Exhibit 10.7
Prepared By/Return To:
Jones Day
3161 Michelson Drive, Suite 800
Irvine, CA 92612
Attn: Cori Capizzi

FEE AND LEASEHOLD DEED OF TRUST, ASSIGNMENT OF LEASES AND RENTS,
SECURITY AGREEMENT AND
FIXTURE FILING
(Fountainhead)

by

KBSII FOUNTAINHEAD, LLC,
a Delaware limited liability company,
as Grantor or Trustor,

to

BANK OF AMERICA, N.A.,
a national banking association,
as Trustee,

for the benefit of

BANK OF AMERICA, N.A.,
a national banking association,
as Beneficiary, in its capacity as administrative agent for the Lenders
identified below

This document serves as a Fixture Filing under the Arizona Uniform Commercial
Code.
    
Grantor’s Organizational Identification Number is: DE 5029811
Property Commonly Known As: 1601 & 1625 Fountainhead Parkway
City/County: Tempe, Maricopa County
State: Arizona

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20180237443

FEE AND LEASEHOLD DEED OF TRUST, ASSIGNMENT OF LEASES AND RENTS,
SECURITY AGREEMENT AND FIXTURE FILING
(Fountainhead)
This Fee and Leasehold Deed of Trust, Assignment of Leases and Rents, Security
Agreement and Fixture Filing is made as of the 29th day of March, 2018, by KBSII
FOUNTAINHEAD, LLC, a Delaware limited liability company (herein referred to as
“Grantor”), whose address is c/o KBS Capital Advisors LLC, 800 Newport Center
Drive, Suite 700, Newport Beach, California 92660, Attention: Tim Helgeson and
Todd Smith, to Bank of America, N.A., a national banking association
(“Trustee”), whose address is P.O. Box 2240, Brea, California 92822, for the
benefit of Bank of America, N.A., a national banking association, whose address
is 520 Newport Center Drive, Suite 1100, Newport Beach, California 92660, as
beneficiary, in its capacity as administrative agent (“Administrative Agent”)
for the lenders (each, a “Lender” and collectively, “Lenders”) from time to time
party to that certain Loan Agreement of even date herewith, as amended (the
“Loan Agreement”) among Borrower (as defined below), Lenders and Administrative
Agent.
Recitals
Grantor has requested that Lenders make the Loan (as hereinafter defined) to
Borrower (as hereinafter defined). As a condition precedent to making the Loan,
Lenders have required that Grantor execute and deliver this Deed of Trust,
Assignment of Leases and Rents, Security Agreement and Fixture Filing to Trustee
and Administrative Agent.
Grants and Agreements
Now, therefore, in order to induce Lenders to make the Loan to Borrower, Grantor
agrees as follows:
Article I
Definitions.
As used in this Deed of Trust, the terms defined in the Preamble hereto shall
have the respective meanings specified therein, and the following additional
terms shall have the meanings specified:
“Accessories” means all fixtures, equipment, systems, machinery, furniture,
furnishings, appliances, inventory, goods, building and construction materials,
supplies and other articles of personal property, of every kind and character,
tangible and intangible (including software embedded therein), now owned or
hereafter acquired by Grantor, which are now or hereafter attached to or
situated in, on or about the Land or Improvements, or used in or necessary to
the complete and proper planning, development, use, occupancy or operation
thereof, or acquired (whether delivered to the Land or stored elsewhere) for use
or installation in or on the Land or Improvements, and all Additions to the
foregoing, all of which are hereby declared to be permanent accessions to the
Land.
“Accounts” means all accounts of Grantor, within the meaning of the Uniform
Commercial Code of the State, derived from or arising out of the use, occupancy
or enjoyment of the Property or for services rendered therein or thereon.

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“Additions” means any and all alterations, additions, accessions and
improvements to property, substitutions therefor, and renewals and replacements
thereof.
“Administrative Agent” means Bank of America, N.A., a national banking
association, in its capacity as administrative agent for Lenders or any
successor administrative agent.
“ARS” means the Arizona Revised Statutes, as amended from time to time.
“Bankruptcy Code” shall mean Title 11 of the United States Code entitled
“Bankruptcy”, as now or hereafter in effect or any successor statute thereto.

“Beneficiary” means Administrative Agent and its successors and assigns, in its
capacity as administrative agent for the Lenders.
“Borrower” means individually and collectively, Grantor, KBSII 100-200 Campus
Drive, LLC, a Delaware limited liability company, KBSII 300-600 Campus Drive,
LLC, a Delaware limited liability company, KBSII Willow Oaks, LLC, a Delaware
limited liability company, KBSII Pierre LaClede Center, LLC, a Delaware limited
liability company, KBSII Emerald View, LLC, a Delaware limited liability
company, KBSII 445 South Figueroa, LLC, a Delaware limited liability company,
and KBSII Granite Tower, LLC, a Delaware limited liability company.
“Claim” means any liability, suit, action, claim, demand, loss, expense,
penalty, fine, judgment or other cost of any kind or nature whatsoever,
including fees, costs and expenses of attorneys, consultants, contractors and
experts.
“Condemnation” means any taking of title to, use of, or any other interest in
the Property under the exercise of the power of condemnation or eminent domain,
whether temporarily or permanently, by any Governmental Authority or by any
other Person acting under or for the benefit of a Governmental Authority.
“Condemnation Awards” means any and all judgments, awards of damages (including
severance and consequential damages), payments, proceeds, settlements, amounts
paid for a taking in lieu of Condemnation, or other compensation heretofore or
hereafter made, including interest thereon, and the right to receive the same,
as a result of, or in connection with, any Condemnation or threatened
Condemnation.
“Contract of Sale” means any contract for the sale of all or any part of the
Property or any interest therein, hereafter executed by Grantor.
“Debtor Relief Law(s)” means any federal, state or local law, domestic or
foreign, as now or hereafter in effect relating to bankruptcy, insolvency,
liquidation, receivership, reorganization, arrangement, composition, extension
or adjustment of debts, or any similar law affecting the rights of creditors ,
including Title 11 of the United States Code, as in effect from time to time.
“Deed of Trust” means this Fee and Leasehold Deed of Trust, Assignment of Leases
and Rents, Security Agreement and Fixture Filing, as the same may from time to
time be extended, amended, restated, supplemented or otherwise modified.

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“Default” means an event or circumstance which, with the giving of Notice or
lapse of time, or both, would constitute an Event of Default under the
provisions of this Deed of Trust.
“Design and Construction Documents” means, collectively, (a) all contracts for
services to be rendered, work to be performed or materials to be supplied in the
development of the Land or the construction or repair of Improvements, including
all agreements with architects, engineers or contractors for such services, work
or materials; (b) all plans, drawings and specifications for the development of
the Land or the construction or repair of Improvements; (c) all permits,
licenses, variances and other rights or approvals issued by or obtained from any
Governmental Authority or other Person in connection with the development of the
Land or the construction or repair of Improvements; and (d) all amendments of or
supplements to any of the foregoing.
“Encumbrance” means any Lien, easement, right of way, roadway (public or
private), condominium regime, cooperative housing regime, condition, covenant or
restriction (including any covenants, conditions or restrictions in connection
with any condominium development or cooperative housing development), Lease or
other matter of any nature that would affect title to the Property.
“Environmental Agreement” means the Environmental Indemnification and Release
Agreement of even date herewith executed by Grantor in favor of Administrative
Agent pertaining to the Property, as the same may from time to time be extended,
amended, restated or otherwise modified. The Environmental Agreement is one of
the Loan Documents, but this Deed of Trust does not secure the obligations of
Grantor under the Environmental Agreement.
“Event of Default” means an event or circumstance specified in ‎Article VI and
the continuance of such event or circumstance beyond the applicable grace and/or
cure periods therefor, if any, set forth in Article VI.
“Expenses” means all fees, charges, costs and expenses of any nature whatsoever
incurred at any time and from time to time (whether before or after an Event of
Default) by Beneficiary or Trustee in making, funding, administering or
modifying the Loan, in negotiating or entering into any “workout” of the Loan,
or in exercising or enforcing any rights, powers and remedies provided in this
Deed of Trust or any of the other Loan Documents, including reasonable
attorneys’ fees actually incurred, court costs, receiver’s fees, management fees
and costs incurred in the repair, maintenance and operation of, or taking
possession of, or selling, the Property.
“Governmental Authority” means any governmental or quasi-governmental entity,
including any court, department, commission, board, bureau, agency,
administration, service, district or other instrumentality of any governmental
entity.
“Guarantor” means KBS REIT Properties II, LLC, a Delaware limited liability
company, and its successors and assigns.
“Guaranty” means the Guaranty Agreement of even date herewith executed by
Guarantor for the benefit of Administrative Agent, as the same may from time to
time be extended, amended, restated, supplemented or otherwise modified.

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“Improvements” means all buildings, structures and other improvements now or
hereafter existing, erected or placed on the Land, together with any on-site
improvements and off-site improvements in any way used or to be used in
connection with the use, enjoyment, occupancy or operation of the Land.
“Insolvency Proceeding” shall mean: (a) any voluntary or involuntary case or
proceeding under the Bankruptcy Code with respect to Grantor or Ground Lessor,
as applicable; (b) any other voluntary or involuntary insolvency, reorganization
or bankruptcy case or proceeding, or any receivership, liquidation,
reorganization or other similar case or proceeding with respect to Grantor or
Ground Lessor, as applicable; (c) any liquidation, dissolution, reorganization
or winding up of Grantor or Ground Lessor, as applicable, whether voluntary or
involuntary and whether or not involving insolvency or bankruptcy; or (d) any
assignment for the benefit of creditors or any other marshalling of assets and
liabilities of Grantor or Ground Lessor, as applicable.
“Insurance Proceeds” means the insurance claims under and the proceeds of any
and all policies of insurance covering the Property or any part thereof,
including all returned and unearned premiums with respect to any insurance
relating to such Property, in each case whether now or hereafter existing or
arising.
“Land” means the real property described in Exhibit A attached hereto and made a
part hereof.
“Law” or “Laws” mean all federal, state and local laws, statutes, rules,
ordinances, regulations, codes, licenses, authorizations, decisions,
injunctions, interpretations, orders or decrees of any court or other
Governmental Authority having jurisdiction as may be in effect from time to
time.
“Lease Damage Claims” shall mean all of Grantor’s claims and rights to payment
of damages, offsets, and other rights and remedies that may arise from: (a)
Ground Lessor’s failure to perform under the Ground Lease; (b) rejection or
disaffirmance of the Ground Lease under any Debtor Relief Law or in connection
with any Insolvency Proceeding; (c) violation or breach by Ground Lessor under
the Ground Lease; or (d) Ground Lessor’s sale of Property pursuant to Section
363 of the Bankruptcy Code or similar provisions of any other Debtor Relief Law,
and all damages and other sums payable with respect to or pursuant to any of the
foregoing.
“Leases” means all leases/subleases, license/sublicense agreements and other
occupancy/sub-occupancy or use/sub-use agreements (whether oral or written), now
or hereafter existing, which cover or relate to the Property or any part
thereof, together with all options therefor, amendments thereto and renewals,
modifications and guaranties thereof, including any cash or security deposited
under the Leases to secure performance by the tenants of their obligations under
the Leases, whether such cash or security is to be held until the expiration of
the terms of the Leases or applied to one or more of the installments of rent
coming due thereunder.
“Lender” means each Lender from time to time party to the Loan Agreement.
“Lessee Bankruptcy Rights” shall mean all of Grantor’s rights, remedies, powers,
and privileges arising at any time under, in, or in connection with or related
to any Insolvency

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Proceeding affecting Ground Lessor, including Grantor’s right: (a) to object to
Ground Lessor’s sale of the Property under any Debtor Relief Law, including
Bankruptcy Code Section 363 and (b) to make the 365(h) Election, and any other
comparable right under any other Debtor Relief Laws and all claims, suits,
actions, proceedings, rights, remedies, and privileges related thereto or
arising therefrom, including Grantor’s right to claim any offset against rent
and other charges and the right to file and prosecute any proofs of claim,
complaints, motions, applications, objections, notices, and any other document
in any case relating to Ground Lessor under any Debtor Relief Laws, any and all
adequate protection or other value received by or to which Grantor is entitled
to in connection with any sale of the Property in connection with any Insolvency
Proceeding.
“Letter of Credit” means any letter of credit issued by Beneficiary for the
account of Grantor or its nominee in connection with the development of the Land
or the construction of the Improvements, together with any and all extensions,
renewals or modifications thereof, substitutions therefor or replacements
thereof.
“Lien” means any mortgage, deed of trust, pledge, security interest, assignment,
judgment, lien or charge of any kind, including any conditional sale or other
title retention agreement, any lease in the nature thereof, and the filing of,
or agreement to give, any financing statement under the Uniform Commercial Code
of any jurisdiction.
“Loan” means the loan from Lenders to Borrower, the repayment obligations in
connection with which are evidenced by the Notes.
“Loan Agreement” means the Loan Agreement of even date herewith among Borrower,
Administrative Agent and Lenders which sets forth, among other things, the terms
and conditions upon which the proceeds of the Loan will be disbursed, as the
same may from time to time be extended, amended, restated, supplemented or
otherwise modified.
“Loan Documents” means this Deed of Trust, the Notes, the Guaranty, the
Environmental Agreement, the Loan Agreement, any Swap Contract, any application
or reimbursement agreement executed in connection with any Letter of Credit, and
any and all other documents which Borrower, Guarantor or any other party or
parties have executed and delivered, or may hereafter execute and deliver, to
evidence, secure or guarantee the Obligations, or any part thereof, as the same
may from time to time be extended, amended, restated, supplemented or otherwise
modified.
“Note” or “Notes” mean (i) one or more promissory notes made by Borrower and
payable to the order of each of the Lenders in the aggregate face principal
amount of Five Hundred Million and No/100 Dollars ($500,000,000.00), and each
bearing interest as provided in the Loan Agreement, and (ii) all other
promissory notes given in substitution thereof or in modification, supplement,
increase, renewal or extension thereof, in whole or in part, whether one or
more, as any or all of such promissory notes may from time to time be renewed,
extended, supplemented, increased or modified. Additionally, the Notes provide
that the principal balance evidenced thereby shall bear interest at a floating
rate of interest subject to change from time to time.
“Notice” means a notice, request, consent, demand or other communication given
in accordance with the provisions of Section 9.8 of this Deed of Trust.

