASSIGNMENT OF LEASES AND RENTS AND SECURITY AGREEMENT (INCLUDING FIXTURE FILING) (“ Deed of Trust ”) is being executed by DECKERS CABRILLO, LLC, a California limited liability company, whose address is 250 Coromar Drive, Goleta, CA 93117, Attn Chief Financial Officer (“ Trustor ”).

B.    Trustor is the owner of the real property described in the attached Exhibit “A” (“ Real Property ”).

C.    This Deed of Trust is being executed by Trustor to FIRST AMERICAN TITLE INSURANCE COMPANY (“ Trustee ”), whose address is 18500 Von Karman Ave., Suite 600, Irvine, CA 92612, in favor of CALIFORNIA BANK & TRUST, a California banking corporation (“ Beneficiary ”), whose address is 1900 Main St., Suite 200, Irvine, CA 92614.

D.    All terms not specifically defined herein shall have the meanings set forth in the Loan Agreement.

DEFINITIONS

“ Action ” shall mean any legal or equitable proceeding brought before a court, tribunal, administrative court, arbitrator, mediator or other forum for alternative dispute resolution.

“ Beneficiary ” shall mean CALIFORNIA BANK & TRUST, a California banking corporation.

“ Compensation ” shall mean the definition set forth in Section 2.14 below.

“ CC&Rs ” shall mean any and all agreements setting forth conditions, covenants, restrictions, easements, reservations, rights and rights of way for the Property.

“ Deed of Trust ” shall mean the definition set forth in Recital “ A ” above.

“ Default Interest Rate ” shall mean the definition given to such term in the Note.

“ Event of Default ” shall mean any event of default defined in the Deed of Trust, Loan Agreement and Note.

“ Future Advances ” shall mean the definition set forth in Section 1.3.4 below.

“ Impound Account ” shall mean the definition set forth in Section 2.17 below.

“ Improvements ” shall mean, without limitation, all present and future structures, buildings, improvements, appurtenances and fixtures of any kind on the Real Property, all apparatus, equipment and appliances used in connection with the operation or occupancy of the Real Property, and all window coverings, drapes and rods, carpeting and floor coverings, it being intended and agreed that all such items will be conclusively considered to be part of the Real Property conveyed by this Deed of Trust, whether or not attached or affixed to the Real Property.

“ Leases ” shall mean the definition set forth in Section 2.8.1(b) below.

“ Loan ” shall mean the definition set forth in Section 1.1 below.

“ Loan Agreement ” shall mean the definition set forth in Section 1.1 below.

“ Loan Documents ” shall mean the definition set forth in Section 1.1 below.

“ Note ” shall mean the definition set forth in Section 1.1 below.

“ Obligations ” shall mean the definition set forth in Section 1.3 below.

“ Personal Property ” shall mean the definition set forth in Section 1.2.3 below.

“ Prevailing Party ” shall mean (a) the party who brings an Action against the other after the other is in breach or default, if such Action is dismissed upon the other’s payment of the sums allegedly due or upon the other’s performance of the covenants allegedly breached, or (b) the party obtains substantially the relief sought by it, whether or not such Action proceeds to a hearing, a trial on the merits, or a final judgment or determination.

“ Proceeds ” shall mean the definition set forth in Section 2.3.1 below.

“ Property ” shall mean the real and personal property described in Sections 1.2.1 through 1.2.7 below.

“ Real Property ” shall mean the real property described in the attached Exhibit “A” .

“ Rents ” shall mean the definition set forth in Section 2.8.1(a) below.

“ Security Deposits ” shall mean the definition set forth in Section 2.8.1(c) below.

“ Subdivision ” shall mean the definition set forth in Section 2.10.3 below.

“ Trustee ” shall mean First American Title Insurance Company.

“ Trustor ” shall mean Deckers Cabrillo, LLC, a California limited liability company.

1. BASIC PROVISIONS .

1.1      Amount of Loan; Loan Documents . Beneficiary is making a term loan to Trustor in an amount not to exceed Thirty-Three Million Nine Hundred Thirty Thousand Five Hundred and No/100 Dollars ($33,930,500.00) (“ Loan ”). The Loan is evidenced by that certain Promissory Note Secured by Deed of Trust of even date herewith (“ Note ”), executed by Trustor in favor of Beneficiary. The terms and conditions of the Loan are evidenced by and subject to the terms and conditions of that certain Term Loan Agreement of even date herewith (“ Loan Agreement ”) executed by Trustor and Beneficiary. All present and future agreements executed by Trustor in favor of Beneficiary and relating to the Loan collectively shall be referred to as the “ Loan Documents. ”

1.2      Grant of Security in Property . In consideration of the Loan, Trustor hereby irrevocably grants, conveys, transfers and assigns to Trustee, its successors and assigns, in trust, with power of sale and right of entry and possession as provided below, all of its present and future estate, right, title and interest in and to the following described property now or hereafter acquired (“ Property ”):

1.2.1      Real Property . The Real Property, and all minerals, oil, gas and other hydrocarbon substances on or under the surface of the Real Property (to the extent owned by Trustor), as well as all development rights, permits, licenses, air rights, water, water rights, and water stock relating to the Real Property.

1.2.2      Improvements . All items listed as “ Improvements ” on Exhibit “B” attached hereto.

1.2.3      Personal Property . The term “ Personal Property ” shall include: (a) all property described in Exhibit “B” attached hereto; (b) all “ Proceeds ” (as defined in Section 2.3.1 below); and (c) all “ Rents ” (as described in Section 2.8.1 below).

1.2.4      Appurtenances of Real Property . All appurtenances of the Real Property and all rights of Trustor in and to any streets, roads or public places, easements or rights of way, relating to the Real Property.

1.2.5      Rents . All Rents and all rights of Trustor under all present and future leases affecting the Real Property, including but not limited to any security deposits.

1.2.6      Proceeds . All Proceeds and all claims arising on account of any damage to or taking of the Real Property or any Improvements thereon or any part thereof, and all causes of action and recoveries for any loss or diminution in the value of the Real Property or any Improvements.

1.2.7      Other Collateral . All other “ Collateral ” (as defined in Exhibit “B” below) pledged by Trustor as security for the Loan.

1.3      Obligations Secured . This Deed of Trust secures the following obligations (“ Obligations ”):

1.3.1      Note Payments . Payment and performance of the Note, including all extensions, renewals and modifications of the Note.

1.3.2      Performance of the Deed of Trust Obligations . The performance of Trustor’s obligations under this Deed of Trust and the Loan Agreement.

1.3.3      Payment of Advanced Sums . The payment of all sums advanced or paid out by Beneficiary or Trustee under any provision of this Deed of Trust, or to protect the security of this Deed of Trust, together with interest thereon as provided herein, should Trustor fail to make any payment or to do any act as herein provided in connection with the rights granted hereunder, Beneficiary or Trustee, without obligation so to do and without notice to or demand upon Trustor and without releasing Trustor from any obligation hereunder, may make any payment or do any act in such manner and to such extent as herein provided or as either may deem necessary to protect the security hereof.

1.3.4      Payment of Future Advances . The payment of the principal and interest on all other future loans or advances made by Beneficiary to Trustor (or any successor in interest to Trustor as the owner of all or any part of the Property) when the promissory note evidencing such loan or advance specifically states that it is secured by this Deed of Trust (“ Future Advances ”), including all extensions, renewals and modifications of any Future Advances.

1.3.5      Performance of the Loan Agreement Obligations . The performance of Trustor’s obligations under the Loan Agreement and under all other Loan Documents.

1.4      Warranty of Title . Trustor warrants that, except as disclosed to Beneficiary in a writing that refers to this warranty, Trustor lawfully possesses and holds fee simple title to the Property without limitation on the right to encumber, and that this Deed of Trust is a valid first and prior lien on the Property subject only to the matters set forth in Schedule B, Part I of the title insurance policy issued in favor or Beneficiary that ensures the priority of this Deed of Trust. Trustor, at its sole cost and expense, shall at all times keep, protect, defend, and maintain title to the Property free and clear of any liens or encumbrances that would or could impair the validity or priority of this Deed of Trust. Trustor will not do or suffer any act or omission whereby the value of said Property, or lien hereof or of any estate or title covered hereby, may be diminished or impaired in any way. Trustor shall timely make all required payments under any other deeds of trust or other encumbrances which may now or hereafter affect the Property encumbered by this Deed of Trust and comply with all obligations hereunder. Should Trustor fail to make any such payment or comply with any such obligation, Beneficiary may, without notice to or authorization from Trustor, and without releasing Trustor from any obligation hereunder or under said deed of trust or other encumbrance, pay any sum which may be owing under any other deed of trust or other encumbrance or otherwise cure any default of Trustor thereunder, and the sums so expended by Beneficiary shall be secured hereby and shall be immediately due and payable by Trustor to Beneficiary, and shall bear interest at the “ Default Interest Rate ” provided for in the Note until paid. Any default (after the passage of any applicable grace or cure period) under any other deed of trust or other encumbrance which may now or hereafter affect the Property encumbered by this Deed of Trust shall constitute a default hereunder.

