Exhibit 10.45

NOTICE OF CONFIDENTIALITY RIGHTS: IF YOU ARE A NATURAL PERSON, YOU MAY REMOVE OR
STRIKE ANY OF THE FOLLOWING INFORMAITON FROM THIS INSTRUMENT BEFORE IT IS FILED
FOR RECORD IN THE PUBLIC RECORDS: YOUR SOCIAL SECURITY NUMBER OR YOUR DRIVER’S
LICENSE NUMBER.
RECORDING REQUESTED BY AND
WHEN RECORDED RETURN TO:
Sheppard, Mullin, Richter & Hampton LLP
650 Town Center Dr., 10th Floor
Costa Mesa, CA 92626
Attn: Mathew B. Holbrook
JUNIOR DEED OF TRUST, ASSIGNMENT OF LEASES AND RENTS,
SECURITY AGREEMENT, FIXTURE FILING AND FINANCING STATEMENT
(515 CONGRESS PROJECT)KBSIII 515 CONGRESS, LLC,
a Delaware limited liability company, as grantor
(Grantor)to
JAMES A. JOHNSON,
an individual, as trustee
                                                                                  (Trustee)
for the benefit of
U.S. BANK NATIONAL ASSOCIATION,
in its capacity as Administrative Agent, as beneficiary
                                                                                        (Beneficiary)
Recording Office: Travis County, Texas

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JUNIOR DEED OF TRUST, ASSIGNMENT OF LEASES AND RENTS, SECURITY AGREEMENT,
FIXTURE FILING AND FINANCING STATEMENT
(515 CONGRESS PROJECT)
(This Document Serves as a Fixture Filing under Section 9.502 of
the Texas Business and Commerce Code)
Borrower’s Organizational Identification Number: 5806540
THIS JUNIOR DEED OF TRUST, ASSIGNMENT OF LEASES AND RENTS, SECURITY AGREEMENT
AND FIXTURE FILING (515 CONGRESS PROJECT) (this “Security Instrument”) is made
as of this 23rd day of January, 2020, by KBSIII 515 CONGRESS, LLC, a Delaware
limited liability company, having an address at c/o KBS Capital Advisors LLC,
800 Newport Center Drive, Suite 700, Newport Beach, California 92660, Attention:
Giovanni Cordoves (“Trustor”), to JAMES A. JOHNSON, having an address at 1717
West Loop South, Suite 1200, Houston, Texas 77027 (“Trustee”), for the benefit
of U.S. BANK NATIONAL ASSOCIATION, a national banking association, as a “Lender”
and as “Administrative Agent” for the “Lenders” under the Loan Agreement (as
hereinafter defined), in such capacity, together with its successors and
assigns, “Administrative Agent”, having an address at 4100 Newport Place, Suite
900, Newport Beach, CA 92660.
W I T N E S S E T H:
WHEREAS, pursuant to that certain Term Loan Agreement dated as October 17, 2018
among Trustor and each of the other borrowers from time to time a party thereto
(individually and collectively, as the context may require, “Borrowers”), the
Lenders from time to time party thereto and Administrative Agent, as amended by
that certain First Modification and Additional Advance Agreement (Long Form) of
even date herewith (collectively, as the same may be amended, restated,
replaced, supplemented or otherwise modified from time to time, the “Loan
Agreement”), the Lenders have agreed to make certain advances from time to time
to Borrower in the maximum aggregate principal amount of THREE HUNDRED
TWENTY-FIVE MILLION AND NO/100 DOLLARS ($325,000,000.00) (which amount may be
increased to SIX HUNDRED FIFTY MILLION AND NO/100 DOLLARS ($650,000,000.00)
pursuant to the terms and conditions set forth in the Loan Agreement) (the
“Loan”) and evidenced by one or more promissory notes made by Borrowers and
delivered to the Lenders (as the same may be amended, restated, replaced,
extended, renewed, supplemented or otherwise modified from time to time,
collectively, the “Notes”);
WHEREAS, Borrowers desire to secure the payment of the Loan, including the
payment of LIBOR Breakage Costs, Swap Obligations of Borrower, Fees and other
costs, expenses, fees and interest relating to the Loan, and the other
obligations of Borrowers under the Loan Documents (as hereinafter defined) and
the performance of all of their obligations under the Notes, the Loan Agreement
and the other Loan Documents (all hereinafter referred to collectively, as the
“Debt”); and
WHEREAS, this Security Instrument is given pursuant to the Loan Agreement and
secures the payment, fulfillment, and performance by Borrowers of their
obligations thereunder
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and under the other Loan Documents, and each and every term and provision of the
Loan Agreement and the Notes, including the rights, remedies, obligations,
covenants, conditions, agreements, indemnities, representations and warranties
of the parties therein, are hereby incorporated by reference herein as though
set forth in full and will be considered a part of this Security Instrument (the
Loan Agreement, the Notes, this Security Instrument, and all other documents
evidencing or securing the Debt or delivered in connection with the making of
the Loan (but expressly excluding the Indemnity and the Guaranties), together
with all amendments, restatements, replacements, extensions, renewals,
supplements or other modifications of any of the foregoing, are hereinafter
referred to collectively as the “Loan Documents”). For avoidance of doubt, the
Indemnity and the Guaranties shall not constitute “Loan Documents” as such term
is defined herein, and neither the Indemnity nor any of the Guaranties is
secured by this Security Instrument.
NOW THEREFORE, in consideration of the making of the Loan by the Lenders and the
covenants, agreements, representations and warranties set forth in this Security
Instrument:
Article 1 - GRANTS OF SECURITY
Section 1.1 PROPERTY CONVEYED. For and in consideration of the sum of Ten
Dollars ($10.00), and other valuable consideration, the receipt and legal
sufficiency of which are hereby acknowledged, Trustor grants to Administrative
Agent a security interest in the Personal Property (as defined below) and
Trustor does hereby GRANT, BARGAIN, SELL, CONVEY, TRANSFER, ASSIGN and SET OVER
to Trustee, in trust, with GENERAL WARRANTY and with POWER OF SALE and right of
entry and possession, all of Trustor’s right, title and interest in, to and
under the following property, rights, interests and estates now owned, or
hereafter acquired by Trustor (collectively, the “Property”):
(a)LAND. The real property described in Exhibit A attached hereto and made a
part hereof (the “Land”), subject to the Permitted Encumbrances;
(b)ADDITIONAL LAND. All additional lands, estates and development rights
hereafter acquired by Trustor for use in connection with the Land and the
development of the Land and all additional lands and estates therein which may,
from time to time, by supplemental deed of trust or otherwise be expressly made
subject to the lien of this Security Instrument;
(c)IMPROVEMENTS. The buildings, structures, fixtures, additions, enlargements,
extensions, modifications, repairs, replacements and improvements now or
hereafter erected or located on the Land (collectively, the “Improvements”);
(d)EASEMENTS. All easements, rights-of-way or use, rights, strips and gores of
land, streets, ways, alleys, passages, sewer rights, water, water courses, water
rights and powers, air rights and development rights, and all estates, rights,
titles, interests, privileges, liberties, servitudes, tenements, hereditaments
and appurtenances of any nature whatsoever, in any way now or hereafter
belonging, relating or pertaining to the Land and the Improvements and the
reversion and reversions, remainder and remainders, and all land lying in the
bed of any street, road or avenue, opened or proposed, in front of or adjoining
the Land, to the center line thereof and all the estates, rights, titles,
interests, dower and rights of dower, curtesy and rights of
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curtesy, property, possession, claim and demand whatsoever, both at law and in
equity, of Trustor of, in and to the Land and the Improvements and every part
and parcel thereof, with the appurtenances thereto;
(e)EQUIPMENT. All “equipment,” as such term is defined in Article 9 of the
Uniform Commercial Code (as hereinafter defined), now owned or hereafter
acquired by Trustor, which is used at or in connection with the Improvements or
the Land or is or will be located thereon or therein (including any Stored
Materials wherever located, all machinery, equipment, furnishings, and
electronic data-processing and other office equipment now owned or hereafter
acquired by Trustor and any and all additions, substitutions and replacements of
any of the foregoing), together with all attachments, components, parts,
equipment and accessories installed thereon or affixed thereto (collectively,
the “Equipment”);
(f)FIXTURES. All Equipment now owned, or the ownership of which is hereafter
acquired, by Trustor which is so related to the Land and Improvements forming
part of the Property that it is deemed fixtures or real property under the law
of the particular state in which the Equipment is located, including all
building or construction materials intended for construction, reconstruction,
alteration or repair of or installation on the Property, construction equipment,
appliances, machinery, plant equipment, fittings, apparatuses, fixtures and
other items now or hereafter attached to, installed in or used in connection
with (temporarily or permanently) any of the Improvements or the Land, including
engines, devices for the operation of pumps, pipes, plumbing, cleaning, call and
sprinkler systems, fire extinguishing apparatuses and equipment, heating,
ventilating, plumbing, laundry, incinerating, electrical, air conditioning and
air cooling equipment and systems, gas and electric machinery, appurtenances and
equipment, pollution control equipment, security systems, disposals,
dishwashers, refrigerators and ranges, recreational equipment and facilities of
all kinds, and water, gas, electrical, storm and sanitary sewer facilities,
utility lines and equipment (whether owned individually or jointly with others,
and, if owned jointly, to the extent of Trustor’s interest therein) and all
other utilities whether or not situated in easements, all water tanks, water
supply, water power sites, fuel stations, fuel tanks, fuel supply, and all other
structures, together with all accessions, appurtenances, additions,
replacements, betterments and substitutions for any of the foregoing and the
proceeds thereof (collectively, the “Fixtures”);
(g)PERSONAL PROPERTY. All personal property of Trustor which Trustor now or
hereafter owns or in which Trustor now or hereafter acquires an interest or
right, including without limitation, all furniture, furnishings, objects of art,
machinery, goods, tools, supplies, appliances, general intangibles, contract
rights, accounts, accounts receivable, franchises, licenses, certificates and
permits, and all other personal property of any kind or character whatsoever (as
defined in and subject to the provisions of the Uniform Commercial Code as
hereinafter defined), other than Fixtures, wherever located (including Stored
Materials located off-site), including without limitation all such personal
property which is used at or in connection with, or located within or about, the
Land and the Improvements, or used or which it is contemplated will be used at
or in connection with the development or construction of the Improvements
together with all accessories, replacements and substitutions thereto or
therefor and the proceeds thereof (collectively, the “Personal Property”), and
the right, title and interest of Trustor in and to any of the Personal Property
which may be subject to any security interests, as defined in the Uniform
Commercial Code, as adopted and enacted by the state, states,
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commonwealth or commonwealths where any of the Property is located (as amended
from time to time, the “Uniform Commercial Code”), superior in lien to the lien
of this Security Instrument and all proceeds and products of the above. Trustor
represents, warrants and covenants that the Personal Property is not used or
bought for personal, family or household purposes;
(h)LEASES AND RENTS. All leases, subleases, subsubleases, lettings, licenses,
concessions or other agreements (whether written or oral) pursuant to which any
Person is granted a possessory interest in, or right to use or occupy all or any
portion of the Land and the Improvements, and every modification, amendment or
other agreement relating to such leases, subleases, subsubleases, or other
agreements entered into in connection with such leases, subleases, subsubleases,
or other agreements and every guarantee of the performance and observance of the
covenants, conditions and agreements to be performed and observed by the other
party thereto, heretofore or hereafter entered into, whether before or after the
filing by or against Trustor of any petition for relief under 11 U.S.C. §101 et
seq., as the same may be amended from time to time (the “Bankruptcy Code”)
(collectively, the “Leases”) and all right, title and interest of Trustor, its
successors and assigns therein and thereunder, including all cash, letters of
credit or securities deposited thereunder to secure the performance by the
lessees of their obligations thereunder and all rents (including, specifically,
all “rents” as defined in TARA [as hereinafter defined]), additional rents, rent
equivalents, moneys payable as damages or in lieu of rent or rent equivalents,
royalties (including all oil and gas or other mineral royalties and bonuses),
income, receivables, receipts, revenues, deposits (including security, utility
and other deposits), accounts, cash, issues, profits, charges for services
rendered, and other consideration of whatever form or nature received by or paid
to or for the account of or benefit of Trustor or its agents or employees from
any and all sources arising from or attributable to the Property, including all
receivables, customer obligations, installment payment obligations and other
obligations now existing or hereafter arising or created out of the sale, lease,
sublease, license, concession or other grant of the right of the use and
occupancy of property or rendering of services by Trustor or Property Manager
and proceeds, if any, from business interruption or other loss of income
insurance whether paid or accruing before or after the filing by or against
Trustor of any petition for relief under the Bankruptcy Code (collectively, the
“Rents”) and all proceeds from the sale or other disposition of the Leases and
the right to receive and apply the Rents to the payment of the Obligations (as
hereinafter defined);
(i)CONDEMNATION AWARDS. All awards or payments (including any administrative
fees or attorneys’ fees), including interest thereon, which may heretofore and
hereafter be made with respect to the Property, whether from the exercise of the
right of eminent domain (including any transfer made in lieu of or in
anticipation of the exercise of the right), or for a change of grade, or for any
other injury to or decrease in the value of the Property;
(j)INSURANCE PROCEEDS. All proceeds (including any administrative fees or
attorneys’ fees) in respect of the Property under any insurance policies
covering the Property, including the right to receive and apply the proceeds of
any insurance, judgments, or settlements made in lieu thereof, for damage to the
Property;

