EXHIBIT 10.16
NOTICE OF CONFIDENTIALITY RIGHTS: IF YOU ARE A NATURAL PERSON, YOU MAY REMOVE OR
STRIKE ANY OF THE FOLLOWING INFORMATION FROM THIS INSTRUMENT BEFORE IT IS FILED
FOR RECORD IN THE PUBLIC RECORDS: YOUR SOCIAL SECURITY NUMBER OR YOUR DRIVER’S
LICENSE NUMBER.
NOTICE: THIS INSTRUMENT SECURES, INTER ALIA, OBLIGATIONS WHICH PROVIDE FOR A
VARIABLE RATE OF INTEREST AND OBLIGATORY FUTURE CREDIT ADVANCES. ALL SUCH
OBLIGATORY FUTURE CREDIT ADVANCES SHALL HAVE THE SAME LIEN PRIORITY AS IF MADE
ON THE DATE HEREOF. [SEE THE FOLLOWING DEED OF TRUST FOR PARTICULARS.]
THIS DEED OF TRUST SHALL BE EFFECTIVE AS AND SHALL CONSTITUTE A FIXTURE FILING
FROM THE DATE OF ITS FILING FOR RECORD IN THE REAL PROPERTY RECORDS OF THE
COUNTY IN WHICH THE LAND (AS DEFINED HEREIN) IS LOCATED.
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SECOND DEED OF TRUST,
SECURITY AGREEMENT AND FIXTURE FILING
     THIS SECOND DEED OF TRUST, SECURITY AGREEMENT AND FIXTURE FILING
(hereinafter referred to as this “Deed of Trust”) is made and entered into as of
the 31st day of October, 2006, by APARTMENT REIT WARKER RANCH, LP, a Txas
limited partnership (“Grantor”), Grantor having as a business address 1606 Santa
Rosa Road, Suite 109, Richmond, Virginia 23229, Attn: S.Jay Olander, to JOHN M.
NOLAN, whose address is Winstead Sechrest & Minick, P.C., 1201 Elm Street,
Dallas, Texas 75270, as Trustee (including any successors or substitutes
appointed as herein provided from time to time, hereinafter referred to as
“Trustee”) for the benefit of WACHOVIA BANK, NATIONAL ASSOCIATION, a national
banking association (hereinafter referred to as “Wachovia”), having as a
business address at 171 17TH Street, N.W., GA 4506, Atlanta, Georgia 30363,
Attn: Cathy Casey, as Agent for itself and the other lenders from time to time
party to the Mezzanine Credit Agreement (as hereinafter defined) (Wachovia, in
its capacity as Agent, hereinafter referred to as the “Lender”).
W I T N E S S E T H:
     WHEREAS, NNN Apartment REIT Holdings, L.P., a Virginia limited partnership
(“Borrower”), Lender and certain other financial institutions parties thereto
from time to time (the Lender, together with such other financial institutions,
the “Banks”) entered into that certain Credit Agreement dated October 31, 2006
(the “Senior Credit Agreement” and the loans made thereunder the “Senior
Loans”); and
     WHEREAS, the Senior Loans are evidenced by (i) those certain Revolving
Credit Note(s) made by Borrower in the aggregate principal amount of up to
$200,000,000.00, each of

 

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which has been issued pursuant to the Senior Credit Agreement and (ii) each
other note as may be issued under the Senior Credit Agreement, each as
originally executed, or if varied, extended, supplemented, consolidated,
amended, replaced, renewed, modified or restated from time to time as so varied,
extended, supplemented, consolidated, amended, replaced, renewed, modified or
restated (collectively, the “Senior Note”); and
     WHEREAS, the obligations under the Senior Credit Agreement and the Senior
Note are (i) guaranteed by, among other things, that certain Guaranty executed
and delivered by, among others, the Grantor, dated October 31, 2006 and
(ii) secured by, among other things, that certain Deed of Trust, Security
Agreement and Fixture Filing dated as of October 31, 2006 given by Grantor (the
“Senior Deed of Trust”), for the use and benefit of Wachovia, as agent under the
Senior Credit Agreement; and
     WHEREAS, the Senior Loan is further secured by the following documents:
(i) an Assignment of Leases and Rents, dated as of October 31, 2006 (the “Senior
Assignment of Leases”), (ii) an Agreement Regarding Environmental Activity,
dated as of October 31, 2006, (iii) a Collateral Assignment of Property
Management Agreement, dated as of October 31, 2006, (iv) a Management Company’s
Consent to Assignment and (ii) various other security documents and financing
statements on form UCC-1.
     WHEREAS, Borrower, Lender and Banks are party to a Mezzanine Credit
Agreement, dated as of October 31, 2006 (hereinafter together with any and all
renewals, modifications, consolidations and extensions thereof, referred to as
the “Mezzanine Credit Agreement”; terms used but not defined herein shall have
the meanings contained in the Mezzanine Credit Agreement), pursuant to which the
Banks may make a loan to Borrower up to the original principal amount of FIFTEEN
MILLION AND NO/100 DOLLARS ($15,000,000.00) (the “Loan”); and
     WHEREAS, it is a condition precedent to the Banks’ obligations under the
Mezzanine Credit Agreement that Grantor execute and deliver this Deed of Trust;
     NOW, THEREFORE, FOR AND IN CONSIDERATION OF TEN AND NO/100 DOLLARS ($10.00)
AND OTHER GOOD AND VALUABLE CONSIDERATIONS, the receipt and sufficiency whereof
are hereby acknowledged by Grantor, and in order to secure the Secured
Obligations (as hereinafter defined), Grantor, with general warranty, does
hereby grant, bargain, sell, convey, transfer, assign, pledge, set over, confirm
and deliver in trust unto Trustee, and his substitutes, successors and assigns,
with power of sale, all of Grantor’s estate, right, title and interest in, to
and under all and singular, the following described property (hereinafter
collectively referred to as the “Property”):
          (a) All that certain tract or parcel of land located in the County of
Bexar, State of Texas, more particularly described in Exhibit A attached hereto
and by this reference made a part hereof, together with all right, title and
interest of Grantor, including any after-acquired title or reversion, in and to
the rights-of-ways, streets and alleys adjacent thereto, and all easements,
rights-of-way, licenses, operating agreements, strips and gores of land, vaults,
streets, ways, alleys, passages, sewers, sewer rights, waters, water courses,
water rights and powers, oil, gas and other minerals, flowers, shrubs, crops,
trees, timber and other emblements now or hereafter

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located on the land or under or above same, and all estates, rights, titles,
interests, privileges, liberties, tenements, hereditaments and appurtenances
whatsoever, in any way belonging, relating to or appertaining to said tract or
parcel of land or any part thereof, or which hereafter shall in any way belong,
relate or be appurtenant thereto, whether now owned or hereafter acquired by
Grantor and the reversion and reversions, remainder and remainders, and all the
estate, right, title, interest, property, possession, claim and demand
whatsoever at law, as well as in equity, of Grantor of, in and to the same
(hereinafter referred to as the “Land”); and
          (b) All buildings, structures, parking areas, landscaping, and other
improvements of every nature now or hereafter situated, erected or placed on the
Land (hereinafter referred to as the “Improvements”), and all materials intended
for construction, reconstruction, alteration and repairs of the Improvements now
or hereafter erected, all of which materials shall be deemed to be included
within the Improvements immediately upon the delivery thereof to the Land; and
          (c) All fixtures, machinery, equipment, furniture, inventory, building
supplies, appliances and other articles of personal property (hereinafter
collectively referred to as the “Personal Property”), including, but not limited
to, all engines, radiators, heaters, furnaces, boilers, stokers, pumps, tanks,
dynamos, motors, generators, switchboards, electrical equipment, heating,
plumbing, lifting and ventilating apparatus, air-cooling and air-conditioning
apparatus, gas and electric fixtures, elevators and motors, escalators, ranges,
ovens, bathtubs, sinks, commodes, basins, pipes, faucets and other plumbing,
mirrors, refrigerating plant, refrigerators, iceboxes, dishwashers, carpeting,
floor coverings, furniture, light fixtures, signs, lawn equipment, water
heaters, cooking apparatus and appurtenances, fittings, machinery, furniture,
furnishings, and all other equipment of every kind and description, used or
procured for use in the operation of any building, structure or other
improvement now or hereafter standing on the Property, and all other fixtures
and equipment now or hereafter owned by Grantor and located in, on or about, or
used or intended to be used with or in connection with the use, operation, or
enjoyment of the Land or the Improvements, whether installed in such a way as to
become a part thereof or not, including all extensions, additions, improvements,
betterments, renewals and replacements of any of the foregoing and all the
right, title and interest of Grantor in and to any of the foregoing now owned or
hereafter acquired by Grantor, all of which are hereby declared and shall be
deemed to be fixtures and accessions to the freehold and a part of the
Improvements as between the parties hereto and all persons claiming by, through
or under them; and
          (d) All right, title and interest of Grantor in and to all policies of
insurance, causes of action, licenses, franchises, permits, service contracts,
maintenance contracts, property management agreements, equipment leases, trade
names, trademarks, service marks, logos, goodwill, accounts, chattel paper and
general intangibles as defined in the Uniform Commercial Code as enacted in the
State of Texas which in any way now or hereafter belong, relate or appertain to
the Land, the Improvements or the Personal Property or any part thereof now
owned or hereafter acquired by Grantor, including, without limitation, all
property management agreements, franchise agreements, so called “patronage”
agreements, agreements relating to the collection of receivables or use of
customer lists, all bookings and reservations for space or facilities within the
Property or other information, sales contracts, purchase options, option
agreements, rights of first refusal, contract deposits, earnest money deposits,
prepaid items and

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payments due and to become due thereunder, condemnation payments, insurance
proceeds and escrow funds (hereinafter referred to as the “Intangible
Property”); and
          (e) All present and future leases, tenancies, occupancies and
licenses, whether written or oral (“Leases”), of the Land, the Improvements, the
Personal Property and the Intangible Property, or any combination or part
thereof, and all income, rents, issues, royalties, profits, revenues, security
deposits, and other benefits of the Land, the Improvements, the Personal
Property and the Intangible Property, from time to time accruing, all payments
under Leases, and all payments on account of oil and gas and other mineral
Leases, working interests, production payments, royalties, overriding royalties,
rents, delay rents, operating interests, participating interests and other such
entitlements, and all the estate, right, title, interest, property, possession,
claim and demand whatsoever at law, as well as in equity, of Grantor of, in and
to the same (hereinafter collectively referred to as the “Revenues”);
          (f) All the right, title and interest of Grantor in and to all
construction contracts, subcontracts, architectural agreements, labor, deposits,
bonds, assurances, material and payment bonds, guaranties and warranties, and
plans and specifications relating to the construction of the Improvements on the
Land, whether now or hereafter existing, including, without limitation (i) any
architectural or engineering agreement entered into with respect to the design
of said Improvements and other architectural or engineering services, (ii) the
plans and specifications for the construction of said Improvements prepared by
the architect, and (iii) any contractor’s agreement entered into with respect to
the construction of the Improvements on the Land (hereinafter collectively
referred to as the “Contracts”);
          (g) All present and future funds, deposit accounts, accounts,
instruments, accounts receivable, documents, causes of action, claims, general
intangibles (including without limitation, payment intangibles, all names by
which the Land or the Improvements may be operated or known, all rights to carry
on business under such names, all telephone numbers or listings), all rights,
interest and privileges which Grantor has or may have as developer or declarant
under any easements, covenants, restrictions or declarations now or hereafter
relating to the Land or the Improvements, all goods (including, without
limitation, inventory, property, possession, equipment, fixtures and
accessions), investment property, commercial tort claims, money, supporting
obligations, as-extracted collateral, timber to be cut, and all notes or chattel
paper (whether tangible or electronic) now or hereafter arising from or by
virtue of any transactions related to the Land or the Improvements and all
customer lists, other lists, and business information relating in any way to the
Land, the Improvements or the use thereof, whether now owned or hereafter
acquired;
          (h) All proceeds, products, substitutions and accessions of the
foregoing of every type.
     TO HAVE AND TO HOLD the Property and all parts, rights, members and
appurtenances thereof, to the use, benefit and behalf of Trustee and the
substitutes, successors and assigns of Trustee forever. Grantor covenants and
represents that Grantor is lawfully seized and possessed of the Property and has
good right to convey and pledge the same, and that the same is unencumbered
except for those matters (hereinafter referred to as the “Permitted
Encumbrances”) expressly set forth in Exhibit B attached hereto and by this
reference made a

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part hereof and the Senior Deed of Trust. Except for the Permitted Encumbrances
and the Senior Deed of Trust, Grantor does warrant and will forever defend the
title to the Property unto Trustee, his successors or substitutes in trust and
his or their assigns, against the claims of all persons whomsoever.
     This Deed of Trust is given to secure the payment and performance of the
following described indebtednesses and obligations (hereinafter collectively
referred to as the “Secured Obligations”):
          (a) The debt evidenced by (i) those certain Notes made or to be made
by Borrower in the aggregate principal amount of up to Fifteen Million and
No/100 Dollars ($15,000,000.00), each of which has been or will be issued
pursuant to the Mezzanine Credit Agreement and each of which is due and payable
in full on or before                      2009; and (ii) each other note as may
be issued under the Mezzanine Credit Agreement, each as originally executed, or
if varied, extended, supplemented, consolidated, amended, replaced, renewed,
modified or restated from time to time as so varied, extended, supplemented,
consolidated, amended, replaced, renewed, modified or restated (collectively,
the “Note”);
          (b) The payment, performance and discharge of each and every
obligation, covenant and agreement of Grantor contained herein or of Grantor and
the other Guarantors in the Guaranty, of Borrower contained in the Mezzanine
Credit Agreement, and of Grantor and Borrower in the other Loan Documents;
          (c) The full and prompt payment and performance of all of the
provisions, agreements, covenants and obligations contained in the Mezzanine
Credit Agreement;
          (d) The full and prompt payment and performance of all of the
provisions, agreements, covenants and obligations of Borrower herein contained
and contained in any other agreements, documents or instruments now or hereafter
evidencing, securing or otherwise relating to the indebtedness evidenced by the
Note (the Note, this Deed of Trust, the Mezzanine Credit Agreement and such
other agreements, documents and instruments, together with any and all renewals,
amendments, extensions and modifications thereof, are hereinafter collectively
referred to as the “Loan Documents”), and the payment of all other sums therein
covenanted to be paid;
          (e) Any and all additional advances made by Lender to protect or
preserve the Property or the lien and security interest created hereby on the
Property, or for taxes, assessments or insurance premiums as hereinafter
provided or for performance of any of Grantor’s obligations hereunder or under
the other Loan Documents or Borrower’s obligations under the Mezzanine Credit
Agreement or under the other Loan Documents or for any other purpose provided
herein or in the other Loan Documents (whether or not the original Grantor
remains the owner of the Property at the time of such advances); and
          (f) Any and all future advances under any of the Loan Documents,
whether such advances are obligatory or are to be made at the option of Lender
or otherwise, as are made within twenty (20) years from the date of this Deed of
Trust, to the same extent as if such future advances were made on the date of
the execution of this Deed of Trust.