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“Obligations” means all present and future debts, obligations and liabilities of
Borrower to Beneficiary and/or Lenders and/or Trustee arising pursuant to,
and/or on account of, the provisions of this Deed of Trust, the Notes or any of
the other Loan Documents, including the obligations: (a) to pay all principal,
interest, late charges, prepayment premiums (if any) and other amounts due at
any time under the Notes; (b) to pay all Expenses, indemnification payments,
fees and other amounts due at any time under this Deed of Trust or any of the
other Loan Documents, together with interest thereon as herein or therein
provided; (c) to pay and perform all obligations of Borrower under any Swap
Contract; (d) to perform, observe and comply with all of the other terms,
covenants and conditions, expressed or implied, which Grantor is required to
perform, observe or comply with pursuant to this Deed of Trust or any of the
other Loan Documents; and (e) to pay and perform all future advances and other
obligations that Grantor or any successor in ownership of all or part of the
Property may agree to pay and/or perform (whether as principal, surety or
guarantor) for the benefit of Beneficiary, when a writing evidences the parties’
agreement that the advance or obligation be secured by this Deed of Trust;
excluding, however, the debts, obligations and liabilities of Grantor under the
Environmental Agreement. This Deed of Trust does not secure the Environmental
Agreement, the Guaranty or any other Loan Document that is expressly stated to
be unsecured.
“Permitted Encumbrances” means (a) any matters set forth in any policy of title
insurance issued to Beneficiary and insuring Beneficiary’s interest in the
Property which are acceptable to Beneficiary as of the date hereof, (b) the
Liens and interests of this Deed of Trust, and (c) any other Encumbrance
disclosed to Beneficiary in any commitment for title insurance delivered to
Beneficiary or otherwise disclosed in writing to Beneficiary that Beneficiary
shall expressly approve in writing in its sole and absolute discretion.
“Person” means an individual, a corporation, a partnership, a joint venture, a
limited liability company, a trust, an unincorporated association, any
Governmental Authority or any other entity.
“Personalty” means all personal property of any kind or nature whatsoever,
whether tangible or intangible and whether now owned or hereafter acquired, in
which Grantor now has or hereafter acquires an interest and which is used in the
construction of, or is placed upon, or is derived from or used in connection
with the maintenance, use, occupancy or enjoyment of the Property, including
(a) the Accessories; (b) the Accounts; (c) all franchise, license, management or
other agreements with respect to the operation of the Real Property or the
business conducted therein (provided all of such agreements shall be subordinate
to this Deed of Trust, and neither Beneficiary nor Lenders shall have any
responsibility for the performance of Grantor’s obligations thereunder) and all
general intangibles (including payment intangibles, trademarks, trade names,
goodwill, software and symbols) related to the Real Property or the operation
thereof; (d) all sewer and water taps, appurtenant water stock or water rights,
any Type 2 nonirregation grandfathered water rights, contractual rights to
water, allocations and agreements for utilities, bonds, letters of credit,
permits, certificates, licenses, guaranties, warranties, causes of action,
judgments, Claims, profits, security deposits, utility deposits, and all rebates
or refunds of fees, Taxes, assessments, charges or deposits paid to any
Governmental Authority related to the Real Property or the operation thereof;
(e) all of Grantor’s rights and interests under all Swap Contracts, including
all rights to the payment of money from Beneficiary under any Swap Contract and
all accounts, deposit accounts and general intangibles, including payment
intangibles, described in any Swap Contract; (f) all insurance policies held by
Grantor with

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respect to the Property or Grantor’s operation thereof; and (g) all money,
instruments and documents (whether tangible or electronic) arising from or by
virtue of any transactions related to the Property, and all deposits and deposit
accounts of Grantor with Beneficiary related to the Property, including any such
deposit account from which Grantor may from time to time authorize Beneficiary
to debit and/or credit payments due with respect to the Loan; together with all
Additions to and Proceeds of all of the foregoing.
“Proceeds,” when used with respect to any of the Property, means all proceeds of
such Property, including all Insurance Proceeds and all other proceeds within
the meaning of that term as defined in the Uniform Commercial Code of the State.
“Property” means the Real Property and the Personalty and all other rights,
interests and benefits of every kind and character which Grantor now has or
hereafter acquires in, to or for the benefit of the Real Property and/or the
Personalty and all other property and rights used or useful in connection
therewith, including all Leases, all Rents, all Condemnation Awards, all
Proceeds, and all of Grantor’s right, title and interest in and to all Design
and Construction Documents, all Contracts of Sale and all Refinancing
Commitments.
“Property Assessments” means all Taxes, payments in lieu of taxes, water rents,
sewer rents, assessments, condominium and owner’s association assessments and
charges, maintenance charges and other governmental or municipal or public or
private dues, charges and levies and any Liens (including federal tax liens)
which are or may be levied, imposed or assessed upon the Property or any part
thereof, or upon any Leases or any Rents, whether levied directly or indirectly
or as excise taxes, as income taxes, or otherwise.
“Real Property” means (1) the leasehold estate (collectively, the “Leasehold
Estate”) in and to the Land and Improvements, granted under that certain Land
and Improvements Lease dated January 11, 2018, by and between Grantor, as
Tenant, and the City of Tempe, a municipal corporation, as Landlord
(hereinafter, in such capacity, together with its successors and assigns,
including, in connection with any Insolvency Proceeding any trustee,
debtor-in-possession, or other estate representative acting on its behalf and
any subsequent assignee or successor thereof, “Ground Lessor”), as to which a
Memorandum of Land and Improvements dated as of January 11, 2018, has been
recorded with the Official Records of Maricopa County, Arizona on January 17,
2018 as Document No. 20180041544 (together with any and all modifications and
amendments thereto, singly and collectively, the “Ground Lease”), including,
without limitation, (i) all Lessee Bankruptcy Rights and (ii) all Lease Damage
Claims; this Deed of Trust constituting a present, irrevocable, and
unconditional assignment of the Lease Damage Claims which shall continue in
effect until the Obligations has been satisfied in full, and (iii) all other or
additional title, estates, interests or rights which are now owned or may
hereafter be acquired by Grantor in or to the property demised under the Ground
Lease creating the leasehold estate or otherwise relating to Grantor’s interest
in the Land and other Property, together with (a) all estates, title interests,
title reversion rights, remainders, increases, issues, profits, rights-of-way or
uses, additions, accretions, servitudes, strips, gaps, gores, liberties,
privileges, water rights, water courses, alleys, passages, ways, vaults,
licenses, tenements, franchises, hereditaments, appurtenances, easements, rights
of way, rights of ingress or egress, parking rights, timber, crops, mineral
interests and other rights, now or hereafter owned by Grantor and belonging or
appertaining to the Leasehold Estate; (b) all Claims whatsoever of Grantor with
respect to the Leasehold Estate, either in law or in equity, in possession or in
expectancy; (c) all estate, right,

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title and interest of Grantor in and to all streets, roads and public places,
opened or proposed, now or hereafter adjoining or appertaining to the Leasehold
Estate; (d) all Grantor’s options to purchase the Land or Improvements, or any
portion thereof or interest therein, and any greater estate in the Land or
Improvements, and (e) all Additions to and Proceeds of the foregoing and (2) in
the event Grantor acquires the fee title to the Land, the Land and Improvements
(collectively, the “Fee Estate”), together with (a) all estates, title
interests, title reversion rights, remainders, increases, issues, profits,
rights-of-way or uses, additions, accretions, servitudes, strips, gaps, gores,
liberties, privileges, water rights, water courses, alleys, passages, ways,
vaults, licenses, tenements, franchises, hereditaments, appurtenances,
easements, rights of way, rights of ingress or egress, parking rights, timber,
crops, mineral interests and other rights, now or hereafter owned by Grantor and
belonging or appertaining to the Land or Improvements; (b) all Claims whatsoever
of Grantor with respect to the Land or Improvements, either in law or in equity,
in possession or in expectancy; (c) all estate, right, title and interest of
Grantor in and to all streets, roads and public places, opened or proposed, now
or hereafter adjoining or appertaining to the Land or Improvements; (d) all
Grantor’s options to purchase the Land or Improvements, or any portion thereof
or interest therein, and any greater estate in the Land or Improvements, and (e)
all Additions to and Proceeds of the foregoing. Notwithstanding the foregoing or
anything else to the contrary set forth herein or in any other Loan Documents,
and unless the context requires otherwise (due to Grantor’s possible future
acquisition of the Fee Estate, if such acquisition occurs or otherwise), the
term “Real Property” shall (i) only mean and refer to Grantor’s Leasehold Estate
and any interests and rights that Grantor possesses in connection with such
Leasehold Estate, and shall take into account that, as of the date hereof,
Grantor only owns the Leasehold Estate and does not own fee title to the Land,
and (ii) expressly excludes the Fee Estate and any interests and rights
incidental to fee ownership of the Land, unless Grantor hereafter acquires such
fee title to the Land.
“Refinancing Commitment” means any commitment from or other agreement with any
Person providing for the financing of the Property, some or all of the proceeds
of which are intended to be used for the repayment of all or a portion of the
Loan.
“Rents” means all of the rents, royalties, issues, profits, revenues, earnings,
income and other benefits of the Property, or arising from the use or enjoyment
of the Property, including all such amounts paid under or arising from any of
the Leases and all fees, charges, accounts or other payments for the use or
occupancy of rooms or other public facilities within the Real Property.
“State” means the state in which the Land is located.
“Swap Contract” means any agreement, whether or not in writing, relating to any
Swap Transaction, including, unless the context otherwise clearly requires, any
form of master agreement (the “Master Agreement”) published by the International
Swaps and Derivatives Association, Inc., or any other master agreement, entered
into on or any time after the date hereof, between Swap Counterparty and
Borrower, together with any related schedule and confirmation, as amended,
supplemented, superseded or replaced from time to time.
“Swap Counterparty” means a Lender or an Affiliate of a Lender, in its capacity
as counterparty under any Swap Contract.

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“Swap Transaction” means any transaction that is a rate swap, basis swap,
forward rate transaction, commodity swap, commodity option, equity or equity
index swap or option, bond option, note or bill option, interest rate option,
forward foreign exchange transaction, cap transaction, collar transaction, floor
transaction, currency swap transaction, cross-currency rate swap transaction,
swap option, currency option, credit swap or default transaction, T-lock, or any
other similar transaction (including any option to enter into the foregoing) or
any combination of the foregoing, entered into prior to, on or anytime after the
date hereof between Swap Counterparty and Borrower so long as a writing, such as
a Swap Contract, evidences the parties’ intent that such obligations shall be
secured by this Deed of Trust in connection with the Loan.
“Taxes” means all taxes and assessments, whether general or special, ordinary or
extraordinary, or foreseen or unforeseen, which at any time may be assessed,
levied, confirmed or imposed by any Governmental Authority or any community
facilities or other private district on Grantor or on any of its properties or
assets or any part thereof or in respect of any of its franchises, businesses,
income or profits.
“Transfer” means any direct or indirect sale, assignment, conveyance or
transfer, including any Contract of Sale and any other contract or agreement to
sell, assign, convey or transfer, whether made voluntarily or by operation of
Law or otherwise, and whether made with or without consideration.
“Trustee” means the Trustee identified in the introductory paragraph of this
Deed of Trust or its successor in trust who may be acting under and pursuant to
this Deed of Trust from time to time.
“365(h) Election” shall mean the right of Grantor to treat the Ground Lease as
terminated pursuant to Section 365(h)(1)(A)(i) of the Bankruptcy Code or retain
Grantor’s rights under the Ground Lease pursuant to Section 365(h)(1)(A)(ii) of
the Bankruptcy Code and all such other rights, powers, and privileges granted to
a lessee pursuant to Section 365(h) of the Bankruptcy Code, together with all
such other similar rights, powers, and privileges granted to a lessee under any
other Debtor Relief Law.
Article II
Granting Clauses; Condition of Grant.
Section 2.1    Conveyances and Security Interests.
In order to secure the prompt payment and performance of the Obligations,
Grantor (a) hereby irrevocably and unconditionally grants, conveys, transfers
and assigns the Real Property unto Trustee, in trust, for the benefit of
Beneficiary, for the ratable benefit of Lenders, with power of sale and right of
entry and possession, all estate, right, title and interest that Grantor now has
or may later acquire in and to the Real Property; (b) grants to Beneficiary, for
the ratable benefit of Lenders, a security interest in the Personalty; (c)
assigns to Beneficiary, and grants to Beneficiary, for the ratable benefit of
Lenders, a security interest in, all Condemnation Awards and all Insurance
Proceeds; and (d) assigns to Beneficiary, and grants to Beneficiary, for the
ratable benefit of Lenders, a security interest in, all of Grantor’s right,
title and interest in, but not any of Grantor’s obligations or liabilities
under, all Design and Construction Documents, all Contracts of Sale and all
Refinancing Commitments. All Persons who may have or acquire an interest in all
or any part of the Property will be deemed to have notice of, and will be bound
by,