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(k)TAX CERTIORARI. All refunds, rebates or credits in connection with reduction
in real estate taxes and assessments charged against the Property as a result of
tax certiorari or any applications or proceedings for reduction;
(l)RIGHTS. The right, in the name and on behalf of Trustor, to appear in and
defend any action or proceeding brought with respect to the Property and to
commence any action or proceeding to protect the interest of Administrative
Agent in the Property;
(m)AGREEMENTS. All agreements, contracts, certificates, instruments, franchises,
permits, licenses, plans, specifications and other documents, now or hereafter
entered into, and all rights therein and thereto, respecting or pertaining to
the use, occupation, construction, management or operation of the Land and any
part thereof and any Improvements or respecting any business or activity
conducted on the Land and any part thereof and all right, title and interest of
Trustor therein and thereunder, including the right, upon the happening of any
default hereunder, to receive and collect any sums payable to Trustor
thereunder;
(n)TRADEMARKS. All tradenames, trademarks, servicemarks, logos, copyrights,
goodwill, books and records and all other general intangibles relating to or
used in connection with the operation of the Property;
(o)ACCOUNTS. All reserves, escrows and deposit accounts maintained by Trustor
with respect to the Property, including all accounts established or maintained
pursuant to the Loan Documents and including, without limitation, funds on
deposit in any Operating Account; together with all deposits or wire transfers
made to such accounts and all cash, checks, drafts, certificates, securities,
investment property, financial assets, instruments and other property held
therein from time to time and all proceeds, products, distributions or dividends
or substitutions thereon and thereof;
(p)SWAP TRANSACTIONS. All of Trustor’s present and future rights, titles and
interests, but not its obligations, duties or liabilities for any breach, in,
under and to all Swap Transactions, any and all amounts received by Trustor in
connection therewith or to which Trustor is entitled thereunder, and all
proceeds of the foregoing including all “accounts”, “chattel paper”, “general
intangibles” and “investment property” (as such terms are defined in the Uniform
Commercial Code as from time to time in effect) constituting or relating to the
foregoing;
(q)PROCEEDS. All proceeds of any of the foregoing, including, without
limitation, proceeds of insurance and condemnation awards, whether cash,
liquidation or other claims or otherwise; and
(r)OTHER RIGHTS. Any and all other rights of Trustor in and to the items set
forth in Subsections (a) through (q) above.
AND without limiting any of the other provisions of this Security Instrument, to
the extent permitted by applicable law, Trustor expressly grants to
Administrative Agent, as secured party, for the benefit of Administrative Agent
and the Lenders, a security interest in the portion of the Property which is or
may be subject to the provisions of the Uniform Commercial Code which are
applicable to secured transactions; it being understood and agreed that the
Improvements and Fixtures are part and parcel of the Land (the Land, the
Improvements and the
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Fixtures are collectively referred to as the “Real Property”) appropriated to
the use thereof and, whether affixed or annexed to the Real Property or not,
will for the purposes of this Security Instrument be deemed conclusively to be
real estate and encumbered hereby.
Section 1.2 ASSIGNMENT OF RENTS.
(a)For other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, Trustor does hereby irrevocably, absolutely and
unconditionally transfer, sell, assign, pledge and convey (and, as to all Rents
subject to TARA (defined below), grant a security interest) to Administrative
Agent and its successors and assigns, all of the right, title and interest
whether now owned or hereinafter acquired by Trustor, as lessor, in and to the
following property, rights, interests and estates: the Leases; the Rents; any
and all claims and rights to the payment of damages and other claims arising
from any rejection by a tenant of any Lease (a “Tenant”) under Title 11 of the
United States Code (the “Bankruptcy Claims”); any and all claims and rights
under any and all lease guaranties, letters of credit and any other credit
support given to Trustor by any guarantor in connection with any of the Leases
(the “Lease Guaranties”); all proceeds from the sale or other disposition of the
Leases and Rents, the Lease Guaranties and the Bankruptcy Claims; all rights,
powers, privileges, options and other benefits of Trustor as lessor under the
Leases and as agent under the Lease Guaranties, including without limitation,
the immediate and continuing right to make claim for, receive, collect and apply
all Rents payable or receivable under the Leases and all sums payable under the
Lease Guaranties or pursuant thereto (and apply the same to the payment of
Debt), and to do all other things which Trustor or any lessor is or may become
entitled to do under the Leases or the Lease Guaranties; the right, at
Administrative Agent’s option, upon revocation of the license granted herein, to
enter upon the Property in person, by agent or by court-appointed receiver, to
collect the Rents and enforce the Leases and contracts as that term is defined
by the Uniform Commercial Code (“Contracts”); Trustor’s irrevocable power of
attorney, coupled with an interest, to take any and all of the actions set forth
in this Security Instrument or any other Loan Document and any other actions
designated by Administrative Agent for the proper management and preservation of
the Property; any and all Contracts; and any and all other rights of Trustor in
and to the items set forth in this Section 1.2(a), and all amendments,
modifications, replacements, renewals, extensions, supplements, restatements and
substitutions thereof.
(b)The assignment in this Section 1.2 is subject to the Texas Assignment of
Rents Act, Chapter 64 of the Texas Property Code, as amended and supplemented
from time to time (herein referred to as, “TARA”). Notwithstanding anything to
the contrary contained herein, Administrative Agent is entitled to all the
rights and remedies of an assignee set forth in TARA. This Security Instrument
will constitute and serve as a security instrument under TARA as to all Rents
subject to TARA. Administrative Agent will have the ability to exercise its
rights related to the Leases and Rents, in Administrative Agent’s sole
discretion and without prejudice to any other remedy available, as provided in
this Security Instrument or any other Loan Document or as otherwise allowed by
applicable law, including, without limitation, TARA. Notwithstanding anything to
the contrary contained in this Security Instrument or the other Loan Documents,
to the extent this Security Instrument modifies the requirements of TARA and
such modification is permitted by the agreement of the parties, this Security
Instrument will govern.

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(c)Notwithstanding that this instrument is a present, unconditional, absolute
and executed assignment of the Leases, a present, unconditional security
interest in the Rents pursuant to TARA, and a present, unconditional, absolute
and executed grant of all powers herein granted to Administrative Agent, subject
to the provisions hereof and of TARA, Trustor is hereby permitted and is hereby
granted a limited license by Administrative Agent, revocable as set forth
herein, to enter into and otherwise deal with the Leases, as applicable to each
of them, including collecting, receiving, retaining and utilizing and disbursing
the Rents and other amounts due under the Leases as they become due (not more
than one month in advance in the case of Rent that is payable on a monthly basis
and not more than one installment in advance if paid otherwise), all subject to
and in accordance with the Loan Agreement, until an Event of Default occurs, in
which event the foregoing right and license will be terminated (until said Event
of Default is cured by Trustor) and of no further force and effect, and
Administrative Agent will be entitled to all Rents and other amounts then due
under the Leases and thereafter accruing without the institution of legal
proceedings of any kind whatsoever, and this Security Instrument will constitute
a direction to and full authority to the Tenants to pay all such amounts to
Administrative Agent upon notice to the Tenants from Administrative Agent. Each
of the Tenants, upon written notice from Administrative Agent, will be and is
hereby authorized by Trustor to pay to Administrative Agent any Rents, rental or
other sums which may be or thereafter become due under the Leases, or any of
them, and to perform each of such Tenant’s undertakings under the Leases without
any obligation to determine whether or not such an Event of Default has in fact
occurred. The requirement for notice to the Tenants is intended solely for the
benefit of such Tenants and not for the benefit of Trustor and all payments made
to Trustor by the Tenants after the occurrence and during the continuance of an
Event of Default, whether before or after notice to the Tenants that an Event of
Default has occurred, will be held in trust by Trustor for the benefit of
Administrative Agent following Trustor’s receipt of written notice of such Event
of Default.
(d)Trustor does hereby irrevocably appoint and empower Administrative Agent, its
agents or attorneys, as Trustor’s true and lawful attorney in its name and stead
(with or without taking possession of the Property) after the occurrence, and
during the continuance, of an Event of Default, if Trustor fails to take any
such action reasonably requested by Administrative Agent within five (5)
Business Days after such request, to rent, lease or let all or any portion of
the Property to any party or parties at such rental and upon such terms as
Administrative Agent will, in its discretion, determine and, to collect, sue
for, settle, compromise and give acquittances for all of the Rents and all
rights and claims of any kind which Trustor now has or may hereafter have
against any Tenant under any Lease or any subtenants or occupants of the
Property, and to avail itself of and pursue all remedies for the enforcement of
the Leases and Trustor’s rights in and under the Leases as Trustor might have
pursued but for this assignment.
(e)Upon issuance of a deed or deeds pursuant to foreclosure of the Security
Instrument, all right, title and interest of Trustor in and to the Leases will
thereupon vest in and become the absolute property of the grantee or grantees in
such deed or deeds without any further act or assignment by Trustor. Trustor
hereby irrevocably appoints Administrative Agent and its successors and assigns,
as its agent and attorney in fact, if Trustor fails to take any such action
reasonably requested by Administrative Agent within five (5) Business Days after
such request, to execute all instruments of assignment for further assurance in
favor of such grantee or grantees in such deed or deeds, as may be reasonably
necessary for such purpose.
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(f)Trustor represents and agrees that no Rent has been or will be paid by any
person in possession of any portion of the Property for more than one (1)
installment in advance and that the payment of none of the Rents to accrue for
any portion of the said Property will be waived, released, reduced, discounted
or otherwise discharged or compromised by Trustor, except as permitted by the
Loan Agreement. As between Trustor and Administrative Agent, Trustor waives any
rights of set off against any person in possession of any portion of the
Property. Trustor agrees that it will not assign any of the Rents other than to
Administrative Agent.
(g)Nothing herein contained will be construed as constituting Administrative
Agent as a mortgagee in possession in the absence of the taking of actual
possession of the Property by Administrative Agent pursuant to this Security
Instrument. IN THE EXERCISE OF THE POWERS HEREIN GRANTED TO ADMINISTRATIVE
AGENT, NO LIABILITY (OTHER THAN IN RESPECT OF GROSS NEGLIGENCE OR WILLFUL
MISCONDUCT) WILL BE ASSERTED OR ENFORCED AGAINST ADMINISTRATIVE AGENT ALL SUCH
LIABILITY BEING EXPRESSLY WAIVED AND RELEASED BY TRUSTOR TO THE FULLEST EXTENT
PERMITTED BY LAW. Nothing contained herein, including without limitation the
assignment provisions set forth above, will impose upon Administrative Agent any
duty to produce any rents, issues or profits or cause Administrative Agent, to
be (i) responsible for performing any of the obligations of lessor under any
lease, or (ii) responsible or liable for any waste or for any dangerous or
defective conditions of the Property, for negligence in the management, upkeep,
repair or control of the Property, or for any other act or omission by any other
person.
(h)Trustor further agrees to assign and transfer to Administrative Agent all
future Leases upon all or any part of the Property and to execute and deliver,
at the request of Administrative Agent, all such further assurances and
assignments in the Property as Administrative Agent will from time to time
reasonably require.
(i)All Leases entered into by Trustor with respect to the Property, and all of
Trustor’s rights with respect to such Leases, will conform with the requirements
of the Loan Agreement.
(j)Notwithstanding anything contained herein to the contrary, in no event will
this assignment be deemed to reduce the Debt by an amount in excess of the
actual amount of cash received by Administrative Agent under any Lease, whether
before or after the occurrence of an Event of Default, and Trustor acknowledges
that in no event will the Debt be reduced by the value from time to time of the
Rents of or from the Property. Trustor will not be relieved of its obligations
hereunder by reason of (i) the failure of Administrative Agent to comply with
any of Trustor’s requests (or the request of any other party) to take any action
to enforce any provision in this Security Instrument or any other Loan Document,
(ii) the release, regardless of consideration, of the whole or any part of the
Property, or (iii) any agreement or stipulation by Administrative Agent
extending the time for payment or otherwise modifying or supplementing the terms
of this Agreement or any other Loan Documents. The right of Administrative Agent
to collect the Debt and enforce any other right therefore held by it may be
exercised by Administrative Agent either prior to, simultaneously with or
subsequent to any action taken pursuant to this Security Instrument.
Furthermore, Administrative Agent may resort for the payment of the Obligations
to any other security held by Administrative Agent in such order and
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manner as Administrative Agent, in its discretion, may elect. Trustor’s receipt
of any Rents, issues, and profits pursuant to this assignment after the
institution of foreclosure proceedings, either by court action or by the private
power of sale contained in the Security Instrument, will not cure an Event of
Default, or affect such proceedings or sale. THIS ASSIGNMENT WILL NOT CONSTITUTE
OR EVIDENCE ANY PAYMENT WHATSOEVER ON ACCOUNT OF THE OBLIGATIONS, AND THE
OBLIGATIONS WILL BE REDUCED BY AMOUNTS COLLECTED BY ADMINISTRATIVE AGENT ONLY IF
AND TO THE EXTENT THAT SUCH AMOUNTS ARE ACTUALLY PAID TO ADMINISTRATIVE AGENT
AND APPLIED BY ADMINISTRATIVE AGENT IN REDUCTION OF THE UNPAID PRINCIPAL BALANCE
OF THE NOTES.
Section 1.3 SECURITY AGREEMENT. This Security Instrument is both a real property
mortgage/deed of trust and a “security agreement” within the meaning of the
Uniform Commercial Code. The Property includes both real and personal property
and all other rights and interests, whether tangible or intangible in nature, of
Trustor in the Property. By executing and delivering this Security Instrument,
Trustor hereby grants to Administrative Agent, for the benefit of Administrative
Agent and the Lenders, as security for the Obligations, a security interest in
the Fixtures, the Equipment, the Personal Property and other property
constituting the Property to the full extent that the Fixtures, the Equipment,
the Personal Property and such other property may be subject to the Uniform
Commercial Code (said portion of the Property so subject to the Uniform
Commercial Code being called the “Collateral”). If an Event of Default occurs,
Administrative Agent will have an option to proceed with respect to both the
Property and the Collateral as permitted or required by Section 51.002 of the
Texas Property Code relating to the sale of real property or and Chapter 9 of
the Uniform Commercial Code relating to the sale of collateral after default by
a debtor (as said section and chapter now exist or may be hereinafter amended or
succeeded), or by any other present or subsequent articles or enactments
relating to same. The parties agree that if Administrative Agent elects to
proceed with respect to the Collateral separately from the Property,
Administrative Agent will have all remedies granted to a secured party upon
default under the Uniform Commercial Code, including without limitation the
right and power to sell, at one or more public or private sales, or otherwise
dispose of, lease, or utilize the Collateral and any part or parts thereof in
any manner authorized or permitted under the Uniform Commercial Code after
default by a debtor and, without limiting the generality of the foregoing, the
right to take possession of the Collateral or any part thereof, and to take such
other measures as Administrative Agent may deem necessary for the care,
protection and preservation of the Collateral. Upon request or demand of
Administrative Agent after the occurrence, and during the continuance, of an
Event of Default, Trustor will, at its expense, assemble the Collateral and make
it available to Administrative Agent at a convenient place (at the Land if
tangible property) acceptable to Administrative Agent. Trustor will pay to
Administrative Agent on demand any and all expenses, including legal expenses
and attorneys’ fees, incurred or paid by Administrative Agent in protecting its
interest in the Collateral and in enforcing its rights hereunder with respect to
the Collateral after the occurrence, and during the continuance, of an Event of
Default. Any notice of sale, disposition or other intended action by
Administrative Agent with respect to the Collateral sent to Trustor in
accordance with the provisions hereof at least 10 Business Days prior to such
action, will, except as otherwise provided by applicable law, constitute
reasonable notice to Trustor. The proceeds of any disposition of the Collateral,
or any part thereof, may, except as otherwise required by applicable law, be
applied by Administrative Agent to the payment of the Obligations in such
priority and
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proportions as Administrative Agent in its discretion deems proper. Without
limiting the foregoing, Administrative Agent has the right upon any such public
sale or sales, and, to the extent permitted by law, upon any such private sale
and sales, to purchase the whole or any part of the Collateral so sold, free of
any right or equity of redemption in Trustor, whether on Property or elsewhere.
Section 1.4 FIXTURE FILING. Trustor and Administrative Agent agree, to the
extent permitted by law, that (i) all of the goods described within the
definition of the term “Property” herein are or are to become fixtures on the
Land; (ii) this Security Instrument, upon recording or registration in the real
estate records of the proper office, will constitute a “fixture filing” within
the meaning of Sections 9.102 and 9.502 of the Uniform Commercial Code; and
(iii) Trustor is the record owner of the certain fee simple estate in the Land.
To the extent permitted under applicable law, a carbon, photographic or other
reproduction of this Security Instrument or of any financing statement relating
to this Security Instrument will be sufficient as a financing statement for any
of the purposes referred to in this Section. The organizational identification
number of Trustor is set forth on the first page of this Security Instrument.
The addresses of Trustor and Administrative Agent are:
Trustor (Debtor):
KBSIII 515 Congress, LLC
c/o KBS Capital Advisors LLC
800 Newport Center Drive, Suite 700
Newport Beach, California 92660
Attn: Giovanni Cordoves
With a copy to:
KBSIII 515 Congress, LLC
c/o KBS Capital Advisors LLC
800 Newport Center Drive, Suite 700
Newport Beach, California 92660
Attn: Todd Smith
Administrative Agent (Secured Party):
U.S. Bank National Association
4100 Newport Place
Suite 900
Newport Beach, CA 92660
Section 1.5 PLEDGES OF MONIES HAD. Trustor hereby pledges to Administrative
Agent, for the benefit of Administrative Agent and the Lenders, any and all
monies now or hereafter held by Administrative Agent or on behalf of
Administrative Agent in connection with the Loan, including the Net Proceeds,
any sums deposited in the Operating Accounts and any Deficiency Deposit (defined
below), as additional security for the Obligations until expended or applied as
provided in this Security Instrument or the Loan Agreement.