2.      COVENANTS OF TRUSTOR . To protect the security of this Deed of Trust, Trustor agrees:

2.1      Performance . To pay all indebtedness and perform all obligations that are secured by this Deed of Trust in accordance with their terms.

2.2      Insurance . Trustor shall comply with all of the policies of insurance for Trustor and/or the Property as set forth in Section 2.1 (and all subsections thereof) of the Loan Agreement. In the event of Trustor’s failure to obtain or maintain any of said policies of insurance, Beneficiary upon giving notice to Trustor may procure such insurance to be effected upon Beneficiary’s interest or upon the interest of Trustee or upon the interest of the owners of said Property and in their names, and Beneficiary may pay and expend for premiums for such insurance such sums as Beneficiary may deem to be reasonably necessary. At its option, in its own name, Beneficiary shall be entitled to commence, appear in and prosecute any action or proceedings or to make any compromise or settlement, in connection with such loss, taking or damage.

2.3      Assignment of Proceeds .

2.3.1      Definition of Proceeds . The term “ Proceeds ” shall mean all insurance proceeds on the Property, all proceeds of a sale of all or any portion of the Property (subject to the release provisions of the Loan Agreement), and all causes of action, claims, “ Compensation ” (as defined below in Section 2.14) , awards and recoveries for any damage, condemnation or taking of all or any part of the Property or for any damage or injury to it or for any loss or diminution in value of the Property. All Proceeds are hereby assigned to and shall be paid to Beneficiary. At Beneficiary’s option, Beneficiary may appear in and prosecute (either in its own name or in the name of Trustor) or participate in any suits or proceedings relating to any such proceeds, causes of actions, claims, compensation, awards or recoveries and may adjust, compromise or settle any claim in connection therewith.

2.3.2      Application of Proceeds . Subject to the provisions of Section 2.3.3 below, Beneficiary shall apply any Proceeds received by it as follows: first, to the payment of all of Beneficiary’s reasonable costs and expenses (including but not limited to reasonable legal fees and disbursements) incurred in obtaining those sums; and, then, in Beneficiary’s sole discretion and without regard to the adequacy of its security, to the payment of the indebtedness and obligations secured by this Deed of Trust. Any application of such funds to the indebtedness secured hereby shall not be construed to cure or waive any “ Event of Default ” (as defined in the Loan Agreement) or invalidate any acts of Beneficiary or Trustee arising out of such Event of Default.

2.3.3      Application of Insurance Proceeds . Notwithstanding the foregoing, any insurance proceeds or condemnation or eminent domain awards (in addition to any funds provided by Trustor, as set forth in Section 2.13.3 below) shall be applied to the restoration of the Property pursuant to Section 2.13 below, provided that:

(a)      The Improvements on the Property are able to be restored in their entirety with such proceeds or awards;

(b)      Trustor is not in default under any of the Loan Documents beyond the expiration of any applicable cure periods; and

(c)      The method for disbursement of any such proceeds or awards by Beneficiary for restoration shall be subject to the terms and conditions of Section 2.13 below.

Provided, however, that nothing herein shall prevent Beneficiary from applying any such proceeds or awards and/or Trustor’s funds in accordance with the terms of Section 2.3.2 if, as required by California law, Beneficiary is able to demonstrate that its security for the Loan has been impaired.

2.4      Property Taxes and Assessments . Trustor agrees to pay when due all taxes, fees, impositions, and assessments which are or may become a lien on all or any portion of or interest in the Property or which are assessed against the Property or its rents, royalties, profits and income.

2.5      Mechanic’s Liens . Trustor also agrees to pay when due all lawful claims and demands of mechanics, materialmen, laborers and others for any work performed or materials delivered with respect to the Property. Trustor may in good faith contest any such claims by appropriate administrative or judicial proceedings as long as:

2.5.1      Trustor has, in Beneficiary’s judgment, a reasonable basis for such contest;

2.5.2      Trustor pays, prior to the date any interest or penalties will attach thereto, any portion of any such claims that Trustor does not contest;

2.5.3      Trustor’s contest will not result in or pose any risk of the seizure, sale or imposition of a lien upon the Property or any portion thereof;

2.5.4      Trustor delivers to Beneficiary such bond or other security as Beneficiary may require in connection with such contest;

2.5.5      Trustor at all times prosecutes such contest with due diligence; and

2.5.6      Trustor pays, prior to the date any interest or penalties will attach thereto, the amount of the disputed claim that is determined to be due and owing by Trustor.

In the event that Trustor does not make any payment required to be made pursuant to subsection 2.5.6 above, Beneficiary may draw or realize upon any bond or other security delivered to Beneficiary in connection with the contest by Trustor, in order to make such payment.

2.6      Taxation of Deed of Trust . In the event of the passage after the date of this Deed of Trust of any law of the State of California deducting from the value of land, for the purpose of taxation, any lien thereon, or changing in any way the laws now in force for the taxation of deeds of trust or debts secured by deeds of trust for state or local purposes or the manner of the collection of such taxes so as to affect this Deed of Trust, the entire principal balance under said Note, together with all accrued interest thereon, at the option of Beneficiary, without demand or notice, forthwith shall become due and payable; provided, however, that such option shall be ineffective if Trustor is permitted by law to pay the whole of such tax, in addition to all other payments required hereunder,

and, if prior to such specified date, Trustor does pay such tax and agrees to pay any such tax when hereafter levied or assessed against the Property, and such agreement shall constitute a modification of this Deed of Trust.

2.7      Perfection of Security . Trustor agrees to execute and deliver to Beneficiary, from time to time on demand and at Trustor’s cost and expense, any documents required to perfect and continue the perfection of Beneficiary’s interest in the Property, or to effect any purpose hereunder.

2.8      Assignment of Rents and Income .

2.8.1      Scope of Assignment . This assignment is intended to confer upon Beneficiary all rights, and impose upon Trustor all obligations, under Civil Code Section 2938 and is intended to be construed in accordance with said statutory requirements. Trustor hereby absolutely and irrevocably grants, sells, assigns, transfers and sets over to Beneficiary:

(a)      Rents . All of the rents, issues, profits, royalties, income, cash proceeds, “ Security Deposits ” (as defined below) and other benefits (collectively “ Rents ”) now existing or hereafter created and affecting all or any portion of the Property or the use or occupancy thereof.

(b)      Leases . All of Trustor’s right, title and interest in and to all leases, subleases, subtenancies, licenses, occupancy agreements and concessions covering Property or any portion thereof or space therein now or hereafter existing, including all modifications, amendments, extensions and renewals thereof, and all rights and privileges incident thereto (collectively “ Leases ”). Notwithstanding any provision of this Section 2.8 to the contrary, Trustor may enter into, amend, modify or terminate (in the ordinary course of Trustor’s business), any Lease for all or any portion of the Property if:

(i)      the leases are on forms which are substantially similar in form and content to the forms of leases for existing tenants submitted to Lender in connection with the closing of the Loan;

(ii)      the term of the Leases is less than five (5) years; and

(iii)      the rental rates are at or above market rates at the time of entering into the Leases.

(c)      Security Deposits . All security deposits, guaranties and other security now or hereafter held by Trustor as security for the performance of the obligations of the lessees under the Leases (collectively “ Security Deposits ”).

2.8.2      Assignment . This assignment is intended by Trustor and Beneficiary to create and shall be construed to create an assignment to Beneficiary of all of Trustor’s right, title and interest in the Rents and in the Leases. Trustor and Beneficiary further agree that, during the term of this assignment, the Rents shall not constitute property of Trustor (or of any estate of Trustor) within the meaning of 11 U.S.C. Section 541, as amended from time to time.

2.8.3      Grant of License . By its acceptance of this assignment and so long as an Event of Default shall not have occurred and be continuing hereunder, Beneficiary hereby grants to Trustor a revocable license to enforce the Leases, to collect the Rents, to apply the Rents to the payment of costs and expenses incurred in connection with the development, construction, operation, maintenance, repair and restoration of the Property, and to any indebtedness secured thereby and to distribute the balance, if any, to Trustor.

2.8.4      Revocation of License . Upon the occurrence of an Event of Default, and at any time thereafter during the continuance of such default, Beneficiary shall have the right to revoke the license granted to Trustor hereby by giving written notice of such revocation to Trustor. Upon such revocation, Trustor shall promptly deliver to Beneficiary all Rents then held by Trustor and Beneficiary shall thereafter be entitled to:

(a)      enforce the Leases, to collect and receive, without deduction or onset, all Rents payable thereunder, including, but not limited to, all Rents which were accrued and unpaid as of the date of such revocation; and

(b)      apply such Rents as provided in this Deed of Trust.

