this instrument prepared by     and when recorded return to:    
Kilpatrick Stockton LLP     Hearst Tower, Suite 2500     214 North Tryon Street
    Charlotte, North Carolina 28202     Attn: James M. Tucker, Esq.    
 
  (SPACE ABOVE THIS LINE FOR RECORDER’S USE)

Loan No.: 50-2860302 Walker Ranch Apartments

APARTMENT REIT WALKER RANCH, LP,
as Borrower

to

WILLIAM M. WOODALL, as Trustee

For the benefit of

WACHOVIA BANK, NATIONAL ASSOCIATION, as Lender

DEED OF TRUST, SECURITY AGREEMENT AND FIXTURE FILING

Dated as of: April 12, 2007

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

1

TABLE OF CONTENTS

Page

      ARTICLE I. REPRESENTATIONS AND WARRANTIES OF BORROWER

 
     

 
   
1.1
  Organization; Special Purpose
 
   
1.2
  Title
 
   
1.3
  No Bankruptcy Filing
 
   
1.4
  Full and Accurate Disclosure
 
   
1.5
  Proceedings; Enforceability
 
   
1.6
  No Conflicts
 
   
1.7
  Federal Reserve Regulations; Investment Company Act
 
   
1.8
  Taxes
 
   
1.9
  ERISA
 
   
1.10
  Property Compliance
 
   
1.11
  Utilities
 
   
1.12
  Public Access
 
   
1.13
  Litigation; Agreements
 
   
1.14
  Physical Condition
 
   
1.15
  Contracts
 
   
1.16
  Leases
 
   
1.17
  Foreign Person
 
   
1.18
  Management Agreement
 
   
1.19
  Fraudulent Transfer
 
   
1.20
  Foreign Assets Control
 
   

      ARTICLE II. COVENANTS OF BORROWER

 
     

 
   
2.1
  Defense of Title
 
   
2.2
  Performance of Obligations
 
   
2.3
  Insurance
 
   
2.4
  Payment of Taxes
 
   
2.5
  Casualty and Condemnation
 
   
2.6
  Construction Liens
 
   
2.7
  Rents and Profits
 
   
2.8
  Leases
 
   
2.9
  Alienation and Further Encumbrances
 
   
2.10
  Payment of Utilities, Assessments, Charges, Etc
 
   
2.11
  Access Privileges and Inspections
 
   
2.12
  Waste; Alteration of Improvements
 
   
2.13
  Zoning
 
   
2.14
  Financial Statements and Books and Records
 
   
2.15
  Further Assurances
 
   
2.16
  Payment of Costs; Reimbursement to Lender
 
   
2.17
  Security Interest
 
   
2.18
  Security Agreement
 
   
2.19
  Easements and Rights-of-Way
 
   
2.20
  Compliance with Laws
 
   
2.21
  Additional Taxes
 
   
2.22
  Secured Indebtedness
 
   
2.23
  Borrower’s Waivers
 
   
2.24
  SUBMISSION TO JURISDICTION; WAIVER OF JURY TRIAL
 
   
2.25
  Attorney-in-Fact Provisions
 
   
2.26
  Management
 
   
2.27
  Hazardous Waste and Other Substances
 
   
2.28
  Indemnification; Subrogation
 
   

2.29 Covenants with Respect to Existence, Indebtedness, Operations, Fundamental
Changes of Borrower

     
2.30
  Embargoed Person
 
   
2.31
  Anti-Money Laundering
 
   
2.32
  ERISA
 
   
2.33
  Opinion Assumptions
 
   

      ARTICLE III. RESERVES AND CASH MANAGEMENT

 
     

 
   
3.1
  Reserves Generally
 
   
3.2
  Intentionally Deleted
 
   
3.3
  Impound Account
 
   
3.4
  Intentionally Deleted
 
   
3.5
  Replacement Reserve
 
   

      ARTICLE IV. EVENTS OF DEFAULT

 
     

 
   
4.1
  Events of Default
 
   

     
ARTICLE V. REMEDIES
 

 
     

 
   
5.1
  Remedies Available
 
   
5.2
  Application of Proceeds
 
   
5.3
  Right and Authority of Receiver or Lender in the Event of Default; Power of
Attorney
 
   
5.4
  Occupancy After Foreclosure
 
   
5.5
  Notice to Account Debtors
 
   
5.6
  Cumulative Remedies
 
   
5.7
  Payment of Expenses
 
   

      ARTICLE VI. MISCELLANEOUS TERMS AND CONDITIONS

 
     

 
   
6.1
  Time of Essence
 
   
6.2
  Release of Deed of Trust
 
   
6.3
  Certain Rights of Lender
 
   
6.4
  Waiver of Certain Defenses
 
   
6.5
  Notices
 
   
6.6
  Successors and Assigns; Joint and Several Liability
 
   
6.7
  Severability
 
   
6.8
  Gender
 
   
6.9
  Waiver; Discontinuance of Proceedings
 
   
6.10
  Section Headings
 
   
6.11
  GOVERNING LAW
 
   
6.12
  Counting of Days
 
   
6.13
  Relationship of the Parties
 
   
6.14
  Application of the Proceeds of the Note
 
   
6.15
  Unsecured Portion of Indebtedness
 
   
6.16
  Cross Default
 
   
6.17
  Interest After Sale
 
   
6.18
  Inconsistency with Other Loan Documents
 
   
6.19
  Construction of this Document
 
   
6.20
  No Merger
 
   
6.21
  Rights With Respect to Junior Encumbrances
 
   
6.22
  Lender May File Proofs of Claim
 
   
6.23
  Fixture Filing
 
   
6.24
  After-Acquired Property
 
   
6.25
  No Representation
 
   
6.26
  Counterparts
 
   
6.27
  Personal Liability
 
   
6.28
  Recording and Filing
 
   
6.29
  Intentionally Deleted
 
   
6.30
  Maximum Interest
 
   
6.31
  Secondary Market
 
   
6.32
  Dissemination of Information
 
   
6.33
  Intentionally Deleted
 
   
6.34
  REMIC Opinions
 
   

      ARTICLE VII. CONCERNING THE TRUSTEE

 
     

 
   
7.1
  Certain Rights
 
   
7.2
  Retention of Money
 
   
7.3
  Successor Trustees
 
   
7.4
  Perfection of Appointment
 
   
7.5
  Succession Instruments
 
   
7.6
  No Representation by Trustee or Lender
 
   
7.7
  Entire Agreement and Modifications
 
   

2

DEED OF TRUST, SECURITY AGREEMENT

AND FIXTURE FILING

THIS DEED OF TRUST, SECURITY AGREEMENT AND FIXTURE FILING (as the same may from
time to time be amended, consolidated, renewed or replaced, this “Deed of
Trust”) is made as of April 12, 2007 by APARTMENT REIT WALKER RANCH, LP, a Texas
limited partnership (“Borrower”), having an address at c/o Triple Net
Properties, LLC, 1551 North Tustin Avenue, Suite 300, Santa Ana, California
92705, to WILLIAM M. WOODALL, an individual and resident of Texas, as Trustee
(“Trustee”), having an address at 8201 Preston Road, Suite 280, Dallas, Texas
75225, for the benefit of WACHOVIA BANK, NATIONAL ASSOCIATION, a national
banking association, as beneficiary (together with its successors and assigns,
“Lender”), whose address is Commercial Real Estate Services, 8739 Research Drive
URP - 4, NC 1075, Charlotte, North Carolina 28262.

