Exhibit 10.9

 

RECORDING REQUESTED BY
AND WHEN RECORDED MAIL TO:

 

GREAT AMERICAN LIFE INSURANCE COMPANY
c/o American Real Estate Capital
Two Alhambra Plaza, Suite 1280
Coral Gables, Florida 33134

Attention: Karin Chan

 

INSTRUCTIONS TO RECORDER:

Index this document as (1) a deed of trust; (2) an assignment
of rents; (3) a security agreement; and (4) a fixture filing

 

 

 

NOTICE OF CONFIDENTIALITY RIGHTS: IF YOU ARE A NATURAL PERSON, YOU MAY REMOVE OR
STRIKE ANY OF THE FOLLOWING INFORMATION FROM ANY INSTRUMENT THAT TRANSFERS AN
INTEREST IN REAL PROPERTY BEFORE IT IS FILED FOR RECORD IN THE PUBLIC RECORDS:
YOUR SOCIAL SECURITY NUMBER OR YOUR DRIVER’S LICENSE NUMBER

 

(Space above this line for County Clerk’s use)

 

DEED OF TRUST, FIXTURE FILING, ASSIGNMENT OF

 

RENTS, AND SECURITY AGREEMENT

 

THIS DEED OF TRUST, FIXTURE FILING, ASSIGNMENT OF RENTS, AND SECURITY AGREEMENT
(the "Deed of Trust") is executed on the date of the acknowledgement below, and
effective as of December 20th, 2012, by BEHRINGER HARVARD MOCKINGBIRD COMMONS,
LLC, a Delaware limited liability company ("Grantor"), having an address at
15601 Dallas Parkway, Suite 600, Addison, Texas 75001-6026, Attention: Chief
Legal Officer, in favor of Rebecca S. Conrad ("Trustee") whose address is c/o
Chicago Title Insurance Company 2828 Routh Street, Suite 800, Dallas, Texas
75201, for the benefit of GREAT AMERICAN LIFE INSURANCE COMPANY, an Ohio
corporation ("Beneficiary"), having an address at c/o American Real Estate
Capital, Two Alhambra Plaza, Suite 1280, Coral Gables, Florida 33134.

 

GRANTOR IRREVOCABLY GRANTS, CONVEYS, TRANSFERS AND ASSIGNS TO TRUSTEE, IN TRUST,
WITH POWER OF SALE and right of entry and possession, all of Grantor's present
and future estate, right, title and interest in and to the following described
property (collectively, the "Property"):

 

(A)         The following described real property located at 5200 E. Mockingbird
Lane in the City of Dallas, County of Dallas, and State of Texas:

 

See Exhibit "A" attached hereto and incorporated herein by this reference.

 

 

 

 

The street or common address of the real property is 5200 E. Mockingbird Lane in
the City of Dallas, County of Dallas, and State of Texas (“Real Property”):

 

and

 

(B)         All Buildings, Fixtures, Leases, Easements, Rents and Profits,
Development Rights, Property Proceeds, Property Claims, Insurance Proceeds,
Insurance Claims, Condemnation Proceeds, Condemnation Claims, Government
Permits, Operational Licenses, Franchise Agreements, Liquor Licenses, Water
Rights, Contracts, Mineral Rights, and Crops (as each of such terms is defined
in Article 1 of this Deed of Trust) and all other or greater rights and
interests of every nature of Grantor in the Property or otherwise and all income
therefrom, whether now owned or hereafter acquired by Grantor.

 

THIS DEED OF TRUST SECURES THE FOLLOWING INDEBTEDNESS AND OBLIGATIONS
(collectively, the "Obligations") in such order of priority as Beneficiary may
from time to time elect:

 

(1)         Payment and performance of Grantor's indebtedness and obligations
under the promissory note of even date herewith in the original face principal
amount of THIRTY ONE MILLION and 00/100 DOLLARS ($31,000,000.00) executed by
Grantor and payable to Beneficiary ("Loan"), or order, and all extensions,
renewals, modifications, and replacements thereof (collectively, the "Note");

 

(2)         Payment and performance of Grantor's indebtedness and obligations
under the Loan Documents, including without limitation, this Deed of Trust and
all extensions, renewals, and modifications of all such Loan Documents;

 

(3)         Payment of all sums of money which may be advanced by, or otherwise
due to, Trustee or Beneficiary under any provision of this Deed of Trust or to
protect the collateral and security of this Deed of Trust, with interest thereon
at the rate provided in this Deed of Trust;

 

(4)         Payment and performance of any future advances and obligations and
liabilities, direct or contingent, of the Grantor owed to Beneficiary that
Beneficiary may elect to make to Grantor, or the record owner of the Real
Property, in respect of the Property, whether now existing or hereafter arising,
and all extensions, renewals, modifications, and replacements thereof, or any
part thereof (such future advances, obligation, and liabilities are referred to
individually, as a "Future Advance," and collectively, as the "Future
Advances"); and

 

(5)         Payment and performance of Grantor's indebtedness and obligations
under all other existing and future agreements executed by Grantor in connection
with the Loan evidenced by the Note or in connection with any Future Advance,
with interest thereon at the rate provided in such agreements, when such
agreement specifically states that it is secured by this Deed of Trust, and all
extensions, renewals, and modifications of such agreements.

 

FOR VALUABLE CONSIDERATION, Grantor agrees as follows:

 

ARTICLE 1

 

DEFINITIONS

 

For purposes of this Deed of Trust, the following terms shall have the following
definitions:

 

1.1         Act. “Act” means The Uniform Condominium Act, Texas Property Code,
Chapter 82, and Section 82.001 et. seq., as amended from time to time.

 

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1.2         Association. “Association” means the organization responsible for
governing the Condominium as is set forth in the Condominium Documents.

 

1.3         Books and Records. "Books and Records" means all books and records
in the possession or under the control of Grantor relating to the design,
construction, improvement, development, use, ownership, operation, maintenance,
repair, or marketing of the Property, including (a) records, including, but not
limited to balance sheets and profit and loss statements, reflecting the results
of operation of the Property; (b) all Leases and other documents relating to the
Property; (c) annual operating budgets and other future projections relating to
the Property, and (d) Grantor's federal income tax returns.

 

1.4         Buildings. "Buildings" means all buildings, structures and other
improvements of every kind now existing or hereafter located on the land which
is subjected to the Condominium.

 

1.5         Bylaws. “Bylaws” means the Bylaws of M Central Master Condominium
Association, Inc.

 

1.6         Closing Certificate. “Closing Certificate” means that certain
Closing Certificate and Agreement dated on or about the date hereof executed by
Grantor for the benefit of Beneficiary.

 

1.7         Commercial Project. "Commercial Project" means a multifamily
residential project or a retail, commercial, office, hotel or industrial
project.

 

1.8         Condemnation Claims. "Condemnation Claims" means all claims,
actions, causes of action, demands, liens, rights, judgments, settlements,
awards, compensation, and damages of every kind and nature which Grantor now has
or which it may hereafter have against any Person, whether arising in tort, by
contract or statute, or in any other manner, which in any way directly or
indirectly relate to or arise out of any condemnation of the Property or other
taking of the Property for public or quasi-public use by eminent domain or to
the transfer of the Property in lieu of condemnation or any such taking.

 

1.9         Condemnation Proceeds. "Condemnation Proceeds" means all proceeds of
the Condemnation Claims, including all money, deposit accounts, accounts, notes,
drafts, instruments, documents, and all other tangible and intangible property
resulting from the payment, collection of, recovery on, or other disposition of
any or all of the Condemnation Claims.

 

1.10         Condominium. “Condominium” means the condominium established
pursuant to the Declaration as more fully described herein.

 

1.11         Condominium Documents “Condominium” means the documents and
instruments governing the affairs of the Condominium including, without
limitation, the Declaration, and the Bylaws enacted as contemplated thereby and
all rules and regulations enacted thereunder.

 

1.12         Contracts. "Contracts" means all contracts and agreements now or
hereafter entered into or otherwise effective, covering or otherwise relating to
all or any part of the Property, as same may be amended and all revenue, income
and other benefits thereof, including, without limitation, management
agreements, license agreements, service contracts, maintenance contracts,
equipment leases, personal property leases and any contracts or documents
relating to construction on any part of the Property or to the management or
operation of any part of the Property.

 

1.13         Covenants and Restrictions. "Covenants and Restrictions" means all
covenants, conditions, restrictions, equitable servitudes, and all other similar
matters now or hereafter affecting the Property, including any condominium,
planned unit development, or cooperative apartment declaration of covenants,
conditions and restrictions, by-laws, articles, rules, and regulations to which
Grantor or the Property is subject or bound.

 

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1.14         Crops. "Crops" means all crops, trees, shrubs, flowers, landscaping
features and vines now or hereafter growing or located on the land which is
subjected to the Condominium.

 

1.15         Declaration. “Declaration” means that certain Master Condominium
Declaration for M Central Master Condominium made, established and recorded on
September 16, 2005 with the Dallas County Clerk’s Office as Instrument Number
3511362, as now or hereinafter amended.

 

1.16         Development Rights. "Development Rights" means all existing and
future development rights, development credits, air rights, and options of any
kind relating to the Property.

 

1.17         Easements. "Easements" means all existing and future easements,
rights of way, rights, privileges, franchises, tenements, hereditaments,
appurtenances, licenses, and similar rights relating or appurtenant to the
Property and all existing and future rights in or to streets, roads, sidewalks,
alleys, strips and gores adjoining or used in connection with the Property.

 

1.18         Event of Default. "Event of Default" means any of the events
described in Article 3 of this Deed of Trust.

 

1.19         Fixtures. "Fixtures" means all fixtures, machinery, equipment,
building materials, and appliances now or hereafter located in, on, attached or
affixed to, or used in connection with the Real Property or the Buildings,
including all systems for the supply or distribution of heat, air conditioning,
electricity, gas, water, air or light; elevators, escalators and related
machinery and equipment; fire prevention and extinguishing equipment and water
sprinkler systems; security and access control equipment; water heaters,
showers, bathtubs, tanks, pumps, toilets, sinks, pipes, and other plumbing
fixtures and equipment; stoves, ranges, refrigerators, dishwashers, and
disposals; laundry equipment; engines, motors, generators, boilers, furnaces,
and incinerators; wall, window, and floor coverings, including screens, shades,
drapes, and awnings; partitions, doors, windows, cabinets, bookcases, and
hardware; janitorial, maintenance, and waste and rubbish removal equipment;
recreational equipment; signs; switchboards, telephone systems, and other
communication equipment; television, radio, and computer cables, antennae, and
other equipment; chandeliers and other light fixtures; trees, plants and other
landscaping; and all attachments, substitutions, accessories, accessions,
replacements, improvements, and additions to any or all of the foregoing, all of
which shall conclusively be deemed to be part of the Real Property and Buildings
and conveyed by this Deed of Trust, whether or not affixed or attached to the
Real Property.

 

1.20         Franchise Agreement. “Franchise Agreement” means any and all
franchise agreements with respect to the Property pursuant to which the Property
is licensed and authorized to operate a hotel under the brand referred to in
such franchise agreement, it being agreed that for purposes of this Deed of
Trust that certain Hotel Operating Agreement dated as of March 8, 2005, executed
between Grantor and Kimpton Hotel & Restaurant Group, LLC (as same may have been
amended) shall be regarded as a Franchise Agreement and Kimpton Hotel and
Restaurant Group, LLC shall be regarded as the franchisor thereunder.

 

1.21         Governmental Authorities. "Governmental Authorities" means (a) the
United States; (b) the state, county, city, or other political subdivision in
which the Property is located; (c) all other governmental or quasi-governmental
authorities, boards, bureaus, agencies, commissions, departments, administrative
tribunals, and other instrumentalities or authorities; and (d) all judicial
authorities and public utilities having or exercising jurisdiction over Grantor
or the Property.

 

1.22         Governmental Permits. "Governmental Permits" means all permits,
approvals, and authorizations now or hereafter issued by all Governmental
Authorities for or in connection with the design, construction, improvement,
development, use, ownership, operation, maintenance, repair, or marketing of the
Property, including without limitation, grading permits, foundation permits,
building permits, tentative subdivision map approvals, zone changes, zone
variances, conditional use permits, temporary certificates of occupancy, and
final certificates of occupancy.

 

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1.23         Governmental Requirements. "Governmental Requirements" means all
existing and future laws, ordinances, rules, regulations, orders, and
requirements of all Governmental Authorities applicable to Grantor or the
Property, including those respecting the design, construction, improvement,
development, use, ownership, operation, maintenance, repair, or marketing of the
Property.

 

1.24         Ground Lease. "Ground Lease" means any lease agreement creating a
leasehold estate which is now or hereafter encumbered by this Deed of Trust.

 

1.25         Guaranties. "Guaranties" means the guaranty agreement or agreements
executed by the Guarantors.

 

1.26         Guarantors. "Guarantors" means the Person or Persons, if any, now
or hereafter guaranteeing payment of the Note or payment or performance of any
or all of the other Obligations.

 

1.27         Impositions. "Impositions" means all (a) Taxes; (b) Insurance
Premiums; (c) gas, electricity, water, sewer, and other utility charges which
are incurred for the benefit of the Property or which may become a lien against
the Property; (d) assessments, charges, and fees imposed pursuant to any
Covenants and Restrictions; (e) assessments, charges and fees payable with
respect to any Easements, Water Rights or Development Rights; (f) principal,
interest, and other amounts payable in connection with any Liens; (g) rents and
other amounts payable under any Ground Lease; and (h) such other taxes, charges,
premiums, assessments and impositions relating to the Property, the payment of
which Beneficiary reasonably determines to be necessary to protect Beneficiary's
security for the Obligations.

 

1.28         Improvements. "Improvements" means the Buildings and Fixtures,
collectively.

 

1.29         Insurance Claims. "Insurance Claims" means all claims, actions,
causes of action, demands, liens, rights, judgments, settlements, awards,
compensation, and damages of every kind and nature which Grantor now has or
which may hereafter accrue against any Person, whether arising in tort, by
contract or statute, or in any other manner, which in any way directly or
indirectly relate to or arise under any policy of insurance which Grantor
maintains with respect to the Property or which Grantor is required to maintain
under this Deed of Trust (collectively, the "Insurance Policies").

 

1.30         Insurance Proceeds. "Insurance Proceeds" means all proceeds of the
Insurance Claims, including all money, deposit accounts, accounts, notes,
drafts, instruments, documents, and all other tangible and intangible property
resulting from the payment, collection of, recovery on, or other disposition of
any or all of the Insurance Claims.

 

1.31         Insurance Premiums. "Insurance Premiums" means all premiums and
other amounts payable in connection with procuring or maintaining the Insurance
Policies.

 

1.32         Leases. "Leases" means all existing and future rental agreements,
leases, licenses, concessions, occupancy agreements, hotel guest and occupancy
arrangements, arrangements for banquet and meeting spaces and other similar
agreements affecting the Property], including all subleases at any level, and
all amendments, extensions, or agreements of or regarding any of the foregoing.

 

1.33         Liens. "Liens" means all mortgages, deeds of trust, mechanics'
liens, and other liens and encumbrances of every kind and nature, other than
this Deed of Trust, now or hereafter affecting the Property.

 

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1.34         Liquor Licenses. “Liquor Licenses” means all licenses, permits and
approvals which are required by Governmental Authorities or are otherwise
necessary or advisable for the sale and distribution of alcohol at the Property.

 

1.35         Loan Documents. "Loan Documents" means the Note, this Deed of
Trust, all promissory notes evidencing any Future Advances, all other documents
secured by this Deed of Trust, and all other documents executed by Grantor or
any of the Guarantors and delivered to Beneficiary in connection with the Loan
or any Future Advance, and all extensions, renewals, modifications, and
replacements of such documents.

 

1.36         Mineral Rights. "Mineral Rights" means all existing and future
right, title, and interest in and to all minerals, oil, gas and other
hydrocarbon substances and timber in or on the Property now and in the future.

 

1.37         Operating Licenses. “Operating Licenses” means all licenses,
permits, authorizations and approvals which are necessary or required for the
operation of the Property.

 

1.38         Permitted Encumbrances. (i) the liens, assignments and security
interests created by the Loan Documents; (ii) all Liens and other matters
disclosed in the mortgagee policy of title insurance issued to Beneficiary in
connection with the Loan; (iii) Liens, if any, for Impositions or other charges
not yet due and payable and not delinquent; (iv) rights of tenants, as tenants
only, under leases in existence on the date of this Deed of Trust and any leases
entered into hereafter in accordance with the requirements of the Loan
Documents; (v) Permitted Equipment Financing, and (vi) such other title and
survey exceptions as Beneficiary approves in writing in Beneficiary’s sole and
absolute discretion.

 

1.39         Permitted Equipment Financing. Leasing of Fixtures (including,
without limitation, television sets, telephone equipment, audio-visual equipment
and computer systems) used in the operation of the Property, provided
Beneficiary has received prior written notification of Grantor’s intent to lease
such Fixtures, and provided, further, that (a) any such lease is subject to
commercially prudent terms and conditions, (ii) the Fixtures leased are readily
replaceable without material interference or interruption to the operation of
the Property, and (iii) the aggregate maximum amount of liability under such
lease of such Fixtures (whether in total lease payments then outstanding or due
in the event of a termination of such lease or otherwise) is less than Two
Hundred Fifty Dollars ($250,000.00).

 

1.40         Permitted Indebtedness. “Permitted Indebtedness” means (a) the
Obligations, (b) Permitted Equipment Financing, (c) unsecured advances or trade
payables or accrued expenses incurred in the ordinary course of business of
owning and operating the Property and the administration of Grantor, as
applicable, provided that such debt is unsecured and (i) is not more than sixty
(60) days past due, and (ii) does not exceed, in the aggregate, $450,000.00; and
(d) the loans set forth on Schedule 7 of the Closing Certificate.

 

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1.41         Permitted Transfers. “Permitted Transfers” means any of the
following: (a) the rental of hotel rooms at the Property to transient guests in
the ordinary course of business at the Property; (b) the rental of meeting
rooms, banquet halls and similar facilities on a non-recurring basis in the
ordinary course of business at the Property; (c) the execution of a Lease which
has been approved by Beneficiary, in accordance with this Deed of Trust; (d) (i)
a conversion or reorganization of Behringer Harvard Short-Term Opportunity Fund
I LP, a Texas limited partnership (“BHSO”), or (ii) a transfer of all of the
assets and liabilities of BHSO to a Person (BHSO, as it may be converted,
reorganized or the Person to which all such assets and liabilities are
transferred pursuant to this clause (d), being herein referred to as “BH Fund”),
but only to the extent with respect to both (i) or (ii), (1) the Persons who or
which hold interests in BHSO prior to such conversion, reorganization or
transfer continue to hold the same percentage interest in the BH Fund after such
conversion, reorganization or transfer, (2) the Person or Persons whom control
BHSO as of the date of this Deed of Trust continue to control the BH Fund after
such conversion, reorganization or transfer, (3) such conversion, reorganization
or transfer is done in compliance with all Governmental Requirements, and (4)
the BH Fund succeeding to or acquiring all of the assets and liabilities of BHSO
executes and delivers to Beneficiary an Indemnity, Guaranty and Suretyship
Agreement in form and substance substantially similar to the Indemnity, Guaranty
and Suretyship Agreement dated of even date herewith given by BHSO to
Beneficiary; (e) transfers of direct or indirect ownership interests in Grantor
or Guarantor to any Person, including without limitation transfers of interests
in Realty America Group (Mockingbird Commons), LP, a Texas limited partnership,
so long as BH Fund, continues to (i) hold 51% or greater directly or indirectly
in Grantor, (ii) control Grantor (for purposes of the foregoing clause, the term
“control” as used in this Deed of Trust means the possession and/or right,
directly or indirectly, of the power to direct or cause the direction of the
decisions, management or policies of a Person, whether through the ability to
exercise voting power, by agreement or otherwise (“Controlled” and “Controlling”
each have the meanings correlative thereto) and the Person or Persons whom
control BHSO as of the date of this Deed of Trust continue to control BHSO or BH
Fund; (f) the granting of Permitted Encumbrances; (g) other Transfers (as
hereinafter defined) expressly permitted under this Deed of Trust by the consent
of Beneficiary (including specifically, without limitation, Section 2.19 and
Section 6.41 below).

 

1.42         Person. "Person" means any natural person or any entity, including
any corporation, partnership, joint venture, limited liability company, trust,
unincorporated organization, trustee, or Governmental Authority.

 

1.43         Preapproved Alterations. “Preapproved Alterations” means (a)
non-structural alterations of the Property that preserve or increase the value
of the Property that cost less than $100,000.00; (b) structural alterations of
the Property that cost less than $100,000.00 and preserve or increase the value
of the Property; (c) any tenant improvement work performed pursuant to any Lease
existing on the date hereof or entered into hereafter in accordance with the
provisions of this Deed of Trust; or (d) alterations performed as part of a
restoration after a casualty or condemnation in accordance with this Deed of
Trust.

 

1.44         Property Claims. "Property Claims" means all claims, actions,
causes of action, demands, liens, rights, judgments, settlements, awards,
compensation, and damages of every kind and nature (other than the Insurance
Claims and Condemnation Claims) which Grantor now has or which may hereafter
accrue against any Person, whether arising in tort, by contract or statute, or
in any other manner, which in any way directly or indirectly relate to or arise
out of any or all of the following: (a) the Property; (b) any existing or future
fact, matter, occurrence, or transaction relating to the Property; or (c) the
design, construction, improvement, development, use, ownership, operation,
maintenance, repair or marketing of the Property.

 

1.45         Property Proceeds. "Property Proceeds" means all proceeds of the
Property Claims, including all money, deposit accounts, accounts, notes, drafts,
instruments, documents, and all other tangible and intangible property resulting
from the payment, collection of, recovery on, or other disposition of any or all
of the Property Claims.

 

1.46         Rents and Profits. "Rents and Profits" means all existing and
future rents, royalties, issues, profits, proceeds, revenues, income and other
benefits of the Property and all Leases, including all security deposits and
prepaid rent.

 

1.47         Rent Roll. "Rent Roll" means the Rent Roll attached to the Closing
Certificate given by Grantor or Beneficiary as Exhibit E.

 

1.48         Reserves. "Reserves" means all cash funds, deposit accounts and
other rights and evidence of rights to cash, now or hereafter created or held by
Beneficiary pursuant to this Deed of Trust or any other of the Loan Documents,
including, without limitation, all funds now or hereafter on deposit in the
Impound Account (as hereinafter defined), Monthly Replacement Reserve, Major
Physical Items Escrow, Cash Flow Sweep Escrow, accounts which are the subject of
the Account Agreement and any other reserve or escrow account established,
pursuant to the terms hereof or of any other Loan Documents.

 

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1.49         Residential Association. “Residential Association” means the
organization responsible for governing the Residential Condominium as is set
forth in the Residential Condominium Documents.

 

1.50         Residential Bylaws. “Residential Bylaws” means the bylaws of M
Central Residences Condominium Association, Inc.

 

1.51         Residential Condominium. “Residential Condominium” means the
condominium established pursuant to the Residential Declaration as more fully
described herein.

 

1.52         Residential Condominium Documents “Residential Condominium” means
the documents and instruments governing the affairs of the Residential
Condominium including, without limitation, the Residential Declaration, and the
Residential Bylaws enacted as contemplated thereby and all rules and regulations
enacted thereunder.

 

1.53         Residential Declaration. “Residential Declaration” means that
certain Residential Condominium Declaration for M Central Residences, a
Condominium made, established and recorded on September 16, 2005 with the Dallas
County Clerk’s Office as Instrument Number 3511369, as now or hereinafter
amended.

 

1.54         Taxes. "Taxes" means (a) all taxes, bonds, levies and assessments
now or hereafter affecting the Property, including all general and special real
and personal property taxes, bonds, and assessments affecting the Property;
(b) all other taxes, bonds, levies and assessments which now are or hereafter
may become a lien on the Property, including all income, profits, franchise,
withholding, and gross receipt taxes; (c) all other charges now or hereafter
imposed on or assessed against the Property by any Governmental Authority or
arising with respect to the design, construction, improvement, development, use,
ownership, operation, maintenance, repair or marketing of the Property; and
(d) all taxes, bonds, levies, and assessments now or hereafter imposed by any
Governmental Authorities on Trustee or Beneficiary by reason of their respective
interests in this Deed of Trust, the Note, or any promissory note evidencing a
Future Advance, excluding any franchise, estate, inheritance, income, or similar
tax imposed on Beneficiary or Trustee.

 

1.55         Tenants. "Tenants" means all tenants and occupants of the Property
under the Leases.

 

1.56         Water rights. "Water rights" means all existing and future water,
water rights (whether riparian, appropriative, or otherwise, and whether or not
appurtenant), all water stock relating to the Property and all ditch, sewer,
well, reservoir and drainage rights which are appurtenant to, located on, under
or above or used in connection with the Real Property, or any part thereof,
whether now existing or hereafter created or acquired.

 

ARTICLE 2

COVENANTS OF GRANTOR

 

2.1         Performance of Secured Obligations. Grantor shall pay and perform
each and all of the Obligations in accordance with their respective terms.

 

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2.2         Preservation of the Property. Grantor (a) shall maintain the
Property in good condition and repair; (b) shall promptly repair and restore in
a good and workmanlike manner any part of the Property which may be damaged or
destroyed, (provided that Insurance Proceeds are made available to pay for the
cost of such repair and restoration); (c) shall comply and cause the Property to
comply with the provisions of all Insurance Policies; (d) shall comply and cause
the Property to comply with all Governmental Requirements; (e) shall comply and
cause the Property to comply with all Covenants and Restrictions; (f) shall
maintain all Governmental Permits required to operate the Property in the manner
in which same is currently being operated; (g) shall not initiate, join in or
consent to any change in the zoning, general plan, specific plan, or any other
land use classification affecting the Property or any Covenant or Restriction
without the prior written consent of Beneficiary; (h) except for Preapproved
Alterations, shall not remove, demolish, improve, add to, or alter the
Improvements or change the character or use of the Property without the prior
written consent of Beneficiary (Beneficiary shall respond to any request for
consent under this Section 2.2(h) within seven (7) days of receipt of any such
request for consent, which request must be accompanied by all information and
documentation that Beneficiary may reasonably require in order to make its
determination with respect to such request (“Accompanying Information”). In the
event that Beneficiary shall fail to respond to any request for consent under
this Section 2.2(h) within such seven (7) day period, Grantor may send a second
request, which shall state in capitalized, bold faced 16 point type at the top
of the first page that: “If Beneficiary fails to approve or disapprove the
request within five (5) days, such request shall be deemed approved”, and if the
Beneficiary shall fail to respond to such second request within such five (5)
day period, the request shall be deemed approved by the Beneficiary, provided
that the Grantor has provided Beneficiary with the Accompanying Information);
(i) shall not commit or permit any waste respecting the Loan, Property or
impairment of the Property; (j) shall not abandon the Property; (k) shall not
commit and shall use commercially reasonable efforts to prevent any act upon the
Property in violation of any Governmental Requirements; (l) shall promptly
complete all Improvements which Grantor commences to construct on the Real
Property in a good and workmanlike manner; and (m) shall paint, cultivate,
irrigate, fertilize, fumigate, prune, maintain and do all other acts, in a
timely and proper manner, which from the character or use of the Property are
customary or appropriate to preserve, protect and maintain the value of the
Property. The covenants and obligations under this Section 2.2, and the timely
performance thereof, shall be performed with time being of the essence. For the
avoidance of doubt and notwithstanding anything to the contrary set forth in
this Deed of Trust or the other Loan Documents, it is expressly agreed that
Grantor may perform alterations to the Property that are Preapproved Alterations
without the consent of Beneficiary.

 

2.3         Insurance. Grantor shall, without cost to Beneficiary, maintain in
force and effect on the Property at all times while this Deed of Trust continues
in effect the following insurance:

 

(1)         Insurance against loss or damage to the Property by fire, windstorm,
tornado and hail and against loss and damage by such other, further and
additional risks as may be now or hereafter embraced by an "all-risk" or
"special form" form of insurance policy. The amount of such insurance shall be
not less than one hundred percent (100%) of the full replacement cost (insurable
value) of the Improvements (as established by an MAI appraisal), including costs
associated with "civil or ordinance of law" requirements and without reduction
for depreciation. The determination of the replacement cost amount shall be
adjusted annually to comply with the requirements of the insurer issuing such
coverage or, at Beneficiary’s election, by reference to such indices, appraisals
or information as Beneficiary determines in its reasonable discretion in order
to reflect increased value due to inflation. Absent such annual adjustment, each
policy shall contain inflation guard coverage insuring that the policy limit
will be increased over time to reflect the effect of inflation. Full replacement
cost, as used herein, means, with respect to the Improvements, the cost of
replacing the Improvements without regard to deduction for depreciation,
exclusive of the cost of excavations, foundations and footings below the lowest
basement floor. Grantor shall also maintain insurance against loss or damage to
furniture, furnishings, fixtures, equipment and other items (whether personalty
or fixtures) included in the Property and owned by Grantor from time to time, to
the extent applicable, in the amount of the cost of replacing the same, in each
case, with inflation guard coverage to reflect the effect of inflation, or
annual valuation. Each policy or policies shall contain a replacement cost
endorsement and either an agreed amount endorsement (to avoid the operation of
any co-insurance provisions) or a waiver of any co-insurance provisions, all
subject to Beneficiary’s approval. The maximum deductible shall be $25,000.00.

 

9

 

 

(2)         Commercial General Liability Insurance against claims for personal
injury, bodily injury, death and property damage occurring on, in or about the
Property in amounts not less than $2,000,000.00 per occurrence and $5,000,000.00
in the aggregate plus combined limit of primary and umbrella coverage in the
amount not less than $25,000,000.00 per occurrence. During any construction on
the Property, Grantor’s general contractor for such construction shall also
provide the insurance required in this Subsection (b). Beneficiary hereby
retains the right to periodically review the amount of said liability insurance
being maintained by Grantor and to require an increase in the amount of said
liability insurance should Beneficiary deem an increase to be reasonably prudent
under then existing circumstances.

 

(3)         Boiler and machinery insurance is required if steam boilers or other
pressure-fired vessels are in operation at the Property. Minimum liability
coverage per accident must equal the greater of the replacement cost (insurable
value) of the Improvements housing such boiler or pressure-fired machinery or
$2,000,000.00. If one or more large HVAC units is in operation at the Property,
"Systems Breakdowns" coverage shall be required, as determined by Beneficiary.
Minimum liability coverage per accident must equal the value of such unit(s).

 

(4)         If the Improvements or any part thereof are situated in an area now
or subsequently designated by the Federal Emergency Management Agency ("FEMA")
as a special flood hazard area under the National Flood Insurance Act of 1968,
as amended, flood insurance in an amount equal to the greater of: (i) the
minimum amount required, under the terms of coverage, to compensate for any
damage or loss on a replacement basis (or the unpaid balance of the Loan if
replacement cost coverage is not available for the type of building insured); or
(ii) the maximum insurance available under the appropriate National Flood
Insurance Administration program. The maximum deductible shall be $5,000.00 per
building or a higher minimum amount as required by FEMA or other applicable law.

 

(5)         During the period of any construction, renovation or alteration of
the Improvements which exceeds the lesser of 10% of the principal amount of the
Note or $500,000.00, the Beneficiary may require a completed value, "All Risk"
Builder’s Risk form, or "Course of Construction" insurance policy in
non-reporting form with replacement cost and no co-insurance, in an amount
approved by Beneficiary, may be required. During the period of any construction
of any addition to the existing Improvements, a completed value, "All Risk"
Builder’s Risk form or "Course of Construction" insurance policy in
non-reporting form, in an amount approved by Beneficiary, shall be required.