2.8.5      Appointment of Trustor as Agent for Beneficiary .

(a)      Purpose of Appointment . Upon such revocation, Beneficiary may, at its option, appoint Trustor to act as agent for Beneficiary for the purpose of:

(i)      Managing and operating the Property and paying all expenses incurred in connection therewith and approved by Beneficiary.

(ii)      Enforcing the provisions of the Leases.

(iii)      Collecting all Rents due thereunder.

(b)      Notice to Trustor To Act as Agent . If Beneficiary so elects, Beneficiary shall give written notice thereof to Trustor to act as agent of Beneficiary for the purpose or purposes specified in such notice. Trustor shall promptly comply with all instructions and directions from Beneficiary with respect thereto. Trustor shall not be entitled to any management fee, commission or other compensation unless expressly agreed to in writing by Beneficiary.

(c)      Deposit of Rents Collected . All Rents collected by Trustor as agent for Beneficiary pursuant to this Section 2.8 shall be immediately deposited in an insured account in the name of Beneficiary in a bank or other financial institution designated by Beneficiary. All Rents collected by Trustor and all amounts deposited in such account, including interest thereon, shall be the property of Beneficiary and Trustor shall not be entitled to withdraw any amount from such account without the prior written consent of Beneficiary.

(d)      Purpose of Agency . The agency hereby created shall be solely responsible for the purpose of implementing the provisions of this assignment and collecting the Rents due Beneficiary hereunder. Nothing contained herein shall place upon Beneficiary the

responsibility for the management, control, operation, repair, maintenance or restoration of the Property, nor shall Beneficiary be liable under or be deemed to have assumed Trustor’s obligations with respect to the Leases. Beneficiary may at any time terminate the agency relationship with Trustor by written notice to Trustor.

2.8.6      Collection by Beneficiary . Upon the occurrence of an Event of Default, and at any time thereafter during the continuance thereof, Beneficiary shall have the right, in addition to the rights granted pursuant to this Section 2.8 , to collect all or any portion of the Rents assigned hereby directly or through a court–appointed receiver or pursuant to a notice to the lessees or by any other means set forth in Civil Code Section 2938(c). Such rights shall include without limitation any and all of the following:

(a)      Notice to Lessees To Pay Rents to Beneficiary . The right to notify the lessees under the Leases, with or without taking possession of the Property, to demand that all Rents under such Leases thereafter be paid to Beneficiary;

(b)      Enter and Possess the Property .

(i)      The right to enter into possession of the Property, either by a court–appointed receiver or by any other legally permissible means;

(ii)      to assume control with respect to and to pay all expenses incurred in connection with the development, construction, operation, maintenance, repair or restoration of the Property;

(iii)      to enforce all Leases and to collect all Rents due thereunder, and to apply all Rents received by Beneficiary as set forth herein;

(iv)      if ordered by a court of competent jurisdiction, to amend, modify, extend, renew and terminate any or all Leases or to execute new Leases; and

(v)      to do all other acts which Beneficiary shall determine, in its sole discretion, to be necessary or desirable to carry out the purposes of this assignment; and

(c)      Specific Performance . The right to specifically enforce the provisions of this assignment and, if Beneficiary shall so elect, to obtain the appointment of a receiver pursuant to and in accordance with the provisions of this Deed of Trust.

2.8.7      Protection of Lessees . Trustor and Beneficiary agree that all lessees under any Leases shall be bound by and required to comply with the provisions of this assignment. In connection therewith, Trustor and Beneficiary further agree as follows:

(a)      Notice to Lessees of Assignment . If requested by Beneficiary, Trustor shall:

(vi)      notify each lessee under any Lease now or hereafter affecting all or any portion of the Property of the existence of this assignment and the rights and obligations of Trustor and Beneficiary hereunder;

(vii)      provide each present or future lessee with a copy of this assignment; and

(viii)      obtain each lessee’s agreement to be bound and comply with the provisions hereof.

(b)      Reference to Assignment . All Leases hereafter executed with respect to the Property or any portion thereof shall contain a reference to this assignment and shall state that such lessee shall be bound by and shall comply with the provisions hereof.

(c)      Occurrence of Event of Default . Upon the occurrence of an Event of Default and at any time thereafter during the continuance thereof, Beneficiary may, at its option, send any lessee a notice in compliance with Civil Code Section 2938(d) to the effect that:

(i)      an Event of Default has occurred and that Beneficiary has revoked Trustor’s license to collect the Rents;

(ii)      Beneficiary has elected to exercise its rights under this assignment and Civil Code Section 2938(d); and

(iii)      such lessee is thereby directed to thereafter make all payments of Rents and to perform all obligations under its Lease for the benefit of Beneficiary or as Beneficiary shall direct.

(d)      Notice to Lessee To Comply With Leases . Upon receipt of any such notice from Beneficiary, each lessee is hereby instructed by Trustor and Beneficiary to comply with the provisions of such notice, to make all payments of Rents and to perform all obligations under the Lease to and for the benefit of Beneficiary or as Beneficiary shall direct. Such notice and direction shall remain effective until the first to occur:

(i)      the receipt by Lessee of a subsequent notice from Beneficiary to the effect that such Event of Default has been cured or that Beneficiary has appointed Trustor to act as agent for Beneficiary pursuant to this assignment;

(ii)      the appointment of a receiver pursuant to this assignment, in which event such lessee shall thereafter make payments of Rents and perform all obligations under the Leases as may be directed by such receiver; or

(iii)      the issuance of an order of a court of competent jurisdiction terminating this assignment or otherwise directing such lessee to pay Rents and perform its obligations in a manner inconsistent with said notice.

(e)      Lessee’s Reliance on Notice From Beneficiary . Each lessee shall be entitled to rely upon any notice from Beneficiary and shall be protected with respect to any payment of Rents made pursuant to such notice.

(f)      No Duty for Lessee To Investigate . Each lessee who receives a notice from Beneficiary pursuant to this assignment shall not be required to investigate or determine the validity or accuracy of such notice or the validity or enforceability of this assignment. Trustor hereby agrees to indemnify, defend and hold such lessee harmless from and against any and all loss, claim, damage or liability arising from or related to payment of Rents or performance of obligations under any Lease by such lessee made in good faith in reliance on and pursuant to such notice.

(g)      No Assumption by Beneficiary of Lease Obligations . The payment of Rents to Beneficiary pursuant to any such notice and the performance of obligations under any Lease to or for the benefit of Beneficiary shall not cause Beneficiary to assume or be bound by the provisions of such Lease, including, but not limited to, any duty to return any Security Deposit to the lessee under such Lease unless and to the extent such Security Deposit was paid to Beneficiary by Trustor.

(h)      Assignment Binding on Lessees . The provisions of this Section 2.8(h) are expressly made for the benefit of and shall be binding on and enforceable by each lessee under any Lease now or hereafter affecting all or any portion of the Property.

2.8.8      Application of Rents; Security Deposits . All Rents received by Beneficiary pursuant to this assignment shall be applied by Beneficiary, in its sole discretion, to any of the following:

(a)      First, to pay any costs and expenses of collection of the Rents that may be incurred by Beneficiary;

(b)      Second, to pay any costs and expenses incurred by beneficiary in connection with the development, construction, operation, maintenance, repair or restoration of the Property;

(c)      Third, to the establishment of reasonable reserves for working capital and for anticipated or projected costs and expenses of the Property, including, without limitation, capital improvements which may be necessary or desirable or required by law;

(d)      Fourth, to the payment of any indebtedness then owing by Trustor to Beneficiary; and

(e)      Thereafter, to remit the remainder, if any, to the person or persons entitled thereto.

(f)      In connection herewith, Trustor further agrees that all Rents received by Beneficiary from any lessee may be allocated, if Beneficiary so elects, to the payment of all current obligations of such lessee under its Lease and not to amounts which may be accrued and

unpaid as of the date of revocation of Trustor’s license to collect such Rents. Beneficiary may, but shall have no obligation to, pursue any lessee for the payment of Rents which may be due under its Lease with respect to any period prior to the exercise of Beneficiary’s rights under this assignment or which may become due thereafter. Beneficiary shall not be liable to any lessee for the payment or return of any Security Deposit under any Lease unless and to the extent that such Security Deposit has been paid to and received by Beneficiary, and Trustor agrees to indemnify, defend and hold Beneficiary harmless from and against any and all losses, claims, damages or liabilities arising out of any claim by a lessee with respect thereto, except to the extent such claim, loss, damage or liability arises from the gross negligence or willful misconduct of Beneficiary. Trustor further agrees that the collection of Rents by Beneficiary and the application of such Rents by Beneficiary to the costs, expenses and obligations referred to herein shall not cure or waive any default or Event of Default or invalidate any act (including, but not limited to, any sale of all or any portion of the Property or any property now or hereafter securing the Loan) done in response to or as a result of such Event of Default or pursuant to any notice of default or notice of sale issued pursuant to this Deed of Trust.

