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KOGER POST OAK LIMITED PARTNERSHIP, as Grantor to

 

DAVID PARNELL, as Trustee

 

for the benefit of

 

COLUMN FINANCIAL, INC., as Beneficiary

 

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DEED OF TRUST AND

SECURITY AGREEMENT

 

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Dated:    As of December 6, 2002 Location:    3000 Post Oak Boulevard      3040
Post Oak Boulevard and      3050 Post Oak Boulevard      Houston, Texas County:
   Harris PREPARED BY AND UPON RECORDATION RETURN TO: Cadwalader, Wickersham &
Taft 100 Maiden Lane New York, New York 10038 Attention: Fredric L. Altschuler,
Esq.

 

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DEED OF TRUST AND SECURITY AGREEMENT

 

THIS DEED OF TRUST AND SECURITY AGREEMENT (this “Security Instrument”) is made
as of this 6th day of December, 2002, by KOGER POST OAK LIMITED PARTNERSHIP, a
Delaware limited partnership, having its principal place of business at 433
Plaza Real, Suite 335, Boca Raton, Florida 33432, as grantor (“Borrower”) to
DAVID PARNELL, having an address at 7557 Rambler Road, Suite 1200, Dallas, Texas
75231, as trustee (“Trustee”), for the benefit of COLUMN FINANCIAL, INC., having
an address at 11 Madison Avenue, New York, New York 10010, as beneficiary
(“Lender”).

 

W I T N E S S E T H:

 

WHEREAS, this Security Instrument is given to secure a loan (the “Loan”) in the
principal sum of SEVENTY SEVEN MILLION AND NO/100 DOLLARS ($77,000,000.00)
advanced pursuant to that certain Loan Agreement, dated as of the date hereof,
between Borrower and Lender (as the same may be amended, restated, replaced,
supplemented or otherwise modified from time to time, the “Loan Agreement”) and
evidenced by that certain Promissory Note, dated the date hereof, made by
Borrower in favor of Lender (such Promissory Note, together with all extensions,
renewals, replacements, restatements or modifications thereof being hereinafter
referred to as the “Note”);

 

WHEREAS, Borrower desires to secure the payment of the Debt (as defined in the
Loan Agreement) and the performance of all of its obligations under the Note,
the Loan Agreement and the other Loan Documents (as herein defined); and

 

WHEREAS, this Security Instrument is given pursuant to the Loan Agreement, and
payment, fulfillment, and performance by Borrower of its obligations thereunder
and under the other Loan Documents are secured hereby, and each and every term
and provision of the Loan Agreement, the Note, and that certain Assignment of
Leases and Rents of even date herewith made by Borrower in favor of Lender
delivered in connection with this Security Agreement (as the same may be
amended, restated, replaced, supplemented or otherwise modified from time to
time, the “Assignment of Leases”), including the rights, remedies, obligations,
covenants, conditions, agreements, indemnities, representations and warranties
of the parties therein, are hereby incorporated by reference herein as though
set forth in full and shall be considered a part of this Security Instrument
(the Loan Agreement, the Note, this Security Instrument, the Assignment of
Leases and Rents and all other documents evidencing or securing the Debt
(including all additional mortgages, deeds to secure debt and assignments of
leases and rents) or executed or delivered in connection therewith, are
hereinafter referred to collectively as the “Loan Documents”).

 

NOW THEREFORE, in consideration of the making of the Loan by Lender and the
covenants, agreements, representations and warranties set forth in this Security
Instrument:

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ARTICLE 1—GRANTS OF SECURITY

 

Section 1.1 Property Conveyed. Borrower does hereby irrevocably grant, bargain,
sell, pledge, assign, warrant, transfer and convey to Trustee and its successors
and assigns, in trust, with Power of Sale for the benefit of Lender as
beneficiary in trust, all of Borrower’s right, title and interest, if any, in
and to the following property, rights, interests and estates now owned, or
hereafter acquired by Borrower (each only to the extent permitted by applicable
law and the instrument or document creating Borrower’s interest thereunder, if
applicable) (collectively, the “Property”):

 

(a) Land. The real property described in Exhibit A attached hereto and made a
part hereof (the “Land”);

 

(b) Additional Land. All additional lands, estates and development rights
hereafter acquired by Borrower for use in connection with the Land and the
development of the Land and all additional lands and estates therein which may,
from time to time, by supplemental mortgage or otherwise be expressly made
subject to the lien of this Security Instrument;

 

(c) Improvements. The buildings, structures, fixtures, additions, enlargements,
extensions, modifications, repairs, replacements and improvements now or
hereafter erected or located on the Land (collectively, the “Improvements”);

 

(d) Easements. All easements, rights-of-way or use, rights, strips and gores of
land, streets, ways, alleys, passages, sewer rights, water, water courses, water
rights and powers, air rights and development rights, and all estates, rights,
titles, interests, privileges, liberties, servitudes, tenements, hereditaments
and appurtenances of any nature whatsoever, in any way now or hereafter
belonging, relating or pertaining to the Land and the Improvements and the
reversions and remainders, and all land lying in the bed of any street, road or
avenue, opened or proposed, in front of or adjoining the Land, to the center
line thereof and all the estates, rights, titles, interests, rights of dower,
rights of curtesy, property, possession, claim and demand whatsoever, both at
law and in equity, of Borrower of, in and to the Land and the Improvements and
every part and parcel thereof, with the appurtenances thereto;

 

(e) Equipment. All “equipment,” as such term is defined in Article 9 of the
Uniform Commercial Code (as hereinafter defined), now owned or hereafter
acquired by Borrower, which is used at or in connection with the Improvements or
the Land or is located thereon or therein (including, but not limited to, all
machinery, equipment, furnishings, and electronic data-processing and other
office equipment now owned or hereafter acquired by Borrower and any and all
additions, substitutions and replacements of any of the foregoing), together
with all attachments, components, parts, equipment and accessories installed
thereon or affixed thereto (collectively, the “Equipment”). Notwithstanding the

 

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foregoing, Equipment shall not include any property belonging to tenants under
leases except to the extent that Borrower shall have any right or interest
therein;

 

(f) Fixtures. All Equipment now owned, or the ownership of which is hereafter
acquired, by Borrower which is so related to the Land and Improvements forming
part of the Property that it is deemed fixtures or real property under the law
of the particular state in which the Equipment is located, including, without
limitation, all building or construction materials intended for construction,
reconstruction, alteration or repair of or installation on the Property,
construction equipment, appliances, machinery, plant equipment, fittings,
apparatuses, fixtures and other items now or hereafter attached to, installed in
or used in connection with (temporarily or permanently) any of the Improvements
or the Land, including, but not limited to, engines, devices for the operation
of pumps, pipes, plumbing, call and sprinkler systems, fire extinguishing
apparatuses and equipment, heating, ventilating, incinerating, electrical, air
conditioning and air cooling equipment and systems, gas and electric machinery,
appurtenances and equipment, pollution control equipment, security systems,
disposals, dishwashers, refrigerators and ranges, recreational equipment and
facilities of all kinds, and water, gas, electrical, storm and sanitary sewer
facilities, utility lines and equipment (whether owned individually or jointly
with others, and, if owned jointly, to the extent of Borrower’s interest
therein) and all other utilities whether or not situated in easements, all water
tanks, water supply, water power sites, fuel stations, fuel tanks, fuel supply,
and all other structures, together with all accessions, appurtenances,
additions, replacements, betterments and substitutions for any of the foregoing
and the proceeds thereof (collectively, the “Fixtures”). Notwithstanding the
foregoing, “Fixtures” shall not include any property which tenants are entitled
to remove pursuant to leases except to the extent that Borrower shall have any
right or interest therein;

 

(g) Personal Property. All furniture, furnishings, objects of art, machinery,
goods, tools, supplies, appliances, general intangibles, contract rights,
accounts, accounts receivable, franchises, licenses, certificates and permits,
and all other personal property of any kind or character whatsoever as defined
in and subject to the provisions of the Uniform Commercial Code, whether
tangible or intangible, other than Fixtures, which are now or hereafter owned by
Borrower and which are located within or about the Land and the Improvements,
together with all accessories, replacements and substitutions thereto or
therefor and the proceeds thereof (collectively, the “Personal Property”), and
the right, title and interest of Borrower in and to any of the Personal Property
which may be subject to any security interests, as defined in the Uniform
Commercial Code, as adopted and enacted by the state or states where any of the
Property is located (the “Uniform Commercial Code”), superior in lien to the
lien of this Security Instrument and all proceeds and products of the above;

 

(h) Leases and Rents. All leases, subleases or subsubleases, lettings, licenses,
concessions or other agreements (whether written or oral) pursuant to which any
Person is granted a possessory interest in, or right to use or occupy all

 

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or any portion of the Land and the Improvements, and every modification,
amendment or other agreement relating to such leases, subleases, subsubleases,
or other agreements entered into in connection with such leases, subleases,
subsubleases, or other agreements and every guarantee of the performance and
observance of the covenants, conditions and agreements to be performed and
observed by the other party thereto, heretofore or hereafter entered into
(collectively, the “Leases”), whether before or after the filing by or against
Borrower of any petition for relief under 11 U.S.C. §101 et seq., as the same
may be amended from time to time (the “Bankruptcy Code”) and all right, title
and interest of Borrower, its successors and assigns therein and thereunder,
including, without limitation, cash or securities deposited thereunder to secure
the performance by the lessees of their obligations thereunder and all rents,
additional rents, revenues, issues and profits (including all oil and gas or
other mineral royalties and bonuses) from the Land and the Improvements whether
paid or accruing before or after the filing by or against Borrower of any
petition for relief under the Bankruptcy Code (collectively, the “Rents”) and
all proceeds from the sale or other disposition of the Leases and the right to
receive and apply the Rents to the payment of the Debt;

 

(i) Condemnation Awards. All awards or payments, including interest thereon,
which may heretofore and hereafter be made with respect to the Property, whether
from the exercise of the right of eminent domain (including, but not limited to,
any transfer made in lieu of or in anticipation of the exercise of the right),
or for a change of grade, or for any other injury to or decrease in the value of
the Property;

 