 

(6)         When required by applicable law, ordinance or other regulation,
Worker’s Compensation and Employer’s Liability Insurance covering all persons
subject to the workers’ compensation laws of the state in which the Property is
located, including adequate limits of employer’s liability and U.S. longshore
and harbor workers’ coverage, if applicable, in amounts as agreed with
Beneficiary.

 

(7)         Business income (loss of rents) insurance in amounts sufficient to
compensate Grantor for all Rents and Profits or income during a period of not
less than twelve (12) months. The amount of coverage shall be adjusted annually
to reflect the Rents and Profits or income payable during the succeeding twelve
(12) months.

 

(8)         If available on commercially reasonable terms, such other insurance
on the Property, Improvements or on any replacements or substitutions thereof or
additions thereto as may from time to time be reasonably required by Beneficiary
against other insurable hazards, casualties or matters which at the time are
commonly insured against in the case of property similarly situated, including,
without limitation, sinkhole, mine subsidence, earthquake, environmental and law
and ordinance insurance, due regard being given to the height and type of
buildings, their construction, location, use and occupancy or as otherwise
required by applicable law, provided that such insurance is generally being
maintained by prudent owners of properties that are comparable to the Property
and located in the same geographical area as the Property and is typically
required by institutional lenders making loans on comparable properties.

 

10

 

 

(9)         In case of Grantor’s failure to keep the Property properly insured
as required herein, Beneficiary, after notice to Grantor, at its option may (but
shall not be required to) acquire such insurance as required herein at Grantor’s
sole expense. TEXAS FINANCE CODE SECTION 307.052 COLLATERAL PROTECTION INSURANCE
NOTICE: (A) GRANTOR IS REQUIRED TO (i) KEEP THE PROPERTY INSURED AGAINST DAMAGE
IN THE AMOUNT SPECIFIED HEREIN; (ii) PURCHASE THE INSURANCE FROM AN INSURER THAT
IS AUTHORIZED TO DO BUSINESS IN THE STATE OF TEXAS OR AN ELIGIBLE SURPLUS LINES
INSURER OR OTHERWISE AS PROVIDED HEREIN; AND (iii) NAME BENEFICIARY AS THE
PERSON TO BE PAID UNDER THE POLICY IN THE EVENT OF A LOSS TO THE EXTENT REQUIRED
HEREIN OR IN THE LOAN AGREEMENT; (B) SUBJECT TO THE PROVISIONS HEREOF, GRANTOR
MUST, IF REQUIRED BY BENEFICIARY, DELIVER TO BENEFICIARY A COPY OF THE POLICY
AND PROOF OF THE PAYMENT OF PREMIUMS; AND (C) SUBJECT TO THE PROVISIONS HEREOF,
IF GRANTOR FAILS TO MEET ANY SET FORTH IN THIS DEED OF TRUST, BENEFICIARY MAY
OBTAIN COLLATERAL PROTECTION INSURANCE ON BEHALF OF GRANTOR AT GRANTOR’S
EXPENSE.

 

2.4         Insurance Policies. All such insurance shall (i) be with insurers
fully licensed and authorized to do business in the state within which the
Property is located and which insurers, unless otherwise approved in writing by
Beneficiary, shall have and maintain a rating of at least “A” or higher by
Standard & Poor’s Rating Services a division of The McGraw Hill Companies
("Standard & Poor’s") or equivalent; (ii) contain the complete address of the
Real Property (or a complete legal description); (iii) be for terms of at least
one year with premium prepaid; (iv) be subject to the approval of Beneficiary as
to insurance companies, amounts, content, forms of policies, method by which
premiums are paid and expiration dates; (v) contain deductibles which do not
exceed $25,000.00 (except that (1) there shall be no deductible with respect to
the policies described in 2.3 (b), above, unless otherwise approved by
Beneficiary and (2) the deductible with respect to the policy described in
clause 2.3(d), above, shall not exceed $5,000.00 unless otherwise approved by
Beneficiary) and (vi) include a standard, non-contributory, Beneficiary clause
naming:

 

GREAT AMERICAN LIFE INSURANCE COMPANY,

its successors and assigns as their interests may appear

c/o American Real Estate Capital

Two Alhambra Plaza, Suite 1280

Coral Gables, Florida 33134

 

(1) as an additional insured under all liability insurance policies, (2) as the
first Beneficiary on all property insurance policies and (3) as the loss payee
on all loss of rents or loss of business income insurance policies.

 

11

 

 

Grantor shall, as of the date hereof, deliver to Beneficiary (a) evidence that
each of the required insurance policies have been prepaid as required above and
(b) copies of such insurance policies and original certificates of insurance
signed by an authorized agent of the applicable insurance companies evidencing
such insurance satisfactory to Beneficiary. Grantor shall renew all such
insurance and deliver to Beneficiary certificates and policies evidencing such
renewals at least twenty (20) days before any such insurance shall expire.
Grantor further agrees that each such insurance policy: (i) shall provide for at
least twenty (20) days’ prior written notice to Beneficiary prior to (1) any
policy reduction, cancellation or termination for any reason and (2) any
modification thereof which affects the interest of Beneficiary; (ii) shall
contain an endorsement or agreement by the insurer that any loss shall be
payable to Beneficiary in accordance with the terms of such policy
notwithstanding any act or negligence of Grantor which might otherwise result in
forfeiture of such insurance; (iii) shall waive all rights of subrogation
against Beneficiary; (iv) in the event that the Real Property or the
Improvements constitutes a legal non-conforming use under applicable building,
zoning or land use laws or ordinances, shall include an ordinance or law
coverage endorsement which will contain Coverage A: "Loss Due to Operation of
Law" (with a minimum liability limit equal to Replacement Cost With Agreed Value
Endorsement), Coverage B: "Demolition Cost" and Coverage C: "Increased Cost of
Construction" coverage; and (v) may be in the form of a blanket policy provided
that, in the event that any such coverage is provided in the form of a blanket
policy, Grantor hereby acknowledges and agrees that failure to pay any portion
of the premium therefor which is not allocable to the Property or by any other
action not relating to the Property which would otherwise permit the issuer
thereof to cancel the coverage thereof, would require the Property to be insured
by a separate, single-property policy. The blanket policy must properly identify
and fully protect the Property as if a separate policy were issued for 100% of
Replacement Cost at the time of loss and otherwise meet all of Beneficiary’s
applicable insurance requirements set forth in Section 2.3 and this Section 2.4.
The delivery to Beneficiary of the insurance policies or the certificates of
insurance as provided above shall constitute an assignment of all proceeds
payable under such insurance policies relating to the Property by Grantor to
Beneficiary as further security for the Loan, unless the insurance policies
maintained by Grantor are blanket insurance policies. In the event of
foreclosure of this Deed of Trust, or other transfer of title to the Property in
extinguishment in whole or in part of the Loan, all right, title and interest of
Grantor in and to all proceeds payable under such policies then in force
concerning the Property shall thereupon vest in the purchaser at such
foreclosure, or in Beneficiary or other transferee in the event of such other
transfer of title. Approval of any insurance by Beneficiary shall not be a
representation of the solvency of any insurer or the sufficiency of any amount
of insurance. In the event Grantor fails to provide, maintain, keep in force or
deliver and furnish to Beneficiary the policies of insurance required by this
Deed of Trust or evidence of their renewal as required herein, Beneficiary may,
but shall not be obligated to, procure such insurance and Grantor shall pay all
amounts advanced by Beneficiary therefor, together with interest thereon at the
Default Rate (as such term is defined in the Note) from and after the date
advanced by Beneficiary until actually repaid by Grantor, promptly upon demand
by Beneficiary. Any amounts so advanced by Beneficiary, together with interest
thereon, shall be secured by this Deed of Trust and by all of the other Loan
Documents securing all or any part of the Loan. Beneficiary shall not be
responsible for nor incur any liability for the insolvency of the insurer or
other failure of the insurer to perform, even though Beneficiary has caused the
insurance to be placed with the insurer after failure of Grantor to furnish such
insurance. To the extent that at any time Beneficiary agrees to accept (a)
insurance in amounts less than that which is required by the foregoing
provisions of Section 2.3 and this Section 2.4 or (b) insurance from an insurer
that is rated less than that which is required by the foregoing provisions of
this Section 2.4, Beneficiary may terminate its waiver and reassert the
aforesaid minimum coverage amounts and rating requirements upon any renewal of
any insurance coverage or at any time if (1) the coverage provided under such
policies is reduced, (2) the rating of any insurer is reduced or (3) Beneficiary
determines that any other material adverse event has occurred with respect to
the financial condition of such insurer.

 

2.5         Assignment of Insurance Claims and Proceeds. To secure the
Obligations, Grantor grants, transfers, and assigns to Beneficiary the Insurance
Claims and Insurance Proceeds.

 

2.6         Assignment of Condemnation Claims and Proceeds and Other Claims. To
secure the Obligations, Grantor grants, transfers, and assigns to Beneficiary
the Condemnation Claims, Condemnation Proceeds, Property Claims, and Property
Proceeds.

 

12

 

 

2.7         Casualty and Condemnation. Grantor shall give Beneficiary written
notice of the occurrence of any casualty affecting, or the institution of any
proceedings for eminent domain or for the condemnation of, the Property or any
portion thereof within three (3) business days after such occurrence. All
Insurance Proceeds and Condemnation Proceeds with respect to the Property, and
all causes of action, claims, compensation, awards and recoveries for any
damage, condemnation or taking of all or any part of the Property or for any
damage or injury to it for any loss or diminution in value of the Property,
shall be paid to Beneficiary. Beneficiary may participate in any suits or
proceedings relating to any Insurance Proceeds and Condemnation Proceeds, causes
of action, claims, compensation, awards or recoveries, and Beneficiary is hereby
authorized, in its own name or in Grantor’s name, to adjust any loss covered by
Insurance Claim or any Condemnation Claim or cause of action, and to settle or
compromise any claim or cause of action in connection therewith, and Grantor
shall from time to time deliver to Beneficiary any instruments required to
permit such participation; provided, however, that, so long as no Event of
Default or no event has occurred or failed to occur which with the passage of
time, the giving of notice, or both, would constitute an Event of Default (a
"Default") shall have occurred and be continuing, Beneficiary shall not have the
right to participate in the adjustment of any loss which is not in excess of the
lesser of (i) five percent (5%) of the then outstanding principal balance of the
Note and (ii) $250,000.00. Insurance Proceeds coming into possession of
Beneficiary shall not be deemed trust funds and Beneficiary shall have the
option in its sole discretion to apply any insurance proceeds it may receive
pursuant hereto to the payment of the Loan or to allow all or a portion of such
proceeds to be used for the restoration of the Property. In the event any such
insurance proceeds shall be used to reduce the Loan, Beneficiary shall apply any
sums received by it under this Section 2.7 first to the payment of all of its
costs and expenses (including, but not limited to, reasonable legal fees and
disbursements) incurred in obtaining those sums, it being agreed that no
prepayment premium or penalty shall be payable by Grantor as a result of such
application of proceeds by Beneficiary.

 

2.8         Repair and Restoration. Notwithstanding the provisions of Section
2.7 above, in the event that less than thirty percent (30%) of the Improvements
(determined by reference to the value of the Property located on the Real
Property have been destroyed or in the event that less than fifteen percent
(15%) of the Real Property (determined by reference to the value of the
Property) is taken (in each case as agreed by Beneficiary in the exercise of its
good faith business judgment), then if and so long as:

 

(1)         no Event of Default or Default is then continuing hereunder or under
any of the other Loan Documents, and

 

(2)         the Property can, in Beneficiary’s reasonable judgment, with
diligent restoration or repair, be returned to a condition at least equal (or
substantially similar) to the condition thereof that existed prior to the
casualty or partial taking causing the loss or damage by the earlier to occur of
(A) expiration of the business interruption insurance in respect of the Property
and (B) six (6) months prior to the stated maturity date of the Note; and

 

(3)         all necessary Governmental Permits can be obtained to allow the
rebuilding and re-occupancy of the Property in accordance with the Loan
Documents; and

 

(4)         there are sufficient sums available (through insurance proceeds or
condemnation awards and contributions by Grantor, the full amount of which
shall, at Beneficiary’s option, have been deposited with Beneficiary) for such
restoration or repair (including, without limitation, for any costs and expenses
of Beneficiary to be incurred in administering said restoration or repair) and
for payment of principal and interest to become due and payable under the Note
during such restoration or repair; and

 

(5)         after such restoration and stabilization the fair market value and
cash flow of the Property is expected to be at least equal to the fair market
value of the Property or cash flow immediately prior to such condemnation or
casualty (assuming that the affected portion of the property is relet within a
reasonable period after such condemnation or casualty); and

 

(6)         the economic feasibility of the Improvements after such restoration
or repair and stabilization will be such that income from their operation is
reasonably anticipated to be sufficient to pay operating expenses of the
Property and debt service on the Loan in full with the same coverage ratio
considered by Beneficiary in its determination to make the Loan; including, but
not limited to, an assessment of the impact of the termination of any Leases due
to such casualty or condemnation; and

 

13

 

 

(7)         Grantor shall have delivered to Beneficiary, at Grantor’s sole cost
and expense, an appraisal report in form and substance reasonably satisfactory
to Beneficiary appraising the value of the Property as proposed to be restored
or repaired to be not less than the appraised value of the Property considered
by Beneficiary in its determination to make the Loan; and

 

(8)         Grantor so elects by written notice delivered to Beneficiary within
fifteen (15) days after settlement of the aforesaid insurance or condemnation
claim;

 

then, Beneficiary shall, solely for the purposes of such restoration or repair,
advance so much of the remainder of such sums collected pursuant to Section 2.7
as may be required for such restoration or repair, and any funds deposited by
Grantor therefor, to Grantor in the manner and upon such terms and conditions as
would be required by a prudent construction lender, with any remainder being
applied by Beneficiary for payment of the Loan in which event no prepayment
premium or penalty or other exit fee shall be payable by Grantor in whatever
order Beneficiary directs in its sole and absolute discretion. Such terms and
conditions include, but are not limited to, the prior approval by Beneficiary of
plans and specifications, contractors and construction contracts and the
furnishing to Beneficiary of permits, bonds, lien waivers, invoices, receipts
and affidavits from contractors and subcontractors, in form and substance
satisfactory to Beneficiary in its reasonable discretion.

 

2.9         Event of No Repair or Restoration. In all other cases other than
that set forth in Section 2.8 above, namely, in the event that thirty percent
(30%) or more of the Improvements located on the Real Property have been
destroyed or fifteen percent (15%) or more of the Real Property is taken or
Grantor does not elect to restore or repair the Property pursuant to Section 2.8
above or otherwise fails to meet the requirements of Section 2.8 above, then, in
any of such events, Beneficiary shall elect, in Beneficiary’s sole and absolute
discretion and without regard to the adequacy of Beneficiary’s security, to do
either of the following: (1) accelerate the maturity date of the Note and
declare any or all of the Loan to be immediately due and payable and apply the
remainder of such sums received pursuant to this Section to the payment of the
Loan in whatever order Beneficiary directs in its absolute discretion (in which
event no prepayment premium or penalty or other exit fee shall be payable by
Grantor), with any remainder being paid to Grantor, or (2) notwithstanding that
Grantor may have elected not to, or otherwise is not permitted to restore or
repair the Property pursuant to the provisions of Section 2.8 above (and
provided that Beneficiary makes available to Grantor all Insurance Proceeds or
Condemnation Proceeds, as the case may be), require Grantor to restore or repair
the Property in the manner and upon such terms and conditions as would be
required by a prudent construction lender, including, but not limited to, the
deposit by Grantor with Beneficiary, within thirty (30) days after demand
therefor, of any deficiency reasonably determined by Beneficiary to be necessary
in order to assure the availability of sufficient funds to pay for such
restoration or repair (or evidence satisfactory to Beneficiary in its sole and
absolute discretion of the irrevocable commitment of funds for such purpose),
including, but not limited to, Beneficiary’s costs and expenses to be incurred
in connection therewith, the prior approval by Beneficiary of plans and
specifications, contractors and construction contracts and the furnishing to
Beneficiary of permits, bonds, lien waivers, invoices, receipts and affidavits
from contractors and subcontractors, in form and substance reasonably
satisfactory to Beneficiary, and apply the remainder of such sums toward such
restoration and repair, with any balance thereafter remaining being applied by
Beneficiary for payment of the Loan in whatever order Beneficiary directs in its
absolute discretion (in which event no prepayment premium or penalty or other
exit fee shall be payable by Grantor.)

 

2.10         Disbursement to Grantor in the Event of Restoration. In the event
of restoration or repair, to the extent permitted pursuant to this Deed of
Trust, Beneficiary will disburse to Grantor (no less frequently than once every
thirty (30) days) portions of the Insurance Proceeds or Condemnation Proceeds,
whichever the case maybe, upon presentation of pertinent documentation regarding
expenses incurred by Grantor in conducting the restoration, which may include
(1) an independent architect's certificate certifying (A) that the portion of
the restoration has been completed in accordance with plans and specifications
previously provided to the trustee and pre-approved by Beneficiary, (B) the
estimated percentage of restoration completed and the sum necessary to complete
the remaining restoration, and (C) compliance of the restoration with all
Governmental Requirements; (2) applicable lien waivers; and (3) to the extent
available, an endorsement to the title insurance policy insuring the continued
priority of the lien created by this Deed of Trust.

 

14

 

 

2.11         Treatment of Application of Proceeds. Any reduction in the Loan
resulting from Beneficiary’s application of any sums received by it hereunder
shall take effect only when Beneficiary actually receives such sums and elects
to apply such sums to the Loan and, in any event, the unpaid portion of the Loan
shall remain in full force and effect and Grantor shall not be excused in the
payment thereof. Partial payments received by Beneficiary, as described in the
preceding sentence, shall be applied first to the final payment due under the
Note and thereafter to installments due under the Note in the inverse order of
their due date (it being agreed that no prepayment premium or penalty or other
exit fee shall be payable by Grantor in connection therewith). If Grantor elects
as provided above or Beneficiary directs Grantor to restore or repair the
Property after the occurrence of a casualty or partial taking of the Property as
provided above, Grantor shall promptly and diligently, at Grantor’s sole cost
and expense and regardless of whether the insurance proceeds or condemnation
award, as appropriate, shall be sufficient for the purpose, restore, repair,
replace and rebuild the Property as nearly as possible to its value, condition
and character immediately prior to such casualty or partial taking in accordance
with the foregoing provisions and Grantor shall pay to Beneficiary all costs and
expenses of Beneficiary incurred in administering said rebuilding, restoration
or repair, provided that Beneficiary makes such proceeds or award available for
such purpose. Grantor agrees to execute and deliver from time to time such
further instruments as may be requested by Beneficiary to confirm the foregoing
assignment to Beneficiary of any award, damage, insurance proceeds, payment or
other compensation. Beneficiary is hereby irrevocably constituted and appointed
the attorney-in-fact of Grantor (which power of attorney shall be irrevocable so
long as any portion of the Loan is outstanding, shall be deemed coupled with an
interest, shall survive the voluntary or involuntary dissolution of Grantor and
shall not be affected by any disability or incapacity suffered by Grantor
subsequent to the date hereof), with full power of substitution, subject to the
terms of this Section 2.11, and to the rights expressly reserved to Grantor
elsewhere in this Deed of Trust, to settle for, collect and receive any such
awards, damages, insurance proceeds, payments or other compensation from the
parties or authorities making the same, to appear in and prosecute any
proceedings therefor and to give receipts and acquittances therefor.
Notwithstanding anything to the contrary contained in this Deed of Trust, if any
Insurance Proceeds or Condemnation Proceeds are retained and applied by
Beneficiary toward the payment of the Loan, Grantor may prepay the entire Loan
without payment of any prepayment premium or penalty or any other exit fee,
provided that (a) such prepayment is made within ninety (90) days after Lender
applies such Insurance Proceeds or Condemnation Proceeds to the Loan, and (b)
together with such prepayment, Grantor pays to Beneficiary all accrued and
unpaid interest and all other sums payable under the Loan Documents.

 

2.12         No Liability by Beneficiary. Nothing contained in this Deed of
Trust shall be deemed to obligate Beneficiary to prosecute or enforce any or all
of the Insurance Claims, Condemnation Claims or Property Claims nor shall
Beneficiary have any liability or responsibility for any failure or delay by
Beneficiary in prosecuting or enforcing any or all of the Insurance Claims,
Condemnation Claims or Property Claims or to collect any or all of the Insurance
Proceeds, Condemnation Proceeds or Property Proceeds. Nothing contained in this
Deed of Trust nor Beneficiary's receipt of any Insurance Proceeds, Condemnation
Proceeds or Property Proceeds shall result in any obligation or liability by
Beneficiary for the performance or observance of any of the terms of any
document or Insurance Policies relating to any or all of the Claims or the
Proceeds.

 

2.13         Taxes and Impositions. Grantor shall pay all (a) Taxes at least
thirty (30) days before the date such Taxes are first due; (b) Insurance
Premiums at least thirty (30) days before due; and (iii) other Impositions when
due. Upon Beneficiary's request, Grantor shall deliver to Beneficiary receipts
and such other substantiating documentation as may be required by Beneficiary to
evidence payment of all Impositions by Grantor in accordance with this Section.
Notwithstanding the foregoing, Grantor need not pay such Taxes and Insurance
Premiums to the extent Beneficiary is obligated to do so pursuant to and
accordance with Section 2.14(g).

 

15

 

 

2.14        Reserves.

 

(a)         Grantor hereby acknowledges and agrees that the Reserves (i) shall
be held in an account designated by, or in the name of Beneficiary, (ii) shall
not accrue or earn any interest in favor of Grantor and (iii) may be commingled
with other funds. Grantor hereby acknowledges and agrees, that Beneficiary, or
at Beneficiary’s election, a servicing agent, shall have exclusive control over
any accounts in which Reserves are held. Notice of the assignment and security
interest granted to Beneficiary herein may be delivered by Beneficiary at any
time to the financial institution wherein the Reserves have been established,
and Beneficiary, or such servicing entity, shall have possession of all
passbooks or other evidences of such accounts. Grantor hereby assumes all risk
of loss with respect to amounts on deposit in the Reserves. Grantor hereby
knowingly, voluntarily and intentionally stipulates, acknowledges and agrees
that the advancement of the funds from the Reserves as set forth herein is at
Grantor’s direction and is not the exercise by Beneficiary of any right of
set-off or other remedy upon a Default or an Event of Default. Grantor hereby
waives all right to withdraw funds from the Reserves except as provided in this
Deed of Trust.

 

(b)         Upon the occurrence and during the continuance of any Event of
Default, Beneficiary, at its option and without regard to the adequacy of any
other collateral securing the Obligations, shall have the right to apply any or
all of the Reserves to any or all of the Obligations in such amounts and order
as Beneficiary may determine. If an Event of Default shall occur hereunder or
under any other of the Loan Documents, then Beneficiary may, during the
continuance of such Event of Default, without notice or demand on Grantor, at
its option: (A) withdraw any or all of the funds (including, without limitation,
interest) then remaining in the Reserves and apply the same, after deducting all
costs and expenses of safekeeping, collection and delivery (including, but not
limited to, attorneys’ fees, costs and expenses) to the Loan or any other
obligations of Grantor under the other Loan Documents in such manner or as
Beneficiary shall deem appropriate in its sole discretion, and the excess, if
any, shall be paid to Grantor, (B) exercise any and all rights and remedies of a
secured party under any applicable Uniform Commercial Code, and/or (C) exercise
any other remedies available at law or in equity. No such use or application of
the funds contained in the Reserves shall be deemed to cure any Default or Event
of Default hereunder or under the other Loan Documents.

 

(c)         The Reserves shall not, unless otherwise explicitly required by
applicable law, be or be deemed to be escrow or trust funds, but, at
Beneficiary’s option and in Beneficiary’s discretion, may either be held in a
separate account or be commingled by Beneficiary with the general funds of
Beneficiary. No interest on the Reserves shall be paid by Beneficiary to Grantor
unless required by law. The Reserves are solely for the protection of
Beneficiary and entail no responsibility on Beneficiary’s part beyond the
payment of the respective items for which they are held following receipt of
bills, invoices or statements therefor in accordance with the terms hereof and
beyond the allowing of due credit for the sums actually received.

 

(d)          If the funds in the applicable Reserve shall exceed the amount of
payments actually applied by Beneficiary for the purposes and items for which
the applicable Reserve is held, such excess may be credited by Beneficiary on
subsequent payments to be made hereunder or, at the option of Beneficiary,
refunded to Grantor. If, however, the applicable Reserve shall not contain
sufficient funds to pay the sums required by the dates on which such sums are
required to be on deposit in such account, Grantor shall, within ten (10) days
after receipt of written notice thereof, deposit with Beneficiary the full
amount of any such deficiency. To the extent Beneficiary determines, in
reasonable discretion, that the payments being made to any Reserve, whether
monthly or otherwise, are insufficient for their intended purpose, Grantor shall
be required to increase such payments as Beneficiary determines, in reasonable
discretion. If Grantor shall fail to deposit with Beneficiary the full amount of
such deficiency as provided above, Beneficiary shall have the option, but not
the obligation, to make such deposit, and all amounts so deposited by
Beneficiary, together with interest thereon at the Default Rate from the date so
deposited by Beneficiary until actually paid by Grantor, shall be immediately
paid by Grantor on demand and shall be secured by this Deed of Trust and by all
of the other Loan Documents securing all or any part of the Loan. Grantor grants
a security interest to Beneficiary in all Reserves deposited by Grantor.

 

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(e)         Upon full payment of the Loan in accordance with its terms or at
such earlier time as Beneficiary may elect, the balance of any or all of the
Reserves then in Beneficiary’s possession shall be paid over to Grantor and no
other party shall have any right or claim thereto. If Beneficiary assigns this
Deed of Trust, Beneficiary shall have the right to transfer all Reserves held by
Beneficiary to Beneficiary's assignee. Upon such assignment, Beneficiary shall
have no further liability of any kind with respect to the Reserves, and
Beneficiary's assignee shall be deemed to have assumed all liabilities of
Beneficiary with respect to the Reserves. Following full payment and performance
of all of the Obligations and the reconveyance of the Property under this Deed
of Trust, Beneficiary shall refund to Grantor any Reserves then held by
Beneficiary. Upon assignment of this Deed of Trust by Beneficiary, any funds in
the Reserves shall be turned over to the assignee and any responsibility of
Beneficiary, as assignor, with respect thereto shall terminate.

 

(f)         Nothing contained in this Section 2.14 shall be deemed (i) to
require Beneficiary to pay any amounts on account of any Impositions, or on
account of any other reason for which a Reserve is created hereunder, in excess
of the applicable Reserves held by Beneficiary; or (ii) to impair, prejudice or
otherwise affect any of Beneficiary's rights or remedies under this Deed of
Trust or under applicable law to pay any or all of the Impositions if the
Reserves then held by Beneficiary are insufficient for such purposes and to add
the amount paid by Beneficiary to the Obligations.

 

(g)         Monthly Replacement Escrow:

 

(1)         Grantor shall establish and maintain, a reserve by paying to
Beneficiary at Closing and then on each Payment Date (as such term is defined in
the Note) thereafter during the term of the Loan, an amount equal to four
percent (4%) of gross operating revenues from the Property for the third month
preceding each such Payment Date (collectively, the “Monthly Replacement
Escrow”). The Monthly Replacement Escrow shall be made available for
replacements and repairs for the Property (“Replacements and Repairs”) during
each calendar year as set forth on a capital budget which shall be provided in
accordance with Section 2.25 of this Deed of Trust. By way of example, the
payment due under this Section 2.14(g)(1) with the Payment Date occurring in
April, 2013, shall be calculated using the gross operating revenues from the
Property for the month of January, 2013 (in other words, four percent (4%) of
the gross operating revenues from the Property for the month of January, 2013).
Notwithstanding anything contained herein to the contrary, it is expressly
stated that maintenance of the “Replacement Reserve Fund” provided for in
Section 3.5.2 of the existing Franchise Agreement shall suffice to satisfy the
requirement of a Monthly Replacement Escrow under this Deed of Trust to the
extent the amount Grantor deposits in the Replacement Reserve Fund each month is
equal to or greater than four percent (4%) of gross operating revenues from the
Property for the third month preceding each such month and to the extent the
amount so deposited is less, Grantor shall deposit the difference on the
applicable Payment Date into the Monthly Replacement Escrow. Funds withdrawn
from the Replacement Reserve Fund shall not be subject to Section 2.14(g)(2)
below to the extent the purpose of the use of such funds and the amount of such
funds are set forth in the capital budget approved by Beneficiary in accordance
with Section 2.25 of this Deed of Trust, except with respect to the restaurant
and bar renovation and improvement project which project shall comply with and
satisfy all of the terms and conditions of Section 2.14(g)(2) below. In the
event Grantor wishes to withdraw funds from the Replacement Reserve Fund for
purposes or amounts which are not contained in the capital budget approved by
Beneficiary in accordance with Section 2.25 of this Deed of Trust, Grantor may
only do so with Beneficiary’s prior written consent; provided such consent shall
not be required with respect to (i) projects which cost less than $20,000.00 in
the aggregate, and (ii) necessary repairs and replacements to existing
equipment, fixtures and personal property which are necessary for the operation
or maintenance of the Property.

 

17

 

 

(2)         Subject to the provisions of Section 2.14(a)-(f) and this Section
2.14(g), Beneficiary shall make disbursements from the Monthly Replacement
Escrow shall be made as requested by Grantor for expenditures made by Grantor
for Repairs and Replacements ("Replacement and Repair Costs") approved by
Beneficiary, in its reasonable discretion, no more frequently than once in any
thirty (30) day period, of no less than $20,000.00, and upon (i) the receipt by
Beneficiary of a written request from Grantor for disbursement from the Monthly
Replacement Escrow in the form reasonably satisfactory to Beneficiary, (ii) the
delivery to Beneficiary of invoices, receipts or other evidence satisfactory to
Beneficiary, verifying the cost of Replacement and Repair Costs and the
performance of the Replacements and Repairs; (iii) for disbursement requests
related to contracts or improvements in excess of $20,000.00, the delivery to
Beneficiary of affidavits, lien waivers or other evidence reasonably
satisfactory to Beneficiary showing that all materialmen, laborers,
subcontractors and any other parties who might or could claim statutory or
common law liens and are furnishing or have furnished material or labor to the
Property have waived all liens conditioned only on payment; (iv) for
disbursement requests related to contracts or improvements in excess of
$100,000.00, delivery to Beneficiary of a certification from an inspecting
architect, engineer or other consultant reasonably acceptable to Beneficiary and
at the expense of Grantor (the "Work Inspector") confirming the completion of
such Replacements and Repairs in accordance with applicable plans and
Governmental Requirements and the value of the completed Replacements and
Repairs; (v) for disbursement requests related to contracts or improvements in
excess of $100,000.00, Beneficiary having preapproved in writing, in its
reasonable discretion, any construction contract for which Grantor is seeking a
disbursement for under this Section 2.14(g); and (vi) the delivery to
Beneficiary of a new (or amended) certificate of occupancy for the portion of
the Improvements covered by such Replacements and Repairs, to the extent a new
(or amended) certificate of occupancy is required by law, or a certification
acceptable to Beneficiary by the Work Inspector that no new (or amended)
certificate of occupancy is required. In making any disbursement from the
Monthly Replacement Escrow, Beneficiary shall be entitled to rely on such
request from Grantor without any inquiry into the accuracy, validity or
contestability of any such amount. Beneficiary, at Grantor’s cost and expense
shall have the right to inspect the Replacements and Repairs. The insufficiency
of funds in the Monthly Replacement Escrow shall not relieve Grantor from its
obligation to fulfill all preservation and maintenance covenants in the Loan
Documents.