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     PROVIDED, ALWAYS, and it is the true intent and meaning of the parties to
these presents, that when Borrower and Grantor, their respective successors or
assigns, shall pay or cause to be paid to Lender, its successors or assigns, the
Secured Obligations according to the conditions and agreements of the Note and
of this Deed of Trust, and shall perform all of the obligations according to the
true intent and meaning of the Note and of this Deed of Trust and the conditions
thereunder and hereunder, then this conveyance of the Property shall become of
no further force and effect, and the lien and security interest hereof shall be
released of record at Grantor’s request and at Grantor’s cost and expense.
     Grantor hereby further covenants and agrees with Lender as follows:
     1. Payment and Performance of Secured Obligations. Grantor shall promptly
pay or cause to be paid the Secured Obligations when due, and fully and promptly
perform or cause to be performed all of the provisions, agreements, covenants
and obligations of the Secured Obligations.
     2. Funds for Impositions. After the occurrence and during the continuance
of an Event of Default, Grantor shall pay to Lender, subject to Lender’s option
under Paragraph 3 hereof, on the days that monthly installments of interest are
payable under the Note, until the Note is paid in full, a sum (hereinafter
referred to as the “Funds”) reasonably estimated by Agent to provide an amount
necessary for payment of the following items in full thirty (30) days prior to
when such items become due (hereinafter collectively referred to as the
“Impositions”): (a) the yearly real estate taxes, ad valorem taxes, personal
property taxes, assessments and betterments, and (b) the yearly premium
installments for the insurance covering the Property and required by Lender
pursuant to Paragraph 4 hereof. The Impositions shall be reasonably estimated
initially and from time to time by Lender on the basis of assessments and bills
and estimates thereof. The Funds shall be held by Lender in a separate account
free of any liens or claims on the part of creditors of Grantor and as part of
the security for the Secured Obligations. Grantor shall pay all Impositions
prior to delinquency as required by Paragraph 3 hereof. Provided no Event of
Default has occurred and is continuing, within ten (10) days after Grantor
furnishes Lender with reasonably satisfactory evidence that Grantor has paid one
or more of the items comprising the Impositions, Lender shall reimburse Grantor
therefor to the extent of the Funds (plus accrued interest) then held by Lender.
Alternatively, Lender shall apply the Funds to pay the Impositions with respect
to which the Funds were paid to the extent of the Funds then held by Lender and
provided Grantor has delivered to Lender the assessments or bills therefor.
Grantor shall be permitted to pay any Imposition early in order to take
advantage of any available discounts. Lender shall make no charge for so holding
and applying the Funds or for verifying and compiling said assessments and
bills. The Funds are pledged as additional security for the Secured Obligations,
and may be applied, at Lender’s option and without notice to Grantor, to the
payment of the Secured Obligations upon the occurrence of any Event of Default
and acceleration of the Note hereunder. If at any time the amount of the Funds
held by Lender shall be less than the amount reasonably deemed necessary by
Lender to pay Impositions as such become due, Grantor shall pay to Lender any
amount necessary to make up the deficiency within fifteen (15) Business Days
after notice from Lender to Grantor requesting payment thereof. Upon payment in
full of the Secured Obligations, Lender shall promptly refund to Grantor any
Funds held by Lender.

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     3. Impositions, Liens and Charges. Grantor shall pay all Impositions and
other charges, if any, attributable to the Property prior to delinquency, and at
Lender’s option, shall pay in the manner provided under Paragraph 2 hereof.
Grantor shall furnish to Lender all bills and notices of amounts due under this
Paragraph 3 as soon as received, and in the event Grantor shall make payment
directly, Grantor shall, as and when available, furnish to Lender receipts
evidencing such payments prior to the dates on which such payments are
delinquent, subject to Grantor’s right to contest taxes, assessments and other
governmental charges as provided in the Mezzanine Credit Agreement. Grantor
shall promptly discharge (by bonding, payment or otherwise) any lien filed
against the Property or Grantor (including federal tax liens) and will keep and
maintain the Property free from the claims of all persons supplying labor or
materials to the Property, subject to Grantor’s right to contest the same as
provided in the Mezzanine Credit Agreement. Grantor shall not claim or be
entitled to any credit against the taxable value of the Property by reason of
this Deed of Trust, or any deduction in or credit on the Secured Obligations by
reason of Impositions paid.
     4. Property and Other Insurance. Grantor shall, at its expense, procure and
maintain or caused to be procured or maintained, for the benefit of Grantor and
Lender, insurance policies issued by such insurance companies, in such amounts,
in such form and substance, and with such coverages, endorsements, deductibles,
and expiration dates, providing the types of insurance set forth in the
Mezzanine Credit Agreement, as may be required by the Mezzanine Credit
Agreement.
     5. Preservation and Maintenance. Grantor (a) shall not permit or commit
waste, impairment, or deterioration of the Property or abandon or discontinue
operations on the Property, (b) shall restore or repair promptly (following
adjustment of any claims for an insured casualty loss, if applicable) and in a
good and workmanlike manner all or any part of the Property in the event of any
damage, injury or loss thereto, to the substantial equivalent of its condition
prior to such damage, injury or loss, or such other condition as Lender may
approve in writing, provided that Lender shall release net insurance proceeds,
to the extent actually received by Lender, to Grantor (provided, however, the
insufficiency of such proceeds shall not relieve Grantor of its obligations to
restore hereunder), (c) shall keep the Property, including the Improvements and
the Personal Property, in first class order, repair and tenantable condition and
shall replace fixtures, equipment, machinery and appliances on the Property when
necessary to keep such items in first class order, repair, and tenantable
condition, (d) subject to Grantor’s right to contest the same as provided in
this Deed of Trust, shall comply with all laws, ordinances, regulations and
requirements of any governmental body applicable to the Property, and (e) shall
keep all franchises, trademarks, trade names, service marks and licenses and
permits necessary for the use and occupancy of the Property in good standing and
in full force and effect. Grantor covenants and agrees to give Lender prompt
notice of any non-compliance with such laws, ordinances, regulations or
requirements and of any notice of non-compliance therewith which it receives or
any threatened or pending proceedings in respect thereto or with respect to the
Property (including, without limitation, changes in zoning). Notwithstanding the
provisions of this Paragraph 5, Grantor at its own expense after written notice
to Lender may contest the applicability or enforcement of such laws, ordinances,
regulations or requirements by an appropriate proceeding conducted in good faith
and with due diligence, provided that such non-compliance will not result in any
lien, charge, fine or other liability against the Property or Grantor and such
non-compliance will not place the Property or any part thereof in any danger of

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being forfeited, lost or closed. Neither Grantor nor any tenant or other person
shall remove, demolish or alter any Improvements now existing or hereafter
erected on the Property or any Personal Property in or on the Property except
when incident to the replacement of Personal Property with items of like kind
and value or customary tenant improvements pursuant to Leases approved or deemed
approved pursuant to the Mezzanine Credit Agreement.
     6. Transfers. Except as may be expressly provided in the Mezzanine Credit
Agreement, (a) if Grantor shall, directly, indirectly or by operation of law,
without the prior written consent of Lender in each instance, (i) sell, convey,
assign, transfer, lease, option, mortgage, pledge, hypothecate or dispose of the
Property, or any part thereof or interest therein, except as expressly permitted
by the terms of this Deed of Trust or the Mezzanine Credit Agreement, or (ii)
create or suffer to be created or to exist any lien, encumbrance, security
interest, mortgage, pledge, restriction, attachment or other charge of any kind
upon the Property, or any part thereof or interest therein, except for Permitted
Encumbrances and the Senior Deed of Trust (subject to Grantor’s right to contest
certain liens to the extent provided in the Mezzanine Credit Agreement), or
(b) if there shall occur, directly, indirectly or by operation of law, without
the prior written consent of Lender in each instance, any sale, assignment,
transfer, conveyance, disposition, option, mortgage, hypothecation, pledge or
other encumbrance of any direct or indirect interest in Grantor, then, in either
(a) or (b), an Event of Default shall exist under this Deed of Trust.
     7. Hazardous Materials.
          (a) Environmental Indemnity. Grantor covenants and agrees, at its sole
cost and expense, to indemnify, defend (at trial and appellate levels and with
attorneys, consultants and experts acceptable to Lender) and hold each Lender,
each of the Banks and each of their respective parents, subsidiaries,
affiliates, shareholders, directors, officers, employees and agents, and the
successors and assigns of any of them (collectively, the “Indemnified Parties”
and individually an “Indemnified Party”) harmless against and from any and all
liens, damages, losses, liabilities, obligations, settlement payments,
penalties, assessments, citations, directives, claims, litigation, demands,
defenses, judgments, suits, proceedings, costs, disbursements or expenses of any
kind or of any nature whatsoever (including, without limitation, reasonable
attorneys’, consultants’ and experts’ fees and disbursements incurred in
investigating, defending against, settling or prosecuting any claim, litigation
or proceeding) which may at any time be imposed upon, incurred by or asserted or
awarded against such Indemnified Party or the Property and arising directly or
indirectly from or out of: (A) the Release or threatened Release of any
Hazardous Materials on, in, under or affecting all or any portion of the
Property or migrating from the Property to any surrounding areas, regardless of
whether or not caused by or within the control of Grantor or any other Obligor;
(B) the existence of any Mold Condition on, in, under or affecting all or any
portion of the Property, regardless of whether or not caused by or within the
control of Grantor or any other Obligor; (C) the violation by Grantor of any
Environmental Laws relating to or affecting the Property of Grantor, whether or
not caused by or within the control of Grantor or any other Obligor; (D) the
failure of Grantor to comply fully with the terms and conditions of this
Paragraph 7 or Sections 6.1(p) and 7.9 of the Mezzanine Credit Agreement;
(E) the violation of any Environmental Laws which gives or may give rise to any
rights whatsoever in any party with respect to the Property by virtue of any
Environmental Laws; (F) the breach of any representation or warranty contained
in Section 6.1(p) of the Mezzanine

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Credit Agreement; or (G) the enforcement of this Paragraph 7, including, without
limitation, (i) the reasonable costs of assessment, containment and/or removal
of any and all Hazardous Materials from all or any portion of the Property or
any surrounding areas to which Hazardous Materials have migrated from the
Property, (ii) the costs of assessment, containment, abatement, remediation
and/or removal of any Mold Condition from all or any portion of the Property so
that such Mold Condition no longer exists, (iii) the reasonable costs of any
actions taken in response to a Release or threatened Release of any Hazardous
Materials on, in, under or affecting all or any portion of the Property or any
surrounding areas to which Hazardous Materials have migrated from the Property
to prevent or minimize such Release or threatened Release so that it does not
migrate or otherwise cause or threaten danger to present or future public
health, safety, welfare or the environment, (iv) the costs of any actions taken
in response to any Mold Condition on, in, under or affecting all or any portion
of the Property to prevent or minimize such Mold Condition so that it does not
migrate or otherwise cause or threaten danger to present or future public
health, safety, welfare or the environment, and (v) reasonable costs incurred to
comply with the Environmental Laws in connection with all or any portion of the
Property or any surrounding areas to which Hazardous Materials have migrated
from the Property; provided, however, nothing contained in this Paragraph 7
shall require Grantor to indemnify any Indemnified Party from any matter, cost
or expense to the extent such matter, cost or expense arises or results solely
from such Indemnified Party’s own gross negligence or willful misconduct.
GRANTOR AGREES THAT THE INDEMNIFICATION OF ANY INDEMNIFIED PARTY BY GRANTOR SET
FORTH IN THIS PARAGRAPH 7 INCLUDES INDEMNIFICATION IN THE EVENT OF ORDINARY
NEGLIGENCE OR STRICT LIABILITY ON THE PART OF SUCH (AND/OR ANY OTHER)
INDEMNIFIED PARTY BUT DOES NOT INCLUDE INDEMNIFICATION OF SUCH INDEMNIFIED PARTY
FOR SUCH INDEMNIFIED PARTY’S GROSS NEGLIGENCE OR WILLFUL MISCONDUCT. Grantor’s
obligations hereunder are separate and distinct from Grantor’s obligations under
the other Loan Documents, and Lender’s and the other Indemnified Parties’ rights
under this Agreement shall be in addition to all rights of Lender under the
Note, the Mezzanine Credit Agreement, the Guaranty and under any other documents
or instruments evidencing, securing or relating to the Secured Obligations, and
payments by Grantor under this Paragraph 7 shall not reduce Grantor’s
obligations and liabilities, if any, under any of the other Loan Documents.
Nothing herein shall require Grantor to indemnify any Indemnified Party from any
matter, cost or expense relating to a Release or Threat of Release of Hazardous
Substances or violation of any Environmental Law caused by an Indemnified Party
or first occurring after the Lender or its nominee acquires title to the
applicable Property by the exercise of its foreclosure remedies or by deed in
lieu of foreclosure or after repayment of the Loan (unless all or any portion of
the Loan is reinstated because such repayment is rescinded or otherwise required
to be returned).
          (b) Survival, Assignability and Transferability.
               (i) Except as expressly provided in Paragraph 7(a) above, the
indemnity set forth above in subparagraph (a) of this Paragraph 7 and any
representations or warranties set forth in Section 6.1(p) of the Mezzanine
Credit Agreement and incorporated herein by reference shall survive the payment
and performance of the Secured Obligations and any exercise by Lender of any
remedies under this Deed of Trust, including without limitation,