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CONDITIONS TO GRANT
TO HAVE AND TO HOLD the above granted and described Property unto and to the use
and benefit of Administrative Agent and its successors and assigns, in fee
simple forever;
PROVIDED, HOWEVER, this grant is made upon the express condition that, if
Borrowers pay to Administrative Agent the Obligations at the time and in the
manner provided in the Loan Documents, and perform the Obligations in the time
and manner set forth in the Loan Documents and comply with each and every
covenant and condition set forth herein and in the other Loan Documents, the
estate hereby granted will cease, terminate and be void; provided, however, that
Trustor’s obligation to indemnify and hold harmless Administrative Agent and the
Lenders pursuant to the provisions hereof will survive any such payment or
release.
Article 2 - DEBT AND OBLIGATIONS SECURED
Section 2.1 DEBT. This Security Instrument and the grants, assignments and
transfers made in Article 1 are given for the purpose of securing the Debt which
includes, but is not limited to, the obligations of Borrowers to pay to
Administrative Agent and the Lenders the principal and interest owing pursuant
to the terms and conditions of the Notes and the Loan Agreement.
Section 2.2 OTHER OBLIGATIONS. This Security Instrument and the grants,
assignments and transfers made in Article 1 are also given for the purpose of
securing the following (the “Other Obligations”):
(a)the payment and performance of all other obligations of Trustor contained
herein, including all fees and charges payable by Trustor;
(b)the payment and performance of all obligations of any other Borrower
contained in any other Security Instrument (as defined in the Loan Agreement),
including all fees and charges payable by such Borrower;
(c)the payment and performance of each obligation of Borrowers contained in the
Loan Agreement and any other Loan Document, including all Swap Obligations of
Borrower and all fees and charges payable by Borrowers; and
(d)the performance of each obligation of Borrowers contained in any renewal,
extension, amendment, modification, consolidation, change of, or substitution or
replacement for, all or any part of the Notes, the Loan Agreement or any other
Loan Document.
Section 2.3 DEBT AND OTHER OBLIGATIONS. Borrowers’ obligations for the payment
of the Debt and the payment and performance of the Other Obligations will be
referred to collectively herein as the “Obligations.”
Article 3 - TRUSTOR COVENANTS
Trustor covenants and agrees that:
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Section 3.1 PAYMENT OF OBLIGATIONS. Trustor will pay and perform the Obligations
at the time and in the manner provided in the Loan Agreement, the Notes and this
Security Instrument.
Section 3.2 INCORPORATION BY REFERENCE. All the covenants, conditions and
agreements contained in (a) the Loan Agreement, (b) the Notes and (c) all and
any of the other Loan Documents, are hereby made a part of this Security
Instrument to the same extent and with the same force as if fully set forth
herein.
Section 3.3 INSURANCE. Trustor will obtain and maintain, or cause to be
maintained, in full force and effect at all times insurance with respect to
Trustor and the Property as required pursuant to the Loan Agreement. In the
event Trustor fails to obtain, maintain, keep in force or deliver to
Administrative Agent the policies of insurance required by the Loan Agreement in
accordance with the terms thereof, Administrative Agent may (but has no
obligation to) procure (upon no less than five (5) Business Days’ notice to
Trustor) such insurance or single-interest insurance for such risks covering
Administrative Agent’s and the Lenders’ interests, and Trustor will pay all
premiums thereon promptly upon demand by Administrative Agent, and until such
payment is made by Trustor, the amount advanced by Administrative Agent with
respect to all such premiums will, at Administrative Agent’s option, bear
interest at the Default Rate.
Section 3.4 MAINTENANCE OF PROPERTY. Trustor will cause the Property to be
maintained in a good and safe condition and repair and otherwise in accordance
with this Security Instrument. The Improvements, the Fixtures, the Equipment and
the Personal Property will not be removed, demolished or altered without the
consent of Administrative Agent and the Required Lenders other than in
accordance with the terms and conditions of the Loan Agreement. Trustor will
promptly repair, replace or rebuild any part of the Property which may be
destroyed by any casualty or become damaged, worn or dilapidated or which may be
affected by any condemnation, and will complete and pay for any structure at any
time in the process of construction or repair on the Land.
Section 3.5 WASTE. Trustor will not commit or knowingly suffer any waste of the
Property or make any change in the use of the Property which will in any way
materially increase the risk of fire or other hazard arising out of the
operation of the Property, or take any action that might invalidate or allow the
cancellation of any insurance policy which Trustor is obligated to maintain
pursuant to the Loan Agreement, or do or permit to be done thereon anything that
may in any way materially impair the value of the Property or the security of
this Security Instrument. Trustor will not, without the prior written consent of
Administrative Agent and the Required Lenders, permit any drilling or
exploration for or extraction, removal, or production of any minerals from the
surface or the subsurface of the Land, except as permitted by the Permitted
Encumbrances, regardless of the depth thereof or the method of mining or
extraction thereof.
Section 3.6 PAYMENT OF LABOR AND MATERIALS.
(a)Subject to the terms of Section 3.6(b) below, Trustor will promptly pay when
due all bills and costs for labor and materials (“Labor and Material Costs”)
incurred in connection with the Property and not permit to exist beyond the due
date thereof in respect of the Property or
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any part thereof any lien or security interest, even though inferior to the
liens and the security interests hereof, and in any event not permit to be
created or exist in respect of the Property or any part thereof any other or
additional Lien or Security Interest other than the liens or security interests
hereof except for the Permitted Encumbrances. Notwithstanding anything to the
contrary in the Loan Documents, that certain Deed of Trust, Assignment of Leases
and Rents, Security Agreement, Fixture Filing and Financing Statement (515
Congress Project), made by Trustor, as trustor, to Trustee, as trustee, for the
benefit of Administrative Agent, as beneficiary, and recorded as Instrument No.
2018164110 in the Official Records of Travis County, Texas on October 18, 2018,
as amended by that certain First Modification and Additional Advance Agreement
(Short Form – 515 Congress) dated as of even date herewith and recording
substantially concurrently herewith in the Official Records of Travis County,
Texas (collectively, as amended, the “Senior Deed of Trust”), shall constitute a
Permitted Encumbrance hereunder.
(b)After prior written notice to Administrative Agent, Trustor, at its own
expense, may contest by appropriate legal proceeding, promptly initiated and
conducted in good faith and with due diligence, the amount or validity or
application in whole or in part of any of the Labor and Material Costs, provided
that (i) no Event of Default has occurred and is continuing, (ii) such
proceeding is permitted and conducted in accordance with the provisions of any
other instrument to which Trustor or the Property is subject and will not
constitute a default thereunder, (iii) neither the Property nor any part thereof
or interest therein will be in danger of being sold, forfeited, terminated,
canceled or lost, and (iv) Trustor has furnished such security as may be
required in the proceeding, or as may be reasonably requested by Administrative
Agent to insure the payment of any contested Labor and Material Costs, together
with all interest and penalties thereon. Administrative Agent may pay over (upon
no less than five (5) Business Days’ written notice to Trustor) any such
security or part thereof held by Administrative Agent to the claimant entitled
thereto at any time when, in the reasonable judgment of Administrative Agent,
the entitlement of such claimant is established or the Property (or part thereof
or interest therein) is in danger of being sold, forfeited, terminated,
cancelled or lost or there is any danger of any Lien related to the contested
Labor and Material Costs becoming senior in priority, in whole or in part, to
the Lien of the Security Instrument. If Administrative Agent shall make any such
payment, Trustor shall provide (at Trustor’s sole cost and expense) such
endorsements to Administrative Agent’s title insurance policy or such other
evidence as Administrative Agent may require to confirm no loss of priority of
the Security Instrument.
Section 3.7 PAYMENT OF TAXES AND IMPOSITIONS.
(a)Trustor will pay, or cause to be paid prior to delinquency, all real property
taxes and assessments, general and special, and all other taxes, assessments,
duties, levies, imposts, deductions, charges or withholdings, of any kind or
nature whatsoever, including nongovernmental levies or assessments such as
maintenance charges, levies or charges resulting from covenants, conditions and
restrictions affecting the Property, which are assessed or imposed upon the
Property, or become due and payable, and which create or may create a lien upon
the Property (all the foregoing, collectively, “Impositions”).
(b)After prior notice to Administrative Agent, Trustor, at its own expense, may
contest by appropriate legal proceeding, promptly initiated and conducted in
good faith and with due diligence, the amount or validity or application in
whole or in part of any Impositions,
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provided that (i) no Event of Default has occurred and is continuing, (ii) such
proceeding is permitted and conducted in accordance with the provisions of any
other instrument to which Trustor or the Property is subject and will not
constitute a default thereunder, (iii) neither the Property nor any part thereof
or interest therein will be in danger of being sold, forfeited, terminated,
canceled or lost, (iv) Trustor will promptly upon final determination thereof
pay the amount of any such Impositions, together with all costs, interest and
penalties which may be payable in connection therewith, and (v) Trustor has
furnished such security as may be required in the proceeding, or as may be
reasonably requested by Administrative Agent to insure the payment of any
contested Impositions, together with all interest and penalties thereon.
Administrative Agent may pay over (upon no less than five (5) Business Days’
written notice to Trustor) any such security or part thereof held by
Administrative Agent to the claimant entitled thereto at any time when, in the
reasonable judgment of Administrative Agent, the entitlement of such claimant is
established or the Property (or part thereof or interest therein) is in danger
of being sold, forfeited, terminated, cancelled or lost or there is any danger
of any Lien related to the contested Impositions becoming senior in priority, in
whole or in part, to the Lien of the Security Instrument. If Administrative
Agent shall make any such payment, Trustor shall provide (at Trustor’s sole cost
and expense) such endorsements to Administrative Agent’s title insurance policy
or such other evidence as Administrative Agent may reasonably require to confirm
no loss of priority of the Security Instrument.
Section 3.8 CHANGE OF NAME, JURISDICTION. In addition to the restrictions
contained in the Loan Agreement, Trustor will not change Trustor’s name,
identity (including its trade name or names) or jurisdiction of formation or
organization unless Trustor has first obtained the prior written consent of
Administrative Agent to such change (which consent shall not be unreasonably
withheld, conditioned or delayed), and has taken all actions reasonably
necessary or reasonably required by Administrative Agent to file or amend any
financing statements or continuation statements to assure perfection and
continuation of perfection of security interests under the Loan Documents.
Trustor will notify Administrative Agent in writing of any change in its
organizational identification number at least 10 Business Days in advance of
such change becoming effective. If Trustor does not now have an organizational
identification number and later obtains one, Trustor will promptly notify
Administrative Agent in writing of such organizational identification number. At
the request of Administrative Agent, Trustor will execute a certificate in form
reasonably satisfactory to Administrative Agent listing the trade names under
which Trustor intends to operate the Property, and representing and warranting
that Trustor does, and has previously never done, business under no other trade
name with respect to the Property.
Section 3.9 UTILITIES. Trustor will pay or cause to be paid prior to delinquency
all utility charges that are incurred by Trustor for the benefit of the Property
or that may become a charge or lien against the Property for gas, electricity,
water or sewer services furnished to the Property and all other assessments or
charges of a similar nature, whether public or private, affecting or related to
the Property or any portion thereof, whether or not such assessments or charges
are or may become liens thereon.
Section 3.10 CASUALTY After obtaining knowledge of the occurrence of any damage,
destruction or other casualty to the Property or any part thereof, whether or
not covered by insurance, Trustor must immediately notify Administrative Agent
in writing. In the event of
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such casualty, all proceeds of insurance (collectively, the “Insurance
Proceeds”) must be payable to Administrative Agent and no other party, and
Trustor hereby authorizes and directs any affected insurance company to make
payment of such Insurance Proceeds directly to Administrative Agent and no other
party. If Trustor receives any Insurance Proceeds, Trustor must pay over such
Insurance Proceeds to Administrative Agent within 5 Business Days.
Administrative Agent is hereby authorized and empowered by Trustor to settle,
adjust or compromise any and all claims for loss, damage or destruction under
any policy or policies of insurance. Notwithstanding the above, provided that
(i) such proceeds do not exceed $500,000 for any Property (as defined in the
Loan Agreement), (ii) no Event of Default exists, and (iii) the casualty does
not materially impair the value of the Project, Trustor may retain such proceeds
(which shall be applied to the restoration of the Improvements to the extent
required to repair a casualty). In the event of a foreclosure of this Security
Instrument, or other transfer of title to the Property in extinguishment in
whole or in part of the Obligations, all right, title and interest of Trustor in
and to any Insurance Proceeds will vest in the purchaser at such foreclosure or
in Administrative Agent, for the benefit of Administrative Agent and the Lenders
or other transferee in the event of such other transfer of title. Nothing herein
will be deemed to excuse Trustor from repairing or maintaining the Property as
provided in this Security Instrument or restoring all damage or destruction to
the Property, regardless of the availability or sufficiency of Insurance
Proceeds, and the application or release by Administrative Agent of any
Insurance Proceeds will not cure or waive any Default, Event of Default or
notice of Default or Event of Default or invalidate any action taken by or on
behalf of Administrative Agent pursuant to any such notice.
Section 3.11 CONDEMNATION If any proceeding or action is commenced for the
taking of the Property, or any part thereof or interest therein, for public or
quasi-public use under the power of eminent domain, condemnation or otherwise,
or if the same is taken or damaged by reason of any public improvement or
condemnation proceeding, or in any other manner, or should Trustor receive any
notice or other information regarding such proceeding, action, taking or damage,
Trustor must immediately notify Administrative Agent in writing. Administrative
Agent may commence, appear in and prosecute in its own name any such action or
proceeding. Administrative Agent may also make (during the existence of an Event
of Default) any compromise or settlement in connection with such taking or
damage. Administrative Agent will not be liable to Trustor for any failure by
Administrative Agent to collect or to exercise diligence in collecting any such
compensation for a taking. All compensation, awards, damages, rights of action
and proceeds awarded to Trustor by reason of any such taking or damage to the
Property or any part thereof or any interest therein for public or quasi-public
use under the power of eminent domain, by reason of any public improvement or
condemnation proceeding, or in any other manner (the “Condemnation Proceeds”)
are hereby assigned to Administrative Agent, for the benefit of Administrative
Agent and the Lenders and Trustor agrees to execute such further assignments of
the Condemnation Proceeds as Administrative Agent may require. Nothing herein
will be deemed to excuse Trustor from repairing, maintaining or restoring the
Property as provided in this Security Instrument, regardless of the availability
or sufficiency of any Condemnation Proceeds, and the application or release by
Administrative Agent of any Condemnation Proceeds will not cure or waive any
Default, Event of Default or notice of Default or Event of Default or invalidate
any action taken by or on behalf of Administrative Agent pursuant to any such
notice. In the event of a foreclosure of this Security Instrument, or other
transfer of title to the Property in extinguishment in whole or in part of the
Obligations, all right,
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title and interest of Trustor in and to the Condemnation Proceeds will vest in
the purchaser at such foreclosure or in Administrative Agent, for the benefit of
Administrative Agent and the Lenders, or other transferee in the event of such
other transfer of title.
Section 3.12 AVAILABILITY OF NET PROCEEDS.
(a)In the event of any damage or destruction of the Property, Administrative
Agent shall apply all Insurance Proceeds remaining after deductions of all
expenses of collection and settlement thereof, including, without limitation,
reasonable attorneys’ and adjustors’ fees and expenses, to the restoration of
the Improvements but only as repairs or replacements are effected and continuing
expenses become due and payable; provided that the following conditions are met:
(a) no Event of Default exists that has not been cured; (b) the Loan is in
balance (taking into account all costs of reconstruction and the amount of the
Insurance Proceeds, if any, the amount of operating expenses and interest that
will accrue under the Notes, and any additional funds deposited by Trustor with
Administrative Agent (“Deficiency Deposit”) to pay for such costs of
reconstruction); (c) Administrative Agent has determined, in its sole
discretion, that the damage or destruction can be repaired and that the damaged
portion of the Improvements can be completed according to the requirements of
the Loan Agreement; (d) Administrative Agent and all applicable governmental
authorities have approved the final plans and specifications for reconstruction
of the damaged portion of the Improvements; (e) Administrative Agent has
approved, for the reconstruction of the damaged portion of the Improvements, in
its sole discretion, the budget, the construction schedule and the construction
contract; and (f) Administrative Agent has determined, in its sole discretion,
that after the reconstruction work is completed, the Borrowing Base Amount as a
percentage of the Borrowing Base Value of the Projects shall not exceed the
Maximum Borrowing Base Leverage Ratio (as defined in the Loan Agreement),
provided Trustor may pay down the Loan so that the foregoing requirement in this
clause (f) is satisfied. If any one or more of such conditions set forth herein
have not been met, Administrative Agent will not be obligated to make any
further disbursements pursuant to the Loan Agreement, and Administrative Agent
shall apply all Insurance Proceeds, after deductions as herein provided, to the
repayment of the outstanding balance of the Notes, (without payment of a
prepayment premium other than LIBOR Breakage Costs) together with all accrued
interest thereon, in such order as Administrative Agent may elect,
notwithstanding that the outstanding balance may not be due and payable.
(b)In the event of any taking or condemnation of the Property or any part
thereof or interest therein, all Condemnation Proceeds will be paid to
Administrative Agent, for the benefit of Administrative Agent and the Lenders.
After deducting therefrom all costs and expenses (regardless of the particular
nature thereof and whether incurred with or without suit), including attorneys’
fees, incurred by it in connection with any such action or proceeding,
Administrative Agent shall apply all such Condemnation Proceeds to the
restoration of the Improvements (other than Condemnation Proceeds attributable
to temporary use or occupancy which may be applied, at Administrative Agent’s
option, to installments of principal and interest and other charges due under
the Notes and other Loan Documents when the same become due and payable, without
payment of a prepayment premium other than LIBOR Breakage Costs) provided that:
(i)the taking or damage will not, in Administrative Agent’s reasonable judgment,
materially impair the security for the Loan; and
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(ii)all conditions set forth in Section 3.12(a) above with respect to the
disbursement of Insurance Proceeds are met.
If all of the above conditions are met, Administrative Agent shall disburse the
Condemnation Proceeds in accordance with the Loan Agreement and only as repairs
or replacements are effected and continuing expenses become due and payable. If
any one or more of the above conditions are not met, Administrative Agent shall
apply all of the Condemnation Proceeds, after deductions as herein provided, to
the repayment of the outstanding balance of the Notes (without payment of
prepayment premiums other than LIBOR Breakage Costs), together with all accrued
interest thereon, in such order as Administrative Agent may elect,
notwithstanding that said outstanding balance may not be due and payable, and
Administrative Agent will have no further obligation to make disbursements
pursuant to the Loan Agreement or the other Loan Documents. If the Condemnation
Proceeds are not sufficient to repay the portion of the Loan allocable to the
Property covered by this Security Instrument and Administrative Agent or Lenders
have determined that its security for the Loan is materially impaired, Trustor
shall immediately pay any such remaining balance allocable to the Property,
together with all accrued interest thereon. Notwithstanding the above, provided
the Condemnation Proceeds do not exceed $125,000, no Event of Default exists,
and the taking has not materially impaired the value of the Property, Trustor
may retain such Condemnation Proceeds.
(c)The term “Net Proceeds” means (i) the net amount of the Insurance Proceeds
received by Administrative Agent after deduction of Administrative Agent’s costs
and expenses (including attorneys’ fees), if any, in collecting the same; or
(ii) the net amount of the Condemnation Proceeds received by Administrative
Agent after deduction of Administrative Agent’s costs and expenses (including
attorneys’ fees), if any, in collecting the same, whichever the case may be; and
(iii) any additional deposit the Administrative Agent requires the Trustor to
make to the Administrative Agent in connection with such casualty or
condemnation proceeding.
Article 4 - OBLIGATIONS AND RELIANCES
Section 4.1 RELATIONSHIP OF TRUSTOR AND LENDERS. The relationship between
Trustor and Administrative Agent and the Lenders is solely that of debtor and
creditor, and neither Administrative Agent nor any Lender has any fiduciary or
other special relationship with Trustor, and no term or condition of any of the
Loan Agreement, the Notes, this Security Instrument, any of the other Loan
Documents, the Indemnity or the Guaranties will be construed so as to deem the
relationship between Trustor and Administrative Agent and the Lenders to be
other than that of debtor and creditor.
Section 4.2 NO RELIANCE ON LENDERS. The general partners, members, principals
and (if Trustor is a trust) beneficial owners of Trustor are experienced in the
ownership and operation of properties similar to the Property, and Trustor and
Administrative Agent and Lenders are relying solely upon such expertise and
business plan in connection with the ownership and operation of the Property.
Trustor is not relying on Administrative Agent’s or any Lender’s expertise,
business acumen or advice in connection with the Property.