 

(3)         Grantor hereby grants to Beneficiary a power-of-attorney, coupled
with an interest, to cause the work and obligations covered by this Section
2.14(g) to be completed, performed, remediated and corrected to the satisfaction
of Beneficiary and in accordance with this Deed of Trust upon Grantor’s failure
to do so in accordance with the terms and conditions of this Deed of Trust,
subject to any applicable notice and cure periods, and to apply the amounts on
deposit in the Monthly Replacement Escrow to the costs associated therewith, all
as Beneficiary may determine in its sole and absolute discretion but without
obligation to do so.

 

(h)         Major Physical Items Escrow.

 

(1)         If during the term of the Loan, Beneficiary determines, in its
reasonable discretion and based upon engineering reports, other reports or as
may be necessitated in order to comply with Governmental Requirements, that any
physical aspect of the Property requires maintenance, repair, replacement or
improvement, Grantor shall deposit with Beneficiary, upon ten (10) days written
notice from Beneficiary of such determination, one hundred ten percent (110%) of
the cost (“Major Physical Items Escrow”) of such maintenance, repair,
replacement or improvement, as determined in Beneficiary’s sole and absolute
discretion (“Major Physical Repairs and Replacements”).

 

18

 

 

(2)         Subject to the provisions of Section 2.14(a)-(f) and this Section
2.14(h), Beneficiary shall make disbursements from the Major Physical Items
Escrow as requested by Grantor for expenditures made by Grantor for Major
Physical Repairs and Replacements ("Major Physical Replacement and Repair
Costs") approved by Beneficiary, in its reasonable discretion, no more
frequently than once in any thirty (30) day period, of no less than $20,000.00,
and upon (i) the receipt by Beneficiary of a written request from Grantor for
disbursement from the Major Physical Items Escrow in the form reasonably
satisfactory to Beneficiary, (ii) the delivery to Beneficiary of invoices,
receipts or other evidence satisfactory to Beneficiary, verifying the cost of
Major Physical Replacements and Repair Costs and the performance of the Major
Physical Repairs and Replacements; (iii) for disbursement requests related to
contracts or improvements in excess of $20,000.00, the delivery to Beneficiary
of affidavits, lien waivers or other evidence reasonably satisfactory to
Beneficiary showing that all materialmen, laborers, subcontractors and any other
parties who might or could claim statutory or common law liens and are
furnishing or have furnished material or labor to the Property have waived all
liens conditioned only on payment; (iv) for disbursement requests related to
contracts or improvements in excess of $100,000.00, delivery to Beneficiary of a
certification from a Work Inspector confirming the completion of such Major
Physical Repairs and Replacements in accordance with applicable plans and
Governmental Requirements and the value of the completed Major Physical Repairs
and Replacements; (v) for disbursement requests related to contracts or
improvements in excess of $100,000.00, Beneficiary having preapproved in
writing, in its reasonable discretion, any construction contract for which
Grantor is seeking a disbursement for under this Section 2.14(h); and (vi) the
delivery to Beneficiary of a new (or amended) certificate of occupancy for the
portion of the Improvements covered by such Major Physical Repairs and
Replacements, to the extent a new (or amended) certificate of occupancy is
required by law, or a certification acceptable to Beneficiary by the Work
Inspector that no new (or amended) certificate of occupancy is required. In
making any disbursement from the Major Physical Items Escrow, Beneficiary shall
be entitled to rely on such request from Grantor without any inquiry into the
accuracy, validity or contestability of any such amount. Beneficiary, at
Grantor’s cost and expense shall have the right to inspect the Major Physical
Repairs and Replacements. The insufficiency of funds in the Major Physical Items
Escrow shall not relieve Grantor from its obligation to fulfill all preservation
and maintenance covenants in the Loan Documents.

 

(3)         Grantor hereby grants to Beneficiary a power-of-attorney, coupled
with an interest, to cause the work and obligations covered by this Section
2.14(h) to be completed, performed, remediated and corrected to the satisfaction
of Beneficiary and in accordance with this Deed of Trust upon Grantor’s failure
to do so in accordance with the terms and conditions of this Deed of Trust,
subject to any applicable notice and cure periods, and to apply the amounts on
deposit in the Major Physical Items Escrow to the costs associated therewith,
all as Beneficiary may determine in its sole and absolute discretion but without
obligation to do so.

 

(i)          Cash Flow Sweep Escrow for Tenant Improvements/Leasing Commissions.

 

(1)         Commencing on the First Payment Date and on each and every Payment
Date thereafter until the twelfth (12th) Payment Date, Grantor shall deposit
with Mortgagee all “Net Excess Cash Flow” derived from the Property for the
prior month (“Cash Flow Sweep Escrow”) which shall be held by Beneficiary and
disbursed in accordance with this Section 2.14(i). “Net Excess Cash Flow” shall
mean Gross Revenues (as such term is defined in Section 2.37 herein) for such
prior month, less (1) Operating Expenses (as such term is defined in Section
2.37 herein) for such prior month, (2) Loan Service (as such term is defined in
Section 2.37 herein) for such prior month, and (3) a reasonable allowance for
monthly working capital for the following month, which shall not exceed ten
percent (10%) of the prior months’ NOI (as such term is defined in Section 2.37
of this Mortgage), all as certified to Beneficiary by an officer of Grantor and
accompanied by the financial statements required pursuant to Section 2.25(b) of
this Mortgage which shall be provided on or prior to each and every Payment Date
in which such payment of Net Excess Cash Flow is made. Notwithstanding anything
to the contrary contained in this Section 2.14(i), Mortgagor shall have no
obligation to deposit more than $50,000.00 on any one Payment Date into the Cash
Flow Sweep Escrow. The funds in the Cash Flow Sweep Escrow shall be used to fund
(i) third party leasing commissions not exceeding the then current market rate
and tenant improvement costs incurred by Grantor in connection with leasing the
Property pursuant to new Leases approved by Beneficiary (but not renewals of
existing Leases or the exercise of option rights contained in existing leases)
and otherwise meeting the terms and conditions set forth in the Loan Documents,
and (ii) costs incurred in constructing improvements on the ninth (9th) floor of
the Property (collectively, the "Leasing Costs").

 

19

 

 

(2)         Subject to the provisions of Section 2.14(a)-(f) and this Section
2.14(i), Beneficiary shall make disbursements from the Cash Flow Sweep Escrow as
requested by Grantor, and approved by Beneficiary in its reasonable discretion,
no more frequently than once in any thirty (30) day period with respect to any
new Leasing Costs, and upon: (i) for disbursement requests related to new
Leases, receipt by Beneficiary of an executed lease and a written request from
Grantor for disbursement from the Cash Flow Sweep Escrow in the form reasonably
satisfactory to Beneficiary and a certification by Grantor in the form
reasonably satisfactory to Beneficiary that (1) the Leasing Costs consist of
commissions payable to brokers not greater than the then-current market rate and
that such leasing commissions have been paid by Grantor, and (2) Leasing Costs
consisting of amounts required to be expended pursuant to the relevant new Lease
for tenant improvement or related costs, and said Leasing Costs shall have been
incurred and paid for and the tenant under such Lease shall have taken
possession of its demised premises and shall have begun to pay rent under its
Lease and any and all free rent, credit and similar periods have expired; (ii)
the delivery to Grantor of paid invoices, receipts or other evidence
satisfactory to Beneficiary, verifying the cost and payment of Leasing Costs and
the performance of the tenant improvements; (iii) for disbursement requests
related to contracts or improvements in excess of $20,000.00, the delivery to
Beneficiary of affidavits, lien waivers or other evidence reasonably
satisfactory to Beneficiary showing that all materialmen, laborers,
subcontractors and any other parties who might or could claim statutory or
common law liens and are furnishing or have furnished material or labor to the
Property have been paid all amounts due for labor and materials furnished to the
Property have waived all liens conditioned only on payment; (iv) for
disbursement requests related to contracts or improvements in excess of
$100,000.00, delivery to Beneficiary of a certification from a Work Inspector
confirming the completion of such tenant improvements in accordance with
applicable plans and Governmental Requirements and the value of the completed
tenant improvements; or other improvements related to the 9th Floor; (v) for
disbursement requests related to contracts or improvements in excess of
$100,000.00. Beneficiary having preapproved in writing, in its reasonable
discretion, any construction contract for which Grantor is seeking a
disbursement for under this Section 2.14(i); and (vi) the delivery to
Beneficiary of a new (or amended) certificate of occupancy for the portion of
the Improvements covered by such improvements, if said new (or amended)
certificate of occupancy is required by law, or a certification acceptable to
Beneficiary by the Work Inspector that no new (or amended) certificate of
occupancy is required. In making any payment from the Cash Flow Sweep Escrow,
Beneficiary shall be entitled to rely on such request from Grantor without any
inquiry into the accuracy, validity or contestability of any such amount.
Beneficiary, at Grantor’s cost and expense, shall have the right to inspect such
tenant improvements. The insufficiency of Cash Flow Sweep Escrow shall not
relieve Grantor from its obligation to fulfill all covenants and obligations
under any Lease or brokerage or listing agreement.

 

(3)         Grantor hereby grants to Beneficiary a power-of-attorney, coupled
with an interest, to cause the work and obligations covered by this Section
2.14(i) to be completed, performed, remediated and corrected to the satisfaction
of Beneficiary and in accordance with this Deed of Trust upon Grantor’s failure
to do so in accordance with the terms and conditions of this Deed of Trust,
subject to any applicable notice and cure period, and to apply the amounts on
deposit in the Cash Flow Sweep Escrow to the costs associated therewith, all as
Beneficiary may determine in its sole and absolute discretion but without
obligation to do so.

 

(4)         In the event Grantor receives any earlier termination fee or other
consideration from any tenant under a Lease in connection with the early
termination of a Lease, whether such early termination is expressly permitted
under such Lease or not, such fee or consideration shall immediately be paid by
Grantor to Beneficiary and shall be included in the Cash Flow Sweep Escrow but
disbursed to Grantor in full at such time as the affected space is leased and
occupied by a new tenant as approved by Beneficiary, in accordance with this
Deed of Trust. Nothing anything contained in this Section 2.14(i) shall grant
Grantor the right to agree to an early termination of any Lease in contravention
of the provisions of the Loan Documents.

 

20

 

 

(j)         Intentionally Deleted

 

(k)         Deposit Account Control Agreement. Within thirty (30) days of date
of this Deed of Trust, Grantor covenants and agrees to enter into one or more
deposit control account agreements acceptable to Beneficiary, in its reasonable
discretion, between Grantor, Beneficiary, and that certain financial institution
acting as depository bank at which institution the Replacement Reserve Fund is
located (together with any modification, amendment, substitution or replacement
thereof, hereinafter collectively referred to as the "Account Agreement").
Grantor shall pay all administrative, servicing and other costs and expenses
relating the Account Agreement and the deposit banks. During such thirty (30)
day period, Grantor shall also execute a pledge agreement, in form and substance
acceptable to Beneficiary in Beneficiary’s reasonable discretion, pledging and
granting a security interest in the Account Agreement, the account which is the
subject thereof and all funds deposited therein ("Pledge Agreement"). Amounts
held pursuant to the Account Agreement shall constitute additional security for
the Loan. In the event the Account Agreement and Pledge Agreement have not been
fully executed and delivered within the time periods, and in accordance with the
provisions, set forth in this Section 2.14(k), such failure shall constitute an
Event of Default hereunder.

 

(l)         Impound Account. Grantor shall establish and maintain at all times
while this Deed of Trust continues in effect an impound account (the "Impound
Account") with Beneficiary for payment of Taxes and Insurance Premiums and as
additional security for the Loan. Simultaneously with the execution hereof,
Grantor shall deposit in the Impound Account an amount determined by Beneficiary
to be necessary to ensure that there will be on deposit with Beneficiary an
amount which, when added to the monthly payments subsequently required to be
deposited with Beneficiary hereunder on account of Impositions (collectively,
"Impound Funds"), will result in there being on deposit with Beneficiary in the
Impound Account an amount sufficient to pay the next due installment of
Impositions at least thirty (30) days prior to the delinquency thereof and the
next due annual Insurance Premiums at least thirty (30) days prior to the due
date thereof. Commencing on the date which is the first of the month after the
closing of the Loan and continuing thereafter on each monthly payment date under
the Note, Grantor shall pay to Beneficiary, concurrently with and in addition to
the monthly payment due under the Note and until the Loan is fully paid and
performed, deposits in an amount equal to one-twelfth (1/12) of the amount of
the annual Taxes that will next become due and payable on the Property, plus
one-twelfth (1/12) of the amount of the annual Insurance Premiums that will next
become due and payable on insurance policies which Grantor is required to
maintain hereunder, each as estimated and determined by Beneficiary. So long as
no Event of Default (as defined in Article III) has occurred, or event or matter
which, with the passage of time or giving of notice, or both, would become an
Event of Default has occurred, all sums in the Impound Account shall be held by
Beneficiary in the Impound Account to pay said Taxes and Insurance Premiums
before the same become delinquent. Grantor shall be responsible for ensuring the
receipt by Beneficiary, at least thirty (30) days prior to the respective due
date for payment thereof, of all bills, invoices and statements for all Taxes
and Insurance Premiums to be paid from the Impound Account, and so long as no
Event of Default exists, Beneficiary shall pay the governmental authority or
other party entitled thereto directly to the extent funds are available for such
purpose in the Impound Account or reimburse Beneficiary to the extent Grantor
pays the Insurance Premiums for any period of time as part of payment of a
blanket insurance policy and Grantor provides Beneficiary with proof of such
payment. In making any payment from the Impound Account, Beneficiary shall be
entitled to rely on any bill, statement or estimate procured from the
appropriate public office or insurance company or agent without any inquiry into
the accuracy of such bill, statement or estimate and without any inquiry into
the accuracy, validity, enforceability or contestability of any tax, assessment,
valuation, sale, forfeiture, tax lien or title or claim thereof. The Impound
Account shall not, unless otherwise explicitly required by applicable law, be or
be deemed to be escrow or trust funds, but, at Beneficiary’s option and in
Beneficiary’s discretion, may either be held in a separate account or be
commingled by Beneficiary with the general funds of Beneficiary. No interest on
the funds contained in the Impound Account, if any, shall be paid by Beneficiary
to Grantor (unless required by applicable law).

 

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2.15        Absolute Assignment of Rents and Profits.

 

(a)         Absolute Assignment. To the extent allowed by applicable law,
Grantor absolutely, irrevocably and unconditionally grants, transfers and
assigns to Beneficiary all Rents and Profits. Prior to the occurrence of an
Event of Default, Grantor shall have a license to collect and retain on the
terms of this Section 2.15 all Rents and Profits as they become due and payable.
Upon the occurrence and during the continuance of an Event of Default, Grantor's
license to collect the Rents and Profits shall automatically be revoked without
notice to Grantor. Following such revocation and while an Event of Default
exists, Beneficiary shall be entitled to collect and retain all Rents and
Profits, whether or not Beneficiary has taken possession of the Property, and
Grantor shall immediately pay or deliver to Beneficiary any Rents and Profits
then held or thereafter collected by Grantor. All Rents and Profits collected by
or on behalf of Beneficiary may be applied by Beneficiary to the Obligations in
such order and amounts as Beneficiary may determine. If Beneficiary elects to
seek the appointment of a receiver following the occurrence of an Event of
Default, Grantor irrevocably and unconditionally consents to the appointment of
a receiver without regard to the adequacy of the security for any of the
Obligations. Notwithstanding anything to the contrary contained in this Deed of
Trust, the assignment of Rents and Profits contained in this Section is an
absolute assignment and not an assignment as security, if and to the extent
allowed by applicable law. Neither the assignment of Rents and Profits contained
in this Section nor any action taken by Beneficiary to collect the Rents and
Profits shall be deemed to make Beneficiary a mortgagee-in-possession of the
Property or shall be deemed to render Beneficiary directly or indirectly liable
or responsible for (i) the use, control, condition, care, operation, occupancy,
management, repair, or leasing of the Property; (ii) the production of Rents and
Profits from the Property; or (iii) the performance or observance of any or all
of Grantor's duties, obligations, representations, or warranties under any
Leases or other agreements relating to the Rents and Profits. Beneficiary shall
have no responsibility or liability of any kind for any failure or delay by
Beneficiary in enforcing any of the terms or conditions of this Section 2.15. It
is understood and agreed that any assignment of Rents and Profits made in this
Deed of Trust or the other Loan Documents shall be subject to the provisions of
applicable law, including, without limitation, the requirements of the Texas
Assignment of Rents Act

 

(b)         Applications of Rents and Profits Prior to Revocation of License.
Grantor shall apply the Rents and Profits to the payment of all reasonable and
necessary operating costs and expenses of the Property, installment payments due
in connection with the Loan and any Future Advances, payment of Impositions, and
a reasonable reserve for future reasonable and necessary expenses, repairs and
replacements relating to the Property before using the Rents and Profits for any
other purpose which does not directly benefit the Property.

 

(c)         Notices to Tenants. Upon revocation of the license described in
Section 2.15(a) above, Grantor irrevocably authorizes and directs all Tenants
under the Leases to comply with any notice or demand by Beneficiary for payment
to Beneficiary of any Rents and Profits or for the performance of any of the
Tenant's other respective obligations under the Leases, regardless of any
conflicting demand by Grantor or notice by Grantor to any Tenant that
Beneficiary's demand is invalid or wrongful. No Tenant shall have any duty to
inquire as to whether any default by Grantor has occurred under the Loan
Documents in connection with any notice or demand by Beneficiary under this
Section.

 

22

 

 

 

2.16        Sales, Transfers, and Further Encumbrances.

 

(i)         Grantor acknowledges that Beneficiary has relied upon the principals
of Grantor and their experience in owning and operating the Property and
properties similar to the Property in connection with the closing of the Loan.
Accordingly, except for Permitted Transfers (for clause (d) and (e) of the
definition of Permitted Transfers (except for transfers by or in Realty America
Group (Mockingbird Commons), LP, a Texas limited partnership and transfers in BH
Fund), Grantor shall provide Beneficiary with five (5) days prior written
notice) and except as specifically allowed herein in this Deed of Trust, in the
event that the Real Property or Improvements which constitutes real property or
any part thereof or interest therein or direct or indirect interest in Grantor
shall be sold, conveyed, disposed of, alienated, hypothecated, leased (except to
Tenants of space in the Improvements in accordance with the provisions of this
Deed of Trust), assigned, pledged, mortgaged, further encumbered or otherwise
transferred or Grantor shall be divested of its title to the Real Property or
Improvements which constitutes real property or any interest therein, in any
manner or way, whether voluntarily or involuntarily (each of the foregoing being
a "Transfer"), without, in each instance, the prior written consent of
Beneficiary being first obtained, which consent may be withheld in Beneficiary’s
sole and absolute discretion, then, the same shall constitute an Event of
Default hereunder and Beneficiary shall have the right, at its option, to
declare any or all of the Loan, irrespective of the maturity date specified in
the Note, immediately due and payable and to otherwise exercise any of its other
rights and remedies contained in Article IV hereof. If such acceleration is a
result of Grantor’s failure to obtain written consent to a Transfer in
accordance with this Deed of Trust and is during any period when a prepayment
fee is payable pursuant to the provisions set forth in the Note, then, in
addition to all of the foregoing, such prepayment fee shall also then be
immediately due and payable to the same end as though Grantor were prepaying the
entire Loan on the date of such acceleration. For the purposes of this Section
each of the following shall be deemed to be a Transfer: (i) in the event either
Grantor or any of its shareholders, general partners or members is a corporation
or trust, the direct or indirect sale, conveyance, transfer or disposition,
alienation, hypothecation, or encumbering of more than 10% of the issued and
outstanding capital stock of Grantor or any of its shareholders, general
partners or members or of the beneficial interest of such trust (or the issuance
of new shares of capital stock in Grantor or any of its shareholders, general
partners or members; and (ii) in the event Grantor or any shareholder, general
partner or managing member of Grantor is a limited or general partnership, a
joint venture or a limited liability company, a change of any general partner,
joint venturer, limited liability company manager or managing member or a change
in the ownership interests in any general partner, joint venturer, limited
liability company manager or managing member, either voluntarily, involuntarily
or otherwise, or the sale, conveyance, transfer, disposition, alienation,
hypothecation or encumbering of all or any portion of the interest of any
shareholder, general partner, joint venturer, limited liability company manager
or managing member in Grantor or such shareholder, general partner, joint
venturer, limited liability company manager or managing member (whether in the
form of a beneficial or ownership interest or in the form of a power of
direction, control or management, or otherwise), and (iii) any change or
transfer in respect of the Property or any interest therein, or any direct or
indirect change or transfer in Grantor or any interest therein, resulting in any
change in the management or control of Grantor or the Property. For the
avoidance of doubt, and notwithstanding anything contained in this Deed of Trust
or the other Loan Documents to the contrary, it is expressly stated that a
Permitted Transfer may be consummated without the consent of Beneficiary.

 

2.17        Condominiums.

 

Master Condominium

 

(a)         Grantor shall promptly pay, when due, all assessments, special
assessments, and other charges imposed by the Association pursuant to the
provisions of the Condominium Documents. Grantor, upon the request of
Beneficiary, shall produce reasonably satisfactory evidence of such payments.

 

(b)         Grantor shall comply with all of the terms and conditions of the
Condominium Documents.

 

(c)         Grantor shall not, without the prior written consent of Beneficiary,
provide its consent as a member of the Board of Directors (as defined in the
Declaration), or in any other capacity, for the Condominium, the Association,
its Board of Directors and/or its officers to:

 

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(1)         abandon or terminate the Condominium;

 

(2)         amend any or all of the Condominium Documents, in a manner that
would change the Allocated Interests (as defined in the Declaration) or the
basis upon which assessments are determined (except as expressly provided in
Sections 2.5, 9.3 and 9.8 of the Declaration);

 

(3)         relocate any of the unit boundaries and/or the Common Elements (as
defined in the Declaration);

 

(4)         permit the present Common Elements to be allocated to unit(s) as
Limited Common Elements or as Common Elements to be used by less than all unit
owners, as such terms are defined in the Condominium Documents;

 

(5)         apply insurance proceeds other than in accordance with the
provisions of this Deed of Trust after a casualty or condemnation unless
otherwise required by the Act; or

 

(6)         amend the amounts or types of insurance coverage obtained by Grantor
on behalf of itself, the Association or any unit owner, or to change the
insurance trustee, if any.

 

(d)         Upon request of Beneficiary, Grantor shall deliver to Beneficiary a
duly executed proxy, which proxy shall be irrevocable and coupled with an
interest, and which shall enable Beneficiary to cast the Grantor’s votes in the
Association with respect to (a) matters relating to those items set forth in
this Section 2.17, and (b) during the continuance of an Event of Default, all
Association matters, whether by meeting or otherwise. It is the intention of
Grantor and Beneficiary that Beneficiary shall hold such a proxy until the
Maturity Date.

 

(e)         Grantor shall have taken all steps necessary under the Condominium
Documents to cause Beneficiary to be a "Mortgagee" under the Declaration and the
Loan to be "Priority Lien Indebtedness" under the Declaration., and, to the
extent requested by Beneficiary, to cause the Association to provide Beneficiary
with the reports and notices provided for in the Declaration and to cause the
Association to provide Beneficiary with written notice of any complaints brought
against the Association, its Board of Directors, or the officers, employees or
agents in their capacities as such and/or the unit owners as members of the
Association.

 

(f)         Grantor agrees to execute, upon request of Beneficiary, any and all
amendments to the Loan Documents to correct omissions or inconsistencies due to
the existence and/or effect of the Act. In the event of any inconsistency
between the terms of the Loan Documents and the Condominium Documents, as
between Grantor and Beneficiary the terms of the Loan Documents shall control,
unless specifically prohibited by the Act.

 

(g)         In the event the Association fails at any time to maintain
satisfactory insurance coverages in amounts satisfactory to Beneficiary on the
Common Elements of the Condominium, Grantor, upon the request of Beneficiary,
shall obtain separate insurance coverage on the Common Elements as requested for
the benefit of Beneficiary, the Association and any other unit owner of the
Condominium.

 

(h)         Beneficiary shall be entitled and Grantor shall cause Beneficiary to
receive in a reasonably timely manner the following:

 

(1)         Copies of budgets, notices of assessment, or any other notices or
statements provided under the Declaration by the Board of Directors to the Owner
of the unit covered by the Mortgage;

 

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(2)         Any financial statements of the Association which are prepared for
the Association and distributed to the unit owners;

 

(3)         Copies of notices of meetings of the unit owners and the right to
designate a representative to attend such meetings;

 

(4)         Notice of the decision of the unit owners to make any material
amendment to the Declaration;

 

(5)         Notice of substantial damage to or destruction of any unit of the
Condominium or any part of the Common Elements;

 

(6)         Notice of the commencement of any condemnation or eminent domain
proceedings with respect to any part of the Condominium;

 

(7)         Notice of any default by the Grantor under the Condominium
Documents; and

 

(8)         The right to examine the books and records of the Board of Directors
at any reasonable time.

 

Residential Condominium

 

(i)         Grantor shall promptly pay, when due, all assessments, special
assessments, and other charges imposed by the Residential Association pursuant
to the provisions of the Residential Condominium Documents. Grantor, upon the
request of Beneficiary, shall produce reasonably satisfactory evidence of such
payments.

 

(j)         Grantor shall comply with all of the terms and conditions of the
Residential Condominium Documents.

 

(k)         Grantor shall not, to the extent applicable, without the prior
written consent of Beneficiary, provide its consent as a member of the
Residential Board of Directors (as defined in the Residential Declaration), or
in any other capacity, for the Residential Condominium, the Residential
Association, its Residential Board of Directors and/or its officers to:

 

(1)         abandon or terminate the Residential Condominium;

 

(2)         amend any or all of the Residential Condominium Documents, in a
manner that would change the Residential Allocated Interests (as defined in the
Residential Declaration) or the basis upon which assessments are determined
(except as expressly provided in the Residential Declaration);

 

(3)         relocate any of the unit boundaries and/or the Residential Common
Elements (as defined in the Residential Declaration);

 

(4)         permit the present Residential Common Elements to be allocated to
unit(s) as Residential Limited Common Elements or as Residential Common Elements
to be used by less than all unit owners, as such terms are defined in the
Residential Condominium Documents;

 

(5)         apply insurance proceeds other than in accordance with the
provisions of this Deed of Trust after a casualty or condemnation unless
otherwise required by the Act; or

 

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(6)         amend the amounts or types of insurance coverage obtained by Grantor
on behalf of itself, the Residential Association or any unit owner, or to change
the insurance trustee, if any.

 

(l)         Upon request of Beneficiary, Grantor shall deliver to Beneficiary a
duly executed proxy, which proxy shall be irrevocable and coupled with an
interest, and which shall enable Beneficiary to cast the Grantor’s votes in the
Residential Association with respect to (a) matters relating to those items set
forth in this Section 2.17(i)-(p), and (b) during the continuance of an Event of
Default, all Residential Association matters, whether by meeting or otherwise.
It is the intention of Grantor and Beneficiary that Beneficiary shall hold such
a proxy until the Maturity Date.

 

(m)         Grantor shall have taken all steps necessary under the Residential
Condominium Documents to cause Beneficiary to be a " Residential Mortgagee"
under the Residential Declaration and the Loan to be " Residential Priority Lien
Indebtedness" under the Residential Declaration., and, to the extent requested
by Beneficiary, to cause the Residential Association to provide Beneficiary with
the reports and notices provided for in the Residential Declaration and to cause
the Residential Association to provide Beneficiary with written notice of any
complaints brought against the Residential Association, its Residential Board of
Directors, or the officers, employees or agents in their capacities as such
and/or the unit owners as members of the Residential Association.

 

(n)         Grantor agrees to execute, upon request of Beneficiary, any and all
amendments to the Loan Documents to correct omissions or inconsistencies due to
the existence and/or effect of the Act. In the event of any inconsistency
between the terms of the Loan Documents and the Residential Condominium
Documents, as between Grantor and Beneficiary the terms of the Loan Documents
shall control, unless specifically prohibited by the Act.

 

(o)         In the event the Residential Association fails at any time to
maintain satisfactory insurance coverages in amounts satisfactory to Beneficiary
on the Residential Common Elements of the Residential Condominium, Grantor, upon
the request of Beneficiary, shall obtain separate insurance coverage on the
Residential Common Elements as requested for the benefit of Beneficiary, the
Residential Association and any other unit owner of the Residential Condominium.

 

(p)         Beneficiary shall be entitled and Grantor shall cause Beneficiary to
receive in a reasonably timely manner all items set forth in Section 13.1 of the
Residential Declaration.

 

2.18         Subordinate Mortgages. Beneficiary prohibits any other Lien on the
Property ("Subordinate Mortgage"), but if the prohibition on Grantor's execution
of any Subordinate Mortgage is unenforceable under applicable law, Grantor shall
not execute any Subordinate Mortgage unless Grantor has first delivered to
Beneficiary a written agreement, acceptable to Beneficiary, executed by the
holder of the Subordinate Mortgage which provides that (a) the Subordinate
Mortgage and the right to payment thereunder is and shall at all times remain
unconditionally subject and subordinate to this Deed of Trust and the right of
payment hereunder; (b) if any action or proceeding is commenced to foreclose the
Subordinate Mortgage, no Tenant under any Lease shall be named as a defendant in
such action or proceeding, nor shall such action or proceeding terminate any
Lease, without Beneficiary's prior written consent; (c) all Rents and Profits,
whether collected directly by the holder of the Subordinate Mortgage or through
a receiver, shall be held in trust for Beneficiary, paid over to the Beneficiary
and applied first to the Obligations hereunder, second to the payment of the
Impositions, and thereafter to payment of maintenance and operating costs
relating to the Property; and (d) the holder of the Subordinate Mortgage shall
give written notice to Beneficiary not later than ten (10) days prior to
commencing any judicial or nonjudicial action or proceeding to foreclose the
Subordinate Mortgage. Grantor acknowledges and agrees that Beneficiary's
determination as to whether or not to grant its consent to any proposed
Subordinate Mortgage shall be based upon, among other things, the debt coverage
ratio of the combined Obligations secured by this Deed of Trust and the
indebtedness to be secured by such proposed Subordinate Mortgage, in addition to
such other factors as Beneficiary, in its sole and absolute discretion, shall
determine to be relevant or appropriate.

 

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2.19         Fixtures. Notwithstanding Section 2.16 above, Grantor may from time
to time replace any Fixtures constituting a part of the Property, provided that
(a) the replacement property for such Fixtures is at least equivalent in value,
character, and quality to the Fixtures being replaced; (b) Grantor has good and
marketable title to such replacement property free and clear of all liens,
claims, and interests other than the lien of this Deed of Trust; and (c) this
Deed of Trust shall constitute a first lien on such replacement Property.
Furthermore, notwithstanding anything to the contrary set forth in this Deed of
Trust or the other Loan Documents, Grantor may, without further consent from
Beneficiary, lease, sell or otherwise transfer all Fixtures and personal
property located, as of the date of this Deed of Trust, in the space comprised
of approximately 8,247 square feet formerly occupied by Brackets Dallas LLC
pursuant to that certain Retail Lease dated June 17, 2010 between Grantor and
Brackets Dallas, LLC (which lease has been terminated), Notwithstanding anything
to the contrary set forth in this Deed of Trust or the other Loan Documents,
Grantor shall have the right to consummate Permitted Equipment Financing without
the consent of Beneficiary but shall, upon receipt of any funds arising out of
such lease, sale or transfer deposit, deposit such funds into the Cash Flow
Sweep Escrow.