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the terms of the Obligations and each other agreement or instrument made or
entered into in connection with each of the Obligations. Such terms include any
provisions in the Note, the Loan Agreement or any Swap Contract which provide
that the interest rate on one or more of the Obligations may vary from time to
time. The definition of “Obligations” includes future advances, including,
without limitation, a revolving line of credit, which obligates Lenders to make
advances to Borrower so long as Borrower complies with all the terms of the Loan
Agreement.
Section 2.2    Absolute Assignment of Leases and Rents.
In consideration of the making of the Loan by Lenders to Borrower and other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, Grantor assigns and conveys the Leases and Rents to Beneficiary,
for the ratable benefit of Lenders. This assignment is, and is intended to be,
an unconditional, absolute and present assignment from Grantor to Beneficiary of
all of Grantor’s right, title and interest in and to the Leases and the Rents
and not an assignment in the nature of a pledge of the Leases and Rents or the
mere grant of a security interest therein. So long as no Event of Default shall
exist, however, Grantor shall have a license (which license shall terminate
automatically and without notice upon the occurrence of an Event of Default) to
collect, but not prior to accrual, all Rents. Grantor agrees to collect and hold
all Rents in trust for Beneficiary and to use the Rents for the payment of the
cost of operating and maintaining the Property and for the payment of the other
Obligations before using the Rents for any other purpose.
Section 2.3    Security Agreement, Fixture Filing and Financing Statement.
This Deed of Trust creates a security interest in the Personalty, and, to the
extent the Personalty is not real property, this Deed of Trust constitutes a
security agreement from Grantor, as debtor, to Beneficiary, for the ratable
benefit of Lenders, as secured party, under the Uniform Commercial Code of the
State. In addition to all of its other rights under this Deed of Trust and
otherwise, Beneficiary shall have all of the rights of a secured party under the
Uniform Commercial Code of the State, as in effect from time to time, or under
the Uniform Commercial Code in force from time to time in any other state to the
extent the same is applicable Law. Trustor is the record owner of the Leasehold
Estate. The types or items of collateral covered hereby includes goods that are
or are to become fixtures with respect to the Leasehold Estate. This Deed of
Trust shall be effective as a financing statement filed as a fixture filing with
respect to all fixtures included within the Property and is to be filed for
record in the real estate records of each county where any part of the Property
(including such fixtures) is situated. This Deed of Trust shall also be
effective as a financing statement with respect to any other Property as to
which a security interest may be perfected by the filing of a financing
statement and may be filed as such in any appropriate filing or recording
office. The respective mailing addresses of Grantor, Trustee and Beneficiary are
set forth in the opening paragraph of this Deed of Trust. A carbon, photographic
or other reproduction of this Deed of Trust or any other financing statement
relating to this Deed of Trust shall be sufficient as a financing statement for
any of the purposes referred to in this Section. Grantor hereby irrevocably
authorizes Beneficiary at any time and from time to time to file any initial
financing statements, amendments thereto and continuation statements as
authorized by applicable Law, reasonably required by Beneficiary to establish or
maintain the validity, perfection and priority of the security interests granted
in this Deed of Trust. The foregoing authorization includes Grantor’s
irrevocable authorization for

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Beneficiary at any time and from time to time to file any initial financing
statements and amendments thereto that indicate the Personalty (a) as “all
assets” of Grantor or words of similar effect, regardless of whether any
particular asset comprised in the Personalty falls within the scope of the
Uniform Commercial Code of the State or the jurisdiction where the initial
financing statement or amendment is filed, or (b) as being of an equal or lesser
scope or with greater detail.
Without limiting the generality of the foregoing, whether or not an Event of
Default has occurred, such appointment of Beneficiary as Grantor’s
attorney-in-fact to exercise shall include, without limitation, the power by
Beneficiary to exercise any Lessee Bankruptcy Rights, including making the
365(h) Election to prepare and file any objection to any proposed sale of the
Property by Ground Lessor pursuant to Section 363 of the Bankruptcy Code, to
prepare and file any objection to any disclosure statement or plan, or similar
document, filed in any Insolvency Proceeding, and to take any other action with
respect to the Land or Ground Lease in any Insolvency Proceeding of Ground
Lessor.
Section 2.4    Reconveyance of Deed of Trust and Termination of Assignments and
Financing Statements.
If and when Borrower has paid and performed all of the Obligations, and no
further advances are to be made under the Loan Agreement, Beneficiary or
Trustee, upon request by Beneficiary, will promptly provide a deed of release
and reconveyance of the Property from the lien of this Deed of Trust and
termination statements for filed financing statements, if any, to Grantor.
Grantor shall be responsible for the recordation of such deed of release and
reconveyance and the payment of any recording and filing costs. Upon the
recording of such reconveyance and the filing of such termination statements,
the absolute assignments set forth in Section 2.2 shall automatically terminate
and become null and void.
Article III
Representations and Warranties.
Grantor makes the following representations and warranties to Beneficiary and
each of the Lenders:
Section 3.1    Title to Real Property.
To Grantor’s knowledge and belief, Grantor (a) owns the Leasehold Estate,
(b) owns all of the beneficial and equitable interest in and to the Leasehold
Estate and (c) is lawfully seized and possessed of the Leasehold Estate. To
Grantor’s knowledge and belief, Grantor has the right and authority to convey
the Leasehold Estate and does hereby convey the Leasehold Estate in accordance
with the terms of this Deed of Trust with general warranty. To Grantor’s
knowledge and belief, the Leasehold Estate portion of the Real Property is
subject to no Encumbrances other than the Permitted Encumbrances and Taxes, not
yet delinquent.
Section 3.2    Title to Other Property.
To Grantor’s knowledge and belief, Grantor has good title to the Personalty, and
the Personalty is not subject to any Encumbrance other than the Permitted
Encumbrances. To Grantor’s knowledge and belief, none of the Leases, Rents,
Design and Construction Documents,

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Contracts of Sale or Refinancing Commitments are subject to any Encumbrance
other than the Permitted Encumbrances.
Section 3.3    Property Assessments.
The fee portion of the Real Property is assessed for purposes of Property
Assessments as a separate and distinct parcel from any other property, such that
such fee portion of the Real Property is not subject to the Lien of any Property
Assessments levied or assessed against any property other than the Real
Property.
Section 3.4    Independence of the Real Property.
Except as disclosed in the underlying documents referenced in the title
commitment relating to the Property delivered to Administrative Agent in
connection with the making of the Loan, no buildings or other improvements on
property not covered by this Deed of Trust rely on the Real Property or any
interest therein to fulfill any requirement of any Governmental Authority for
the existence of such property, building or improvements; and, to Grantor’s
knowledge and belief, none of the Real Property relies, or will rely, on any
property not covered by this Deed of Trust or any interest therein to fulfill
any requirement of any Governmental Authority. To Grantor’s knowledge and
belief, the Real Property has been properly subdivided from all other property
in accordance with the requirements of any applicable Governmental Authorities.
Section 3.5    Existing Improvements.
To Grantor’s knowledge and belief, the existing Improvements, if any, were
constructed, and are being used and maintained, in accordance with all
applicable Laws, including zoning Laws.
Section 3.6    Leases and Tenants.
To Grantor’s knowledge and belief, and except as expressly disclosed to
Administrative Agent in writing, the Leases are valid and are in full force and
effect, and Grantor is not in default under any of the terms thereof. Except as
expressly permitted in the Loan Agreement, and except as expressly disclosed to
Administrative Agent in writing, Grantor has not accepted any Rents more than
thirty (30) days in advance of the time the same became due under the Leases and
has not forgiven, compromised or discounted any of the Rents. Grantor has title
to and the right to assign the Leases and Rents to Beneficiary, and no other
assignment of the Leases or Rents has been granted. To the best of Grantor’s
knowledge and belief and except as disclosed to Administrative Agent in writing,
no tenant or tenants occupying, individually or in the aggregate, more than five
percent (5%) of the net rentable area of the Improvements are in default under
their Lease(s) or are the subject of any bankruptcy, insolvency or similar
proceeding.

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Section 3.7    Specific Representations, Warranties and Covenants Respecting
Ground Lease.
In addition to Grantor’s representations, warranties and covenants elsewhere
contained herein, and without limitation of same, Grantor specifically
represents, warrants, covenants and agrees to and with Beneficiary as follows:
(a)    Ground Lease. Grantor has delivered to Beneficiary a true, correct, and
complete copy of the Ground Lease, together with all amendments, modifications,
supplements, assignments, or other transfers thereto, and any and all guaranties
thereof. Except as disclosed to Beneficiary, the Ground Lease has not been
amended, modified, supplemented, assigned, or transferred.
(b)    Possession of Leasehold; Leasehold Interest; Exercise of Options. The
interest of the Tenant under the Ground Lease is presently vested in Grantor,
and Grantor is the holder of the sole leasehold estate in the Land and other
Property in accordance with the provisions of the Ground Lease. Other than
pursuant to this Deed of Trust, Grantor has not executed any other mortgage,
deed of trust, pledge, assignment, hypothecation, or other transfer, lien,
security interest, or other encumbrance (other than subleases) of all or any
portion of Grantor’s right, title and interest under the Ground Lease. Grantor
has not executed any instrument or agreement with respect to the Ground Lease
which could reasonably be expected to prevent or restrict Beneficiary from
exercising its rights and remedies under this Deed of Trust or any other Loan
Documents relating in any way to the Ground Lease. Grantor shall hereby forever
warrant, defend, protect, and preserve against the claims of all persons: (i)
Grantor’s leasehold interest in the Land and other Property arising pursuant to
the Ground Lease and (ii) the validity and priority of the respective lien and
title interest of Beneficiary granted by Grantor to Beneficiary hereunder.
(c)    No Existing Default. To Grantor’s knowledge and belief, there is no
existing default (or occurrence which with the passage of time would constitute
a default) under the provisions of the Ground Lease or in the performance of any
of the terms, covenants, conditions or warranties thereof on the part of Grantor
or Ground Lessor thereof to be kept, performed and observed under the Ground
Lease.
(d)    Rent and Other Payments under Ground Lease. Grantor shall promptly pay,
as and when due and payable, all rent, any additional rent and/or percentage
rent, and all other sums and charges described in and required to be paid by
Grantor under the terms and conditions of the Ground Lease, including, without
limitation, all taxes, assessments and other charges or levies and all insurance
premiums required to be paid by Grantor thereunder.
(e)    Compliance; Performance under Ground Lease. Grantor shall promptly
perform and observe all of the terms, covenants, and conditions required to be
performed and observed by Grantor as tenant under the Ground Lease, within the
periods provided in the Ground Lease, and shall do all things reasonably
necessary to preserve and to keep unimpaired Grantor’s rights under the Ground
Lease. Without the express prior written consent of Beneficiary in each
instance, Grantor shall not: (i) knowingly take any act which would destroy or
materially impair the benefits to Beneficiary pursuant to this Deed of Trust;
(ii) knowingly take any action or omit to take any action which would effect or
permit the termination of the Ground Lease (except as expressly provided
herein); and (iii) waive, excuse, release, or discharge in any way Ground

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Lessor of or from Ground Lessor’s material obligations, covenants, and/or
conditions under the Ground Lease.
(f)    Conditional Assignment of Ground Lease. To the fullest extent permitted
by applicable Law and the terms and conditions of the Ground Lease, and without
limiting the provisions of Section 2.2 (Assignment of Leases and Rents)
hereunder, Grantor does hereby assign, convey, transfer, set, over and deliver
to Beneficiary, for collateral purposes only, all of Grantor’s rights, title and
interest in, to and under the Ground Lease. By its acceptance hereof,
Beneficiary hereby covenants and agrees that so long as there exists no Event of
Default hereunder, Grantor shall have the right to possess and enjoy the Land
and other Property leased pursuant to the Ground Lease, subject to the terms and
conditions contained herein.
(g)    Acquisition of Fee; No Merger. In the event that Grantor acquires fee
title to the Land or other Property, such interest shall be deemed to be subject
to and covered by this Deed of Trust, and in confirmation thereof, Grantor shall
promptly: (i) provide Beneficiary with notice of such further title interest of
Grantor to the Land and (ii) execute, acknowledge, and deliver such other and
further instruments, documents, and agreements as may be reasonably required by
Beneficiary to ratify, confirm, re-affirm, and perfect Beneficiary’s interest in
such Property, including without limitation, any additional mortgage or
amendment requested by Beneficiary to confirm Grantor’s right, title and
interest in and to the fee title of Grantor to the Land. Without the express
prior written approval of Beneficiary, there shall be no merger of the leasehold
estate created by the Ground Lease with the fee estate of the Land, and
Grantor’s leasehold estate created by the Ground Lease shall not merge, but
shall always remain separate and distinct, notwithstanding any union of such
estates in Ground Lessor, Beneficiary, or Grantor by purchase, operation of Law,
or otherwise. In the event that Beneficiary shall acquire such fee title and
leasehold estate by foreclosure of this Deed of Trust (or by conveyance or
assignment in lieu thereof) or otherwise, then such estates shall not merge as a
result thereof but shall remain separate and distinct for all purposes after
such acquisition unless and until Beneficiary elects in writing to merge such
estates.
(h)    Ground Lessor’s Default. Grantor shall promptly notify Beneficiary in
writing of any known default (however described or defined in the Ground Lease)
by Ground Lessor in the performance or observance of any of the terms, covenants
or conditions on the part of Ground Lessor to be performed or observed under the
Ground Lease. Further, Grantor, promptly upon learning that Ground Lessor has
failed to perform the terms and provisions under the Ground Lease (including by
reason of a rejection or disaffirmance or purported rejection or disaffirmance
of such Ground Lease pursuant to any Debtor Relief Law), shall notify
Beneficiary in writing of any such failure to perform. Grantor shall cause a
copy of each such written notice received by Grantor to be delivered to
Beneficiary no later than five (5) business days after the receipt thereof.
(i)    Grantor’s Default. Grantor shall promptly notify Beneficiary in writing
of any of the following: (i) any (x) notice of default received by Grantor in
the performance or observance of any of the terms, covenants, or conditions on
the part of Grantor to be performed or observed under the Ground Lease, (y)
notice received by Grantor of the occurrence of any event which with the passage
of time may become a default (however defined or described) under the Ground
Lease or permit Ground Lessor to terminate the Ground Lease or re-enter and take
possession of the Property, and/or (z) written notice received by Grantor of the
exercise by Ground Lessor of