2.8.9      Covenants of Trustor . Trustor agrees as follows:

(a)      No Amendment or Termination of Leases . Trustor shall not enter into, amend, modify or terminate any Lease of all or any portion of the Property, except in accordance with the provisions of this Deed of Trust;

(b)      No Acceptance of Advance Rent . Trustor shall not accept advance rent in excess of one (1) month from any Lessee without the prior written consent of Beneficiary;

(c)      Delivery of Leases . Upon request by written notice to Trustor by Beneficiary, Trustor shall provide Beneficiary with true, correct and complete copies of all Leases, together with such other information relating to the Leases or to the lessees thereunder as Beneficiary shall reasonably request; and

(d)      Beneficiary’s Rights To Inspect Books and Records . Upon request of Beneficiary, Trustor shall make available to Beneficiary all books, records, financial statements and other information relating to the Leases, the collection of all Rents, and the disposition and disbursement thereof.

2.8.10      Priority of Assignment; Further Assurances . Trustor hereby represents and warrants that the assignment hereby granted is a first priority assignment and that no other assignments of all or any portion of the Rents or the Leases exist or remain outstanding. Trustor agrees to take such action and to execute, deliver and record such documents as may be reasonably necessary to evidence such assignment, and to establish the priority thereof and to carry out the intent and purpose hereof. If requested by Beneficiary, Trustor shall execute a specific assignment of any Lease now or hereafter affecting all or any portion of the Property.

2.8.11      Beneficiary Not Responsible for Trustor’s Obligations . Nothing contained herein shall operate or be construed to obligate Beneficiary to perform any of the terms, covenants and conditions contained in any Lease or otherwise to impose any obligation upon Beneficiary with respect to any Lease, including, but not limited to, any obligation arising out of

any covenant of quiet enjoyment therein contained in the event the lessee under any such Lease shall have been joined as a party defendant in any action to foreclose and the estate of such Lessee shall have been thereby terminated. Prior to actual entry into and taking possession of the Property by Beneficiary, this assignment shall not operate to place upon Beneficiary any responsibility for the operation, control, care, management or repair of the Property or any portion thereof, and the execution of this assignment by Trustor shall constitute conclusive evidence that all responsibility for the operation control, care, management and repair of the Property is and shall be that of Trustor, prior to such actual entry and taking of possession.

2.8.12      Termination of Assignment . A full and complete release and reconveyance of this Deed of Trust shall operate as a full and complete release of all of Beneficiary’s rights and interest hereunder. Upon the recordation of such release and reconveyance, this assignment shall thereafter be void and of no further effect.

2.9      Due–On–Sale Provision . The Note secured by this Deed of Trust provides for, among other provisions, the following:

“Borrower acknowledges and agrees that the creditworthiness and expertise of Borrower in owning and operating the Property covered by the Deed of Trust which secures this Note is the basis upon which Lender has determined that it is protected against impairment of the security and risk of default and thereby has agreed to lend Borrower the principal sum set forth above. Except as may be expressly set forth in the Loan Agreement for a “ Permitted Transfer ” (as defined in the Loan Agreement), Borrower agrees that: (a) said Property shall not be sold, agreed to be sold, conveyed, transferred, assigned, disposed of, or further encumbered, whether voluntarily, involuntarily, by operation of law or otherwise, and/or (b) any change in any manager or general partner of Borrower or in any membership or partnership interest of Borrower, shall constitute a breach hereof. Any “ Transfer ” (as defined in the Loan Agreement) in violation of the above restrictions shall cause the then outstanding principal balance and interest thereon and other sums secured by said Deed of Trust, at the option of said holder, to immediately become due and payable.”

2.10      Waste; Changes in Zoning; Subdivision .

2.10.1      No Waste Permitted; Condition and Repair of Property . Trustor shall not commit any waste on the Property or take any actions that might invalidate any insurance carried on the Property. Trustor shall maintain the Property, and every portion thereof, in good condition and repair. Beneficiary shall have the right, but not the obligation, to enter upon and take possession of the Property and to make additions, alterations, repairs, or improvements to the Property which Beneficiary may reasonably consider necessary or proper to keep the Property in good condition and repair. Except for any demolition of existing improvements which has been approved by Beneficiary, no improvements may be removed, demolished or materially altered without the prior

written consent of Beneficiary, which Beneficiary may withhold in its sole and absolute discretion. Notwithstanding the foregoing, Beneficiary hereby consents to Borrower making interior improvements to “Building 3” of the Improvements, so long as the same are consistent in nature with the existing interior improvements in the other Improvements at the Property. No Personal Property in which Beneficiary has a security interest may be removed from the Property unless it is immediately replaced by similar property of at least equivalent value on which Beneficiary will immediately have a valid first lien and security interest. Trustor affirmatively warrants and represents that if any Improvements, or any part thereof, require inspection, repair or protection other than that given by Trustor, then, and in that event, Beneficiary may enter or cause entry to be made upon said property and into said building or buildings for inspection, repair or protection thereof, and such repair may be made by Beneficiary and be made or done in such manner as fully to protect the interest of Beneficiary, and any and all sums expended by Beneficiary in doing or causing to be done any of the things above authorized are secured by this Deed of Trust and shall be paid by Trustor on demand. Trustor shall comply with all laws, ordinances, governmental regulations, and CC&Rs affecting the Property or requiring any alteration or improvement thereof, and shall permit no violation, as to the Property, of any such law, ordinance, governmental regulation, covenant, condition or restriction affecting the Property.

2.10.2      No Change in Zoning, CC&Rs, Etc . Without the prior written consent of Beneficiary, which Beneficiary may withhold in its sole and absolute discretion, Trustor shall not seek, make or consent to any change in the zoning or conditions of use of the Property. Trustor, at its sole cost, shall comply with and make all payments required under the provisions of any CC&Rs affecting the Property, including but not limited to those contained in any declaration and constituent documents of any condominium, cooperative or planned Unit development project on the Property. Trustor, at its sole cost, shall comply with all existing and future requirements of all governmental authorities having jurisdiction over the Property.

2.10.3      Governmental Permits, Licenses and Approvals . If this Deed of Trust covers a subdivision or common interest development (“ Subdivision ”), as defined under any California law relating to the development or sale of a “ common interest development ” or a “ subdivision, ” Trustor shall obtain, comply with and keep in effect all present and future permits, maps, bonds and other agreements required by applicable laws and regulations for the lawful construction or sale of the Subdivision lots and/or units. Trustor must also maintain an active sales program for the Subdivision, and always be in a position to convey insurable title to the lots and/or units to purchasers.

2.11      Books and Records .

2.11.1      Books and Records Maintained by Trustor . Trustor shall keep adequate books and records of account for the Property and for its own financial affairs in a manner sufficient to permit the preparation of financial statements required under the Loan Agreement. Beneficiary shall have the right to examine, copy and audit Trustor’s records and books of account at all reasonable times by written notice to Trustor. Trustor will deliver to Beneficiary all financial statements for Trustor and the Property as required under the Loan Agreement.

2.11.2      Written Statement of Indebtedness . Trustor will promptly furnish from time to time, upon Beneficiary’s request, a duly acknowledged written statement setting forth all amounts due on the indebtedness secured by this Deed of Trust and stating whether any offsets or defenses exist, and containing such other matters as Beneficiary may reasonably require.

2.12      Defend Security .

2.12.1      Defense of Beneficiary . Trustor shall, at its own expense, appear in and defend any action or proceeding that is reasonably likely to materially affect Beneficiary’s security or the rights or powers of Beneficiary or Trustee or that purports to affect any of the Property. If Trustor fails to perform any of its covenants or agreements contained in this Deed of Trust, the Loan Agreement, or any of the other Loan Documents, or if any action or proceedings of any kind (including but not limited to any bankruptcy, insolvency, arrangement, reorganization or other debtor relief proceeding) is commenced which might affect Beneficiary’s or Trustee’s interest in the Property or Beneficiary’s right to enforce its security, then Beneficiary and/or Trustee may, at their option, make any appearances, disburse any sums and take any actions as may be necessary or desirable to protect or enforce the security of this Deed of Trust or to remedy the failure of Trustor to perform its covenants, including without limitation payment on behalf of Trustor of any taxes, assessments, liens, insurance premiums, and repair or maintenance costs (without, however, waiving any default of Trustor).

2.12.2      Payment of Defense Fees and Costs . Trustor agrees to pay all reasonable out–of–pocket expenses of Beneficiary and Trustee incurred under 2.12.1 above (including but not limited to fees and disbursements of counsel). Any sums disbursed or advanced by Beneficiary or Trustee shall be additional indebtedness of Trustor secured by this Deed of Trust and shall be payable by Trustor upon demand. Any such sums so disbursed or advanced by Beneficiary shall bear interest at the Default Interest Rate as set forth in the Note. This Section 2.12 shall not be construed to require Beneficiary or Trustee to incur any expenses, make any appearances, or take any other actions.