(j) Insurance Proceeds. All proceeds in respect of the Property under any
insurance policies covering the Property, including, without limitation, the
right to receive and apply the proceeds of any insurance, judgments, or
settlements made in lieu thereof, for damage to the Property;

 

(k) Tax Appeal. All refunds, rebates or credits in connection with reduction in
real estate taxes and assessments charged against the Property as a result of
tax appeal or any applications or proceedings for reduction;

 

(l) Conversion. All proceeds of the conversion, voluntary or involuntary, of any
of the foregoing including, without limitation, proceeds of insurance and
condemnation awards, into cash or liquidation claims;

 

(m) Rights. The right, in the name and on behalf of Borrower, to appear in and
defend any action or proceeding brought with respect to the Property and to
commence any action or proceeding to protect the interest of Lender in the
Property;

 

(n) Agreements. All agreements, contracts, certificates, instruments,
franchises, permits, licenses, plans, specifications and other documents, now or
hereafter entered into, and all rights therein and thereto, respecting or
pertaining

 

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to the use, occupation, construction, management or operation of the Land and
any part thereof and any Improvements or any business or activity conducted on
the Land and any part thereof and all right, title and interest of Borrower
therein and thereunder, including, without limitation, the right, upon the
happening of any default hereunder, to receive and collect any sums payable to
Borrower thereunder;

 

(o) Trademarks. All tradenames, trademarks, servicemarks, logos, copyrights,
goodwill, books and records and all other general intangibles relating to or
used in connection with the operation of the Property;

 

(p) Accounts. All reserves, escrows and deposit accounts maintained by Borrower
with respect to the Property, including, without limitation, all accounts
established pursuant to the Cash Management Agreement; together with all
deposits or wire transfers made to the Lockbox Account and all cash, checks,
drafts, certificates, securities, investment property, financial assets,
instruments and other property held therein from time to time and all proceeds,
products, distributions or dividends or substitutions thereon and thereof; and

 

(q) Other Rights. Any and all other rights of Borrower in and to the items set
forth in Subsections (a) through (p) above.

 

AND without limiting any of the other provisions of this Security Instrument, to
the extent permitted by applicable law, Borrower expressly grants to Lender, as
secured party, a security interest in the portion of the Property which is or
may be subject to the provisions of the Uniform Commercial Code which are
applicable to secured transactions; it being understood and agreed that the
Improvements and Fixtures are part and parcel of the Land (the Land, the
Improvements and the Fixtures collectively referred to as the “Real Property”)
appropriated to the use thereof and, whether affixed or annexed to the Real
Property or not, shall for the purposes of this Security Instrument be deemed
conclusively to be real estate and mortgaged hereby.

 

Section 1.2 Assignment of Rents. Borrower hereby absolutely and unconditionally
assigns to Lender all of Borrower’s right, title and interest in and to all
current and future Leases and Rents; it being intended by Borrower that this
assignment constitutes a present, absolute assignment and not an assignment for
additional security only. Nevertheless, subject to the terms of the Assignment
of Leases, the Cash Management Agreement and Section 7.1(h) of this Security
Instrument, Lender grants to Borrower a revocable license to collect, receive,
use and enjoy the Rents and Borrower shall hold the Rents, or a portion thereof
sufficient to discharge all current sums due on the Debt, for use in the payment
of such sums.

 

Section 1.3 Security Agreement. This Security Instrument is both a real property
mortgage and a “security agreement” within the meaning of the Uniform Commercial
Code. The Property includes both real and personal property and all other rights
and interests, whether tangible or intangible in nature, of Borrower in the
Property. By executing and delivering this Security Instrument, Borrower hereby
grants to Lender, as security for the Obligations (hereinafter defined), a
security interest in the Fixtures, the Equipment and the

 

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Personal Property to the full extent that the Fixtures, the Equipment and the
Personal Property may be subject to the Uniform Commercial Code (said portion of
the Property so subject to the Uniform Commercial Code being called the
“Collateral”). If an Event of Default shall occur and be continuing, Lender, in
addition to any other rights and remedies which it may have, shall have and may
exercise immediately and without demand, any and all rights and remedies granted
to a secured party upon default under the Uniform Commercial Code, including,
without limiting the generality of the foregoing, the right to take possession
of the Collateral or any part thereof, and to take such other measures as Lender
may deem necessary for the care, protection and preservation of the Collateral.
Upon request or demand of Lender after the occurrence and during the continuance
of an Event of Default, Borrower shall, at its expense, assemble the Collateral
and make it available to Lender at a convenient place (at the Land if tangible
property) reasonably acceptable to Lender. Borrower shall pay to Lender on
demand any and all expenses, including reasonable legal expenses and attorneys’
fees, incurred or paid by Lender in protecting its interest in the Collateral
and in enforcing its rights hereunder with respect to the Collateral after the
occurrence and during the continuance of an Event of Default. Any notice of
sale, disposition or other intended action by Lender with respect to the
Collateral sent to Borrower in accordance with the provisions hereof at least
ten (10) business days prior to such action, shall, except as otherwise provided
by applicable law, constitute reasonable notice to Borrower. The proceeds of any
disposition of the Collateral, or any part thereof, may, except as otherwise
required by applicable law, be applied by Lender to the payment of the Debt in
such priority and proportions as Lender in its discretion shall deem proper.
Borrower’s (debtor’s) principal place of business is as set forth on page one
hereof and the address of Lender (secured party) is as set forth on page one
hereof.

 

Section 1.4 Fixture Filing. Certain of the Property is or will become “fixtures”
(as that term is defined in the Uniform Commercial Code) on the Land, and this
Security Instrument, upon being filed for record in the real estate records of
the city or county wherein such fixtures are situated, shall operate also as a
financing statement filed as a fixture filing in accordance with the applicable
provisions of said Uniform Commercial Code upon such of the Property that is or
may become fixtures.

 

Section 1.5 Pledges of Monies Held. Borrower hereby pledges to Lender any and
all monies now or hereafter held by Lender or on behalf of Lender, including,
without limitation, any sums deposited in the Lockbox Account, the Reserve Funds
and Net Proceeds, as additional security for the Obligations until expended or
applied as provided in this Security Instrument.

 

CONDITIONS TO GRANT

 

TO HAVE AND TO HOLD the above granted and described Property unto and to the use
and benefit of Trustee and its successors and assigns, forever;

 

IN TRUST, WITH POWER OF SALE, to secure payment to Lender of the Obligations at
the time and in the manner provided for its payment in the Note and in this
Security Instrument.

 

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PROVIDED, HOWEVER, these presents are upon the express condition that, if
Borrower shall well and truly pay to Lender the Debt at the time and in the
manner provided in the Note, the Loan Agreement and this Security Instrument,
shall well and truly perform the Other Obligations as set forth in this Security
Instrument and shall well and truly abide by and comply with each and every
covenant and condition set forth herein and in the Note, the Loan Agreement and
the other Loan Documents, these presents and the estate hereby granted shall
cease, terminate and be void; provided, however, that Borrower’s obligation to
indemnify and hold harmless Lender pursuant to the provisions hereof shall
survive any such payment or release.

 

ARTICLE 2—DEBT AND OBLIGATIONS SECURED

 

Section 2.1 Debt. This Security Instrument and the grants, assignments and
transfers made in Article 1 are given for the purpose of securing the Debt.

 

Section 2.2 Other Obligations. This Security Instrument and the grants,
assignments and transfers made in Article 1 are also given for the purpose of
securing the following (the “Other Obligations”):

 

(a) the performance of all other obligations of Borrower contained herein;

 

(b) the performance of each obligation of Borrower contained in the Loan
Agreement and any other Loan Document; and

 

(c) the performance of each obligation of Borrower contained in any renewal,
extension, amendment, modification, consolidation, change of, or substitution or
replacement for, all or any part of the Note, the Loan Agreement or any other
Loan Document.

 

Section 2.3 Debt and Other Obligations. Borrower’s obligations for the payment
of the Debt and the performance of the Other Obligations shall be referred to
collectively herein as the “Obligations.”

 

ARTICLE 3—BORROWER COVENANTS

 

Borrower covenants and agrees that:

 

Section 3.1 Payment of Debt. Borrower will pay the Debt at the time and in the
manner provided in the Loan Agreement, the Note and this Security Instrument.

 

Section 3.2 Incorporation by Reference. All the covenants, conditions and
agreements contained in (a) the Loan Agreement, (b) the Note and (c) all and any
of the other Loan Documents, are hereby made a part of this Security Instrument
to the same extent and with the same force as if fully set forth herein.

 

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Section 3.3 Insurance. Borrower shall obtain and maintain, or cause to be
maintained, in full force and effect at all times insurance with respect to
Borrower and the Property as required pursuant to the Loan Agreement.

 

Section 3.4 Maintenance of Property. Borrower shall cause the Property to be
maintained in a good and safe condition and repair. The Improvements, the
Fixtures, the Equipment and the Personal Property shall not be removed,
demolished or materially altered (except for normal replacement of the Fixtures,
the Equipment or the Personal Property, tenant finish and refurbishment of the
Improvements) without the consent of Lender. Subject to the terms and conditions
of the Loan Agreement, Borrower shall promptly repair, replace or rebuild any
part of the Property which may be destroyed by any Casualty or become damaged,
worn or dilapidated or which may be affected by any Condemnation, and shall
complete and pay for any structure at any time in the process of construction or
repair on the Land.

 

Section 3.5 Waste. Borrower shall not commit or suffer any waste of the Property
or make any change in the use of the Property which will in any way materially
increase the risk of fire or other hazard arising out of the operation of the
Property, or take any action that might invalidate or allow the cancellation of
any Policy, or do or permit to be done thereon anything that may in any way
materially impair the value of the Property or the security of this Security
Instrument. Borrower will not, without the prior written consent of Lender,
permit any drilling or exploration for or extraction, removal, or production of
any minerals from the surface or the subsurface of the Land, regardless of the
depth thereof or the method of mining or extraction thereof.