W I T N E S S E T H:

THAT FOR AND IN CONSIDERATION OF THE SUM OF TEN AND NO/100 DOLLARS ($10.00), AND
OTHER VALUABLE CONSIDERATION, THE RECEIPT AND SUFFICIENCY OF WHICH ARE HEREBY
ACKNOWLEDGED, BORROWER HEREBY IRREVOCABLY GRANTS, BARGAINS, SELLS AND CONVEYS to
Trustee in trust, for the benefit of Lender, with power of sale, all of
Borrower’s estate, right, title and interest in, to and under any and all of the
following described property, whether now owned or hereafter acquired by
Borrower (collectively, the “Property”):

(A) All that certain real property situated in the County of Bexar, State of
Texas, more particularly described on Exhibit “A” attached hereto and
incorporated herein by this reference (the “Premises”), together with all of the
easements, rights, privileges, franchises, tenements, hereditaments and
appurtenances now or hereafter thereunto belonging or in any way appertaining
thereto, and all of the estate, right, title, interest, claim and demand
whatsoever of Borrower therein or thereto, either at law or in equity, in
possession or in expectancy, now or hereafter acquired;

(B) All structures, buildings and improvements of every kind and description now
or at any time hereafter located or placed on the Premises (the “Improvements”);

(C) All furniture, furnishings, fixtures, goods, equipment, inventory or
personal property owned by Borrower and now or hereafter located on, attached to
or used in and about the Improvements, including, but not limited to, all
machines, engines, boilers, dynamos, elevators, stokers, tanks, cabinets,
awnings, screens, shades, blinds, carpets, draperies, lawn mowers, and all
appliances, plumbing, heating, air conditioning, lighting, ventilating,
refrigerating, disposal and incinerating equipment, and all fixtures and
appurtenances thereto, and such other goods and chattels and personal property
owned by Borrower as are now or hereafter used or furnished in operating the
Improvements, or the activities conducted therein, and all building materials
and equipment hereafter situated on or about the Premises or Improvements, and
all warranties and guaranties relating thereto, and all additions thereto and
substitutions and replacements therefor (exclusive of any of the foregoing owned
or leased by tenants of space in the Improvements);

(D) All easements, rights-of-way, strips and gores of land, vaults, streets,
ways, alleys, passages, sewer rights, and other emblements now or hereafter
located on the Premises or under or above the same or any part or parcel
thereof, and all estates, rights, titles, interests, tenements, hereditaments
and appurtenances, reversions and remainders whatsoever, in any way belonging,
relating or appertaining to the Property or any part thereof, or which hereafter
shall in any way belong, relate or be appurtenant thereto, whether now owned or
hereafter acquired by Borrower;

(E) All water, ditches, wells, reservoirs and drains and all water, ditch, well,
reservoir and drainage rights which are appurtenant to, located on, under or
above or used in connection with the Premises or the Improvements, or any part
thereof, whether now existing or hereafter created or acquired;

(F) All minerals, crops, timber, trees, shrubs, flowers and landscaping features
now or hereafter located on, under or above the Premises;

(G) All cash funds, deposit accounts and other rights and evidence of rights to
cash, now or hereafter created or held by Lender pursuant to this Deed of Trust
or any other of the Loan Documents (as hereinafter defined), including, without
limitation, all funds now or hereafter on deposit in the Reserves (as
hereinafter defined);

(H) All leases (including, without limitation, oil, gas and mineral leases),
licenses, concessions and occupancy agreements of all or any part of the
Premises or the Improvements (each, a “Lease” and collectively, “Leases”),
whether written or oral, now or hereafter entered into and all rents, royalties,
issues, profits, bonus money, revenue, income, rights and other benefits
(collectively, the “Rents and Profits”) of the Premises or the Improvements, now
or hereafter arising from the use or enjoyment of all or any portion thereof or
from any present or future Lease or other agreement pertaining thereto or
arising from any of the Leases or any of the General Intangibles (as hereinafter
defined) and all cash or securities deposited to secure performance by the
tenants, lessees or licensees (each, a “Tenant” and collectively, “Tenants”), as
applicable, of their obligations under any such Leases, whether said cash or
securities are to be held until the expiration of the terms of said Leases or
applied to one or more of the installments of rent coming due prior to the
expiration of said terms, subject, however, to the provisions contained in
Section 2.7 hereinbelow;

(I) All contracts and agreements now or hereafter entered into covering any part
of the Premises or the Improvements (collectively, the “Contracts”) and all
revenue, income and other benefits thereof, including, without limitation,
management agreements, service contracts, maintenance contracts, equipment
leases, personal property leases and any contracts or documents relating to
construction on any part of the Premises or the Improvements (including plans,
drawings, surveys, tests, reports, bonds and governmental approvals) or to the
management or operation of any part of the Premises or the Improvements;

(J) All present and future monetary deposits given to any public or private
utility with respect to utility services furnished to any part of the Premises
or the Improvements;

(K) All present and future funds, accounts, instruments, accounts receivable,
documents, causes of action, claims, general intangibles (including, without
limitation, trademarks, trade names, service marks and symbols now or hereafter
used in connection with any part of the Premises or the Improvements, all names
by which the Premises or the Improvements may be operated or known, all rights
to carry on business under such names, and all rights, interest and privileges
which Borrower has or may have as developer or declarant under any covenants,
restrictions or declarations now or hereafter relating to the Premises or the
Improvements) and all notes or chattel paper now or hereafter arising from or by
virtue of any transactions related to the Premises or the Improvements
(collectively, the “General Intangibles”);

(L) All water taps, sewer taps, certificates of occupancy, permits, licenses,
franchises, certificates, consents, approvals and other rights and privileges
now or hereafter obtained in connection with the Premises or the Improvements
and all present and future warranties and guaranties relating to the
Improvements or to any equipment, fixtures, furniture, furnishings, personal
property or components of any of the foregoing now or hereafter located or
installed on the Premises or the Improvements;

(M) All building materials, supplies and equipment now or hereafter placed on
the Premises or in the Improvements and all architectural renderings, models,
drawings, plans, specifications, studies and data now or hereafter relating to
the Premises or the Improvements;

(N) All right, title and interest of Borrower in any insurance policies or
binders now or hereafter relating to the Property, including any unearned
premiums thereon;

(O) All proceeds, products, substitutions and accessions (including claims and
demands therefor) of the conversion, voluntary or involuntary, of any of the
foregoing into cash or liquidated claims, including, without limitation,
proceeds of insurance and condemnation awards; and

(P) All other or greater rights and interests of every nature in the Premises or
the Improvements and in the possession or use thereof and income therefrom,
whether now owned or hereafter acquired by Borrower.

FOR THE PURPOSE OF SECURING:

(1) The loan (the “Loan”) evidenced by that certain Promissory Note (such
Promissory Note, together with any and all renewals, amendments, modifications,
consolidations and extensions thereof, is hereinafter referred to as the “Note”)
of even date with this Deed of Trust, made by Borrower payable to the order of
Lender in the principal face amount of Twenty Million and No/100 Dollars
($20,000,000.00), together with interest as therein provided; and having a
maturity date of May 11, 2017;

(2) The full and prompt payment and performance of all of the provisions,
agreements, covenants and obligations herein contained and contained in any
other agreements, documents or instruments now or hereafter evidencing, securing
or otherwise relating to the Debt (as hereinafter defined) including the
Environmental Indemnity Agreement (as hereinafter defined) and the Indemnity and
Guaranty Agreement (as hereinafter defined) (the Note, this Deed of Trust, and
such other agreements, documents and instruments, together with any and all
renewals, amendments, extensions and modifications thereof, are hereinafter
collectively referred to as the “Loan Documents”) and the payment of all other
sums herein or therein covenanted to be paid;

(3) Any and all additional advances made by Lender to protect or preserve the
Property or the lien or security interest created hereby on the Property, or for
taxes, assessments or insurance premiums as hereinafter provided or for
performance of any of Borrower’s obligations hereunder or under the other Loan
Documents or for any other purpose provided herein or in the other Loan
Documents (whether or not the original Borrower remains the owner of the
Property at the time of such advances); and

(4) Any and all other indebtedness now owing or which may hereafter be owing by
Borrower to Lender, including, without limitation, all prepayment fees, however
and whenever incurred or evidenced, whether express or implied, direct or
indirect, absolute or contingent, or due or to become due, and all renewals,
modifications, consolidations, replacements and extensions thereof, it being
contemplated by Borrower and Lender that Borrower may hereafter become so
indebted to Lender.

(All of the sums referred to in Paragraphs (1) through (4) above are herein
referred to as the “Debt”).

TO HAVE AND TO HOLD the Property unto Trustee, its successors, substitutes or
assigns, in trust, and Borrower does hereby bind itself, its successors and
assigns, to WARRANT AND FOREVER DEFEND the title to the Property, subject to the
Permitted Encumbrances (as hereinafter defined), unto Trustee against every
person whomsoever lawfully claiming or to claim the same or any part thereof;

PROVIDED, HOWEVER, that if the principal and interest and all other sums due or
to become due under the Note or under the other Loan Documents, including,
without limitation, any prepayment fees required pursuant to the terms of the
Note, shall have been paid at the time and in the manner stipulated therein and
the Debt shall have been paid and all other covenants contained in the Loan
Documents shall have been performed, then, in such case, the liens, security
interests, estates and rights granted by this Deed of Trust shall be satisfied
and the estate, right, title and interest of Lender in the Property shall cease,
and upon payment to Lender of all costs and expenses incurred for the
preparation of the release hereinafter referenced and all recording costs if
allowed by law, Lender shall promptly satisfy and release this Deed of Trust of
record and the lien hereof by proper instrument.