2.13      Damage and Destruction . Notwithstanding anything contained herein to the contrary, if any part of the Property is damaged or destroyed by any means, including, without limitation, by flood, earthquake, wind or fire, Trustor shall promptly restore the Property to its prior undamaged condition in accordance with the following:

2.13.1      Plan of Restoration . Trustor shall present within ninety (90) days of such damage or destruction to Beneficiary a plan for restoration which includes, among other things, plans and specifications prepared by an architect satisfactory to Beneficiary, cost estimates and time schedules which in Beneficiary’s sole discretion are satisfactory;

2.13.2      Construction Contract . Trustor shall enter into, with Beneficiary’s prior written consent, which consent shall not be unreasonably withheld, a contract with contractor(s) providing for the complete restoration in accordance with such restoration plan previously approved by Beneficiary within ninety (90) days of such damage or destruction; and

2.13.3      Application of Insurance Proceeds . The insurance proceeds available by reason of such damage or destruction that are received by Beneficiary pursuant to Section 2.3.1 above (less Beneficiary’s reasonable costs and expenses incurred in obtaining such funds) plus additional sums provided to Beneficiary by Trustor for restoration purposes shall be at least equal to the anticipated costs of competing such construction, which anticipated costs shall include, but not be limited to, appropriate interest reserves and contingency funds reasonably required by Beneficiary.

2.13.4      Conditions to Disbursement of Proceeds . When Trustor has complied with all of the preceding subsections of this Section 2.13 , Beneficiary may condition disbursement of the sums specified in subsection 2.13.3 above to Trustor on terms and conditions such as those governing disbursements of loan funds in construction loans made by Beneficiary for similar properties.

2.14      Condemnation . Trustor hereby assigns to Beneficiary, as security for Trustor’s obligations under the Loan Documents, all compensation, awards and other payments (collectively “ Compensation ”) payable to Trustor in connection with any taking of all or any portion of the Property for public use, and any Proceeds of any related settlement regardless of whether eminent domain proceedings are instituted in connection therewith. Trustor shall deliver to Beneficiary immediately upon receipt all Compensation and related settlement proceeds.

2.15      Security Agreement and Fixture Filing .

2.15.1      Deed of Trust Includes Security Agreement . This Deed of Trust is intended to be and shall constitute a “ Security Agreement ” as defined in the California Commercial Code, Trustor being the “ debtor ” and the Beneficiary being the “ secured party. ” Trustor hereby grants Beneficiary a security interest in any items of Personal Property described in Exhibit “B” attached hereto which are not herein effectively made a part of the Real Property for the purpose of securing all indebtedness and other obligations of Trustor now or hereafter secured by this Deed of Trust.

2.15.2      Delivery of Financing Statements . Trustor agrees to execute and deliver financing and continuation statements covering the Personal Property from time to time in such form as Beneficiary may require to perfect and continue the perfection of Beneficiary’s security interest with respect to said property, and to reimburse Beneficiary for any costs incurred in filing such financing statements and any continuation statements.

2.15.3      No Other Security Interest Permitted . Trustor shall not create or allow the creation of any other security interest in the Personal Property, except as expressly permitted herein and in the Loan Agreement in connection with the Subordinate Debt.

2.15.4      Rights Upon Default . Upon the occurrence of any Event of Default by Trustor, Beneficiary shall have the rights and remedies of a secured party under the California Commercial Code, as well as all other rights and remedies available at law or in equity or as provided herein, all at Beneficiary’s option.

2.15.5      Effect of Filing of Financing Statement . Trustor and Beneficiary agree that the filing of a financing statement in the records normally having to do with personal property shall never be construed as in any way impairing this declaration and the stated intention of the parties hereto that everything used in connection with the operation or occupancy of said property or the production of income therefrom (which is owned by Trustor) is and, at all times and for all purposes and in all proceedings, both legal and equitable, shall be regarded as Real Property encumbered by this Deed of Trust.

2.16      Indemnification of Trustee and Beneficiary .

2.16.1      Indemnification . Trustor hereby agrees to indemnify Trustee and Beneficiary against, and hold them harmless from, all losses, damages, liabilities, claims, causes of action, judgments, court costs, reasonable attorneys’ fees and other legal expenses, which either may suffer or reasonably incur:

(e)      By reason of this Deed of Trust (excluding any regulatory or other administrative losses, damages, liabilities, claims, causes of action, judgments, court costs, reasonable attorneys’ fees and other legal expenses arising out of claims against Beneficiary in connection with its lending activities); or

(f)      By reason of the execution of this Deed of Trust or in performance of any act by Trustor which is required or permitted hereunder or by law; or

(g)      As a result of any failure of Trustor to perform Trustor’s obligations under the Loan Documents; or

(h)      By reason of any alleged obligation or undertaking on Beneficiary’s part to perform or discharge any of the representations, warranties, conditions, covenants or other obligations of Trustor contained in any other Loan Document related to the Property, the Loan or Trustor.

2.16.2      No Liability of Trustor . Notwithstanding the foregoing, Trustor shall not be liable under Section 2.16.1 to the extent that Trustor establishes that such liability is attributable solely and directly to the gross negligence or willful misconduct of Trustee or Beneficiary.

2.16.3      Payment of Indebtedness . Trustor shall pay all indebtedness arising under this Section 2.16 immediately upon demand by Trustee or Beneficiary, together with interest thereon from the date the indebtedness arises at the Default Interest Rate of interest set forth in the Note (after giving effect to any notice and/or cure periods). Trustor’s duty to indemnify Trustee and Beneficiary shall survive the release and cancellation of the Obligations and the release and reconveyance or any partial release or reconveyance of this Deed of Trust.

2.17      Insurance and Tax Impounds . Upon notice by Beneficiary to Trustor on or after the occurrence of an Event of Default, Trustor shall establish and maintain at all times while this Deed of Trust continues in effect an impound account (“ Impound Account ”) with Beneficiary for

the payment of real estate taxes and assessments and insurance on the Property and as additional security for the indebtedness secured hereby.

2.17.1      Deposit Into Impound Account . If required by Beneficiary in its sole discretion after any Event of Default, Trustor shall deposit in the Impound Account an amount determined by Beneficiary to be necessary to ensure that there will be on deposit with Beneficiary an amount which, when added to the monthly payments subsequently required to be deposited with Beneficiary hereunder on account of real estate taxes, assessments and insurance premiums, will result in there always being on deposit with Beneficiary in the Impound Account an amount sufficient to pay the next due semiannual installments of real estate taxes and assessments on the Property and the next due annual insurance premiums with respect to the Property (if paid in one installment).

(a)      If required by Beneficiary in its sole discretion, after an Event of Default and commencing on the next monthly payment date under the Note following said default, and continuing thereafter on each subsequent monthly payment date under the Note, Trustor shall pay to Beneficiary, concurrently with and in addition to the monthly payment due under the Note and until the Note and all other indebtedness secured hereby is fully paid and performed, deposits in an amount equal to one–twelfth (1/12) of the amount of the annual real estate taxes and assessments that will next become due and payable on the Property, plus one–twelfth (1/12) of the amount of the annual premiums that will next become due and payable on insurance policies which Trustor is required to maintain hereunder, each as estimated and determined by Beneficiary.

(b)      Notwithstanding anything to the contrary herein, if the amount of the monthly deposit being paid at any time pursuant to subsection (a) above, multiplied by the number of subsequent monthly installments, when added to the amount held on deposit at such time, will be insufficient to pay, thirty (30) days prior to delinquency, the next annual installments of insurance and taxes and assessments due and payable, then Trustor shall immediately deposit the amount of the deficiency, and any failure to do so shall be deemed to be an Event of Default under this Deed of Trust.

2.17.2      Responsibility . Trustor shall be responsible for ensuring the receipt by Beneficiary, at least thirty (30) days prior to the respective due dates for payment thereof, of all bills, invoices and statements for all taxes, assessments and insurance premiums to be paid from the Impound Account, and Beneficiary shall pay the governmental authority or other party entitled thereto directly to the extent funds are available for such purpose in the Impound Account.

2.17.3      Reliance . In making any payment from the Impound Account, Beneficiary shall be entitled to rely on any bill, statement or estimate procured from the appropriate public office or insurance company or agent without any inquiry into the accuracy of such bill, statement or estimate and without any inquiry into the accuracy, validity, enforceability or contestability of any tax, assessment, valuation, sale, forfeiture, tax lien or title or claim thereof.