 

2.20         Leasing. Grantor covenants and agrees that it shall not without the
prior written approval of Beneficiary in each instance, which approval may be
withheld in Beneficiary’s sole and absolute discretion: (a) enter into any new
Lease; (b) terminate, cancel, accept a surrender of, modify, amend or waive any
of the Leases (including but not limited to, any guaranty, letter of credit or
other credit support thereof); (c) collect rent under any of the Leases for more
than one (1) month in advance; (d) agree to subordinate any of the Leases to any
other Lien (excluding any subordination of Grantor's landlord lien rights to any
lender providing financing to a tenant, at Grantor's discretion or as required
under the applicable Lease); (e) discount the rent or other amounts payable
under any of the Leases or release any Tenant or any other party liable for the
performance of any Tenant's obligations under any of the Leases; (f) consent to
any sublease or to the assignment of all or part of any Tenant's interest under
the Leases; or (g) in any other manner impair Beneficiary's rights with respect
to or interest in the Rents and Profits. Any attempted entering into,
termination, cancellation, surrender, modification, amendment, or subordination
of a Lease in violation of this Section shall be void. Grantor shall give
immediate written notice to Beneficiary of (i) any material default by any
Tenant under any of the Leases; (ii) any notice received by Grantor from any
Tenant under any of the Leases claiming any default or breach by Grantor under
such Tenant's Lease; and (iii) any other default by Grantor under any of the
Leases of which Grantor is aware. Upon Beneficiary's request, Grantor shall
furnish to Beneficiary all information which Beneficiary may require regarding
Grantor's performance under any or all of the Leases. Beneficiary shall respond
to any request for consent under Section 2.20 within ten (10) days of receipt of
any such request for consent, which request must be accompanied by all
information and documentation that Beneficiary may reasonably require in order
to make its determination with respect to such request (“Accompanying
Information”), including without limitation, to the extent applicable, the
following: (i) a narrative from Grantor detailing the request for consent being
sought from Beneficiary, (ii) a copy of the proposed Lease or amendment,
termination, sublease or assignment of the existing Lease, or any letter of
intent, proposal or term sheet evidencing any of the foregoing, and (iii)
financial statements, credit checks, background searches and any other due
diligence in the possession of Grantor regarding any proposed tenant, guarantor,
sublessee or assignee. In the event that Beneficiary shall fail to respond to
any request for consent under Section 2.20 within such ten (10) day period,
Grantor may send a second request, which shall state in capitalized, bold faced
16 point type at the top of the first page that: “If Beneficiary fails to
approve or disapprove the request within ten (10) business days, such request
shall be deemed approved”, and if the Beneficiary shall fail to respond to such
second request within such ten (10) business day period, the request shall be
deemed approved by the Beneficiary, provided that the Grantor has provided
Beneficiary with the Accompanying Information.

 

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2.21         Leases. Upon Beneficiary's request, Grantor shall execute,
acknowledge and deliver to Beneficiary an absolute and unconditional assignment
acceptable to Beneficiary of all of Grantor's interests in all Leases and all
guaranties of and security for the Tenants' respective obligations under the
Leases.

 

2.22         Attornment at Beneficiary's Option. To the fullest extent allowed
by applicable law, each Tenant who enters into a Lease for the Property after
the date of recordation of this Deed of Trust (each such Lease is referred to as
a "Subordinate Lease") and who has not entered into a written non-disturbance
and attornment agreement with Beneficiary shall be deemed to have agreed to
attorn to Beneficiary and accept Beneficiary as the landlord under its Lease on
the terms of this Section. If Beneficiary acquires title to the Property by
judicial or nonjudicial foreclosure under this Deed of Trust or by deed in lieu
of foreclosure under this Deed of Trust, Beneficiary, at its option, shall have
the right to require any or all Tenants under Subordinate Leases to attorn to
and accept Beneficiary as the landlord under such Tenant's Subordinate Lease
(the "Attornment Option") by giving written notice to such Tenant within thirty
(30) days after the date on which Beneficiary acquires title to the Property
(the "Acquisition Date"). If Beneficiary exercises the Attornment Option with
respect to any Subordinate Lease, such attornment shall be effective and
self-operative as of the Acquisition Date without the execution of any further
documents on the part of the Tenant, Beneficiary, or any other party, and the
Tenant under the Subordinate Lease shall be bound to Beneficiary under all of
the terms, covenants, and conditions of the Subordinate Lease for the remaining
balance of the term thereof, with the same force and effect as if Beneficiary
were the landlord under such Lease. Whether or not Beneficiary exercises its
Attornment Option with respect to any Subordinate Lease, Beneficiary (a) shall
not be liable for any act or omission of any prior landlord under any
Subordinate Lease, including Grantor; (b) shall not be subject to any offset,
defense, or claim which any Tenant may have against any prior landlord under any
Subordinate Lease, including Grantor; (c) shall not be obligated (i) to return
any security deposit now or hereafter paid by any Tenant; (ii) to return any
prepaid rent or other amounts prepaid by any Tenant; or (iii) to grant any
Tenant a credit for any such security deposit, prepaid rent or other prepaid
amounts (excluding monthly rent and other charges which have not been prepaid
for more than one month in advance), except to the extent, if any, that
Beneficiary has actually and unconditionally received such security deposit,
prepaid rent or other prepaid amounts; and (d) shall not be obligated to
complete the construction of any or all improvements. Without limiting the terms
of this Section, upon Beneficiary's request, each Tenant under a Subordinate
Lease shall execute and deliver to Beneficiary any document which Beneficiary
determines to be necessary or appropriate to evidence such Tenant's attornment
to Beneficiary on the terms of this Section, including a new lease with
Beneficiary on the same terms and conditions as the Subordinate Lease for a term
equal to the unexpired term of the Subordinate Lease. Nothing contained in this
Section shall be deemed to obligate Beneficiary to recognize any Subordinate
Lease or accept an attornment by any Tenant upon Beneficiary's acquisition of
title to the Property. If Beneficiary elects not to exercise the Attornment
Option within the time period specified in this Section with respect to any
Subordinate Lease, such Subordinate Lease and all of the rights, privileges and
powers of the Tenant thereunder shall automatically terminate and shall be of no
further force or effect from and after the Acquisition Date. Beneficiary shall
provide nondisturbance protection to new Tenants at the Property pursuant to a
written agreement the form of which shall be acceptable to Beneficiary in its
reasonable discretion.

 

2.23         Compliance with Leases. Grantor (a) shall perform all obligations
of the landlord under the Leases and shall not permit or suffer any default by
Grantor under the terms of any of the Leases; and (b) shall diligently enforce
all remedies available to Grantor in the event of a default by any Tenant under
any of the Leases, except to the extent Grantor elects not to enforce such
remedies in its good faith business judgment.

 

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2.24        Franchise Agreements, Liquor Licenses and Operating Licenses.
Grantor covenants and agrees that it shall not without the prior written
approval of Beneficiary in each instance, which approval may be withheld in
Beneficiary’s sole and absolute discretion: (a) enter into any Franchise
Agreement; (b) terminate, cancel, modify, amend or waive any Franchise
Agreement; or (c) assign any Franchise Agreement to a Person other than
Beneficiary. Grantor (a) shall perform in all material respects all of its
obligations under any Franchise Agreement and shall not permit or suffer any
default by Grantor under the terms of any Franchise Agreement; and (b) shall
diligently enforce all remedies available to Grantor in the event of a default
by the franchisor under any Franchise Agreement. Within ten (10) days of
receipt, Grantor shall provide Beneficiary with copies of all material notices,
reports, correspondence and other documents received by Grantor from any
franchisor under any Franchise Agreement and Grantor shall contemporaneously
provide Beneficiary with copies of all material notices, inspection reports,
correspondence and other documents provided by Grantor to any franchisor under
any Franchise Agreement. Grantor shall obtain, maintain, keep current and in
full force and effect at all times or shall cause to be obtained, maintained,
kept current and in full force and effect at all times, all Liquor Licenses and
Operating Licenses and shall not, except to Beneficiary, assign, or relinquish
any rights under, the Liquor Licenses. Grantor hereby agrees that, upon an Event
of Default, upon request from Beneficiary, Grantor will cooperate and take such
actions or cause any third party which may hold the Liquor Licenses and
Operational Licenses to cooperate and take such actions, which may be necessary
in order to effectuate the transition of the operations and management of the
Property to Beneficiary, including without limitation, continuing to hold the
Liquor Licenses and Operational Licenses, which are not assignable, for the
benefit of Beneficiary until such time as Beneficiary can obtain such Liquor
Licenses and Operational Licenses in its own name or the name of a nominee.

 

2.25        Financial Statements; Books and Records; Estoppel Certificates and
Recertifications.

 

(a)         Financial Statements. Within ninety (90) days after the close of
Grantor's fiscal year, Grantor shall deliver to Beneficiary a balance sheet and
a statement of profit and loss for Grantor for such fiscal year. Within ninety
(90) days after the close of the fiscal year for (a) each Guarantor; and (b) the
managing member of Grantor, and (3) each Person who is an Affiliate with Grantor
and who occupies or operates a business on all or a part of the Property,
including without limitation any property manager or manager of food or beverage
services (each, together with Grantor, a “Reporting Entity” and collectively the
“Reporting Entities”), Grantor shall cause each such Reporting Entity to provide
Beneficiary with a balance sheet and a statement of profit and loss for such
Reporting Entity for such fiscal year. Within forty-five (45) days after the end
of each calendar quarter, Grantor shall cause each and every Guarantor to
provide Beneficiary with a balance sheet and a statement of profit and loss for
each such Guarantor for each such previous calendar quarter. Grantor shall cause
all financial statements furnished to Beneficiary under this Section to be
certified by the party to whom such statements apply. If any Reporting Entity
has audited financial statements prepared, Grantor shall cause a copy of such
audited financial statements to be delivered to Beneficiary within fifteen (15)
days after such statements are received by Grantor or the Person to whom such
statements apply. Grantor and each Reporting Entity shall, by submitting such
statements to Beneficiary, be conclusively deemed to have certified to
Beneficiary, in addition to any other certifications contained in such
statements, that the financial statements furnished to Beneficiary (i) are
accurate and complete in all material respects as of the dates appearing
thereon; (ii) present fairly the financial condition and results of operations
of the Person to whom the statements apply as of the date and for the period
shown in such statements; and (iii) disclose all suits, actions, proceedings and
contingent liabilities affecting the Person to whom the financial statements
apply. Grantor shall provide Beneficiary with such other information concerning
the financial condition and affairs of each Reporting Entity as Beneficiary may
reasonably require within ten (10) business days after Beneficiary's request for
such information. Grantor shall deliver to Beneficiary, or cause to be delivered
to Beneficiary, a complete and accurate copy of each federal income tax return
filed by Grantor and any Reporting Entity within thirty (30) days after the date
on which each such return is filed. For purposes of this Deed of Trust except
for in Sections 2.31 and 2.32 of this Deed of Trust, the term "Affiliate" shall
include the following Persons occupying or operating a business on all or part
of the Property: [1] any Person who directly or indirectly controls, Grantor,
the managing member of Grantor (“Manager”), or any Guarantor; [2] any Person,
ten percent (10%) or more of the direct or indirect outstanding securities or
equity, partnership or membership interests of which are held beneficially or of
record by Grantor, Manager or any Guarantor; [3] any shareholder, officer,
director, or agent of Grantor, Manager or any Guarantor; or [4] if Grantor,
Manager or any Guarantor, is an officer, director, or partner of any partnership
or corporation other than Grantor, the partnership or corporation for which such
Person acts in such capacity. For purposes of this Section, the term "control"
means the direct or indirect power or effective ability to cause the direction
of the management or policies of any Person, whether through the ownership of
voting securities, by contract, family relationship, or otherwise.

 

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(b)         Operating Statements and Budgets. Within forty-five (45) days after
the end of each calendar year, within forty five (45) days after the end of each
calendar quarter, within twenty (20) days after the end of each calendar month,
and within ten (10) business days after Beneficiary's request from time to time,
Grantor shall deliver to Beneficiary an accurate and complete operating
statement for the Property for the immediately preceding calendar year, quarter
or one (1) month period as applicable. All such operating statements shall be in
a form reasonably acceptable to Beneficiary and shall contain such detail as
Beneficiary may reasonably require. Each operating statement delivered by
Grantor to Beneficiary under this Section shall be signed by Grantor and shall
be certified as being accurate and complete in all material respects by Grantor.
No later than December 20 of the prior year, Grantor shall deliver to
Beneficiary a complete and materially accurate budget in form and substance
reasonably acceptable to Beneficiary, including without limitation for capital
items, for the Property for the following year. Within twenty (20) days after
the end of each calendar month, Grantor shall provide Beneficiary with bank
statements regarding the Replacement Reserve Fund.

 

(c)         Rental Statements. Within forty-five (45) days after the end of each
calendar year and after the end of each calendar quarter, and within ten (10)
business days after Beneficiary's request from time to time, Grantor shall
deliver to Beneficiary an accurate and complete rent statement for the Property
(the "Rent Statement") as of the last day of the most recent calendar month
showing (i) the leasing status of all retail space in the Buildings that is
leased or available for lease, including information as to whether such space is
vacant or subject to a Lease; and (ii) with respect to each retail space in the
Buildings that has been leased, [A] the name of the Tenant renting the space;
[B] the premises occupied by each of the Tenants; [C] the current monthly rent
and all other amounts payable by such Tenant under such Lease and delinquencies
related thereto; [D] the total amount of all prepaid rent received by Grantor
from such Tenant; [E] the total amount of any security deposit or other deposit
received by Grantor from such Tenant; [F] the expiration date of the term of
such Lease or nature of the tenancy under such Lease; [G] the rent payment dates
and the amount of any delinquent rent or other payments owing by such Tenant;
[H] extension or renewal options under the Leases; [I] any rent or other
concessions granted to, and any claims or offsets asserted by, any Tenants; and
[J] such other information as Beneficiary may reasonably designate. Each Rent
Statement delivered by Grantor to Beneficiary under this Section or
Section 2.25(e) below shall be signed by Grantor and shall be certified as being
accurate and complete by Grantor in all material respects. Grantor shall provide
Beneficiary with the Rent Statements described in this Section whether the
Buildings are occupied by one or more Affiliates, a single tenant or user, or
multiple tenants or users.

 

(d)         Books and Records. Grantor shall keep and maintain complete and
accurate Books and Records at Grantor's principal place of business, and Grantor
shall not remove the Books and Records from such location without Beneficiary's
prior written consent. Upon reasonable prior written notice and during regular
business hours, Beneficiary shall have access to the Books and Records at all
reasonable times for the purposes of examination, inspection, verification,
copying and for any other reasonable purpose. The Books and Records shall
include a complete and accurate record of all costs incurred and payments made
in connection with the design, construction, improvement, development, use,
ownership, operation, maintenance, repair, and marketing of the Property. If (i)
Grantor fails to provide Beneficiary with any annual financial statement or
income tax return, annual operating statement, or annual Rent Statement which
Grantor is required to deliver to Beneficiary under Sections 2.25(a), 2.25(b)
and 2.25(c) above within the required time period; and (ii) Grantor fails to
cure such failure within ten (10) days after the date on which written notice is
given by Beneficiary to Grantor notifying Grantor of such failure and of the
fact that a late charge will be imposed on Grantor if Grantor fails to cure the
failure within the time provided by this Section, then, in addition to all other
remedies that Beneficiary may have under this Deed of Trust, Grantor shall
immediately pay a late charge to Beneficiary equal to $500 to compensate
Beneficiary for administrative costs and expenses incurred in connection with
such late performance by Grantor. Grantor agrees that the actual damages
suffered by Beneficiary because of any failure to deliver the information
described in the immediately preceding sentence are extremely difficult and
impracticable to ascertain, and the late charge described in this Section
represents a reasonable attempt to fix such damages under the circumstances
existing at the time this Deed of Trust is executed. Beneficiary's acceptance of
any late charge shall not constitute a waiver of any breach by Grantor of its
obligation to provide the information required by Section 2.25 of this Deed of
Trust or any of the other terms of the Loan Documents and shall not affect
Beneficiary's right to enforce any of its rights and remedies against Grantor or
any other any Person under the Loan Documents.

 

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(e)         Additional Reports and Information. Within ten (10) business days
after Beneficiary's request from time to time, Grantor shall deliver to
Beneficiary such additional information available to Grantor and reports as
Beneficiary may reasonably request concerning the Property and the business and
affairs of Grantor or any Guarantor or Affiliate, that Beneficiary may
reasonably request, including (i) a balance sheet and profit and loss statement
for the most recent fiscal year and for the most recent fiscal year-to-date
quarterly period or periods of Grantor or any Guarantor and Manager, each of
which shall be certified and otherwise prepared in accordance with the
requirements of Section 2.25(a) above; (ii) monthly operating statements from
Grantor for the Property for each calendar month containing the same detailed
information required to be included in the operating statements described in
Section 2.25(b) above; (iii) monthly Rent Statements from Grantor for the
Property for each calendar month containing the same detailed information
required to be included in the Rent Statements described in Section 2.25(c)
above; (iv) copies of all financial statements and reports that Grantor sends to
its partners or shareholders, if any; (v) copies of all reports which are
available for public inspection or which Grantor is required to file with any
Governmental Authorities; (vi) a certificate executed by Grantor, dated within
ten (10) business days of the date of delivery of such certificate to
Beneficiary, stating that Grantor knows of no Event of Default under the Loan
Documents or, if an Event of Default exists, stating the nature of the default
and what action Grantor has taken or proposes to take with respect to such Event
of Default; (vii) to the extent in possession of Grantor, complete and accurate
as-built plans for all Buildings located on the Real Property; (viii) complete
and accurate copies of all Leases and any currently effective letters of intent
or proposals to lease all or part of the Property received or made by or behalf
of Grantor; and (ix) the most recent years' federal income tax returns for
Grantor or any Guarantor, General Partner, Manager, or Affiliate. All financial
statements that are required to be provided to Beneficiary under this
Section 2.25 shall be on Grantor's standard form of financial statement, unless
Beneficiary specifically requires or approves a reasonable alternate form, in
which case such financial statements shall be provided on such alternate form.
Beneficiary may exercise its rights to require additional reports and
information under this Section at any time and from time to time on such
periodic basis as Beneficiary shall determine to be necessary or appropriate,
including annual requests on the anniversary of the date of recordation of this
Deed of Trust. Additionally, Grantor shall provide to Beneficiary, within ten
(10) business days of receipt thereof, all material reports and information
received from, or with respect, to the Condominium and Association and the
franchisor under the Franchise Agreement.

 

(f)         Notice of Certain Matters. Grantor shall promptly notify Beneficiary
in writing of (i) any claim, demand, right, or Lien relating to the Property;
(ii) any material loss, depreciation, or adverse change in the value of the
Property and any other occurrence which may materially and adversely affect
Beneficiary's lien on the Property; (iii) any adverse change in Grantor's
ability to perform any or all of the Obligations; (iv) any event or condition
which constitutes an Event of Default; and (v) any dispute between Grantor and
any Governmental Authority relating to the Property which may have a material
adverse effect on the Property.

 

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(g)         Estoppel Certificates. Within twenty (20) business days after
Beneficiary's request (but no more than twice in any twelve month period),
Grantor shall deliver to Beneficiary a written statement signed and acknowledged
by Grantor stating (i) the amount of all monetary Obligations secured by this
Deed of Trust; (ii) to the knowledge of Grantor, whether any Default or Event of
Default has occurred hereunder; (iii) whether Grantor contends that any offsets
or defenses exist against the Obligations secured by this Deed of Trust and
whether Grantor has any known claims of any kind against Beneficiary; and
(iv) such other information with respect to the Obligations or the Loan
Documents as Beneficiary may reasonably require, including evidence acceptable
to Beneficiary of Grantor's compliance with any of the terms of the Loan
Documents which are specifically identified in Beneficiary's request. With
respect to all statements, information and reports that Grantor submits to
Beneficiary pursuant to this Deed of Trust, including pursuant to this
Section 2.25, Grantor shall be deemed conclusively to have certified to
Beneficiary, whether or not such statements, information or reports have been
signed by Grantor, that [A] such statements, information and reports are
accurate and complete in all material respects as of the date or for such
periods as may be shown in the statements, information, and reports; and
[B] such statements, information, and reports do not omit to state any facts or
other information so as to make the statements, information, or reports
submitted to Beneficiary misleading in any material respect.

 

(h)         Form of Statements. All financial statements and operating
statements required to be submitted pursuant to this Deed of Trust or any other
Loan Document shall be prepared in accordance with one of the following: (i)
GAAP, (ii) the Uniform System of Accounts for Hotels, current edition, or (iii)
tax accounting principles consistently applied. Beneficiary acknowledges that
some of the financial statements and operating statements required by this Deed
of Trust will be prepared by the unaffiliated entity that operates the Property
under the existing Franchise Agreement, and Beneficiary agrees that the form of
the financial statements or operating statements previously provided to Grantor
by such unaffiliated entity shall be acceptable to Beneficiary.

 

(i)         Recertification. Upon Beneficiary’s request from time to time during
the term of the Loan (but no more than twice in any twelve month period),
Grantor agrees deliver a certification confirming that, to the actual knowledge
of Grantor, the representations and warranties set forth in this Deed of Trust
remain true and correct as of the date of such certification(or updating any
such representations and warranties as appropriate) and confirming, to the
actually knowledge of Grantor, Grantor’s compliance with the covenants contained
in this Deed of Trust as of the date of such certification.

 

2.26         Inspection and Investigations. Beneficiary, if acting in good faith
and for a valid business purpose, shall have the right at all reasonable times
and upon reasonable prior written notice (a) to enter upon and inspect the
Property, including any entry which Beneficiary determines is necessary or
appropriate in connection with enforcing or exercising any right, remedy or
power available to or conferred on Beneficiary under the Loan Documents; (b) to
contact any Person to verify any information provided or disclosed by Grantor to
Beneficiary; and (c) to release such information regarding the Property,
Grantor, or the Obligations as Beneficiary may determine to be necessary or
appropriate in connection with enforcing or exercising any right, remedy or
power available to or conferred on Beneficiary under the Loan Documents. Without
limiting any other provision of the Loan Documents, Grantor, for itself and on
behalf of each Manager of Grantor, and each Guarantor, as applicable,
irrevocably authorizes Beneficiary, without further notice to or approval of
Grantor or any other Person, to request and obtain at any time and from time to
time (whether before or after the closing of the Loan) any and all information
and to make or have made any other investigative inquiries that Beneficiary
determines to be necessary or appropriate in connection with Beneficiary’s
origination, closing, servicing, administration, modification, extension,
renewal, transfer, or enforcement of the Loan or in connection with any of the
transactions that are the subject of the Loan Documents, including (i)
information bearing on the credit worthiness, credit standing, credit capacity,
character, general reputation, experience, or expertise of Grantor, each Manager
of Grantor, and each Guarantor, respectively, as applicable; and (ii) credit
reports and other reports from one or more credit reporting agencies or bureaus
bearing on the credit worthiness, credit standing, credit capacity, character,
general reputation, experience, or expertise of Grantor, each Manager of
Grantor, and each Guarantor, respectively, as applicable. Beneficiary shall have
no obligation or duty to inspect the Property or the Books and Records or to
perform any investigations, and all such inspections and investigations by
Beneficiary shall be for Beneficiary's sole benefit and not for the benefit of
Grantor or any other Person.

 

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2.27         Defense of Actions and Protection of Security by Grantor. Grantor
shall appear in and defend any action or proceeding commenced by any Person
other than Beneficiary which affects or which Beneficiary determines may affect
any or all of the following: (a) the Property; (b) the Insurance Claims,
Condemnation Claims, or Property Claims; (c) Beneficiary's, Trustee's or
Grantor's respective rights and obligations under the Loan Documents; (d) the
Obligations; or (e) any other transaction or matter which affects Beneficiary by
reason of its interest in the Property. Grantor shall promptly commence and
diligently prosecute all actions and proceedings which are necessary or
appropriate or which Beneficiary determines may be necessary or appropriate to
do any or all of the following: (i) prevent any damage, destruction, or injury
to the Property; (ii) enforce or recover upon the Insurance Claims, Condemnation
Claims or Property Claims or collect the Insurance Proceeds, Condemnation
Proceeds, or Property Proceeds; or (iii) to preserve, protect, maintain, and
defend the Property and Beneficiary's lien thereon.

 

2.28         Leasehold Estates.

 

(a)         Grantor's Obligations under Ground Lease. If this Deed of Trust
encumbers a Ground Lease, Grantor (i) shall perform all obligations of the
tenant under the Ground Lease and shall not permit or suffer any default by
Grantor under the terms of the Ground Lease; (ii) shall not amend, modify,
terminate, cancel, or surrender its interest in the Ground Lease without
Beneficiary's prior written consent; (iii) shall give immediate written notice
to Beneficiary of [1] any default by the landlord under the Ground Lease (the
"Lessor"); [2] any notice received by Grantor from the Lessor of any default by
Grantor under the Ground Lease; and [3] any other default by Grantor under the
Ground Lease of which Grantor is aware; and (iv) shall furnish to Beneficiary
all information which Beneficiary may require regarding Grantor's performance
under the Ground Lease.

 

(b)         Leasehold Estate. If this Deed of Trust encumbers a Ground Lease,
whenever the context of this Deed of Trust so requires, the term Property shall
be deemed to include the leasehold estate under the Ground Lease and any other
interest of Grantor in the real property which is the subject of the Ground
Lease.

 

(c)         Acquisition of Title. If this Deed of Trust encumbers a Ground
Lease, if Grantor shall, directly or indirectly, acquire fee title or any other
estate or interest in the real property which is the subject of the Ground
Lease, this Deed of Trust shall attach to and encumber such fee title or other
estate or interest without further action by Grantor, Trustee or Beneficiary.

 

(d)         No Merger. If this Deed of Trust encumbers a Ground Lease, there
shall be no merger of the leasehold estate arising under the Ground Lease with
all or any portion of the fee estate in the real property which is the subject
of the Ground Lease by reason of the fact that such leasehold estate may be held
by any Person who shall hold all or any portion of such fee estate in the real
property which is the subject of the Ground Lease, unless Beneficiary shall
expressly agree otherwise in writing.

 

(e)         Cure Rights. If this Deed of Trust encumbers a Ground Lease, if
Grantor fails to perform any of its obligations as tenant under the Ground
Lease, Beneficiary shall have the right to pay or perform any or all of such
obligations in such manner and to such extent as Beneficiary determines to be
necessary or appropriate to preserve or protect the security for the
Obligations. All costs and expenses, including without limitation attorneys'
fees, incurred by Beneficiary in connection with the payment or performance of
such obligations shall be payable by Grantor to Beneficiary on Beneficiary's
demand, shall bear interest at the rate specified in the Note from the date of
expenditure, and shall be deemed to be secured by this Deed of Trust and all
other agreements given by Grantor to secure the Note. Nothing contained in this
Deed of Trust shall be construed to obligate Beneficiary to pay or perform any
of Grantor's obligations under the Ground Lease, and no election by Beneficiary
to pay or perform such obligations shall constitute a waiver of any default by
Grantor under this Deed of Trust.

 

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2.29         Enforcement of Covenants and Restrictions. If any of the Covenants
and Restrictions apply to Persons owning or occupying real property which is
adjacent to or in the vicinity of the Property, Grantor shall diligently enforce
the Covenants and Restrictions against such Persons if (a) such Persons have
breached their obligations under the Covenants and Restrictions; and (b) such
breach has not been cured by such Persons within ninety (90) days after a
request by Beneficiary to Grantor to enforce the Covenants and Restrictions.

 

2.30         Agricultural Property. If the Property consists in whole or in part
of agricultural property, Grantor (a) shall farm the same using good and proper
practices of husbandry; (b) shall keep all Crops properly cultivated, irrigated,
fertilized, sprayed, fumigated and maintained; and (c) shall promptly replace
all dead or unproductive crops, trees or vines.