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Section 4.3 NO ADMINISTRATIVE AGENT OBLIGATIONS.
(a)Notwithstanding anything to the contrary contained in this Security
Instrument, neither Administrative Agent nor any Lender is undertaking the
performance of (i) any obligations under the Leases; or (ii) any obligations
with respect to any other agreements, contracts, certificates, instruments,
franchises, permits, trademarks, licenses and other documents.
(b)By accepting or approving anything required to be observed, performed or
fulfilled or to be given to Administrative Agent or any Lender pursuant to this
Security Instrument, the Loan Agreement, the Notes, the other Loan Documents,
the Indemnity or the Guaranties, including any officer’s certificate, balance
sheet, statement of profit and loss or other financial statement, survey,
appraisal, or insurance policy, neither Administrative Agent nor any Lender will
be deemed to have warranted, consented to, or affirmed the sufficiency, legality
or effectiveness of same, and such acceptance or approval thereof will not
constitute any warranty or affirmation with respect thereto by Administrative
Agent or any Lender.
Section 4.4 Reliance. Trustor recognizes and acknowledges that in accepting the
Loan Agreement, the Notes, this Security Instrument, the other Loan Documents,
the Indemnity and the Guaranties, Administrative Agent and the Lenders are
expressly and primarily relying on the truth and accuracy of the warranties and
representations set forth in Article V of the Loan Agreement without any
obligation to investigate the Property and notwithstanding any investigation of
the Property by Administrative Agent or any Lender; that such reliance existed
on the part of Administrative Agent and Lenders prior to the date hereof; that
the warranties and representations are a material inducement to the Lenders in
making the Loan; and that Administrative Agent and the Lenders in entering into
the Loan Agreement; and that the Lenders would not be willing to make the Loan
and accept this Security Instrument in the absence of the warranties and
representations as set forth in Article V of the Loan Agreement. For the
avoidance of doubt, the Senior Deed of Trust shall constitute a Permitted
Encumbrance in connection with those warranties and representations relating to
the Property.
Article 5 - FURTHER ASSURANCES
Section 5.1 RECORDING OF SECURITY INSTRUMENT, ETC. Trustor forthwith upon the
execution and delivery of this Security Instrument and thereafter, from time to
time, will cause this Security Instrument and any of the other Loan Documents
creating a lien or security interest or evidencing the lien hereof upon the
Property and each instrument of further assurance to be filed, registered or
recorded in such manner and in such places as may be required by any present or
future law in order to publish notice of and fully to protect and perfect the
lien or security interest hereof upon, and the interest of Administrative Agent
in, the Property. Trustor will pay all taxes, filing, registration or recording
fees, and all reasonable expenses incident to the preparation, execution,
acknowledgment and/or recording of the Notes, this Security Instrument, the
other Loan Documents, any note, deed of trust or mortgage supplemental hereto,
any security instrument with respect to the Property and any instrument of
further assurance, and any modification or amendment of the foregoing documents,
and all federal, state, county and municipal taxes, duties, imposts, assessments
and charges arising out of or in connection with the execution and delivery of
this Security Instrument, any deed of trust or mortgage supplemental
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hereto, any security instrument with respect to the Property or any instrument
of further assurance, and any modification or amendment of the foregoing
documents, except where prohibited by law so to do.
Section 5.2 FURTHER ACTS, ETC. Trustor will, at Trustor’s sole cost and expense,
and without expense to Administrative Agent or any Lender, do, execute,
acknowledge and deliver all and every such further acts, deeds, conveyances,
deeds of trust, mortgages, assignments, notices of assignments, transfers and
assurances as Administrative Agent or Trustee may, from time to time, reasonably
require, for the better assuring, conveying, assigning, transferring, and
confirming unto Administrative Agent and/or Trustee (for the benefit or itself
and the Lenders) the property and rights hereby mortgaged, deeded, granted,
bargained, sold, conveyed, confirmed, pledged, assigned, warranted and
transferred or intended now or hereafter so to be, or which Trustor may be or
may hereafter become bound to convey or assign to Administrative Agent and/or
Trustee, in each case for the benefit of Administrative Agent and the Lenders,
or for carrying out the intention or facilitating the performance of the terms
of this Security Instrument or for filing, registering or recording this
Security Instrument, or for complying with all applicable Laws and Governmental
Requirements. Trustor, within ten (10) Business Days following written demand by
Administrative Agent, will execute and deliver, and in the event it fails to so
execute and deliver, hereby authorizes Administrative Agent and/or Trustee to
execute in the name of Trustor or file or record without the signature of
Trustor to the extent Administrative Agent or Trustee may lawfully do so, one or
more financing statements (including initial financing statements and amendments
thereto and continuation statements), to evidence more effectively the security
interest of Administrative Agent in the Property. Trustor also ratifies its
authorization for Administrative Agent or Trustee to have filed or recorded any
like initial financing statements, amendments thereto and continuation
statements, if filed or recorded prior to the date of this Security Instrument.
Trustor grants to Administrative Agent an irrevocable power of attorney coupled
with an interest for the purpose of exercising and perfecting any and all rights
and remedies available to Administrative Agent at law and in equity during the
existence of an Event of Default, including such rights and remedies available
to Administrative Agent pursuant to this Section. To the extent not prohibited
by applicable law, Trustor hereby ratifies all acts Administrative Agent has
lawfully done in the past or will lawfully do or cause to be done in the future
by virtue of such power of attorney.
Section 5.3 CHANGES IN TAX DEBT, CREDIT AND DOCUMENTARY STAMP LAWS.
(a)If any law is enacted or adopted or amended after the date of this Security
Instrument which deducts the Debt from the value of the Property for the purpose
of taxation or which imposes a tax, either directly or indirectly, on the Debt
or Administrative Agent’s interest in the Property, Trustor will pay the tax,
with interest and penalties thereon, if any, in accordance with the applicable
provisions of the Loan Agreement.
(b)Trustor will not claim or demand or be entitled to any credit or credits on
account of the Debt for any part of the Taxes assessed against the Property, or
any part thereof, and no deduction will otherwise be made or claimed from the
assessed value of the Property, or any part thereof, for real estate tax
purposes by reason of this Security Instrument or the Debt.