2.17.4      Funds in Impound Account . The Impound Account shall not, unless otherwise explicitly required by applicable law, be or be deemed to be escrow or trust funds, but, at Beneficiary’s option and in Beneficiary’s discretion, may either be held in a separate account or be commingled by Beneficiary with the general funds of Beneficiary. No interest on funds contained

in the Impound Account shall be paid by Beneficiary to Trustor. The Impound Account is solely for the protection of Beneficiary and entails no responsibility on Beneficiary’s part beyond the payment of taxes, assessments and insurance premiums following receipt of bills, invoices or statements therefor in accordance with the terms hereof and beyond the allowing of due credit for the sums actually received.

(a)      Upon assignment of this Deed of Trust by Beneficiary, any funds in the Impound Account shall be turned over to the assignee and any responsibility of Beneficiary, as assignor, with respect thereto shall terminate.

(b)      If the total funds in the Impound Account shall exceed the amount of payments actually applied by Beneficiary for the purposes of the Impound Account, such excess may be credited by Beneficiary on subsequent payments to be made hereunder or, at the option of Beneficiary, refunded to Trustor. If, however, the Impound Account shall not contain sufficient funds to pay the sums required when the same shall become due and payable, Trustor shall, within ten (10) business days after receipt of written notice thereof, deposit with Beneficiary the full amount of any such deficiency. If Trustor shall fail to deposit with Beneficiary the full amount of such deficiency as provided above, Beneficiary shall have the option, but not the obligation, to make such deposit and all amounts so deposited by Beneficiary, together with interest thereon at the Default Interest Rate from the date incurred by Beneficiary until actually paid by Trustor, shall be immediately paid by Trustor on demand and shall be secured by this Deed of Trust and by all of the other Loan Documents securing all or any part of the indebtedness evidenced by the Note. If there is a default under this Deed of Trust which is not cured within any applicable grace or cure period, Beneficiary may, but shall not be obligated to, apply at any time the balance then remaining in the Impound Account against the indebtedness secured hereby in whatever order Beneficiary shall subjectively determine.

2.17.5      No Cure or Waiver . No such application of the Impound Account shall be deemed to cure any default hereunder. Upon full payment of the indebtedness secured hereby in accordance with its terms or at such earlier time as Beneficiary may elect, the balance of the Impound Account then in Beneficiary’s possession shall be paid over to Trustor and no other party shall have any right or claim thereto.

3.      EVENTS OF DEFAULT .

3.1      List of Events of Default . An “ Event of Default ” shall have occurred under this Deed of Trust upon the occurrence of any of the following:

3.1.6      Failure To Make Note Payments . Trustor fails timely to make any payment required by the Note, any Future Advances, or any of the other Loan Documents; or

3.1.7      Breach of Loan Agreement and Deed of Trust Covenants . Trustor breaches any warranty or fails to perform any other covenant contained in the Loan Agreement, this Deed of Trust or any of the other Loan Documents, and does not cure that failure within the period of time, if any, that Beneficiary has granted to Trustor in said documents to cure that failure; or

3.1.8      Violation of Due–On–Sale Provision . Any violation of the restrictions on the transfer of the Property or the transfer of any interest in Trustor as set forth in Section 2.9 of this Deed of Trust without the prior written consent of Beneficiary; or

3.1.9      Other Events of Default . Any other Event of Default occurs under the Loan Agreement, the Note, or any of the other Loan Documents.

3.1.10      Notice and Cure Rights . All of the Events of Default described herein shall be subject to any notice and cure provisions set forth in the Loan Agreement and the Note.

4.      REMEDIES FOR DEFAULT .

4.1      List of Remedies for Default . At any time following an Event of Default, Beneficiary may, at its option, and without notice to or demand upon Trustor (except as may be required under applicable law):

4.1.4      Acceleration of Debt . Declare any or all indebtedness secured by this Deed of Trust to be due and payable immediately;

4.1.5      Enter and Possess Property . Enter onto the Property, in person or by agent or by court appointed receiver, and take any and all steps which may be desirable in Beneficiary’s judgment to complete any unfinished construction and/or to manage, operate, preserve, develop, maintain and protect the Property, and Beneficiary may apply any Rents, royalties, income or profits collected against the Obligations secured by this Deed of Trust without in any way curing or waiving any default of Trustor;

4.1.6      Assemble and Deliver Personal Property . Cause Trustor to assemble any Personal Property and deliver it to Beneficiary at a place designated by Beneficiary;

4.1.7      Judicial Foreclosure . Bring a court action to foreclose this Deed of Trust or to enforce its provisions or any of the indebtedness or Obligations secured by this Deed of Trust;

4.1.8      Power of Sale . Cause any or all of the Property to be sold under the power of sale granted by this Deed of Trust in any manner permitted by applicable law;

4.1.9      Other Rights and Remedies . Exercise any other right or remedy available under any of the Loan Documents or otherwise available under law or in equity, including without limitation, rights and remedies with respect to the Personal Property that are available to a Secured Party under the California Uniform Commercial Code.

4.2      Sale of Property .

4.2.1      Record Notices of Default and Sale . For any sale under the power of sale granted by this Deed of Trust, Beneficiary shall cause Trustee to record and give all notices required by law. After compliance with such notice requirements, and upon the expiration of such time as is required by law, Trustee may sell the Property upon any terms and conditions specified by Beneficiary and permitted by applicable law.

4.2.2      Right To Postpone Sale . Trustee may postpone any sale by public announcement at the time and place noticed for the sale.

4.2.3      Sale of Multiple Lots/Parcels . If the Property consists of several lots or parcels, Beneficiary in its discretion may designate their order of sale or may elect to sell them through a single sale, or through two (2) or more successive sales, or in any other manner Beneficiary may elect. In the event Beneficiary elects to dispose of the Property through more than one (1) sale, Trustor shall pay the costs and expenses of each such sale and of any judicial proceedings wherein the same may be made.

4.2.4      Right To Purchase at Nonjudicial Sale . Any person, including Trustor, Trustee, and Beneficiary, may purchase at any sale, and Beneficiary shall have the right to purchase at any sale hereunder by crediting upon the bid price the amount of all or any part of the indebtedness secured hereby.

4.2.5      Deed at Sale . Upon the completion of the sale, Trustee shall execute and deliver to the purchaser or purchasers a deed or deeds conveying the property sold, but without any covenant or warranty, express or implied, and the recitals in the deed or deeds of any facts affecting the regularity or validity of the sale shall be conclusive against all persons.

4.3      Application of Proceeds . The proceeds of any sale under this Deed of Trust shall be applied in the following manner:

4.3.7      First : Payment of the costs and expenses of the sale, including but not limited to Trustee’s fees, legal fees and disbursements, title charges and transfer taxes, and payment of all expenses, liabilities and advances of Trustee, together with interest on all advances made by Trustee at the maximum rate permitted to be charged by Trustee under applicable law.

4.3.8      Second : Payment of all sums expended by Beneficiary under the terms of this Deed of Trust and not yet repaid, together with interest on such sums at the Default Interest Rate set forth in the Note.

4.3.9      Third : Payment of the entire indebtedness and Obligations of Trustor secured by this Deed of Trust, in any order that Beneficiary chooses.

4.3.10      Fourth : The remainder, if any, to the person or persons legally entitled to it.

4.4      Waiver of Rights . Trustor waives all rights to direct the order in which any of the Property shall be sold in the event of any sale under this Deed of Trust, and also any right to have any of the Property marshaled upon any sale.

4.5      Remedies Are Cumulative . All remedies contained in this Deed of Trust are cumulative, and Beneficiary has all other remedies provided by law, in equity, or in any other agreement between Trustor and Beneficiary. No delay or failure by Beneficiary to exercise any right or remedy under this Deed of Trust shall be construed to be a waiver of that right or remedy

or of any default by Trustor. Beneficiary may exercise any one (1) or more of its rights and remedies at its option without regard to the adequacy of its security.

4.6      Payment of Expenses . Trustor shall pay all of Beneficiary’s and Trustee’s reasonable expenses incurred in any efforts to enforce any terms of this Deed of Trust, whether or not any lawsuit is filed, including but not limited to reasonable legal fees and disbursements, foreclosure costs, escrow fees, filing fees, recording fees, and title charges.

4.7      No Cure or Waiver . Neither Beneficiary’s nor Trustee’s nor any receiver’s entry upon and taking possession of all or any part of the Property, nor any collection of Rents, issues, profits, Proceeds, other security or proceeds of other security, or other sums, nor the application of any collected sum to any Obligation, nor the exercise of any other right or remedy by Beneficiary or Trustee or any receiver shall cure or waive any breach, Event of Default or notice of default under this Deed of Trust, or nullify the effect of any notice of default or sale (unless all Obligations then due have been paid and performed and Trustor has cured all other defaults), or impair the status of the security, or prejudice Beneficiary or Trustee in the exercise of any right or remedy, or be construed as an affirmation by Beneficiary of any tenancy, Lease, or option or a subordination of the lien of this Deed of Trust.