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any remedies relating to defaults or breach of the Ground Lease; (ii) the
receipt by Grantor of any written notice from Ground Lessor of termination of
the Ground Lease (or otherwise threatening to terminate the Ground Lease)
pursuant to the provisions of the Ground Lease; and/or (iii) any material
litigation or material arbitration threatened in a writing received by Grantor
or commenced with respect to the Ground Lease. Grantor shall cause a copy of
each such notice received by Grantor to be delivered to Beneficiary no later
than five (5) business days after the receipt thereof.
(j)    Estoppel Certificates. Grantor shall, within ten (10) days after written
demand from Beneficiary, use its commercially reasonable efforts to obtain from
Ground Lessor and deliver to Beneficiary an estoppel certificate in form and
substance reasonably satisfactory to Beneficiary stating that the Ground Lease
is in full force and effect, is unmodified, that no notice of termination
thereon has been served on Grantor or Ground Lessor, as the case may be, stating
the date to which the rent has been paid, and stating whether there are any
defaults thereunder and specifying the nature of such defaults.
(k)    Proof of Payment and Performance. Grantor shall furnish Beneficiary
within ten (10) days of the written request therefor: (i) proof of payment of
all items which are required to be paid by Grantor pursuant to the Ground Lease
and (ii) any and all information with respect to the Ground Lease that
Beneficiary may reasonably request concerning Grantor’s and/or Ground Lessor’s
performance under, and compliance with, the terms and conditions thereof.
(l)    No Amendment, Modification, Termination, Subordination of Ground Lease.
Without the express prior written consent of Beneficiary in each instance,
Grantor shall not, either orally or in writing: (i) materially modify, amend,
supplement, alter, or change the Ground Lease (provided that Grantor shall
deliver to Beneficiary a copy of any such modification, amendment, supplement,
alternation or change promptly upon execution); (ii) terminate or cancel the
Ground Lease or (except as expressly permitted in this Deed of Trust or in the
Loan Agreement) otherwise surrender all or any portion of Grantor’s leasehold
estate and interest under the Ground Lease; (iii) (except as expressly permitted
in this Deed of Trust or in the Loan Agreement) assign, transfer, or sublease
all or any portion of Grantor’s leasehold estate and interest under the Ground
Lease; or (iv) cause, agree to, or knowingly permit or knowingly suffer to occur
any subordination, or consent to the subordination of, the Ground Lease to any
mortgage, deed of trust or other lien encumbering (or which may thereafter
encumber) Ground Lessor’s fee interest in the Land or other Property demised to
Grantor under the Ground Lease (other than a subordination or consent to
subordination expressly required by the terms and conditions of the Ground
Lease). Without limiting the generality of the foregoing, Beneficiary’s consent
to any modification, amendment, supplement, alteration, alteration, sublease,
transfer, or assignment respecting the Ground Lease on any one occasion shall
not be deemed or construed to constitute a waiver of Beneficiary’s right to
require consent to any other or further, future, or successive modification,
amendment, supplement, alteration, alteration, sublease, transfer, or assignment
thereof. Further, to the extent that Ground Lessor requests that Grantor to take
(or refrain from taking) any material action under or with respect to the Ground
Lease (for which the consent or approval by Grantor is required under the Ground
Lease and Ground Lessor has requested Grantor’s consent or approval), Grantor
shall provide Beneficiary with prompt written notice of such request and shall
not provide such consent or approval without the express prior written consent
of Beneficiary in each instance (which consent shall not be unreasonably
withheld, conditioned or delayed).

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(m)    Proceeds of Casualty or Condemnation Without Beneficiary’s express prior
written consent in each instance, Grantor shall not agree with Ground Lessor to
disburse any proceeds of any casualty or condemnation contrary to the provisions
of this Deed of Trust and the other Loan Documents unless Grantor is required to
so agree pursuant to the terms of the Ground Lease.
(n)    Cure of Default. Beneficiary shall have the right, but not the
obligation, to take any actions reasonably necessary to cure any default
(however defined or described) by Grantor under the Ground Lease within the time
provided by the terms of the Ground Lease for such purpose (but upon no less
than two (2) Business Days’ prior notice to Grantor). Grantor shall execute and
deliver, on written request of Beneficiary, such instruments as Beneficiary may
reasonably request and deem useful or required to permit Beneficiary to cure any
default under the Ground Lease or permit Beneficiary to take such other action
as Beneficiary considers desirable to cure or remedy the matter in default and
preserve the interest of Beneficiary in the Property. Upon receipt by
Beneficiary from Ground Lessor of any written notice of default by Grantor under
the Ground Lease, Beneficiary may rely thereon and, whether or not such notice
or notice of default constitutes an Event of Default hereunder or under any
other Loan Document (but upon no less than two (2) Business Days’ prior notice
to Grantor), take any and all action reasonably deemed necessary by Beneficiary
to prevent or cure such default, notwithstanding that the occurrence of such
default may be disputed by Grantor. Without limiting the rights and remedies of
Beneficiary pursuant to this Deed of Trust, in exercising its rights to prevent
or to cure any such default with respect to the Ground Lease: (i) Beneficiary
shall have the absolute and immediate right to enter in and upon the Property or
any part thereof , subject to the rights of tenants and upon one (1) Business
Day notice to Grantor, and as, when, and to the extent determined reasonably
necessary or appropriate by Beneficiary and without Beneficiary being deemed or
construed to be a Beneficiary in possession and (ii) Beneficiary may pay and
expend such sums of money as Beneficiary in its sole but reasonable
determination deems appropriate (which sums shall automatically constitute
Secured Indebtedness immediately upon payment by Beneficiary), and Grantor
hereby agrees to pay to Beneficiary within two (2) business days after written
demand, all such sums so paid and expended by Beneficiary, together with
interest thereon at the default rate provided in the Loan Agreement.
(o)    Arbitration or other Dispute Resolution under Ground Lease. Grantor shall
promptly notify Beneficiary in writing of any request that any party to the
Ground Lease makes for any arbitration or other dispute resolution procedure
pursuant to the Ground Lease and of the institution of any such arbitration or
dispute resolution. Grantor hereby authorizes Beneficiary, if an Event of
Default shall then exist, to participate in any such arbitration or dispute
resolution. To the extent that Grantor is involved in any such arbitration or
dispute resolution hereunder and under the other Loan Documents, Grantor hereby
agrees that it shall promptly deliver to Beneficiary a copy of the determination
of each such arbitration or dispute resolution mechanism and shall at all times
keep Beneficiary reasonably apprised with respect to the status of such
arbitration or dispute resolution.
(p)    Authority to Act on Behalf of Grantor; Attorney-in-Fact. During the
continuance of an Event of Default hereunder, Grantor hereby authorizes
Beneficiary, at Beneficiary’s sole option and in its sole and exclusive
discretion from time to time, upon five (5) Business Days’ prior written notice
to Grantor: (i) to pay any and all rental payments or similar sums to be paid by
Grantor payment of which are then due and payable under the Ground Lease, with
interest

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and penalties thereon if charged by Ground Lessor under the Ground Lease and
(ii) to incur and pay all sums reasonably necessary to protect Beneficiary’s
rights hereunder and under the Ground Lease. Such sums shall automatically
constitute Secured Indebtedness immediately upon payment by Beneficiary and
Grantor hereby agrees to pay to Beneficiary within two (2) business days after
written demand, all such sums so paid and expended by Beneficiary, together with
interest thereon at the default rate provided in the Loan Agreement.
(q)    Early Termination of Ground Lease; Grantor’s Continued Obligations. If,
during the term of the Loan, the Ground Lease is for any reason terminated prior
to the natural expiration of its term, and if, pursuant to any provision of the
Ground Lease or otherwise, Beneficiary or its designee shall acquire from Ground
Lessor thereunder a new or replacement ground lease of the Land and other
Property, or otherwise relating to the Property, Grantor shall have no right,
title or interest in or to such new or replacement ground lease or the leasehold
estate created thereby, or any proceeds or income arising from the leasehold
estate under such new or replacement ground lease, including, without
limitation, on account of any sale or other disposition thereof. Neither the
execution and delivery of any such new or replacement ground lease, nor any
release or forbearance by Ground Lessor of Grantor’s obligations under the
Ground Lease shall release or otherwise affect Grantor’s continued obligations
under this Deed of Trust, including, without limitation, all covenants of
Grantor hereunder with respect to the timely payment of all rent under the
Ground Lease and the performance of all terms, provisions, covenants,
conditions, and agreements contained in the Ground Lease to be kept, performed
and complied with by Grantor as provided therein.
Section 3.8    Treatment of Ground Lease in Bankruptcy of Ground Lessor.
(a)    Rejection or Affirmation of Ground Lease. If Ground Lessor rejects or
disaffirms, or seeks or purports to reject or disaffirm, the Ground Lease
pursuant to any Debtor Relief Law, then Grantor shall not exercise the 365(h)
Election without the express prior written consent of Beneficiary. To the extent
permitted by Law, Grantor shall not suffer, permit, or consent to the
termination (and/or any rejection or disaffirmance) of the Ground Lease pursuant
to the Debtor Relief Law without Beneficiary’s express prior written consent.
Grantor acknowledges and agrees that because the Ground Lease is a primary
element of Beneficiary’s security for the Secured Indebtedness secured
hereunder, it is not anticipated that Beneficiary would consent to termination
of any Ground Lease. Accordingly, if Grantor makes any 365(h) Election in
violation of this Deed of Trust, then such 365(h) Election shall be void and of
no force or effect.
(b)    365(h) Election. To the extent permitted by Law, Grantor hereby assigns
to Beneficiary the 365(h) Election with respect to the Ground Lease until the
Secured Indebtedness secured hereunder has been indefeasibly paid and satisfied
in full. Grantor acknowledges and agrees that the foregoing assignment of the
365(h) Election and related rights is one of the rights that Beneficiary may use
at any time to protect and preserve Beneficiary’s other rights and interests
under this Deed of Trust. Grantor further acknowledges that exercise of the
365(h) Election by Grantor in favor of terminating the Ground Lease would
constitute waste prohibited by this Deed of Trust. Grantor acknowledges and
agrees that the 365(h) Election is in the nature of a remedy available to
Grantor under the Ground Lease, and is not a property interest that Grantor can
separate from the Ground Lease as to which it arises. Therefore, Grantor agrees
and acknowledges that exercise of the 365(h) Election in favor of preserving the
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under the Ground Lease shall not be deemed to constitute Beneficiary’s taking or
sale of the Land and other Property (or any element thereof) and shall not
entitle Grantor to any credit against the Secured Indebtedness secured hereunder
or otherwise impair Beneficiary’s remedies. Without limiting the generality of
the foregoing, Grantor acknowledges and agrees that, in the event that the
365(h) Election is exercised in favor of Grantor remaining in possession, then
Grantor’s resulting right to possession and use of the Property (and the rents,
issues and profits therefrom), as adjusted by the effect of Section 365 of the
Bankruptcy Code, shall then be subject to the lien and encumbrance of this Deed
of Trust; provided, however, Grantor acknowledges and agrees that such right to
possession and use of the Property as so adjusted is not equivalent to Grantor’s
leasehold estate under the Ground Lease as of the date hereof. Accordingly, and
without limiting the provisions of Article VI (Events of Default) herein,
Grantor acknowledges and agrees that the rejection of the Ground Lease under the
Bankruptcy Code shall constitute an Event of Default under this Deed of Trust if
such rejection shall reasonably result in material impairment to the value of
the Property and shall entitle Beneficiary to exercise all rights and remedies
provided for in this Deed of Trust or the other Loan Documents in the event of
the occurrence of an Event of Default.
(c)    Lien on Occupancy Rights. Grantor acknowledges that if the 365(h)
Election is exercised in favor of Grantor’s remaining in possession under the
Ground Lease, then Grantor’s resulting occupancy rights, as adjusted by the
effect of Section 365 of the Bankruptcy Code, shall then be part of the Property
and shall be subject to the lien of this Deed of Trust.
(d)    Rejection of Lease by Ground Lessor. If Ground Lessor rejects or
disaffirms any Ground Lease or purports or seeks to disaffirm such Ground Lease
pursuant to any Debtor Relief Law, then:
(i)    To the fullest extent not prohibited by applicable Law, Grantor shall
remain in possession of the Property demised under the Ground Lease and shall
perform all acts reasonably necessary for Grantor to remain in such possession
for the unexpired term of the Ground Lease (including all renewals), whether the
then existing terms and provisions of the Ground Lease require such acts or
otherwise; and
(ii)    All the terms and provisions of this Deed of Trust and the lien created
by this Deed of Trust shall remain in full force and effect and shall extend
automatically to all of Grantor’s rights and remedies arising at any time under,
or pursuant to, Section 365(h) of the Bankruptcy Code, including all of
Grantor’s rights to remain in possession of the Property.
(e)    Offset by Grantor. If pursuant to Section 365(h)(1)(B) of the Bankruptcy
Code or any other similar Debtor Relief Law, Grantor seeks to offset against any
rent under the Ground Lease the amount of any Lease Damage Claim, then Grantor
shall notify Beneficiary of its intent to do so at least ten (10) days before
effecting such offset. Such notice shall set forth the amounts proposed to be so
offset and the basis for such offset. If Beneficiary reasonably objects to all
or any part of such offset, then Grantor shall not effect any offset of the
amounts to which Beneficiary reasonably objects. If Beneficiary approves such
offset (which approval shall not be unreasonably withheld, conditioned or
delayed), then Grantor may effect such offset as set forth in Grantor’s notice.
Neither Beneficiary’s failure to object, nor any objection or other
communication between Beneficiary and Grantor that relates to such offset, shall
constitute

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Beneficiary’s approval of any such offset. Grantor shall indemnify Beneficiary
against any offset against the rent reserved in any Lease.
(f)    Lessor’s Sale of Land. In connection with any Insolvency Proceeding,
Grantor, upon learning that Ground Lessor intends to conduct a sale of the
Property, shall immediately notify Beneficiary of such intention and, to the
fullest extent not prohibited by applicable Law, Grantor shall timely file any
and all objections, pleadings, and notices contesting and objecting to Ground
Lessor’s intention to sell the Property, whether such sale is pursuant to
Section 363 of the Bankruptcy Code or any other Debtor Relief Law.
(g)    Notice of Bankruptcy. Grantor, upon learning of any Insolvency Proceeding
with respect to Ground Lessor, shall immediately notify Beneficiary of such
Insolvency Proceeding, including using good faith efforts to provide all
relevant information pertaining thereto (to the extent available to Grantor),
including jurisdiction, case number, and relevant case information. Grantor,
upon learning of any actions by Ground Lessor to sell, encumber, or otherwise
effect the Property, or terminate, reject, disaffirm or assign the Ground Lease,
shall promptly notify Beneficiary, including using good faith efforts to provide
Beneficiary with copies of any and all notices and pleadings filed in connection
with the foregoing (to the extent available to Grantor).
Article IV
Affirmative Covenants.
Section 4.1    Obligations.
Grantor agrees to promptly pay and perform all of the Obligations in accordance
with the terms of the Loan Documents, time being of the essence in each case.
Section 4.2    Property Assessments; Documentary Taxes.
Grantor (a) will promptly pay in full and discharge all Property Assessments,
and (b) will furnish to Beneficiary, upon written demand, the receipted bills
for such Property Assessments prior to the day upon which the same shall become
delinquent. Property Assessments shall be considered delinquent as of the first
day any interest or penalty commences to accrue thereon. Except as may be
permitted pursuant to the provisions of Section 4.3 below, Grantor will promptly
pay all stamp, documentary, recordation, transfer and intangible taxes and all
other similar taxes that may from time to time be required to be paid with
respect to the Loan, the Note, this Deed of Trust or any of the other Loan
Documents.
Section 4.3    Permitted Contests.
Grantor shall not be required to pay any of the Property Assessments, or to
comply with any Law, so long as Grantor shall in good faith, and at its cost and
expense, contest the amount or validity thereof, or take other appropriate
action with respect thereto, in good faith and in an appropriate manner or by
appropriate proceedings; provided that (a) such proceedings operate to prevent
the collection of, or other realization upon, such Property Assessments or
enforcement of the Law so contested, (b) there will be no sale, forfeiture or
loss of the Property during the contest, (c) neither Beneficiary, any Lenders
nor Trustee is subjected to any Claim as a result of such contest, and
(d) Grantor provides assurances satisfactory to Beneficiary (including the
establishment of an appropriate reserve account with Beneficiary) of its ability
to pay such