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the power of sale, or any other remedy in the nature of foreclosure, and shall
not merge with any deed given by Grantor to Lender in lieu of foreclosure or any
deed under a power of sale.
               (ii) It is agreed and intended by Grantor and Lender that the
indemnity set forth above in subparagraph (a) of this Paragraph 7 and any
representations or warranties set forth in Section 6.1(p) of the Mezzanine
Credit Agreement and incorporated herein by reference may be assigned or
otherwise transferred by Lender to its successors and assigns in connection with
an assignment of this Deed of Trust and to any subsequent purchasers of all or
any portion of the Property by, through or under Lender, without notice to
Grantor and without any further consent of Grantor. To the extent consent to any
such assignment or transfer is required by law, advance consent to any such
assignment or transfer is hereby given by Grantor in order to maximize the
extent and effect of the warranties, representations and indemnity given hereby.
     8. Protection of Lender’s Security. If Grantor fails to perform the
covenants and agreements contained in this Deed of Trust or (to the extent
applicable to Grantor) the Mezzanine Credit Agreement, or if any action or
proceeding is commenced which affects the Property or title thereto or the
interest of Lender therein, including, but not limited to, eminent domain,
insolvency, code enforcement or arrangements or proceedings involving a bankrupt
or decedent, then Lender at Lender’s option, but without any duty or obligation
of any sort to do so and without in any way waiving or relieving any Default or
Event of Default, may make such appearances, disburse such sums and take such
action as Lender reasonably deems necessary to protect Lender’s interest or cure
such Default or Event of Default, including, but not limited to, disbursement of
reasonable attorneys’ fees, payment, contest or compromise of any lien or
security interest which is prior to the lien or security interest of this Deed
of Trust, including the Senior Deed of Trust, payment of insurance premiums,
taxes, charges and assessments and entry upon the Property to make repairs. Any
reasonable amounts disbursed by Lender pursuant to this Paragraph 8, with
interest thereon, shall become a portion of the Secured Obligations. Unless
Grantor and Lender agree to other terms of payment, such amounts shall be
payable upon notice from Lender to Grantor requesting payment thereof and shall
bear interest from the date of disbursement at the Post-Default Rate stated in
the Mezzanine Credit Agreement unless collection from Grantor of interest at
such rate would be contrary to applicable law, in which event such amounts shall
bear interest at the highest rate which may be collected from Grantor under
applicable law. Grantor shall have the right to prepay such amounts in whole or
in part at any time. Nothing contained in this Paragraph 8 shall require Lender
to incur any expense or do any act.
     9. Inspection. Lender may, at Grantor’s expense, during normal business
hours make or cause to be made reasonable entries upon and inspections of the
Property as permitted in the Mezzanine Credit Agreement, or at any other time
when necessary or appropriate, in the sole reasonable discretion of Lender, to
protect or preserve the Property.
     10. Grantor and Security Title Not Released. From time to time, without
affecting any obligation of Grantor or Grantor’s successors or assigns to pay
the Secured Obligations and to observe the covenants of Grantor contained in
this Deed of Trust and the other Loan Documents, and without affecting the
guaranty of any person, corporation, partnership or other entity for payment or
performance of the Secured Obligations, and without affecting the lien or
security interest or priority of lien or security interest of this Deed of Trust
on the Property,

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Lender may, at Lender’s option, without giving notice to or obtaining the
consent of Grantor or Grantor’s successors or assigns or of any guarantor, and
without liability on Lender’s part, grant extensions or postponements of the
time for payment of the Secured Obligations or any part thereof, release anyone
liable on any of the Secured Obligations, accept a renewal note or notes
therefor, release from this Deed of Trust any part of the Property, take or
release other or additional security, reconvey any part of the Property, consent
to any map or plat or subdivision of the Property, consent to the granting of
any easement, join in any extension or subordination agreement and agree in
writing with Borrower to modify the rate of interest or terms and time of
payment or period of amortization of the Note or change the amount of the
monthly installments payable thereunder. Grantor shall pay Lender a reasonable
service charge, together with such title insurance premiums and reasonable
attorneys’ fees as may be incurred, at Lender’s option, for any such action if
taken at Grantor’s request.
     11. Forbearance Not Waiver. Any forbearance by Lender in exercising any
right or remedy hereunder, or otherwise afforded by applicable law, shall not be
a waiver of or preclude the exercise of any right or remedy hereunder. The
procurement of insurance or the payment of taxes or other liens or charges by
Lender shall not be a waiver of Lender’s right to accelerate the maturity of the
Secured Obligations. Lender’s receipt of any awards, proceeds or damages under
Paragraphs 4 and 9 hereof shall not operate to cure or waive any default in
payment of the Secured Obligations by any Obligor.
     12. Estoppel Certificates. Grantor shall within ten (10) Business Days of a
written request from Lender, but no more often than quarterly, furnish Lender
with a written statement, duly acknowledged, setting forth the amount of the
Secured Obligations and any right of set-off, counterclaim or other defense
which may exist or be claimed by Grantor against the Secured Obligations and the
obligations of Grantor under this Deed of Trust.
     13. Security Agreement.
          (a) Insofar as any item of property included in the Property which is
or might be deemed to be “personal property” is concerned, this Deed of Trust is
hereby made and declared to be, among other things, a security agreement,
granting a security interest to Lender in and to each and every item of such
property included in the Property (hereinafter collectively referred to as the
“Collateral”), in compliance with the provisions of the Uniform Commercial Code
as enacted in the State of Texas. A financing statement or statements (whether
or not reciting this Deed of Trust to be a security agreement), covering all of
the Collateral, shall be authorized by Grantor and appropriately filed. The
remedies for any violation of the covenants, terms and conditions of the
security agreement herein contained shall be (i) as prescribed herein, or
(ii) as prescribed by general law, or (iii) as prescribed by the specific
statutory consequences now or hereafter enacted and specified in said Uniform
Commercial Code, all at Lender’s sole election. Upon the occurrence and
continuance of an Event of Default, Lender may require Grantor, at its expense,
to assemble all personal property which is a part of the Property, and with
respect to which such request or demand is made, and make the same available to
Lender at a convenient place upon the Land (or within Improvements upon the
Land, as may be appropriate for the protection of such personal property)
acceptable to Lender. Any notice of sale, disposition or other action by Lender
with respect to personal property which is a part of the Property sent to
Grantor in accordance with the provisions hereof relating to communications at

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least ten (10) days prior to such action shall constitute adequate and
reasonable notice to Grantor of such action. Grantor and Lender agree that the
filing of such financing statement(s) in the records normally having to do with
personal property shall never be construed as in any way derogating from or
impairing this declaration and hereby stated intention of Grantor and Lender
that everything used in connection with the production of income from the
Property and/or adapted for use therein and/or which is described or reflected
in this Deed of Trust, is, and at all times and for all purposes and in all
proceedings, both legal or equitable, shall be, regarded as part of the real
estate irrespective of whether (i) any such item is physically attached to the
Land or the Improvements, (ii) serial numbers are used for the better
identification of certain items capable of being thus identified in a recital
contained herein, or (iii) any such item is referred to or reflected in any such
financing statement(s) so filed at any time. Similarly, the mention in any such
financing statement(s) of the rights in and to the proceeds of any hazard
insurance policy, or any award in eminent domain proceedings for a taking or for
loss of value, or Grantor’s interest as lessor in any present or future lease or
rights to income growing out of the use and/or occupancy of the Property,
whether pursuant to lease or otherwise, shall never be construed as in any way
altering any of the rights of Lender as determined by this instrument or
impugning the priority of Lender’s lien granted hereby or by any other recorded
document, but such mention in such financing statement(s) is declared to be for
the protection of Lender in the event any court shall at any time hold, with
respect to any such matter, that notice of Lender’s priority of interest, to be
effective against a particular class of persons, must be filed in the Uniform
Commercial Code records. Grantor warrants that (i) Grantor’s (that is,
“Debtor’s”) name, identity or organizational structure and residence or
principal place of business are as set forth in Exhibit C attached hereto and by
this reference made a part hereof; (ii) Grantor (that is, “Debtor”) has been
using or operating under said name, identity or organizational structure without
change for the time period set forth in Exhibit C attached hereto and by this
reference made a part hereof; and (iii) the location of all collateral
constituting fixtures is upon the Land. Grantor covenants and agrees that
Grantor will furnish Lender with notice of any change in name, identity,
organizational structure, residence or principal place of business within thirty
(30) days of the effective date of any such change and Grantor will promptly
upon request by Lender execute any financing statements or other instruments
deemed necessary by Lender to prevent any filed financing statement from
becoming misleading or losing its perfected status. The information contained in
this Paragraph 13 is provided in order that this Deed of Trust shall comply with
the requirements of the Uniform Commercial Code, as enacted in the State of
Texas, for instruments to be filed as financing statements. This Deed of Trust
shall be effective as and shall constitute a fixture filing from the date of its
filing for record in the Real Property Records of the county in which the Land
is located.
          (b) Lender may, at its election, at any time after delivery of this
Deed of Trust, sign one or more copies hereof in order that such copies may be
used as a financing statement under said Uniform Commercial Code. The signature
of Lender may be placed between the last sentence of this Deed of Trust and
Grantor’s acknowledgment or may follow Grantor’s acknowledgment. Lender’s
signature need not be acknowledged and is not necessary to the effectiveness
hereof as a deed of trust, mortgage, assignment, pledge, security agreement or
(unless otherwise required by applicable law) as a financing statement. Lender
is authorized to file in any jurisdiction where Lender deems it necessary this
Deed of Trust, a financing statement or statements and one or more continuation
statements, pursuant to said Uniform Commercial Code, in form satisfactory to
Lender, and will pay the cost of filing or recording any

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such instrument, in all public offices at any time and from time to time
whenever filing or recording of any financing statement, continuation statement
or this Deed of Trust is deemed by Lender to be necessary or desirable. Certain
of the Property is or will become “fixtures” (as that term is defined in said
Uniform Commercial Code) on the Property of which Grantor is record owner
(unless otherwise stated herein) and upon filing of this Deed of Trust for
record in the real estate records of the county wherein such fixtures are
situated, it shall operate also as a financing statement upon such of the
Property which is or may become fixtures.
          (c) The information contained in Exhibit C is provided in order that
this Deed of Trust shall comply with the requirements of the Uniform Commercial
Code for instruments to be filed as financing statements. The names of “Debtor”
and the “Secured Party”, the identity or organizational structure, jurisdiction
of organization, organizational number, federal tax identification number and
residence or chief executive office of “Debtor,” and the time period for which
“Debtor” has been using or operating under said name and identity or
organizational structure without change are as set forth in Part 1 of Exhibit C
attached hereto and by this reference made a part hereof; the mailing address of
the “Secured Party” from which information concerning the security interest may
be obtained, and the mailing address of “Debtor,” are as set forth in Part 1 and
Part 2 of Exhibit C attached hereto. Exhibit C correctly sets forth all names
and tradenames that Grantor has used within the last five years and also
correctly sets forth the locations of all of the chief executive offices of
Grantor over the last five years.
          (d) Grantor shall, at any time and from time to time, take such steps
as Lender may reasonably request for Lender (i) to obtain an acknowledgment, in
form and substance reasonably satisfactory to Lender, of any bailee having
possession of any of the Collateral, stating that the bailee holds possession of
such Collateral on behalf of Lender, (ii) to obtain “control” of any investment
property, deposit accounts, letter-of-credit rights, or electronic chattel paper
(as such terms are defined by the Uniform Commercial Code with corresponding
provisions thereof defining what constitutes “control” for such items of
collateral), with any agreements establishing control to be in form and
substance reasonably satisfactory to Lender, and (iii) otherwise to insure the
continued perfection and priority of the Lender’s security interest in any of
the Collateral and of the preservation of its rights therein, subject to the
prior lien of the Senior Deed of Trust, whether in anticipation of or following
the effectiveness of the Uniform Commercial Code. If Grantor shall at any time
acquire a “commercial tort claim” (as such term is defined in the Uniform
Commercial Code) with respect to the Collateral or any portion thereof, Grantor
shall promptly notify Lender thereof in writing, providing a reasonable
description and summary thereof, and shall execute a supplement to this Deed of
Trust in form and substance acceptable to Lender granting a security interest in
such commercial tort claim to Lender.
          (e) Grantor hereby authorizes Lender, its counsel or its
representative, at any time and from time to time, to file financing statements,
amendments and continuations that describe or relate to the Collateral or any
portion thereof in such jurisdictions as Lender may deem necessary or desirable
in order to perfect the security interests granted by Grantor under this Deed of
Trust or any other Loan Document, subject to the prior lien of the Senior Deed
of Trust, and such financing statements may contain, among other items as Lender
may deem advisable to include therein, the federal tax identification number of
Grantor. Lender shall upon request provide Grantor with copies of any and all
such filings made by Lender.