4.8      Power To File Notices and Cure Defaults . Subject to any notice and cure rights set forth herein or in any of the Loan Documents, Trustor hereby irrevocably appoints Beneficiary and its successors and assigns as Trustor’s attorney–in–fact, which agency is coupled with an interest:

4.8.4      to execute and record any notices of completion, cessation of labor, or any other notices that Beneficiary deems appropriate to protect Beneficiary’s interest, and

4.8.5      upon the occurrence of an Event of Default, to perform any obligation of Trustor hereunder; provided, that:

(i)      Beneficiary, as such attorney–in–fact, shall only be accountable for such funds as are actually received by Beneficiary, and

(j)      Beneficiary shall not be liable to Trustor or any other person or entity for any failure to act under this section.

5.      MISCELLANEOUS .

5.1      Invalidity . The invalidity or unenforceability of any one (1) or more provisions of this Deed of Trust will in no way affect any other provision.

5.2      Statement . Trustor agrees to pay Beneficiary a reasonable charge, not to exceed the maximum allowed by law, for giving any statement of the status of the Obligations secured by this Deed of Trust.

5.3      Notices . All notices given under this Deed of Trust must be in writing and shall be in the form and delivered in the manner set forth in the Loan Agreement.

5.4      Rights of Beneficiary To Release Debtors or Security . Without affecting Trustor’s liability for the payment of any of the indebtedness secured by this Deed of Trust, Beneficiary may from time to time and without notice to Trustor:

5.4.1      release any person liable for the payment of this indebtedness;

5.4.2      extend or modify the terms of that indebtedness;

5.4.3      accept additional real or personal property of any kind as security, or alter, substitute or release any property securing that indebtedness; or

5.4.4      cause Trustee to consent to the making of any map or plat of the Property, or to reconvey any part of the Property, or to join in granting any easement or creating any restriction on the Property, or to join in any subordination or other agreement affecting this Deed of Trust.

5.5      Inspection Rights . Beneficiary may at any reasonable times enter upon and inspect the Property in person or by agent upon reasonable prior written notice to Trustor; provided that such inspection shall not unreasonably interfere with the operations of the tenant(s) of the Property.

5.6      Full Reconveyance . Upon the payment and performance in full of all Obligations secured by this Deed of Trust, Beneficiary agrees to request Trustee to reconvey the Property, and upon payment by Trustor of its fees and all other sums owing to it under this Deed of Trust, Trustee shall reconvey the Property without warranty to the person or persons legally entitled to it. Such person or persons must pay all costs of recordation. The recitals in the reconveyance of any facts will be conclusive as to all persons. The grantee in the reconveyance may be described as “ the person or persons legally entitled thereto. ” The Loan Agreement shall set forth certain terms and conditions, if applicable, for the partial reconveyances of the individual Units or lots comprising the Property encumbered by this Deed of Trust.

5.7      Governing Law . This Deed of Trust and all rights and obligations hereunder shall be governed by and interpreted according to the laws of the State of California, without regard to conflicts of laws principles.

5.8      Subsequent Trustors and Beneficiaries . The term “ Trustor ” includes both the original Trustor and any subsequent owner or owners of any of the Property, and the term “ Beneficiary ” includes the original Beneficiary and also any future owner or holder, including pledges and participants, of the Note or any interest therein.

5.9      Headings; Underlining . The headings of the sections of this Deed of Trust are for convenience only and do not limit its provisions. The use of underlining in this Deed of Trust is for convenience only, and the parties understand and agree that the presence or absence of underlining shall not be used in interpreting or construing this Deed of Trust or any provision hereof.

5.10      Waiver . Neither the acceptance of any partial or delinquent payment or performance, nor the failure to exercise any rights upon a default, shall be a waiver of Trustor’s obligations hereunder. Beneficiary’s consent to any act or omission by Trustor will not be a consent to any

other or subsequent act or omission or a waiver of the need for such consent in any future or other instance.

5.11      Successors and Assigns . The terms of this Deed of Trust shall bind and benefit heirs, legal representatives, successors and assigns of Trustor and Beneficiary and the successors in trust of Trustee.

5.12      Joint and Several Liability . If Trustor consists of more than one (1) person or entity, each shall be jointly and severally liable to perform the obligations of Trustor.

5.13      Acceptance of Trust; Powers and Duties of Trustee . Trustee accepts this trust when this Deed of Trust is recorded. From time to time upon written request of Beneficiary and presentation of this Deed of Trust for endorsement, and without affecting the personal liability of any person for payment of any indebtedness or performance of any Obligation secured hereby, Trustee may, without liability therefor and without notice, and upon the direction of Beneficiary : reconvey all or any part of the Property; consent to the making of any map or plat thereof; join in any grant of easement thereon, any declaration of CC&Rs, any extension agreement or any agreement subordinating the lien or charge hereof.

5.14      Removal of Trustee . Beneficiary may remove Trustee or any successor Trustee at any time or times and appoint a successor Trustee by recording a written substitution in the county where the Real Property covered by this Deed of Trust is located, or in any other manner permitted by law. Upon that appointment, all of the powers, rights and authority of Trustee will immediately become vested in its successor.

5.15      Subrogation . Beneficiary shall be subrogated to the lien of all encumbrances, whether released of record or not, paid in whole or in part by Beneficiary pursuant to this Deed of Trust or by the proceeds of any loan secured by this Deed of Trust.

5.16      Statutes of Limitation . Trustor hereby waives the pleading of any and all statutes of limitation as a defense to any action brought against Trustor by Beneficiary, to the fullest extent permitted by law.

5.17      Time of the Essence . Time is of the essence as to all Obligations secured by or arising under this Deed of Trust.

5.18      Requests For Notice . Trustor requests that a copy of any notice of default and notice of sale required by law be mailed to it at its address set forth above.

5.19      Attorneys’ Fees . The Prevailing Party in any Action shall recover all reasonable attorneys’ fees incurred by said Prevailing Party in connection with any default hereunder and in any proceeding brought to enforce any of the provisions of this Deed of Trust.

5.20      Partial Release . Beneficiary shall cause partial releases of the Improvements to be issued pursuant to the terms and conditions of Section 8 of the Loan Agreement.

5.21      Savings Clause . Regardless of any provision contained in this Deed of Trust, the Loan Documents, or any documents executed or delivered in connection therewith, Beneficiary will never be considered to have contracted for or to be entitled to charge, receive, collect, or apply as interest, and hereby disavows any intention to so receive, collect, or apply as interest, any amount in excess of the maximum amount permissible under applicable law. Without limiting its general applicability, the preceding sentence specifically applies to any acceleration of the Obligations or any part thereof. In the event that Beneficiary ever receives, collects, or applies as interest any such excess, the amount which would be excessive interest will be applied to the reduction of the principal balance of the Obligations, and, if the principal balance of the Obligations is paid in full, any remaining excess shall forthwith be paid to Trustor, and Trustor agrees to accept such payment from Beneficiary, together with interest on such sums at the maximum lawful rate then in effect. In determining whether the interest paid or payable exceeds the maximum amount permissible under applicable law, Trustor and Beneficiary shall, to the greatest extent permitted under applicable law:

5.21.1      Characterize any nonprincipal payment (other than payments which are expressly designated as interest payments hereunder) as an expense or fee rather than as interest;

5.21.2      Exclude voluntary prepayments and the effect thereof; and

5.21.3      Amortize, prorate, allocate, and spread the total amount of interest throughout the entire contemplated term of the Obligations so that the interest rate is uniform throughout the term.

THIS DEED OF TRUST IS A FIRST DEED OF TRUST. NO FURTHER DEEDS OF TRUST WILL BE RECORDED AGAINST THE REAL PROPERTY WITHOUT THE PRIOR WRITTEN CONSENT OF BENEFICIARY. FAILURE TO COMPLY WITH THIS PROVISION SHALL CONSTITUTE AN EVENT OF DEFAULT AND THE LOAN SHALL IMMEDIATELY BECOME DUE AND PAYABLE. CONSENT TO ONE (1) FURTHER ENCUMBRANCE SHALL NOT BE DEEMED TO BE A WAIVER OF THE RIGHT TO REQUIRE SUCH CONSENT TO FUTURE OR SUCCESSIVE ENCUMBRANCES.

[Signature page follows]

IN WITNESS WHEREOF, the undersigned have executed this Deed of Trust as of the date first above written.

TRUSTOR

 

DECKERS CABRILLO, LLC ,

a California limited liability company

By:    Deckers Outdoor Corporation,

    a Delaware corporation,

    its sole member

By:                         

Name:                         

    Title:                         

State of California    )

County of ______________________    )

On _________________________, before me,      ,

(insert name and title of the officer)

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

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

WITNESS my hand and official seal.