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Property Assessments or comply with such Law in the event Grantor is
unsuccessful in its contest. Each such contest shall be promptly prosecuted to
final conclusion or settlement, and Grantor shall indemnify and save
Beneficiary, each Lender and Trustee harmless against all Claims in connection
therewith. Promptly after the settlement or conclusion of such contest or
action, Grantor shall comply with such Law and/or pay and discharge the amounts
which shall be levied, assessed or imposed or determined to be payable, together
with all penalties, fines, interests, costs and expenses in connection
therewith.
Section 4.4    Compliance with Laws.
Grantor will comply with and not knowingly violate, and cause to be complied
with and not violated, all present and future Laws applicable to the Property
and its use and operation.
Section 4.5    Maintenance and Repair of the Property.
Grantor, at Grantor’s sole expense, will (a) keep and maintain Improvements and
Accessories in good condition, working order and repair, and (b) make all
necessary or appropriate repairs and Additions to Improvements and Accessories,
so that each part of the Improvements and all of the Accessories shall at all
times be in good condition and fit and proper for the respective purposes for
which they were originally intended, erected, or installed.
Section 4.6    Additions to Security.
All right, title and interest of Grantor in and to all Improvements and
Additions hereafter constructed or placed on the Property and in and to any
Accessories hereafter acquired shall, without any further deed of trust,
conveyance, assignment or other act by Grantor, become subject to the Lien of
this Deed of Trust as fully and completely, and with the same effect, as though
now owned by Grantor and specifically described in the granting clauses hereof.
Grantor agrees, however, to execute and deliver to Trustee and/or Beneficiary
such further documents as may be reasonably required by the terms of the Loan
Agreement and the other Loan Documents.
Section 4.7    Subrogation.
To the extent permitted by Law, Beneficiary shall be subrogated, notwithstanding
its release of record, to any Lien now or hereafter existing on the Property to
the extent that such Lien is paid or discharged by Beneficiary or any Lender
whether or not from the proceeds of the Loan. This Section shall not be deemed
or construed, however, to obligate Beneficiary or any Lender to pay or discharge
any Lien.
Section 4.8    Leases.
(a)    Except as expressly permitted in the Loan Agreement, Grantor shall not
enter into any Lease with respect to all or any portion of the Property without
the prior written consent of Beneficiary as provided under the terms of the Loan
Agreement.
(b)    Neither Trustee, Beneficiary nor any Lender shall be obligated to perform
or discharge any obligation of Grantor under any Lease. The assignment of Leases
provided for in this Deed of Trust in no manner places on Beneficiary, any
Lender or Trustee any responsibility for (i) the control, care, management or
repair of the Property, (ii) the carrying out of any of the

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terms and conditions of the Leases, (iii) any waste committed on the Property,
or (iv) any dangerous or defective condition on the Property (whether known or
unknown).
(c)    No approval of any Lease by Beneficiary shall be for any purpose other
than to protect Beneficiary’s security and to preserve Beneficiary’s rights
under the Loan Documents, and no such approval shall result in a waiver of a
Default or Event of Default.
Article V
Negative Covenants.
Section 5.1    Encumbrances.
Except as expressly permitted in this Deed of Trust, Grantor will not permit any
of the Property to become subject to any Encumbrance other than the Permitted
Encumbrances. Within thirty (30) days after the filing of any mechanic’s lien or
other Lien or Encumbrance against the Property, Grantor will promptly discharge
the same by payment or filing a bond or otherwise as permitted by Law. So long
as Beneficiary’s security has been protected by the filing of a bond or
otherwise in a manner satisfactory to Beneficiary in its sole and absolute
discretion, Grantor shall have the right to contest in good faith any Claim,
Lien or Encumbrance (and shall not be deemed in default hereunder), provided
that Grantor does so diligently and without prejudice to Beneficiary or delay in
completing construction of the Improvements. Grantor shall give Beneficiary
Notice of any default under any Lien and Notice of any foreclosure or threat of
foreclosure with respect to any of the Property.
Section 5.2    Transfer of the Property.
With the exception of Permitted Transfers (as defined in the Loan Agreement),
Grantor will not Transfer, or contract to Transfer, all or any part of the
Property or any legal or beneficial interest therein (except for certain
Transfers of the Accessories and other Transfers expressly permitted in this
Deed of Trust).
Section 5.3    Removal, Demolition or Alteration of Accessories and
Improvements.
Except to the extent permitted by the following sentence, no Improvements or
Accessories shall be removed, demolished or materially altered without the prior
written consent of Beneficiary and the Required Lenders, which consent shall not
be unreasonably withheld, conditioned or delayed. Grantor may remove and dispose
of, free from the Lien of this Deed of Trust, such Accessories as from time to
time become worn out or obsolete, provided that, either (a) at the time of, or
prior to, such removal, any such Accessories are replaced with other Accessories
which are free from Liens other than Permitted Encumbrances and have a value at
least equal to that of the replaced Accessories (and by such removal and
replacement Grantor shall be deemed to have subjected such replacement
Accessories to the Lien of this Deed of Trust), or (b) so long as a prepayment
may be made without the imposition of any premium pursuant to the Note, such
Accessories are sold at fair market value for cash and the net cash proceeds
received from such disposition are paid over promptly to Beneficiary to be
applied to the prepayment of the principal of the Loan. Notwithstanding the
foregoing, nothing herein shall limit Grantor’s right to undertake any tenant
improvements for tenants under their Leases (approved or deemed approved by
Beneficiary or otherwise existing as of the date of this Deed

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of Trust), tenant improvements ongoing as of the date hereof, or any capital
improvements to the Property.
Section 5.4    Additional Improvements.
Grantor will not construct any Improvements other than those presently on the
Land and those described in the Loan Agreement without the prior written consent
of Beneficiary and the Required Lenders, which consent shall not be unreasonably
withheld, conditioned or delayed. Grantor will complete and pay for, prior to
delinquency, any Improvements which Grantor is permitted to construct on the
Land. Grantor will construct and erect any permitted Improvements (a) strictly
in accordance with all applicable Laws and any private restrictive covenants,
(b) entirely on lots or parcels of the Land, (c) so as not to encroach upon any
easement or right-of-way or upon the land of others, and (d) wholly within any
building restriction and setback lines applicable to the Land. Notwithstanding
the foregoing, nothing herein shall limit Grantor’s right to undertake any
tenant improvements for tenants under their Leases (approved or deemed approved
by Beneficiary), or any capital improvements to the Property.
Section 5.5    Restrictive Covenants, Zoning, etc.
Without the prior written consent of Beneficiary and the Required Lenders, which
consent shall not be unreasonably withheld, conditioned or delayed, Grantor will
not initiate, join in, or consent to any change in, any restrictive covenant,
easement, zoning ordinance, or other public or private restrictions limiting or
defining the uses which may be made of the Property. Except as expressly
permitted in this Deed of Trust, Grantor (a) will promptly perform and observe,
and use commercially reasonable efforts to cause to be performed and observed,
all of the terms and conditions of all agreements affecting the Property, and
(b) will do or cause to be done all things reasonably necessary to preserve
intact and unimpaired any and all easements, appurtenances and other interests
and rights in favor of, or constituting any portion of, the Property.
Article VI
Events of Default.
The occurrence or happening, from time to time, of any one or more of the
following shall constitute an Event of Default under this Deed of Trust:
Section 6.1    Payment Obligations.
Borrower fails to pay any of the Obligations within five (5) business days after
same becomes due, whether on the scheduled due date or upon acceleration,
maturity or otherwise.
Section 6.2    Transfers.
Grantor fails to comply with the provisions of Section 5.2 above.

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Section 6.3    Other Obligations.
Grantor fails to promptly perform or comply with any of the Obligations set
forth in this Deed of Trust (other than those expressly described in other
Sections of this Article VI), and such failure continues uncured for a period of
thirty (30) days after Notice from Beneficiary to Grantor, unless (a) such
failure, by its nature, is not capable of being cured within such period, and
(b) within such period, Grantor commences to cure such failure and thereafter
diligently prosecutes the cure thereof, and (c) Grantor causes such failure to
be cured no later than ninety (90) days after the date of such Notice from
Beneficiary.
Section 6.4    Event of Default Under Other Loan Documents.
An Event of Default (as defined therein) occurs under the Notes or the Loan
Agreement, or Borrower or Guarantor fails to promptly pay, perform, observe or
comply with any obligation or agreement contained in any of the other Loan
Documents (within any applicable grace or cure period) and in accordance with
the terms of the applicable Loan Documents, or if no such grace or cure period
is specified, such failure continues uncured for a period of thirty (30) days
after Notice from Beneficiary to Grantor, unless (a) such failure, by its
nature, is not capable of being cured within such period, and (b) within such
period, Grantor commences to cure such failure and thereafter diligently
prosecutes the cure thereof, and (c) Grantor causes such failure to be cured no
later than ninety (90) days after the date of such Notice from Beneficiary.
Section 6.5    Default Under Other Lien Documents.
A default occurs (and is not cured within any applicable notice and/or cure
period) under any other mortgage, deed of trust or security agreement covering
the Property, including any Permitted Encumbrances.
Section 6.6    Execution; Attachment.
Any execution or attachment is levied against any of the Property, and such
execution or attachment is not set aside, discharged or stayed within thirty
(30) days after the same is levied.
Section 6.7    Termination of Ground Lease.
The termination of the Ground Lease for any reason unless (a) prior written
notice has been provided to Beneficiary of such termination and (b) concurrent
with the termination of the Ground Lease (i) the Fee Estate is transferred to
Grantor and (ii) at Grantor’s sole cost and expense, Beneficiary receives a
satisfactory endorsement to the title insurance policy insuring Beneficiary’s
interest under this Deed of Trust to the Fee Estate.
Article VII
Rights and Remedies.
Upon the happening, and during the continuance of any Event of Default,
Beneficiary, or Trustee at the direction of Beneficiary, shall have the right,
in addition to any other rights or remedies available to Beneficiary under any
of the Loan Documents or applicable Law, to exercise any one or more of the
following rights, powers or remedies:

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Section 7.1    Acceleration.
Beneficiary may accelerate all Obligations under the Loan Documents whereupon
such Obligations shall become immediately due and payable, without notice of
default, notice of acceleration or intention to accelerate, presentment or
demand for payment, protest, notice of protest, notice of nonpayment or
dishonor, or notices or demands of any kind or character (all of which are
hereby waived by Grantor).
Section 7.2    Appraisal; Inspection.
Following the occurrence, and during the continuance, of an Event of Default,
Beneficiary may pay such sums as may be necessary to obtain a current appraisal
of the Real Property and/or other Property, to inspect and test the Real
Property and/or other Property, to pay any tax, assessment, insurance premium,
lien, encumbrance or other charge against the Property, to obtain a title report
and/or Trustee’s sale guaranty, all such expenditures to be paid by Grantor on
demand and added to the Obligations.
Section 7.3    Foreclosure; Power of Sale.
Trustee, if and as directed by Beneficiary, shall have all of the rights and may
exercise all of the powers set forth in applicable Law of the State, including
those powers, as applicable, set forth in ARS Sections 33-701 et seq. (with
respect to realty mortgages) and 33-801 et seq. (with respect to deeds of trust)
or any successor provision of Law. Trustee may sell the Property in its entirety
or in parcels, and by one or by several sales, as deemed appropriate by
Beneficiary in its sole and absolute discretion. If Beneficiary chooses to have
more than one foreclosure sale, Trustee may cause the foreclosure sales to be
held simultaneously or successively, on the same day, or on such different days
and at such different times as Beneficiary may elect. Trustee shall receive and
apply the proceeds from the sale of the Property, or any portion thereof, in
accordance with applicable Law, including ARS Sections 12-1562, 12-1566, 33-725,
33-727 and 33-812 or any successor provision of Law. Immediately upon the first
delivery or publication of any advertisement or notice of sale, there shall
become due and owing by Grantor all Expenses incident to any foreclosure
proceedings under this Deed of Trust together with fees and expenses of the
Trustee, and no Person shall be required to receive only the aggregate amount of
the Obligations to the date of payment unless the same is accompanied by a
tender of such Expenses and fees. All Expenses incurred by Beneficiary and
Trustee’s fees and expenses must be paid by Grantor as part of any reinstatement
tendered in connection with a trustee’s sale of the Property.
Section 7.4    Judicial Action.
Beneficiary shall have the right from time to time to sue Grantor for any sums
(whether interest, damages for failure to pay principal or any installments
thereof, taxes, or any other sums required to be paid under the terms of this
Deed of Trust, as the same become due), without regard to whether or not any of
the other Obligations shall be due, and without prejudice to the right of
Beneficiary thereafter to enforce any appropriate remedy against Grantor,
including an action of foreclosure or an action for specific performance, for a
Default or Event of Default existing at the time such earlier action was
commenced.