 

Section 3.6 Payment for Labor and Materials. (a) Borrower will promptly pay when
due all bills and costs for labor, materials, and specifically fabricated
materials (“Labor and Material Costs”) incurred in connection with the Property
and never permit to exist beyond the due date thereof in respect of the Property
or any part thereof any lien or security interest, even though inferior to the
liens and the security interests hereof, and in any event never permit to be
created or exist in respect of the Property or any part thereof any other or
additional lien or security interest other than the liens or security interests
hereof except for the Permitted Encumbrances.

 

(b) After prior written notice to Lender, Borrower, at its own expense, may
contest by appropriate legal proceeding, promptly initiated and conducted in
good faith and with due diligence, the amount or validity or application in
whole or in part of any of the Labor and Material Costs, provided that (i) no
Event of Default has occurred and is continuing under the Loan Agreement, the
Note, this Security Instrument or any of the other Loan Documents, (ii) Borrower
is permitted to do so under the provisions of any other mortgage, deed of trust
or deed to secure debt affecting the Property, (iii) such proceeding shall
suspend the collection of the Labor and Material Costs from Borrower and from
the Property

 

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or Borrower shall have paid all of the Labor and Material Costs under protest,
(iv) such proceeding shall be permitted under and be conducted in accordance
with the provisions of any other instrument to which Borrower is subject and
shall not constitute a default thereunder, (v) neither the Property nor any part
thereof or interest therein will be in danger of being sold, forfeited,
terminated, canceled or lost, and (vi) Borrower shall have furnished the
security as may be required in the proceeding, or as may be reasonably requested
by Lender to insure the payment of any contested Labor and Material Costs,
together with all interest and penalties thereon.

 

Section 3.7 Performance of Other Agreements. Borrower shall observe and perform
each and every term, covenant and provision to be observed or performed by
Borrower pursuant to the Loan Agreement, any other Loan Document and any other
agreement or recorded instrument affecting or pertaining to the Property and any
amendments, modifications or changes thereto.

 

Section 3.8 Change of Name, Identity or Structure. Borrower shall not change
Borrower’s name, identity (including its trade name or names) or, if not an
individual, Borrower’s corporate, partnership or other structure without
notifying Lender of such change in writing at least fifteen (15) days prior to
the effective date of such change and, in the case of a change in Borrower’s
structure, without first obtaining the prior written consent of Lender. Borrower
shall execute and deliver to Lender, prior to or contemporaneously with the
effective date of any such change, any financing statement or financing
statement change required by Lender to establish or maintain the validity,
perfection and priority of the security interest granted herein. At the request
of Lender, Borrower shall execute a certificate in form satisfactory to Lender
listing the trade names under which Borrower intends to operate the Property,
and representing and warranting that Borrower does business under no other trade
name with respect to the Property.

 

Section 3.9 Title. Borrower has good and insurable fee simple title to the real
property comprising part of the Property and good title to the balance of such
Property, free and clear all Liens (as defined in the Loan Agreement) whatsoever
except the Permitted Encumbrances (as defined in the Loan Agreement), such other
Liens as are permitted pursuant to the Loan Documents and the Liens created by
the Loan Documents. The Permitted Encumbrances in the aggregate do not
materially and adversely affect the value, operation or use of the Property or
Borrower’s ability to repay the Loan. This Security Instrument, when properly
recorded in the appropriate records, together with any Uniform Commercial Code
financing statements required to be filed in connection therewith, will create
(a) a valid, perfected first priority lien on the Property, subject only to
Permitted Encumbrances, other Liens permitted by the Loan Documents and the
Liens created by the Loan Documents and (b) perfected security interests in and
to, and perfected collateral assignments of, all personalty (including the
Leases), all in accordance with the terms thereof, in each case subject only to
any applicable Permitted Encumbrances, such other Liens as are permitted
pursuant to the Loan Documents and the Liens created by the Loan Documents.
There are no claims for payment for work, labor or materials affecting the
Property which are past due and are or may become a lien prior to, or of equal
priority with, the Liens created by the Loan Documents unless such claims for
payments are being contested in accordance with the terms and conditions of this
Security Instrument.

 

ARTICLE 4—OBLIGATIONS AND RELIANCES

 

Section 4.1 Relationship of Borrower and Lender. The relationship between
Borrower and Lender is solely that of debtor and creditor, and Lender has no
fiduciary or other

 

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special relationship with Borrower, and no term or condition of any of the Loan
Agreement, the Note, this Security Instrument and the other Loan Documents shall
be construed so as to deem the relationship between Borrower and Lender to be
other than that of debtor and creditor.

 

Section 4.2 No Reliance on Lender. The general partners, members, principals and
(if Borrower is a trust) beneficial owners of Borrower are experienced in the
ownership and operation of properties similar to the Property, and Borrower and
Lender are relying solely upon such expertise and business plan in connection
with the ownership and operation of the Property. Borrower is not relying on
Lender’s expertise, business acumen or advice in connection with the Property.

 

Section 4.3 No Lender Obligations. (a) Notwithstanding the provisions of
Subsections 1.1(h) and (n) or Section 1.2, Lender is not undertaking the
performance of (i) any obligations under the Leases; or (ii) any obligations
with respect to such agreements, contracts, certificates, instruments,
franchises, permits, trademarks, licenses and other documents.

 

(b) By accepting or approving anything required to be observed, performed or
fulfilled or to be given to Lender pursuant to this Security Instrument, the
Loan Agreement, the Note or the other Loan Documents, including, without
limitation, any officer’s certificate, balance sheet, statement of profit and
loss or other financial statement, survey, appraisal, or insurance policy,
Lender shall not be deemed to have warranted, consented to, or affirmed the
sufficiency, the legality or effectiveness of same, and such acceptance or
approval thereof shall not constitute any warranty or affirmation with respect
thereto by Lender.

 

Section 4.4 Reliance. Borrower recognizes and acknowledges that in accepting the
Loan Agreement, the Note, this Security Instrument and the other Loan Documents,
Lender is expressly and primarily relying on the truth and accuracy of the
warranties and representations set forth in Section 4.1 of the Loan Agreement
without any obligation to investigate the Property and notwithstanding any
investigation of the Property by Lender; that such reliance existed on the part
of Lender prior to the date hereof, that the warranties and representations are
a material inducement to Lender in making the Loan; and that Lender would not be
willing to make the Loan and accept this Security Instrument in the absence of
the warranties and representations as set forth in Section 4.1 of the Loan
Agreement.

 

ARTICLE 5—FURTHER ASSURANCES

 

Section 5.1 Recording of Security Instrument, etc. Borrower forthwith upon the
execution and delivery of this Security Instrument and thereafter, from time to
time, will cause this Security Instrument and any of the other Loan Documents
creating a lien or security interest or evidencing the lien hereof upon the
Property and each instrument of further assurance to be filed, registered or
recorded in such manner and in such places as may be required by any present or
future law in order to publish notice of and fully to protect and perfect the
lien or security interest hereof upon, and the interest of Lender in, the
Property. Borrower will pay all taxes, filing, registration or recording fees,
and all expenses incident to the preparation, execution, acknowledgment and/or
recording of the Note, this Security Instrument, the other

 

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Loan Documents, any note, deed of trust or mortgage supplemental hereto, any
security instrument with respect to the Property and any instrument of further
assurance, and any modification or amendment of the foregoing documents, and all
federal, state, county and municipal taxes, duties, imposts, assessments and
charges arising out of or in connection with the execution and delivery of this
Security Instrument, any deed of trust or mortgage supplemental hereto, any
security instrument with respect to the Property or any instrument of further
assurance, and any modification or amendment of the foregoing documents, except
where prohibited by law so to do.

 

Section 5.2 Further Acts, etc. Borrower will, at the cost of Borrower, and
without expense to Lender, do, execute, acknowledge and deliver all and every
further acts, deeds, conveyances, deeds of trust, mortgages, assignments,
notices of assignments, transfers and assurances as Lender shall, from time to
time, reasonably require, for the purpose of assuring, conveying, assigning,
transferring, and confirming unto Lender and Trustee the property and rights
hereby deeded, granted, bargained, sold, conveyed, confirmed, pledged, assigned,
warranted and transferred or intended now or hereafter so to be, or which
Borrower may be or may hereafter become bound to convey or assign to Lender, or
for carrying out the intention or facilitating the performance of the terms of
this Security Instrument or for filing, registering or recording this Security
Instrument, or for complying with all Legal Requirements. Borrower, promptly on
demand, will execute and deliver, and in the event it shall fail to so execute
and deliver, hereby authorizes Lender to execute in the name of Borrower or
without the signature of Borrower to the extent Lender may lawfully do so, one
or more financing statements to evidence more effectively the security interest
of Lender in the Property. Borrower grants to Lender an irrevocable power of
attorney coupled with an interest for the purpose of exercising and perfecting
any and all rights and remedies available to Lender at law and in equity,
including without limitation, such rights and remedies available to Lender
pursuant to this Section 5.2.

 

Section 5.3 Changes in Tax, Debt, Credit and Documentary Stamp Laws. (a) If any
law is enacted or adopted or amended after the date of this Security Instrument
which deducts the Debt from the value of the Property for the purpose of
taxation or which imposes a tax, either directly or indirectly, on the Debt or
Lender’s interest in the Property, Borrower will pay the tax, with interest and
penalties thereon, if any. If Lender is advised by counsel chosen by it that the
payment of tax by Borrower would be unlawful or taxable to Lender or
unenforceable or provide the basis for a defense of usury then Lender shall have
the option by written notice of not less than one hundred twenty (120) days to
declare the Debt immediately due and payable.

 

(b) Borrower will not claim or demand or be entitled to any credit or credits on
account of the Debt for any part of the Taxes or Other Charges assessed against
the Property, or any part thereof, and no deduction shall otherwise be made or
claimed from the assessed value of the Property, or any part thereof, for real
estate tax purposes by reason of this Security Instrument or the Debt. If such
claim, credit or deduction shall be required by law, Lender shall have the
option, by written notice of not less than one hundred twenty (120) days, to
declare the Debt immediately due and payable.

 

(c) If at any time the United States of America, any State thereof or any
subdivision of any such State shall require revenue or other stamps to be

 

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affixed to the Note, this Security Instrument, or any of the other Loan
Documents or impose any other tax or charge on the same, Borrower will pay for
the same, with interest and penalties thereon, if any.