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(c)If at any time the United States of America, any State thereof or any
subdivision of any such State will require revenue or other stamps to be affixed
to the Notes, this Security Instrument, or any of the other Loan Documents or
impose any other tax or charge on the same, Trustor will pay for the same, with
interest and penalties thereon, if any.
Article 6 - DUE ON SALE/ENCUMBRANCE
Section 6.1 ADMINISTRATIVE AGENT RELIANCE. Trustor acknowledges that
Administrative Agent and the Lenders have examined and relied on the experience
of Trustor and its general partners, members, principals and (if Trustor is a
trust) beneficial owners in owning and operating properties such as the Property
in agreeing to make the Loan, and will continue to rely on Trustor’s ownership
of the Property as a means of maintaining the value of the Property as security
for repayment and performance of the Obligations. Trustor acknowledges that
Administrative Agent and the Lenders have a valid interest in maintaining the
value of the Property so as to ensure that, should Borrowers default in the
repayment of the Obligations or the performance of the Obligations,
Administrative Agent, for the benefit of Administrative Agent and the Lenders
can recover the Obligations by a sale of the Property.
Section 6.2 NO TRANSFER. Trustor will comply in all respects with the provisions
of the Loan Agreement regarding (a) selling, transferring, leasing, conveying or
encumbering the Land, the Equipment or the Improvements or the direct or
indirect interests in Trustor, and (b) changing control of Trustor.
Article 7 - RIGHTS AND REMEDIES UPON DEFAULT
Section 7.1 REMEDIES. Upon the occurrence, and during the continuance, of any
Event of Default, unless such Event of Default is subsequently waived in writing
by the Required Lenders or Administrative Agent, as applicable (provided that
the Required Lenders and Administrative Agent have no obligation whatsoever to
grant any such waiver and any such waiver, if granted, will be considered a
one-time waiver), Administrative Agent may exercise any or all of the following
rights and remedies, consecutively or simultaneously, and in any order:
(a)Intentionally omitted;
(b)institute proceedings, judicial or otherwise, for the complete foreclosure of
this Security Instrument under any applicable provision of law, in which case
the Property or any interest therein may be sold for cash or upon credit in one
or more parcels or in several interests or portions and in any order or manner;
(c)with or without entry, to the extent permitted and pursuant to the procedures
provided by applicable law, institute proceedings for the partial foreclosure of
this Security Instrument for the portion of the Obligations then due and
payable, subject to the continuing lien and security interest of this Security
Instrument for the balance of the Obligations not then due, unimpaired and
without loss of priority;

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(d)institute an action, suit or proceeding in equity for the specific
performance of any covenant, condition or agreement contained herein, in the
Notes, the Loan Agreement or in the other Loan Documents;
(e)apply for the appointment of a receiver, trustee, liquidator or conservator
of the Property, without notice and without regard for the adequacy of the
security for the Obligations and without regard for the solvency of Borrower,
any guarantor or any indemnitor with respect to the Loan or of any Person liable
for the payment of the Obligations. Trustor waives any right to any hearing or
notice of hearing prior to the appointment of a receiver. Such receiver and his
agents will be empowered to (i) take possession of the Property and perform all
necessary or desirable acts with respect to management and operation of the
Property, (ii) exclude Trustor and Trustor’s agents, servants, and employees
from the Property, (iii) collect the rents, issues, profits, and income
therefrom, (iv) complete any construction which may be in progress, (v) do such
maintenance and make such repairs and alterations as the receiver deems
necessary, (vi) use all stores of materials, supplies, and maintenance equipment
on the Property and replace such items at the expense of the receivership
estate, (vii) to pay all taxes and assessments against the Property, all
premiums for insurance thereon, all utility and other operating expenses, and
all sums due under any prior or subsequent encumbrance, (viii) generally do
anything which Trustor could legally do if Trustor were in possession of the
Property, and (ix) take any other action permitted by law. All expenses incurred
by the receiver or his agents will constitute a part of the Obligations. Any
revenues collected by the receiver will be applied first to the expenses of the
receivership, including reasonable attorneys’ fees incurred by the receiver and
by Administrative Agent, together with interest thereon at the Default Rate from
the date incurred until repaid, and the balance will be applied toward the
Obligations or in such other manner as the court may direct. Unless sooner
terminated with the express consent of Administrative Agent, any such
receivership will continue until the Obligations have been discharged in full,
or until title to the Property has passed after a receivership sale or a
foreclosure sale and all applicable periods of redemption have expired;
(f)the license granted to Trustor under Section 1.2 hereof will automatically be
revoked and Administrative Agent may enter into or upon the Property, either
personally or by its agents, nominees or attorneys (with or without bringing any
action or proceeding) or by court-appointed receiver and dispossess Trustor and
its agents and servants therefrom, without liability for trespass, damages or
otherwise and exclude Trustor and its agents or servants wholly therefrom, and
may take possession of all books, records and accounts relating thereto and
Trustor agrees to surrender possession of the Property and of such books,
records and accounts to Administrative Agent upon demand, and thereupon
Administrative Agent may (i) use, operate, manage, control, insure, maintain,
repair, restore and otherwise deal with all and every part of the Property and
conduct the business thereat; (ii) complete any construction on the Property in
such manner and form as Administrative Agent deems advisable; (iii) make
alterations, additions, renewals, replacements and improvements to or on the
Property; (iv) exercise all rights and powers of Trustor with respect to the
Property, whether in the name of Trustor or otherwise, including the right to
make, cancel, enforce or modify Leases, obtain and evict tenants, and demand,
sue for, collect and receive all Rents of the Property and every part thereof;
(v) require Trustor to pay monthly in advance to Administrative Agent, or any
receiver appointed to collect the Rents, the fair and reasonable rental value
for the use and occupation of such part of the Property as may be occupied by
Trustor; (vi) require Trustor to vacate and surrender possession
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of the Property to Administrative Agent or to such receiver and, in default
thereof, Trustor may be evicted by summary proceedings or otherwise; and (vii)
apply the receipts from the Property to the payment of the Obligations, in such
order, priority and proportions as Administrative Agent deems appropriate in its
sole discretion after deducting therefrom all expenses (including attorneys’
fees) incurred in connection with the aforesaid operations and all amounts
necessary to pay the Taxes, Insurance Premiums and other expenses in connection
with the Property, as well as just and reasonable compensation for the services
of Administrative Agent, its in-house and outside counsel, agents and employees;
(g)Exercise any and all rights and remedies granted to a secured party upon
default under the Uniform Commercial Code, including, without limiting the
generality of the foregoing: (i) the right to take possession of the Fixtures,
the Equipment and the Personal Property, or any part thereof, and to take such
other measures as Administrative Agent may deem necessary for the care,
protection and preservation of the Fixtures, the Equipment and the Personal
Property for the benefit of Administrative Agent and the Lenders, and (ii)
require Trustor at its expense to assemble the Fixtures, the Equipment and the
Personal Property and make it available to Administrative Agent at a convenient
place acceptable to Administrative Agent, for the benefit of Administrative
Agent and the Lenders. Any notice of sale, disposition or other intended action
by Administrative Agent with respect to the Fixtures, the Equipment and/or the
Personal Property sent to Trustor in accordance with the provisions hereof at
least 5 days prior to such action, will constitute commercially reasonable
notice to Trustor;
(h)Apply any sums then deposited or held in escrow or otherwise by or on behalf
of Administrative Agent in accordance with the terms of the Loan Agreement, this
Security Instrument or any other Loan Document to the payment of the following
items in any order as determined in the sole and absolute discretion of
Administrative Agent and the Required Lenders:
(i)Taxes;
(ii)Insurance Premiums;
(iii)Interest on the unpaid principal balance of the Notes;
(iv)The unpaid principal balance of the Notes;
(v)All other sums payable pursuant to the Notes, the Loan Agreement, this
Security Instrument and the other Loan Documents, including advances made by
Administrative Agent pursuant to the terms of this Security Instrument;
(i)apply the undisbursed balance of any Net Proceeds and any Deficiency Deposit
held by Administrative Agent or Lenders, together with interest thereon, if any,
to the payment of the Obligations in such order, priority and proportions as
Administrative Agent and the Required Lenders will deem to be appropriate in
their discretion; and
(j)Pursue such other remedies as Administrative Agent may have under the other
Loan Documents, the Indemnity or the Guaranties and/or applicable law.
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In the event of a sale, by foreclosure, power of sale or otherwise, of less than
all of Property, this Security Instrument will continue as a lien and security
interest on the remaining portion of the Property unimpaired and without loss of
priority.
Section 7.2 APPLICATION OF PROCEEDS. The purchase money, proceeds and avails of
any disposition of the Property, and or any part thereof, or any other sums
collected by Administrative Agent pursuant to the Notes, this Security
Instrument or the other Loan Documents, may be applied by Administrative Agent
to the payment of the Obligations in such priority and proportions as
Administrative Agent and the Required Lenders in their discretion will deem
proper, to the extent consistent with applicable Laws.
Section 7.3 ACTIONS AND PROCEEDINGS. Trustor will give Administrative Agent
prompt written notice of the assertion of any claim with respect to, or the
filing of any action or proceeding purporting to affect the Property, the
security hereof or the rights or powers of Administrative Agent. Administrative
Agent has the right to appear in and defend any action or proceeding brought
with respect to the Property and to bring any action or proceeding, in the name
and on behalf of Trustor, which Administrative Agent, in its discretion, decides
should be brought to protect its interest in the Property.
Section 7.4 RECOVERY OF SUMS REQUIRED TO BE PAID. Administrative Agent will have
the right from time to time to take action to recover any sum or sums which
constitute a part of the Obligations as the same become due, without regard to
whether or not the balance of the Obligations is due, and without prejudice to
the right of Administrative Agent or Trustee thereafter to bring an action of
foreclosure, or any other action, for a default or defaults by Trustor existing
at the time such earlier action was commenced. In the event Trustor is curing a
default or is paying off the Loan and Administrative Agent has incurred fees
which Trustor is obligated to pay to Administrative Agent under any of the Loan
Documents, and such amount has not been reduced to a final amount at the time
Trustor is curing the default or is paying off the Loan, Administrative Agent
may require Trustor to pay a reasonable estimate of such fees with the payment
curing the default or with the payoff of the Loan, and any amount paid in excess
of the estimate by the Trustor will be refunded to the Trustor after the final
amount of such fee is determined.
Section 7.5 OTHER RIGHTS, ETC.
(a)The failure of Administrative Agent or the Lenders to insist upon strict
performance of any term hereof will not be deemed to be a waiver of any term of
this Security Instrument. Trustor will not be relieved of Trustor’s obligations
hereunder by reason of (i) the failure of Administrative Agent or Trustee to
comply with any request of Trustor or any guarantor or indemnitor with respect
to the Loan to take any action to foreclose this Security Instrument or
otherwise enforce any of the provisions hereof or of the Notes, the other Loan
Documents, the Indemnity or the Guaranties, (ii) the release, regardless of
consideration, of the whole or any part of the Property, or of any Person liable
for the Obligations or any portion thereof, or (iii) any agreement or
stipulation by Administrative Agent or the Lenders extending the time of payment
or otherwise modifying or supplementing the terms of the Notes, this Security
Instrument or the other Loan Documents, the Indemnity or the Guaranties.
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(b)It is agreed that the risk of loss or damage to the Property is on Trustor,
and neither Administrative Agent nor any Lender will have any liability
whatsoever for decline in value of the Property, for failure to maintain any
insurance policies, or for failure to determine whether insurance in force is
adequate as to the amount or nature of risks insured. Possession by
Administrative Agent will not be deemed an election of judicial relief if any
such possession is requested or obtained with respect to all or any portion of
the Property or collateral not in Administrative Agent’s possession.
(c)Administrative Agent may resort for the payment of the Obligations to any
other security held by Administrative Agent in such order and manner as
Administrative Agent, in its discretion, may elect. Administrative Agent may
take action to recover the Obligations, or any portion thereof, or to enforce
any covenant hereof without prejudice to the right of Administrative Agent
thereafter to foreclose this Security Instrument. The rights of Administrative
Agent under this Security Instrument will be separate, distinct and cumulative
and none will be given effect to the exclusion of the others. No act of
Administrative Agent or Trustee will be construed as an election to proceed
under any one provision herein to the exclusion of any other provision.
Administrative Agent will not be limited exclusively to the rights and remedies
herein stated but will be entitled to every right and remedy now or hereafter
afforded at law or in equity.
Section 7.6 RIGHT TO RELEASE ANY PORTION OF THE PROPERTY. Administrative Agent
may release, or cause Trustee to release, any portion of the Property for such
consideration as Administrative Agent may require without, as to the remainder
of the Property, in any way impairing or affecting the lien or priority of this
Security Instrument, or improving the position of any subordinate lienholder
with respect thereto, except to the extent that the obligations hereunder are
reduced by the actual monetary consideration, if any, received by Administrative
Agent for such release, and may accept by assignment, pledge or otherwise any
other property in place thereof as Administrative Agent may require without
being accountable for so doing to any other lienholder. This Security Instrument
will continue as a lien on, and security interest in, the remaining portion of
the Property.
Section 7.7 INTENTIONALLY.
Section 7.8 RIGHT OF ENTRY. Upon reasonable notice to Trustor (and subject to
the rights of tenants under their leases), Administrative Agent and its agents
will have the right to enter and inspect the Property at all reasonable times.
Section 7.9 BANKRUPTCY.
(a)After the occurrence, and during the continuance, of an Event of Default,
Administrative Agent will have the right to proceed in its own name or in the
name of Trustor in respect of any claim, suit, action or proceeding relating to
the rejection of any Lease, including the right to file and prosecute, to the
exclusion of Trustor, any proofs of claim, complaints, motions, applications,
notices and other documents, in any case in respect of the lessee under such
Lease under the Bankruptcy Code.