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Section 7.5    Collection of Rents.
Upon the occurrence, and during the continuance of an Event of Default, the
license granted to Grantor to collect the Rents shall be automatically and
immediately revoked, without further notice to or demand upon Grantor.
Beneficiary may, but shall not be obligated to, and perform any or all
obligations of the landlord under any or all of the Leases, and Beneficiary may,
but shall not be obligated to, exercise and enforce any or all of Grantor’s
rights under the Leases. Without limitation to the generality of the foregoing,
Beneficiary may, upon the occurrence, and during the continuance, of an Event of
Default, notify the tenants under the Leases that all Rents are to be paid to
Beneficiary, and following such notice all Rents shall be paid directly to
Beneficiary and not to Grantor or any other Person other than as directed by
Beneficiary, it being understood that a demand by Beneficiary on any tenant
under the Leases for the payment of Rent shall be sufficient to warrant payment
by such tenant of Rent to Beneficiary without the necessity of further consent
by Grantor. Grantor hereby irrevocably authorizes and directs the tenants under
the Leases to pay all Rents to Beneficiary instead of to Grantor, upon receipt
of written notice from Beneficiary, without the necessity of any inquiry of
Grantor and without the necessity of determining the existence or non-existence
of an Event of Default. Grantor hereby appoints Beneficiary as Grantor’s
attorney-in-fact with full power of substitution, which appointment shall take
effect upon the occurrence of an Event of Default and is coupled with an
interest and is irrevocable prior to the full and final payment and performance
of the Obligations, in Grantor’s name or in Beneficiary’s name: (a) to endorse
all checks and other instruments received in payment of Rents and to deposit the
same in any account selected by Beneficiary; (b) to give receipts and releases
in relation thereto; (c) to institute, prosecute and/or settle actions for the
recovery of Rents; (d) to modify the terms of any Leases including terms
relating to the Rents payable thereunder; (e) to cancel any Leases; (f) to enter
into new Leases; and (g) to do all other acts and things with respect to the
Leases and Rents which Beneficiary may deem necessary or desirable to protect
the security for the Obligations. For purposes of ARS §14-5501.E, Grantor
acknowledges that this power of attorney forms a part of a contract (this Deed
of Trust) and is security for money or for the performance of a valuable act.
Any authority under the foregoing power of attorney may be exercised for
Beneficiary’s benefit, need not be exercised for Grantor’s best interest. Any
Rents received shall be applied first to pay all Expenses and next in reduction
of the other Obligations. Grantor shall pay, on demand, to Beneficiary, the
amount of any deficiency between (i) the Rents received by Beneficiary, and
(ii) all Expenses incurred together with interest thereon as provided in the
Loan Agreement and the other Loan Documents.
Section 7.6    Taking Possession or Control of the Property.
Upon the occurrence, and during the continuance, of an Event of Default, as a
matter of right without bond and without regard to the adequacy of the security,
and to the extent permitted by Law without notice to Grantor, Beneficiary shall
be entitled, upon application to a court of competent jurisdiction, to the
immediate appointment of a receiver for all or any part of the Property and the
Rents, whether such receivership may be incidental to a proposed sale of the
Property or otherwise, and Grantor hereby consents to the appointment of such a
receiver and agrees that such receiver shall have all of the rights and powers
granted to Beneficiary pursuant to Section 7.5. In addition, upon the
occurrence, and during the continuance, of an Event of Default to the extent
permitted by Law, and with or without the appointment of a receiver, or an
application therefor, Beneficiary may (a) enter upon, and take possession of
(and Grantor shall

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surrender actual possession of), the Property or any part thereof, without
notice to Grantor and without bringing any legal action or proceeding, or, if
necessary by force, legal proceedings, ejectment or otherwise, and (b) remove
and exclude Grantor and its agents and employees therefrom.
Section 7.7    Management of the Property.
Upon obtaining possession of the Property or upon the appointment of a receiver
as described in Section 7.6, Beneficiary, Trustee or the receiver, as the case
may be, may, at its sole option, (a) make all necessary or proper repairs and
Additions to or upon the Property, (b) operate, maintain, control, make secure
and preserve the Property, and (c) complete the construction of any unfinished
Improvements on the Property and, in connection therewith, continue any and all
outstanding contracts for the erection and completion of such Improvements and
make and enter into any further contracts which may be necessary, either in
their or its own name or in the name of Grantor (the costs of completing such
Improvements shall be Expenses secured by this Deed of Trust and shall accrue
interest as provided in the Loan Agreement and the other Loan Documents).
Beneficiary, Trustee or such receiver shall be under no liability for, or by
reason of, any such taking of possession, entry, holding, removal, maintaining,
operation or management, except for gross negligence or willful misconduct. The
exercise of the remedies provided in this Section shall not cure or waive any
Event of Default, and the enforcement of such remedies, once commenced, shall
continue for so long as Beneficiary shall elect, notwithstanding the fact that
the exercise of such remedies may have, for a time, cured the original Event of
Default.
Section 7.8    Uniform Commercial Code.
Beneficiary may proceed under the Uniform Commercial Code as to all or any part
of the Personalty, and in conjunction therewith may exercise all of the rights,
remedies and powers of a secured creditor under the Uniform Commercial Code.
Upon the occurrence of any Event of Default, Grantor shall assemble all of the
Accessories and make the same available within the Improvements. Any
notification required by the Uniform Commercial Code shall be deemed reasonably
and properly given if sent in accordance with the Notice provisions of this Deed
of Trust at least ten (10) days before any sale or other disposition of the
Personalty. Disposition of the Personalty shall be deemed commercially
reasonable if made pursuant to a public sale advertised at least twice in a
newspaper of general circulation in the community where the Property is located.
It shall be deemed commercially reasonable for the Trustee and/or Beneficiary to
dispose of the Personalty without giving any warranties as to the Personalty and
specifically disclaiming all disposition warranties. Alternatively, Beneficiary
may choose to dispose of some or all of the Property, in any combination
consisting of both Personalty and Real Property, in one sale to be held in
accordance with the Law and procedures applicable to real property, as permitted
by Article 9 of the Uniform Commercial Code. Grantor agrees that such a sale of
Personalty together with Real Property constitutes a commercially reasonable
sale of the Personalty.
Section 7.9    Application of Proceeds.
Unless otherwise required by applicable Law, all proceeds from the sale of the
Property or any part thereof pursuant to the rights and remedies set forth in
this Article VII and any other proceeds received by Beneficiary from the
exercise of any of its other rights and remedies

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hereunder or under the other Loan Documents shall be applied first to pay all
Expenses and next in reduction of the other Obligations, in such manner and
order as Beneficiary may elect.
Section 7.10    Other Remedies.
Beneficiary shall have the right from time to time to protect, exercise and
enforce any legal or equitable remedy against Grantor provided under the Loan
Documents or by applicable Laws.
Article VIII
Trustee.
Section 8.1    Liability of Trustee.
Trustee shall have no liability or responsibility for, and make no warranties in
connection with, the validity or enforceability of any of the Loan Documents or
the description, value or status of title to the Property. Trustee shall be
protected in acting upon any notice, request, consent, demand, statement, note
or other paper or document believed by Trustee to be genuine and to have been
signed by the party or parties purporting to sign the same. To the extent
permitted by applicable Laws, Trustee shall not be liable for any error of
judgment, nor for any act done or step taken or omitted, nor for any mistakes of
Law or fact, nor for anything which Trustee may do or refrain from doing in good
faith, nor generally shall Trustee have any accountability hereunder except for
willful misconduct or gross negligence. To the extent permitted by applicable
Laws, the powers and duties of Trustee hereunder may be exercised through such
attorneys, agents or servants as Trustee may in good faith and reasonably
appoint, and Trustee shall have no liability or responsibility for any act,
failure to act, negligence or willful conduct of such attorney, agent or
servant, so long as the selection was made with reasonable care. In addition,
Trustee may consult with legal counsel selected by Trustee, and, to the extent
permitted by applicable Laws, Trustee shall have no liability or responsibility
by reason of any act or failure to act in accordance with the opinions of such
counsel. To the extent permitted by applicable Laws, Trustee may act hereunder
and may sell or otherwise dispose of the Property or any part thereof as herein
provided, although Trustee has been, may now be or may hereafter be, an
attorney, officer, agent or employee of Beneficiary, in respect of any matter or
business whatsoever. Trustee, however, shall have no obligation to sell all or
any part of the Property following an Event of Default or to take any other
action authorized to be taken by Trustee hereunder except upon the demand of
Beneficiary.
Section 8.2    Indemnification of Trustee.
Grantor agrees to indemnify Trustee and to hold Trustee harmless from and
against any and all Claims and Expenses directly or indirectly arising out of or
resulting from any transaction, act, omission, event or circumstance in any way
connected with the Property or the Loan, including but not limited to any Claim
arising out of or resulting from any assertion or allegation that Trustee is
liable for any act or omission of Grantor or any other Person in connection with
the ownership, development, financing, operation or sale of the Property;
provided, however, that Grantor shall not be obligated to indemnify Trustee with
respect to any Claim arising solely from the gross negligence or willful
misconduct of Trustee or Beneficiary. The agreements and indemnifications
contained in this Section shall apply to Claims arising both before and after
the repayment of the Loan and shall survive the repayment of the Loan, any

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foreclosure or deed, conveyance or assignment in lieu thereof and any other
action by Trustee to enforce the rights and remedies of Beneficiary or Trustee
hereunder or under the other Loan Documents.
Section 8.3    Substitution of Trustee; Multiple Trustees.
In case of the death, resignation, removal, or disqualification of Trustee, or
if for any reason Beneficiary shall deem it desirable to appoint a substitute or
successor trustee, Beneficiary shall have, and is hereby granted with warranty
of further assurances, the irrevocable power to appoint a new or replacement or
substitute Trustee. Such power may be exercised at any time with notice to
Grantor, without cause and without specifying any reason therefor, by filing for
record in the office where this Deed of Trust is recorded a notice of
Substitution of Trustee. The power of appointment of a successor Trustee may be
exercised as often as and whenever Beneficiary may choose, and the exercise of
the power of appointment, no matter how often, shall not be an exhaustion
thereof. Upon the recordation of such Substitution of Trustee, the Trustee so
appointed shall thereupon, without any further act or deed of conveyance, become
fully vested with identically the same title and estate in and to the Property
and with all the rights, powers, trusts and duties of its predecessor in the
trust hereunder with like effect as if originally named as Trustee hereunder.
Whenever in this Deed of Trust reference is made to Trustee, it shall be
construed to mean each Person appointed as Trustee for the time being, whether
original or successor in trust. All title, estate, rights, powers, trusts and
duties granted to Trustee shall be in each Person appointed as Trustee so that
any action hereunder by any Person appointed as Trustee shall for all purposes
be deemed to be, and as effective as, the action of all Trustees.
Article IX
Miscellaneous.
Section 9.1    Rights, Powers and Remedies Cumulative.
To the extent permitted by applicable Laws, each right, power and remedy of
Beneficiary or Trustee as provided for in this Deed of Trust, or in any of the
other Loan Documents or now or hereafter existing by Law, shall be cumulative
and concurrent and shall be in addition to every other right, power or remedy
provided for in this Deed of Trust, or in any of the other Loan Documents or now
or hereafter existing by Law, and the exercise or beginning of the exercise by
Beneficiary or Trustee of any one or more of such rights, powers or remedies
shall not preclude the simultaneous or later exercise by Beneficiary or Trustee
of any or all such other rights, powers or remedies.
Section 9.2    No Waiver by Beneficiary or Trustee.
No course of dealing or conduct by or among Beneficiary, Trustee and Grantor
shall be effective to amend, modify or change any provisions of this Deed of
Trust or the other Loan Documents. No failure or delay by Beneficiary or Trustee
to insist upon the strict performance of any term, covenant or agreement of this
Deed of Trust or of any of the other Loan Documents, or to exercise any right,
power or remedy consequent upon a breach thereof, shall constitute a waiver of
any such term, covenant or agreement or of any such breach, or preclude
Beneficiary or Trustee from exercising any such right, power or remedy at any
later time or times. By accepting payment after the due date of any of the
Obligations, neither Beneficiary nor Trustee

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shall be deemed to waive the right either to require prompt payment when due of
all other Obligations, or to declare an Event of Default for failure to make
prompt payment of any such other Obligations. Neither Grantor nor any other
Person now or hereafter obligated for the payment of the whole or any part of
the Obligations shall be relieved of such liability by reason of (a) the failure
of Beneficiary to comply with any request of Grantor or of any other Person to
take action to foreclose this Deed of Trust or otherwise enforce any of the
provisions of this Deed of Trust, or (b) any agreement or stipulation between
any subsequent owner or owners of the Property and Beneficiary, or
(c) Beneficiary’s extending the time of payment or modifying the terms of this
Deed of Trust or any of the other Loan Documents without first having obtained
the consent of Grantor or such other Person. Regardless of consideration, and
without the necessity for any notice to or consent by the holder of any
subordinate Lien on the Property, Beneficiary may release any Person at any time
liable for any of the Obligations or any part of the security for the
Obligations and may extend the time of payment or otherwise modify the terms of
this Deed of Trust or any of the other Loan Documents without in any way
impairing or affecting the Lien of this Deed of Trust or the priority of this
Deed of Trust over any subordinate Lien. The holder of any subordinate Lien
shall have no right to terminate any Lease regardless of whether or not such
Lease is subordinate to this Deed of Trust. Beneficiary may resort to the
security or collateral described in this Deed of Trust or any of the other Loan
Documents in such order and manner as Beneficiary may elect in its sole
discretion.
Section 9.3    Waivers and Agreements Regarding Remedies.
To the extent permitted by applicable Laws, Grantor hereby:
(a)    to the full extent permitted by Law, hereby voluntarily and knowingly
waives its rights to reinstatement and redemption, and to the full extent
permitted by Law, waives the benefits of all present and future valuation
(including any hearing to determine fair market value pursuant to ARS Sections
12-1566, 33-725, 33-727 and/or 33-814), appraisement, homestead, exemption,
stay, extension or redemption (if applicable), right to notice of election to
accelerate the Obligations, and moratorium laws under any state or federal law;
(b)    waives all rights to a marshalling of the assets of Grantor, including
the Property, or to a sale in the inverse order of alienation in the event of a
foreclosure of the Property, and agrees not to assert any right under any Law
pertaining to the marshalling of assets, the sale in inverse order of
alienation, the exemption of homestead, the administration of estates of
decedents, or other matters whatsoever to defeat, reduce or affect the right of
Beneficiary under the terms of this Deed of Trust to a sale of the Property
without any prior or different resort for collection, or the right of
Beneficiary to the payment of the Obligations out of the proceeds of sale of the
Property in preference to every other claimant whatsoever;
(c)    waives any right to bring or utilize any defense, counterclaim or setoff,
other than one which denies the existence or sufficiency of the facts upon which
any foreclosure action is grounded. If any defense, counterclaim or setoff,
other than one permitted by the preceding clause, is timely raised in a
foreclosure action, such defense, counterclaim or setoff shall be dismissed. If
such defense, counterclaim or setoff is based on a Claim which could be tried in
an action for money damages, such Claim may be brought in a separate action
which shall not thereafter be consolidated with the foreclosure action. The
bringing of such separate action for