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          (f) Upon the occurrence of an Event of Default, Lender may require
Grantor to assemble the Collateral and make it available to Lender, at Grantor’s
sole risk and expense, at a place or places to be designated by Lender which are
reasonably convenient to both Lender and Grantor.
     14. Leases and Revenues.
          (a) As part of the consideration for the Secured Obligations, Grantor
has absolutely and unconditionally assigned and transferred to Lender all of
Grantor’s right, title and interest in and to the Leases and the Revenues,
including those now due, past due or to become due by virtue of any of the
Leases for the occupancy or use of all or any part of the Property. Grantor
hereby authorizes Lender or Lender’s agents to collect the Revenues and hereby
directs such tenants, lessees and licensees of the Property to pay the Revenues
to Lender or Lender’s agents; provided, however, that prior to written notice
given by Lender to Grantor of any Event of Default, Grantor shall have a license
(revocable upon the occurrence of an Event of Default) to collect and receive
the Revenues as trustee for the benefit of Lender, and apply the Revenues so
collected to the Secured Obligations, to the extent then due and payable, then
to the payment of normal and customary operating expenses for the Property which
are then due and payable, with the balance, so long as no Event of Default has
occurred, to the account of Grantor. Grantor agrees that each and every tenant,
lessee and licensee of the Property shall pay, and hereby irrevocably authorizes
and directs each and every tenant, lessee and licensee of the Property to pay,
the Revenues to Lender or Lender’s agents on Lender’s written demand therefor
(which demand may be made by Lender at any time after the occurrence of an Event
of Default) without any obligation on the part of said tenant, lessee or
licensee to inquire as to the existence of an Event of Default and
notwithstanding any notice or claim of Grantor to the contrary, and Grantor
agrees that Grantor shall have no right or claim against said tenant, lessee or
licensee for or by reason of any Revenues paid to Lender following receipt of
such written demand.
          (b) Grantor hereby covenants that Grantor has not executed any prior
assignment of the Leases or the Revenues, other than the prior lien of the
Senior Deed of Trust and the Senior Assignment of Leases, that Grantor has not
performed, and will not perform, any acts and has not executed, and will not
execute, any instruments which would prevent Lender from exercising the rights
of holder under this Deed of Trust, other than the prior lien of the Senior Deed
of Trust and the Senior Assignment of Leases, and that at the time of execution
of this Deed of Trust there has been no anticipation or prepayment of any of the
Revenues for more than one (1) month prior to the due dates of such Revenues.
Grantor further covenants that Grantor will not hereafter collect or accept
payment of any Revenues more than one (1) month prior to the due dates of such
Revenues.
          (c) Grantor agrees that neither the foregoing assignment of Leases and
Revenues nor the exercise of any of Lender’s rights and remedies under
Paragraph 19 of this Deed of Trust shall be deemed to make Lender a
mortgagee-in-possession or otherwise responsible or liable in any manner with
respect to the Leases, the Property or the use, occupancy, enjoyment or
operation of all or any portion thereof, unless and until Lender, in person or
by agent, assumes actual possession thereof. Grantor further agrees that the
appointment of any receiver for the Property by any court at the request of
Lender or by agreement with Grantor, or the entering into possession of any part
of the Property by such

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receiver, shall not be deemed to make Lender a mortgagee-in-possession or
otherwise responsible or liable in any manner with respect to the Leases, the
Property or the use, occupancy, enjoyment or operation of all or any portion
thereof.
          (d) If Lender or a court-appointed receiver enters upon, takes
possession of and maintains control of the Property pursuant to Paragraph 19 of
this Deed of Trust, all Revenues thereafter collected shall be applied, subject
to the prior lien of the Senior Deed of Trust, in such order as Lender may elect
in its discretion against the reasonable costs of taking control of and managing
the Property and collecting the Revenues, including, but not limited to,
reasonable attorneys’ fees actually incurred, receiver’s fees, premiums on
receiver’s bonds, costs of repairs to the Property, premiums on insurance
policies, Impositions and other charges on the Property, and the costs of
discharging any obligation or liability of Grantor as landlord, lessor or
licensor of the Property, or to the Secured Obligations. Lender or the receiver
shall have access to the books and records used in the operation and maintenance
of the Property and shall be liable to account only for those Revenues actually
received. Lender shall not be liable to Grantor, anyone claiming under or
through Grantor or anyone having an interest in the Property by reason of
anything done or left undone by Lender pursuant to Paragraph 19 of this Deed of
Trust, except in the event of Lender’s gross negligence or willful misconduct.
If the Revenues are not sufficient to meet the costs of taking control of and
managing the Property and collecting the Revenues, any monies reasonably
expended by Lender for such purposes shall become a portion of the Secured
Obligations. Unless Lender and Grantor agree in writing to other terms of
payment, such amounts shall be payable upon notice from Lender to Grantor
requesting payment thereof and shall bear interest from the date of disbursement
at the Post-Default Rate stated in the Mezzanine Credit Agreement unless payment
of interest at such rate would be contrary to applicable law, in which event
such amounts shall bear interest at the highest rate which may be collected from
Grantor under applicable law. The entering upon and taking possession of and
maintaining of control of the Property by Lender or the receiver pursuant to
Paragraph 19 of this Deed of Trust and the application of Revenues as provided
herein shall not cure or waive any Event of Default or invalidate any other
right or remedy of Lender hereunder.
          (e) It is the intention of Lender and Grantor that the assignment
effectuated by this Deed of Trust with respect to the Revenues shall be a direct
and currently effective assignment and shall not constitute merely the granting
of a lien, security interest or pledge for the purpose of securing the Secured
Obligations. In the event that a court of competent jurisdiction determines
that, notwithstanding such expressed intent of the parties, Lender’s interest in
the Revenues constitutes a lien on or security interest in or pledge of the
Revenues, it is agreed and understood that the forwarding of a notice to Grantor
after the occurrence of an Event of Default advising Grantor of the revocation
of Grantor’s license to collect such Revenues, shall be sufficient action by
Lender to (i) perfect such lien on or security interest in or pledge of the
Revenues, (ii) take possession thereof and (iii) entitle Lender to immediate and
direct payment of the Revenues, for application as provided in this Deed of
Trust, subject to the prior lien of the Senior Deed of Trust, all without the
necessity of any further action by Lender, including, without limitation, any
action to obtain possession of the Land, Improvements or any other portion of
the Property.
     15. Leases of the Property.

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          (a) Except as permitted in the Mezzanine Credit Agreement, Grantor
will not enter into any Lease of all or any portion of the Property or amend,
supplement or otherwise modify, or terminate or cancel, or accept the surrender
of, or consent to the assignment or subletting of, or grant any concessions to
or waive the performance of any obligations of any tenant, lessee or licensee
under, any now existing or future Lease of the Property, without the prior
written consent of Lender. Grantor, at Lender’s request, shall furnish Lender
with executed copies of all Leases hereafter made of all or any part of the
Property as required by the Mezzanine Credit Agreement. Upon Lender’s request,
Grantor shall make a separate and distinct assignment to Lender, as additional
security, subject to the prior lien of the Senior Deed of Trust and the Senior
Assignment of Leases, of all Leases hereafter made of all or any part of the
Property.
          (b) There shall be no merger of the leasehold estates created by the
Leases with the fee estate of the Property without the prior written consent of
Lender. Lender may at any time and from time to time by specific written
instrument intended for the purpose, unilaterally subordinate the lien of this
Deed of Trust to any Lease, without joinder or consent of, or notice to,
Grantor, any tenant or any other Person, and notice is hereby given to each
tenant under a Lease of such right to subordinate. No such subordination shall
constitute a subordination to any lien or other encumbrance, whenever arising,
or improve the right of any junior lienholder. Nothing herein shall be construed
as subordinating this Deed of Trust to any Lease.
          (c) Grantor hereby appoints Lender its attorney-in-fact, coupled with
an interest, empowering Lender to subordinate any Leases to this Deed of Trust.
     16. Remedies Cumulative. All remedies provided in this Deed of Trust are
distinct and cumulative to any other right or remedy under this Deed of Trust or
under the other Loan Documents or afforded by law or equity, and may be
exercised concurrently, independently or successively.
     17. Taxation of Deed of Trusts. In the event of the enactment of any law
deducting from the value of the Property any deed of trust lien thereon, or
imposing upon Lender the payment of all or part of the taxes, charges or
assessments previously paid by Grantor pursuant to this Deed of Trust, or
changing the law relating to the taxation of deeds of trust or debts secured by
deeds of trust or Lender’s interest in the Property so as to impose new
incidents of tax on Lender, then Grantor shall pay such taxes or assessments or
shall reimburse Lender therefor; provided, however, that if in the opinion of
counsel to Lender, such payment cannot lawfully be made by Grantor, then Lender
may, at Lender’s option, declare the Secured Obligations to be immediately due
and payable and invoke any remedies permitted by Paragraph 19 of this Deed of
Trust.
     18. Events of Default and Acceleration. The term “Event of Default”,
wherever used in this Deed of Trust, shall mean any one or more of the following
conditions or events:
          (a) Failure by Grantor to pay as and when due and payable any sums to
be paid by Grantor under this Deed of Trust (including, but not limited to any
payment of Funds) and continuance of such failure for a period of five (5) days
after notice thereof from Lender

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(provided that no such cure period is provided with respect to any payments for
which no cure or grace period is provided under the Mezzanine Credit Agreement);
or
          (b) Failure by Grantor to duly observe or perform any term, covenant,
condition or agreement contained in Paragraph 3 or 4 of this Deed of Trust where
such failure continues for ten (10) Business Days; or
          (c) Failure by Grantor to duly observe or perform any other term,
covenant, condition or agreement contained in this Deed of Trust and continuance
of such failure for a period of thirty (30) days after notice thereof from
Lender, provided, that any such cure period shall not apply to any default
excluded from any provision of grace or cure of defaults contained in this Deed
of Trust or in any other of the Loan Documents; or
          (d) Any representation or warranty of Grantor contained in this Deed
of Trust shall prove to have been false or incorrect in any material respect
upon the date when made; or
          (e) The occurrence of any “Event of Default” as defined in any of the
other Loan Documents.
     If an Event of Default shall have occurred, Lender may, at Lender’s option,
by notice to Grantor declare the entire Secured Obligations to be immediately
due and payable, whereupon the same shall become immediately due and payable,
and without presentment, protest, demand, notice of intent to accelerate, or
other notice of any kind, all of which are hereby expressly waived by Grantor.
No omission on the part of Lender to exercise such option when entitled to do so
shall be construed as a waiver of such right.
     19. Rights and Remedies. If an Event of Default shall have occurred, then
the entire Secured Obligations shall, at the option of Lender, immediately
become due and payable without presentment, protest, demand, notice of intent to
accelerate, notice of acceleration or other notice of any kind, all of which are
hereby expressly WAIVED by Grantor, time being of the essence, and Lender, at
its option, may do any one or more of the following (and, if more than one,
either concurrently or independently, and in such order as Lender may determine
in its discretion), all without regard to the adequacy or value of the security
for the Secured Obligations:
          (a) Enter upon and take possession of the Property without the
appointment of a receiver, or an application therefor; at its option, operate
the Property; at its option, exclude Grantor and its agents and employees wholly
therefrom; at its option, employ a managing agent of the Property; and at its
option, exercise any one or more of the rights and powers of Grantor to the same
extent as Grantor could, either in its own name, or in the name of Grantor; and
receive the rents, incomes, issues and profits of the Property. Lender shall
have no obligation to discharge any duties of a landlord to any tenant or to
incur any liability as a result of any exercise by Lender of any rights
hereunder; and Lender shall not be liable for any failure to collect rents,
issues, profits or revenues, nor liable to account for any rents, issues,
profits or revenues unless actually received by Lender.
          (b) Apply, as a matter of strict right, without notice and without
regard to the solvency, fraud or mismanagement of any party bound for its
payment, for the appointment of a receiver to take possession of and to operate
the Property and to collect and apply the incomes,

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rents, issues, profits and revenues thereof, and Grantor does hereby irrevocably
consent to such appointment. Any such receiver shall have all the usual powers
and duties of receivers in similar cases, including the full power to rent,
maintain and otherwise operate the Property upon such terms as may be approved
by the court, and shall apply such rents in accordance with the provisions of
this Deed of Trust.
          (c) Pay, perform or observe any term, covenant or condition of this
Deed of Trust and any of the other Loan Documents and all payments made or costs
or expenses incurred by Lender in connection therewith shall be secured hereby
and shall be, without demand, immediately repaid by Grantor to Lender with
interest thereon at the lesser of the Post-Default Rate or the maximum rate of
interest permitted by applicable law. The necessity for any such actions and of
the amounts to be paid shall be determined by Lender in its discretion. Lender
is hereby empowered to enter and to authorize others to enter upon the Property
or any part thereof for the purpose of performing or observing any such
defaulted term, covenant or condition without thereby becoming liable to Grantor
or any person in possession holding under Grantor. Grantor hereby acknowledges
and agrees that the remedies set forth in this Paragraph 19(c) shall be
exercisable by Lender, and any and all payments made or costs or expenses
incurred by Lender in connection therewith shall be secured hereby and shall be,
without demand, immediately repaid by Grantor with interest thereon at the
lesser of the Post-Default Rate or the maximum rate of interest permitted by
applicable law, notwithstanding the fact that such remedies were exercised and
such payments made and costs incurred by Lender after the filing by Grantor of a
voluntary case or the filing against Grantor of an involuntary case pursuant to
or within the meaning of the Bankruptcy Code, Title 11 U.S.C., or after any
similar action pursuant to any other debtor relief law (whether statutory,
common law, case law or otherwise) of any jurisdiction whatsoever, now or
hereafter in effect, which may be or become applicable to Grantor, Lender, any
guarantor, the Secured Obligations or any of the Loan Documents.
          (d) Trustee, upon the request of Lender, shall be authorized and
empowered and it shall be his special duty to sell the Property or any part
thereof at public auction to the highest bidder for cash, with or without having
taken possession of same. The sale shall be made in the county in which the
Property is situated. If the Property is situated in more than one county, then
notices as hereinafter provided shall be given in both or all of such counties,
the Property may be sold in either county, and such notices shall designate the
county where the Property will be sold. Notice of such sale shall be given by
posting written notice of the sale at the courthouse door or other place
designated for the filing of such notices in the county where the Property is
situated, and by filing a copy of the notice in the county clerk’s office, in
the county in which the sale is to be made, at least twenty-one (21) days
preceding the date of the sale. If the Property is in more than one county, one
notice shall be posted at the courthouse door of each county in which the
Property is situated and one notice shall be filed with the county clerk of each
county in which the Property is situated. In addition, one of the holders of the
Secured Obligations (or any part thereof) shall at least twenty-one (21) days
preceding the date of such sale serve written notice of the proposed sale by
certified mail on each debtor obligated to pay the Secured Obligations (or any
part thereof) according to the records of such holder. Service of such notice
upon each debtor shall be completed upon deposit of the notice, enclosed in a
postpaid wrapper, properly addressed to such debtor at his, her or its most
recent address as shown by the records of such holder of the Secured Obligations
(or any part thereof) in a post office or official depository under the care and
custody of the United States Postal