 

Section 5.4 Splitting of Deed of Trust. This Security Instrument and the Note
shall, at any time until the same shall be fully paid and satisfied, at the sole
election of Lender, be severed into two or more notes and two or more security
instruments in such denominations as Lender shall determine in its sole
discretion, each of which shall cover all or a portion of the Property to be
more particularly described therein. To that end, Borrower, upon written request
of Lender, shall execute, acknowledge and deliver, or cause to be executed,
acknowledged and delivered by the then owner of the Property, to Lender and/or
its designee or designees substitute notes and security instruments in such
principal amounts, aggregating not more than the then unpaid principal amount of
this Security Instrument, and containing terms, provisions and clauses similar
to those contained herein and in the Note, and such other documents and
instruments as may be required by Lender.

 

Section 5.5 Replacement Documents. Upon receipt of an affidavit of an officer of
Lender as to the loss, theft, destruction or mutilation of the Note or any other
Loan Document which is not of public record, and, in the case of any such
mutilation, upon surrender and cancellation of such Note or other Loan Document,
Borrower will issue, in lieu thereof, a replacement Note or other Loan Document,
dated the date of such lost, stolen, destroyed or mutilated Note or other Loan
Document in the same principal amount thereof and otherwise of like tenor.

 

ARTICLE 6—DUE ON SALE/ENCUMBRANCE

 

Section 6.1 Lender Reliance. Borrower acknowledges that Lender has examined and
relied on the experience of Borrower and its general partners, members,
principals and (if Borrower is a trust) beneficial owners in owning and
operating properties such as the Property in agreeing to make the Loan, and will
continue to rely on Borrower’s ownership of the Property as a means of
maintaining the value of the Property as security for repayment of the Debt and
the performance of the Other Obligations. Borrower acknowledges that Lender has
a valid interest in maintaining the value of the Property so as to ensure that,
should Borrower default in the repayment of the Debt or the performance of the
Other Obligations, Lender can recover the Debt by a sale of the Property.

 

Section 6.2 No Sale/Encumbrance. Neither Borrower nor any Restricted Party shall
Transfer the Property or any part thereof or any interest therein or permit or
suffer the Property or any part thereof or any interest therein to be
Transferred other than as expressly permitted pursuant to the terms of the Loan
Agreement.

 

ARTICLE 7—RIGHTS AND REMEDIES UPON DEFAULT

 

Section 7.1 Remedies. Upon the occurrence and during the continuance of any
Event of Default, Borrower agrees that Lender or Trustee, or both may take such
action, without notice or demand, as it deems advisable to protect and enforce
its rights against Borrower and in and to the Property, including, but not
limited to, the following actions, each of

 

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which may be pursued concurrently or otherwise, at such time and in such order
as Lender or Trustee may determine, in their sole discretion, without impairing
or otherwise affecting the other rights and remedies of Lender or Trustee:

 

(a) declare the entire unpaid Debt to be immediately due and payable;

 

(b) institute proceedings, judicial or otherwise, for the complete foreclosure
of this Security Instrument under any applicable provision of law, in which case
the Property or any interest therein may be sold for cash or upon credit in one
or more parcels or in several interests or portions and in any order or manner;

 

(c) with or without entry, to the extent permitted and pursuant to the
procedures provided by applicable law, institute proceedings for the partial
foreclosure of this Security Instrument for the portion of the Debt then due and
payable, subject to the continuing lien and security interest of this Security
Instrument for the balance of the Debt not then due, unimpaired and without loss
of priority;

 

(d) to the extent permitted by applicable law, sell for cash or upon credit the
Property or any part thereof and all estate, claim, demand, right, title and
interest of Borrower therein and rights of redemption thereof, pursuant to power
of sale or otherwise, at one or more sales, as an entirety or in parcels, at
such time and place, upon such terms and after such notice thereof as may be
required or permitted by law;

 

(e) institute an action, suit or proceeding in equity for the specific
performance of any covenant, condition or agreement contained herein, in the
Note, the Loan Agreement or in the other Loan Documents;

 

(f) recover judgment on the Note either before, during or after any proceedings
for the enforcement of this Security Instrument or the other Loan Documents;

 

(g) apply for the appointment of a receiver, trustee, liquidator or conservator
of the Property, without notice and without regard for the adequacy of the
security for the Debt and without regard for the solvency of Borrower, any
guarantor, indemnitor with respect to the Loan or of any Person liable for the
payment of the Debt;

 

(h) revoke the license granted to Borrower under Section 1.2 hereof and Lender
may enter into or upon the Property, either personally or by their agents,
nominees or attorneys and dispossess Borrower and its agents and servants
therefrom, without liability for trespass, damages or otherwise and exclude
Borrower and its agents or servants wholly therefrom, and take possession of all
books, records and accounts relating thereto and Borrower agrees to surrender
possession of the Property and of such books, records and accounts to Lender
upon demand, and thereupon Lender may (i) use, operate, manage, control,

 

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insure, maintain, repair, restore and otherwise deal with all and every part of
the Property and conduct the business thereat; (ii) complete any construction on
the Property in such manner and form as Lender deems advisable; (iii) make
alterations, additions, renewals, replacements and improvements to or on the
Property; (iv) exercise all rights and powers of Borrower with respect to the
Property, whether in the name of Borrower or otherwise, including, without
limitation, the right to make, cancel, enforce or modify Leases, obtain and
evict tenants, and demand, sue for, collect and receive all Rents of the
Property and every part thereof; (v) require Borrower to pay monthly in advance
to Lender, or any receiver appointed to collect the Rents, the fair and
reasonable rental value for the use and occupation of such part of the Property
as may be occupied by Borrower; (vi) require Borrower to vacate and surrender
possession of the Property to Lender or to such receiver and, in default
thereof, Borrower may be evicted by summary proceedings or otherwise; and (vii)
apply the receipts from the Property to the payment of the Debt, in such order,
priority and proportions as Lender shall deem appropriate in its sole discretion
after deducting therefrom all expenses (including reasonable attorneys’ fees)
incurred in connection with the aforesaid operations and all amounts necessary
to pay the Taxes, Other Charges, insurance and other expenses in connection with
the Property, as well as just and reasonable compensation for the services of
Lender, its counsel, agents and employees;

 

(i) exercise any and all rights and remedies granted to a secured party upon
default under the Uniform Commercial Code, including, without limiting the
generality of the foregoing: (i) the right to take possession of the Fixtures,
the Equipment, the Personal Property or any part thereof, and to take such other
measures as Lender may deem necessary for the care, protection and preservation
of the Fixtures, the Equipment, the Personal Property, and (ii) request Borrower
at its expense to assemble the Fixtures, the Equipment, the Personal Property
and make it available to Lender at the Real Property or such other convenient
place acceptable to Lender. Any notice of sale, disposition or other intended
action by Lender with respect to the Fixtures, the Equipment, the Personal
Property sent to Borrower in accordance with the provisions hereof at least ten
(10) days prior to such action, shall constitute commercially reasonable notice
to Borrower;

 

(j) apply any sums then deposited or held in escrow or otherwise by or on behalf
of Lender in accordance with the terms of the Loan Agreement, this Security
Instrument or any other Loan Document to the payment of the following items in
any order in its uncontrolled discretion:

 

(i) Taxes and Other Charges;

 

(ii) Insurance Premiums;

 

(iii) Interest on the unpaid principal balance of the Note;

 

(iv) Amortization of the unpaid principal balance of the Note;

 

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(v) All other sums payable pursuant to the Note, the Loan Agreement, this
Security Instrument and the other Loan Documents, including without limitation
advances made by Lender pursuant to the terms of this Security Instrument;

 

(k) pursue such other remedies as Lender may have under applicable law; or

 

(l) apply the undisbursed balance of any Net Proceeds Deficiency deposit,
together with interest thereon, to the payment of the Debt in such order,
priority and proportions as Lender shall deem to be appropriate in its
discretion.

 

In the event of a sale, by foreclosure, power of sale or otherwise, of less than
all of Property, this Security Instrument shall continue as a lien and security
interest on the remaining portion of the Property unimpaired and without loss of
priority.

 

Section 7.2 Application of Proceeds. The purchase money, proceeds and avails of
any disposition of the Property, and or any part thereof, or any other sums
collected by Lender pursuant to the Note, this Security Instrument or the other
Loan Documents, may be applied by Lender to the payment of the Debt in such
priority and proportions as Lender in its discretion shall deem proper.

 

Section 7.3 Right to Cure Defaults. Upon the occurrence and during the
continuance of any Event of Default, Lender may, but without any obligation to
do so and without notice to or demand on Borrower and without releasing Borrower
from any obligation hereunder, make any payment or do any act required of
Borrower hereunder in such manner and to such extent as Lender may deem
necessary to protect the security hereof. Lender is authorized to enter upon the
Property for such purposes, or appear in, defend, or bring any action or
proceeding to protect its interest in the Property or to foreclose this Security
Instrument or collect the Debt, and the cost and expense thereof (including
reasonable attorneys’ fees to the extent permitted by law), with interest as
provided in this Section 7.3, shall constitute a portion of the Debt and shall
be due and payable to Lender upon demand. All such costs and expenses incurred
by Lender in remedying such Event of Default or such failed payment or act or in
appearing in, defending, or bringing any such action or proceeding shall bear
interest at the Default Rate, for the period after notice from Lender that such
cost or expense was incurred to the date of payment to Lender. All such costs
and expenses incurred by Lender together with interest thereon calculated at the
Default Rate shall be deemed to constitute a portion of the Debt and be secured
by this Security Instrument and the other Loan Documents and shall be
immediately due and payable upon demand by Lender therefor.

 

Section 7.4 Actions and Proceedings. Lender or Trustee has the right to appear
in and defend any action or proceeding brought with respect to the Property and
to bringany action or proceeding, in the name and on behalf of Borrower, which
Lender, in its discretion, decides should be brought to protect its interest in
the Property.

 

Section 7.5 Recovery of Sums Required To Be Paid. Lender shall have the right
from time to time to take action to recover any sum or sums which constitute a
part of the

 

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Debt as the same become due, without regard to whether or not the balance of the
Debt shall be due, and without prejudice to the right of Lender or Trustee
thereafter to bring an action of foreclosure, or any other action, for a default
or defaults by Borrower existing at the time such earlier action was commenced.