ARTICLE I.
REPRESENTATIONS AND WARRANTIES OF BORROWER

Borrower, for itself and its successors and assigns, does hereby represent,
warrant and covenant to and with Lender, its successors and assigns, that:

1.1 Organization; Special Purpose. Borrower has been duly organized and is
validly existing and in good standing under the laws of the state of its
formation, with requisite power and authority, and all rights, licenses, permits
and authorizations, governmental or otherwise, necessary to own its properties
and to transact the business in which it is now engaged. Borrower is duly
qualified to do business and is in good standing in each jurisdiction where it
is required to be so qualified in connection with its properties, business and
operations. Borrower possesses all franchises, patents, copyrights, trademarks,
trade names, licenses and permits necessary for the conduct of its business
substantially as now conducted. Borrower is a Single-Purpose Entity in
compliance with the provisions of Section 2.29 hereof. All of the assumptions
made in that certain substantive non-consolidation opinion letter dated the date
hereof, delivered by Borrower’s counsel in connection with the Loan and any
subsequent non-consolidation opinion delivered in accordance with the terms and
conditions of this Deed of Trust (the “Non-Consolidation Opinion”), including,
but not limited to, any exhibits attached thereto, are true and correct in all
respects.

1.2 Title. Borrower has good, marketable and indefeasible fee simple title to
the Property, subject only to those matters expressly set forth as exceptions to
or subordinate matters in the title insurance policy insuring the lien of this
Deed of Trust delivered as of the date hereof which Lender has agreed to accept,
excepting therefrom all preprinted and/or standard exceptions (such items being
the “Permitted Encumbrances”), and has full power and lawful authority to grant,
bargain, sell, convey, assign, transfer, encumber and mortgage its interest in
the Property in the manner and form hereby done or intended. Borrower will
preserve its interest in and title to the Property and will forever warrant and
defend the same to Lender against any and all claims whatsoever and will forever
warrant and defend the validity and priority of the lien and security interest
created herein against the claims of all persons and parties whomsoever, subject
to the Permitted Encumbrances. Upon proper recordation and indexing, this Deed
of Trust creates (i) a valid, perfected lien on the Premises, subject only to
Permitted Encumbrances and the liens created by the Loan Documents and
(ii) perfected security interests in and to, and perfected collateral
assignments of, all personalty, all in accordance with the terms thereof, in
each case subject only to any applicable Permitted Encumbrances, such other
liens as are permitted pursuant to the Loan Documents and the liens created by
the Loan Documents. There are no security agreements or financing statements
affecting all or any portion of the Property other than (i) as disclosed in
writing by Borrower to Lender prior to the date hereof and (ii) the security
agreements and financing statements created in favor of Lender. There are no
claims for payment for work, labor or materials affecting the Premises which are
or may become a lien prior to, or of equal priority with, the liens created by
the Loan Documents. None of the Permitted Encumbrances, individually or in the
aggregate, materially interfere with the benefits of the security intended to be
provided by this Deed of Trust, materially and adversely affect the value of the
Premises, impair the use or operations of the Premises or impair Borrower’s
ability to pay its obligations in a timely manner. The foregoing warranty of
title shall survive the foreclosure of this Deed of Trust and shall inure to the
benefit of and be enforceable by Lender in the event Lender acquires title to
the Property pursuant to any foreclosure.

1.3 No Bankruptcy Filing. No bankruptcy, insolvency proceedings or liquidation
of all or a substantial portion of the Property is pending or contemplated by
Borrower or, to the best knowledge of Borrower, against Borrower or by or
against any endorser or cosigner of the Note or of any portion of the Debt, or
any guarantor or indemnitor under any guaranty or indemnity agreement,
including, without limitation, that certain Indemnity and Guaranty Agreement,
dated the date hereof, executed in favor of Lender (the “Indemnity and Guaranty
Agreement”) executed in connection with the Note or the loan evidenced thereby
and secured hereby (an “Indemnitor”). No petition in bankruptcy has been filed
against Borrower or any general partner, manager, sole member, managing member
or majority shareholder of Borrower, as applicable (collectively, the “Borrower
Parties”, each a “Borrower Party”), and neither Borrower Party or any principal
of a Borrower Party has ever made an assignment for the benefit of creditors or
taken advantage of any insolvency act for the benefit of debtors.

1.4 Full and Accurate Disclosure. No statement of fact made by Borrower in any
Loan Documents contains any untrue statement of a material fact or omits to
state any material fact necessary to make statements contained therein not
misleading. There is no material fact presently known to Borrower that has not
been disclosed to Lender which adversely affects, or, as far as Borrower can
foresee, might adversely affect, the Property or the business, operations or
condition (financial or otherwise) of Borrower. All financial data, including
the statements of cash flow and income and operating expense, that have been
delivered to Lender with respect to Borrower and the Property (i) are true,
complete and correct in all material respects, (ii) accurately represent the
financial condition of Borrower and the Property as of the date of such reports,
and (iii) to the extent prepared by an independent certified public accounting
firm, have been prepared in accordance with sound accounting practices relating
to the real estate industry, on a Cash/Tax basis, consistently applied
throughout the periods covered, except as disclosed therein. Borrower has no
contingent liabilities, liabilities for taxes, unusual forward or long-term
commitments, unrealized or anticipated losses from any unfavorable commitments
or any liabilities or obligations not expressly permitted by this Deed of Trust.
Since the date of such financial statements, there has been no materially
adverse change in the financial condition, operations or business of Borrower or
the Property from that set forth in said financial statements.

1.5 Proceedings; Enforceability. The execution, delivery and performance of this
Deed of Trust, the Note and all of the other Loan Documents have been duly
authorized by all necessary action to be, and are, binding and enforceable
against Borrower in accordance with the respective terms thereof and do not
contravene, result in a breach of or constitute a default (nor upon the giving
of notice or the passage of time or both will constitute a default) under the
partnership agreement, articles of incorporation, operating agreement or other
organizational documents of Borrower or any contract or agreement of any nature
to which Borrower is a party or by which Borrower or any of its property may be
bound and do not violate or contravene any law, order, decree, rule or
regulation to which Borrower is subject. The Loan Documents are not subject to,
and Borrower has not asserted, any right of rescission, set-off, counterclaim or
defense, including the defense of usury.

1.6 No Conflicts. Borrower is not required to obtain any consent, approval or
authorization from or to file any declaration or statement with, any
governmental authority or agency in connection with or as a condition to the
execution, delivery or performance of this Deed of Trust, the Note or the other
Loan Documents which has not been so obtained or filed. Borrower has obtained or
made all necessary (i) consents, approvals and authorizations and registrations
and filings of or with all governmental authorities or agencies and
(ii) consents, approvals, waivers and notifications of partners, stockholders,
members, creditors, lessors and other non-governmental persons and/or entities,
in each case, which are required to be obtained or made by Borrower in
connection with the execution and delivery of, and the performance by Borrower
of its obligations under, the Loan Documents.

1.7 Federal Reserve Regulations; Investment Company Act. No part of the proceeds
of the Loan will be used for the purpose of purchasing or acquiring any “margin
stock” within the meaning of Regulation T, U or X of the Board of Governors of
the Federal Reserve System or for any other purpose that would be inconsistent
with such Regulation T, U or X or any other regulation of such Board of
Governors, or for any purpose prohibited by law or any Loan Document. Borrower
is not (i) an “investment company” or a company “controlled” by an “investment
company,” within the meaning of the Investment Company Act of 1940, as amended;
(ii) 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
(iii) subject to any other federal or state law or regulation which purports to
restrict or regulate its ability to borrow money.