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Service. The affidavit of any person having knowledge of the facts to the effect
that such service was completed shall be prima facie evidence of the fact of
service. After such written notice shall have been posted or filed, as
aforesaid, and such notice shall have been served upon such debtor or debtors,
as aforesaid, Trustee shall perform his duty to enforce the trusts created
herein by selling the Property, either as an entirety or in parcels as the
Lender may direct (all rights to a marshaling of assets or sale in inverse order
of alienation being waived and Grantor shall not have any right to require the
Trustee to sell less than all of the Property) at public venue, in the place
designated by the commissioner’s court in the county designated in such notice
on the first Tuesday in any month between the hours of 10:00 A.M. and 4:00 P.M.
(and within three (3) hours after a specific time designated in such notice), to
the highest bidder or bidders for cash, and make due conveyance of the Property
to the purchaser or purchasers, with general warranty subject to the Permitted
Encumbrances and subject to the prior lien of the Senior Deed of Trust and any
other leases or matters affecting title approved by Lender hereunder or pursuant
to the Mezzanine Credit Agreement. Grantor binds itself, its heirs, legal
representatives, successors and assigns, to warrant and forever defend the title
to such purchaser or purchasers, when so made by Trustee acting against the
claims and demands of every person whomsoever lawfully claiming or to claim the
same or any part thereof subject to the Permitted Encumbrances and subject to
the prior lien of the Senior Deed of Trust and any other leases or matters
affecting title approved by Lender hereunder or pursuant to the Mezzanine Credit
Agreement. Payment of the purchase price to Trustee shall satisfy the obligation
of the purchaser at such sale therefor, and such purchaser shall not be
responsible for the application thereof. The sale or sales by Trustee of less
than the whole of the Property shall not exhaust the power of sale herein
granted, and Trustee is specifically empowered to make successive sale or sales
under such power until the whole of the Property shall be sold; and if the
proceeds of such sale or sales of less than the whole of the Property shall be
less than the aggregate of the Secured Obligations and the expenses thereof,
this Deed of Trust and the lien, security interest and assignment hereof shall
remain in full force and effect as to the unsold portion of the Property just as
though no sale or sales had been made; provided, however, that Grantor shall
never have any right to require the sale or sales of less than the whole of the
Property, but Lender shall have the right, at its sole election, to request
Trustee to sell less than the whole of the Property. If an Event of Default
occurs, the holder of the Secured Obligations or any part thereof on which the
payment is delinquent shall have the option to proceed with foreclosure in
satisfaction of such item either through judicial proceedings or by directing
Trustee to proceed as if under a full foreclosure, conducting the sale as herein
provided without declaring the entire Secured Obligations due, and if sale is
made because of default of an installment, or a part of an installment, such
sale may be made subject to the unmatured part of the Secured Obligations; and
it is agreed that such sale, if so made, shall not in any manner affect the
unmatured part of the Secured Obligations, but as to such unmatured part, this
Deed of Trust shall remain in full force and effect as though no sale had been
made under the provisions of this paragraph. Several sales may be made hereunder
without exhausting the right of sale for any unmatured part of the Secured
Obligations. To the extent permitted by applicable law, any sale may be
adjourned by announcement at the time and place appointed for such sale without
further notice except as may be required by law. Trustee may, after any request
or direction by Lender, sell not only the real property but also the Collateral
and other interests which are a part of the Property, or any part thereof, as a
unit and as a part of a single sale, or may sell any part of the Property
separately from the remainder of the Property. It shall not be necessary for
Trustee to have taken possession of any part of the

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Property or to have present or to exhibit at any sale any of the Collateral. The
Trustee or his successor or substitute may appoint or delegate any one or more
persons as agent to perform any act or acts necessary or incident to any sale
held by Trustee, including the posting of notices and the conduct of sale, but
in the name and on behalf of Trustee, his successor or substitute. If Trustee or
his successor or substitute shall have given notice of sale hereunder, any
successor or substitute Trustee thereafter appointed may complete the sale and
the conveyance of the property pursuant thereto as if such notice had been given
by the successor or substitute Trustee conducting the sale. At any such sale
(1) Grantor hereby agrees, on its behalf and on behalf of its heirs, executors,
administrators, successors, personal representatives and assigns, that any and
all recitals made in any deed of conveyance given by Trustee with respect to the
identity of Lender, the occurrence or existence of any default, the acceleration
of the maturity of any of the Secured Obligations, the request to sell, the
notice of sale, the giving of notice to all debtors legally entitled thereto,
the time, place, terms, and manner of sale, and receipt, distribution and
application of the money realized therefrom, or the due and proper appointment
of a substitute Trustee, and, without being limited by the foregoing, with
respect to any other act or thing having been duly done by Lender or by Trustee
hereunder, shall be taken by all courts of law and equity as prima facie
evidence that the statements or recitals state facts and are without further
question to be so accepted, and Grantor hereby ratifies and confirms every act
that Trustee or any substitute Trustee hereunder may lawfully do in the premises
by virtue hereof, and (2) the purchaser may disaffirm any easement granted, or
rental, lease or other contract made in violation of any provision of this Deed
of Trust, and may take immediate possession of the Property free from, and
despite the terms of, such grant of easement and rental or lease contract.
Lender may bid and become the purchaser of all or any part of the Property at
any trustee’s or foreclosure sale hereunder, and the amount of Lender’s
successful bid may be credited on the Secured Obligations. Lender may, at its
option, direct the Trustee to sell the Property subject to the rights of any
tenants of the Property, and the failure to make any such tenants parties to any
foreclosure proceedings and to foreclose their rights will not be asserted by
Grantor to be a defense to any proceedings instituted by Lender to collect the
Secured Obligations. The provisions hereof with respect to posting and giving
notices of sale are intended to comply with the provisions of the Texas Property
Code, including without limitation Section 51.002, and other applicable laws,
and in the event the requirement for any notice under the Texas Property Code or
such other applicable law shall be eliminated or the prescribed manner of giving
same modified by future amendment to, or adoption of any statute superseding the
Texas Property Code or such other applicable law, the requirement for such
particular notice shall be deemed stricken from or modified in this Deed of
Trust in conformity with such amendment or superseding statute, effective as of
the effective date of same. The manner herein prescribed for serving or giving
any notice, other than that to be posted or caused to be posted by Trustee,
shall not be deemed exclusive but such notice or notices may be given in any
other manner which may be permitted by applicable law. Said sale shall forever
be a bar against Grantor, its heirs, legal representatives, successors and
assigns, and all other persons claiming under it. It is expressly agreed that
the recitals in each conveyance to the purchaser shall be full evidence of the
truth of the matters therein stated, and all lawful prerequisites to said sale
shall be conclusively presumed to have been performed.
          (e) Enforce any legal or equitable remedy against Grantor, including
without limitation suing for any sums, whether interest, principal or any
installment of either or both, taxes, penalties or any other sums required to be
paid under the terms of this Deed of Trust, as

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the same become due, without regard to whether or not all of the Secured
Obligations shall then be due, and without prejudice to the right of Lender
thereafter to enforce any other remedy, including without limitation an action
of foreclosure, whether or not such other remedy be based upon an Event of
Default which existed at the time of commencement of an earlier or pending
action, and whether or not such other remedy be based upon the same Event of
Default upon which an earlier or pending action is based.
          (f) UCC Remedies. In addition to any other remedies set forth herein,
with respect to any Collateral subject to the security interest created by this
Deed of Trust as security instrument, or any financing statement filed in
connection with such security interest under the Uniform Commercial Code, Lender
may exercise any and all rights and remedies of a secured party under the
Uniform Commercial Code. Expenses of retaking, holding, preparing for sale,
selling or the like (including, without limitation, reasonable attorneys’ fees
and legal expenses), together with interest thereon at the Post-Default Rate,
from the date incurred by Lender until actually paid by Grantor, shall be paid
by Grantor on demand and shall be secured by this Deed of Trust and by all of
the other Loan Documents securing all or any part of the Obligations. If notice
is required by law, Lender shall give Grantor at least ten (10) days’ prior
written notice of the time and place of any public sale of such property or of
the time of or after which any private sale or any other intended disposition
thereof is to be made, and if such notice is sent to Grantor, as the same is
provided for the mailing of notices herein, it is hereby deemed that such notice
shall be and is reasonable notice to Grantor. No such notice is necessary for
any such property which is perishable, threatens to decline speedily in value or
is of a type customarily sold on a recognized market. Any sale made pursuant to
the provisions of this Paragraph 19(f) shall be deemed to have been a public
sale conducted in a commercially reasonable manner if held contemporaneously
with the foreclosure sale as provided in Paragraph 19(d) of this Deed of Trust
upon giving the same notice with respect to the sale of the Property hereunder
as is required under said Paragraph 19(d).
          (g) The proceeds of any sale of, and any rents and other amounts
generated by the holding, leasing, operation or other use of the Property shall
be applied by the Trustee (or the receiver, if one is appointed) to the extent
that funds are so available therefrom, in the following order of priority:
               (i) Costs of Trustee’s Sale. First, to the payment of all
reasonable costs of the sale by the Trustee or other costs mandated by law
(including a reasonable trustee’s commission);
               (ii) Other Costs. Second, to the payment of the reasonable costs
and expenses of taking possession of the Property and of holding, using,
leasing, repairing and selling the same, including, without limitation,
(A) reasonable attorneys’ and accountants’ fees, and (B) the payment of any and
all Impositions, liens, security interests or other rights, titles or interest
superior to the lien and security interest of this Deed of Trust;
               (iii) Secured Obligations Other than the Note. Third, to the
payment of all amounts of the Secured Obligations, excluding the principal
balance and accrued but unpaid interest on the Note, which may be due to the
holder of the Note or any of the other Loan Documents, together with interest
thereon as provided therein;

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               (iv) Note. Fourth, to the payment of the indebtedness evidenced
by the Note, the application to the different portions of the Note to be made in
such manner, order and priority as Lender in its sole discretion may elect; and
               (v) Balance. Fifth, to Grantor, its heirs, legal representatives,
successors and assigns, or to whomsoever may be lawfully entitled to receive the
same.
          (h) Trustee may require minimum bids at any foreclosure sale and may
cancel and abandon the sale if no bid is received equal to or greater than any
such minimum bid. If foreclosure should be commenced by Trustee, Lender may at
any time before the sale direct Trustee to abandon the sale for any reason, and
may at any time or times thereafter direct Trustee to again commence
foreclosure. Irrespective of whether foreclosure is commenced by Trustee, Lender
may at any time after the occurrence of an Event of Default institute suit for
collection of the Secured Obligations or foreclosure of the lien of this Deed of
Trust. If Lender should institute suit for collection of the Secured Obligations
or foreclosure of the lien of this Deed of Trust, Lender or such other holder
may at any time before the entry of final judgment dismiss the same, and require
Trustee to sell the Property in accordance with the provisions of this Deed of
Trust.
          (i) No single sale or series of sales by Trustee or by any substitute
or successor Trustee under this Deed of Trust, and no judicial foreclosure or
incomplete or defective sale shall extinguish the lien or security interest, or
exhaust the power of sale under this Deed of Trust except with respect to the
items of property sold, but such lien or security interest and power shall exist
for so long as, and may be exercised in any manner by law or in this Deed of
Trust provided as often as, the circumstances require to give Lender full relief
hereunder.
          (j) Lender shall have the right to become the purchaser at any sale
made hereunder, being the highest bidder, and credit upon all or any part of the
Secured Obligations shall be deemed cash paid for the purposes of this Article.
          (k) Grantor hereby waives any right or remedy which Grantor may have
or be able to assert pursuant to Chapter 34 of the Texas Business and Commerce
Code, or any other provision of Texas law, pertaining to the rights and remedies
of sureties.
          (l) If the liens or securities interests hereof shall be foreclosed by
power of sale granted herein, by judicial action, or otherwise, the purchaser at
any such sale shall receive, as an incident to purchaser’s ownership, immediate
possession of the property purchased, and if Grantor or any of Grantor’s
successors shall hold possession of said property or any part thereof subsequent
to foreclosure, Grantor and Grantor’s successors shall be considered as tenants
at sufferance of the purchaser at foreclosure sale (without limitation of other
rights or remedies, at a reasonable rental per day, due and payable daily, based
upon the value of the portion of the Property so occupied and sold to such
purchaser), and anyone occupying such portion of the Property, after demand is
made for possession thereof, shall be guilty of forcible detainer and shall be
subject to eviction and removal, forcible or otherwise, with or without process
of law, and all damages by reason thereof are hereby expressly waived.