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(b)If there is filed by or against Trustor a petition under the Bankruptcy Code
and Trustor, as lessor under any Lease, determines to reject such Lease pursuant
to Section 365(a) of the Bankruptcy Code, then Trustor will give Administrative
Agent not less than 10 days’ prior notice of the date on which Trustor will
apply to the bankruptcy court for authority to reject the Lease (or such lesser
notice as may be reasonably practicable under the circumstances). Administrative
Agent will have the right, but not the obligation, to serve upon Trustor within
such 10 day period a notice stating that (i) Administrative Agent demands that
Trustor assume and assign the Lease to Administrative Agent pursuant to Section
365 of the Bankruptcy Code and (ii) Administrative Agent covenants to cure or
provide adequate assurance of future performance under the Lease. If
Administrative Agent serves upon Trustor the notice described in the preceding
sentence, Trustor will not seek to reject the Lease and will comply with the
demand provided for in clause (i) of the preceding sentence within 30 days after
the notice is given, subject to the performance by Administrative Agent of the
covenant provided for in clause (ii) of the preceding sentence.
Section 7.10 ACCEPTANCE OF CURE. Administrative Agent may accept a cure of an
Event of Default from time to time in its discretion but without any obligation
whatsoever to do so. Trustor will only be entitled to rely on such an acceptance
if Administrative Agent expressly states, in writing, that it has accepted such
a cure. If Administrative Agent accepts a cure of an Event of Default, and no
other uncured Event of Default is then continuing, then Administrative Agent may
agree in its discretion, but without any obligation to do so, to treat any
provision in this Security Instrument or in any other Loan Document as if no
Event of Default had ever occurred.
Section 7.11 ACCEPTANCE OF PAYMENTS. Trustor agrees that if Trustor makes a
tender of a payment but does not simultaneously tender payment of any late
charge, Default Rate interest, LIBOR Breakage Costs, Swap Obligations of
Borrower or other amount then due and owing by Trustor under this Security
Instrument or the other Loan Documents, and such payment is accepted by
Administrative Agent or any Lender, with or without protest, such acceptance
will not constitute any waiver of Administrative Agent’s or such Lender’s rights
to receive such amounts. Furthermore, if Administrative Agent accepts any
payment from Trustor or any Guarantor after a Default or Event of Default, such
acceptance will not constitute a waiver or satisfaction of any such Default or
Event of Default. Any waiver or satisfaction of a Default or Event of Default
must be evidenced by an express writing of Administrative Agent.
Article 8 - ENVIRONMENTAL HAZARDS
Section 8.1 ENVIRONMENTAL COVENANTS. Trustor has provided representations,
warranties and covenants regarding environmental matters set forth in the
Indemnity and Trustor will comply with the aforesaid covenants regarding
environmental matters. Notwithstanding anything in this Security Instrument to
the contrary, the term “Obligations” does not include any obligations or
liabilities under the Indemnity (as defined in the Loan Agreement) and the
obligations and liabilities under the Indemnity are not secured by this Security
Instrument.

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Article 9 - INDEMNIFICATION
The provisions of Section 2.10(b), Section 6.24 [Fees and Expenses] and Section
10.1 [General Indemnities] of the Loan Agreement are hereby incorporated by
reference into this Security Instrument to the same extent and with the same
force as if fully set forth herein. Notwithstanding the foregoing or anything in
this Security Instrument to the contrary, however, this Security Instrument
shall not secure Borrower’s or Guarantor’s obligations under the Indemnity or
Guarantor’s obligations under any Guaranty.
Article 10 - CERTAIN WAIVERS
Section 10.1 WAIVER OF OFFSETS, DEFENSES, COUNTERCLAIM. Trustor hereby waives
the right to assert a counterclaim, other than a compulsory counterclaim, in any
action or proceeding brought against it by Administrative Agent and/or any
Lender to offset any obligations to make the payments required by the Loan
Documents. No failure by Administrative Agent or any Lender to perform any of
its obligations hereunder will be a valid defense to, or result in any offset
against, any payments which Trustor is obligated to make under any of the Loan
Documents.
Section 10.2 MARSHALLING AND OTHER MATTERS. To the extent permitted by
applicable law, Trustor hereby waives the benefit of all appraisement,
valuation, stay, extension, reinstatement and redemption Laws now or hereafter
in force and all rights of marshalling in the event of any sale hereunder of the
Property or any part thereof or any interest therein. Further, Trustor hereby
expressly waives any and all rights of redemption from sale under any order or
decree of foreclosure of this Security Instrument on behalf of Trustor, and on
behalf of each and every Person acquiring any interest in or title to the
Property subsequent to the date of this Security Instrument and on behalf of all
other Persons to the extent permitted by applicable law.
Section 10.3 Waiver of Notice. To the extent permitted by applicable law, and
unless such notice is required pursuant to the terms hereof, the Indemnity,
Guaranties or any Loan Documents, Trustor will not be entitled to any notices of
any nature whatsoever from Administrative Agent and/or the Lenders except with
respect to matters for which this Security Instrument or any of the other Loan
Documents specifically and expressly provides for the giving of notice by
Administrative Agent or any Lender to Trustor and except with respect to matters
for which Administrative Agent or any Lender is required by applicable law to
give notice, and Trustor hereby expressly waives the right to receive any notice
from Administrative Agent and/or the Lenders with respect to any matter for
which this Security Instrument does not specifically and expressly provide for
the giving of notice by Administrative Agent and/or the Lenders to Trustor. All
sums payable by Trustor pursuant to this Security Instrument must be paid
without notice, demand, counterclaim, setoff, deduction or defense and without
abatement, suspension, deferment, diminution or reduction, and the obligations
and liabilities of Trustor hereunder will in no way be released, discharged or
otherwise affected (except as expressly provided herein) by reason of: (a) any
damage to or destruction of or any condemnation or similar taking of the
Property or any part thereof; (b) any restriction or prevention of or
interference by any third party with any use of the Property or any part
thereof; (c) any title defect or encumbrance or any eviction from the Property
or any part thereof by title paramount or otherwise; (d) any bankruptcy,
insolvency, reorganization, composition, adjustment,
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dissolution, liquidation or other like proceeding relating to Administrative
Agent or any Lender, or any action taken with respect to this Security
Instrument by any trustee or receiver of Administrative Agent or any Lender, or
by any court, in any such proceeding; (e) any claim which Trustor has or might
have against Administrative Agent or any Lender; (f) any default or failure on
the part of Administrative Agent or any Lender to perform or comply with any of
the terms hereof or of any other agreement with Trustor; or (g) any other
occurrence whatsoever, whether similar or dissimilar to the foregoing; whether
or not Trustor has notice or knowledge of any of the foregoing.
Section 10.4 WAIVER OF STATUE OF LIMITATIONS. To the extent permitted by
applicable law, Trustor hereby expressly waives and releases to the fullest
extent permitted by law, the pleading of any statute of limitations as a defense
to payment or performance of the Obligations.
Article 11 - NOTICES
All notices or other written communications hereunder will be delivered in
accordance with the notice provisions of the Loan Agreement.
Article 12 - APPLICABLE LAW
Section 12.1 GOVERNING LAW; WAIVER OF JURY TRIAL; JURISDICTION. IN ALL RESPECTS,
INCLUDING, WITHOUT LIMITING THE GENERALITY OF THE FOREGOING, MATTERS OF
CONSTRUCTION, VALIDITY AND PERFORMANCE, THIS SECURITY INSTRUMENT AND THE
OBLIGATIONS ARISING HEREUNDER WILL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE
WITH, THE LAWS OF THE STATE OF TEXAS, APPLICABLE TO CONTRACTS MADE AND PERFORMED
IN SUCH STATE (WITHOUT REGARD TO PRINCIPLES OF CONFLICT LAWS) AND ANY APPLICABLE
LAW OF THE UNITED STATES OF AMERICA. TO THE FULLEST EXTENT PERMITTED BY LAW,
TRUSTOR HEREBY UNCONDITIONALLY AND IRREVOCABLY WAIVES ANY CLAIM TO ASSERT THAT
THE LAW OF ANY OTHER JURISDICTION GOVERNS THIS SECURITY INSTRUMENT, AND THIS
SECURITY INSTRUMENT WILL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF TEXAS AND ANY LAWS OF THE UNITED STATES OF AMERICA
APPLICABLE TO NATIONAL BANKS.
TO THE FULLEST EXTENT PERMITTED BY LAW, TRUSTOR Administrative Agent AND EACH
LENDER HEREBY WAIVE ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION RELATING TO THE
LOAN AND/OR THE LOAN DOCUMENTS. TRUSTOR, TO THE FULLEST EXTENT PERMITTED BY LAW,
HEREBY KNOWINGLY, INTENTIONALLY AND VOLUNTARILY, WITH AND UPON THE ADVICE OF
COMPETENT COUNSEL, (A) SUBMITS TO PERSONAL JURISDICTION IN THE STATE OF TEXAS
OVER ANY SUIT, ACTION OR PROCEEDING BY ANY PERSON ARISING FROM OR RELATING TO
THIS SECURITY INSTRUMENT, (B) AGREES THAT ANY SUCH ACTION, SUIT OR PROCEEDING
MAY BE BROUGHT IN ANY STATE OR FEDERAL COURT OF COMPETENT JURISDICTION IN THE
STATE OF TEXAS, (C) SUBMITS TO THE JURISDICTION AND VENUE OF SUCH COURTS AND
WAIVES ANY
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ARGUMENT THAT VENUE IN SUCH FORUMS IS NOT CONVENIENT, AND (D) AGREES THAT IT
WILL NOT BRING ANY ACTION, SUIT OR PROCEEDING IN ANY OTHER FORUM (BUT NOTHING
HEREIN WILL AFFECT THE RIGHT OF ADMINISTRATIVE AGENT AND EACH LENDER TO BRING
ANY ACTION, SUIT OR PROCEEDING IN ANY OTHER FORUM). TRUSTOR FURTHER CONSENTS AND
AGREES TO SERVICE OF ANY SUMMONS, COMPLAINT OR OTHER LEGAL PROCESS IN ANY SUCH
SUIT, ACTION OR PROCEEDING BY REGISTERED OR CERTIFIED U.S. MAIL, POSTAGE
PREPAID, TO TRUSTOR AT THE ADDRESSES FOR NOTICES DESCRIBED IN THIS SECURITY
INSTRUMENT, AND CONSENTS AND AGREES THAT SUCH SERVICE WILL CONSTITUTE IN EVERY
RESPECT VALID AND EFFECTIVE SERVICE (BUT NOTHING HEREIN WILL AFFECT THE VALIDITY
OR EFFECTIVENESS OF PROCESS SERVED IN ANY OTHER MANNER PERMITTED BY LAW).
Section 12.2 PROVISIONS SUBJECT TO APPLICABLE LAW. All rights, powers and
remedies provided in this Security Instrument may be exercised only to the
extent that the exercise thereof does not violate any applicable provisions of
law and are intended to be limited to the extent necessary so that they will not
render this Security Instrument invalid, unenforceable or not entitled to be
recorded, registered or filed under the provisions of any applicable law. If any
term of this Security Instrument or any application thereof will be invalid or
unenforceable, the remainder of this Security Instrument and any other
application of the term will not be affected thereby.
Article 13 - DEFINITIONS
All capitalized terms not defined herein will have the respective meanings set
forth in the Loan Agreement. If a capitalized term is defined herein and the
same capitalized term is defined in the Loan Agreement, then the capitalized
term that is defined herein will be utilized for the purposes of this Security
Instrument, provided that the foregoing does not impact provisions that are
incorporated herein by reference. Unless the context clearly indicates a
contrary intent or unless otherwise specifically provided herein, words used in
this Security Instrument may be used interchangeably in singular or plural form
and the word “Trustor” will mean “each Trustor and any subsequent owner or
owners of the Property or any part thereof or any interest therein, without
limitation or waiver of any restrictions on transfers of any interest therein as
set forth in any Loan Document,” the word “Administrative Agent” will mean
“Administrative Agent and any subsequent administrative agent for the Lenders
with respect to the Loan, the word “Property” will include any portion of the
Property and any interest therein, and the phrases “attorneys’ fees”, “legal
fees” and “counsel fees” will include any and all in-house and outside
attorneys’, paralegals’ and law clerks’ fees and disbursements, including fees
and disbursements at the pre-trial, trial and appellate levels incurred or paid
by Administrative Agent and/or any Lender in protecting its interest in the
Property, the Leases and the Rents and enforcing its rights hereunder.
Article 14 - MISCELLANEOUS PROVISIONS
Section 14.1 NO ORAL CHANGE. This Security Instrument, and any provisions
hereof, may not be modified, amended, waived, extended, changed, discharged or
terminated orally or
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by any act or failure to act on the part of Trustor, Administrative Agent or
Trustee, but only by an agreement in writing signed by the party against whom
enforcement of any modification, amendment, waiver, extension, change, discharge
or termination is sought.
Section 14.2 SUCCESSORS AND ASSIGNS. This Security Instrument will be binding
upon and inure to the benefit of Trustor, Administrative Agent and the Lenders
and their respective successors and assigns forever.
Section 14.3 INAPPLICABLE PROVISIONS. If any term, covenant or condition of the
Loan Agreement, the Notes or this Security Instrument is held to be invalid,
illegal or unenforceable in any respect, the Loan Agreement, the Notes and this
Security Instrument will be construed without such provision.
Section 14.4 HEADINGS, ETC. The headings and captions of various Sections of
this Security Instrument are for convenience of reference only and are not to be
construed as defining or limiting, in any way, the scope or intent of the
provisions hereof.
Section 14.5 SUBROGATION. If any or all of the proceeds of the Loan have been
used to extinguish, extend or renew any indebtedness heretofore existing against
the Property, then, to the extent of the funds so used, Administrative Agent
will be subrogated to all of the rights, claims, liens, titles, and interests
existing against the Property heretofore held by, or in favor of, the holder of
such indebtedness and such former rights, claims, liens, titles, and interests,
if any, are not waived but rather are continued in full force and effect in
favor of Administrative Agent, for the benefit of Administrative Agent and the
Lenders, and are merged with the lien and security interest created herein as
cumulative security for the repayment of the Obligations, the performance and
discharge of Trustor’s obligations hereunder, under the Loan Agreement, the
Notes and the other Loan Documents and the performance and discharge of the
Other Obligations.
Section 14.6 ENTIRE AGREEMENT. The Notes, the Loan Agreement, this Security
Instrument and the other Loan Documents constitute the entire understanding and
agreement among Trustor, the Lenders and Administrative Agent with respect to
the transactions arising in connection with the Obligations and supersede all
prior written or oral understandings and agreements among Trustor, the Lenders
and Administrative Agent with respect thereto. Trustor hereby acknowledges that,
except as incorporated in writing in the Notes, the Loan Agreement, this
Security Instrument and the other Loan Documents, there are not, and were not,
and no Persons are or were authorized by Administrative Agent or the Lenders to
make, any representations, understandings, stipulations, agreements or promises,
oral or written, with respect to the transaction which is the subject of the
Notes, the Loan Agreement, this Security Instrument and the other Loan
Documents.
Section 14.7 LIMITATION ON ADMINISTRATIVE AGENT’S RESPONSIBILITY. No provision
of this Security Instrument will operate to place any obligation or liability
for the control, care, management or repair of the Property upon Trustee,
Administrative Agent or any Lender, nor will it operate to make Trustee,
Administrative Agent or any Lender responsible or liable for any waste committed
on the Property by the tenants or any other Person, or for any dangerous or
defective condition of the Property, or for any negligence in the management,
upkeep, repair or
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control of the Property resulting in loss or injury or death to any tenant,
licensee, employee or stranger. Nothing herein contained will be construed as
constituting Administrative Agent a “mortgagee in possession.”
Section 14.8 JOINT AND SEVERAL. If more than one Person has executed this
Security Instrument as “Trustor,” the representations, covenants, warranties and
obligations of all such Persons hereunder will be joint and several.
Section 14.9 ADMINISTRATIVE AGENT’S DISCRETION. Whenever, pursuant to this
Security Instrument or any of the other Loan Documents, Administrative Agent
exercises any right given to it to approve or disapprove, or any arrangement or
term is to be satisfactory or acceptable to Administrative Agent, or
Administrative Agent exercises any right to grant or withhold consent, or
Administrative Agent exercises its discretion in making any decision, the
decision of Administrative Agent will, except as is otherwise specifically
herein provided, be in the sole and absolute discretion of Administrative Agent
and will be final and conclusive.
Section 14.10 NO MERGER. So long as the Obligations owed to the Lenders secured
hereby remain unpaid and undischarged and unless Administrative Agent otherwise
consents in writing, the fee, leasehold, subleasehold and sub-subleasehold
estates in and to the Property will not merge but will always remain separate
and distinct, notwithstanding the union of estates (without implying Trustor’s
consent to such union) either in Trustor, Administrative Agent, any tenant or
any third party by purchase or otherwise. In the event this Security Instrument
is originally placed on a leasehold estate and Trustor later obtains fee title
to the Property, such fee title will be subject and subordinate to this Security
Instrument.
Section 14.11 JOINT BORROWER PROVISIONS. Section 10.13 of the Loan Agreement is
hereby incorporated in this Security Instrument by reference as if more fully
set forth herein.
Section 14.12 LIMITED RECOURSE PROVISION. Except as to Guarantor as set forth in
the Guaranties, Administrative Agent and Lenders shall have no recourse against,
nor shall there be any personal liability to, the members of any Borrower
(including the members of Trustor), or to any shareholders, members, partners,
beneficial interest holders or any other entity or person in the ownership
(directly or indirectly) of any Borrower, including any such owners of Trustor
(except for Guarantor as provided in the Guaranties) with respect to the
obligations of Borrowers (including Trustor) and Guarantor under the Loan. For
purposes of clarification, in no event shall the above language limit, reduce or
otherwise affect any Borrowers’ liability or obligations under the Loan
Documents, Guarantor’s liability or obligations under the Guaranties or
Administrative Agent’s right to exercise any rights or remedies against any
collateral securing the Loan.
Article 15 - STATE-SPECIFIC PROVISIONS
Section 15.1 PRINCIPLES OF CONSTRUCTION. In the event of any inconsistencies
between the terms and conditions of this Article 15 and the other terms and
conditions of this Security Instrument, the terms and conditions of this Article
15 will control and be binding.
Section 15.2 POWER OF SALE; FORECLOSURE.