 

2.31         Covenants with Respect to Special Purpose Entity. Grantor hereby
represents, warrants and covenants, as of the date hereof and until such time as
the Loan is paid in full, that Grantor:

 

(a)         shall not engage and will not engage, either directly or indirectly,
in any business other than the ownership, management, operation and maintenance
of the Property and activities incidental thereto;

 

(b)         shall not own and will not own any asset other than (i) the
Property, and (ii) such incidental personal property necessary for the operation
of the Property;

 

(c)         shall not liquidate, terminate or dissolve (or suffer any
liquidation, termination or dissolution) in whole or in part, or enter into any
transaction of merger or consolidation or acquire by purchase or otherwise all
or substantially all the business or assets of, or any stock or other evidence
of beneficial ownership of any entity nor has Grantor heretofore done any of the
foregoing;

 

(d)         has not incurred and shall not incur any debt, secured or unsecured,
direct or contingent (including, but not limited to, guaranteeing any
obligation), other than the Permitted Indebtedness;

 

(e)         shall not, nor shall any partner, limited or general, member or
shareholder thereof, as applicable, amend, modify or otherwise change its
partnership certificate, partnership agreement, articles of incorporation,
by-laws, operating agreement, articles of organization, or other formation
agreement or document, as applicable, in any manner which adversely affects
Grantor’s existence as a special purpose entity;

 

(f)         Intentionally omitted;

 

(g)         shall maintain correct and complete financial statements, accounts,
books and records and other entity documents separate from those of any other
Person, it being agreed that Grantor shall prepare unaudited quarterly and
annual financial statements; provided, however, that (i) the financial
statements of Grantor may be included in the consolidated financial statements
of another Person in accordance with GAAP, provided that in each case, such
financial statements shall reflect that such Person is a separate member of such
consolidated group; and (ii) provided further that if Grantor is a so-called
“disregarded entity” under applicable law for tax purposes, and such entity is
required or permitted to be included in a consolidated return of another entity,
then such entity may be included in the consolidated return of such other
entity;

 

34

 

 

(h)         shall maintain its own separate bank accounts, payroll and correct,
complete and separate books of account, subject to the proviso in Section
2.31(g) above;

 

(i)         shall file or cause to be filed its own separate tax returns,
subject to the proviso in Section 2.31(g) above;

 

(j)         shall hold itself out to the public (including any of its
Affiliates’ creditors) under Grantor’s own name (or its trade name) and as a
separate and distinct entity and not as a department, division or otherwise of
any Affiliate;

 

(k)         shall observe all customary formalities regarding the existence of
Grantor, including holding meetings to the extent required by Grantor’s
organizational documents and maintaining current and accurate minute books
separate from those of any Affiliate of same;

 

(l)         shall hold title to its assets in its own name and act solely in its
own name and through its own duly authorized officers and agents. No entity that
is an Affiliate of Grantor shall be appointed or act as agent of Grantor, other
than, as applicable, Manager or an asset manager or property manager with
respect to the Property;

 

(m)         shall make investments in the name of Grantor directly by Grantor or
on its behalf by brokers engaged and paid by Grantor or its agents;

 

(n)         except as set forth in the Loan Documents, shall not guarantee,
pledge or assume or hold itself out or permit itself to be held out as having
guaranteed, pledged or assumed any liabilities or obligations of any partner,
member or shareholder, as applicable, or any Affiliate of Grantor, nor shall it
make any loan, except as permitted in this Deed of Trust;

 

(o)         is and will be solvent to the extent there exists sufficient cash
flow from the Property to remain solvent based on the capitalization of Grantor
as of the date of this Deed of Trust (provided that neither the foregoing clause
nor any other provision of the Loan Documents shall be construed to require that
any owner of an interest in Grantor or any other Person make capital
contributions or loans to Grantor or otherwise invest in Grantor or any of its
members, and provided further that the foregoing clause shall not be breached
solely by reason of any owner of interests in Grantor having a negative capital
account);

 

(p)         shall separately identify, maintain and segregate its assets.
Grantor’s assets shall at all times be held by or on behalf of Grantor and if
held on behalf of the Grantor by another entity, shall at all times be kept
identifiable (in accordance with customary usages) as assets owned by Grantor.
This restriction requires, among other things, that (i) Grantor funds shall be
deposited or invested in Grantor’s name, (ii) Grantor funds shall not be
commingled with the funds of any Affiliate or any other person, (iii) Grantor
shall maintain all accounts in its own name and with its own tax identification
number, separate from those of any Affiliate or any other person and
(iv) Grantor funds shall be used only for the business of Grantor;

 

(q)         shall maintain its assets in such a manner that it is not costly or
difficult to segregate, ascertain or identify its individual assets from those
of any Affiliate or other person;

 

(r)         shall pay or cause to be paid its own liabilities and expenses of
any kind, only out of its own separate funds and assets, except as otherwise
expressly permitted under this Deed of Trust;

 

35

 

  

(s)          shall at all times be adequately capitalized for the normal
obligations reasonably foreseeable in a business of its size and character and
in light of the transactions contemplated in its business operations, to the
extent there exists sufficient cash flow from the Property to do so based on the
capitalization of Grantor as of the date of this Deed of Trust (provided that
neither the foregoing clause nor any other provision of the Loan Documents shall
be construed to require that any owner of an interest in Grantor or any other
Person make capital contributions or loans to Grantor or otherwise invest in
Grantor or any member in Grantor, and provided further that the foregoing clause
shall not be breached solely by reason of any owner of interest in Grantor
having a negative capital account);

 

(t)          shall not do any act which would make it impossible to carry on the
ordinary business of Grantor;

 

(u)          shall reflect Grantor’s ownership interest in all data and records
(including computer records) used by the Grantor or any Affiliate of same in the
collection and administration of any loan;

 

(v)         shall not invest any of Grantor’s funds in securities issued by, nor
shall Grantor acquire the indebtedness or obligation of, any Affiliate or own
any subsidiary;

 

(w)          shall maintain an arm’s length relationship with each of its
Affiliates, however, the foregoing shall not preclude Grantor from being a party
to any transaction with its partners, members, shareholders or Affiliates made
in the ordinary course of its business and on terms which are intrinsically fair
and are no less favorable to it than would be obtained in a comparable
arm’s-length transaction with an unrelated third party;

 

(x)          shall correct any misunderstanding that is known by Grantor
regarding its name or separate identity;

 

(y)          has and shall maintain a stated purpose, as set forth in its
organizational documents, that is expressly limited to owning, operating, using
and maintaining the Property and activities necessary and incidental thereto;

 

2.32         Covenants Regarding SPC ENTITY. By execution hereof, Behringer
Harvard Mockingbird Commons GP, LLC, a Texas limited liability company
(including any and all successors and assigns, the "SPC Entity"), hereby
represents, warrants and covenants, as of the date hereof and until such time as
the Loan is paid in full, that the SPC Entity:

 

(a)          shall at all times act as the Manager of Grantor with all of the
rights, powers, obligations and liabilities of Manager under the limited
liability company agreement of Grantor and shall take any and all actions and do
any and all things necessary or appropriate to the accomplishment of same and
will engage in no other business;

 

(b)          makes each of the representations, warranties and covenants set
forth in Section 2.31 (with the exception of the provisions of clauses (a) and
(g) of such section) as to itself as if fully set forth in this Section 2.32 and
with respect to its role as Manager of Grantor as though such representations,
warranties and covenants were set forth fully herein;

 

(c)          shall not engage and will not engage, either directly or
indirectly, in any business other than the ownership of the equity interests in
Grantor;

 

(d)          shall not own and will not own any asset other than the equity
interests in Grantor;

 

36

 

 

(e)          shall not, without the prior written vote of one hundred percent
(100%) of its partners, members or directors, as the case may be and including
the affirmative vote of the Independent Director, institute, consent, file or
take any action in furtherance of any Insolvency Action as to itself or Grantor;
and

 

(f)          shall have at least one (1) Independent Director. In the event of
the death, incapacity, resignation or removal of an Independent Director, a
replacement Independent Director shall promptly be appointed and no action
requiring the consent of the Independent Director shall be taken until a
replacement Independent Director has been appointed. In addition, no Independent
Director may be removed unless his or her successor satisfying the definition
hereunder has been appointed.

 

"Affiliate," for purposes of Sections 2.31 and 2.32, means any person or entity
which directly or indirectly through one or more intermediaries controls, is
controlled by or is under common control with a specified person or entity. For
purposes hereof, the terms "control", "controlled", or "controlling" with
respect to a specified person or entity shall include, without limitation, (i)
the ownership, control or power to vote ten percent (10%) or more of (x) the
outstanding shares of any class of voting securities or (y) beneficial
interests, of any such person or entity, as the case may be, directly or
indirectly, or acting through one or more persons or entities, (ii) the control
in any manner over such person or entity or the election of more than one
director or trustee (or persons exercising similar functions) of such person or
entity, or (iii) the power to exercise, directly or indirectly, control over the
management or policies of such person or entity.

 

2.33         Intentionally Omitted.

 

2.34         OFAC Lists. That (i) no Related Entity is (and to Beneficiary’s
knowledge after diligent inquiry, no other Person holding any legal or
beneficial interest whatsoever in Beneficiary or Guarantor, directly or
indirectly, is) included in, owned by, Controlled by, acting for or on behalf
of, providing assistance, support, sponsorship, or services of any kind to, or
otherwise associated with any of the Persons referred to or described in any
list of persons, entities, and governments issued by the Office of Foreign
Assets Control of the United States Department of the Treasury ("OFAC") pursuant
to Executive Order 13224 – Blocking Property and Prohibiting Transactions with
Persons Who Commit, Threaten to Commit, or Support Terrorism, as amended
("Executive Order 13224"), or any similar list issued by OFAC or any other
department or agency of the United States of America (collectively, the "OFAC
Lists"), and (ii) none of the Related Entities are Controlled by, acting for or
on behalf of, providing assistance, support, sponsorship, or services of any
kind to, or otherwise associated with any of the Persons referred to or
described in any list of persons, entities, and governments issued by OFAC
pursuant to Executive Order 13224, or any other OFAC Lists. "Related Entity"
shall mean Beneficiary, Guarantor, or any general partner, manager or managing
member of or Person having a direct or indirect interest in, Beneficiary or
Guarantor, and any other Affiliate of Beneficiary or Guarantor which directly or
indirectly owns any legal or beneficial interest in Beneficiary.

 

2.35         Compliance With Anti-Terrorism Regulations.

 

(1)         Grantor hereby covenants and agrees that (i) no Related Entity will
be included in, owned by, controlled by, act for or on behalf of, provide
assistance, support, sponsorship, or services of any kind to, or otherwise
associate with any of the Persons referred to or described in any list of
persons, entities, and governments issued by OFAC pursuant to Executive Order
13224 or any other OFAC Lists, and (ii) none of the Related Entities will be
controlled by, act for or on behalf of, provide assistance, support,
sponsorship, or services of any kind to, or otherwise associate with any of the
Persons referred to or described in any list of persons, entities, and
governments issued by OFAC pursuant to Executive Order 13224, or any other OFAC
Lists.

 

37

 

 

(2)         Grantor hereby covenants and agrees that it will comply at all times
with the requirements of Executive Order 13224; the International Emergency
Economic Powers Act, 50 U.S.C. Sections 1701-06; the United and Strengthening
America by Providing Appropriate Tools Required to Intercept and Obstruct
Terrorism Act of 2001, Pub. L. 107-56; the Iraqi Sanctions Act, Pub. L. 101-513,
104 Stat. 2047-55; the United Nations Participation Act, 22 U.S.C. Section 287c;
the Antiterrorism and Effective Death Penalty Act, (enacting 8 U.S.C.
Section 219, 18 U.S.C. Section 2332d, and 18 U.S.C. Section 2339b); the
International Security and Development Cooperation Act, 22 U.S.C. Section 2349
aa-9; the Terrorism Sanctions Regulations, 31 C.F.R. Part 595; the Terrorism
List Governments Sanctions Regulations, 31 C.F.R. Part 596; and the Foreign
Terrorist Organizations Sanctions Regulations, 31 C.F.R. Part 597 and any
similar laws are regulation currently in force or hereafter enacted
(collectively, the "Anti-Terrorism Regulations").

 

(3)         Grantor hereby covenants and agrees that if it becomes aware or
receives any notice that any Related Entity is named on any of the OFAC Lists
(such occurrence, an "OFAC Violation"), Grantor will immediately (i) give notice
to Beneficiary of such OFAC Violation, and (ii) comply with all laws applicable
to such OFAC Violation (regardless of whether the party included on any of the
OFAC Lists is located within the jurisdiction of the United States of America),
including, without limitation, the Anti-Terrorism Regulations, and Grantor
hereby authorizes and consents to Beneficiary’s taking any and all steps
Beneficiary deems necessary, in its sole discretion, to comply with all laws
applicable to any such OFAC Violation, including, without limitation, the
requirements of the Anti-Terrorism Regulations (including the "freezing" and/or
"blocking" of assets).

 

2.36         Property Management. Any manager of the Property (“Property
Manager”) and management agreement shall be acceptable to Beneficiary, in its
sole absolute discretion. Subject to the terms of the Franchise Agreement which
is approved by Beneficiary as of the date hereof, Beneficiary may require
Grantor to terminate and replace Property Manager with an independent third
party manager acceptable to Beneficiary on terms and conditions acceptable to
Beneficiary upon the occurrence of (i) an Event of Default, or (ii) a default by
Property Manager under the management agreement, beyond all notice and cure
periods.

 

2.37         Loan Service Coverage Ratio. The Property shall have achieved at
the closing of the Loan, a Loan Service Coverage Ratio (as hereinafter defined)
(as determined by Beneficiary) of not less than 1.30x. "Loan Service Coverage
Ratio" means, for any twelve month period, the ratio calculated by dividing (i)
the trailing twelve (12) months Net Operating Income (as underwritten and
determined by Beneficiary), less a Reserve calculated by taking four percent
(4%) of the Gross Revenues (as defined below) for the Property for such twelve
(12) month period and less the management fees actually paid by Grantor during
such twelve (12) month period pursuant to any management agreement approved by
Beneficiary in accordance with this Mortgage, by the (ii) Loan Service for such
twelve month period. "Net Operating Income" or "NOI" means, for any given
period, Gross Revenue for such period, less Operating Expenses for such period,
all as underwritten and determined in accordance with Beneficiary’s standard
practices. "Loan Service" means, for any period, the principal (if any),
interest, Default Rate interest and Late Charges that accrue or are due and
payable in accordance with the Loan Documents during such period. "Gross
Revenue" means, for any given period, the gross revenues for the Property from
any source collected by Grantor for such period (or, for future periods,
reasonably expected to be collected), including room revenue, rents and expense
reimbursements. Gross Revenue shall not include (i) any revenues determined by
Beneficiary in its reasonable discretion to be extraordinary or one-time sources
of revenue, (ii) any future revenues from any Tenant that is the subject of a
bankruptcy or insolvency proceeding, unless such Tenant has affirmed its Lease
at the Property, (iii) any revenues derived from the sales of furniture,
fixtures and equipment, (iv) interest income, (v) disbursements from the
Reserves, (vi) insurance proceeds or condemnation awards, and (vii) lease
termination payments (unless amortized over the duration of the term remaining
under the applicable Lease at the time of termination). "Operating Expenses"
means, for any given period, all bona fide, normal, customary and reasonable
operating expenses of the Property (other than any operating expenses directly
paid by Tenants) actually paid or accrued by Grantor during such period, which
shall exclude Loan Service and payments by Grantor into the Impound Account but
shall include Taxes, insurance, utilities, and management fees. Grantor
acknowledges and agrees that the Gross Revenues and Operating Expenses as shown
on Beneficiary’s Underwriting Analysis provided to Grantor on the date of
Closing shall be conclusive for all determinations and purposes of methodology
or otherwise under this Section 2.37, absent manifest error.

 

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2.38         Right to Contest. Notwithstanding anything to the contrary
contained in this Deed of Trust or the other Loan Documents, Grantor shall not
be required to (a) pay any Impositions or other charge, or (b) comply with any
Governmental Requirement, Contract, Covenant and Restriction or other obligation
to a third party, so long as (1) the Borrower shall (i) contest, in good faith,
the existence, amount or the validity thereof, the amount of damages caused
thereby or the extent of its liability therefor, by appropriate proceedings
which operate during the pendency thereof to prevent (A) the sale, forfeiture or
loss of, or damage to, the Property or any part thereof, and (B) any material
interference with the use or occupancy of the Property or any part thereof, and
(ii) shall give such security to Beneficiary as may reasonably be required by
Beneficiary to ensure compliance with the foregoing provisions of this Section
2.37 and (2) there shall be no enforcement action, proceeding or lawsuit
commenced with respect to the item being contested. Grantor shall give prompt
written notice to Beneficiary of the commencement of any contest referred to in
this Section 2.37.

 

ARTICLE 3

 

EVENTS OF DEFAULT

 

Beneficiary, at its option, shall have the right to declare Grantor to be in
default under this Deed of Trust and the other Loan Documents upon the
occurrence of any or all of the following events (each an "Event of Default"):

 

3.1           Payment of Note and Other Monetary Obligations. If Grantor fails
to pay any of its indebtedness under the Note or perform any of its other
obligations under the Loan Documents requiring the payment of money to
Beneficiary or any third Person when due;

 

3.2           Performance of Non-Monetary Obligations Under Other Loan
Documents. If (a) Grantor fails to perform any of its non-monetary obligations
to Beneficiary or any third Person under any of the Loan Documents when due; and
(b) Grantor fails to diligently complete a cure of its breach of such
non-monetary obligation as soon as reasonably practicable after written notice
by Beneficiary to Grantor setting forth such non-monetary breach, but in any
event within thirty (30) days after such notice is given; provided, however,
that the thirty (30) day cure period contained in this Section 3.2 shall not be
deemed to apply if Grantor commits more than two (2) non-monetary breaches of
the same covenant or obligation within any twelve (12) calendar month period.
For purposes of this Section 3.2, the term "non-monetary obligation" means any
non-monetary obligation of Grantor under any of the terms of the Loan Documents,
the breach of which is reasonably susceptible to being cured by Grantor. Without
limiting the generality of the immediately preceding sentence, a non-monetary
obligation shall not include any of Grantor’s obligations to make payments of
principal, interest, or other amounts under the terms of the Note or any of the
other Loan Documents. Without limiting any of the terms of this Section 3.2, the
cure provision contained in this Section 3.2 (the "Cure Provision") shall not
apply with respect to any breach of Sections 2.16, 2.31, 2.32, 2.34 or 2.35 of
this Deed of Trust. Notwithstanding anything to the contrary contained in this
Section 3.2 or Section 3.1 above, if Grantor breaches any of the terms of the
Loan Documents, and if Beneficiary, in its good faith business judgment,
determines that such breach impairs Beneficiary’s security for the Loan,
Beneficiary, immediately upon the occurrence of any such breach, shall have the
right to take such actions and exercise such remedies under the Loan Documents
as Beneficiary may in good faith determine to be necessary or appropriate to
avoid such impairment. The preceding sentence is specifically intended, among
other things, to grant Beneficiary the right to immediately obtain fire and
extended coverage and other forms of insurance with respect to the Property if
Grantor fails to obtain or maintain any such insurance in effect in accordance
with the terms of the Loan Documents, notwithstanding the existence of the Cure
Provision or any other cure period in favor of Grantor;

 

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3.3           Intentionally Deleted.

 

3.4           Misrepresentation. If any request, statement, information,
certification, or representation, whether written or oral, submitted or made by
Grantor to Beneficiary in connection with the Loan or any other extension of
credit by Beneficiary to Grantor is false or misleading in any material respect;

 

3.5           Insolvency of Grantor. If (a) a petition is filed by or against
Grantor under the federal bankruptcy laws or any other applicable federal or
state bankruptcy, insolvency or similar law; (b) a receiver, liquidator,
trustee, custodian, sequestrator, or other similar official is appointed to take
possession of Grantor or the Property, or Grantor consents to such appointment;
(c) Grantor makes an assignment for the benefit of creditors or fails generally
to pay its debts as they become due; or (d) Grantor takes any action in
furtherance of any of the foregoing; or (e) Grantor takes any action in
furtherance, provided, however, that Grantor shall have forty-five (45) days
within which to cause any involuntary bankruptcy proceeding to be dismissed or
the involuntary appointment of any receiver, liquidator, trustee, custodian, or
sequestrator to be discharged. The cure provision contained in this Section
shall be in lieu of, and not in addition to, any and all other cure provisions
contained in the Loan Documents;

 

3.6           Insolvency of Other Persons. If any of the events specified in
parts (a) through (e) of Section 3.5 above occurs with respect to (a) any
General Partner of Grantor, if Grantor is a partnership; (b) any of the
Guarantors; or (c) any Manager of Grantor, if Grantor is a limited liability
company;

 

3.7           Performance of Obligations to Senior Lien Holders. If Grantor
fails to pay any of its indebtedness or to perform any of its obligations under
any agreement between Grantor and any other Person who holds a Lien senior to
this Deed of Trust when due, provided Beneficiary determines in good faith that
such failure has an actual or potential material adverse effect on the Property
or Grantor's ability to perform any or all of the Obligations. Nothing contained
in this Section constitutes or shall be construed as Beneficiary’s consent to
any Lien being placed on the Property which is senior to the lien of this Deed
of Trust;

 

3.8           Attachment. If all or any material part of the assets of Grantor,
any of the Guarantors, or any General Partner or Manager of Grantor are
attached, seized, subjected to a writ or levied upon by any court process and
Grantor fails to cause such attachment, seizure, writ or levy to be fully
released or removed within sixty (60) days after the occurrence of such event.
The cure provision contained in this Section shall be in lieu of, and not in
addition to, any and all other cure periods contained in the Loan Documents;

 

3.9           Injunctions. If a court order is entered against Grantor, any of
the Guarantors, or any General Partner or Manager of Grantor enjoining the
conduct of all or part of such Person's business and Grantor fails to cause such
injunction to be fully stayed, dissolved or removed within sixty (60) days after
such order is entered. The cure provision contained in this Section shall be in
lieu of, and not in addition to, any and all other cure periods contained in the
Loan Documents;

 

3.10         Dissolution. If Grantor, any of the Guarantors, or any General
Partner or Manager of Grantor is a corporation, partnership, limited liability
company or trust, the dissolution, liquidation, or termination of existence of
such Person;

 

3.11         Transfers of Partnership Interests. If Grantor is a partnership
(a) the admission, withdrawal, death, retirement, or removal of any General
Partner of Grantor, unless occurring as a result of a Permitted Transfer; or
(b) a Transfer made not in accordance with this Deed of Trust;

 

3.12         Transfers of Corporate Ownership. If Grantor is a corporation, a
Transfer made not in accordance with this Deed of Trust;

 

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3.13         Transfer of Manager’s Interests. If Grantor is a limited liability
company, (a) the appointment, withdrawal, death, retirement or removal of any
Manager of Grantor, unless occurring as a result of a Permitted Transfer; or
(b) a Transfer made not in accordance with this Deed of Trust;

 

3.14         Death; Incompetency. If Grantor, any of the Guarantors, or any
General Partner or Manager of Grantor is an individual, the death or
incompetency of such Person, except where applicable law limits or prohibits
Beneficiary's declaration of a default based on such occurrences; provided,
however, that Beneficiary shall not declare an Event of Default to exist based
solely on the death or mental incompetence of any individual Guarantor, General
Partner, or Manager if, within ninety (90) days after the occurrence of such
event, (a) in the case of the death or mental incompetence of a Guarantor,
Grantor causes a substitute guarantor to execute and deliver to Beneficiary a
continuing guaranty in the form previously executed by the affected Guarantor,
and Beneficiary in good faith determines that such substitute guarantor’s
financial condition is comparable to that of the affected Guarantor and that
such substitute Guarantor is otherwise reasonably acceptable to Beneficiary; and
(b) in the case of the death or mental incompetence of a General Partner or
Manager, Grantor causes a substitute general partner or manager, as applicable,
to be admitted to Grantor or appointed, and Beneficiary in good faith determines
that the financial condition, credit history, character, experience, ability and
expertise of such substitute general partner or manager are comparable to the
affected General Partner or Manager and that such substitute general partner or
manager is otherwise reasonably acceptable to Beneficiary;

 

3.15         Impairment of Priority. If (i) the priority of this Deed of Trust
or Beneficiary's security interest under any of the other agreements securing
any or all of the Obligations is impaired for any reason; or (ii) the value of
the Property has deteriorated, declined or depreciated as a result of any
intentional tortuous act or omission by Grantor;

 

3.16         Condemnation. If any Condemnation Proceeding or action is pending
or commenced by any Governmental Authority with respect to all or any material
part of the Property, and such action or proceeding results in the Governmental
Authority acquiring title to or possession of all or any material part of the
Property;

 

3.17         Condominium. A default or breach by Grantor under any of the
provisions of the Condominium Documents or Residential Condominium Documents.

 

3.18         Failure to Repair Casualty. If there is an uninsured casualty with
respect to the Property, and Grantor (a) fails to commence repairs and
reconstruction of the Property within sixty (60) days after such damage; or
(b) thereafter fails to diligently prosecute such repairs and reconstruction to
completion;

 

3.19         Transfers of Property. If any Transfer (other than a Permitted
Transfer) occurs not in strict accordance with the provisions of Section 2.16 of
this Deed of Trust;

 

3.20         Default by Guarantors. If any Guarantor fails to pay any of its
indebtedness or perform any of its obligations under any of the Guaranties when
due or the revocation, limitation or termination or attempted revocation,
limitation or termination of any of the obligations of any Guarantor under any
of the Guaranties, except in accordance with the express written terms of the
Guaranties; or

 

3.21         Misrepresentation by Guarantors. If any request, statement,
information, certification, or representation, whether written or oral,
submitted or made by any Guarantor to Beneficiary in connection with the Loan or
any other extension of credit by Beneficiary to Grantor or such Guarantor is
false or misleading in any material respect.

 

41

 

 

ARTICLE 4

 

REMEDIES

 

Upon the occurrence and during the continuance of an Event of Default under this
Deed of Trust pursuant to Article 3 above or upon Beneficiary’s election to
declare a default under the other Loan Documents, Grantor shall be deemed to be
in default under this Deed of Trust and the other Loan Documents, whichever the
case may be, and Beneficiary shall have the following rights and remedies:

 

4.1           Acceleration. Beneficiary shall have the right to declare any or
all of the Obligations to be immediately due and payable, including the entire
principal amount and all accrued but unpaid interest under the Note and all
Future Advances, and notwithstanding the stated maturity of the Note or any
Future Advances, such Obligations shall thereupon be immediately due and
payable.

 

4.2           Entry by Beneficiary. Whether or not Beneficiary elects to
accelerate any or all of the Obligations under Section 4.1 above, Beneficiary
personally, or by its agents or attorneys, may enter into and upon all or any
part of the Property, and each and every part thereof, and may exclude Grantor,
its agents and servants wholly therefrom and, having and holding the same, may
use, occupy and control the Property, either personally or by its
superintendents, Manager, agents, servants, attorneys or receivers; and upon
every such entry Beneficiary, at the expense of the Property or Grantor, from
time to time, either by purchase, repairs or construction, may maintain and
restore the Property, and may complete the construction or development of any
improvements and in the course of such completion may make such changes in the
contemplated improvements as it may deem desirable and may insure the same; and
likewise, from time to time, at the expense of the Property or Grantor,
Beneficiary may make all necessary or proper repairs, renewals and replacements
and such useful alterations, additions, betterments and improvements thereto and
thereon as may seem advisable to Beneficiary; and in every such case Beneficiary
shall have the right to manage and operate the Property and exercise all rights
and powers of Grantor with respect thereto either in the name of Grantor or
otherwise as it shall deem best, and Grantor shall indemnify, defend, and hold
Beneficiary harmless of and from any claims, expenses, demands and/or liability
arising therefrom; and Beneficiary shall be entitled to collect and receive all
earnings, revenues, rents, issues, profits and income of the Property and every
part thereof; and after deducting the expenses of conducting the business
thereof and of all maintenance, repairs, renewals, replacements, alterations,
betterments and improvements and amounts necessary to pay for taxes,
assessments, insurance and prior or other proper charges on the Property, or any
part thereof, as well as just and reasonable compensation for the services of
Beneficiary and for all attorneys, counsel, agents, clerks, servants and other
employees or representatives by it properly engaged and employed, Beneficiary
shall apply the monies arising as aforesaid, first, to the payment of the
Obligations, when and as the same shall become payable and, second, to the
payment of any other sums required to be paid by Grantor under this Deed of
Trust or the other Loan Documents. If Beneficiary elects to take possession of
the Property or to take any or all of the other actions described in this
Section by court process, Grantor irrevocably and unconditionally agrees that a
receiver may be appointed by a court for such purpose pursuant to Section 4.6
below.

 

4.3           Judicial Action. Beneficiary shall have the right to commence an
action or proceeding to foreclose this Deed of Trust and to enforce any or all
of the terms of the Loan Documents, including without limitation, specific
performance under this Deed of Trust.

 

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4.4           Foreclosure by Power of Sale.

 

(a)          Declaration and Notice of Default. Beneficiary shall have the right
(i) to cause the Property to be sold under the power of sale contained in this
Deed of Trust in any manner permitted by applicable law; and (ii) to deliver to
Trustee a written declaration of default and demand for sale and a written
notice of default and election to cause the Property to be sold, which notice
the Trustee or Beneficiary shall cause to be recorded as required by law. Upon
the expiration of such period of time after the recordation of such notice of
default and election to sell and the giving of such notice of sale as may then
be required by law, and without the necessity of any demand on Grantor, Trustee,
at the time and place specified in the notice of sale, shall sell the Property
at public auction to the highest bidder for cash in lawful money of the United
States payable at the time of sale.

 

(b)          Postponements; Multiple Parcels. To the extent permitted by law,
Trustee may, and upon request of Beneficiary shall, from time to time, postpone
any sale hereunder by public announcement at the time and place noticed for such
sale or may, in its discretion, give a new notice of sale. If the Property
consists of several lots, parcels or items of property, Beneficiary shall have
the exclusive right (i) to designate the order in which such lots, parcels or
items shall be offered for sale or sold; and (ii) to elect to sell such lots,
parcels or items through a single sale, through two or more successive sales, or
in any other manner Beneficiary determines to be in its best interest. Any
Person, including Grantor, Trustee and Beneficiary, may purchase at any sale
under this Deed of Trust, and Beneficiary shall have the right to purchase at
any such sale by crediting upon the bid price the amount of all or any part of
the Obligations. If Beneficiary determines to sell the Property in more than one
sale, Beneficiary may, at its option, cause such sales of the Property to be
conducted simultaneously or successively, on the same day or on such different
days or times and in such order as Beneficiary may determine, and no such sale
shall terminate or otherwise affect the lien of this Deed of Trust on any part
of the Property that has not been sold until all Obligations have been paid in
full.

 

(c)          Costs of Sale; Deed to Purchaser. Grantor shall pay all costs,
fees, and expenses of all sales of the Property under this Deed of Trust,
including the costs, fees, and expenses (including attorneys' fees) of Trustee
and Beneficiary, together with interest thereon at the interest rate applicable
to principal under the Note or, with respect to Trustee, the maximum rate
permitted by law to be charged by Trustee. Upon any sale under the power of sale
contained in this Deed of Trust, Trustee shall execute and deliver to the
purchaser or purchasers a deed or deeds conveying the property so sold, but
without any covenant or warranty whatsoever, express or implied. The recitals in
any such deed or deeds of any matter or facts, including the existence of any
default by Grantor, the giving of notice of default and notice of sale, and
other facts affecting the regularity or validity of such sale or sales, shall be
conclusive proof of the truth of such facts and matters, and any such deed or
deeds shall be conclusive against all Persons as to such facts and matters
recited therein. A sale of less than all of the Property or any defective or
irregular sale under this Deed of Trust shall not exhaust, impair or otherwise
affect the power of sale contained in this Deed of Trust, and subsequent sales
of the Property may be made under this Deed of Trust until all Obligations have
been satisfied or until the entire Property has been sold without defect or
irregularity. If Beneficiary elects to cause the Property to be sold under the
power of sale contained in this Deed of Trust, Beneficiary shall deposit with
the Trustee this Deed of Trust, the Note, and such receipts and evidence of such
other Obligations as Trustee may reasonably require.

 

4.5           Application of Sale Proceeds. Except as otherwise required by law,
Trustee shall apply the proceeds of the sale or sales conducted by Trustee in
the following order of priority: (a) first, to payment of all expenses of such
sale or sales and all costs, expenses, fees, and liabilities of Trustee and this
trust, including attorneys' fees, costs of a trustee's sale guaranty, costs of
other evidence of title, and Trustee's fees in connection with such sale or
sales; (b) second, to all amounts advanced by Trustee or Beneficiary under any
of the terms of this Deed of Trust which have not then been repaid, together
with interest thereon at the rate applicable to principal under the Note or,
with respect to Trustee, the maximum rate permitted by law to be charged by
Trustee; (c) third, to the payment of all other Obligations in such order and
amounts as Beneficiary determines; and (d) the remainder, if any, to the Person
or Persons legally entitled thereto.

 

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4.6           Appointment of a Receiver.

 

(a)          Upon the occurrence and during the continuance of any Event of
Default, Beneficiary shall be entitled to apply at any time to the appointment
of a receiver of the Property or any part thereof and of all rents, incomes,
profits, issues and revenues thereof, from whatever source derived by a court
having jurisdiction thereof; and thereupon it is hereby expressly covenanted and
agreed that the court shall forthwith appoint such receiver with the usual
powers and duties of receivers in like cases; and said appointment shall be made
by the court as a matter of strict right to Beneficiary, and without reference
to the adequacy or inadequacy of the value of the Property, or to the solvency
or insolvency of Grantor or any party liable for the Obligations and without
proof of waste or fraud by Grantor. Grantor hereby specifically waives the right
to object to the appointment of a receiver as aforesaid and hereby expressly
consents that such appointment shall be made as a matter of absolute right to
Beneficiary. Grantor further agrees that subject to the approval of the
appointing court, Beneficiary shall have the right to designate the person or
entity to be appointed as receiver. In order to operate and maintain and
preserve the Property and to prevent waste and impairment of its security,
Beneficiary may, at its option, advance monies to the appointed receiver and all
such sums advanced shall become Obligations and shall bear interest from the
date of such advance at the Default Rate specified in the Loan Documents.

 

(b)          The receiver or its agents shall be entitled to enter upon and take
possession of any and all of the Property, together with any and all businesses
conducted thereon and all business assets used therewith or thereon, or any part
or parts thereof, and to operate and conduct the business or businesses, or
complete construction of improvements, to the same extent and in the same manner
as Grantor might lawfully do (including entering into, amending or terminating
leases or other agreements in connection with the operation, maintenance and
improvement of the Property). The receiver, personally or through its agents or
attorneys, may exclude Grantor and its subsidiaries, agents, servants and
employees wholly from the Property, and have, hold, use, operate, manage and
control the same and each and every part thereof, and in the name of Grantor,
its subsidiaries, or agents, exercise all of their rights and powers and use all
of the then existing items of security and collateral, materials, current
supplies, stores and assets and, at the expense of Grantor, maintain, restore,
complete construction of, insure and keep insured, the properties, equipment,
and apparatus provided or required for use in connection with such business or
businesses, and make all such necessary and proper repairs, renewals and
replacements and all such useful alterations, additions, betterments and
improvements as the receiver may deem judicious. The receiver shall from time to
time apply any net revenues in its possession to the payment of the Obligations.