 

Section 7.6 Examination of Books and Records. At reasonable times and upon
reasonable notice, Lender, its agents, accountants and attorneys shall have the
right to examine the records, books, management and other papers of Borrower
which reflect upon their financial condition, at the Property or at any office
regularly maintained by Borrower where the books and records are located. Lender
and its agents shall have the right to make copies and extracts from the
foregoing records and other papers. In addition, at reasonable times and upon
reasonable notice, Lender, its agents, accountants and attorneys shall have the
right to examine and audit the books and records of Borrower pertaining to the
income, expenses and operation of the Property during reasonable business hours
at any office of Borrower where the books and records are located. This Section
7.6 shall apply throughout the term of the Note and without regard to whether an
Event of Default has occurred or is continuing.

 

Section 7.7 Other Rights, etc. (a) The failure of Lender or Trustee to insist
upon strict performance of any term hereof shall not be deemed to be a waiver of
any term of this Security Instrument. Borrower shall not be relieved of
Borrower’s obligations hereunder by reason of (i) the failure of Lender or
Trustee to comply with any request of Borrower or any guarantor or indemnitor
with respect to the Loan to take any action to foreclose this Security
Instrument or otherwise enforce any of the provisions hereof or of the Note or
the other Loan Documents, (ii) the release, regardless of consideration, of the
whole or any part of the Property, or of any person liable for the Debt or any
portion thereof, or (iii) any agreement or stipulation by Lender extending the
time of payment or otherwise modifying or supplementing the terms of the Note,
this Security Instrument or the other Loan Documents.

 

(a) It is agreed that the risk of loss or damage to the Property is on Borrower,
and Lender shall have no liability whatsoever for decline in value of the
Property, for failure to maintain the Policies, or for failure to determine
whether insurance in force is adequate as to the amount of risks insured.
Possession by Lender shall not be deemed an election of judicial relief if any
such possession is requested or obtained with respect to any Property or
collateral not in Lender’s possession.

 

(b) Lender may resort for the payment of the Debt to any other security held by
Lender in such order and manner as Lender, in its discretion, may elect. Lender
or Trustee may take action to recover the Debt, or any portion thereof, or to
enforce any covenant hereof without prejudice to the right of Lender or Trustee
thereafter to foreclose this Security Instrument. The rights of Lender or
Trustee under this Security Instrument shall be separate, distinct and
cumulative and none shall be given effect to the exclusion of the others. No act
of Lender or Trustee shall be construed as an election to proceed under any one
provision herein to the exclusion of any other provision. Neither Lender nor
Trustee shall be limited exclusively to the rights and remedies herein stated
but

 

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shall be entitled to every right and remedy now or hereafter afforded at law or
in equity.

 

Section 7.8 Right to Release Any Portion of the Property. Lender may release any
portion of the Property for such consideration as Lender may require without, as
to the remainder of the Property, in any way impairing or affecting the lien or
priority of this Security Instrument, or improving the position of any
subordinate lienholder with respect thereto, except to the extent that the
obligations hereunder shall have been reduced by the actual monetary
consideration, if any, received by Lender for such release, and may accept by
assignment, pledge or otherwise any other property in place thereof as Lender
may require without being accountable for so doing to any other lienholder. This
Security Instrument shall continue as a lien and security interest in the
remaining portion of the Property.

 

Section 7.9 Violation of Laws. If the Property is not in material compliance
with Legal Requirements, Lender may impose additional requirements upon Borrower
in connection herewith including, without limitation, monetary reserves or
financial equivalents.

 

Section 7.10 Recourse and Choice of Remedies. Notwithstanding any other
provision of this Security Instrument or the Loan Agreement, including, without
limitation, Section 9.4 of the Loan Agreement, Lender and other Indemnified
Parties (as hereinafter defined) are entitled to enforce the obligations of
Borrower, any guarantor and indemnitor contained in Sections 9.2, 9.3 and 9.4
herein without first resorting to or exhausting any security or collateral and
without first having recourse to the Note or any of the Property, through
foreclosure or acceptance of a deed in lieu of foreclosure or otherwise, and in
the event Lender commences a foreclosure action against the Property, or
otherwise causes Trustee to exercise the power of sale pursuant to this Security
Instrument, Lender is entitled to pursue a deficiency judgment with respect to
such obligations against Borrower and any guarantor or indemnitor with respect
to the Loan. The provisions of Sections 9.2, 9.3 and 9.4 herein are exceptions
to any non-recourse or exculpation provisions in the Loan Agreement, the Note,
this Security Instrument or the other Loan Documents, and Borrower and any
guarantor or indemnitor with respect to the Loan are fully and personally liable
for the obligations pursuant to Sections 9.2, 9.3 and 9.4 herein. The liability
of Borrower and any guarantor or indemnitor with respect to the Loan pursuant to
Sections 9.2, 9.3 and 9.4 herein is not limited to the original principal amount
of the Note. Notwithstanding the foregoing, nothing herein shall inhibit or
prevent Lender or Trustee from foreclosing or exercising a power of sale
pursuant to this Security Instrument or exercising any other rights and remedies
pursuant to the Loan Agreement, the Note, this Security Instrument and the other
Loan Documents, whether simultaneously with foreclosure proceedings or in any
other sequence. A separate action or actions may be brought and prosecuted
against Borrower pursuant to Sections 9.2, 9.3 and 9.4 herein whether or not
action is brought against any other Person or whether or not any other Person is
joined in the action or actions. In addition, Lender shall have the right but
not the obligation to join and participate in, as a party if it so elects, any
administrative or judicial proceedings or actions initiated in connection with
any matter addressed in Article 8 or Section 9.4 herein.

 

Section 7.11 Right of Entry. Upon reasonable notice to Borrower, Lender and its
agents shall have the right to enter and inspect the Property at all reasonable
times.

 

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ARTICLE 8—ENVIRONMENTAL HAZARDS

 

Section 8.1 Environmental Representations and Warranties. Except as otherwise
disclosed by that certain Phase I environmental report (or Phase II
environmental report, if required) delivered to Beneficiary by Grantor in
connection with the origination of the Loan (such report is referred to below as
the “Environmental Report”), (a) there are no Hazardous Substances (defined
below) or underground storage tanks in, on, or under the Secured Property,
except those that are both (i) in compliance with Environmental Laws (defined
below) and with permits issued pursuant thereto and (ii) fully disclosed to
Beneficiary in writing pursuant the Environmental Report; (b) there are no past,
present or to Borrower’s knowledge, threatened Releases (defined below) of
Hazardous Substances in, on, under or from the Secured Property which has not
been fully remediated in accordance with Environmental Law; (c) to Borrower’s
knowledge there is no threat of any Release of Hazardous Substances migrating to
the Secured Property; (d) to Borrower’s knowledge there is no past or present
non-compliance with Environmental Laws, or with permits issued pursuant thereto,
in connection with the Secured Property which has not been fully remediated in
accordance with Environmental Law; (e) Grantor does not know of, and has not
received, any written or oral notice or other communication from any Person
(including but not limited to a Governmental Authority) relating to Hazardous
Substances or Remediation (defined below) thereof, of possible liability of any
Person pursuant to any Environmental Law, other environmental conditions in
connection with the Secured Property, or any actual or potential administrative
or judicial proceedings in connection with any of the foregoing; and (f) Grantor
has truthfully and fully provided to Beneficiary, in writing, any and all
information relating to conditions in, on, under or from the Secured Property
that is known to Grantor and all information that is contained in Grantor’s
files and records, including, but not limited to, any reports relating to
Hazardous Substances in, on, under or from the Secured Property and/or to the
environmental condition of the Secured Property.

 

“Environmental Law” means any present and future federal, state and local laws,
statutes, ordinances, rules, regulations and the like, as well as common law,
relating to protection of human health or the environment, relating to Hazardous
Substances, relating to liability for or costs of Remediation or prevention of
Releases of Hazardous Substances or relating to liability for or costs of other
actual or threatened danger to human health or the environment. Environmental
Law includes, but is not limited to, the following statutes, as amended, any
successor thereto, and any regulations promulgated pursuant thereto, and any
state or local statutes, ordinances, rules, regulations and the like addressing
similar issues: the Comprehensive Environmental Response, Compensation and
Liability Act; the Emergency Planning and Community Right-to-Know Act; the
Hazardous Substances Transportation Act; the Resource Conservation and Recovery
Act (including but not limited to Subtitle I relating to underground storage
tanks); the Solid Waste Disposal Act; the Clean Water Act; the Clean Air Act;
the Toxic Substances Control Act; the Safe Drinking Water Act; the Occupational
Safety and Health Act; the Federal Water Pollution Control Act; the Federal
Insecticide, Fungicide and Rodenticide Act; the Endangered Species Act; the
National Environmental Policy Act; and the River and Harbors Appropriation Act.
Environmental Law also includes, but is not limited to, any present and future
federal, state and local laws, statutes, ordinances, rules, regulations and the
like, as well as common law: conditioning transfer of property upon a negative
declaration or other approval of a governmental authority of the environmental
condition of the Secured

 

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Property; requiring notification or disclosure of Releases of Hazardous
Substances or other environmental condition of the Secured Property to any
governmental authority or other Person, whether or not in connection with
transfer of title to or interest in property; imposing conditions or
requirements in connection with permits or other authorization for lawful
activity; relating to nuisance, trespass or other causes of action related to
the Secured Property; or relating to wrongful death, personal injury, or
property or other damage in connection with any physical condition or use of the
Secured Property.

 

“Hazardous Substances” include but are not limited to any and all substances
(whether solid, liquid or gas) defined, listed, or otherwise classified as
pollutants, hazardous wastes, hazardous substances, hazardous materials,
extremely hazardous wastes, or words of similar meaning or regulatory effect
under any present or future Environmental Laws or that may have a negative
impact on human health or the environment, including but not limited to
petroleum and petroleum products, asbestos and asbestos-containing materials,
polychlorinated biphenyls, lead, radon, radioactive materials, flammables and
explosives, but excluding substances of kinds and in amounts ordinarily and
customarily used or stored in similar properties for the purpose of cleaning or
other maintenance or operations and otherwise in compliance with all
Environmental Laws.