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(a)If an Event of Default has occurred hereunder and is continuing, or when the
Debt or any part thereof becomes due, whether by acceleration or otherwise,
Trustee, or his successor or substitute, is authorized and empowered and it will
be his special duty at the request of Administrative Agent to sell the Property
or any part thereof situated in the State of Texas, at the courthouse of any
county (whether or not the counties in which the Property is located are
contiguous, if the Property is located in more than one county) in the State of
Texas in which any part of the Property is situated, at public venue to the
highest bidder for cash between the hours of ten o’clock a.m. and four o’clock
p.m. on the first Tuesday in any month or at such other place, time and date as
provided by the statutes of the State of Texas then in force governing sales of
real estate under powers of sale conferred by deed of trust, after having given
notice of such sale in accordance with such statutes. Any sale made by Trustee
hereunder may be as an entirety or in such parcels as Administrative Agent may
request. The sale will be made in accordance with Texas Property Code § 51.002
or any successor statute. To the extent permitted by applicable law, any sale
may be adjourned by announcement at the time and place appointed for such sale
without further notice except as may be required by law. The sale by Trustee of
less than the whole of the Property will not exhaust the power of sale herein
granted, and Trustee is specifically empowered to make successive sale or sales
under such power until the whole of the Property is sold; and, if the proceeds
of such sale of less than the whole of the Property are less than the aggregate
of the Debt and the expense of executing this trust as provided herein, this
Security Instrument and the lien hereof will remain in full force and effect as
to the unsold portion of the Property just as though no sale had been made;
provided, however, that Trustor will never have any right to require the sale of
less than the whole of the Property but Administrative Agent has the right, at
its sole election, to request Trustee to sell less than the whole of the
Property. Trustee may, after any request or direction by Administrative Agent,
sell not only the real property but also the Collateral (as hereinafter defined)
and other interests which are a part of the Property, or any part thereof, as a
unit and as a part of a single sale, or may sell any part of the Property
separately from the remainder of the Property. It is not be necessary for
Trustee to have taken possession of any part of the Property or to have present
or to exhibit at any sale any of the Collateral. After each sale, Trustee will
make to the purchaser or purchasers at such sale good and sufficient conveyances
in the name of Trustor, conveying the property so sold to the purchaser or
purchasers with general warranty of title of Trustor, subject to the Permitted
Encumbrances (and to such Leases and other matters, if any, as Trustee may elect
upon request of Administrative Agent), and will receive the proceeds of said
sale or sales and apply the same as herein provided. Payment of the purchase
price to Trustee will satisfy the obligation of purchaser at such sale therefor,
and such purchaser will not be responsible for the application thereof. If any
sale hereunder is not completed or is defective in the opinion of Administrative
Agent, such sale will not exhaust the power of sale hereunder and Administrative
Agent will have the right to cause a subsequent sale or sales to be made
hereunder. Any and all statements of fact or other recitals made in any deed or
deeds or other conveyances given by Trustee or any successor or substitute
appointed hereunder as to nonpayment of the Obligations or as to the occurrence
of any default, or as to Administrative Agent’s having declared all of said
indebtedness to be due and payable, or as to the request to sell, or as to
notice of time, place and terms of sale and the properties to be sold having
been duly given, or as to the refusal, failure or inability to act of Trustee or
any substitute or successor trustee, or as to the appointment of any substitute
or successor trustee, or as to any other act or thing having been duly done by
Administrative Agent or by such Trustee, substitute or successor, will be taken
as prima facie
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evidence of the truth of the facts so stated and recited. Trustee or his
successor or substitute may appoint or delegate any one or more persons as agent
to perform any act or acts necessary or incident to any sale held by Trustee,
including the posting of notices and the conduct of sale, but in the name and on
behalf of Trustee, his successor or substitute. If Trustee or his successor or
substitute give notice of sale hereunder, any successor or substitute Trustee
thereafter appointed may complete the sale and the conveyance of the property
pursuant thereto as if such notice had been given by the successor or substitute
Trustee conducting the sale.
(b)Administrative Agent may release, without the joinder of Trustee, a portion
of the Property or one or more of the interests encumbered by this Security
Instrument from the lien of this Security Instrument (without the lien of this
Security Instrument losing its priority) and, following such event, foreclose on
the remaining portion of the Property or the remaining interests affected by
this Security Instrument; provided, however, that all persons now or at any time
hereafter liable therefor, or interested in the Property, will be held to assent
to such extension, variation or release, and their liability and the lien and
all provisions hereof will continue in full force, the right of recourse, if
any, against all such persons being expressly reserved by Administrative Agent,
notwithstanding such partial release.
(c)Any sale or sales made under or by virtue of this section, whether made under
the power of sale herein granted or under or by virtue of judicial proceedings
or of a judgment or decree of foreclosure and sale, will operate to divest all
the estate, right, title, interest, claim and demand whatsoever, whether at law
or in equity, of Trustor in and to the properties and rights so sold, and will
be a perpetual bar both at law and in equity against Trustor and against any and
all persons claiming or who may claim the same, or any part thereof from,
through or under Trustor.
(d)Trustor irrevocably appoints Administrative Agent as Trustor’s true and
lawful attorney in fact, which appointment is coupled with an interest and is
unconditional and irrevocable, in Trustor’s name and stead and on its behalf,
for the purposes of effectuating any sale, assignment, transfer or delivery of
the Property or any part thereof or any interest therein for the enforcement of
this Security Instrument as Administrative Agent may consider necessary or
appropriate as set forth above after the occurrence and during the continuance
of an Event of Default, if Trustor fails to take any such action reasonably
requested by Administrative Agent, with full power of substitution, Trustor
hereby ratifying and confirming all that such attorney will lawfully do by
virtue hereof. If so requested by Administrative Agent or any other purchaser,
Trustor will ratify and confirm any such sale, assignment, transfer or delivery
by executing and delivering to Administrative Agent or such other purchaser, all
proper deeds, bills of sale, assignments, releases and other instruments as may
be designated in any such request.
(e)Administrative Agent has the right to be a purchaser at any sale made under
or by virtue of this Security Instrument, whether made under the power of sale
herein granted or under or by virtue of judicial proceedings or of a judgment or
decree of foreclosure and sale, and on so purchasing will have the right to be
credited upon the amount of the bid made therefor with the amount payable to
Administrative Agent of the net proceeds of such sale.
(f)The provisions hereinabove set forth relating to the remedy of foreclosure of
the lien of this Security Instrument by public sale to be conducted by Trustee,
are not intended as an exclusive method of foreclosure hereunder or to deprive
Administrative Agent of any other legal
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or equitable remedies available to Administrative Agent. Accordingly, it is
specifically agreed that such remedy will be cumulative and will not in any way
be construed as an exclusive remedy, and Administrative Agent will be fully
entitled to a court foreclosure and to avail itself of any and all other legal
or equitable remedies at any time available under the law.
(g)In connection with any foreclosure of the lien hereof (whether by judicial
proceeding or power of sale) or any action to enforce any other remedy of
Administrative Agent under this Security Instrument or any of the other Loan
Documents, Trustor agrees to pay all expenditures and expenses which may be paid
or incurred by or on behalf of Administrative Agent for reasonable attorneys’
fees and costs, a reasonable fee to Trustee (not exceeding five percent (5%) of
the gross proceeds of such sale) appraiser’s fees and costs, outlays for
documentary and expert evidence, stenographers’ charges, publication costs, and
costs (which may be estimated as to items to be expended after entry of the
decree) of procuring all such abstracts of title, title searches and
examinations, title insurance policies, and similar data, and assurances with
respect to title and value as Administrative Agent may deem reasonably necessary
either to prosecute such suit or to evidence to bidders at any sale which may be
had pursuant to such decree the true condition of the title to or the value of
the Property and the right to such fees and expenses will be deemed to have
accrued on commencement of such action and will be enforceable whether or not
such action is prosecuted to judgment. All expenditures and expenses of the
nature in this Section mentioned, and such expenses and fees as may be incurred
in the protection of the Property and the maintenance of the lien of this
Security Instrument, including the reasonable fees of any attorney employed by
Administrative Agent in any litigation or proceeding affecting this Security
Instrument, the Notes, the Loan Agreement and any other Loan Document, or the
Property (including without limitation the occupancy thereof or any construction
work performed thereon), including probate and bankruptcy proceedings, or in
preparations for the commencement or defense of any proceeding or threatened
suit or proceeding whether or not an action is actually commenced, will be due
and payable by Trustor promptly upon twenty (20) days written notice, with
interest thereon at the Default Rate and will be secured by this Security
Instrument.
(h)WITHOUR LIMITING THE LIABILITY OF TRUSTOR AS SET FORTH ABOVE, TRUSTOR MUST
INDEMNIFY THE INDEMNIFIED PARTIES AND HOLD THEM HARMLESS FROM AND AGAINST ALL
CLAIMS, INJURY, DAMAGE, LOSS AND LIABILITY (COLLECTIVELY, “CLAIMS”) OF ANY AND
EVERY KIND (INCLUDING REASONABLE ATTORNEYS’ FEES AND CHARGES) TO ANY PERSONS OR
PROPERTY BY REASON OF (1) THE OPERATION OR MAINTENANCE OF THE PROPERTY; OR (2)
ANY OTHER ACTION OR INACTION BY, OR MATTER WHICH IS THE RESPONSIBILITY OF,
TRUSTOR (BUT EXPRESSLY EXCLUDING ANY CLAIMS WHICH ARE SOLELY THE RESULT OF AN
INDEMNIFIED PARTY’S GROSS NEGLIGENCE OR WILLFUL MISCONDUCT). As used herein, the
term “Indemnified Parties” means, collectively, Administrative Agent and its
affiliates, directors, officers and employees, agents and advisors.
(i)TRUSTOR MUST INDEMNIFY AND HOLD HARMLESS THE INDEMNIFIED PARTIES AGAINST ALL
LIABILITY, COST AND EXPENSE, INCLUDING WITHOUT LIMITATION REASONABLE ATTORNEYS’
CHARGES, DISBURSEMENTS AND REASONABLE FEES, INCURRED IN CONNECTION WITH
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ANY CLAIMS WHICH MAY BE ASSERTED BY ANY BROKERS OR FINDER OR SIMILAR AGENT
ALLEGING TO HAVE DEALT WITH TRUSTOR IN ANY OF THE TRANSACTIONS CONTEMPLATED
HEREBY. WITHOUT LIMITATION, THE INDEMNITIES CONTAINED IN SECTION 15.2(h) AND
THIS SECTION 15.2(i) APPLY TO EACH INDEMNIFIED PARTY WITH RESPECT TO MATTERS
WHICH IN WHOLE OR IN PART ARE CAUSED BY OR ARISE OUT OF, OR ARE CLAIMED TO BE
CAUSED BY OR ARISE OUT OF, THE NEGLIGENCE (WHETHER SOLE, COMPARATIVE OR
CONTRIBUTORY) OR STRICT LIABILITY OF SUCH INDEMNIFIED PERSON. HOWEVER, SUCH
INDEMNITIES WILL NOT APPLY TO A PARTICULAR INDEMNIFIED PARTY TO THE EXTENT THAT
THE SUBJECT OF THE INDEMNIFICATION IS CAUSED BY OR ARISES OUT OF THE GROSS
NEGLIGENCE OR WILLFUL MISCONDUCT OF THAT INDEMNIFIED PERSON.
(j)The proceeds of any foreclosure sale of the Property will be distributed and
applied in the following order of priority: (i) FIRST, to the payment of all
necessary costs and expenses incident to such foreclosure sale, including but
not limited to all attorneys’ fees and legal expenses, advertising costs,
auctioneer’s fees, costs of title rundowns and lien searches, inspection fees,
appraisal costs, fees for professional services, environmental assessment and
remediation fees, all court costs and charges of every character (not exceeding
five percent (5%) of the gross proceeds of such sale), to Trustee acting under
the provisions of this Security Instrument if foreclosed by power of sale as
provided in said paragraph, and to the payment of the other Obligations,
excluding any amounts owed to Administrative Agent or Lenders in respect of any
Swap Obligations, including specifically without limitation the principal,
accrued interest and attorneys’ fees due and unpaid on the Loan and the amounts
due and unpaid and owed to Administrative Agent and Lenders under this Security
Instrument, the order and manner of application to the items in this clause (all
with interest at the rate per annum provided in the Loan Agreement) in
Administrative Agent’s sole discretion; (ii) SECOND, to amounts due and payable
to Administrative Agent or Lenders under any Swap Obligations; and (iii) THIRD,
the remainder, if any, will be paid to Trustor, or to Trustor’s successors or
assigns, or such other persons (including holder or beneficiary of any inferior
lien) as may be entitled thereto by law; provided, however, that if
Administrative Agent is uncertain which person or persons are so entitled,
Administrative Agent may interplead such remainder in any court of competent
jurisdiction, and the amount of any attorneys’ fees, court costs and expenses
incurred in such action will be a part of the Obligations and will be
reimbursable (without limitation) from such remainder.
(k)In the event an interest in any of the Property is foreclosed upon pursuant
to a judicial or nonjudicial foreclosure sale, Trustor agrees as follows:
notwithstanding the provisions of Sections 51.003, 51.004, and 51.005 of the
Texas Property Code (as the same may be amended from time to time), and to the
extent permitted by law, Trustor agrees that Administrative Agent is entitled to
seek a deficiency judgment from Trustor and any/or other party obligated on the
Obligations equal to the difference between the amount owing on the Obligations
and the amount for which the Property was sold pursuant to judicial or
nonjudicial foreclosure sale. Trustor expressly recognizes that this Section
15.2(k) constitutes a waiver of the above-cited provisions of the Texas Property
Code which would otherwise permit Trustor and other Persons against whom
recovery of deficiencies is sought (even absent the initiation of deficiency
proceedings against them) to present competent evidence of the fair market value
of
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the Property as of the date of the foreclosure sale and offset against any
deficiency the amount by which the foreclosure sale price is determined to be
less than such fair market value. Trustor further recognizes and agrees that
this waiver creates an irrebuttable presumption that the foreclosure sale price
is equal to the fair market value of the Property for purposes of calculating
deficiencies owed by Trustor and/or others against whom recovery of a deficiency
is sought.
(l)Alternatively, in the event the waiver provided for in Section 15.2(k) above
is determined by a court of competent jurisdiction to be unenforceable, the
following will be the basis for the finder of fact’s determination of the fair
market value of the Property as of the date of the foreclosure sale in
proceedings governed by Sections 51.003, 51.004 and 51.005 of the Texas Property
Code (as amended from time to time): (i) the Property will be valued in an “as
is” condition as of the date of the foreclosure sale, without any assumption or
expectation that the Property will be repaired or improved in any manner before
a resale of the Property after foreclosure; (ii) the valuation will be based
upon an assumption that the foreclosure purchaser desires a resale of the
Property for cash promptly (but not later than twelve [12] months) following the
foreclosure sale; (iii) all reasonable closing costs customarily borne by the
seller in commercial real estate transactions should be deducted from the gross
fair market value of the Property, including, without limitation, brokerage
commissions, title insurance, a survey of the Property, tax prorations,
attorneys’ fees, and marketing costs; (iv) the gross fair market value of the
Property will be further discounted to account for any estimated holding costs
associated with maintaining the Property pending sale, including, without
limitation, utilities expenses, property management fees, taxes and assessments
(to the extent not accounted for in (iii) above), and other maintenance,
operational and ownership expenses; and (v) any expert opinion testimony given
or considered in connection with a determination of the fair market value of the
Property must be given by persons having at least five (5) years’ experience in
appraising property similar to the Property and who have conducted and prepared
a complete written appraisal of the Property taking into consideration the
factors set forth above.
Section 15.3 SUBSTITUTE TRUSTEE. Trustee may resign by an instrument in writing
addressed to Administrative Agent, or Trustee may be removed at any time with or
without cause by an instrument in writing executed by Administrative Agent. In
case of the death, resignation, removal, or disqualification of Trustee, or if
for any reason Administrative Agent deems it desirable to appoint a substitute
or successor trustee to act instead of the herein named trustee or any
substitute or successor trustee, then Administrative Agent will have the right
and is hereby authorized and empowered to appoint a successor trustee(s), or a
substitute trustee(s), without other formality than appointment and designation
in writing executed by Administrative Agent and the authority hereby conferred
will extend to the appointment of other successor and substitute trustees
successively until the Obligations have been paid in full, or until the Property
is fully and finally sold hereunder. If Administrative Agent is a corporation or
association and such appointment is executed on its behalf by an officer of such
corporation or association, such appointment will be conclusively presumed to be
executed with authority and will be valid and sufficient without proof of any
action by the board of directors or any superior officer of the corporation or
association. Upon the making of any such appointment and designation, all of the
estate and title of Trustee in the Property will vest in the named successor or
substitute Trustee(s) and he will thereupon succeed to, and will hold, possess
and execute, all the rights, powers, privileges, immunities and duties herein
conferred upon Trustee. All references herein to
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“Trustee” are deemed to refer to Trustee (including any successor(s) or
substitute(s) appointed and designated as herein provided) from time to time
acting hereunder.
Section 15.4 NO LIABILITY OF TRUSTEE. Trustee is not be liable for any error of
judgment or act done by Trustee in good faith, or be otherwise responsible or
accountable under any circumstances whatsoever (including Trustee’s negligence),
except for Trustee’s gross negligence or willful misconduct. Trustee has the
right to rely on any instrument, document or signature authorizing or supporting
any action taken or proposed to be taken by him hereunder, believed by him in
good faith to be genuine. All moneys received by Trustee will, until used or
applied as herein provided, be held in trust for the purposes for which they
were received, but need not be segregated in any manner from any other moneys
(except to the extent required by law), and Trustee will be under no liability
for interest on any moneys received by him hereunder. Trustor hereby ratifies
and confirms any and all acts which the herein named Trustee or his successor or
successors, substitute or substitutes, in this trust, will do lawfully by virtue
hereof. Trustor will reimburse Trustee for, and save him harmless against, any
and all liability and expenses which may be incurred by him in the performance
of his duties, subject to the limitations set forth in this Section 15.4. The
foregoing indemnity will not terminate upon discharge of the indebtedness
secured hereby or foreclosure, or release or other termination, of this Security
Instrument.
Section 15.5 WAIVERS. Trustor does hereby waive presentment and demand for
payment, notice of dishonor, notice of intention to accelerate, notice of
acceleration, protest and notice of protest and non-payment and all other
notices of any kind, except where any such notice is expressly provided for
pursuant to the terms of any Loan Documents.
Section 15.6 COLLATERAL PROTECTION INSURANCE NOTICE.