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money damages shall not be deemed to afford any grounds for staying the
foreclosure action; and
(d)    waives and relinquishes any and all rights and remedies which Grantor may
have or be able to assert by reason of the provisions of any Laws pertaining to
the rights and remedies of sureties. Grantor specifically waives the provisions
of ARS Sections 12-1641 through 12-1646, 44-142 and 47-3605, and Rule 17(e) of
the Arizona Rules of Civil Procedure, with respect to the rights of guarantors,
indemnitors, sureties, co-makers or accommodation parties.
Section 9.4    Successors and Assigns.
All of the grants, covenants, terms, provisions and conditions of this Deed of
Trust shall run with the Land and shall apply to and bind the successors and
assigns of Grantor (including any permitted subsequent owner of the Property),
and inure to the benefit of Beneficiary, its successors and assigns and to the
successors in trust of Trustee.
Section 9.5    No Warranty by Beneficiary or Trustee.
By inspecting the Property or by accepting or approving anything required to be
observed, performed or fulfilled by Grantor or to be given to Beneficiary or
Trustee pursuant to this Deed of Trust or any of the other Loan Documents,
Beneficiary and Trustee shall not be deemed to have warranted or represented the
condition, sufficiency, legality, effectiveness or legal effect of the same, and
such acceptance or approval shall not constitute any warranty or representation
with respect thereto by Beneficiary or Trustee.
Section 9.6    Amendments.
This Deed of Trust may not be modified or amended except by an agreement in
writing, signed by the party against whom enforcement of the change is sought.
Section 9.7    Subject to Law; Severability.
All rights, powers and remedies provided in this Deed of Trust or any of the
other Loan Documents may be exercised only to the extent that the exercise
thereof does not violate any applicable provisions of Laws and are intended to
the extent necessary so that they will not render this Deed of Trust or any of
the other Loan Documents invalid, unenforceable or not entitled to be recorded,
registered or filed under any provision of applicable Laws. In the event any one
or more of the provisions of this Deed of Trust or any of the other Loan
Documents shall for any reason be held to be invalid, illegal or unenforceable,
in whole or in part or in any other respect, or in the event any one or more of
the provisions of this Deed of Trust or the Loan Documents operates or would
prospectively operate to invalidate this Deed of Trust or any of the other Loan
Documents, then and in either of those events, at the option of Beneficiary,
such provision or provisions only shall be deemed null and void and shall not
affect the validity of the remaining Obligations, and the remaining provisions
of this Deed of Trust or the other Loan Documents shall remain operative and in
full force and effect and shall in no way be affected, prejudiced or disturbed
thereby.

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Section 9.8    Notices.
All Notices required or which any party desires to give hereunder or under any
other Loan Document shall be in writing and, unless otherwise specifically
provided in such other Loan Document, shall be deemed sufficiently given or
furnished if delivered by personal delivery, by nationally recognized overnight
courier service or by certified United States mail, postage prepaid, addressed
to the party to whom directed at the applicable address specified in the
Preamble to this Deed of Trust (unless changed by similar notice in writing
given by the particular party whose address is to be changed) or by facsimile.
Any Notice shall be deemed to have been given either at the time of personal
delivery or, in the case of courier or mail, as of the date of first attempted
delivery at the address and in the manner provided herein, or, in the case of
facsimile, upon receipt; provided that service of a Notice required by any
applicable statute shall be considered complete when the requirements of that
statute are met. Notwithstanding the foregoing, no notice of change of address
shall be effective except upon actual receipt. This Section shall not be
construed in any way to affect or impair any waiver of notice or demand provided
in this Deed of Trust or in any other Loan Document or to require giving of
notice or demand to or upon any Person in any situation or for any reason.
Section 9.9    Joint and Several Liability.
If Grantor consists of two (2) or more Persons, the term “Grantor” shall also
refer to all Persons signing this Deed of Trust as Grantor, and to each of them,
and all of them are jointly and severally bound, obligated and liable hereunder.
Trustee or Beneficiary may release, compromise, modify or settle with any of
Grantor, in whole or in part, without impairing, lessening or affecting the
obligations and liabilities of the others of Grantor hereunder or under the
Note. Any of the acts mentioned aforesaid may be done without the approval or
consent of, or notice to, any of Grantor.
Section 9.10    Rules of Construction.
The words “hereof,” “herein,” “hereunder,” “hereto,” and other words of similar
import refer to this Deed of Trust in its entirety. The terms “agree” and
“agreements” mean and include “covenant” and “covenants.” The words “include”
and “including” shall be interpreted as if followed by the words “without
limitation.” The headings of this Deed of Trust are for convenience of reference
only and shall not be considered a part hereof and are not in any way intended
to define, limit or enlarge the terms hereof. Any reference to a Property street
address(es) is for administrative and reference purposes only. In the event of
any conflict between a Property street address(es) listed herein and Exhibit A
attached hereto, the legal description set forth on Exhibit A shall control. All
references (a) made in the neuter, masculine or feminine gender shall be deemed
to have been made in all such genders, (b) made in the singular or plural number
shall be deemed to have been made, respectively, in the plural or singular
number as well, (c) to the Loan Documents are to the same as extended, amended,
restated, supplemented or otherwise modified from time to time unless expressly
indicated otherwise, (d) to the Land, Improvements, Personalty, Real Property or
Property shall mean all or any portion of each of the foregoing, respectively,
and (e) to Articles or Sections are to the respective Articles or Sections
contained in this Deed of Trust unless expressly indicated otherwise. Any term
used or defined in the Uniform Commercial Code of the State, as in effect from
time to time, which is not defined in this Deed of Trust shall have the meaning
ascribed to

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that term in the Uniform Commercial Code of the State. If a term is defined in
Article 9 of the Uniform Commercial Code of the State differently than in
another Article of the Uniform Commercial Code of the State, the term shall have
the meaning specified in Article 9. For purposes of ARS §§ 33-801 through 821,
Grantor herein shall be “Trustor.”
Section 9.11    Governing Law; Usury.
This Deed of Trust shall be construed, governed and enforced in accordance with
the Laws in effect from time to time in the State (without regard to its
conflicts of law principles).
Section 9.12    Entire Agreement.
The Loan Documents constitute the entire understanding and agreement between
Grantor and Beneficiary with respect to the transactions arising in connection
with the Loan, and supersede all prior written or oral understandings and
agreements between Grantor and Beneficiary with respect to the matters addressed
in the Loan Documents. In particular, and without limitation, the terms of any
commitment by Beneficiary to make the Loan are merged into the Loan Documents.
Except as incorporated in writing into the Loan Documents, there are no
representations, understandings, stipulations, agreements or promises, oral or
written, with respect to the matters addressed in the Loan Documents.
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.
Section 9.13    Limited Recourse Provision.
Beneficiary shall have no recourse against, nor shall there be any personal
liability to, the members of Grantor, or to any shareholders, members, partners,
beneficial interest holders or any other entity or person in the ownership
(directly or indirectly) of Grantor with respect to the obligations of Grantor
and Guarantor under the Loan. For purposes of clarification, in no event shall
the above language limit, reduce or otherwise affect Grantor’s liability or
obligations under the Loan Documents, Guarantor’s liability or obligations under
the Guaranty, or Beneficiary’s right to exercise any rights or remedies against
any collateral securing the Loan.
Section 9.14    Property Insurance Limitation.
Grantor acknowledges and agrees that it has not been required as a condition of
the Loan to obtain property insurance in an amount that exceeds the replacement
cost of the improvements as established by the property insurer.

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Article X
Non-Borrower Grantor.
Section 10.1    Definition. As used in this Article X, “Third Party Secured
Obligation” means any obligation secured by this Deed of Trust which is required
to be performed by any Borrower under the Loan Agreement other than Grantor.
Section 10.2    Rights of Beneficiary. Grantor authorizes Beneficiary to perform
any or all of the following acts at any time in its sole discretion, all without
notice to Grantor and without affecting Beneficiary’s rights or Grantor’s
obligations under this Deed of Trust:
(a)    Beneficiary may alter any terms of the Third Party Secured Obligations or
any part of them, including renewing, compromising, modifying, extending or
accelerating, terminating early, or otherwise changing the time for payment of,
or increasing or decreasing the rate of interest on, the Third Party Secured
Obligations or any part of them.
(b)    Beneficiary may enforce or forbear from enforcing the Third Party Secured
Obligations on a net or gross basis.
(c)    Beneficiary may take and hold security for the Third Party Secured
Obligations, accept additional or substituted security for that obligation, and
subordinate, exchange, enforce, waive, release, reconvey, compromise, fail to
perfect and sell or otherwise dispose of any such security.
(d)    Beneficiary may direct the order and manner of any sale of all or any
part of any security now or later to be held for the Third Party Secured
Obligations, and Beneficiary may also bid at any such sale and may apply all or
any part of the Third Party Secured Obligations against the amount so bid.
(e)    To the extent permitted by applicable Laws, Beneficiary may apply any
payments or recoveries from Borrower (or any of them), Grantor or any other
source, and any proceeds of any security, to the Third Party Secured Obligations
in such manner, order and priority as Beneficiary may elect, whether that
obligation is secured by this Deed of Trust or not at the time of the
application.
(f)    Beneficiary may substitute, add or release any Borrower, guarantors or
endorsers.
(g)    In addition to the Third Party Secured Obligation, Beneficiary may extend
other credit to any Borrower, and may take and hold security for the credit so
extended, whether or not such security is also security for the Third Party
Secured Obligations, all without affecting Beneficiary’s rights or Grantor’s
liability under this Deed of Trust.
Section 10.3    Deed of Trust to be Absolute.
Grantor expressly agrees that until the earlier of (i) the release and
reconveyance of this Deed of Trust in accordance with Section 9.29 of the Loan
Agreement, or (ii) the date that the Third Party Secured Obligations are paid
and performed in full, and each and every term, covenant and condition of this
Deed of Trust is fully performed, to the extent permitted by applicable Laws,
Grantor shall not be released by or because of:

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(a)    Any act or event which might otherwise discharge, reduce, limit or modify
Grantor’s obligations under this Deed of Trust;
(b)    Any waiver, extension, modification, forbearance, delay or other act or
omission of Beneficiary, or the failure by Beneficiary to proceed promptly or
otherwise against any Borrower, Grantor or any security;
(c)    Any action, omission or circumstance which might increase the likelihood
that Grantor may be called upon to perform under this Deed of Trust or which
might affect the rights or remedies of Grantor against any Borrower; or
(d)    Any Borrower becoming insolvent or subject to any bankruptcy or other
voluntary or involuntary proceeding, in or out of court, for the adjustment of
debtor-creditor relationships (an “Insolvency Proceeding”) and as a result
thereof some or all of the Third Party Secured Obligations being terminated,
rejected, discharged, modified or abrogated.
This Deed of Trust shall remain in full force and effect without regard to, and
shall not be affected or impaired, by any invalidity, irregularity or
unenforceability, in whole or in part (including with respect to any netting
provision) of any Loan Document or Swap Contract or any limitation on the
liability of any Borrower thereunder or any limitation on the method or terms of
payment thereunder which may now or in the future be caused or imposed in any
manner whatsoever. Grantor hereby acknowledges that absent this Section 10.3,
Grantor might have a defense to the enforcement of this Deed of Trust as a
result of one or more of the foregoing acts, omissions, agreements, waivers or
matters. To the extent permitted by applicable Laws, Grantor hereby expressly
waives and surrenders any defense to any liability under this Deed of Trust
based upon any of such acts, omissions, agreements, waivers or matters. It is
the express intent of Grantor that Grantor’s obligations under this Deed of
Trust are and shall be absolute, unconditional and irrevocable.
Section 10.4    Grantor’s Waivers.
Grantor waives, to the extent permitted by applicable Laws:
(a)    All statutes of limitations as a defense to any action or proceeding
brought against Grantor by Beneficiary, to the fullest extent permitted by law;
(b)    Any right it may have to require Beneficiary to proceed against any
Borrower or any other party, proceed against or exhaust any security held from
any Borrower or any other party, or pursue any other remedy in Beneficiary’s
power to pursue;
(c)    To the extent permitted by applicable law, the benefit of all laws now
existing or which may hereafter be enacted providing for any appraisement,
valuation, stay, extension, redemption or moratorium;
(d)    All rights of marshaling in the event of foreclosure;
(e)    Any defense based on any claim that Grantor’s obligations exceed or are
more burdensome than those of any other Borrower;

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(f)    Any defense based on: (i) any legal disability of any Borrower, (ii) any
release, discharge, modification, impairment or limitation of the liability of
any Borrower to Beneficiary from any cause, whether consented to by Beneficiary
or arising by operation of law or from any Insolvency Proceeding, and (iii) any
rejection, disallowance or disaffirmance of any of the Third Party Secured
Obligations, or any part of them, or any security held for any of them, in any
such Insolvency Proceeding;
(g)    Any defense based on any action taken or omitted by Beneficiary in any
Insolvency Proceeding involving any Borrower, including. without limitation,
filing, defending, settling or obtaining a judgment or order on any proof of
claim or any adversary proceeding, making any election to have Beneficiary’s
claim allowed as being secured, partially secured or unsecured, including any
election under 11 U.S.C. Section 1111(b), seeking relief from the automatic stay
or adequate protection, including submitting an appraisal of any security,
voting to reject or accept or failing to vote on any reorganization plan, making
any extension of credit by Beneficiary to any Borrower in any Insolvency
Proceeding, and the taking and holding by Beneficiary of any security for any
such extension of credit, whether or not such security is also security for the
Third Party Secured Obligations;
(h)    All presentments, demands for performance, notices of nonperformance,
protests, notices of protest, notices of dishonor, notices of acceptance of this
Deed of Trust and of the existence, creation, or incurring of new or additional
indebtedness, and demands and notices of every kind (other than notices
expressly provided for under this Deed of Trust or under the Loan Agreement);
and
(i)    Any defense based on or arising out of any defense that any Borrower may
have to the payment or performance of the Third Party Secured Obligations or any
part of them other than payment and performance in full.
Section 10.5    Grantor’s Additional Waivers.
Grantor waives to extent permitted by applicable Laws:
(a)    The obligations of Grantor hereunder are independent of the obligations
of any other Borrower, and a separate action or actions may be brought against
Grantor whether or not action or suit is brought against any other Borrower or
any other Borrower is joined in any such action or actions. At the option of
Beneficiary, Grantor may be joined in any action or proceeding commenced by
Beneficiary against any other Borrower in connection with or based on the Third
Party Secured Obligations or any security therefor, and recovery may be had
against Grantor in such action or proceeding without any requirement that
Beneficiary first assert, prosecute or exhaust any remedy or claim against any
other Borrower.
(b)    Upon the occurrence and during the continuance of any Event of Default
under any of the Loan Documents, Beneficiary in its sole discretion, without
prior notice to or consent of Grantor, may elect to: (i) foreclose either
judicially or nonjudicially against any real or personal property security that
Beneficiary may hold for the Third Party Secured Obligations other than the
Property hereby encumbered, (ii) accept a transfer of any such security in lieu
of foreclosure, (iii) compromise or adjust any of the Third Party Secured
Obligations or any part of them or make any other accommodation with any other
Borrower or Grantor, or (iv) exercise any other remedy against any Borrower or
any security other than the Property hereby encumbered.