 

“Release” of any Hazardous Substance includes but is not limited to any release,
deposit, discharge, emission, leaking, spilling, seeping, migrating, injecting,
pumping, pouring, emptying, escaping, dumping, disposing or other movement of
Hazardous Substances.

 

“Remediation” includes but is not limited to any response, remedial, removal, or
corrective action, any activity to cleanup, detoxify, decontaminate, contain or
otherwise remediate any Hazardous Substance, any actions to prevent, cure or
mitigate any Release of any Hazardous Substance, any action to comply with any
Environmental Laws or with any permits issued pursuant thereto, any inspection,
investigation, study, monitoring, assessment, audit, sampling and testing,
laboratory or other analysis, or evaluation relating to any Hazardous Substances
or to anything referred to in Article 8.

 

Section 8.2 Environmental Covenants. Grantor covenants and agrees that: (a) all
uses and operations on or of the Secured Property, whether by Grantor or any
other Person, shall be in compliance with all Environmental Laws and permits
issued pursuant thereto; (b) except in compliance with Environmental Law, there
shall be no Releases of Hazardous Substances in, on, under or from the Secured
Property; (c) there shall be no Hazardous Substances in, on, or under the
Secured Property, except those that are both (i) in compliance with all
Environmental Laws and with permits issued pursuant thereto and (ii) fully
disclosed to Beneficiary in writing; (d) Grantor shall keep the Secured Property
free and clear of all liens and other encumbrances imposed pursuant to any
Environmental Law, whether due to any act or omission of Grantor or any other
Person (the “Environmental Liens”); (e) Grantor shall, at its sole cost and
expense, fully and expeditiously cooperate in all activities pursuant to Section
8.3 below, including but not limited to providing all relevant information and
making knowledgeable persons available for interviews; (f) Grantor shall, at its
sole cost and expense, perform any environmental site assessment or other
investigation of environmental conditions in connection with the Secured
Property, pursuant to any reasonable written request of Beneficiary made in the
event that Beneficiary has reason to believe that an environmental hazard exists
on the Secured

 

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Property (including but not limited to sampling, testing and analysis of soil,
water, air, building materials and other materials and substances whether solid,
liquid or gas provided that Grantor shall only make such request if Beneficiary
has good faith reason to believe that an undisclosed Release of Hazardous
Substance has occurred and/or that any provision of this Security Deed has been
breached), and share with Beneficiary the reports and other results thereof, and
Beneficiary and other Indemnified Parties shall be entitled to rely on such
reports and other results thereof to the extent permitted by the Person
preparing the same; (g) Grantor shall, at its sole cost and expense, comply with
all reasonable written requests of Beneficiary made in the event that
Beneficiary has reason to believe that an environmental hazard exists on the
Secured Property (i) reasonably effectuate Remediation of any adverse
environmental condition (including but not limited to a Release of a Hazardous
Substance other than a Release in compliance with Environmental Law) in, on,
under or from the Secured Property; (ii) comply with any Environmental Law;
(iii) comply with any directive from any Governmental Authority; and (iv) take
any other reasonable action necessary or appropriate for protection of human
health or the environment; (h) with respect to the existence of Hazardous
Substances on the Property, Grantor shall not do or allow any tenant or other
user of the Secured Property to do any act that materially increases the dangers
to human health or the environment, poses an unreasonable risk of harm to any
Person (whether on or off the Secured Property), impairs or may impair the value
of the Secured Property, is contrary to any requirement of any insurer,
constitutes a public or private nuisance, constitutes waste, or violates any
covenant, condition, agreement or easement applicable to the Secured Property;
and (i) Grantor shall immediately notify Beneficiary in writing of (A) any
presence or Releases or threatened Releases of Hazardous Substances in, on,
under, from or migrating towards the Secured Property; (B) any non-compliance
with any Environmental Laws related in any way to the Secured Property; (C) any
actual or potential Environmental Lien; (D) any required or proposed Remediation
of environmental conditions relating to the Secured Property; and (E) any
written or oral notice or other communication of which Grantor becomes aware
from any source whatsoever (including but not limited to a governmental entity)
relating in any way to Hazardous Substances or Remediation thereof, possible
liability of any Person pursuant to any Environmental Law, other environmental
conditions in connection with the Secured Property, or any actual or potential
administrative or judicial proceedings in connection with anything referred to
in this Article 8.

 

Section 8.3 Beneficiary’s Rights. In the event that Beneficiary has reason to
believe that an environmental hazard exists on the Secured Property that does
not, in Beneficiary’s sole discretion, endanger any tenants or other occupants
of the Secured Property or their guests or the general public or materially and
adversely affect the value of the Secured Property, upon reasonable notice from
Beneficiary, Grantor shall, at Grantor’s expense, promptly cause an engineer or
consultant satisfactory to Beneficiary to conduct any environmental assessment
or audit (the scope of which shall be determined in Beneficiary’s sole and
absolute discretion) and take any samples of soil, groundwater or other water,
air, or building materials or any other invasive testing requested by
Beneficiary and promptly deliver the results of any such assessment, audit,
sampling or other testing; provided, however, if such results are not delivered
to Beneficiary within a reasonable period or if Beneficiary has reason to
believe that an environmental hazard exists on the Secured Property that, in
Beneficiary’s sole judgment, endangers any tenant or other occupant of the
Secured Property or their guests or the general public or may materially and
adversely affect the value of the Secured Property, upon reasonable notice to
Grantor, Beneficiary and any other Person designated by Beneficiary, including
but not

 

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limited to any receiver, any representative of a governmental entity, and any
environmental consultant, shall have the right, but not the obligation, to enter
upon the Secured Property at all reasonable times to assess any and all aspects
of the environmental condition of the Secured Property and its use, including
but not limited to conducting any environmental assessment or audit (the scope
of which shall be determined in Beneficiary’s sole and absolute discretion) and
taking samples of soil, groundwater or other water, air, or building materials,
and reasonably conducting other invasive testing. Grantor shall cooperate with
and provide Beneficiary and any such Person designated by Beneficiary with
access to the Secured Property.

 

ARTICLE 3—INDEMNIFICATION

 

Section 9.1 General Indemnification. Borrower shall, at its sole cost and
expense, protect, defend, indemnify, release and hold harmless the Indemnified
Parties from and against any and all claims, suits, liabilities (including,
without limitation, strict liabilities), actions, proceedings, obligations,
debts, damages, losses, costs, expenses, diminutions in value, fines, penalties,
charges, fees, expenses, judgments, awards, amounts paid in settlement, punitive
damages, foreseeable and unforeseeable consequential damages, of whatever kind
or nature (including but not limited to reasonable attorneys’ fees and other
costs of defense) (collectively, the “Losses”) imposed upon or incurred by or
asserted against any Indemnified Parties and directly or indirectly arising out
of or in any way relating to any one or more of the following: (a) ownership of
this Security Instrument, the Property or any interest therein or receipt of any
Rents; (b) any amendment to, or restructuring of, the Debt, the Note, the Loan
Agreement, this Security Instrument, or any other Loan Documents; (c) any and
all lawful action that may be taken by Lender in connection with the enforcement
of the provisions of this Security Instrument, the Loan Agreement, the Note or
any of the other Loan Documents, whether or not suit is filed in connection with
same, or in connection with Borrower, any guarantor or indemnitor and/or any
partner, joint venturer or shareholder thereof becoming a party to a voluntary
or involuntary federal or state bankruptcy, insolvency or similar proceeding;
(d) any accident, injury to or death of persons or loss of or damage to property
occurring in, on or about the Property or any part thereof or on the adjoining
sidewalks, curbs, adjacent property or adjacent parking areas, streets or ways;
(e) any use, nonuse or condition in, on or about the Property or any part
thereof or on the adjoining sidewalks, curbs, adjacent property or adjacent
parking areas, streets or ways; (f) any failure on the part of Borrower to
perform or be in compliance with any of the terms of this Security Instrument,
the Note, the Loan Agreement or any of the other Loan Documents; (g) performance
of any labor or services or the furnishing of any materials or other property in
respect of the Property or any part thereof; (h) the failure of any person to
file timely with the Internal Revenue Service an accurate Form 1099-B, Statement
for Recipients of Proceeds from Real Estate, Broker and Barter Exchange
Transactions, which may be required in connection with this Security Instrument,
or to supply a copy thereof in a timely fashion to the recipient of the proceeds
of the transaction in connection with which this Security Instrument is made;
(i) any failure of the Property to be in compliance with any Legal Requirements;
(j) the enforcement by any Indemnified Party of the provisions of this Article
9; (k) any and all claims and demands whatsoever which may be asserted against
Lender by reason of any alleged obligations or undertakings on its part to
perform or discharge any of the terms, covenants, or agreements contained in any
Lease; (l) the payment of any commission, charge or brokerage fee to anyone
claiming through Borrower which may be payable in connection with

 

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the funding of the Loan; or (m) any misrepresentation made by Borrower in this
Security Instrument or any other Loan Document. Any amounts payable to Lender by
reason of the application of this Section 9.1 shall become immediately due and
payable and shall bear interest at the Default Rate from the date loss or damage
is sustained by Lender until paid. For purposes of this Article 9, the term
“Indemnified Parties” means Lender and any Person in whose name the encumbrance
created by this Security Instrument is or will have been recorded, persons and
entities who may hold or acquire or will have held a full or partial interest in
the Loan secured hereby (including, but not limited to, investors or prospective
investors in the Securities, as well as custodians, trustees and other
fiduciaries who hold or have held a full or partial interest in the Loan secured
hereby for the benefit of third parties) as well as the respective directors,
officers, shareholders, partners, employees, agents, servants, representatives,
contractors, subcontractors, affiliates, subsidiaries, participants, successors
and assigns of any and all of the foregoing (including, but not limited to, any
other Person who holds or acquires or will have held a participation or other
full or partial interest in the Loan, whether during the term of the Loan or as
a part of or following a foreclosure of the Loan and any successors by merger,
consolidation or acquisition of all or a substantial portion of Lender’s assets
and business).