1.8 Taxes. Borrower and any general partner or managing member of Borrower, if
any, has filed all federal, state and local tax returns required to be filed as
of the date hereof and has paid or made adequate provision for the payment of
all federal, state and local taxes, charges and assessments payable by Borrower
and any general partner or managing member, if any, as of the date hereof.
Borrower and any general partner or managing member, if any, believe that their
respective tax returns properly reflect the income and taxes of Borrower and
said general partner or managing member, if any, for the periods covered
thereby, subject only to reasonable adjustments required by the Internal Revenue
Service or other applicable tax authority upon audit. Borrower and the Property
are free from any past due obligations for sales and payroll taxes.

1.9 ERISA. Borrower (i) has no knowledge of any material liability that has been
incurred or is expected to be incurred by Borrower that is or remains
unsatisfied for any taxes or penalties with respect to any “employee benefit
plan”, as defined in section 3(3) of the Employee Retirement Income Security Act
of 1974, as amended (“ERISA”), or any “plan” within the meaning of
Section 4975(e)(1) of the Internal Revenue Code of 1986, as amended (the “Code”)
or any other benefit plan (other than a multi-employer plan) maintained,
contributed to, or required to be contributed to by Borrower or by any entity
that is under the common control with Borrower within the meaning of ERISA
Section 4001(a)(14) (collectively, a “Plan”) or any plan that would be a Plan
but for the fact that it is a multi-employer plan within the meaning of ERISA
Section 3(37) and (ii) has made and shall continue to make when due all required
contributions to all such Plans, if any. Each such Plan, if any, has been and
will be administered in compliance with its terms and the applicable provisions
of ERISA, the 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 the tax-exempt status of any such Plan, if any, intended to be qualified
or tax-exempt. The assets of Borrower do not constitute “plan assets” of one or
more such plans within the meaning of 29 C.F.R. Section 2510.3-101.

1.10 Property Compliance. The Premises and the Improvements and the current
intended use thereof by Borrower comply in all material respects with all
applicable restrictive covenants, zoning ordinances, subdivision and building
codes, flood disaster laws, health and environmental laws and regulations and
all other ordinances, orders or requirements issued by any state, federal or
municipal authorities having or claiming jurisdiction over the Property. In the
event that all or any part of the Improvements are destroyed or damaged, said
Improvements can be legally reconstructed to their condition prior to such
damage or destruction, and thereafter exist for the same use without violating
any zoning or other ordinances applicable thereto and without the necessity of
obtaining any variances or special permits. No legal proceedings are pending or,
to the knowledge of Borrower, threatened with respect to the zoning of the
Premises. Neither the zoning nor any other right to construct, use or operate
the Premises is in any way dependent upon or related to any property other than
the Premises. All certifications, permits, licenses and approvals, including
certificates of completion and occupancy permits required for the legal use,
occupancy and operation of the Premises have been obtained and are in full force
and effect. The Premises and Improvements constitute one or more separate tax
parcels for purposes of ad valorem taxation. The Premises and Improvements do
not require any rights over, or restrictions against, other property in order to
comply with any of the aforesaid governmental ordinances, orders or
requirements.

1.11 Utilities. All utility services necessary and sufficient for the full use,
occupancy, operation and disposition of the Premises and the Improvements for
their intended purposes are available to the Property, including water, storm
sewer, sanitary sewer, gas, electric, cable and telephone facilities, through
public rights-of-way or perpetual private easements approved by Lender. The
Property is free from delinquent water charges, sewer rents, taxes and
assessments.

1.12 Public Access. All streets, roads, highways, bridges and waterways
necessary for access to and full use, occupancy, operation and disposition of
the Premises and the Improvements have been completed, have been dedicated to
and accepted by the appropriate municipal authority and are open and available
to the Premises and the Improvements without further condition or cost to
Borrower. All curb cuts, driveways and traffic signals shown on the survey
delivered to Lender prior to the execution and delivery of this Deed of Trust
are existing and have been fully approved by the appropriate governmental
authority.

1.13 Litigation; Agreements. There are no judicial, administrative, mediation or
arbitration actions, suits or proceedings pending or threatened against or
affecting Borrower (or, if Borrower is a partnership or a limited liability
company, any of its general partners or members) or the Property which, if
adversely determined, would materially impair either the Property or Borrower’s
ability to perform the covenants or obligations required to be performed under
the Loan Documents. Borrower is not a party to any agreement or instrument or
subject to any restriction which might adversely affect Borrower or the
Property, or Borrower’s business, properties, operations or condition, financial
or otherwise. Borrower is not in default in any material respect in the
performance, observance or fulfillment of any of the obligations, covenants or
conditions contained in any Permitted Encumbrance or any other agreement or
instrument to which it is a party or by which it or the Property is bound.

1.14 Physical Condition. As of the date of this Deed of Trust, (i) the Property
is free from unrepaired damage caused by fire, flood, accident or other
casualty, (ii) no part of the Premises or the Improvements has been taken in
condemnation, eminent domain or like proceeding nor is any such proceeding
pending or, to Borrower’s knowledge and belief, threatened or contemplated,
(iii) except as may otherwise be disclosed in that certain property condition
assessment (the “Property Condition Report”), dated October 17, 2006 and
prepared by Jones, Hill, McFarland & Ellis, the Improvements are structurally
sound, in good repair and free of defects in materials and workmanship and have
been constructed and installed in substantial compliance with the plans and
specifications relating thereto, and (iv) all major building systems located
within the Improvements, including, without limitation, the heating and air
conditioning systems and the electrical and plumbing systems, are in good
working order and condition.

1.15 Contracts. Borrower has delivered to Lender true, correct and complete
copies of all Contracts and all amendments thereto or modifications thereof.
Each Contract constitutes the legal, valid and binding obligation of Borrower
and, to the best of Borrower’s knowledge and belief, is enforceable against any
other party thereto. No default exists, or with the passing of time or the
giving of notice or both would exist, under any Contract which would, in the
aggregate, have a material adverse effect on Borrower or the Property. No
Contract provides any party with the right to obtain a lien or encumbrance upon
the Property superior to the lien of this Deed of Trust. All Contracts affecting
the Property have been entered into at arms-length in the ordinary course of
Borrower’s business and provide for the payment of fees in amounts and upon
terms comparable to existing market rates.

1.16 Leases. Borrower has delivered (i) a true, correct and complete schedule
(the “Rent Roll”) of all Leases 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 and (ii) true,
correct and complete copies of all Leases described in the Rent Roll. Each Lease
constitutes the legal, valid and binding obligation of Borrower and, to the best
of Borrower’s knowledge and belief, is enforceable against the Tenant thereof.
No default exists, or with the passing of time or the giving of notice or both
would exist, under any Lease which would, in the aggregate, have a material
adverse effect on Borrower or the Property. No Tenant under any Lease 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. All security deposits required under such Leases have been fully
funded and are held by Borrower in a separate segregated account or as otherwise
required by applicable law. No Lease provides any party with the right to obtain
a lien or encumbrance upon the Property superior to the lien of this Deed of
Trust. The Property forms no part of any property owned, used or claimed by
Borrower as a residence or business homestead and is not exempt from forced sale
under the laws of the state in which the Premises is located. Borrower hereby
disclaims and renounces each and every claim to all or any portion of the
Property as a homestead.

1.17 Foreign Person. Borrower is not a “foreign person” within the meaning of
§1445(f)(3) of the Code, and the related Treasury Department regulations,
including temporary regulations.

1.18 Management Agreement. The property management agreement relating to the
Premises (the “Management Agreement”) is in full force and effect and to the
best of Borrower’s knowledge, there is no default, breach or violation existing
thereunder by any party thereto beyond the expiration of applicable notice and
grace periods thereunder and no event has occurred (other than payments due but
not yet delinquent) that, with the passage of time or the giving of notice, or
both, would constitute a default, breach or violation by any party thereunder.
The fee due under the Management Agreement, and the terms and provisions of the
Management Agreement, are subordinate to this Deed of Trust.

1.19 Fraudulent Transfer. Borrower has not entered into the Loan or any Loan
Document with the actual intent to hinder, delay, or defraud any creditor, and
Borrower has received reasonably equivalent value in exchange for its
obligations under the Loan Documents. Giving effect to the transactions
contemplated by the Loan Documents, the fair saleable value of Borrower’s assets
exceeds and will, immediately following the execution and delivery of the Loan
Documents, exceed Borrower’s total liabilities, including subordinated,
unliquidated, disputed or contingent liabilities, including the maximum amount
of its contingent liabilities or its debts as such debts become absolute and
matured. Borrower’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. Borrower
does not intend to, and does not believe that it will, incur debts and
liabilities (including 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 Borrower).