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With respect to security other than the Property hereby encumbered, no such
action by Beneficiary shall release or limit the liability of Grantor, who shall
remain liable under this Deed of Trust after the action, even if the effect of
the action is to deprive Grantor of any subrogation rights, rights of indemnity,
rights of contribution, or other rights to collect reimbursement from any
Borrower for any recovery by Beneficiary against Grantor, whether contractual or
arising by operation of law or otherwise. After any foreclosure or deed in lieu
of foreclosure of any real or personal property pledged to secure any of the
Third Party Secured Obligations, Grantor shall under no circumstances be deemed
to have any right, title, interest or claim in or to such property, whether it
is held by Beneficiary or any third party.
(c)    Regardless of whether Beneficiary may have recovered against Grantor,
Grantor hereby waives, to the extent permitted by applicable law: (i) all rights
of subrogation, all rights of indemnity, and any other rights to collect
reimbursement or contribution from any other Borrower or any other party for any
recovery by Beneficiary against Grantor, whether contractual or arising by
operation of law (including the United States Bankruptcy Code or any successor
or similar statute) or otherwise (collectively, “Reimbursement Rights”), (ii)
all rights to enforce any remedy that Beneficiary may have against any other
Borrower, and (iii) all rights to participate in any security now or later to be
held by Beneficiary for the Third Party Secured Obligations. To the extent
Grantor’s waiver of Reimbursement Rights is found by a court of competent
jurisdiction to be void or voidable for any reason, any Reimbursement Rights
Grantor may have against any other Borrower or any collateral or security shall
be junior and subordinate to any rights Beneficiary may have against such
Borrower and to all right, title and interest Beneficiary may have in any such
collateral or security. If any amount should be paid to Grantor on account of
any Reimbursement Rights at any time when any the Third Party Secured
Obligations have not been paid in full, such amount shall be held in trust for
Beneficiary and shall immediately be paid over to Beneficiary to be credited and
applied against the Third Party Secured Obligations, whether matured or
unmatured, in accordance with the terms of the Loan Documents. The covenants and
waivers of Grantor set forth in this Section 10.5(c) shall be effective until
all of the Third Party Secured Obligations have been paid and performed in full
and are made solely for the benefit of Beneficiary.
(d)    No provision or waiver in this Deed of Trust shall be construed as
limiting the generality of any other provision or waiver contained in this Deed
of Trust.
Section 10.6    Revival and Reinstatement.
If Beneficiary is required to pay, return or restore to any Borrower or any
other person any amounts previously paid on any of the Third Party Secured
Obligations because of any Insolvency Proceeding of any Borrower, any stop
notice or any other reason, the obligations of Grantor shall be reinstated and
revived and the rights of Beneficiary shall continue with regard to such
amounts, all as though they had never been paid, and this Deed of Trust shall
continue to be effective or be reinstated, as the case may be.
Section 10.7    Information Regarding Borrowers.
Grantor represents that: (a) Beneficiary has not made any representation to
Grantor as to the creditworthiness of any Borrower, and (b) no oral promises,
assurances, representations or warranties have been made by or on behalf of
Beneficiary to induce Grantor to execute and deliver this Deed of Trust. Grantor
has received and approved copies of all other requested Loan

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Documents. Before signing this Deed of Trust, Grantor investigated the financial
condition and business operations of each other Borrower and such other matters
as Grantor deemed appropriate to assure itself of each such Borrower’s ability
to discharge its obligations in connection with the Third Party Secured
Obligations. Grantor assumes full responsibility for that due diligence and for
keeping informed of all matters which may affect any Borrower’s ability to pay
and perform its obligations to Beneficiary. Beneficiary has no any duty to
disclose to Grantor any information which Beneficiary may have or receive about
any Borrower’s financial condition or business operations or any other
circumstances bearing on any Borrower’s ability to perform.
Section 10.8    Counsel; Integration; Miscellaneous.
Grantor acknowledges that Grantor has had adequate opportunity to carefully read
this Deed of Trust and to consult with an attorney of Grantor’s choice prior to
signing it. No consent, approval or authorization of or notice to any person or
entity is required in connection with Grantor’s execution of and obligations
under this Deed of Trust, and Grantor acknowledges its execution and delivery of
this Deed of Trust is made voluntarily without any duress or undue influence of
any kind. No course of prior dealing, usage of trade, parol or extrinsic
evidence of any nature shall be used to supplement, modify or vary any of the
terms hereof. This Deed of Trust is intended by the parties to be a fully
integrated and final expression of their agreement. This Deed of Trust and the
other Loan Documents incorporate all negotiations of the parties and constitute
the parties’ entire agreement. Grantor acknowledges that is relying on no
written or oral agreement, representation, warranty or understanding of any kind
made by Beneficiary, or any employee, attorney or agent of Beneficiary, except
for the agreements of Beneficiary set forth herein and in the Loan Documents.
[Signatures appear on following page.]

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IN WITNESS WHEREOF, Grantor has caused this Deed of Trust to be executed as of
the day and year first written above.
GRANTOR:

KBSII FOUNTAINHEAD, LLC,
a Delaware limited liability company

By:
KBSII REIT ACQUISITION XXIV, LLC,

a Delaware limited liability company,
its sole member

By:
KBS REIT PROPERTIES II, LLC,

a Delaware limited liability company,
its sole member

By:
KBS LIMITED PARTNERSHIP II,

a Delaware limited partnership,
its sole member

By:
KBS REAL ESTATE INVESTMENT TRUST II, INC.,

a Maryland corporation,
its general partner

By:
/s/ Charles J. Schreiber, Jr.

Charles J. Schreiber, Jr.,
Chief Executive Officer

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ACKNOWLEDGMENT
 
 
 
 
 
A notary public or other officer completing this certificate verifies only the
identity 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 March 27, 2018 before me, K. Godin, Notary Public,
(here insert name of the officer)
personally appeared Charles J. Schreiber, Jr., who proved to me on the basis of
satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the
within instrument and acknowledged to me that he/she/they executed the same in
his/her/their authorized capacity(ies), and that by his/her/their signature(s)
on the instrument the person(s), or the entity upon behalf of which the
person(s) acted, executed the instrument.
I certify under PENALTY OF PERJURY under the laws of the State of California
that the foregoing paragraph is true and correct.
WITNESS my hand and official seal.

Signature /s/ K. Godin  (Seal)

 

        

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20180237443

EXHIBIT A
Legal Description

REAL PROPERTY IN THE CITY OF TEMPE, COUNTY OF MARICOPA, STATE OF ARIZONA, MORE
PARTICULARLY DESCRIBED AS FOLLOWS:

PARCEL NO. 1:

LOT 7A OF FOUNTAINHEAD LOT 7, A REPLAT OF LOT 7, FOUNTAINHEAD CORPORATE PARK
AMENDED, ACCORDING TO THE PLAT OF SAID SUBDIVISION RECORDED IN BOOK 864 OF MAPS,
PAGE 8 OF THE RECORDS OF MARICOPA COUNTY, ARIZONA;

EXCEPT THAT PORTION THAT WAS CONVEYED IN INSTRUMENT RECORDED AS RECORDING NO.
2008-1071568 OF OFFICIAL RECORDS, MORE PARTICULARLY DESCRIBED AS FOLLOWS:

THAT PORTION OF LOT 7A, FOUNTAINHEAD LOT 7 REPLAT, ACCORDING TO BOOK 864 OF
MAPS, PAGE 8, RECORDS OF MARICOPA COUNTY, ARIZONA, LOCATED IN THE NORTHEAST
QUARTER (NE 1/4) OF SECTION 29, TOWNSHIP 1 NORTH, RANGE 4 EAST, GILA AND SALT
RIVER MERIDIAN, MARICOPA COUNTY, ARIZONA, DESCRIBED AS FOLLOWS:

COMMENCING AT A 3/8” IRON BAR 1 FOOT BELOW GROUND TAGGED “RLS 42014” MARKING THE
CENTER OF SAID SECTION 29, BEING SOUTH 89 DEGREES 40 MINUTES 03 SECONDS WEST,
2676.43 FEET FROM A CITY OF TEMPE (COT) BRASS CAP IN HAND HOLE LABELED GDAC
64022-1, MARKING THE EAST QUARTER CORNER OF SAID SECTION 29;

THENCE ALONG THE EAST-WEST MIDSECTION LINE OF SAID SECTION 29, NORTH 89 DEGREES
40 MINUTES 03 SECONDS EAST, 799.18 FEET TO THE EXISTING EASTERLY RIGHT OF WAY
LINE OF INTERSTATE HIGHWAY 10 (PHOENIX - CASA GRANDE HIGHWAY);

THENCE ALONG SAID EXISTING EASTERLY RIGHT OF WAY LINE, NORTH 00 DEGREES 35
MINUTES 19 SECONDS EAST, 201.01 FEET;

THENCE CONTINUING ALONG SAID EXISTING EASTERLY RIGHT OF WAY LINE, FROM A LOCAL
TANGENT BEARING OF NORTH 01 DEGREES 00 MINUTES 23 SECONDS WEST ALONG A CURVE TO
THE LEFT HAVING A RADIUS OF 3969.72 FEET, A LENGTH OF 354.65 FEET TO THE
SOUTHWEST CORNER OF SAID LOT 7A AND THE POINT OF BEGINNING;

THENCE CONTINUING ALONG SAID EXISTING EASTERLY RIGHT OF WAY LINE ALSO BEING THE
WESTERLY LINE OF SAID LOT 7A, FROM A LOCAL TANGENT BEARING OF NORTH 06 DEGREES
07 MINUTES 31 SECONDS WEST ALONG SAID

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20180237443

CURVE TO THE LEFT, HAVING A RADIUS OF 3969.72 FEET, A LENGTH OF 186.29 FEET;

THENCE CONTINUING ALONG SAID WESTERLY LINE OF LOT 7A, NORTH 89 DEGREES 37
MINUTES 35 SECONDS EAST, 101.07 FEET;

THENCE CONTINUING ALONG SAID WESTERLY LINE, FROM A LOCAL TANGENT BEARING OF
NORTH 08 DEGREES 36 MINUTES 18 SECONDS WEST, ALONG A CURVE TO THE LEFT, HAVING A
RADIUS OF 4069.72 FEET, A LENGTH OF 200.40 FEET;

THENCE CONTINUING ALONG SAID WESTERLY LINE, NORTH 89 DEGREES 38 MINUTES 42
SECONDS EAST, 13.02 FEET;

THENCE FROM A LOCAL TANGENT BEARING OF SOUTH 11 DEGREES 22 MINUTES 44 SECONDS
EAST, ALONG A CURVE TO THE RIGHT, HAVING A RADIUS OF 4082.72 FEET, A LENGTH OF
386.66 FEET TO THE SOUTHERLY LINE OF SAID LOT 7A;

THENCE ALONG SAID SOUTHERLY LINE, SOUTH 89 DEGREES 40 MINUTES 03 SECONDS WEST,
113.25 FEET TO THE POINT OF BEGINNING.

PARCEL NO. 2:

NONEXCLUSIVE EASEMENTS AND RIGHTS OF PEDESTRIAN AND VEHICULAR ACCESS OVER AND
ACROSS PRIVATE ROADS AND STREETS, INCLUDING BUT NOT LIMITED TO FOUNTAINHEAD
PARKWAY AND 55TH STREET, BY OR PURSUANT TO THAT CERTAIN “DECLARATION OF
COVENANTS, CONDITIONS, RESTRICTIONS AND EASEMENTS FOR FOUNTAINHEAD CORPORATE
PARK” RECORDED FEBRUARY 25, 2005, IN DOCUMENT NO. 20050232522, AND RE-RECORDED
MARCH 9, 2005, IN DOCUMENT NO. 20050288447, OFFICIAL RECORDS OF MARICOPA COUNTY,
ARIZONA, AS AMENDED IN A FIRST AMENDMENT RECORDED APRIL 1, 2009, IN DOCUMENT NO.
20090288536, AND IN A SECOND AMENDMENT RECORDED APRIL 13, 2010, IN DOCUMENT NO.
20100308375, OFFICIAL RECORDS OF MARICOPA COUNTY, ARIZONA.

PARCEL NO. 3:

A NONEXCLUSIVE EASEMENT FOR A WATER SYSTEM BY OR PURSUANT TO THAT CERTAIN “WATER
DELIVERY AGREEMENT, COVENANTS RUNNING WITH THE LAND AND EASEMENTS” RECORDED
DECEMBER 28, 2006, IN DOCUMENT NO. 20061691569, AND RE-RECORDED APRIL 19, 2007,
IN DOCUMENT NO. 20070457533, OFFICIAL RECORDS OF MARICOPA COUNTY, ARIZONA, AS
AMENDED IN A FIRST AMENDMENT RECORDED AUGUST 4, 2009, IN DOCUMENT NO.
20090719807 AND IN A SECOND AMENDMENT RECORDED DECEMBER 17, 2009, IN DOCUMENT
NO. 20091154258, OFFICIAL RECORDS OF MARICOPA COUNTY, ARIZONA.

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20180237443

APN: 123-33-056B

NAI-1503489766v4

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