 

Section 9.2 Mortgage and/or Intangible Tax. Borrower shall, at its sole cost and
expense, protect, defend, indemnify, release and hold harmless the Indemnified
Parties from and against any and all Losses imposed upon or incurred by or
asserted against any Indemnified Parties and directly or indirectly arising out
of or in any way relating to any tax on the making and/or recording of this
Security Instrument, the Note or any of the other Loan Documents, but excluding
any income, franchise or other similar taxes.

 

Section 9.3 ERISA Indemnification. Borrower shall, at its sole cost and expense,
protect, defend, indemnify, release and hold harmless the Indemnified Parties
from and against any and all Losses (including, without limitation, reasonable
attorneys’ fees and costs incurred in the investigation, defense, and settlement
of Losses incurred in correcting any prohibited transaction or in the sale of a
prohibited loan, and in obtaining any individual prohibited transaction
exemption under ERISA that may be required, in Lender’s sole discretion) that
Lender may incur, directly or indirectly, as a result of a default under
Sections 4.1.9 or 5.2.9 of the Loan Agreement.

 

Section 9.4 Environmental Indemnification. Borrower shall, at its sole cost and
expense, protect, defend, indemnify, release and hold harmless the Indemnified
Parties from and against any and all Losses and costs of Remediation (whether or
not performed voluntarily), engineers’ fees, environmental consultants’ fees,
and costs of investigation (including but not limited to sampling, testing, and
analysis of soil, water, air, building materials and other materials and
substances whether solid, liquid or gas) imposed upon or incurred by or asserted
against any Indemnified Parties, and directly or indirectly arising out of or in
any way relating to any one or more of the following: (a) any presence of any
Hazardous Substances in, on, above, or under the Property; (b) any past, present
or threatened Release of Hazardous Substances in, on, above, under or from the
Property; (c) any activity by Borrower, any Person affiliated with Borrower or
any tenant or other user of the Property in connection with any actual, proposed
or threatened use, treatment, storage, holding, existence, disposition or other
Release, generation, production, manufacturing, processing, refining, control,
management, abatement, removal, handling, transfer or transportation to or from
the Property of any Hazardous Substances at any

 

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tine located in, under, on or above the Property; (d) any activity by Borrower,
any Person affiliated with Borrower or any tenant or other user of the Property
in connection with any actual or proposed Remediation of any Hazardous
Substances at any time located in, under, on or above the Property, whether or
not such Remediation is voluntary or pursuant to court or administrative order,
including but not limited to any removal, remedial or corrective action; (e) any
past or present non-compliance or violations of any Environmental Laws (or
permits issued pursuant to any Environmental Law) in connection with the
Property or operations thereon, including but not limited to any failure by
Borrower, any Affiliate of Borrower or any tenant or other user of the Property
to comply with any order of any Governmental Authority in connection with any
Environmental Laws; (f) the imposition, recording or filing of any Environmental
Lien encumbering the Property; (g) any administrative processes or proceedings
or judicial proceedings in any way connected with any matter addressed in
Article 8 and this Section 9.4; (h) any past, present or threatened injury to,
destruction of or loss of natural resources in any way connected with the
Property, including but not limited to costs to investigate and assess such
injury, destruction or loss; (i) any acts of Borrower or other users of the
Property in arranging for disposal or treatment, or arranging with a transporter
for transport for disposal or treatment, of Hazardous Substances owned or
possessed by such Borrower or other users, at any facility or incineration
vessel owned or operated by another Person and containing such or any similar
Hazardous Substance; (j) any acts of Borrower or other users of the Property, in
accepting any Hazardous Substances for transport to disposal or treatment
facilities, incineration vessels or sites selected by Borrower or such other
users, from which there is a Release, or a threatened Release of any Hazardous
Substance which causes the incurrence of costs for Remediation; (k) any personal
injury, wrongful death, or property damage arising under any statutory or common
law or tort law theory, including but not limited to damages assessed for the
maintenance of a private or public nuisance or for the conducting of an
abnormally dangerous activity on or near the Property; and (1) any
misrepresentation or inaccuracy in any representation or warranty or material
breach or failure to perform any covenants or other obligations pursuant to
Article 8. This indemnity shall survive any termination, satisfaction or
foreclosure of this Security Instrument, subject to the provisions of Section
10.5.

 

Section 9.5 Duty to Defend; Attorneys’ Fees and Other Fees and Expenses. Upon
written request by any Indemnified Party, Borrower shall defend such Indemnified
Party (if requested by any Indemnified Party, in the name of the Indemnified
Party), with respect to a claim covered by this Security Instrument and/or any
of the other Loan Documents, by attorneys and other professionals approved by
the Indemnified Parties. Notwithstanding the foregoing, if the defendants in any
such claim or proceeding include both Borrower and any Indemnified Party and
Borrower and such Indemnified Party shall have reasonably concluded that there
are any legal defenses available to it and/or other Indemnified Parties that are
different from or additional to those available to Borrower, such Indemnified
Party shall have the right to select separate counsel to assert such legal
defenses and to otherwise participate in the defense of such action on behalf of
such Indemnified Party, provided that no compromise or settlement shall be
entered without Borrower’s consent, which consent shall not be unreasonably
withheld. Upon demand, Borrower shall pay or, in the sole and absolute
discretion of the Indemnified Parties, reimburse, the Indemnified Parties for
the payment of reasonable fees and disbursements of attorneys, engineers,
environmental consultants, laboratories and other professionals in connection
therewith.

 

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ARTICLE 10—WAIVERS

 

Section 10.1 Waiver of Counterclaim. To the extent permitted by applicable law,
Borrower hereby waives the right to assert a counterclaim, other than a
mandatory or compulsory counterclaim, in any action or proceeding brought
against it by Lender arising out of or in any way connected with this Security
Instrument, the Loan Agreement, the Note, any of the other Loan Documents, or
the Obligations.

 

Section 10.2 Marshalling and Other Matters. To the extent permitted by
applicable law, Borrower hereby waives the benefit of all appraisement,
valuation, stay, extension, reinstatement and redemption laws now or hereafter
in force and all rights of marshalling in the event of any sale hereunder of the
Property or any part thereof or any interest therein. Further, Borrower hereby
expressly waives any and all rights of redemption from sale under any order or
decree of foreclosure of this Security Instrument on behalf of Borrower, and on
behalf of each and every person acquiring any interest in or title to the
Property subsequent to the date of this Security Instrument and on behalf of all
persons to the extent permitted by applicable law.

 

Section 10.3 Waiver of Notice. To the extent permitted by applicable law,
Borrower shall not be entitled to any notices of any nature whatsoever from
Lender or Trustee except with respect to matters for which this Security
Instrument specifically and expressly provides for the giving of notice by
Lender or Trustee to Borrower and except with respect to matters for which
Lender or Trustee is required by applicable law to give notice, and Borrower
hereby expressly waives the right to receive any notice from Lender or Trustee
with respect to any matter for which this Security Instrument does not
specifically and expressly provide for the giving of notice by Lender or Trustee
to Borrower.

 

Section 10.4 Waiver of Statute of Limitations. To the extent permitted by
applicable law, Borrower hereby expressly waives and releases to the fullest
extent permitted by law, the pleading of any statute of limitations as a defense
to payment of the Debt or performance of its Other Obligations.

 

Section 10.5 Survival. The indemnifications made pursuant to Sections 9.3 and
9.4 herein and the representations and warranties, covenants, and other
obligations arising under Article 8, shall continue indefinitely in full force
and effect and shall survive and shall in no way be impaired by any of the
following: any satisfaction or other termination of this Security Instrument,
any assignment or other transfer of all or any portion of this Security
Instrument or Lender’s interest in the Property (but, in such case, shall
benefit both Indemnified Parties and any assignee or transferee, any exercise of
Lender’s rights and remedies pursuant hereto including, but not limited to,
foreclosure or acceptance of a deed in lieu of foreclosure, any exercise of any
rights and remedies pursuant to the Loan Agreement, the Note or any of the other
Loan Documents, any transfer of all or any portion of the Property (whether by
Borrower or by Lender following foreclosure or acceptance of a deed in lieu of
foreclosure or at any other time), any amendment to this Security Instrument,
the Loan Agreement, the Note or the other Loan Documents, and any act or
omission that might otherwise be construed as a release or discharge of Borrower
from the obligations pursuant hereto.

 

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ARTICLE 11—EXCULPATION

 

The provisions of Section 9.4 of the Loan Agreement are hereby incorporated by
reference into this Security Instrument to the same extent and with the same
force as if fully set forth herein.

 

ARTICLE 12—NOTICES

 

All notices or other written communications hereunder shall be delivered in
accordance with Section 10.6 of the Loan Agreement.

 

ARTICLE 13—APPLICABLE LAW

 

Section 13.1 Governing Law. This security instrument shall be governed in
accordance with the terms and provisions of Section 10.3 of the Loan Agreement.

 

Section 13.2 Usury Laws. Notwithstanding anything to the contrary, (a) all
agreements and communications between Borrower and Lender are hereby and shall
automatically be limited so that, after taking into account all amounts deemed
interest, the interest contracted for, charged or received by Lender shall never
exceed the maximum lawful rate or amount, (b) in calculating whether any
interest exceeds the lawful maximum, all such interest shall be amortized,
prorated, allocated and spread over the full amount and term of all principal
indebtedness of Borrower to Lender, and (c) if through any contingency or event,
Lender receives or is deemed to receive interest in excess of the lawful
maximum, any such excess shall be deemed to have been applied toward payment of
the principal of any and all then outstanding indebtedness of Borrower to
Lender, or if there is no such indebtedness, shall immediately be returned to
Borrower.

 

Section 13.3 Provisions Subject to Applicable Law. All rights, powers and
remedies provided in this Security Instrument may be exercised only to the
extent that the exercise thereof does not violate any applicable provisions of
law and are intended to be limited to the extent necessary so that they will not
render this Security Instrument invalid, unenforceable or not entitled to be
recorded, registered or filed under the provisions of any applicable law. If any
term of this Security Instrument or any application thereof shall be invalid or
unenforceable, the remainder of this Security Instrument and any other
application of the term shall not be affected thereby.