1.20 Foreign Assets Control.

(a) None of the Borrower, any subsidiary of the Borrower or any Affiliate of the
Borrower or any Indemnitor (i) is a Sanctioned Person (defined below), (ii) has
more than 15% of its assets in Sanctioned Countries (defined below), or
(iii) derives more than 15% of its operating income from investments in, or
transactions with Sanctioned Persons or Sanctioned Countries. The loan proceeds
to be advanced by Lender will not be used and have not been used to fund any
operations in, finance any investments or activities in or make any payments to,
a Sanctioned Person or a Sanctioned Country. For purposes of the foregoing, a
“Sanctioned Person” shall mean (i) a person named on the list of “specially
designated nationals” or “blocked persons” maintained by the U.S. Office of
Foreign Assets Control (“OFAC”) at
http://www.treas.gov/offices/eotffc/ofac/sdn/index.html, or as otherwise
published from time to time, or (ii) (A) an agency of the government of a
Sanctioned Country, (B) an organization controlled by a Sanctioned Country, or
(C) a person resident in a Sanctioned Country, to the extent subject to a
sanctions program administered by OFAC. A “Sanctioned Country” shall mean a
country subject to a sanctions program identified on the list maintained by OFAC
and available at http://www.treas.gov/offices/eotffc/ofac/sanctions/index.html,
or as otherwise published from time to time.

(b) Lender may reject or refuse to accept any Collateral for credit toward
payment of the obligations hereunder or under any of the Loan Documents that is
an account, instrument, chattel paper, lease, or other obligation or property of
any kind due from, owed by, or belonging to, a Sanctioned Person.

(c) Notwithstanding any grant of a security interest in the Collateral by virtue
of other provisions of this Deed of Trust or under any of the Loan Documents,
(i) no account, instrument, chattel paper or other obligation or property of any
kind due from, owed by, or belonging to, a Sanctioned Person or (ii) any lease
in which the lessee is a Sanctioned Person shall be Collateral.

(d) Borrower shall pay any civil penalty or fine assessed by the U. S.
Department of the Treasury’s Office of Foreign Assets Control against, and all
reasonable costs and expenses (including counsel fees and disbursements)
incurred in connection with defense thereof by Lender as a result of the funding
of the loan proceeds by Lender hereunder or the acceptance of payments hereunder
or under the Note and other Loan Documents or of Collateral due under any of the
Loan Documents.

All of the representations and warranties in this Article I and elsewhere in the
Loan Documents (i) shall survive for so long as any portion of the Debt remains
owing to Lender and (ii) shall be deemed to have been relied upon by Lender
notwithstanding any investigation heretofore or hereafter made by Lender or on
its behalf.

ARTICLE II.
COVENANTS OF BORROWER

For the purposes of further securing the Debt and for the protection of the
security of this Deed of Trust, for so long as the Debt or any part thereof
remains unpaid, Borrower covenants and agrees as follows:

2.1 Defense of Title. If, while this Deed of Trust is in force, the title to the
Property or the interest of Lender therein shall be the subject, directly or
indirectly, of any action at law or in equity, or be attached directly or
indirectly, or endangered, clouded or adversely affected in any manner,
Borrower, at Borrower’s expense, shall take all necessary and proper steps for
the defense of said title or interest, including the employment of counsel
approved by Lender, the prosecution or defense of litigation, and the compromise
or discharge of claims made against said title or interest. Notwithstanding the
foregoing, in the event that Lender determines that Borrower is not adequately
performing its obligations under this Section, Lender may, without limiting or
waiving any other rights or remedies of Lender hereunder, take such steps with
respect thereto as Lender shall deem necessary or proper and any and all costs
and expenses incurred by Lender in connection therewith, together with interest
thereon at the Default Interest Rate (as defined in the Note) from the date
incurred by Lender until actually paid by Borrower, shall be immediately paid by
Borrower 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 indebtedness evidenced by
the Note.

2.2 Performance of Obligations. Borrower shall pay when due the principal of and
the interest on the Debt in accordance with the terms of the Note. Borrower
shall also pay all charges, fees and other sums required to be paid by Borrower
as provided in the Loan Documents, in accordance with the terms of the Loan
Documents, and shall observe, perform and discharge all obligations, covenants
and agreements to be observed, performed or discharged by Borrower set forth in
the Loan Documents in accordance with their terms. Further, Borrower shall
promptly and strictly perform and comply with all covenants, conditions,
obligations and prohibitions required of Borrower in connection with any other
document or instrument affecting title to the Property, or any part thereof,
regardless of whether such document or instrument is superior or subordinate to
this Deed of Trust.

2.3 Insurance. Borrower shall at Borrower’s expense, maintain in force and
effect on the Property at all times while this Deed of Trust continues in effect
the following insurance:

(a) Insurance against loss or damage to the Property by fire, lightning,
windstorm, tornado, hail, terrorism, riot and civil commotion, vandalism,
malicious mischief, burglary and theft and against loss and damage by such
other, further and additional risks as may be now or hereafter embraced by a
“special causes of loss” type 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 a Member of the
Appraisal Institute appraisal), 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
Lender’s election, by reference to such indices, appraisals or information as
Lender 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
and elsewhere in this Section 2.3, 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. Borrower 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 Borrower from time to time to
the extent applicable. Each policy 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 Lender’s approval. The maximum deductible shall be $25,000.00.

(b) If the “special causes of loss” policy required in subsection (a) above
excludes coverage for wind damage, Borrower shall maintain separate coverage for
such risk. Furthermore, if the Property is located in the State of Florida, or
within twenty five (25) miles of the ocean coast of the states of Texas,
Louisiana, Mississippi, Alabama, Georgia, North Carolina, Hawaii or South
Carolina, windstorm insurance must be maintained in an amount equal to the
lesser of (i) the full replacement cost of the Property or (ii) the maximum
limit of coverage available with respect to the Improvements and Equipment. If
available, a minimum of eighteen (18) months general business income coverage
specifically relating to wind damage shall be required. The maximum deductible
shall be $25,000.00.

(c) Ordinance and law insurance is required if the Property is “non-conforming”
with respect to any zoning requirements. Borrower shall maintain “Coverage A”
against loss on value to the undamaged portion of the Improvements for the full
replacement cost of the Improvements. Borrower shall also maintain “Coverage B”
against the cost of demolition in an amount equal to ten percent (10%) of the
total value of the Improvements and “Coverage C” against increased cost of
reconstruction in an amount equal to twenty percent (20%) of the total value of
the Improvements. The maximum deductible shall be $25,000.00.

(d) Commercial General Liability Insurance against claims for personal injury,
bodily injury, death and property damage occurring on, in or about the Premises
or the Improvements in amounts not less than $1,000,000.00 per occurrence and
$2,000,000.00 in the aggregate plus umbrella coverage in an amount not less than
$25,000,000. Lender hereby retains the right to periodically review the amount
of said liability insurance being maintained by Borrower and to require an
increase in the amount of said liability insurance should Lender deem an
increase to be reasonably prudent under then existing circumstances. The maximum
deductible shall be $10,000.00.

(e) Equipment breakdown (also known as boiler and machinery insurance) is
required if steam boilers or other pressure-fired vessels are in operation at
the Premises. 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 Premises, “Systems Breakdowns” coverage shall be required,
as determined by Lender. Minimum liability coverage per accident must equal the
value of such unit(s). If available, a minimum of eighteen (18) months general
business income coverage specifically relating to boiler and machinery damage
shall be required. The maximum deductible shall be $10,000.00. Co-insurance is
prohibited.

(f) If the Improvements or any part thereof is situated in an area designated by
the Federal Emergency Management Agency (“FEMA”) as a special flood hazard area
(Zone A or Zone V), flood insurance in an amount equal to the lesser 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 Debt 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. If available, a minimum of eighteen
(18) months general business income coverage specifically relating to flood
damage shall be required. The maximum deductible shall be $3,000.00 per building
or a higher minimum amount as required by FEMA or other applicable law.