 

(c)          Such receivership shall, at the option of Beneficiary, continue
until full payment of the Note and all other sums hereby secured, or until title
to the Property shall have been conveyed as a result of foreclosure sale under
this Deed of Trust.

 

4.7           Protection of Beneficiary's Security. Beneficiary or Trustee,
without obligation to do so and without notice to or demand on Grantor, and
without releasing Grantor from any of its Obligations or waiving Beneficiary's
rights under the Loan Documents, shall have the right to perform any Obligation
which Grantor has breached in such manner, at such time, and to such extent as
Beneficiary or Trustee determines to be necessary or appropriate to preserve,
protect, maintain and defend the Property and Beneficiary's lien thereon.

 

4.8           Assembly of Property. Upon Beneficiary's request, Grantor shall
assemble and make available to Beneficiary at the location of the Real Property
all Property which has been removed from or which is not located on the Real
Property.

 

4.9           Discontinuation of Disbursements Under Loan and Advances under
Other Extensions of Credit. Beneficiary shall have the (a) right to discontinue
or withhold any or all disbursements of the proceeds of the Loan and any Future
Advances; and (b) to discontinue advancing money or extending credit to or for
the benefit of Grantor in connection with any other document between Beneficiary
and Grantor.

 

44

 

 

4.10         Rescission of Notice of Default. Prior to the conduct of any sale
under the power of sale contained in this Deed of Trust, Beneficiary, at its
option, shall have the right to rescind any notice of default and election to
sell the Property by delivering to Trustee a written notice of rescission
executed by Beneficiary which, when recorded, shall cancel the foreclosure
proceedings which have been commenced by the recordation of such notice of
default and election to sell. Beneficiary's rescission of any notice of default
and election to sell pursuant to this Section or under applicable law shall not
constitute or be construed as a waiver of any Event of Default or impair,
prejudice or otherwise affect (a) Beneficiary's right to record a new notice of
default and election to sell the Property based on the same or any other Event
of Default; or (b) Beneficiary's rights and remedies in connection with the
Obligations.

 

4.11         Easements. Without limiting the effect of any right or remedy
exercised by Beneficiary under the Loan Documents, any Easements granted by
Grantor or other agreement made by Grantor in violation of any of the terms of
this Deed of Trust shall, at the option of any purchaser at any judicial or
nonjudicial foreclosure sale under this Deed of Trust, be voidable, and any such
purchaser shall have the right to take possession of the Property free from the
terms of such Easement or agreement.

 

4.12         Exercise of Rights Under Other Loan Documents. Beneficiary shall
have the right to exercise any or all rights and remedies which Beneficiary may
have under any or all of the other Loan Documents, applicable law and principles
of equity.

 

4.13         Proofs of Claim. In the case of any receivership, insolvency,
bankruptcy, reorganization, arrangement, adjustment, composition or other
judicial proceedings affecting Grantor, any endorser, co-maker, surety, or
guarantor of the Obligations secured hereby, or any of their respective
properties, Beneficiary, to the extent permitted by law, shall be entitled to
file such proofs of claim and other documents as may be necessary or advisable
in order to have its claim allowed in such proceedings for the entire unpaid
obligations at the date of the institution of such proceedings, and for any
additional amounts which may become due and payable after such date.

 

4.14         Automatic Stay. Grantor hereby agrees that, in consideration of the
recitals and mutual covenants contained herein, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
Grantor does agree that in the event Grantor or (if applicable) any partner of
Grantor shall (a) file with any bankruptcy court of competent jurisdiction or be
the subject of any petition under title 11 of the U.S. Code, as amended; (b) be
the subject of any order for relief issued under such Title 11 of the U.S. Code,
as amended; (c) file or be the subject of any petition seeking any
reorganization, arrangement, composition, readjustment, liquidation,
dissolution, or similar relief under any present or future federal or state act
or law relating to bankruptcy, insolvency, or other relief for debtors; (d) have
sought or consented to or acquiesced in the appointment of any trustee,
receiver, conservator, or liquidator; or (e) be the subject of any order,
judgment, or decree entered by any court of competent jurisdiction approving a
petition filed against such party for any reorganization, arrangement,
composition, readjustment, liquidation, dissolution, or similar relief under any
present or future federal or state act or law relating to bankruptcy,
insolvency, or relief for debtors, then and in any of such events Beneficiary
shall thereupon be entitled to relief from any automatic stay imposed by Section
362 of Title 11 of the U.S. Code, as amended, or otherwise, on or against the
exercise of the rights and remedies otherwise available to Beneficiary as
provided in the Note, this Deed of Trust, and all associated Loan Documents, and
as otherwise provided by law. Grantor hereby agrees not to object to Beneficiary
immediately seeking relief from the automatic stay, to allow Beneficiary to
proceed immediately to obtain a final judgment of foreclosure of this Deed of
Trust, to complete a foreclosure sale and/or to proceed against and realize upon
the collateral for the indebtedness secured hereby and to otherwise allow
Beneficiary to take all such actions as Beneficiary may elect in its sole
discretion in pursuance of the other rights and remedies available in the event
of a default by Grantor under this Deed of Trust and all associated Loan
Documents. Grantor hereby waives any protection afforded under 11 U.S.C.,
Section 362(a).

 

45

 

 

4.15         Cure. Upon the occurrence of an Event of Default, it shall be in
Beneficiary’s sole and absolute discretion whether it shall accept any cure or
attempted cure from Grantor with respect to such Event of Default, and it shall
also be in Beneficiary’s sole and absolute discretion whether such cure offered
or attempted by Grantor is sufficient and satisfactory. Grantor acknowledges
that such determinations by Beneficiary with respect to the foregoing shall be
effective at such time as Grantor receives such determination in writing from
Beneficiary. Only upon Beneficiary’s written agreement to accept a cure of any
Event of Default, along with the satisfaction of any conditions or requirements
which Beneficiary may impose in connection with such cure, shall such Event of
Default be deemed to be cured and only at such time shall it be deemed for all
purpose under the Loan Documents that such Event of Default is no longer
continuing.

 

ARTICLE 5

 

WARRANTIES AND REPRESENTATIONS

 

5.1           Warranties and Representations. As a material inducement to the
Beneficiary's extension of credit to Grantor in connection with the Loan,
Grantor warrants and represents to the Beneficiary as follows, as of the
effective date hereof:

 

(a)          Valid Execution and Delivery. All of the Loan Documents requiring
execution by Grantor have been duly and validly executed and delivered by
Grantor.

 

(b)          No Violation of Law. The execution, delivery and performance by the
Grantor of the Loan Documents will not violate or breach any Governmental
Requirements of any Governmental Authorities or any judgment, writ, injunction,
decree or order of any court relating to Grantor or the Property.

 

(c)          Compliance with Applicable Laws and Regulations. The Property,
including, but not limited to, its use and operation, complies with, and shall
remain in compliance with, all Governmental Requirements now or hereafter
relating to the ownership, construction, use or operation of the Property,
including, but not limited to, all applicable statutes, rules and regulations
pertaining to requirements for equal opportunity, anti-discrimination, fair
housing, environmental protection, zoning, subdivision, flood, health,
environmental and land use. The Buildings comply with, and shall remain in
compliance with, applicable health, fire and building codes. To the knowledge of
Grantor, there is no evidence of any illegal activities relating to controlled
substances on the Property. To the knowledge of Grantor, all Governmental
Permits, including, but not limited to, certifications, permits, licenses and
approvals, and all franchises, patents, copyrights, trademarks and trade names,
including, without limitation, certificates of completion and occupancy permits
required for the legal use, occupancy and operation of the Property as currently
in use, are in the possession of either Grantor or the manager of the property
and are in full force and effect. All of the Improvements comply with all
requirements of any applicable zoning and subdivision laws and ordinances.

 

(d)          Consents Obtained. All consents, approvals, authorizations, orders
or filings with any court or Governmental Authorities, if any, required for the
execution, delivery and performance of the Loan Documents by Grantor have been
obtained or made.

 

(e)          Governmental Restrictions. To the best of Grantor’s knowledge,
there are no conditions or restrictions affecting the use or development of the
Property and no agreements or contracts with any Governmental Authorities,
including local, regional, state, or federal governmental authorities, affecting
the use or development of the Property which have not been disclosed in writing
by Grantor to Beneficiary or otherwise made available to Beneficiary.

 

46

 

 

(f)          No Litigation. There are no pending or threatened judicial,
governmental, administrative, mediation or arbitration actions, suits or
proceedings, arbitrations or governmental investigations against the Property,
Grantor, any general partner, member or shareholder of Grantor, or any
guarantor, of any of Grantor’s obligations under the Loan Documents, an adverse
outcome of which would materially impair either the use, value and operation of
the Property or Grantor’s ability to perform its covenants and obligations under
the Note, the Deed of Trust, and the other Loan Documents.

 

(g)          Title. Grantor has good and indefeasible fee simple title to the
Property, subject to no liens, charges or encumbrances other than the Permitted
Encumbrances. The Permitted Encumbrances do not and will not materially and
adversely affect (1) the ability of the Grantor to pay in full the principal and
interest on the Note in a timely manner or (2) the use of the Property for the
use currently being made thereof, the operation of the Property as currently
being operated or the value of the Property.

 

(h)          Permitted Encumbrances. The Permitted Encumbrances do not and will
not materially interfere with the security of this Deed of Trust or materially
and adversely affect (1) the ability of Grantor to generate income from the
Property sufficient to pay in full the principal and interest on the Note and
otherwise service the Loan evidenced by the Note in a timely manner or (2) the
use of the Property for the use currently being made thereof, the operation of
the Property as currently being operated or the value of the Property.

 

(i)          Contingent Liabilities. Grantor has no known material contingent
liabilities.

 

(j)          No Other Obligations. Grantor has no material financial obligation
under any indenture, mortgage, deed of trust, loan agreement or other agreement
or instrument to which Grantor is a party or by which Grantor or the Property is
otherwise bound, other than obligations incurred in the ordinary course of the
operation of the Property and other than obligations under this Deed of Trust
and the other Loan Documents, except to the extent provided in Schedule 7 of the
Closing Certificate.

 

(k)          No Loan. Grantor has not borrowed or received any other debt
financing that has not been heretofore repaid in full, except to the extent
provided in Schedule 7 of the Closing Certificate.

 

(l)          Fraudulent Conveyance. Grantor (1) has not entered into the Loan or
any Loan Document with the actual intent to hinder, delay, or defraud any
creditor and (2) received reasonably equivalent value in exchange for its
obligations under the Loan Documents. Giving effect to the Loan, the fair
saleable value of Grantor’s assets exceed and will, immediately following the
execution and delivery of the Loan Documents, exceed Grantor’s total
liabilities, including, without limitation, subordinated, unliquidated, disputed
or contingent liabilities. The fair saleable value of Grantor’s assets is and
will, immediately following the execution and delivery of the Loan Documents, be
greater than Grantor’s probable liabilities, including the maximum amount of its
contingent liabilities or its debts as such debts become absolute and matured.
Grantor’s assets do not and, immediately following the execution and delivery of
the Loan Documents will not, constitute unreasonably small capital to carry out
its business as conducted or as proposed to be conducted. Grantor does not
intend to, and does not believe that it will, incur debts and liabilities
(including, without limitation, contingent liabilities and other commitments)
beyond its ability to pay such debts as they mature (taking into account the
timing and amounts to be payable on or in respect of obligations of Grantor).

 

47

 

 

(m)          Access/Utilities. The Property has adequate rights of access to
public ways and is served by adequate gas, electric, cable, telephone, water,
storm, sewer, sanitary sewer and storm drain facilities. Except as may be
disclosed on the survey of the Property obtained by Beneficiary, all public
utilities (including, but not limited to, the foregoing) necessary to the
continued use, enjoyment, occupancy, operation and disposition of the Property
as presently used and enjoyed are located in the public right-of-way abutting
the Property, and all such utilities are connected so as to serve the Property
without passing over other property. All streets, roads, highways, bridges and
waterways necessary for access to and full use, occupancy, operation and
disposition of the Real Property and the Improvements have been completed, have
been publicly dedicated and accepted by the appropriate municipal authority and
are open and provide public ingress and egress to the Real Property and the
Improvements, or are the subject of irrevocable, perpetual access easements
without condition or cost to Grantor.

 

(n)          Zoning. All improvements on the Property comply with applicable
zoning laws and set-back ordinances.

 

(o)          Special Assessments. Except as disclosed in the title insurance
policy, there are no pending or, to the knowledge of Grantor, proposed special
or other assessments for public improvements or otherwise affecting the
Property, nor, to the knowledge of Grantor, are there any contemplated
improvements to the Property that may result in such special or other
assessments.

 

(p)          Flood Zone. The Property is not located in a flood hazard area as
defined by the Federal Insurance Administration.

 

(q)          Seismic Exposure. The Property is not located in Zone 3 or Zone 4
of the "Seismic Zone Map of the U.S."

 

(r)           Misstatements of Fact. No statement of fact made in the Loan
Documents contains any untrue statement of a material fact or omits to state any
material fact necessary to make statements contained herein or therein not
misleading. There is no fact presently known to Grantor which has not been
disclosed which adversely affects, nor as far as Grantor can foresee, might
adversely affect the business, operations or condition (financial or otherwise)
of the representing party.

 

(s)          Title Insurance. The Property is covered by a mortgagee title
insurance policy insuring that the mortgage is a valid first lien on the
Property subject only to the matters set forth in such policy.

 

(t)          Environmental Compliance. To the knowledge of Grantor, the Property
is in compliance with all applicable federal, state, and local environmental
laws, and no notice of violation of such laws has been issued by any
governmental agency or authority; no action has been taken that would cause the
Property to not be in compliance with all federal, state, and local
environmental laws pertaining to environmental hazards; and no hazardous
material is present at the Property in violation of environmental laws.

 

(u)          Compliance with Laws. To the knowledge of Grantor, the Property and
the Grantor's operations at the Property comply in all material respects with
all Government Requirements.

 

(v)         Permits. The Grantor, lessee and/or operator of the Property is in
possession of all Government Permits required for use of the Property which are
valid and in full force and effect.

 

(w)          Security Deposits. All security deposits collected in connection
with the Property are being held (1) in accordance with all applicable laws.

 

(x)          Condition of Property. The Property is (1) free and clear of any
damage that would materially and adversely affect the use or value of the
Property as security for the Loan, (2) in good repair and condition so as not to
materially and adversely affect the use or value of the Property as security for
the Loan and (3) to the knowledge of Grantor, all building systems contained
therein are in good working order so as not to materially and adversely affect
the use or value of the Property as security for the Loan.

 

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(y)          No Insolvency or Judgment. Neither Grantor, Manager nor any
Guarantor is currently (a) the subject of or a party to any completed or pending
bankruptcy, reorganization or insolvency proceeding; or (b) the subject of any
judgment unsatisfied of record or docketed in any court of the state in which
the Property is located or in any other court located in the United States. The
Loan will not render Grantor, Manager or any Guarantor insolvent. As used in
this Deed of Trust, the term "insolvent" means that the sum total of all of an
entity’s liabilities (whether secured or unsecured, contingent or fixed, or
liquidated or unliquidated) is in excess of the value of all such entity’s
non-exempt assets, i.e., all of the assets of the entity that are available to
satisfy claims of creditors.

 

(z)          No Condemnation. No part of any property subject to the Deed of
Trust has been taken in condemnation or any like proceeding, which part would
constitute a material portion of the Property or would otherwise impair the use,
value or operation of the Property, the Deed of Trust or the Loan or the
usefulness of such property for the purposes contemplated by the loan
application relating to the Loan (the "Loan Application"), nor is any proceeding
pending, threatened or known to be contemplated for the partial or total
condemnation or taking of the Property.

 

(aa)         Repair Orders. To the best of Grantor's knowledge, no orders or
directives have been issued by any Governmental Authorities requiring that any
work of repair, maintenance or improvement be performed with respect to the
Property.

 

(bb)         No Labor or Materialmen Claims. All parties furnishing labor and
materials have been paid in full and, except for such liens or claims insured
against by the policy of title insurance to be issued in connection with the
Loan, there are no mechanics, laborers or materialmen’s liens or claims
outstanding for work, labor or materials affecting the Property, whether prior
to, equal with or subordinate to the lien of this Deed of Trust.

 

(cc)         Leases.

 

(1)         Grantor has delivered to Beneficiary the Rent Roll of all Leases of
retail space affecting the Property as of the date hereof, which accurately and
completely sets forth in all material respects for each such Lease, the
following: the name of the Tenant, the Lease expiration date, extension and
renewal provisions, the base rent payable, the security deposit held thereunder,
and any other material provisions of such Lease.

 

(2)         Each Lease constitutes the legal, valid and binding obligation of
Grantor and, to the best of Grantor’s knowledge and belief, is enforceable
against the Tenant thereof. To Grantor’s knowledge, no default exists, or with
the passing of time or the giving of notice or both would exist, under any Lease
shown on the rent roll, which would, in the aggregate, have a material adverse
effect on Grantor or the Property.

 

(3)         No Tenant under any Lease shown on the Rent Roll has, as of the date
hereof, paid rent more than thirty (30) days in advance, and the rents under
such Leases have not been waived, released, or otherwise discharged or
compromised.

 

(4)         All work to be performed by Grantor under the Lease shown on the
Rent Roll has been substantially performed, all contributions to be made by
Grantor to the Tenants thereunder have been made and all other conditions
precedent to each such Tenant’s obligations thereunder have been satisfied.

 

49

 

 

(5)         Each Tenant shown on the Rent Roll under a Lease has entered into
occupancy of the demised premises.

 

(6)         Grantor has delivered to Beneficiary true, correct and complete
copies of all Leases described in the Rent Roll.

 

(7)         To the best of Grantor’s knowledge and belief, each Tenant shown on
the Rent Roll is free from bankruptcy, reorganization or arrangement proceedings
or a general assignment for the benefit of creditors.

 

(8)         No Lease shown on the Rent Roll provides any party with the right to
obtain a lien or encumbrance upon the Property superior to the lien of this Deed
of Trust.

 

(9)         No person or entity has any possessory interest in the retail space
in the Property or right to occupy the same except under and pursuant to the
provisions of the Leases.

 

(10)        As of the date hereof, (i) Grantor is the owner and holder of the
landlord’s interest under each Lease shown on the Rent Roll; (ii) there are no
prior assignments of any Lease or any portion of the Rents and Profits, which
assignments are presently outstanding; (iii) the Leases shown on the Rent Roll
are on the standard form of lease submitted to Beneficiary prior to the
execution of this Deed of Trust and have not been modified or amended, except as
disclosed to Beneficiary in writing; (iv) each Lease shown on the Rent Roll is
in full force and effect; (v) to the knowledge of Grantor, neither Grantor nor
any tenant under any Lease is in default under any of the terms, covenants or
provisions of any Lease, and Grantor knows of no event which, but for the
passage of time or the giving of notice or both, would constitute an event of
default under any Lease shown on the Rent Roll; (vi) to the knowledge of
Grantor, there are no offsets or defenses to the payment of any portion of the
Rents and Profits and (vii) all Rents and Profits due and payable under each
Lease shown on the Rent Roll, have been paid in full and no said Rents and
Profits have been paid more than one (1) month in advance of the due date
thereof.

 

(dd)         Condominium.

 

(1)         The Land is subject to the Declaration which establishes units as
follows: the Hotel Unit, the Residential Unit, the Retail Unit, the Future
Development Area Unit and Hotel Room Units 1 through 4 of the Condominium
pursuant to the Declaration.

 

(2)         The Condominium is comprised of a total of eight (8) units and the
common elements.

 

(3)         The Act, Allocation Document (as defined in the Declaration),
Articles (as defined in the Declaration, Declaration, the Bylaws and Regulations
(as defined in the Declaration) are the only documents governing the Condominium
and no amendments or modifications to either document have been made.

 

(4)         Grantor owns the Hotel Unit, the Retail Unit, and Hotel Room Units
1-4 of the Condominium and no other unit of the Condominium.

 

(5)         As of the date hereof, Grantor has paid all monthly assessments,
special assessments, capital assessments, fees and other charges due and payable
under the Condominium Documents.

 

(6)         Grantor has complied with all material provisions of the Condominium
Documents and no uncured defaults or events of default by Grantor exist
thereunder.

 

50

 

 

(7)         To the knowledge of Grantor, there are no defaults by the
Association or any other unit owner of the Condominium that exists under the
Condominium Documents.

 

(ee)         Residential Condominium.

 

(1)         A portion of the Land is subject to the Residential Declaration
which establishes 72 residential condominium units and the residential common
elements.

 

(2)          The Act, Residential Articles (as defined in the Residential
Declaration, Declaration, the Residential Bylaws and Residential Regulations (as
defined in the Residential Declaration) are the only documents governing the
Residential Condominium and no amendments or modifications to either document
have been made.

 

(3)         Grantor owns Loft 304 and the Penthouse in the Hotel Tower in the
Residential Condominium and no other unit of the Residential Condominium.

 

(5)         As of the date hereof, Grantor has paid all monthly assessments,
special assessments, capital assessments, fees and other charges due and payable
under the Residential Condominium Documents.

 

(6)         Grantor has complied with all material provisions of the Residential
Condominium Documents and no uncured defaults or events of default by Grantor
exist thereunder.

 

(7)         To the knowledge of Grantor, there are no defaults by the
Residential Association or any other unit owner of the Residential Condominium
that exists under the Residential Condominium Documents.

 

(ff)         Financial Statements. All statements respecting the financial
condition of Grantor, any General Partner or Manager of Grantor, and any
Guarantors which have been furnished to the Beneficiary (i) are accurate and
complete in all material respects as of the dates appearing thereon;
(ii) present fairly the financial condition and results of operations of the
Person to whom the financial statement applies as of the dates and for the
periods shown on such statements; and (iii) disclose all suits, actions,
proceedings and contingent liabilities affecting the Person to whom the
financial statement applies. Since the last date covered by such financial
statements, there has been no material adverse change in the financial condition
of the Persons to whom such statements apply.

 

(gg)         Commissions. Grantor has not dealt with any Person who is or may be
entitled to any finder's fee, brokerage commission, loan commission or other
similar sum in connection with the consummation of the transactions contemplated
by the Loan Documents, except for such commissions as have been specifically
disclosed to and approved in writing by Beneficiary prior to the date of
recordation of this Deed of Trust.

 

(hh)         Boundary Lines. All of the Improvements which were included in
determining the appraised value of the Property lie wholly within the boundaries
and building restriction lines of the Property, and no improvements on adjoining
properties encroach upon the Property, and no easements or other encumbrances
upon the Property encroach upon any of the Improvements, so as to affect the
value or marketability of the Property except those which are insured against by
title insurance.

 

5.2           Continuing Warranties and Representations. As a material
inducement to the Beneficiary's extension of credit to Grantor in connection
with the Loan, Grantor warrants and represents to the Beneficiary as follows,
which shall be true and correct as of the effective date hereof, and shall
remain true and correct at all times during the term of the Loan:

 

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(a)          Organization and Existence. Grantor is duly organized and validly
existing in good standing under the laws of the State of Delaware and in all
other jurisdictions in which Grantor is transacting business. Grantor has all
licenses and authorizations necessary to carry on its business. Grantor has the
power and authority to execute, deliver and perform the obligations imposed on
it under the Loan Documents and to consummate the transactions contemplated by
the Loan Documents.

 

(b)          Authorization. Grantor has taken all necessary action for the
authorization of the borrowing on account of the Loan and for the execution,
delivery and performance of the Loan Documents, including, without limitation,
that the partners, members, officers or shareholders of Grantor whose approval
is required by the terms of Grantor’s organizational documents have duly
approved the transactions contemplated by the Loan Documents and have authorized
execution and delivery thereof by the respective signatories. No other consent
by any local, state or federal agency is required in connection with the
execution and delivery of the Loan Documents. Grantor has all necessary power
and authority to carry on its business as now being conducted.

 

(c)          Enforceability. All of the Loan Documents constitute valid, legal
and binding obligations of Grantor and are fully enforceable against Grantor in
accordance with their terms by Beneficiary and its successors, transferees and
assigns, subject only to bankruptcy laws and general principles of equity.

 

(d)          No Defenses. The Note, this Deed of Trust and the other Loan
Documents are not subject to any right of rescission, set-off, counterclaim or
defense, nor would the operation of any of the terms of the Note, this Deed of
Trust or any of the other Loan Documents, or the exercise of any right
thereunder, render this Deed of Trust unenforceable, in whole or in part, or
subject to any right of rescission, set-off, counterclaim or defense, including
the defense of usury.

 

(e)          No Conflict. The execution, delivery and performance of the Loan
Documents by Grantor will not cause or constitute, including upon due notice or
lapse of time or both, a default under or conflict with the organizational
documents of Grantor, and any other agreement, mortgage, commitment,
restriction, or other document of Grantor, any guarantor of any of Grantor’s
obligations under the Loan Documents or any shareholder, general partner or
managing member of Grantor or any such guarantor.

 

(f)          First Lien. Upon the execution by Grantor and the recording of this
Deed of Trust, and upon the execution and filing of UCC-1 financing statements
or amendments thereto, Beneficiary will have a valid and enforceable first lien
on the Property and a valid and enforceable security interest in all personal
property secured hereby, subject to no liens, charges or encumbrances other than
the Permitted Encumbrances.

 

(g)          ERISA. Grantor (1) has no knowledge of any material liability which
has been incurred or is expected to be incurred by Grantor that is or remains
unsatisfied for any taxes or penalties with respect to any "employee benefit
plan" within the meaning of Section 4975(e)(1) of the Internal Revenue Code or
any other benefit plan or multi-employer plan, and each such plan has been
administered in compliance with its terms and the applicable provisions of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA") and any
other federal or state law and (2) has made and shall continue to make all
required contributions to all employee benefit plans, if any. Each such employee
benefit plan has been and will be administered in compliance with its terms and
the applicable provisions of ERISA, the Internal Revenue Code and any other
applicable federal or state law; and no action shall be taken or fail to be
taken that would result in the disqualification or loss of tax-exempt status of
any such plan intended to be qualified and/or tax exempt.

 

52

 

 

(h)          Investment Company Act. Grantor is not (1) an "investment company"
or a company "controlled" by an "investment company," within the meaning of the
Investment Company Act of 1940, as amended; (2) a "holding company" or a
"subsidiary company" of a "holding company" or an "affiliate" of either a
"holding company" or a "subsidiary company" within the meaning of the Public
Utility Holding Company Act of 1935, as amended; or (3) subject to any other
federal or state law or regulation which purports to restrict or regulate its
ability to borrow money.

 

(i)          Transfers. Grantor has not sold, transferred, leased or encumbered
the Property or entered into any agreement for the sale, transfer, lease or
encumbrance of the Property, except as described and permitted in the Loan
Documents.

 

(j)          No Affiliation With Tenants. Neither (i) Grantor; (ii) any General
Partner or Manager of Grantor, if Grantor is a partnership or limited liability
company, (iii) any shareholder in Grantor, if Grantor is a corporation; or (iv)
any Guarantors have any direct or indirect financial or other interest in any
Tenant, except for such interests as have been specifically disclosed to and
approved in writing by Beneficiary prior to the date of recordation of this Deed
of Trust.

 

ARTICLE 6

 

MISCELLANEOUS

 

6.1           Beneficiary Statement; Certain Charges. With respect to (a) any
statement, accounting, or similar information requested by Grantor or any other
Person pursuant to any provision of applicable law; or (b) any other document
furnished to Grantor or any other Person by Beneficiary at Grantor's request,
Beneficiary shall have the right to charge its customary charge for providing
such statement, accounting, or other information. Grantor shall pay Beneficiary
its customary charge for any other service rendered by Beneficiary in connection
with the Loan or the Property, including the issuance of a request for full or
partial reconveyance of this Deed of Trust, transmitting Loan proceeds to an
escrow holder and changing Beneficiary's records relating to the Obligations.

 

6.2           Reconveyance. Upon payment in full of all Obligations secured by
this Deed of Trust, Beneficiary shall, at the expense of Grantor, cause this
Deed of Trust and all other liens and security interest encumbering the Property
to be released of record.

 

6.3           Substitution of Trustee. Beneficiary, at its option, shall have
the right from time to time to appoint a successor trustee to any trustee
appointed under this Deed of Trust by Beneficiary's execution and acknowledgment
of a written instrument which is recorded in the office of the recorder of each
county in which the Property is located. The recordation of such an instrument
in accordance with this Section shall constitute conclusive proof of the proper
substitution of a successor trustee under this Deed of Trust. Upon recordation
of such an instrument, the successor trustee shall succeed to all the title,
power and duties granted to the Trustee under this Deed of Trust and by
applicable law without conveyance of the Property. Such instrument shall contain
the name of the original Beneficiary, Trustee and Grantor named in this Deed of
Trust, the book and page or other recording information for this Deed of Trust,
the name and address of the successor trustee, and the legal description of the
Property. If a notice of default has been recorded prior to the recordation of a
substitution of trustee, the power of substitution shall not be exercised by
Beneficiary until the costs, fees and expenses of the acting trustee have been
paid in full and the acting trustee has endorsed acknowledgment of receipt of
such amounts on the instrument substituting the successor trustee. Without
limiting the terms of this Section, Beneficiary shall have the right from time
to time to substitute a successor to any trustee appointed under this Deed of
Trust in accordance with any statutory or other procedure allowed by law for
such substitution.

 

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6.4           Execution of Instruments by Beneficiary and Trustee. Without
notice to or affecting the liability of Grantor or any other Person for the
payment or performance of the Obligations, without affecting the lien or
priority of this Deed of Trust or Beneficiary's rights and remedies under the
Loan Documents, and without liability to Grantor or any other Person,
Beneficiary and Trustee (if Trustee is so requested in writing by Beneficiary)
shall have the right, at any time and from time to time, to do any one or more
of the following: (a) reconvey any part of the Property; (b) consent in writing
to the making of any map or plat relating to the Property; (c) join in or
consent to the granting of any Easement affecting the Property; and (d) execute
any extension agreement relating to any or all of the Obligations, any document
subordinating the lien of this Deed of Trust to any other Lien or document, or
any other document relating to the Property, Obligations, or Loan Documents.

 

6.5           Trust Irrevocable; Acceptance by Trustee. The trust created by
this Deed of Trust is irrevocable by Grantor. Trustee accepts this trust when
this Deed of Trust, duly executed and acknowledged, is recorded in the county in
which the Property is located as provided by law. Trustee is not obligated to
notify any party of a pending sale under any other deed of trust or of any
action or proceeding in which Grantor, Beneficiary or the Trustee shall be a
party unless brought by the Trustee.

 

6.6           Late Charges. If any payment under the Note or any note evidencing
a Future Advance is not paid when due, Grantor shall pay any late charge
provided for in the Loan Documents.

 

6.7           Requests by Grantor for Approvals by Beneficiary. All requests by
Grantor for Beneficiary's consent to or approval of any transaction or matter
requiring Beneficiary's consent or approval under the Loan Documents (a) shall
be made by Grantor in writing; (b) shall specifically describe the transaction
or matter with respect to which Beneficiary's consent or approval is requested;
(c) shall be accompanied by such information and documentation as Beneficiary
may require in connection with such request; and (d) shall be delivered to
Beneficiary not less than fifteen (15) days before Grantor proposes to take the
action or effect the transaction with respect to which Beneficiary's consent or
approval is requested, unless a different period of time is expressly provided
for in the Loan Documents.