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          (m) The remedies in this Paragraph 19 shall be available under and
governed by the real property laws of Texas and shall not be governed by the
personal property laws of Texas, including, but not limited to, the power to
dispose of personal property in a commercially reasonable manner under
Section 9.610 of the Texas Uniform Commercial Code, unless Lender elects to
proceed as to the Collateral together with the other Property under and pursuant
to the real property remedies of this Paragraph 19.
          (n) THE TRUSTEE SHALL NOT BE LIABLE FOR ANY ERROR OF JUDGMENT OR ACT
DONE BY TRUSTEE IN GOOD FAITH, OR BE OTHERWISE RESPONSIBLE OR ACCOUNTABLE UNDER
ANY CIRCUMSTANCES WHATSOEVER (EXPRESSLY INCLUDING FOR TRUSTEE’S NEGLIGENCE),
EXCEPT FOR TRUSTEE’S GROSS NEGLIGENCE OR WILLFUL MISCONDUCT. THE TRUSTEE SHALL
HAVE THE RIGHT TO RELY ON ANY INSTRUMENT, DOCUMENT OR SIGNATURE AUTHORIZING OR
SUPPORTING ANY ACTION TAKEN OR PROPOSED TO BE TAKEN BY HIM/HER HEREUNDER,
BELIEVED BY HIM/HER IN GOOD FAITH TO BE GENUINE. ALL MONIES RECEIVED BY TRUSTEE
SHALL, UNTIL USED OR APPLIED AS HEREIN PROVIDED, BE HELD IN TRUST FOR THE
PURPOSES FOR WHICH THEY WERE RECEIVED, BUT NEED NOT BE SEGREGATED IN ANY MANNER
FROM ANY OTHER MONIES (EXCEPT TO THE EXTENT REQUIRED BY LAW), AND TRUSTEE SHALL
BE UNDER NO LIABILITY FOR INTEREST ON ANY MONIES RECEIVED BY HIM/HER HEREUNDER.
GRANTOR HEREBY RATIFIES AND CONFIRMS ANY AND ALL ACTS WHICH THE HEREIN NAMED
TRUSTEE OR HIS/HER SUCCESSOR OR SUCCESSORS, SUBSTITUTE OR SUBSTITUTES, IN THIS
TRUST, SHALL DO LAWFULLY BY VIRTUE HEREOF. GRANTOR WILL REIMBURSE TRUSTEE FOR,
AND SAVE HIM/HER HARMLESS AGAINST, ANY AND ALL LIABILITY AND EXPENSES WHICH MAY
BE INCURRED BY HIM/HER IN THE PERFORMANCE OF HIS/HER DUTIES. THE FOREGOING
INDEMNITY SHALL NOT TERMINATE UPON DISCHARGE OF THE SECURED OBLIGATIONS OR
FORECLOSURE, OR RELEASE OR OTHER TERMINATION, OF THIS DEED OF TRUST.
     20. Waiver of Deficiency Statute.
          (a) Waiver. In the event an interest in any of the Property is
foreclosed upon pursuant to a judicial or nonjudicial foreclosure sale, Grantor
agrees as follows: notwithstanding the provisions of Sections 51.003, 51.004,
and 51.005 of the Texas Property Code (as the same may be amended from time to
time), and to the extent permitted by law, Grantor agrees that Lender shall be
entitled to seek a deficiency judgment from Grantor and any other party
obligated on the Note equal to the difference between the amount owing on the
Note and the amount for which the Property was sold pursuant to judicial or
nonjudicial foreclosure sale. Grantor expressly recognizes that this
Paragraph 20 constitutes a waiver of the above-cited provisions of the Texas
Property Code which would otherwise permit Grantor, Borrower and other persons
against whom recovery of deficiencies is sought or any Guarantor independently
(even absent the initiation of deficiency proceedings against them) to present
competent evidence of the fair market value of the Property as of the date of
the foreclosure sale and offset against any deficiency the amount by which the
foreclosure sale price is determined to be less than such fair market value.
Grantor further recognizes and agrees that this waiver creates an irrebuttable
presumption that the foreclosure sale price is equal to the fair market value of
the Property for

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purposes of calculating deficiencies owed by any Grantor, Borrower, and others
against whom recovery of a deficiency is sought.
          (b) Alternative to Waiver. Alternatively, in the event the waiver
provided for in subparagraph (a) above is determined by a court of competent
jurisdiction to be unenforceable, the following shall be the basis for the
finder of fact’s determination of the fair market value of the Property as of
the date of the foreclosure sale in proceedings governed by Sections 51.003,
51.004 and 51.005 of the Texas Property Code (as amended from time to time):
(i) the Property shall be valued in an “as is” condition as of the date of the
foreclosure sale, without any assumption or expectation that the Property will
be repaired or improved in any manner before a resale of the Property after
foreclosure; (ii) the valuation shall be based upon an assumption that the
foreclosure purchaser desires a resale of the Property for cash promptly (but no
later than twelve (12) months) following the foreclosure sale; (iii) all
reasonable closing costs customarily borne by the seller in commercial real
estate transactions should be deducted from the gross fair market value of the
Property, including, without limitation, brokerage commissions, title insurance,
a survey of the Property, tax prorations, reasonable attorneys’ fees, and
marketing costs; (iv) the gross fair market value of the Property shall be
further discounted to account for any estimated holding costs associated with
maintaining the Property pending sale, including, without limitation, utilities
expenses, property management fees, taxes and assessments (to the extent not
accounted for in (iii) above), and other maintenance, operational and ownership
expenses; and (v) any expert opinion testimony given or considered in connection
with a determination of the fair market value of the Property must be given by
persons having at least five (5) years experience in appraising property similar
to the Property and who have conducted and prepared a complete written appraisal
of the Property taking into consideration the factors set forth above.
     21. Substitute Trustee. In case of absence, death, inability, refusal or
failure of Trustee herein named to act, or in case he should resign (and he is
hereby authorized to resign without notice to Grantor), or if Lender shall
desire, with or without cause, to replace Trustee herein named, a successor and
substitute Trustee may be named, constituted and appointed by Lender or other
holder of the Secured Obligations, without other formality than an appointment
and designation in writing. This conveyance shall vest in such successor or
substitute Trustee, as Trustee, the estate in and title to all of the Property,
and such successor or substitute Trustee so appointed and designated shall
thereupon hold, possess and exercise all the title, rights, powers and duties
herein conferred on Trustee named herein and any previous successor or
substitute Trustee, and his/her conveyance to the purchaser at any such sale
shall be equally valid and effective as if made by Trustee named herein, and
such right to appoint a successor or substitute Trustee shall exist and may be
exercised as often and whenever from any of said causes, or without cause, as
aforesaid.
     22. Notices. Except as otherwise specified in this Deed of Trust, any and
all notices, demands, elections or requests provided for or permitted to be
given pursuant to this Deed of Trust (hereinafter in this Paragraph 22 referred
to as “Notice”) shall be in writing and shall be deemed to have been properly
given or served by personal delivery or by sending same by overnight courier or
by depositing same in the United States Mail, postpaid and registered or
certified, return receipt requested, and addressed to the addresses set forth on
page one hereof. A duplicate copy of each Notice to Lender shall be sent to
Wachovia Bank, National Association,

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171 17th Street, N.W., GA 4506, Atlanta, Georgia 30303, Attn: Cathy Casey. A
duplicate copy of each Notice to Grantor shall be sent to William F. Timmons,
Esq., McKenna Long & Aldridge LLP, 303 Peachtree Street, N.E., Suite 5300,
Atlanta, Georgia, 30308. Each Notice shall be effective upon being personally
delivered or upon being sent by overnight courier or upon being deposited in the
United States Mail as aforesaid. However, the time period in which a response to
such Notice must be given or any action taken with respect thereto, if any,
shall commence to run from the date of receipt if personally delivered or sent
by overnight courier, or, if so deposited in the United States Mail, on the date
of receipt as disclosed on the return receipt. Rejection or other refusal to
accept or the inability to deliver because of changed address for which no
Notice was given shall be deemed to be receipt of the Notice sent. By giving at
least five (5) Business Days prior Notice thereof, Grantor or Lender shall have
the right from time to time and at any time during the term of this Deed of
Trust to change their respective addresses and each shall have the right to
specify as its address any other address within the United States of America.
     23. Successors and Assigns Bound; Captions. The covenants and agreements
herein contained shall bind, and the rights hereunder shall inure to, the
respective successors and assigns of Lender and Grantor, subject to the
provisions of Paragraph 6 hereof. The captions and headings of the paragraphs of
this Deed of Trust are for convenience only and are not to be used to interpret
or define the provisions hereof.
     24. GOVERNING LAW; SEVERABILITY. THIS DEED OF TRUST AND THE OBLIGATIONS OF
GRANTOR HEREUNDER SHALL BE GOVERNED BY AND INTERPRETED AND DETERMINED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS, AND THE LAWS OF THE UNITED
STATES OF AMERICA. SHOULD ANY OBLIGATION OR REMEDY UNDER THIS INSTRUMENT BE
INVALID OR UNENFORCEABLE PURSUANT TO THE LAWS PROVIDED HEREIN TO GOVERN, THE
LAWS OF ANY OTHER STATE REFERRED TO HEREIN OR OF ANOTHER STATE WHOSE LAWS CAN
VALIDATE AND APPLY THERETO SHALL GOVERN. In the event that any provision or
clause of this Deed of Trust, the Note or the other Loan Documents is invalid or
unenforceable or conflicts with applicable law, such invalidity,
unenforceability or conflict shall not affect other provisions of this Deed of
Trust, the Note or the other Loan Documents which can be given effect without
the invalid, unenforceable or conflicting provision, and to this end, the
provisions of this Deed of Trust, the Note and the other Loan Documents are
declared to be severable. In the event that any applicable law limiting the
amount of interest or other charges permitted to be collected from Grantor is
interpreted so that any charge for which provision is made in this Deed of
Trust, the Note or the other Loan Documents, whether considered separately or
together with other charges permitted to be collected from Grantor as a part of
the transaction represented by this Deed of Trust, the Note and the other Loan
Documents, violates such law, and Grantor is entitled to the benefit of such
law, such charge is hereby reduced to the extent necessary to eliminate such
violation. The amounts, if any, previously paid to Lender in excess of the
amounts payable to Lender pursuant to such charges as reduced shall be applied
by Lender to reduce the principal of the indebtedness evidenced by the Note.
     25. WAIVERS. GRANTOR AGREES TO THE FULL EXTENT PERMITTED BY LAW, THAT IN
CASE OF AN EVENT OF DEFAULT HEREUNDER, NEITHER

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GRANTOR NOR ANYONE CLAIMING THROUGH OR UNDER GRANTOR SHALL OR WILL SET UP, CLAIM
OR SEEK TO TAKE ADVANTAGE OF ANY MORATORIUM, REINSTATEMENT, FORBEARANCE,
APPRAISEMENT, VALUATION, STAY, EXTENSION, HOMESTEAD, EXEMPTION OR REDEMPTION
LAWS NOW OR HEREAFTER IN FORCE, IN ORDER TO PREVENT OR HINDER THE ENFORCEMENT OR
FORECLOSURE OF THIS DEED OF TRUST, OR THE ABSOLUTE SALE OF THE PROPERTY, OR THE
FINAL AND ABSOLUTE PUTTING INTO POSSESSION THEREOF, IMMEDIATELY AFTER SUCH SALE,
OF THE PURCHASERS THEREAT, AND GRANTOR, FOR GRANTOR AND ALL WHO MAY AT ANY TIME
CLAIM THROUGH OR UNDER GRANTOR, HEREBY WAIVES TO THE FULLEST EXTENT THAT GRANTOR
MAY LAWFULLY SO DO, THE BENEFIT OF ALL SUCH LAWS, AND ANY AND ALL RIGHT TO HAVE
THE ASSETS COMPRISED IN THE SECURITY INTENDED TO BE CREATED HEREBY MARSHALED
UPON ANY TRUSTEE’S SALE OR JUDICIAL FORECLOSURE OF THE LIEN HEREOF. NO DELAY OR
OMISSION OF LENDER OR OF ANY HOLDER OF THE NOTE TO EXERCISE ANY RIGHT, POWER OR
REMEDY ACCRUING UPON ANY EVENT OF DEFAULT SHALL EXHAUST OR IMPAIR ANY SUCH
RIGHT, POWER OR REMEDY OR SHALL BE CONSTRUED TO BE A WAIVER OF ANY SUCH DEFAULT,
OR ACQUIESCENCE THEREIN; AND EVERY RIGHT, POWER AND REMEDY GIVEN BY THIS DEED OF
TRUST TO LENDER MAY BE EXERCISED FROM TIME TO TIME AND AS OFTEN AS MAY BE DEEMED
EXPEDIENT BY LENDER. NO CONSENT OR WAIVER, EXPRESSED OR IMPLIED, BY LENDER TO OR
OF ANY EVENT OF DEFAULT SHALL BE DEEMED OR CONSTRUED TO BE A CONSENT OR WAIVER
TO OR OF ANY OTHER EVENT OF DEFAULT. FAILURE ON THE PART OF LENDER TO COMPLAIN
OF ANY ACT OR FAILURE TO ACT WHICH CONSTITUTES AN EVENT OF DEFAULT, IRRESPECTIVE
OF HOW LONG SUCH FAILURE CONTINUES, SHALL NOT CONSTITUTE A WAIVER BY LENDER OF
LENDER’S RIGHTS HEREUNDER OR IMPAIR ANY RIGHTS, POWERS OR REMEDIES CONSEQUENT ON
ANY EVENT OF DEFAULT. NO ACT OR OMISSION OF LENDER AS DESCRIBED IN PARAGRAPH 10
ABOVE SHALL PRECLUDE LENDER FROM EXERCISING ANY RIGHT, POWER OR PRIVILEGE HEREIN
GRANTED OR INTENDED TO BE GRANTED IN THE EVENT OF ANY EVENT OF DEFAULT THEN MADE
OR OF ANY SUBSEQUENT EVENT OF DEFAULT; NOR, EXCEPT AS OTHERWISE EXPRESSLY
PROVIDED IN AN INSTRUMENT OR INSTRUMENTS EXECUTED BY LENDER, SHALL THE LIEN OF
THIS DEED OF TRUST BE ALTERED THEREBY. IN THE EVENT OF THE SALE OR TRANSFER BY
OPERATION OF LAW OR OTHERWISE OF ALL OR ANY PART OF THE PROPERTY, LENDER,
WITHOUT NOTICE, IS HEREBY AUTHORIZED AND EMPOWERED TO DEAL WITH ANY SUCH VENDEE
OR TRANSFEREE WITH REFERENCE TO THE PROPERTY OR THE SECURED OBLIGATIONS OR WITH
REFERENCE TO ANY OF THE TERMS, COVENANTS, CONDITIONS OR AGREEMENTS HEREOF, AS
FULLY AND TO THE SAME EXTENT AS IT MIGHT DEAL WITH THE ORIGINAL PARTIES HERETO
AND WITHOUT IN ANY WAY RELEASING OR DISCHARGING ANY LIABILITIES, OBLIGATIONS OR
UNDERTAKINGS (INCLUDING, WITHOUT LIMITATION, THE RESTRICTIONS UPON TRANSFER
CONTAINED IN PARAGRAPH 6 OF THIS DEED