(g) If the Property is situated in an area designated by FEMA as a high
probability earthquake area (Zone 2b or greater), Lender may require a Probable
Maximum Loss (“PML”) study to be conducted at the Property. If the PML study
reveals a PML equal to or exceeding twenty percent (20%) of the full replacement
cost of the Improvements, Borrower shall be required to maintain earthquake
insurance in an amount equal to the PML percentage of full replacement cost of
the Improvements. If available, a minimum of eighteen (18) months general
business Income coverage specifically relating to earthquake damage shall be
required. The maximum deductible shall be no more than five percent (5%) of the
value at risk or the lowest deductible available in the State in which the
Property is located.

(h) During the period of any construction, renovation or alteration of the
existing Improvements which exceeds the lesser of 10% of the principal amount of
the Note or $500,000, at Lender’s request, a completed value, “All Risk”
Builder’s Risk form or “Course of Construction” insurance policy in
non-reporting form, in an amount approved by Lender, 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 Lender, shall
be required. The maximum deductible shall be $25,000.00.

(i) When required by applicable law, ordinance or other regulation, Worker’s
Compensation and Employer’s Liability Insurance covering all persons subject to
the worker’s compensation laws of the state in which the Property is located.
Additionally, if Borrower has direct employees, Hired and Non-Owned Auto
Insurance is required in an amount equal to $1,000,000 per occurrence. The
maximum deductible shall be $25,000.00.

(j) In addition to the specific risk coverage required herein, general business
income (loss of rents) insurance in amounts sufficient to compensate Borrower
for all Rents and Profits or income during a period of not less than eighteen
(18) months. The “actual loss” amount of coverage shall be adjusted annually to
reflect the greater of (i) estimated Rents and Profits or income payable during
the succeeding eighteen (18) month period or (ii) the projected operating
expenses, capital expenses and debt service for the Property as approved by
Lender in its sole discretion. Additionally, Lender, in its sole discretion, may
require an “Extended Period of Indemnity” endorsement for an additional six
(6) months to allow for re-leasing of the Property. The maximum deductible shall
be $10,000.00.

(k) Such other insurance on the Property or on any replacements or substitutions
thereof or additions thereto as may from time to time be required by Lender
against other insurable hazards or casualties which at the time are commonly
insured against in the case of property similarly situated including, without
limitation, Sinkhole, Mine Subsidence and Environmental insurance, due regard
being given to the height and type of buildings, their construction, location,
use and occupancy.

All such insurance shall (i) be with insurers fully licensed and authorized to
do business in the state within which the Premises is located and who have and
maintain a rating of at least (A) A or higher from Standard & Poors and (B) AIX
or higher from A.M. Best, (ii) contain the complete address of the Premises (or
a complete legal description), (iii) be for terms of at least one year, with
premium prepaid, and (iv) be subject to the approval of Lender as to insurance
companies, amounts, content, forms of policies, method by which premiums are
paid and expiration dates, and (v) include a standard, non-contributory,
mortgagee clause naming EXACTLY:

Wachovia Bank, National Association,
its Successors and Assigns ATIMA
c/o Wachovia Bank, National Association, as Servicer
P.O. Box 563956
Charlotte, North Carolina 28256-3956

(A) as an additional insured under all liability insurance policies, (B) as the
first mortgagee on all property insurance policies and (C) as the loss payee on
all loss of rents or loss of business income insurance policies.

Borrower shall, as of the date hereof, deliver to Lender evidence that said
insurance policies have been prepaid as required above and certified 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 Lender. Borrower shall renew all such insurance and deliver to
Lender an Accord 28 certificate for proof of commercial property insurance and
an Accord 25 certificate for proof of liability insurance, together with such
other certificates reasonably requested by Lender and policies evidencing such
renewals at least thirty (30) days before any such insurance shall expire.
Borrower further agrees that each such insurance policy: (i) shall provide for
at least thirty (30) days’ prior written notice to Lender prior to any policy
reduction or cancellation for any reason other than non-payment of premium and
at least ten (10) days’ prior written notice to Lender prior to any cancellation
due to non-payment of premium; (ii) shall contain an endorsement or agreement by
the insurer that any loss shall be payable to Lender in accordance with the
terms of such policy notwithstanding any act or negligence of Borrower which
might otherwise result in forfeiture of such insurance; (iii) shall waive all
rights of subrogation against Lender; and (iv) 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, Borrower 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 Lender’s applicable insurance requirements set forth in
this Section 2.3. The delivery to Lender 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
Borrower to Lender as further security for the Debt. 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 Debt, all right, title and interest of
Borrower 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 Lender or other transferee in the event of such other
transfer of title. Approval of any insurance by Lender shall not be a
representation of the solvency of any insurer or the sufficiency of any amount
of insurance. In the event Borrower fails to provide, maintain, keep in force or
deliver and furnish to Lender the policies of insurance required by this Deed of
Trust or evidence of their renewal as required herein, Lender may, but shall not
be obligated to, procure such insurance and Borrower shall pay all amounts
advanced by Lender therefor, together with interest thereon at the Default
Interest Rate from and after the date advanced by Lender until actually repaid
by Borrower, promptly upon demand by Lender. Any amounts so advanced by Lender,
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 Debt. Lender
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 Lender has
caused the insurance to be placed with the insurer after failure of Borrower to
furnish such insurance. Borrower shall not obtain insurance for the Property in
addition to that required by Lender without the prior written consent of Lender,
which consent will not be unreasonably withheld provided that (i) Lender is a
named insured on such insurance, (ii) Lender receives complete copies of all
policies evidencing such insurance, and (iii) such insurance complies with all
of the applicable requirements set forth herein.

2.4 Payment of Taxes. Borrower shall pay or cause to be paid, except to the
extent provision is actually made therefor pursuant to Section 3.3 of this Deed
of Trust, all taxes and assessments which are or may become a lien on the
Property or which are assessed against or imposed upon the Property. Borrower
shall furnish Lender with receipts (or if receipts are not immediately
available, with copies of canceled checks evidencing payment with receipts to
follow promptly after they become available) showing payment of such taxes and
assessments at least fifteen (15) days prior to the applicable delinquency date
therefor. Notwithstanding the foregoing, Borrower may, in good faith, by
appropriate proceedings and upon notice to Lender, contest the validity,
applicability or amount of any asserted tax or assessment so long as (a) such
contest is diligently pursued, (b) Lender determines, in its subjective opinion,
that such contest suspends the obligation to pay the tax and that nonpayment of
such tax or assessment will not result in the sale, loss, forfeiture or
diminution of the Property or any part thereof or any interest of Lender
therein, and (c) prior to the earlier of the commencement of such contest or the
delinquency date of the asserted tax or assessment, Borrower deposits in the
Impound Account (as hereinafter defined) an amount determined by Lender, to be
adequate to cover the payment of such tax or assessment and a reasonable
additional sum to cover possible interest, costs and penalties; provided,
however, that Borrower shall promptly cause to be paid any amount adjudged by a
court of competent jurisdiction to be due, with all interest, costs and
penalties thereon, promptly after such judgment becomes final; and provided
further that in any event each such contest shall be concluded and the taxes,
assessments, interest, costs and penalties shall be paid prior to the date any
writ or order is issued under which the Property may be sold, lost or forfeited.

2.5 Casualty and Condemnation. Borrower shall give Lender prompt written notice
of (i) the occurrence of any casualty affecting the Property or any portion
thereof, (ii) the institution of any proceedings for eminent domain or for the
condemnation of the Property or any portion thereof or (iii) any written
notification threatening the institution of any proceedings for eminent domain
or for the condemnation of the Property or any portion thereof or any written
request to execute a deed in lieu of condemnation affecting the Property or any
portion thereof. All insurance proceeds on the Property, and all causes of
action, claims, compensation, awards and recoveries for any damage, condemnation
or taking, or any deed in lieu of condemnation, affecting 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, are hereby assigned to and shall be paid to Lender. Lender may
participate in any suits or proceedings relating to any such proceeds, causes of
action, claims, compensation, awards or recoveries, and Lender is hereby
authorized, in its own name or in Borrower’s name, to adjust any loss covered by
insurance or any condemnation claim or cause of action, and to settle or
compromise any claim or cause of action in connection therewith, and Borrower
shall from time to time deliver to Lender any instruments required to permit
such participation; provided, however, that, so long as no Event of Default has
occurred, and 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”), Lender 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) $100,000. Lender shall
apply any sums received by it under this Section 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, and then, as follows:

(a) In the event that (x) less than fifteen percent (15%), in the case of
condemnation, or thirty percent (30%), in the case of casualty, of the fair
market value or net rentable square footage of the Improvements located on the
Premises have been taken or destroyed and (y) Leases covering in the aggregate
at least sixty-five percent (65%) of the total rentable space in the Property
which has been demised under executed and delivered Leases in effect as of the
date of the occurrence of such casualty or condemnation, whichever the case may
be, and each Major Lease (as hereinafter defined) in effect as of such date
shall remain in full force and effect during and after the completion of the
restoration without abatement of rent beyond the time required for restoration,
then if and so long as:

(1) no Default or Event of Default has occurred hereunder or under any of the
other Loan Documents, and

(2) the Property can, in Lender’s judgment, with diligent restoration or repair,
be returned to a condition at least equal to the condition thereof that existed
prior to the casualty or partial taking causing the loss or damage within the
earlier to occur of (A) nine (9) months after the initial receipt of any
insurance proceeds or condemnation awards by either Borrower or Lender but in
any event prior to the expiration or lapse of rent loss or general business
income necessary to satisfy current obligations of the Loan, and (B) six
(6) months prior to the stated maturity date of the Note, and

(3) all necessary governmental approvals can be obtained to allow the rebuilding
and reoccupancy of the Property as described in Section (a)(2) above, and

(4) there are sufficient sums available (through insurance proceeds or
condemnation awards and contributions by Borrower, the full amount of which
shall, at Lender’s option, have been deposited with Lender) for such restoration
or repair (including, without limitation, for any costs and expenses of Lender
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) the economic feasibility of the Improvements after such restoration or
repair 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 Debt in full with the same coverage ratio considered by Lender in its
determination to make the loan secured hereby, and

(6) in the event that the insurance proceeds or condemnation awards received as
a result of such casualty or partial taking exceed the lesser of (i) five
percent (5%) of the then outstanding principal balance of the Note and (ii)
$150,000, Borrower shall have delivered to Lender, at Borrower’s sole cost and
expense, an appraisal report in form and substance satisfactory to Lender
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 Lender in its
determination to make the loan secured hereby, and

(7) Borrower so elects by written notice delivered to Lender within five
(5) days after settlement of the aforesaid insurance or condemnation claim.

Lender shall, solely for the purposes of such restoration or repair, advance so
much of the remainder of such sums as may be required for such restoration or
repair, and any funds deposited by Borrower therefor, to Borrower in the manner
and upon such terms and conditions as would be required by a prudent interim
construction lender, including, but not limited to, the prior approval by Lender
of plans and specifications, contractors and form of construction contracts and
the furnishing to Lender of permits, bonds, lien waivers, invoices, receipts and
affidavits from contractors and subcontractors, in form and substance
satisfactory to Lender in its discretion, with any remainder being applied by
Lender for payment of the Debt in whatever order Lender directs in its absolute
sole discretion, or at the discretion of Lender, the same may be paid, either in
whole or in part, to, or for the benefit of, Borrower for such purposes as
Lender shall designate in its discretion.

(b) In all other cases, namely, in the event that (x) more than fifteen percent
(15%), in the case of condemnation, or thirty percent (30%), in the case of
casualty, of the fair market value or net rentable square footage of the
Improvements located on the Premises have been taken or destroyed (y) Leases
covering in the aggregate at least sixty-five percent (65%) of the total
rentable space in the Property which has been demised under executed and
delivered Leases in effect as of the date of the occurrence of such casualty or
condemnation, whichever the case may be, and each Major Lease (as hereinafter
defined) in effect as of such date will not remain in full force and effect
during and after the completion of the restoration without abatement of rent
beyond the time required for restoration, or (z) Borrower does not elect to
restore or repair the Property pursuant to clause (a) above or otherwise fails
to meet the requirements of clause (a) above, then, in any of such events,
Lender shall elect, in Lender’s absolute discretion and without regard to the
adequacy of Lender’s security to do either of the following: (1) accelerate the
maturity date of the Note and declare any and all of the Debt to be immediately
due and payable and apply the remainder of such sums received pursuant to this
Section to the payment of the Debt in whatever order Lender directs in its
absolute discretion, with any remainder being paid to Borrower, or
(2) notwithstanding that Borrower may have elected not to restore or repair the
Property pursuant to the provisions of Section 2.5(a)(7) above, so long as the
proceeds of any such award with respect to any casualty or condemnation are made
available to the Borrower for restoration, require Borrower to restore or repair
the Property in the manner and upon such terms and conditions as would be
required by a prudent interim construction lender, including, but not limited
to, the deposit by Borrower with Lender, within thirty (30) days after demand
therefor, of any deficiency reasonably determined by Lender to be necessary in
order to assure the availability of sufficient funds to pay for such restoration
or repair, including Lender’s costs and expenses to be incurred in connection
therewith, the prior approval by Lender of plans and specifications, contractors
and form of construction contracts and the furnishing to Lender of permits,
bonds, lien waivers, invoices, receipts and affidavits from contractors and
subcontractors, in form and substance satisfactory to Lender in its discretion,
and apply the remainder of such sums toward such restoration and repair, with
any balance thereafter remaining being applied by Lender for payment of the Debt
in whatever order Lender directs in its absolute sole discretion, or at the
discretion of Lender, the same may be paid, either in whole or in part, to, or
for the benefit of, Borrower for such purposes as Lender shall designate in its
discretion.

Any reduction in the Debt resulting from Lender’s application of any sums
received by it hereunder shall take effect only when Lender actually receives
such sums and elects to apply such sums to the Debt and, in any event, the
unpaid portion of the Debt shall remain in full force and effect and Borrower
shall not be excused in the payment thereof. Partial payments received by
Lender, 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. If Borrower elects or Lender
directs Borrower to restore or repair the Property after the occurrence of a
casualty or partial taking of the Property as provided above, Borrower shall
promptly and diligently, at Borrower’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
Borrower shall pay to Lender all costs and expenses of Lender incurred in
administering said rebuilding, restoration or repair, provided that Lender makes
such proceeds or award available for such purpose. Borrower agrees to execute
and deliver from time to time such further instruments as may be requested by
Lender to confirm the foregoing assignment to Lender of any award, damage,
insurance proceeds, payment or other compensation. Lender is hereby irrevocably
constituted and appointed the attorney-in-fact of Borrower (which power of
attorney shall be irrevocable so long as any portion of the Debt is outstanding,
shall be deemed coupled with an interest, shall survive the voluntary or
involuntary dissolution of Borrower and shall not be affected by any disability
or incapacity suffered by Borrower subsequent to the date hereof), with full
power of substitution, subject to the terms of this Section, 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.

2.6 Construction Liens. Borrower shall pay when due all claims and demands of
mechanics, materialmen, laborers and others for any work performed or materials
delivered for the Premises or the Improvements; provided, however, that,
Borrower shall have the right to contest in good faith any such claim or demand,
so long as it does so diligently, by appropriate proceedings and without
prejudice to Lender and provided that neither the Property nor any interest
therein would be in any danger of sale, loss or forfeiture as a result of such
proceeding or contest. In the event Borrower shall contest any such claim or
demand, Borrower shall promptly notify Lender of such contest and thereafter
shall, upon Lender’s request, promptly provide a bond, cash deposit or other
security satisfactory to Lender to protect Lender’s interest and security should
the contest be unsuccessful. If Borrower shall fail to immediately discharge or
provide security against any such claim or demand as aforesaid, Lender may do so
and any and all expenses incurred by Lender, together with interest thereon at
the Default Interest Rate from the date incurred by Lender until actually paid
by Borrower, shall be immediately paid by Borrower 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 Debt.