 

6.8           Approvals by Beneficiary. Whenever (a) the terms of the Loan
Documents grant Beneficiary the right to consent to or approve any transaction
or matter; (b) Beneficiary is authorized or empowered under the Loan Documents
to make a determination with respect to any transaction or matter; or (c) the
Loan Documents provide that any document or other item must be approved by or
acceptable to Beneficiary, then except as otherwise expressly provided in the
Loan Documents, (i) Beneficiary shall have the right to grant or withhold such
approval or consent and make such determination in its sole and absolute
discretion; and (ii) the form and substance of such document or other item must
be satisfactory to Beneficiary in its sole and absolute discretion. Whenever the
terms of the Loan Documents require Beneficiary's consent to or approval of any
transaction, matter, or document, such consent or approval shall not be deemed
to be effective unless it is set forth in a written instrument executed by
Beneficiary.

 

6.9           Transfers by Grantor; No Release of Grantor. The following
provisions shall apply if Grantor sells, conveys, transfers or alienates the
Property or any interest in the Property with or without Beneficiary's consent:

 

(a)          No Release of Grantor. No such action by Grantor nor any assumption
of any or all of the Obligations by any transferee of the Property
("Transferee") shall be deemed to release Grantor or any other Person, including
any Guarantor, from any liability under the terms of the Loan Documents, and
Grantor and such Persons shall remain liable to Beneficiary for the payment and
performance of all of their respective obligations under the Loan Documents.

 

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(b)          Actions Without Grantor's Consent. Grantor agrees that, unless
otherwise required by applicable law, Beneficiary may do any one or all of the
following without notice to or the consent of Grantor and without affecting
Beneficiary's rights or remedies against Grantor: (i) accelerate, accept partial
payment of, compromise, settle, renew, extend the time for payment or
performance of, or refuse to enforce any of Grantor's Obligations to Beneficiary
under or in connection with this Deed of Trust or any of the other Loan
Documents; (ii) grant any indulgence or forbearance to the Transferee or any
other Person under or in connection with any or all of the Loan Documents;
(iii) release, waive, substitute or add any or all collateral securing payment
of any or all of the Obligations; (iv) release, substitute or add any one or
more endorsers or guarantors of any or all of the Obligations; (v) amend,
supplement, alter or change in any respect whatsoever any term or provision of
the Loan Documents or any other agreement relating to the Obligations; and
(vi) exercise any right or remedy with respect to the Obligations or any
collateral securing the Obligations, notwithstanding any effect on or impairment
of Grantor's subrogation, reimbursement or other rights against the Transferee,
whether by operation of law or otherwise.

 

(c)          Waivers. To the extent permitted by law, Grantor waives all rights
which it may have (i) to require Beneficiary to exhaust its rights and remedies
against the Transferee, any other Person, or any collateral securing any or all
of the Obligations before pursuing its rights and remedies against Grantor;
(ii) to require Beneficiary to exercise any right or power or to pursue any
remedy which Beneficiary may have under the Loan Documents or applicable law
before pursuing its rights and remedies against Grantor; and (iii) to assert any
defense to Beneficiary's enforcement of its rights and remedies against Grantor
based on an election of remedies by Beneficiary or the manner in which
Beneficiary exercises any remedy which destroys, diminishes or interferes with
any or all of Grantor's subrogation, reimbursement or other rights against the
Transferee, whether by operation of law or otherwise.

 

6.10         Taxes Imposed on Beneficiary. If, after the date of this Deed of
Trust, any Governmental Requirements are enacted for the purpose of taxing any
lien on the Property or changing in any way the laws for the taxation of deeds
of trust or debts secured by deeds of trust, so as to impose on Beneficiary
payment of all or part of any Taxes assessed against the Property, then prior to
the due date of such Taxes, Grantor shall pay all such Taxes and agree to pay
such Taxes when levied or assessed against the Property or Beneficiary;
provided, however, that if such payment or agreement by Grantor shall not be
permitted by law, Beneficiary, at its option, shall have the right, upon ninety
(90) days’ prior written notice, to declare the Obligations to be immediately
due and payable, in which event Grantor may pay the Obligations without payment
of any prepayment premium or penalty or any other exit fee. Nothing contained in
this Section shall be deemed to require Grantor to pay any franchise, estate,
inheritance, income or similar tax imposed on Beneficiary.

 

6.11         Recourse Against Separate Property. Each Grantor who is a married
person agrees that Beneficiary shall have the right to recourse against his or
her community property and separate property for any or all Obligations to the
fullest extent permitted by law.

 

6.12         Defense of Actions and Protection of Security by Beneficiary.
Whether or not an Event of Default has occurred, Beneficiary and Trustee shall
each have the right, but not the obligation, to appear in and defend any action
or proceeding, whether commenced by or against Grantor, any of the Guarantors,
or any other Person, which affects or which Beneficiary or Trustee determines
may affect any or all of the following: (a) the Property; (b) the Insurance
Claims, Condemnation Claims, or Property Claims; (c) Beneficiary's, Trustee's,
or Grantor's respective rights and obligations under the Loan Documents; (d) the
Obligations; or (e) any other transaction or matter which affects Beneficiary by
reason of its interest in the Property. Beneficiary and Trustee shall each have
the right, but not the obligation, to commence and prosecute any action or
proceeding which Beneficiary or Trustee determines to be necessary or
appropriate to do any or all of the following: (i) prevent any damage,
destruction, or injury to the Property; (ii) enforce or recover upon the
Insurance Claims, Condemnation Claims, or Property Claims or collect the
Insurance Proceeds, Condemnation Proceeds, or Property Proceeds pursuant to this
Deed of Trust; (iii) preserve, protect, maintain, and defend the Property and
Beneficiary's lien thereon; or (iv) enforce or exercise any right, remedy or
power available to or conferred on Beneficiary or Trustee under the Loan
Documents or applicable law. Beneficiary and Trustee shall each have the right
to discontinue, suspend or dismiss any such action or proceeding which has been
commenced by Beneficiary or Trustee at any time.

 

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6.13         Expenses. Beneficiary and Trustee, and each of them, shall have the
right to incur and pay all costs, fees, expenses, and liabilities that
Beneficiary and Trustee, respectively, determine to be necessary or appropriate
in connection with any or all of the following matters (all such costs, fees,
expenses and liabilities, excluding ordinary overhead expenses of Beneficiary's
and Trustee's respective regular business premises and salary expenses for
Beneficiary's and Trustee's respective clerical and supervisory personnel, are
referred to collectively as the "Reimbursable Costs"): (a) costs and expenses
incurred in the management, servicing, or administration of the Loan and any
Future Advances which relate to Beneficiary’s review of those documents,
transactions or other matters requiring Beneficiary’s approval under the terms
of the Loan Documents; (b) the exercise of any or all of Beneficiary's and
Trustee's respective rights and remedies under the Loan Documents, including
(i) all premiums and other costs and expenses paid or incurred by Beneficiary in
connection with Beneficiary's obtaining any Insurance Policies; and (ii) all
costs and expenses, including attorneys' fees and costs, incurred in connection
with Beneficiary's review, preparation, analysis, or negotiation, as applicable,
of any of the further documents or other matters that are contemplated by the
Loan Documents or that Beneficiary has the right to require, review or approve
pursuant to the Loan Documents, including Leases, estoppel certificates from any
Tenant under any Lease or from any other Person, and non-disturbance,
subordination or attornment agreements by any Tenant under any Lease or by any
other Person; (c) the enforcement of any or all of the Obligations or any other
obligation of any Person liable to Beneficiary in connection with the Loan or
any Future Advance, whether or not any legal action or proceeding is commenced
by Beneficiary; (d) the preservation, protection, maintenance, or defense of the
Property or Beneficiary's lien thereon; (e) the sale or disposition of the
Property or any other collateral securing any or all of the Obligations; (f) the
defense of any action or proceeding commenced by Grantor, any of the Guarantors,
or any other Person under Section 6.12 above; or (g) the commencement and
prosecution of any action or proceeding by Beneficiary or Trustee with respect
to any or all of the matters described in this Section or in Section 6.12 above,
including an action for relief from any stay, injunction, or similar order or
enactment arising under any federal or state bankruptcy, insolvency or similar
law. Without limiting the terms of this Section, Beneficiary shall have the
right to do any or all of the following in connection with any of the matters
described in this Section, and all costs, fees, expenses, and liabilities
incurred or paid in connection therewith shall constitute Reimbursable Costs:
(1) select, retain, and consult with attorneys, accountants, appraisers,
contractors, brokers, architects, engineers and such other experts, consultants,
advisors and third Persons as Beneficiary determines to be necessary or
appropriate; (2) settle, purchase, compromise or pay any or all claims, demands,
and Liens; and (3) obtain any trustee's sale guaranty or other title insurance
coverage relating to the Property which Beneficiary determines to be necessary
or appropriate. Beneficiary agrees that if Beneficiary obtains an appraisal of
the Property and Grantor pays for same, Beneficiary shall deliver a complete
copy of such appraisal to Grantor promptly after receipt of such appraisal.

 

6.14         Payment of Advances by Grantor. All Reimbursable Costs and all
other costs, fees, expenses and liabilities incurred or paid by Beneficiary
under any other provision of the Loan Documents or under applicable law in
connection with the Obligations or the Property (a) shall be payable by Grantor
to Beneficiary on Beneficiary's demand; (b) shall constitute additional
indebtedness of Grantor to Beneficiary; (c) shall be secured by this Deed of
Trust; and (d) shall bear interest at the maximum rate permitted to be charged
under applicable law and shall bear interest from the date of expenditure at the
rate of interest applicable to principal under the Note. All Reimbursable Costs
and all other costs, fees, expenses and liabilities incurred or paid by Trustee
under this Deed of Trust or under applicable law in connection with this Deed of
Trust shall be payable by Grantor to Trustee on Trustee's demand and shall bear
interest at the maximum rate permitted to be charged by Trustee under applicable
law. Nothing contained in this Deed of Trust shall be deemed to obligate
Beneficiary or Trustee (i) to incur any costs, fees, expenses, or liabilities;
(ii) to make any appearances in or defend any action or proceeding; or (iii) to
commence or prosecute any action or proceeding relating to any matter.

 

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6.15         No Third Party Beneficiaries. The Loan Documents are entered into
for the sole protection and benefit of Beneficiary, Grantor and Trustee and
their respective permitted successors and assigns. No other Person shall have
any rights or causes of action under the Loan Documents.

 

6.16         Notices. All notices and demands by Beneficiary to Grantor under
this Deed of Trust shall be in writing and shall be effective on the earlier of
personal delivery to Grantor or two (2) days after deposit in first-class or
certified United States mail, postage prepaid, addressed to Grantor at the
address set forth in this Deed of Trust, except that service of any notice of
default or notice of sale provided or required by law shall, if mailed, be
deemed effective on the date of mailing. All notices and demands by Grantor to
Beneficiary under this Deed of Trust shall be in writing and shall be effective
on actual receipt by Beneficiary at Beneficiary's address set forth in this Deed
of Trust; provided, however, that nonreceipt of any such notice or demand by
Beneficiary as a result of Beneficiary's refusal to accept delivery or
Beneficiary's failure to notify Grantor of Beneficiary's change of address shall
be deemed receipt by Beneficiary. Grantor's and Beneficiary's respective
addresses set forth in this Deed of Trust may be changed by written notice given
to the other party in accordance with this Section. If Grantor consists of more
than one Person, service of any notice or demand on any one of such Persons by
Beneficiary shall be effective service on Grantor for all purposes.

 

6.17         Cost of Performance of Covenants. Grantor shall perform and comply
with all of its obligations under this Deed of Trust at Grantor's sole cost and
expense.

 

6.18         Severability. If any provision of the Loan Documents shall be held
by any court of competent jurisdiction to be unlawful, voidable, void, or
unenforceable for any reason, such provision shall be deemed to be severable
from and shall in no way affect the validity or enforceability of the remaining
provisions of the Loan Documents.

 

6.19         Interpretation. Whenever the context of the Loan Documents
reasonably requires, all words used in the singular shall be deemed to have been
used in the plural, and the neuter gender shall be deemed to include the
masculine and feminine gender, and vice versa. For purposes of this Deed of
Trust, all references to the Property or Improvements shall be deemed to refer
to all or any part of the Property or Improvements, respectively. The headings
to sections of this Deed of Trust are for convenient reference only, and they do
not in any way define or limit any of the terms of this Deed of Trust and shall
not be used in interpreting this Deed of Trust. For purposes of this Deed of
Trust, the term "including" shall be deemed to mean "including without
limitation," and the term "document" shall include all written contracts,
commitments, restrictions, agreements, mortgages, and instruments.

 

6.20         Time of the Essence. Time is of the essence in the performance of
each provision of the Loan Documents by Grantor.

 

6.21         Amendments. The Loan Documents (excluding the Guaranties) may be
modified only by written agreement signed by Beneficiary and Grantor.

 

6.22         Entire Agreement. The Loan Documents contain the entire agreement
concerning the subject matter of the Loan Documents and supersede all prior and
contemporaneous negotiations, agreements, statements, understandings, terms,
conditions, representations and warranties, whether oral or written, between
Beneficiary and Grantor concerning the Loan and any Future Advances which are
the subject matter of the Loan Documents.

 

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6.23         No Waiver by Beneficiary. No waiver by Beneficiary of any of its
rights or remedies in connection with the Obligations or of any of the terms or
conditions of the Loan Documents shall be effective unless such waiver is in
writing and signed by Beneficiary. Without limiting the generality of this
Section, (a) no delay or omission by Beneficiary in exercising any of its rights
or remedies in connection with the Obligations shall constitute or be construed
as a waiver of such rights or remedies; (b) no waiver by Beneficiary of any
default by Grantor under the Loan Documents or consent by Beneficiary to any act
or omission by Grantor shall constitute or be construed as a waiver of or
consent to any other or subsequent default, act or omission by Grantor; (c) no
disbursement of the proceeds of the Loan or any Future Advance by Beneficiary
following any Event of Default shall constitute or be construed as a waiver of
such Event of Default or obligate Beneficiary to make any other disbursement
under the Loan Documents; (d) no acceptance by Beneficiary of any late payment
or late or defective performance of any of the Obligations by Grantor shall
constitute a waiver by Beneficiary of the right to require prompt payment and
performance strictly in accordance with the Loan Documents with respect to any
other payment or performance of any of the Obligations; (e) no acceptance by
Beneficiary of any payment or performance following any notice of default which
has been given or recorded by Beneficiary shall constitute a waiver of
Beneficiary's right to proceed with the exercise of its remedies with respect to
any Obligations which have not been paid or performed in full; (f) no acceptance
by Beneficiary of any partial payment or performance shall constitute a waiver
by Beneficiary of any of its rights or remedies relating to any Obligations
which have not been paid or performed in full; and (g) no application of Rents
and Profits, Insurance Proceeds, Condemnation Proceeds or Property Proceeds to
any of the Obligations shall constitute or be construed as a waiver by
Beneficiary or cure of any Event of Default or impair, prejudice, invalidate or
otherwise affect any action by Beneficiary or Trustee in response to such
default.

 

6.24         Waivers by Grantor. To the fullest extent allowed by applicable
law, Grantor waives presentment, demand for payment, protest, notice of demand,
dishonor, protest and non-payment, and all other notices and demands in
connection with the delivery, acceptance, performance, default under, and
enforcement of the Loan Documents. Grantor waives the right to assert any
statute of limitations as a defense to the enforcement of any or all of the Loan
Documents to the fullest extent permitted by law.

 

6.25         Waiver of Marshalling. Grantor and all Persons holding a Lien
affecting the Property who have actual or constructive notice of this Deed of
Trust waive (a) all rights to require marshalling of assets or liens in the
event of Beneficiary's exercise of any of its rights and remedies under this
Deed or Trust, including any judicial or nonjudicial foreclosure sale of the
Property; (b) all rights to require Beneficiary to exhaust its rights and
remedies against any other collateral securing any or all of the Obligations
before pursuing its rights and remedies under this Deed of Trust; and (c) all
rights to require Beneficiary to exercise any other right or power or to pursue
any other remedy which Beneficiary may have under any document or applicable law
before pursuing its rights and remedies under this Deed of Trust.

 

6.26         Waiver of Subrogation. Grantor waives all rights to recover against
Beneficiary for any loss or damage incurred by Grantor from any cause which is
insured under any of the Insurance Policies, except that the foregoing waiver of
subrogation shall not be effective with respect to any Insurance Policy if the
coverage under such policy would be materially reduced or impaired as a result
of such waiver. Grantor shall use its best efforts to obtain Insurance Policies
which permit the waiver of subrogation contained in this Section.

 

6.27         Waiver of Redemption and Other Rights. To the extent permitted by
applicable law, Grantor will not at any time insist upon, or plead, or in any
manner whatever claim or take any benefit or advantage of any stay or extension
or moratorium law, or any exemption from execution or sale of the Property or
any part thereof; nor will Grantor claim, take or insist upon any benefit or
advantage of any law now or hereafter in force providing for the valuation or
appraisal of the Property, or any part thereof, prior to any sale or sales
thereof which may be made pursuant to any provision herein, or pursuant to the
decree, judgment or order of any court of competent jurisdiction; nor will
Grantor, after any such sale or sales, claim or exercise any right under any
statute heretofore or hereafter enacted to redeem the property so sold or any
part thereof; and Grantor hereby expressly waives all benefit or advantage of
any such law or laws, and Grantor covenants not to hinder, delay or impede the
execution of any power herein granted or delegated to Beneficiary, but to suffer
and permit the execution of every power as though no such law or laws had been
made or enacted. Without limiting the generality of the foregoing, Grantor
expressly waives all rights of redemption under any applicable Governmental
Requirements (and amendments thereof). Grantor, for itself and all who claim
under it, waives, to the extent that it lawfully may, all right to have the
Property, or any other assets which secure the Obligations, marshaled upon any
foreclosure hereof.

 

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6.28         Cumulative Remedies. No right or remedy of Beneficiary or Trustee
under this Deed of Trust or the other Loan Documents shall be exclusive of any
other right or remedy under the Loan Documents or to which Beneficiary or
Trustee may be entitled. Beneficiary's rights and remedies under the Loan
Documents are cumulative and in addition to all other rights and remedies which
Beneficiary may have under any other document with Grantor and under applicable
law. Beneficiary shall have the right to exercise any one or more of its rights
and remedies in connection with the Obligations at Beneficiary's option and in
its sole and absolute discretion, without notice to Grantor or any other Person
(except as otherwise expressly required by law or under the Loan Documents), and
in such order as Beneficiary may determine in its sole and absolute discretion.
If Beneficiary holds any collateral in addition to the Property for any of the
Obligations, Beneficiary, at its option, shall have the right to pursue its
rights or remedies with respect to such other collateral either before,
contemporaneously with, or after Beneficiary's exercise of its rights or
remedies with respect to the Property. Upon the occurrence and during the
continuance of an Event of Default, Beneficiary, at its option, shall have the
right to offset against any debt or monies due from Beneficiary to Grantor
against all or part of the Obligations.

 

6.29         Subrogation to Lien Rights. If any or all of the proceeds of the
Note or any Future Advance are directly or indirectly used to pay any
outstanding Lien against the Property, or if Beneficiary pays or discharges any
Lien pursuant to any of the terms of the Loan Documents or under applicable law,
Beneficiary shall be subrogated to all rights and liens held by the holder of
such Lien, regardless of whether such Lien is reconveyed.

 

6.30         Joint and Several Liability. Each Person signing this Deed of Trust
as Grantor shall be jointly and severally liable to Beneficiary for the
performance of Grantor's obligations under the Loan Documents. If Grantor
consists of more than one Person, the occurrence of any Event of Default with
respect to any one or more of such Persons shall constitute an Event of Default
and entitle Beneficiary to exercise its rights and remedies under Article 4 of
this Deed of Trust.

 

6.31         Further Documentation and Actions.

 

(1)         Grantor shall, on the request of Beneficiary and at the expense of
Grantor: (1) promptly correct any defect, error or omission which may be
discovered in the contents of this Deed of Trust or in the contents of any of
the other Loan Documents; (2) promptly execute, acknowledge, deliver and record
or file such further instruments (including, without limitation, further
mortgages, deeds of trust, security deeds, security agreements, financing
statements, continuation statements and assignments of rents or leases) and
promptly do such further acts as may be necessary, desirable or proper to carry
out more effectively the purposes of this Deed of Trust and the other Loan
Documents and to subject to the liens and security interests hereof and thereof
any property intended by the terms hereof and thereof to be covered hereby and
thereby, including specifically, but without limitation, any renewals,
additions, substitutions, replacements or appurtenances to the Property; (3)
promptly execute, acknowledge, deliver, procure and record or file any document
or instrument (including specifically, without limitation, any financing
statement) deemed advisable by Beneficiary to protect, continue or perfect the
liens or the security interests hereunder against the rights or interests of
third persons; and (4) provide a new appraisal of the Property, not more than
one time in any five (5) year period during the term of the Loan, for the
benefit of Beneficiary from a licensed appraiser acceptable to Beneficiary, in
its sole and absolute discretion (a copy of which appraisal shall be delivered
to Grantor promptly after receipt of same by Beneficiary).

 

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(2)         Grantor acknowledges that Beneficiary and its successors and assigns
may effectuate a Secondary Market Transaction (defined below). Grantor shall
cooperate in good faith with Beneficiary (but without being obligated to incur a
material cost or expense for which Beneficiary shall have the right but not the
obligation to reimburse) in effecting any such Secondary Market Transaction and
in implementing all requirements imposed by any rating agency involved in any
Secondary Market Transaction including, without limitation, all structural or
other changes to the Loan, providing audited financial statements on a
continuing basis, modifications to any documents evidencing or securing the
Loan; provided, however, that (except as may be required under Section 6.30(a)),
Grantor shall not be required to modify any documents evidencing or securing the
Loan which would modify (A) the interest rate payable under the Note, (B) the
stated maturity of the Note, (C) the amortization of principal of the Note, or
(D) any other material economic term of the Loan. Grantor shall provide such
information, and documents relating to Grantor, any guarantor or indemnitor, the
Property and any tenants of the Improvements as Beneficiary may reasonably
request in connection with such Secondary Market Transaction. Grantor shall make
available to Beneficiary all information concerning its business and operations
that Beneficiary may reasonably request. Beneficiary shall be permitted to share
all such information with the investment banking firms, rating agencies,
accounting firms, law firms and other third-party advisory firms involved with
the Loan Documents or the applicable Secondary Market Transaction. It is
understood that the information provided by Grantor to Beneficiary may
ultimately be incorporated into the offering documents for the Secondary Market
Transaction and thus various investors may also see some or all of the
information. Beneficiary and all of the aforesaid third-party advisors and
professional firms shall be entitled to rely on the information supplied by, or
on behalf of, Grantor and Grantor indemnifies and holds Beneficiary harmless
hereunder as to any and all losses, claims, damages or liabilities that arise
out of or are based upon any untrue statement or alleged untrue statement of any
material fact contained in such information or arise out of or are based upon
the omission or alleged omission to state therein a material fact required to be
stated in such information or necessary in order to make the statements in such
information, or in light of the circumstances under which they were made, not
misleading. Beneficiary may publicize the existence of the Loan in connection
with its marketing for a Secondary Market Transaction or otherwise as part of
its business development. For purposes hereof, a "Secondary Market Transaction"
shall be (a) any sale of the Deed of Trust, Note and other Loan Documents to one
or more investors as a whole loan; (b) a participation of the Loan to one or
more investors, (c) any deposit of the Deed of Trust, Note and other Loan
Documents with a trust or other entity which may sell certificates or other
instruments to investors evidencing an ownership interest in the assets of such
trust or other entity, or (d) any other sale or transfer of the Loan or any
interest therein to one or more investors.

 

6.32         Applicable Law; Jurisdiction; Venue. The creation, perfection and
enforcement of the lien and security interest of this Deed of Trust shall be
governed by the law of the State in which the property is located. Subject to
the foregoing, in all other respects, this Deed of Trust shall be governed by
the substantive laws of the State of Ohio without regard to principles of
conflicts of laws. Grantor hereby irrevocably consents to the exclusive
jurisdiction of any state or federal court for the county or judicial district
in the State of Ohio; provided that nothing contained in this Deed of Trust will
prevent the Beneficiary from bringing any action, enforcing any award or
judgment or exercising any rights against the Grantor individually, against any
security or against any property of the Grantor within any other county, state
or other foreign or domestic jurisdiction. Grantor waives any objection to venue
and any objection based on a more convenient forum in any action instituted
under this Deed of Trust. Grantor agrees that service of process on Grantor may
be effected by certified or registered mail, return receipt requested, directed
to Grantor at its address shown in this Deed of Trust.

 

6.33         Successors. Subject to the restrictions contained in the Loan
Documents, the terms, provisions, indemnities, covenants and conditions hereof
shall be binding upon Grantor and the successors and assigns of Grantor,
including all successors in interest of Grantor in and to all or any part of the
Property, and shall inure to the benefit of Beneficiary, its directors,
officers, shareholders, employees and agents and their respective successors and
assigns and shall constitute covenants running with the land. All references in
this Deed of Trust to Grantor or Beneficiary shall be deemed to include all such
parties’ successors and assigns, and the term "Beneficiary" as used herein shall
also mean and refer to any lawful holder or owner, including pledgees and
participants, of any of the Loan.

 

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6.34         Power of Attorney. Grantor irrevocably appoints Beneficiary, with
full power of substitution, as Grantor's attorney-in-fact, coupled with an
interest, with full power, in Beneficiary's own name or in the name of Grantor
(a) to take any or all of the actions specified in Article 4 above with respect
to the Property; and (b) to sign and record notices of completion, notices of
cessation of labor, and any other similar notice or document which Beneficiary
determines to be necessary or appropriate to protect its interests in connection
with the Obligations. Beneficiary shall have the right to exercise the power of
attorney granted in this Section directly or to delegate all or part of such
power to one or more agents of Beneficiary. Nothing contained in this Deed of
Trust shall be construed to obligate Beneficiary to act on behalf of Grantor as
attorney-in-fact.

 

6.35         No Merger. There shall be no merger of any estate in the Property
which Grantor acquires after the date of this Deed of Trust with all or any
portion of the estate in the Property which Grantor holds as of the date of this
Deed of Trust, unless Beneficiary shall expressly agree otherwise in writing.

 

6.36         Secondary Market. Beneficiary may sell, transfer and deliver all or
portions of, or interests in, the Loan Documents and/or the Loan to one or more
investors in the secondary mortgage market. At any time and from time to time on
or after the date hereof, Beneficiary may retain or assign from time to time
some or all of the responsibility for servicing the Loan or may delegate some or
all of such responsibility and/or obligations to a servicer (as same may be
changed from time to time, the "Servicer"), including, but not limited to, any
subservicer or master servicer, on behalf of the investors or the holder or
holders of the Note. All references to Beneficiary herein shall refer to and
include, without limitation, any such Servicer, to the extent applicable.

 

6.37         Maximum Interest. The provisions of this Deed of Trust and of all
agreements between Grantor and Beneficiary, whether now existing or hereafter
arising and whether written or oral, are hereby expressly limited so that in no
contingency or event whatsoever, whether by reason of demand or acceleration of
the maturity of the Note or otherwise, shall the amount paid, or agreed to be
paid ("Interest"), to Beneficiary for the use, forbearance or retention of the
money loaned under the Note exceed the maximum amount permissible under
applicable law. If, from any circumstance whatsoever, performance or fulfillment
of any provision hereof or of any agreement between Grantor and Beneficiary
shall, at the time performance or fulfillment of such provision shall be due,
exceed the limit for Interest prescribed by law or otherwise transcend the limit
of validity prescribed by applicable law, then, ipso facto, the obligation to be
performed or fulfilled shall be reduced to such limit, and if, from any
circumstance whatsoever, Beneficiary shall ever receive anything of value deemed
Interest by applicable law in excess of the maximum lawful amount, an amount
equal to any excessive Interest shall be applied to the reduction of the
principal balance owing under the Note in the inverse order of its maturity
(whether or not then due) or, at the option of Beneficiary, be paid over to
Grantor, and not to the payment of Interest. All Interest (including any amounts
or payments deemed to be Interest) paid or agreed to be paid to Beneficiary
shall, to the extent permitted by applicable law, be amortized, prorated,
allocated and spread throughout the full period until payment in full of the
principal balance of the Note so that the Interest thereon for such full period
will not exceed the maximum amount permitted by applicable law. This Section
will control all agreements between Grantor and Beneficiary.

 

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6.38         Indemnification. Indemnification. Grantor hereby indemnifies and
holds Beneficiary harmless from and against all loss, cost and expenses with
respect to any Event of Default, any liens (i.e., judgments, mechanics’ and
materialmen’s liens, or otherwise), charges and encumbrances filed against the
Property, and from any claims and demands for damages or injury, including
claims for property damage, personal injury or wrongful death, arising out of or
in connection with any accident or fire or other casualty on the Property or any
nuisance made or suffered thereon, including, without limitation, in any case,
attorneys’ fees, costs and expenses as aforesaid, whether at pretrial, trial or
appellate level, and such indemnity shall survive payment in full of the Loan.

 

IT IS THE INTENTION OF GRANTOR, AND GRANTOR AGREES THAT ALL INDEMNITIES ARISING
UNDER THIS DEED OF TRUST SHALL APPLY WITH RESPECT TO THE MATTERS ADDRESSED
HEREIN THAT MAY BE IN WHOLE OR IN PART CAUSED BY OR MAY ARISE OUT OF THE SOLE,
CONTRIBUTORY OR COMPARATIVE NEGLIGENCE OR STRICT LIABILITY OF ANY INDEMNITEE.

 

6.39         Request for Notices. Grantor hereby requests that a copy of any
notice of default and notice of sale as may be required by law be mailed to
Grantor at its address stated above.

 

6.40         Waiver. To the extent not prohibited by applicable law, Grantor
unconditionally and irrevocably waives any rights, defenses or remedies it may
have under Section 17.001 of the Texas Civil Practice and Remedies Code, Texas
Rule of Civil Procedure 31, Sections 43.002, 43.003 and 43.004 of the Texas
Civil Practice and Remedies Code, and Sections 51.003 through 51.005 of the
Texas Property Code, as amended from time to time.

 

6.41         Release of Loft Unit. Grantor has advised Beneficiary that Grantor
intends to market and sell Loft Unit 304 (the “Loft Unit”) during the term of
this Loan. Notwithstanding anything contained in this Deed of Trust or the other
Loan Documents to the contrary, Grantor may market and sell the Loft Unit
without further consent of Beneficiary, and at the closing of such sale
Beneficiary shall promptly release the Loft Unit from the lien of this Deed of
trust and all other liens and security interests securing the Obligations,
provided that upon the closing of such sale Grantor remits to Beneficiary the
greater of (a) the proceeds from the sale of the Loft Unit, less customary
closing costs (including specifically, without limitation, legal fees, broker
fees and title insurance premiums), and (b) Two Hundred Sixty Thousand Dollars
($260,000.00). It is expressly agreed that no prepayment premium or penalty will
be due from Grantor as a result of payment made pursuant to the preceding
sentence.

 

6.42         Exculpation. Notwithstanding anything to the contrary set forth in
this Deed of Trust, the liability of Grantor under this Deed of Trust and the
other Loan Documents shall be limited as set forth in Section 2.05 of the Note.