26

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OF TRUST). GRANTOR COVENANTS AND AGREES THAT, UPON THE COMMENCEMENT OF A
VOLUNTARY OR INVOLUNTARY BANKRUPTCY PROCEEDING BY OR AGAINST BORROWER OR ANY
OTHER GUARANTOR, GRANTOR SHALL NOT SEEK A SUPPLEMENTAL STAY OR OTHER RELIEF,
WHETHER INJUNCTIVE OR OTHERWISE, PURSUANT TO 11 U.S.C. §105 OR ANY OTHER
PROVISION OF THE BANKRUPTCY REFORM ACT OF 1978, AS AMENDED, OR ANY OTHER DEBTOR
RELIEF LAW (WHETHER STATUTORY, COMMON LAW, CASE LAW OR OTHERWISE) OF ANY
JURISDICTION WHATSOEVER, NOW OR HEREAFTER IN EFFECT, WHICH MAY BE OR BECOME
APPLICABLE, TO STAY, INTERDICT, CONDITION, REDUCE OR INHIBIT THE ABILITY OF
LENDER TO ENFORCE ANY RIGHTS OF LENDER AGAINST BORROWER OR ANY OTHER GUARANTOR
OF OR ANY OTHER PERSON OR PARTY LIABLE WITH RESPECT TO THE SECURED OBLIGATIONS.
     26. Further Assurances. At any time and from time to time, upon request by
Lender, Grantor will make, execute and deliver, or cause to be made, executed
and delivered, to Lender and, where appropriate, cause to be recorded and/or
filed and from time to time thereafter to be re-recorded and/or refiled at such
time and in such offices and places as shall be deemed desirable by Lender, any
and all such other and further assignments, deeds of trust, security agreements,
financing statements, continuation statements, instruments of further assurance,
certificates and other documents as may, in the opinion of Lender, be necessary
or desirable in order to effectuate, complete, or perfect, or to continue and
preserve, subject to the prior lien of the Senior Deed of Trust, (a) the
obligations of Grantor under this Deed of Trust, and (b) the lien and security
interest created by this Deed of Trust upon the Property. Upon any failure by
Grantor so to do, Lender may make, execute, record, file, re-record and/or
refile any and all such assignments, deeds of trust, security agreements,
financing statements, continuation statements, instruments, certificates, and
documents for and in the name of Grantor, and Grantor hereby irrevocably
appoints Lender the agent and attorney in fact of Grantor so to do.
     27. Subrogation. Lender shall be subrogated to all right, title, lien or
equity of all persons to whom Lender may have paid any monies or that may have
been paid with proceeds of the Loan in settlement of liens, charges or
assessments, or in acquisition of title or for its benefit hereunder, or for the
benefit or account of Grantor upon execution of the Note or subsequently paid
under any provisions hereof.
     28. Time of the Essence. Time is of the essence with respect to each and
every covenant, agreement and obligation of Grantor under this Deed of Trust,
the Note and any and all other Loan Documents.

27

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     29. INDEMNIFICATION; SUBROGATION; WAIVER OF OFFSET AND JURY TRIAL.
          (a) GRANTOR SHALL INDEMNIFY, DEFEND AND HOLD EACH INDEMNIFIED PARTY
HARMLESS AGAINST: (I) ANY AND ALL CLAIMS FOR BROKERAGE, LEASING, FINDERS OR
SIMILAR FEES WHICH MAY BE MADE RELATING TO THE PROPERTY OR THE SECURED
OBLIGATIONS, AND (II) ANY AND ALL LIABILITY, OBLIGATIONS, LOSSES, DAMAGES,
PENALTIES, CLAIMS, ACTIONS, SUITS, COSTS AND EXPENSES (INCLUDING SUCH
INDEMNIFIED PARTY’S REASONABLE ATTORNEYS’ FEES, TOGETHER WITH REASONABLE
APPELLATE COUNSEL FEES, IF ANY) OF WHATEVER KIND OR NATURE WHICH MAY BE ASSERTED
AGAINST, IMPOSED ON OR INCURRED BY SUCH INDEMNIFIED PARTY (EXPRESSLY INCLUDING
ANY AND ALL LIABILITY, OBLIGATIONS, LOSSES, DAMAGES, PENALTIES, CLAIMS, ACTIONS,
SUITS, COSTS AND EXPENSES DUE TO ANY NEGLIGENT ACTIONS OR OMISSIONS OF SUCH
INDEMNIFIED PARTY) IN CONNECTION WITH THE SECURED OBLIGATIONS, THIS DEED OF
TRUST, THE PROPERTY, OR ANY PART THEREOF, OR THE EXERCISE BY ANY INDEMNIFIED
PARTY OF ANY RIGHTS OR REMEDIES GRANTED TO IT UNDER THIS DEED OF TRUST;
PROVIDED, HOWEVER, THAT NOTHING HEREIN SHALL BE CONSTRUED TO OBLIGATE GRANTOR TO
INDEMNIFY, DEFEND AND HOLD HARMLESS ANY INDEMNIFIED PARTY FROM AND AGAINST ANY
AND ALL LIABILITIES, OBLIGATIONS, LOSSES, DAMAGES, PENALTIES, CLAIMS, ACTIONS,
SUITS, COSTS AND EXPENSES ENACTED AGAINST, IMPOSED ON OR INCURRED BY SUCH
INDEMNIFIED PARTY BY REASON OF SUCH INDEMNIFIED PARTY’S WILLFUL MISCONDUCT OR
GROSS NEGLIGENCE IF A JUDGMENT IS ENTERED AGAINST SUCH INDEMNIFIED PARTY BY A
COURT OF COMPETENT JURISDICTION AFTER THE EXHAUSTION OF ALL APPLICABLE APPEAL
PERIODS. GRANTOR AGREES THAT THE INDEMNIFICATION OF THE INDEMNIFIED PARTIES BY
GRANTOR SET FORTH IN THIS SECTION 29 INCLUDES INDEMNIFICATION IN THE EVENT OF
ORDINARY NEGLIGENCE ON THE PART OF THE INDEMNIFIED PARTIES BUT DOES NOT INCLUDE
INDEMNIFICATION OF ANY INDEMNIFIED PARTY FOR SUCH INDEMNIFIED PARTY’S GROSS
NEGLIGENCE OR WILLFUL MISCONDUCT.
          (b) IF ANY INDEMNIFIED PARTY IS MADE A PARTY DEFENDANT TO ANY
LITIGATION OR ANY CLAIM IS THREATENED OR BROUGHT AGAINST SUCH INDEMNIFIED PARTY
CONCERNING THE SECURED OBLIGATIONS, THIS DEED OF TRUST, THE PROPERTY, OR ANY
PART THEREOF, OR ANY INTEREST THEREIN, OR THE CONSTRUCTION, MAINTENANCE,
OPERATION OR OCCUPANCY OR USE THEREOF, THEN GRANTOR SHALL INDEMNIFY, DEFEND AND
HOLD SUCH INDEMNIFIED PARTY HARMLESS FROM AND AGAINST ALL LIABILITY BY REASON OF
SAID LITIGATION OR CLAIMS, INCLUDING REASONABLE ATTORNEYS’ FEES (TOGETHER WITH
REASONABLE APPELLATE COUNSEL FEES, IF ANY) AND REASONABLE EXPENSES INCURRED BY
SUCH INDEMNIFIED PARTY IN ANY SUCH LITIGATION OR CLAIM, WHETHER OR NOT ANY SUCH
LITIGATION OR CLAIM IS PROSECUTED TO JUDGMENT; PROVIDED, HOWEVER, THAT NOTHING
IN THIS PARAGRAPH 29 SHALL BE CONSTRUED TO OBLIGATE GRANTOR TO

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INDEMNIFY, DEFEND AND HOLD HARMLESS ANY INDEMNIFIED PARTY BY REASON OF SUCH
INDEMNIFIED PARTY’S WILLFUL MISCONDUCT OR GROSS NEGLIGENCE OR WITH RESPECT TO
MATTERS RELATING TO THE PROPERTY FIRST OCCURRING AFTER ANY SUCH INDEMNIFIED
PARTY OR ITS NOMINEE ACQUIRES TITLE TO THE PROPERTY BY THE EXERCISE OF ITS
FORECLOSURE REMEDIES OR BY DEED IN LIEU OF FORECLOSURE, BUT SHALL APPLY WITH
RESPECT TO MATTERS THAT IN WHOLE OR IN PART ARE CAUSED BY OR ARISE OUT OF ANY
INDEMNIFIED PARTY’S NEGLIGENCE. IF ANY INDEMNIFIED PARTY COMMENCES AN ACTION
AGAINST GRANTOR TO ENFORCE ANY OF THE TERMS HEREOF OR TO PROSECUTE ANY EVENT OF
DEFAULT BY GRANTOR HEREOF OR TO RECOVER ANY SUM SECURED HEREBY, GRANTOR SHALL
PAY TO SUCH INDEMNIFIED PARTY ITS REASONABLE ATTORNEYS’ FEES (TOGETHER WITH
REASONABLE APPELLATE COUNSEL FEES, IF ANY) AND REASONABLE EXPENSES. THE RIGHT TO
SUCH ATTORNEYS’ FEES (TOGETHER WITH REASONABLE APPELLATE COUNSEL FEES, IF ANY)
AND REASONABLE EXPENSES SHALL BE DEEMED TO HAVE ACCRUED ON THE COMMENCEMENT OF
SUCH ACTION, AND SHALL BE ENFORCEABLE WHETHER OR NOT SUCH ACTION IS PROSECUTED
TO JUDGMENT. IF AN EVENT OF DEFAULT OCCURS UNDER THIS DEED OF TRUST, ANY
INDEMNIFIED PARTY MAY ENGAGE THE SERVICES OF AN ATTORNEY OR ATTORNEYS TO PROTECT
ITS RIGHTS HEREUNDER, AND IN THE EVENT OF SUCH ENGAGEMENT FOLLOWING ANY BREACH
BY GRANTOR, GRANTOR SHALL PAY SUCH INDEMNIFIED PARTY REASONABLE ATTORNEYS’ FEES
(TOGETHER WITH REASONABLE APPELLATE COUNSEL FEES, IF ANY) AND REASONABLE
EXPENSES INCURRED BY SUCH INDEMNIFIED PARTY, WHETHER OR NOT AN ACTION IS
ACTUALLY COMMENCED AGAINST GRANTOR BY REASON OF SUCH BREACH. ALL REFERENCES TO
“ATTORNEYS” IN THIS SUBPARAGRAPH AND ELSEWHERE IN THIS DEED OF TRUST SHALL
INCLUDE WITHOUT LIMITATION ANY REASONABLE ATTORNEY OR LAW FIRM ENGAGED BY ANY
INDEMNIFIED PARTY AND SUCH INDEMNIFIED PARTY’S IN-HOUSE COUNSEL, AND ALL
REFERENCES TO “FEES AND EXPENSES” IN THIS SUBPARAGRAPH AND ELSEWHERE IN THIS
DEED OF TRUST SHALL INCLUDE WITHOUT LIMITATION ANY REASONABLE FEES OF SUCH
ATTORNEY OR LAW FIRM AND ANY ALLOCATION CHARGES AND ALLOCATION COSTS OF ANY SUCH
INDEMNIFIED PARTY’S IN-HOUSE COUNSEL.
               (c) A waiver of subrogation shall be obtained by Grantor from its
insurance carrier and, consequently, Grantor waives any and all right to claim
or recover against any Indemnified Party, for loss of or damage to Grantor, the
Property, Grantor’s property or the property of others under Grantor’s control
from any cause insured against or required to be insured against by the
provisions of this Deed of Trust.
               (d) ALL SUMS PAYABLE BY GRANTOR HEREUNDER SHALL BE PAID WITHOUT
NOTICE (EXCEPT AS MAY OTHERWISE BE PROVIDED HEREIN), DEMAND, COUNTERCLAIM,
SETOFF, DEDUCTION OR DEFENSE AND WITHOUT ABATEMENT, SUSPENSION, DEFERMENT,
DIMINUTION OR REDUCTION, AND THE OBLIGATIONS AND LIABILITIES OF GRANTOR
HEREUNDER SHALL IN NO WAY BE RELEASED, DISCHARGED OR OTHERWISE AFFECTED BY
REASON OF: (I) ANY