Signature          (Seal)

EXHIBIT “A”

LEGAL DESCRIPTION

THE LAND REFERRED TO IS IN SANTA BARBARA COUNTY, CALIFORNIA, AND IS DESCRIBED AS FOLLOWS:

LOTS 1, 2 AND 3 OF FINAL MAP NO. 32,035, IN THE CITY OF GOLETA, COUNTY OF SANTA BARBARA, STATE OF CALIFORNIA, AS PER THE MAP FILED IN BOOK 204, PAGES 54 THROUGH 57 OF MAPS, AND AMENDED BY CERTIFICATE OF CORRECTION RECORDED MAY 26, 2010, AS INSTRUMENT NO. 2010-0028009 OF OFFICIAL RECORDS, IN THE OFFICE OF THE COUNTY RECORDER OF SAID COUNTY.

APN: 073-610-08 (Lot 1), 073-610-09 (Lot 2) and 073-610-10 (Lot 3)

EXHIBIT “B”

DESCRIPTION OF PERSONAL PROPERTY FOR FIXTURE FILING

1.     REAL PROPERTY RIGHTS, APPURTENANCES AND IMPROVEMENTS . All present and future structures, buildings, improvements and fixtures of any kind on the real property described in the attached Exhibit “A” (“ Real Property ”), which is incorporated herein by this reference, as well as:

1.1    all appurtenances of the Real Property and all rights in and to any streets, roads or public places, easements or rights of way, relating to the Real Property, and all minerals, oil, gas and other hydrocarbon substances on or under the surface of the Real Property, as well as all development rights, permits, licenses, air rights, water and water rights relating to the Real Property, and all existing and future goods and tangible personal property located on the Real Property or wherever located and used or useable in connection with the use, operation or occupancy of the Real Property or in construction of any improvements thereon, including, but not limited to, apparatus, equipment and appliances used to supply air cooling, air conditioning, heat, gas, water, light, power, refrigeration, ventilation, laundry, drying, dishwashing, garbage disposal, waste removal, recreation or other services on the Real Property; and

1.2    to the extent owned by Trustor and not otherwise pledged as collateral under the Guarantor Credit Agreement (as defined in the Loan Agreement), all elevators, escalators, and related machinery and equipment, fire prevention and extinguishing apparatus, security and access control apparatus, partitions, ducts, compressors, plumbing, ovens, refrigerators, dishwashers, disposals, washers, dryers, awnings, storm windows, storm doors, screens, blinds, shades, curtains and curtain rods, mirrors, cabinets, paneling, rugs, attached floor coverings, furniture, pictures, antennas, pools and spas and pool and spa operation and maintenance equipment and apparatus; and

1.3    all trees and plants located on the Real Property, and all renewals or replacements thereof or articles in substitution thereof; it being intended and agreed that all such items will be conclusively considered to be part of the Real Property, whether or not attached or affixed to the Real Property (“ Improvements ”).

2.     COLLATERAL . All right, title and interest in and to the following described property and any and all products and proceeds thereof, now owned or hereafter acquired (sometimes all of such being collectively referred to herein as the “ Collateral ”):

2.1     General Intangibles . All general intangibles relating to design, development, operation, management and use of the Real Property and construction of the Improvements, including, but not limited to:

2.1.1    all names under which or by which the Real Property or the Improvements may at any time be operated or known, all rights to carry on business under any such names or any variants thereof, and all goodwill in any way relating to the Real Property;

2.1.2    all permits, licenses, authorizations, variances, land use entitlements, approvals and consents issued or obtained in connection with the construction, maintenance or operation of the Improvements;

2.1.3    all permits, licenses, approvals, consents, authorizations, franchises and agreements issued or obtained in connection with the use, occupancy or operation of the Real Property;

2.1.4    all rights as a declarant (or its equivalent) under any covenants, conditions and restrictions or other matters of record affecting the Real Property;

2.1.5    all materials prepared for filing or filed with any governmental agency;

2.1.6    all rights under any contract in connection with the development, design, use, operation, management and construction of the Real Property and/or the Improvements; and

2.1.7    all books and records prepared and kept in connection with the acquisition, construction, operation and occupancy of the Real Property and the Improvements;

2.2     Contracts . All construction, service, management, engineering, consulting, leasing, architectural, design, landscape and other similar contracts of any nature, as such may be modified, amended or supplemented from time to time, concerning the design, construction, management, operation, occupancy, use, and/or disposition of any portion of or all of the Real Property;

2.3     Plans and Reports . All architectural, design and engineering drawings, plans, specifications, working drawings, shop drawings, general conditions, addenda, soil tests and reports, feasibility studies, appraisals, engineering reports, environmental reports and similar materials relating to any portion of or all of the Real Property and/or the Improvements and all modifications, supplements and amendments thereto;

2.4     Sureties . All payment and performance bonds or guarantees, and any and all modifications and extensions thereof relating to the Real Property and/or the Improvements;

2.5     Payments . All reserves, deferred payments, deposits, refunds, cost savings, letters of credit and payments of any kind relating to the construction, design, development, operation, occupancy, use and disposition of all or any portion of the Real Property and/or the Improvements, including, without limitation, any property tax rebates now owing or hereafter payable;

2.6     Loan Proceeds . All proceeds of the loan secured hereby;

2.7     Claims . All proceeds and any claims arising on account of any damage to or taking of the Real Property and/or the Improvements or any part thereof, and all causes of action and recoveries for any loss or diminution in the value of the Real Property and/or the Improvements;

2.8     Insurance . All policies of, and proceeds resulting from, insurance relating to the Real Property, Improvements or any of the Collateral, and any and all riders, amendments, renewals, supplements or extensions thereof, and all proceeds thereof;

2.9     Deposits . All deposits made with or other security given to utility companies with respect to the Real Property and/or the Improvements, and all advance payments of insurance premiums made with respect thereto and claims or demands relating to insurance and all deposit accounts wherever located;

2.10     Stock . All shares of stock or other evidence of ownership of any part of the Real Property that are owned in common with others, including all water stock relating to the Real Property, if any, and all documents or rights of membership in any owners’ or members’ association or similar group having responsibility for managing or operating any part of the Real Property and/or the Improvements;

2.11     Sale Contracts . All sales contracts, escrow agreements and broker’s agreements concerning the sale of any or all of the Real Property and/or the Improvements, and all amendments thereto; and

2.12     Income . All income, rents, revenues, issues, deposits, receipts, profits and proceeds, and accounts receivable generated from the use and operation, of the Real Property, the Improvements and the Collateral to which Trustor may be entitled, whether now due, past due or to become due including, without limiting the above items, all “ Goods ”, “ Accounts ”, “ Documents ”, “ Instruments ”, “ Money ”, “ Chattel Paper ” and “ General Intangibles ”, as those terms are defined in the California Commercial Code from time to time in effect.

ATTENTION: COUNTY CLERK/RECORDER — THIS INSTRUMENT COVERS GOODS THAT ARE OR ARE TO BECOME FIXTURES ON THE REAL PROPERTY DESCRIBED HEREIN AND IS TO BE FILED FOR RECORD IN THE RECORDS WHERE DEEDS OF TRUST AND MORTGAGES ON REAL ESTATE ARE RECORDED.

ADDITIONALLY, THIS INSTRUMENT SHOULD BE APPROPRIATELY INDEXED, NOT ONLY AS A DEED OF TRUST OR MORTGAGE, BUT ALSO AS A FINANCING STATEMENT COVERING GOODS THAT ARE OR ARE TO BECOME FIXTURES ON THE REAL PROPERTY DESCRIBED HEREIN. THE MAILING ADDRESSES OF THE TRUSTOR (DEBTOR) AND BENEFICIARY (SECURED PARTY) ARE SET FORTH IN THIS INSTRUMENT.

RECORDING REQUESTED BY

AND WHEN RECORDED RETURN TO:

BOB L. HAGLE, ESQ.

RUTAN & TUCKER, LLP

611 ANTON BLVD., SUITE 1400

COSTA MESA, CA 92626

                                                    

                        (Space Above This Line For Recorder’s Use)

DEED OF TRUST, ASSIGNMENT OF LEASES AND RENTS AND
SECURITY AGREEMENT (INCLUDING FIXTURE FILING)

Made By

DECKERS CABRILLO, LLC
250 Coromar Drive
Goleta, CA 93117
Attn: Chief Financial Officer
Hereinafter referred to as “Trustor”

To

FIRST AMERICAN TITLE INSURANCE COMPANY
18500 Von Karman Ave., Suite 600
Irvine, CA 92612
Hereinafter referred to as “Trustee”

In Favor Of

CALIFORNIA BANK & TRUST,
a California banking corporation
1900 Main Street, Suite 200, Irvine, California 92614
Hereinafter referred to as “ Beneficiary ”

TERM LOAN AMOUNT: $33,930,500

Dated as of July 9, 2014

EXHIBITS :

Exhibit “A”    Legal Description

Exhibit “B”    Description of Personal Property for Fixture Filing