 

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ARTICLE 7

 

UNIFORM COMMERCIAL CODE SECURITY AGREEMENT

 

7.1           Uniform Commercial Code Security Agreement. Article 7 of this Deed
of Trust constitutes a security agreement pursuant to the Uniform Commercial
Code of the State in which the Property is located (the "Code"). All terms that
are used in this Article 7 but which are not specifically defined in this Deed
of Trust shall have the meanings given to such terms in the Code. To secure
payment and performance of the Obligations, Grantor grants Beneficiary a
security interest in all now owned and hereafter acquired assets and personal
property of Grantor now or hereafter located on the Property or now or hereafter
obtained for, used connection with, or otherwise relating to the design,
planning, construction, development, use, operation, maintenance, or marketing
of the Property (collectively, the "Personal Property Collateral"), including,
without limitation, all right, title and interest of Grantor, in and to the
following: (a) all fixtures, machinery, machines, motor vehicles, tools, parts,
equipment, pumps, engines, motors, boilers, incinerators, building materials,
inventory, supplies, goods, systems for the supply or distribution of heat, air
conditioning, electricity, gas, water, air or light, elevators and related
machinery and equipment, fire prevention and extinguishing equipment, security
and access control equipment, plumbing, showers, bath tubs, water heaters,
toilets, sinks, stoves, ranges, refrigerators, dishwashers, disposals, laundry
equipment, wall, window and floor coverings, partitions, doors, windows,
hardware, waste and rubbish removal equipment, recreational equipment, signs,
furniture, furnishings, appliances, telephone equipment, computer systems,
office equipment and supplies, plants, carpets, rugs, sculptures, art work,
mirrors, tables, lamps, beds, television sets, light fixtures, chandeliers,
desks, cabinets, bookcases, chairs, sofas, benches, and janitorial and
maintenance equipment and supplies, and all substitutions, accessories,
accessions, replacements, improvements, and additions to any or all of the
foregoing; (b) all deposits, advance payments, security deposits, and rental
payments made by or on behalf of Grantor to others in connection with the
Property and relating to any or all of the following: (i) management or
operational services; (ii) marketing services; (iii) architectural, engineering,
or design services; (iv) utility services; (v) cleaning, maintenance, security,
or repair services; (vi) rubbish or refuse removal services; (vii) sewer
services; (viii) rental of furnishings, fixtures or equipment; (ix) parking; or
(x) any service similar to any or all of the foregoing; (c) all reports,
appraisals, drawings, plans, blueprints, studies, specifications, certificates
of occupancy, building permits, grading permits, and surveys relating to all or
part of the Property, and all amendments, modifications, supplements, general
conditions and addenda thereto and all Operational Licenses, Franchise
Agreements and Liquor Licenses; (d) all trade names, trademarks, trade styles,
service marks, domain names, computer software and computer software products,
logos, letterheads, advertising symbols, goodwill, telephone numbers,
advertising rights, negatives, prints, brochures, flyers, pamphlets and other
media items used or intended to be used in connection with the Property; (e) all
warranties and guaranties, whether written or oral, from any third Person which
directly or indirectly relate to all or part of the Property or personal
property described in parts (a) through (d) of this Section 7.1; (f) all legal
and equitable claims, causes of action, and rights against architects,
engineers, designers, contractors, subcontractors, suppliers, materialmen and
any other Persons supplying labor, services, materials or equipment, directly or
indirectly, in connection with the design, planning, construction, development,
use, operation, maintenance, or marketing of all or part of the Property;
(g) all Condemnation Claims, Condemnation Proceeds, Property Claims (including
commercial tort claims), Property Proceeds, Insurance Claims, and Insurance
Proceeds (regardless of whether or not Beneficiary required Grantor to obtain or
maintain in effect the Insurance Policy or Insurance Policies under which the
Insurance Claims arise or the Insurance Proceeds are payable); (h) all real
property tax refund claims, general intangibles (including payment intangibles),
letters of credit, letter-of-credit rights, supporting obligations, accounts,
deposit accounts, documents, instruments, chattel paper (including electronic
chattel paper and tangible chattel paper), health-care-insurance receivables,
and accounts receivable relating to the design, planning, construction,
development, use, operation, maintenance or marketing of all or part of the
Property or any business now or hereafter conducted on the Property, including
any right to payment for goods sold or leased or to be sold or leased or for
services rendered or to be rendered, however evidenced, including purchase
orders, negotiable documents, notes, drafts, acceptances, claims, instruments,
insurance policies, and all other forms of obligations and receivables; (i) all
Contracts, (j) (i) the Reserves, (ii) the accounts into which the Reserves have
been deposited, (iii) all insurance of said accounts, (iv) all accounts,
agreements, contract rights and general intangibles or other rights and
interests pertaining thereto, (v) all sums now or hereafter therein or
represented thereby, (vi) all replacements, substitutions or proceeds thereof,
(vii) all instruments and documents now or hereafter evidencing the Reserves or
such accounts, (viii) all powers, options, rights, privileges and immunities
pertaining to the Reserves (including the right to make withdrawals therefrom),
and (ix) all proceeds of the foregoing; and (k) all products and proceeds of any
or all of the foregoing assets and personal property, including all money,
deposit accounts, accounts, chattel paper, documents, notes, drafts,
instruments, insurance proceeds, and all other tangible and intangible property
resulting from the sale, lease, or other disposition of any or all of the
foregoing personal property. Grantor hereby covenants and agrees that it shall
not grant or provide any notice, approval, or draw request with respect to any
of the Contracts without obtaining Beneficiary’s prior written approval.

 

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7.2           Filing. Grantor agrees that Beneficiary may file this Deed of
Trust, or a reproduction thereof, in the real estate records or other
appropriate index, as a financing statement for any of the items of Personal
Property Collateral specified in Section 7.1 above which is or may be part of
the Property. Any reproduction of this Deed of Trust or of any other security
agreement or financing statement shall be sufficient as a financing statement.
Grantor (a) irrevocably authorizes Beneficiary to file a financing statement
with respect to any or all of the Personal Property Collateral and in particular
an “All Assets” collateral description, and such other financing statements,
addenda thereto, and financing statement amendments, termination statements,
continuation statements, and assignments in such filing offices or with such
other Governmental Authorities as Beneficiary may deem to be necessary or
appropriate in order to perfect the security interest granted to Beneficiary
under this Article 7 or to otherwise effectuate the terms of this Article 7; (b)
agrees to execute and deliver to Beneficiary, upon Beneficiary's request, any or
all of such documents in such form as Beneficiary may require to perfect the
security interest granted to Beneficiary under this Article 7 or to otherwise
effectuate the terms of this Article 7. Grantor shall pay all costs of filing of
such financing statements and any extensions, renewals, amendments and releases
thereof, and shall pay all costs and expenses of any record searches for
financing statements that Beneficiary may reasonably require.

 

7.3           Additional Covenants of Grantor. Grantor, at its sole cost and
expense, (a) shall give Beneficiary at least thirty (30) days prior written
notice of (i) if Grantor is an individual, any change in Grantor’s principal
residence; (ii) if Grantor is a registered organization as to which the state or
other Governmental Authority under which Grantor is organized maintains a public
record showing Grantor to have been organized (a "Registered Organization"), any
change in the state or Governmental Authority under which Grantor is organized;
(iii) if Grantor is an organization which is not a Registered Organization, any
change in Grantor’s place of business or chief executive office; and (iv) the
acquisition or use of a trade name or style by Grantor; (b) shall promptly
notify Beneficiary in writing of any claim, lien, security interest, right,
encumbrance or any other occurrence which may be adverse to Beneficiary's
security interest in the Personal Property Collateral; (c) shall defend the
Personal Property Collateral from all claims, liens, security interests, rights,
encumbrances and other matters which are adverse to Beneficiary's security
interest in the Personal Property Collateral; (d) shall promptly pay all costs
and expenses relating to the purchase, ownership, or use of the Personal
Property Collateral, including all liens, taxes, assessments and charges of
Governmental Authorities levied, assessed or imposed on all or part of the
Personal Property Collateral; (e) shall not sell, transfer, pledge, hypothecate,
lease or otherwise dispose of or abandon all or part of the Personal Property
Collateral without Beneficiary's prior written consent, except in connection
with a Permitted Transfer or for the sale of inventory in the ordinary course of
Grantor's business, the disposition of any Personal Property Collateral which is
obsolete or which has a de minimus value, and the disposition of any Personal
Property Collateral which is promptly replaced with new Personal Property
Collateral of substantially comparable value and utility; (f) shall not remove
any material part of the Personal Property Collateral which consists of tangible
personal property from its location on the Property without Beneficiary's prior
written consent, except for the sale of inventory in the ordinary course of
Grantor's business, the disposition of any Personal Property Collateral which is
obsolete or which has a de minimus value, and the disposition of any Personal
Property Collateral which is promptly replaced with new Personal Property
Collateral of substantially comparable value and utility; (g) shall, upon
Beneficiary's request, give notice, in form and substance acceptable to
Beneficiary, to any or all account debtors or Persons obligated on an instrument
designated by Beneficiary of Grantor's grant of a security interest in any
Personal Property Collateral which consists of accounts, contract rights,
instruments, documents, or general intangibles (referred to collectively as the
"Accounts" and individually as an "Account"); (h) following the occurrence and
during the continuance of any Event of Default, shall not compromise, settle,
adjust, or grant any discount, credit, or allowance to any Account debtor
without Beneficiary's prior written consent; (i) shall undertake any and all
other acts necessary or appropriate to maintain, preserve and protect the
Personal Property Collateral and Beneficiary's security interest therein,
including any actions requested by Beneficiary; and (j) shall execute and
deliver to Beneficiary such other documents as Beneficiary may request in order
to evidence, effectuate, perfect, maintain, preserve or protect Beneficiary's
security interest in the Personal Property Collateral, including security
agreements and assignments. If Grantor fails to execute and deliver to
Beneficiary any document requested by Beneficiary pursuant Section 7.3(j) within
ten (10) days after such request, then Grantor irrevocably appoints Beneficiary,
with full power of substitution, as Grantor's attorney-in-fact, coupled with an
interest, with full power, in its own name or in the name of Grantor, to execute
such document on behalf of Grantor. Grantor has set forth above its full and
correct name, and Grantor does not presently use any other names or tradenames,
except for those tradenames specifically disclosed in writing by Grantor to
Beneficiary prior to the recordation of this Deed of Trust. Nothing contained in
this Article 7 shall be construed to obligate Beneficiary to act on behalf of
Grantor as attorney-in-fact.

 

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7.4           Rights and Additional Remedies of Beneficiary under Uniform
Commercial Code. Without limiting Article 4 above, upon the occurrence and
during the continuance of an Event of Default, Beneficiary shall have the
following additional rights and remedies with respect to the Personal Property
Collateral: (a) Beneficiary shall have all the rights and remedies of a secured
party under the Code and under any other applicable law, and, at Beneficiary's
option, shall also have the right to invoke any or all of the remedies provided
in Article 4 of this Deed of Trust with respect to the Personal Property
Collateral, and in exercising any of such remedies, Beneficiary may proceed
against the items of real property and any items of Personal Property Collateral
separately or together and in any order whatsoever, without in any way affecting
the availability of Beneficiary's remedies under the Code or of the remedies
provided in Article 4 of this Deed of Trust; (b) Beneficiary, at its option,
shall have the right (i) to direct any or all Account debtors to make payment
directly to Beneficiary; (ii) to demand, collect, receive and give receipts for
any and all money and other property due or to become due in connection with all
or part of the Personal Property Collateral, including any of the Accounts;
(iii) to take possession of and endorse and collect any or all notes, checks,
drafts, money orders, or other instruments of payment relating to all or part of
the Personal Property Collateral or proceeds of the Personal Property
Collateral, including any of the Accounts; and (iv) to file any claim and take
any other action which Beneficiary determines to be appropriate for the purpose
of collecting any or all of the Accounts and to compromise, adjust or settle
Accounts for less than face value thereof, and to execute all releases and other
documents in connection therewith; provided, however, that Beneficiary shall not
be obligated in any manner to make any demand for or to make any inquiry as to
the nature or sufficiency of any payment received by it, or to present or file
any claim or take any action to collect or enforce the payment of any or all of
the Accounts; (c) should Beneficiary seek to take possession of any or all of
the Personal Property Collateral by court process, Grantor irrevocably and
unconditionally agrees that a receiver may be appointed by a court for such
purpose without regard to the adequacy of the security for the Obligations; and
(d) Grantor irrevocably appoints Beneficiary, with full power of substitution,
as Grantor's attorney-in-fact, coupled with an interest, with full power, in its
own name or in the name of Grantor to take any or all of the actions described
in Section 7.4(b) after the occurrence and during the continuance of an Event of
Default. Beneficiary, at its option, and whether or not an Event of Default
exists, shall at all times have the right [A] to take such actions as
Beneficiary determines to be necessary or appropriate to maintain, preserve and
protect the Personal Property Collateral and Beneficiary's security interest
therein; and [B] to give notice to any Account debtor containing such
information and instructions concerning the existence of Beneficiary's security
interest and rights in the Personal Property Collateral under this Deed of Trust
as Beneficiary determines to be necessary or appropriate to protect its
interest.

 

7.5           Fixtures. The Personal Property Collateral in which Beneficiary
has a security interest under this Article 7 includes goods which are or may
become Fixtures on the Property. This Deed of Trust constitutes a fixture filing
pursuant to the terms of Section 9502 of the Code which shall be recorded in the
real estate records of the county in which the Property is located and that
relates to the Property more particularly described in this Deed of Trust. In
that regard, the following information is provided:

 

Name of Debtor: Behringer Harvard Mockingbird Commons, LLC     Address of
Debtor: 15601 Dallas Parkway, Suite 600, Addison, Texas 75001-6026

 

Name of Secured Party: Great American Life Insurance Company     Address of
Secured Party: c/o American Real Estate Capital, Two Alhambra Plaza, Suite 1280,
Coral Gables, Florida 33134

 

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ARTICLE 8

 

ENVIRONMENTAL AND HUMAN HEALTH MATTERS

 

8.1           Hazardous Waste and Other Substances.

 

(a)          Grantor hereby represents and warrants to Beneficiary that, as of
the date hereof, except as disclosed in that certain Phase 1 Environmental Site
Assessment Report prepared by Partner Engineering and Science, Inc., dated
November 30, 2012, Beneficiary has received with respect to the Property: (i) to
the best of Grantor’s knowledge, information and belief, none of Grantor nor the
Property nor any Tenant at the Property the operations conducted thereon is in
direct or indirect violation of or otherwise exposed to any liability under any
local, state or federal law, rule or regulation or common law duty pertaining to
human health, natural resources or the environment, including, without
limitation, the Comprehensive Environmental Response, Compensation and Liability
Act of 1980 (42 U.S.C. §9601 et seq. and 40 CFR §302.1 et. seq. ("CERCLA"), the
Resource Conservation and Recovery Act of 1976 (42 U.S.C. §6901 et seq.), the
Federal Water Pollution Control Act (33 U.S.C. §1251 et seq. and 40 CFR §116.1
et. seq.), the Clean Air Act (42 U.S.C. §7401 et seq.), the Emergency Planning
and Community-Right-to-Know Act (42 U.S.C. §11001 et seq.), the Endangered
Species Act (16 U.S.C. §1531 et seq.), the Toxic Substances Control Act (15
U.S.C. §2601 et seq.), the Occupational Safety and Health Act (29 U.S.C. §651 et
seq.), those relating to lead based paint, and the Hazardous Materials
Transportation Act (49 U.S.C. §1801 et seq.), and the regulations promulgated
pursuant to said laws, all as amended from time to time (collectively, the
"Environmental Law" or "Environmental Laws") or otherwise exposed to any
liability under any Environmental Law relating to or affecting the Property,
whether or not used by or within the control of Grantor; (ii) to the best of
Grantor’s knowledge, information and belief, no hazardous, toxic or harmful
substances, wastes, materials, pollutants, or contaminants (including, without
limitation, asbestos or asbestos-containing materials, polychlorinated
biphenyls, petroleum or petroleum products or byproducts, flammable explosives,
radioactive materials, paint containing more than 0.5% lead by dry weight ("Lead
Based Paint") infectious substances, radon gas or raw materials which include
hazardous constituents) or Microbial Matter (hereinafter defined) or any other
substances or materials which are included under or regulated by Environmental
Laws (collectively, "Hazardous Substances") are located on, in or under or have
been handled, generated, stored, processed or disposed of on or released or
discharged from the Property (including underground contamination), except for
those substances used by Grantor or any Tenant in the ordinary course of their
respective businesses and in compliance with all Environmental Laws and where
such use could not reasonably be expected to give rise to liability under
Environmental Laws; (iii) the Property is not subject to any private or
governmental lien or judicial or administrative notice or action relating to
Hazardous Substances; (iv) there is no pending, nor, to Grantor’s knowledge,
information or belief, threatened litigation arising under Environmental Laws
affecting Grantor or the Property; to the best of Grantor’s knowledge,
information and belief, there are no and have been no existing or closed
underground storage tanks or other underground storage receptacles for Hazardous
Substances or landfills or dumps on the Property; (v) Grantor has received no
notice of, and to the best of Grantor’s knowledge and belief, there exists no
investigation, action, proceeding or claim by any agency, authority or unit of
government or by any third party which could result in any liability, penalty,
sanction or judgment under any Environmental Laws with respect to any condition,
use or operation of the Property, nor does Grantor know of any basis for an
investigation, action, proceeding or claim; (vi) Grantor has received no notice
of and, to the best of Grantor’s knowledge and belief, there has been no claim
by any party that any use, operation or condition of the Property has caused any
nuisance or any other liability or adverse condition on any other property, nor
does Grantor know of any basis for such a claim; and (vii) to the best of
Grantor’s knowledge information and belief, radon is not present at the Property
in excess or in violation of any applicable thresholds or standards or in
amounts that require disclosure under applicable law to any tenant or occupant
of or invitee to the Property or to any governmental agency or the general
public. "Microbial Matter" shall mean the presence of fungi or bacterial matter
which reproduces through the release of spores or the splitting of cells,
including, but not limited to, mold, mildew and viruses, whether or not such
Microbial Matter is living.

 

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(b)          Grantor has not received nor to the best of Grantor’s knowledge,
information and belief has there been issued, any notice, notification, demand,
request for information, citation, summons, or order in any way relating to any
actual, alleged or potential violation or liability arising under Environmental
Laws.

 

(c)          Neither the Property, nor to the best of Grantor’s knowledge,
information and belief, any property to which Grantor has, in connection with
the maintenance or operation of the Property, directly or indirectly transported
or arranged for the transportation of any Hazardous Substances is listed or, to
the best of Grantor’s knowledge, information and belief, proposed for listing on
the National Priorities List promulgated pursuant to CERCLA, on CERCLIS (as
defined in CERCLA) or on any similar federal or state list of sites requiring
environmental investigation or clean-up.

 

(d)          Grantor shall comply with all applicable Environmental Laws.
Grantor shall keep or cause the Property to be kept free from Hazardous
Substances (except those substances used by Grantor or any Tenant in the
ordinary course of their respective businesses in compliance with all
Environmental Laws and where such use could not reasonably be expected to give
rise to liability under Environmental Laws) and in compliance with all
Environmental Laws Grantor shall not install or use any underground storage
tanks, shall expressly prohibit the use, generation, handling, storage,
production, processing and disposal of Hazardous Substances by all Tenants in
quantities or conditions that would violate or give rise to any obligation to
take remedial or other action under any applicable Environmental Laws. Without
limiting the generality of the foregoing, during the term of this Deed of Trust,
Grantor shall not install in the Improvements or permit to be installed in the
Improvements any asbestos or asbestos-containing material.

 

(e)          Grantor shall promptly notify Beneficiary if Grantor shall become
aware of (i) the actual or potential existence of any Hazardous Substances on
the Property other than those occurring in the ordinary course of Grantor’s or
any Tenant’s business which do not violate, or would not otherwise give rise to
liability under Environmental Laws, (ii) any direct or indirect violation of, or
other exposure to liability under, any Environmental Laws, (iii) any lien,
action or notice affecting the Property or Grantor resulting from any violation
or alleged violation of or liability or alleged liability under any
Environmental Laws, (iv) the institution of any investigation, inquiry or
proceeding concerning Grantor or the Property pursuant to any Environmental Laws
or otherwise relating to Hazardous Substances, or (v) the discovery of any
occurrence, condition or state of facts which would render any representation or
warranty contained in this Deed of Trust incorrect in any respect if made at the
time of such discovery. Immediately upon receipt of same, Grantor, shall deliver
to Beneficiary copies of any and all requests for information, complaints,
citations, summonses, orders, notices, reports, permits, applications or other
communications, documents or instruments in any way relating to any actual,
alleged or potential violation or liability of any nature whatsoever arising
under the Environmental Laws and relating to the Property or to Grantor. Grantor
shall remedy or cause to be remedied in a timely manner (and in any event within
the time period permitted by applicable Environmental Laws) any violation of
Environmental Laws or any condition that could give rise to liability under
Environmental Laws. Without limiting the foregoing, Grantor shall, promptly (on
its own initiative or if required by Beneficiary) and regardless of the source
of the contamination or threat to the environment or human health, at its own
cost and expense, take all actions as shall be necessary or prudent, for the
clean-up of any and all portions of the Property or other affected property,
including, without limitation, all investigative, monitoring, removal,
containment and remedial actions in accordance with all applicable Environmental
Laws (and in all events in a manner satisfactory to Beneficiary) and shall
further pay or cause to be paid, at no expense to Beneficiary, all clean-up,
administrative and enforcement costs of applicable governmental agencies which
may be asserted against the Property. In the event Grantor fails to do so,
Beneficiary may, but shall not be obligated to, cause the Property or other
affected property to be freed from any Hazardous Substances or otherwise brought
into conformance with Environmental Laws and any and all costs and expenses
incurred by Beneficiary in connection therewith, together with interest thereon
at the Default Rate from the date incurred by Beneficiary until actually paid by
Grantor, shall be immediately paid by Grantor on demand and shall be secured by
this Deed of Trust and by all of the other Loan Documents securing all or any
part of the Loan. Grantor hereby grants to Beneficiary and its agents and
employees access to the Property and a license to remove any items deemed by
Beneficiary to be Hazardous Substances and to do all things Beneficiary shall
deem necessary to bring the Property into conformance with Environmental Laws.

 

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(f)          Grantor covenants and agrees, at Grantor’s sole cost and expense,
to indemnify, defend (at trial and appellate levels, and with attorneys,
consultants and experts acceptable to Beneficiary), and hold Beneficiary
harmless from and against any and all liens, damages (including without
limitation, punitive or exemplary damages), losses, liabilities (including,
without limitation, strict liability), obligations, settlement payments,
penalties, fines, assessments, citations, directives, claims, litigation,
demands, defenses, judgments, suits, proceedings, costs, disbursements or
expenses of any kind or of any nature whatsoever (including, without limitation,
reasonable attorneys’, consultants’ and experts’ fees and disbursements actually
incurred in investigating, defending, settling or prosecuting any claim,
litigation or proceeding) which may at any time be imposed upon, incurred by or
asserted or awarded against Beneficiary or the Property, and arising directly or
indirectly from or out of: (i) any violation or alleged violation of, or
liability or alleged liability under, any Environmental Law; (ii) the presence,
release or threat of release of or exposure to any Hazardous Substances on, in,
under or affecting all or any portion of the Property or any surrounding areas,
regardless of whether or not caused by or within the control of Grantor; (iii)
any transport, treatment, recycling, storage, disposal or arrangement therefor
of Hazardous Substances whether on the Property, originating from the Property,
or otherwise associated with Grantor or any operations conducted on the Property
at any time; (iv) the failure by Grantor to comply fully with the terms and
conditions of this Section 8.1; (v) the breach of any representation or warranty
contained in this Section 8.1; (vi) the enforcement of this Section 8.1,
including, without limitation, the cost of assessment, investigation,
containment, removal and/or remediation of any and all Hazardous Substances from
all or any portion of the Property or any surrounding areas, the cost of any
actions taken in response to the presence, release or threat of release of any
Hazardous Substances on, in, under or affecting any portion of the Property or
any surrounding areas to prevent or minimize such release or threat of release
so that it does not migrate or otherwise cause or threaten danger to present or
future public health, safety, welfare or the environment, and costs incurred to
comply with the Environmental Laws in connection with all or any portion of the
Property or any surrounding areas. The indemnity set forth in this Section 8.1
shall also include any diminution in the value of the security afforded by the
Property or any future reduction in the sales price of the Property by reason of
any matter set forth in this Section 8.1. The foregoing indemnity shall
specifically not include any such costs relating to Hazardous Substances which
are initially placed on, in or under the Property after foreclosure or other
taking of title to the Property by Beneficiary or its successor or assigns.
Beneficiary’s rights under this Section 8.1(f) shall survive payment in full of
the Loan, taking of title to the Property by Beneficiary or its successors or
assigns and foreclosure of this Deed of Trust, and shall be in addition to all
other rights of Beneficiary under this Deed of Trust, the Note and the other
Loan Documents.

 

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(g)          Upon Beneficiary’s request, at any time after the occurrence and
during the continuance of an Event of Default or at such other time as
Beneficiary has reasonable grounds to believe that Hazardous Substances are or
have been released, stored or disposed of on or around the Property in violation
of the Environmental Laws or that the Property may otherwise be in violation of
the Environmental Laws, Grantor shall perform or cause to be performed, at
Grantor’s sole cost and expense and in scope, form and substance reasonably
satisfactory to Beneficiary, an inspection or audit of the Property prepared by
a hydrogeologist or environmental engineer or other appropriate consultant
approved by Beneficiary indicating the presence or absence of Hazardous
Substances on the Property, the compliance or non-compliance status of the
Property and the operations conducted thereon with applicable Environmental
Laws, or an inspection or audit of the Property prepared by an engineering or
consulting firm approved by Beneficiary indicating the presence or absence of
friable asbestos or substances containing asbestos, lead or substances
containing lead or Lead Based Paint on the Property. If Grantor fails to provide
reports of such inspection or audit within thirty (30) days after such request,
Beneficiary may order the same, and Grantor hereby grants to Beneficiary and its
employees and agents access to the Property and an irrevocable license to
undertake such inspection or audit. The cost of such inspection or audit,
together with interest thereon at the Default Rate from the date incurred by
Beneficiary until actually paid by Grantor, shall be immediately due and payable
to Beneficiary by Grantor on demand and shall be secured by this Deed of Trust
and by all of the other Loan Documents securing all or any part of the Loan.

 

(h)           Reference is made to that certain Hazardous Substances Indemnity
Agreement of even date herewith by and among Grantor and (as hereafter amended
from time to time, the "Hazardous Substances Indemnity Agreement"). The
provisions of this Deed of Trust and the Hazardous Substances Indemnity
Agreement shall be read together to maximize the coverage with respect to the
subject matter thereof, as determined by Beneficiary.

 

(i)          Grantor agrees that if it has been, or if at any time hereafter it
is, determined that the Property contains either Lead Based Paint or Microbial
Matter, on or before thirty (30) days following (i) the date hereof, if such
determination was made prior to the date hereof or (ii) such determination, if
such determination is hereafter made, as applicable, Grantor shall, at its sole
cost and expense, develop and implement, and thereafter diligently and
continuously carry out (or cause to be developed and implemented and thereafter
diligently and continually to be carried out), an operations, abatement and
maintenance plan for the Lead Based Paint or Microbial Matter, as applicable on
or at the Property, which plans shall be prepared by an expert, and be in form,
scope and substance, acceptable to Beneficiary (together with any Lead Based
Paint Report or Microbial Matter Report, as applicable, an "O&M Plan"). (If an
O&M Plan has been prepared prior to the date hereof, Grantor agrees to
diligently and continually carry out (or cause to be carried out) the provisions
thereof.) Compliance with the O&M Plan shall require or be deemed to require,
without limitation, the proper preparation and maintenance of all records,
papers and forms required under the Environmental Laws.

 

(j)          Notwithstanding the foregoing provisions of this Deed of Trust to
the contrary, the liabilities and obligations of Grantor hereunder shall not
apply to such liabilities and obligations which relate to Hazardous Substances
that were not present on or a threat to the Property prior to the date, if ever,
that Beneficiary or its nominee acquired title to the Property, whether by
foreclosure, exercise of power of sale or otherwise.  Grantor shall have the
burden of proof as to whether the Hazardous Substances were present or a threat
to the Property prior to the date, if ever, that Beneficiary or its nominee
acquired title to the Property, whether by foreclosure, exercise of power of
sale or otherwise and the fact that such presence or threat was known or not
known to Beneficiary or Grantor prior to such date shall be irrelevant.

 

THIS DEED OF TRUST AND THE OTHER DOCUMENTS RELATED THERETO REPRESENT THE FINAL
WRITTEN AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF
PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE
NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.

 

69

 

 

IN WITNESS WHEREOF, Grantor has on the date set forth in the acknowledgment
hereto, effective as of the date first above written, caused this Deed of Trust
to be duly EXECUTED AND DELIVERED, UNDER SEAL, by authority duly given.

 

 

  GRANTOR:         BEHRINGER HARVARD MOCKINGBIRD COMMONS, LLC, a Delaware
limited liability company         By: Behringer Harvard Mockingbird Commons GP  
  LLC, a Texas limited liability company,     Its Manager           By: /s/
Michael J. O’Hanlon     Name: Michael J. O’Hanlon     Title: Chief Executive
Officer

 

STATE OF TEXAS )     ) ss:       COUNTY OF DALLAS )  

 

On the ___ day of _________, 2012, before me, the undersigned, personally
appeared ____________________, of Behringer Harvard Mockingbird Commons GP, LLC,
a Texas limited liability company, which is the Manager of Behringer Havard
Mockingbird Commons, LLC, a Delaware limited liability company, personally known
to me or proved to me on the basis satisfactory evidence to be the individual
whose name is subscribed to the within instrument, and acknowledged to me that
he executed the same on behalf of Behringer Harvard Mockingbird Commons GP, LLC,
acting for and on behalf of Behringer Harvard Mockingbird Commons, LLC.

 

[SEAL]     Notary Public:

 

70

 

 

DEED OF TRUST

 

EXHIBIT "A"

 

LEGAL DESCRIPTION

 

THE REAL PROPERTY REFERRED TO HEREIN IS ALL THAT CERTAIN REAL PROPERTY LOCATED
IN THE CITY OF DALLAS, COUNTY OF DALLAS, STATE OF TEXAS DESCRIBED AS FOLLOWS:

TRACT I:

 

Unit *, of M CENTRAL MASTER CONDOMINIUM, a Condominium regime in the City of
Dallas, Dallas County, Texas, according to the Declaration filed for record on
September 16, 2005, and recorded in Volume 2005182, Page 111, Real Property
Records, Dallas County, Texas, and affected by First Amendment recorded under
Clerk's File No. 200600480560, Real Property Records, Dallas County, Texas, and
affected by Second Amendment recorded under Clerk's File No. 20070028530, Real
Property Records, Dallas County, Texas, together with an undivided interest in
the General Common Elements as described in and allocated pursuant to said
Declaration, and together with the exclusive use of the Limited Common Elements
appurtenant thereto, all as described in said

Declaration.

 

Unit *

 

Hotel Unit

Retail Unit

Hotel Room Unit 1

Hotel Room Unit 2

Hotel Room Unit 3

Hotel Room Unit 4

 

TRACT II:

 

Unit *, of M CENTRAL RESIDENCES, a Condominium regime in the City of Dallas,
Dallas County, Texas, according to the Declaration filed for record on September
16, 2005, and recorded in Volume 2005182, Page 204, Real Property Records,
Dallas County, Texas, and affected by First Amendment recorded under Clerk's
File No. 200600480562, Real Property Records, Dallas County, Texas, and affected
by Second Amendment recorded under Clerk's File No. 20070028529, Real Property
Records, Dallas County, Texas, together with an undivided allocated percent
interest in the Residential General Common Elements as described in and
allocated pursuant to said Declaration, and together with the exclusive use of
the Residential Limited Common Elements appurtenant thereto, all as described in
said Declaration.

 

Unit *

 

Loft 304

Penthouse in Hotel Tower