29

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DAMAGE TO OR DESTRUCTION OF OR ANY CONDEMNATION OR SIMILAR TAKING OF THE
PROPERTY OR ANY PART THEREOF; (II) ANY RESTRICTION OR PREVENTION OF OR
INTERFERENCE WITH ANY USE OF THE PROPERTY OR ANY PART THEREOF; (III) ANY TITLE
DEFECT OR ENCUMBRANCE OR ANY EVICTION FROM THE LAND OR THE IMPROVEMENTS ON THE
LAND OR ANY PART THEREOF BY TITLE PARAMOUNT OR OTHERWISE; (IV) ANY BANKRUPTCY,
INSOLVENCY, REORGANIZATION, COMPOSITION, ADJUSTMENT, DISSOLUTION, LIQUIDATION,
OR OTHER LIKE PROCEEDING RELATING TO ANY INDEMNIFIED PARTY, OR ANY ACTION TAKEN
WITH RESPECT TO THIS DEED OF TRUST BY ANY TRUSTEE OR RECEIVER OF ANY SUCH
INDEMNIFIED PARTY, OR BY ANY COURT, IN SUCH PROCEEDING; (V) ANY CLAIM WHICH
GRANTOR HAS, OR MIGHT HAVE, AGAINST ANY INDEMNIFIED PARTY; (VI) ANY DEFAULT OR
FAILURE ON THE PART OF ANY INDEMNIFIED PARTY TO PERFORM OR COMPLY WITH ANY OF
THE TERMS HEREOF OR OF ANY OTHER AGREEMENT WITH GRANTOR; OR (VII) ANY OTHER
OCCURRENCE WHATSOEVER, WHETHER SIMILAR OR DISSIMILAR TO THE FOREGOING, WHETHER
OR NOT GRANTOR SHALL HAVE NOTICE OR KNOWLEDGE OF ANY OF THE FOREGOING. GRANTOR
WAIVES ALL RIGHTS NOW OR HEREAFTER CONFERRED BY STATUTE OR OTHERWISE TO ANY
ABATEMENT, SUSPENSION, DEFERMENT, DIMINUTION, OR REDUCTION OF ANY SUM SECURED
HEREBY AND PAYABLE BY GRANTOR.
               (e) GRANTOR HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY AND
ALL PERSONAL RIGHTS UNDER THE LAWS OF ANY STATE TO THE RIGHT, IF ANY, TO TRIAL
BY JURY.
     30. Revolving Credit/Future Advance. This Deed of Trust secures Secured
Obligations which may provide for a variable rate of interest as well as
revolving credit advances and other future advances, whether such advances are
obligatory or otherwise. Advances under the Note are subject to the terms and
provisions of the Mezzanine Credit Agreement and the other Security Documents.
Grantor acknowledges that the Secured Obligations may increase or decrease from
time to time and that if the outstanding balance of the Secured Obligations is
ever repaid to zero the security title and security interest created by this
Deed of Trust shall not be deemed released or extinguished by operation of law
or implied intent of the parties. This Deed of Trust shall remain in full force
and effect as to any further advances under the Mezzanine Credit Agreement made
after any such zero balance until the Secured Obligations are paid in full, all
agreements to make further advances or issue letters of credit have been
terminated and this Deed of Trust has been canceled of record. Grantor waives
the operation of any applicable statutes, case law or regulation having a
contrary effect.
     31. Prior Security Deed. This Deed of Trust is subject and subordinate to
the Senior Deed of Trust. Grantor hereby expressly agrees that any Event of
Default under the Senior Deed of Trust shall constitute and be deemed to be an
Event of Default under this Deed of Trust. Lender shall have the right, but not
the obligation, to pay any sums or to take any action which Lender deems
necessary or advisable to cure any alleged default under the Senior Deed of
Trust, and such payment or such action is hereby authorized by Grantor, and any
sum so paid and any expense incurred by Lender in taking any such action shall
be secured hereby and shall be immediately due and payable by Grantor to

30

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Lender. Grantor hereby transfers and assigns to Lender any excess proceeds
arising from any foreclosure or sale under power pursuant to the Senior Deed of
Trust or any instrument evidencing the indebtedness secured thereby, and Grantor
hereby authorizes and directs the holder or holders of the Senior Deed of Trust
to pay such excess proceeds directly to Lender.
     32. Mezzanine Credit Agreement. Notwithstanding anything contained herein
to the contrary, Grantor agrees to be bound to all of the terms and conditions
of the Mezzanine Credit Agreement that (i) apply to the Property or Grantor,
including without limitation, Section 7.5 of the Mezzanine Credit Agreement
relating to insurance, casualty and condemnation, and (ii) relate to grace or
notice and cure periods, notices of default and acceleration of the Secured
Obligations, including without limitation, Section 10.1 of the Mezzanine Credit
Agreement. Additionally, Grantor does hereby make and reaffirm each and every
warranty and representation set forth in the Mezzanine Credit Agreement
concerning the Property, subject to the prior lien of the Senior Deed of Trust,
as if the Property were Eligible Real Estate under the Mezzanine Credit
Agreement.
     33. WAIVER OF CONSUMER RIGHTS. GRANTOR WAIVES ALL OF ITS RIGHTS, REMEDIES,
CLAIMS DEMANDS AND CAUSES OF ACTION UNDER, BASED UPON OR RELATED TO THE TEXAS
DECEPTIVE TRADE PRACTICES CONSUMER PROTECTIONS ACT AS DESCRIBED IN SECTION 17.41
ET SEQ. (OTHER THAN SECTION 17.555) OF THE TEXAS BUSINESS AND COMMERCE CODE, A
LAW THAT GIVES CONSUMERS SPECIAL RIGHTS AND PROTECTIONS, AS THE SAME PERTAINS OR
MAY PERTAIN TO THE NOTE, THE SECURED OBLIGATIONS AND ANY OF THE OTHER LOAN
DOCUMENTS OR ANY OF THE TRANSACTIONS CONTEMPLATED THEREIN, TO THE MAXIMUM EXTENT
THAT SUCH RIGHTS, REMEDIES, CLAIMS, DEMANDS, AND CAUSES OF ACTION MAY LAWFULLY
AND EFFECTIVELY BE WAIVED. AFTER CONSULTATION WITH AN ATTORNEY OF ITS OWN
SELECTION, GRANTOR VOLUNTARILY CONSENTS TO THIS WAIVER. IN FURTHERANCE OF THIS
WAIVER, GRANTOR HEREBY REPRESENTS AND WARRANTS TO LENDER THAT (A) GRANTOR IS
REPRESENTED BY LEGAL COUNSEL IN CONNECTION WITH THE NEGOTIATION, EXECUTION AND
DELIVERY OF THIS DEED OF TRUST, (B) GRANTOR HAS A CHOICE OTHER THAN TO ENTER
INTO THIS WAIVER IN THAT IT CAN OBTAIN THE LOAN EVIDENCED BY THE NOTE FROM
ANOTHER INSTITUTION, AND (C) GRANTOR DOES NOT CONSIDER ITSELF TO BE IN A
SIGNIFICANTLY DISPARATE BARGAINING POSITION RELATIVE TO LENDER WITH RESPECT TO
THE NOTE AND THE OTHER LOAN DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED THEREBY.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

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

                          GRANTOR:
 
                        APARTMENT REIT WALKER RANCH, LP, a Texas limited
partnership
 
                        By:   APARTMENT REIT WALKER RANCH GP, LLC, a Delaware
limited liability company, its General Partner
 
                   
 
      By:     NNN APARTMENT REIT HOLDINGS, L.P., a Virginia limited partnership,
its Manager
 
                   
 
              By:   NNN APARTMENT REIT, INC., a
 
                  Maryland corporation, its General Partner

                  By:   /s/ Stanley J. Olander Jr.         Name:   Stanley J.
Olander, Jr.        Title:   CEO

[CORPORATE SEAL]    

[Signature Page to Mezzanine Deed of Trust — Wachovia/NNN October 2006]

32

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NOTICE PURSUANT TO TEXAS BUS. & COMM. CODE § 26.02
THIS WRITTEN DEED OF TRUST AND ALL OTHER WRITTEN LOAN DOCUMENTS EXECUTED BY ANY
OF THE PARTIES PRIOR TO OR SUBSTANTIALLY CONTEMPORANEOUSLY WITH THE EXECUTION
HEREOF, TOGETHER CONSTITUTE A WRITTEN LOAN AGREEMENT WHICH REPRESENTS 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.

                  GRANTOR:    
 
                APARTMENT REIT WALKER RANCH, LP, a Texas limited partnership    
 
           
 
  By:   APARTMENT REIT WALKER RANCH GP, LLC,
a Delaware limited liability company, its General Partner    

                          By:   NNN APARTMENT REIT HOLDINGS, L.P., a
Virginia limited partnership, its Manager
 
                   
 
      By:   NNN APARTMENT REIT INC., a Maryland corporation, its General Partner
       

             
 
  By:   /s/ STANLEY J. OLANDER,    
 
  Name:  
 
STANLEY J. OLANDER, JR.    
 
  Title:   CEO    
 
           
 
      [CORPORATE SEAL]    

                  LENDER:    
 
                WACHOVIA BANK, NATIONAL
ASSOCIATION, as Agent    
 
           
 
  By:        
 
           
 
      Name:    
 
      Title:    

[Signature Page to Mezzanine Deed of Trust — Wachovia/NNN October 2006]

 

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NOTICE PURSUANT TO TEXAS BUS. & COMM. CODE § 26.02
THIS WRITTEN DEED OF TRUST AND ALL OTHER WRITTEN LOAN DOCUMENTS EXECUTED BY ANY
OF THE PARTIES PRIOR TO OR SUBSTANTIALLY CONTEMPORANEOUSLY WITH THE EXECUTION
HEREOF, TOGETHER CONSTITUTE A WRITTEN LOAN AGREEMENT WHICH REPRESENTS 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.

                  GRANTOR:    
 
                APARTMENT REIT WALKER RANCH, LP, a Texas limited
partnership    
 
           
 
  By:   APARTMENT REIT WALKER RANCH GP, LLC, a
Delaware limited liability company, its General Partner    

                          By:   NNN APARTMENT REIT HOLDINGS, L.P., a
Virginia limited partnership, its Manager
 
                   
 
      By:   NNN APARTMENT REIT INC., a
Maryland corporation, its General Partner        

             
 
  By:        
 
           
 
  Name:        
 
           
 
  Title:        
 
           
 
           
 
      [CORPORATE SEAL]    

                  LENDER:    
 
                WACHOVIA BANK, NATIONAL
ASSOCIATION, as Agent    
 
           
 
  By:   /s/ CATHY A. CASEY    
 
           
 
      Name: CATHY A. CASEY    
 
      Title: MANAGING DIRECTOR    

(SEAL) [a24798a2479804.gif]
[Signature Page to Mezzanine Deed of Trust - Wachovia/NNN October 2006]

 

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STATE OF VIRGINIA
COUNTY OF [ILLEGIBLE]
     This instrument was acknowledged before me on October 27, 2006, by S J
OLANDER, the CEO of NNN Apartment REIT, Inc., a Maryland corporation, on behalf
of said corporation as the General Partner of NNN Apartment REIT Holdings, L.P.,
a Virginia limited partnership, on behalf of such limited partnership as the
Manager of Apartment REIT Walker Ranch GP, LLC, a Delaware limited liability
company as the General Partner of APARTMENT REIT WALKER RANCH, LP, a Texas
limited partnership.

         
 
  /s/ [ILLEGIBLE]    
 
 
 
Notary Public, in and for    
 
       
(SEAL)
  THE STATE OF VIRGINIA    
 
       
 
  My Commission Expires: 6/30/10    

[Notary Page to Mezzanine Deed of Trust — Wachovia/NNN October 2006]

 

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STATE OF GEORGIA
COUNTY OF FULTON
     This instrument was acknowledged before me on October 30, 2006 by Cathy A.
Casey, a Managing Director of Wachovia Bank, National Association, a national
banking association, on behalf of said association.

         
(SEAL) [a24798a2479805.gif]
       
 
  /s/ Valretha V. Bailey    
 
 
 
Notary Public, in and for    
 
       
 
  THE STATE OF Georgia    
 
       
 
  My Commission Expires: 4-14-2007    

[Notary Page to Mezzanine Deed of Trust — Wachovia/NNN October 2006]

 

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EXHIBIT A
Legal Description

37

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EXHIBIT B
Permitted Encumbrances
     Permitted Encumbrances are such matters as are shown on Schedule B to that
certain Commitment for Title Insurance (No.                     ) issued by
                     with an effective date of                     .

38

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EXHIBIT C
Schedule 1
DESCRIPTION OF DEBTOR AND SECURED PARTY
Part 1 – Description of Debtor
A.                     , a                     . Such Debtor has been using or
operating under said name and identity or corporate structure without change
since                     .
Names and Tradenames used within the last five years:
Location of all chief executive offices over last five years:
                                        
                                        
                                        
Mailing address:
                                        
                                        
                                        
Attn:                               
Organizational Identification Number:                     
Federal Tax Identification Number:                     
Part 2 – Description of Secured Party
Wachovia Bank, National Association, a national banking association, as Agent
171 17th Street, N.W.
GA 4506
Atlanta, Georgia 30363
Attn: Cathy Casey
***********************************************************

39