 

ARTICLE 14—DEFINITIONS

 

All capitalized terms not defined herein shall have the respective meanings set
forth in the Loan Agreement. Unless the context clearly indicates a contrary
intent or unless otherwise specifically provided herein, words used in this
Security Instrument may be used interchangeably in singular or plural form and
the word “Borrower” shall mean “each Borrower and any subsequent owner or owners
of the Property or any part thereof or any interest therein,” the word “Lender”
shall mean “Lender and any subsequent holder of the Note,” the word “Note” shall
mean “the Note and any other evidence of indebtedness secured by this Security

 

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Instrument,” the word “Property” shall include any portion of the Property and
any interest therein, and the phrases “attorneys’ fees”, “legal fees” and
“counsel fees” shall include any and all attorneys’, paralegal and law clerk
fees and disbursements, including, but not limited to, fees and disbursements at
the pre-trial, trial and appellate levels incurred or paid by Lender in
protecting its interest in the Property, the Leases and the Rents and enforcing
its rights hereunder.

 

ARTICLE 15—MISCELLANEOUS PROVISIONS

 

Section 15.1 No Oral Change. This Security Instrument, and any provisions
hereof, may not be modified, amended, waived, extended, changed, discharged or
terminated orally or by any act or failure to act on the part of Borrower or
Lender, but only by an agreement in writing signed by the party against whom
enforcement of any modification, amendment, waiver, extension, change, discharge
or termination is sought.

 

Section 15.2 Successors and Assigns. This Security Instrument shall be binding
upon and inure to the benefit of Borrower and Lender and their respective
successors and assigns forever.

 

Section 15.3 Inapplicable Provisions. If any term, covenant or condition of the
Loan Agreement, the Note or this Security Instrument is held to be invalid,
illegal or unenforceable in any respect, the Loan Agreement, the Note and this
Security Instrument shall be construed without such provision.

 

Section 15.4 Headings, etc. The headings and captions of various Sections of
this Security Instrument are for convenience of reference only and are not to be
construed as defining or limiting, in any way, the scope or intent of the
provisions hereof.

 

Section 16.5 Number and Gender. Whenever the context may require, any pronouns
used herein shall include the corresponding masculine, feminine or neuter forms,
and the singular form of nouns and pronouns shall include the plural and vice
versa.

 

Section 16.6 Subrogation. If any or all of the proceeds of the Note have been
used to extinguish, extend or renew any indebtedness heretofore existing against
the Property, then, to the extent of the funds so used, Lender shall be
subrogated to all of the rights, claims, liens, titles, and interests existing
against the Property heretofore held by, or in favor of, the holder of such
indebtedness and such former rights, claims, liens, titles, and interests, if
any, are not waived but rather are continued in full force and effect in favor
of Lender and are merged with the lien and security interest created herein as
cumulative security for the repayment of the Debt, the performance and discharge
of Borrower’s obligations hereunder, under the Loan Agreement, the Note and the
other Loan Documents and the performance and discharge of the Other Obligations.

 

Section 16.7 Entire Agreement. The Note, the Loan Agreement, this Security
Instrument and the other Loan Documents constitute the entire understanding and
agreement between Borrower and Lender with respect to the transactions arising
in connection with the Debt and supersede all prior written or oral
understandings and agreements between Borrower

 

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and Lender with respect thereto. Borrower hereby acknowledges that, except as
incorporated in writing in the Note, the Loan Agreement, this Security
Instrument and the other Loan Documents, there are not, and were not, and no
persons are or were authorized by Lender to make, any representations,
understandings, stipulations, agreements or promises, oral or written, with
respect to the transaction which is the subject of the Note, the Loan Agreement,
this Security Instrument and the other Loan Documents.

 

Section15.8 Limitation on Lender’s Responsibility. No provision of this Security
Instrument shall operate to place any obligation or liability for the control,
care, management or repair of the Property upon Lender, nor shall it operate to
make Lender responsible or liable for any waste committed on the Property by the
tenants or any other Person, or for any dangerous or defective condition of the
Property, or for any negligence in the management, upkeep, repair or control of
the Property resulting in loss or injury or death to any tenant, licensee,
employee or stranger. Nothing herein contained shall be construed as
constituting Lender a “mortgagee in possession.”

 

ARTICLE 16—DEED OF TRUST PROVISIONS

 

Section 16.1 Concerning the Trustee. Trustee shall be under no duty to take any
action hereunder except as expressly required hereunder or by law, or to perform
any act which would involve Trustee in any material expense or liability or to
institute or defend any suit in respect hereof, unless properly indemnified to
Trustee’s reasonable satisfaction. Trustee, by acceptance of this Security
Instrument, covenants to perform and fulfill the trusts herein created, being
liable, however, only for negligence or willful misconduct, and hereby waives
any statutory fee and agrees to accept reasonable compensation, in lieu thereof,
for any services rendered by Trustee in accordance with the terms hereof.
Trustee may resign at any time upon giving thirty (30) days’ notice to Borrower
and to Lender. Lender may remove Trustee at any time or from time to time and
select a successor trustee. In the event of the death, removal, resignation,
refusal to act, or inability to act of Trustee, or in its sole discretion for
any reason whatsoever Lender may, without notice and without specifying any
reason therefor and without applying to any court, select and appoint a
successor trustee, by an instrument recorded wherever this Security Instrument
is recorded and all powers, rights, duties and authority of Trustee, as
aforesaid, shall thereupon become vested in such successor. Such substitute
trustee shall not be required to give bond for the faithful performance of the
duties of Trustee hereunder unless required by Lender. The procedure provided
for in this paragraph for substitution of Trustee shall be in addition to and
not in exclusion of any other provisions for substitution, by law or otherwise.

 

Section 16.2 Trustee’s Fees. Borrower shall pay all reasonable costs, fees and
expenses incurred by Trustee and Trustee’s agents and counsel in connection with
the performance by Trustee of Trustee’s duties hereunder and all such costs,
fees and expenses shall be secured by this Security Instrument.

 

Section 16.3 Certain Rights. With the approval of Lender, Trustee shall have the
right to take any and all of the following actions: (i) to select, employ, and
advise with counsel (who may be, but need not be, counsel for Lender) upon any
matters arising hereunder, including the preparation, execution, and
interpretation of the Loan Agreement, the Note, this

 

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Security Instrument or the other Loan Documents, and shall be fully protected in
relying as to legal matters on the advice of counsel, (ii) to execute any of the
trusts and powers hereof and to perform any duty hereunder either directly or
through his agents or attorneys, (iii) to select and employ, in and about the
execution of his duties hereunder, suitable accountants, engineers and other
experts, agents and attorneys-in-fact, either corporate or individual, not
regularly in the employ of Trustee, and Trustee shall not be answerable for any
act, default, negligence, or misconduct of any such accountant, engineer or
other expert, agent or attorney-in-fact, if selected with reasonable care, or
for any error of judgment or act done by Trustee in good faith, or be otherwise
responsible or accountable under any circumstances whatsoever, except for
Trustee’s gross negligence or bad faith, and (iv) any and all other lawful
action as Lender may instruct Trustee to take to protect or enforce Lender’s
rights hereunder. Trustee shall not be personally liable in case of entry by
Trustee, or anyone entering by virtue of the powers herein granted to Trustee,
upon the Property for debts contracted for or liability or damages incurred in
the management or operation of the Property. Trustee shall have the right to
rely on any instrument, document, or signature authorizing or supporting an
action taken or proposed to be taken by Trustee hereunder, believed by Trustee
in good faith to be genuine. Trustee shall be entitled to reimbursement for
actual expenses incurred by Trustee in the performance of Trustee’s duties
hereunder and to reasonable compensation for such of Trustee’s services
hereunder as shall be rendered.

 

Section 16.4 Retention of Money. All moneys 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
moneys (except to the extent required by applicable law) and Trustee shall be
under no liability for interest on any moneys received by Trustee hereunder.

 

Section 16.5 Perfection of Appointment. Should any deed, conveyance, or
instrument of any nature be required from Borrower by any Trustee or substitute
trustee to more fully and certainly vest in and confirm to the Trustee or
substitute trustee such estates rights, powers, and duties, then, upon written
request by the Trustee or substitute trustee, any and all such deeds,
conveyances and instruments reasonably requested shall be made, executed,
acknowledged, and delivered and shall be caused to be recorded and/or filed by
Borrower.

 

Section 16.6 Succession Instruments. Any substitute trustee appointed pursuant
to any of the provisions hereof shall, without any further act, deed, or
conveyance, become vested with all the estates, properties, rights, powers, and
trusts of its or his predecessor in the rights hereunder with like effect as if
originally named as Trustee herein; but nevertheless, upon the written request
of Lender or of the substitute trustee, the Trustee ceasing to act shall execute
and deliver any instrument transferring to such substitute trustee, upon the
trusts herein expressed, all the estates, properties, rights, powers, and trusts
of the Trustee so ceasing to act, and shall duly assign, transfer and deliver
any of the property and moneys held by such Trustee to the substitute trustee so
appointed in the Trustee’s place.

 

 

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IN WITNESS WHEREOF, the party hereto has caused this Security Instrument to be
duly executed by its duly authorized representative, as of the day and year
first above written.

 

 

BORROWER:

 

KOGER POST OAK LIMITED PARTNERSHIP,

a Delaware limited partnership

 

 

 

By: KOGER POST OAK, INC., a Delaware

       corporation, its general partner

By:   /s/ Thomas C. Brockwell    

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    Name:    Thomas C. Brockwell     Title:      Vice President

 

 

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STATE OF                        )             )  

ss.

   

COUNTY OF                 

  )        

 

This instrument was acknowledged before me on the              day of December,
2002, by Thomas C. Brockwell, the Vice President of Koger Post Oak, Inc., a
Delaware corporation, the general partner of Koger Post Oak Limited Partnership,
a Delaware limited partnership.

 

(SEAL)     

           

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My commission Expires:

 

Print Name of Notary:

   

 

 

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EXHIBIT A

 

(Legal Description)

 

EXH. A-1