PURSUANT TO TEXAS FINANCE CODE SECTION 307.052, (A) TRUSTOR IS REQUIRED TO: (i)
KEEP THE PROPERTY INSURED AGAINST DAMAGE IN THE AMOUNT THAT ADMINISTRATIVE AGENT
SPECIFIES; (ii) PURCHASE INSURANCE FROM AN INSURER THAT IS AUTHORIZED TO DO
BUSINESS IN THE STATE OF TEXAS OR AN ELIGIBLE SURPLUS LINES INSURER; AND (iii)
NAME ADMINISTRATIVE AGENT AS THE PERSON TO BE PAID UNDER THE POLICY IN THE EVENT
OF A LOSS; (B) TRUSTOR MUST, IF REQUIRED BY ADMINISTRATIVE AGENT, DELIVER TO
ADMINISTRATIVE AGENT A COPY OF THE POLICY AND PROOF OF THE PAYMENT OF PREMIUMS;
AND (C) IF TRUSTOR FAILS TO MEET ANY REQUIREMENT LISTED IN PARAGRAPH (A) OR (B),
ADMINISTRATIVE AGENT MAY OBTAIN COLLATERAL PROTECTION INSURANCE ON BEHALF OF
TRUSTOR AT TRUSTOR’S EXPENSE.

THE WRITTEN LOAN DOCUMENTS REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES AND
MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL
AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE
PARTIES.
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Section 15.7 ASSESSMENTS AGAINST PROPERTY. Trustor will not, without the prior
written approval of Administrative Agent, which may be withheld for any reason,
consent to or allow the creation of any so-called special districts, special
improvement districts, benefit assessment districts or similar districts, or any
other body or entity of any type, or allow to occur any other event, that would
or might result in the imposition of any additional taxes, assessments or other
monetary obligations or burdens on the Property, and this provision serves as
RECORD NOTICE to any such district or districts or any governmental entity under
whose authority such district or districts exist or are being formed that,
should Trustor or any other person or entity include all or any portion of the
Property in such district or districts, whether formed or in the process of
formation, without first obtaining Administrative Agent’s express written
consent, the rights of Administrative Agent in the Property pursuant to this
Security Instrument or following any foreclosure of this Security Instrument,
and the rights of any person or entity to whom Administrative Agent might
transfer the Property following a foreclosure of this Security Instrument, will
be senior and superior to any taxes, charges, fees, assessments or other
impositions of any kind or nature whatsoever, or liens (whether statutory,
contractual or otherwise) levied or imposed, or to be levied or imposed, upon
the Property or any portion thereof as a result of inclusion of the Property in
such district or districts.
[NO FURTHER TEXT ON THIS PAGE]

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IN WITNESS WHEREOF, THIS SECURITY INSTRUMENT has been executed by Trustor as of
the day and year first above written.

KBSIII 515 CONGRESS, LLC,
a Delaware limited liability companyBy:KBSIII REIT ACQUISITION XXVII, LLC,
a Delaware limited liability company,
its sole memberBy:KBS REIT PROPERTIES III, LLC,
a Delaware limited liability company,
its sole memberBy:KBS LIMITED PARTNERSHIP III,
a Delaware limited partnership,
its sole memberBy:KBS REAL ESTATE INVESTMENT TRUST III, INC.,
a Maryland corporation,
its general partnerBy:
/s/ Charles J. Schreiber, Jr.
Charles J. Schreiber, Jr.
Chief Executive Officer

Signature Page to Junior Deed of Trust

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ACKNOWLEDGMENTA notary public or other officer completing this certificate
verifies on ly the idenity of the
individual who signed the document to which this certificate is attached, and
not the
truthfulness, accuracy, or validity of that document.
State of California
County of Orange )
On January 9, 2020 before me, K. Godin, Notary Public
                                                              (insert name and
title of the officer)
personally appeard Charles J. Schreiber, Jr.
who proved to me on the baiss of satisfactory evidence to be the person(s) whose
name(s) is/are
subscribed to the within instrument and acknowledged to me that he/she/they
executed the same
in his/her/their authorized capacity(ies), and that by his/her/their
signature(s) on the instrument
the person(s), or the entity upon behalf of which the person(s) acted, executed
the instrument.
I certify under PENALTY OF PERJURY under the laws of the State of California
that the
foregoing paragraph is true and correct.WITNESS my hand and official seal.
Signature /s/K. Godin (Seal)

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EXHIBIT A
LEGAL DESCRIPTION
That certain real property located in Travis County, Texas, more particularly
described as follows:
TRACT 1 (Bank of America Land):
All of Lots 4, 5 and 6, Block 56, of the Original City of Austin, Travis County,
Texas, according to the Plat on file at the General Land Office of the State of
Texas.
TRACT 2 (515 Aliev Tract):
The westerly one-half of the alley adjoining Lots 4, 5 and 6, Block 56, of the
Original City of Austin, Travis County, Texas, according to the Plat on file at
the General Land Office of the State of Texas as vacated by the City of Austin
by Ordinance No. 20081211-013, a certified copy of which is recorded under
Document No. 2008201289, of the Official Public Records of Travis County, Texas.
TRACT 3 (Access Easement Estate):
Easement Estate created by that certain Access Easement Agreement dated July 15,
2015, recorded under Document No. 2015113052, of the Official Public Records of
Travis County, Texas, upon, over and across:
The westerly one-half of the alley adjacent to Lots 1, 2 and 3, Block 56, of the
Original City of Austin, Travis County, Texas, according to the Plat on file at
the General Land Office of the State of Texas as vacated by the City of Austin
by Ordinance No. 20081211-013, a certified copy of which is recorded under
Document No. 2008201289, of the Official Public Records of Travis County, Texas;
and
The easterly one-half of the alley adjacent to Lots 11 and 12, Block 56, of the
Original City of Austin, Travis County, Texas, according to the Plat on file at
the General Land Office of the State of Texas as vacated by the City of Austin
by Ordinance No. 20081211-013, a certified copy of which is recorded under
Document No. 2008201289, of the Official Public Records of Travis County, Texas;
and
The easterly one-half of the alley adjacent to the west 57 feet of Lots 7 and 8
and all of Lots 9 and 10, Block 56, of the Original City of Austin, Travis
County, Texas, according to the Plat on file at the General Land Office of the
State of Texas as vacated by the City of Austin by Ordinance No. 20081211-013, a
certified copy of which is recorded under Document No. 2008201289, of the
Official Public Records of Travis County, Texas.