2.7 Rents and Profits. As additional and collateral security for the payment of
the Debt and cumulative of any and all rights and remedies herein provided for,
Borrower hereby absolutely and presently assigns to Lender all existing and
future Rents and Profits. Borrower hereby grants to Lender the sole, exclusive
and immediate right, without taking possession of the Property, to demand,
collect (by suit or otherwise), receive and give valid and sufficient receipts
for any and all of said Rents and Profits, for which purpose Borrower does
hereby irrevocably make, constitute and appoint Lender its attorney-in-fact with
full power to appoint substitutes or a trustee to accomplish such purpose (which
power of attorney shall be irrevocable so long as any portion of the Debt is
outstanding, shall be deemed to be coupled with an interest, shall survive the
voluntary or involuntary dissolution of Borrower and shall not be affected by
any disability or incapacity suffered by Borrower subsequent to the date
hereof). Lender shall be without liability for any loss which may arise from a
failure or inability to collect Rents and Profits, proceeds or other payments.
However, until the occurrence of an Event of Default under this Deed of Trust or
under any other of the Loan Documents, Borrower shall have a license to collect,
receive, use and enjoy the Rents and Profits when due and prepayments thereof
for not more than one (1) month prior to due date thereof. Upon the occurrence
of an Event of Default, Borrower’s license shall automatically terminate without
notice to Borrower and Lender may thereafter, without taking possession of the
Property, collect the Rents and Profits itself or by an agent or receiver. From
and after the termination of such license, Borrower shall be the agent of Lender
in collection of the Rents and Profits, and all of the Rents and Profits so
collected by Borrower shall be held in trust by Borrower for the sole and
exclusive benefit of Lender, and Borrower shall, within one (1) business day
after receipt of any Rents and Profits, pay the same to Lender to be applied by
Lender as hereinafter set forth. Neither the demand for or collection of Rents
and Profits by Lender shall constitute any assumption by Lender of any
obligations under any agreement relating thereto. Lender is obligated to account
only for such Rents and Profits as are actually collected or received by Lender.
Borrower irrevocably agrees and consents that the respective payors of the Rents
and Profits shall, upon demand and notice from Lender of an Event of Default,
pay said Rents and Profits to Lender without liability to determine the actual
existence of any Event of Default claimed by Lender. Borrower hereby waives any
right, claim or demand which Borrower may now or hereafter have against any such
payor by reason of such payment of Rents and Profits to Lender, and any such
payment shall discharge such payor’s obligation to make such payment to
Borrower. All Rents collected or received by Lender may be applied against all
expenses of collection, including, without limitation, reasonable attorneys’
fees, against costs of operation and management of the Property and against the
Debt, in whatever order or priority as to any of the items so mentioned as
Lender directs in its sole subjective discretion and without regard to the
adequacy of its security. Neither the exercise by Lender of any rights under
this Section nor the application of any Rents to the Debt shall cure or be
deemed a waiver of any Event of Default. The assignment of Rents and Profits
hereinabove granted shall continue in full force and effect during any period of
foreclosure or redemption with respect to the Property. Borrower has executed an
Assignment of Leases and Rents dated of even date herewith (the “Lease
Assignment”) in favor of Lender covering all of the right, title and interest of
Borrower, as landlord, lessor or licensor, in and to any Leases. All rights and
remedies granted to Lender under the Lease Assignment shall be in addition to
and cumulative of all rights and remedies granted to Lender hereunder.

2.8 Leases.

(a) Prior to execution of any Leases of space in the Improvements after the date
hereof, Borrower shall submit to Lender, for Lender’s prior approval, which
approval shall not be unreasonably withheld, a copy of the form Lease Borrower
plans to use in leasing space in the Improvements or at the Property. All such
Leases of space in the Improvements or at the Property shall be on terms
consistent with the terms for similar leases in the market area of the Premises,
shall provide for free rent only if the same is consistent with prevailing
market conditions and shall provide for market rents then prevailing in the
market area of the Premises. Such Leases shall also provide for security
deposits in reasonable amounts consistent with prevailing market conditions.
Borrower shall also submit to Lender for Lender’s approval, which approval shall
not be unreasonably withheld, prior to the execution thereof, any proposed Lease
of the Improvements or any portion thereof that differs materially and adversely
from the aforementioned form Lease. Borrower shall not execute any Lease for all
or a substantial portion of the Property, except for an actual occupancy by the
Tenant, lessee or licensee thereunder, and shall at all times promptly and
faithfully perform, or cause to be performed, all of the covenants, conditions
and agreements contained in all Leases with respect to the Property, now or
hereafter existing, on the part of the landlord, lessor or licensor thereunder
to be kept and performed. Borrower shall furnish to Lender, within sixty
(60) days after a request by Lender to do so, but in any event by January 1 of
each year, a current Rent Roll, certified by Borrower as being true and correct,
containing the names of all Tenants with respect to the Property, the terms of
their respective Leases, the spaces occupied and the rentals or fees payable
thereunder and the amount of each Tenant’s security deposit. Upon the request of
Lender, Borrower shall deliver to Lender a copy of each such Lease. Borrower
shall not do or suffer to be done any act, or omit to take any action, that
might result in a default by the landlord, lessor or licensor under any such
Lease or allow the Tenant thereunder to withhold payment of rent or cancel or
terminate same and shall not further assign any such Lease or any such Rents and
Profits. Borrower, at no cost or expense to Lender, shall enforce, short of
termination, the performance and observance of each and every condition and
covenant of each of the parties under such Leases and Borrower shall not
anticipate, discount, release, waive, compromise or otherwise discharge any rent
payable under any of the Leases. Notwithstanding the foregoing, at any time and
from time to time, Lender shall be entitled to, and Borrower hereby grants to
Lender the right to, undertake any and all action as may be required (in the
sole discretion of Lender) to cure any default, or event which with the passage
of time following any notice and cure period shall constitute a default by
Borrower, under such Leases. Borrower shall not, without the prior written
consent of Lender, modify any of the Leases, terminate or accept the surrender
of any Leases, waive or release any other party from the performance or
observance of any obligation or condition under such Leases except, with respect
only to Leases affecting less than the lesser of (x) five percent (5%) of the
gross leaseable area of the Improvements and (y) 2,500 square feet and having a
term of three (3) years or less, in the normal course of business in a manner
which is consistent with sound and customary leasing and management practices
for similar properties in the community in which the Property is located.
Borrower shall not permit the prepayment of any rents under any of the Leases
for more than one (1) month prior to the due date thereof.

(b) Each Lease executed after the date hereof affecting any of the Premises or
the Improvements must provide, in a manner approved by Lender, that the Tenant
will recognize as its landlord, lessor or licensor, as applicable, and attorn to
any person succeeding to the interest of Borrower upon any foreclosure of this
Deed of Trust or deed in lieu of foreclosure. Each such Lease shall also provide
that, upon request of said successor-in-interest, the Tenant shall execute and
deliver an instrument or instruments confirming its attornment as provided for
in this Section; provided, however, that neither Lender nor any
successor-in-interest shall be bound by any payment of rent for more than one
(1) month in advance, or any amendment or modification of said Lease made
without the express written consent of Lender or said successor-in-interest.

(c) Upon the occurrence of an Event of Default under this Deed of Trust, whether
before or after the whole principal sum secured hereby is declared to be
immediately due or whether before or after the institution of legal proceedings
to foreclose this Deed of Trust, forthwith, upon demand of Lender, Borrower
shall surrender to Lender, and Lender shall be entitled to take actual
possession of, the Property or any part thereof personally, or by its agent or
attorneys. In such event, Lender shall have, and Borrower hereby gives and
grants to Lender, the right, power and authority to make and enter into Leases
with respect to the Property or portions thereof for such rents and for such
periods of occupancy and upon conditions and provisions as Lender may deem
desirable in its sole discretion, and Borrower expressly acknowledges and agrees
that the term of any such Lease may extend beyond the date of any foreclosure
sale of the Property, it being the intention of Borrower that in such event
Lender shall be deemed to be and shall be the attorney-in-fact of Borrower for
the purpose of making and entering into Leases of parts or portions of the
Property for the rents and upon the terms, conditions and provisions deemed
desirable to Lender in its sole discretion and with like effect as if such
Leases had been made by Borrower as the owner in fee simple of the Property free
and clear of any conditions or limitations established by this Deed of Trust.
The power and authority hereby given and granted by Borrower to Lender shall be
deemed to be coupled with an interest, shall not be revocable by Borrower so
long as any portion of the Debt is outstanding, shall survive the voluntary or
involuntary dissolution of Borrower and shall not be affected by any disability
or incapacity suffered by Borrower subsequent to the date hereof. In connection
with any action taken by Lender pursuant to this Section, Lender shall not be
liable for any loss sustained by Borrower resulting from any failure to let the
Property, or any part thereof, or from any other act or omission of Lender in
managing the Property, nor shall Lender be obligated to perform or discharge any
obligation, duty or liability under any Lease covering the Property or any part
thereof or under or by reason of this instrument or the exercise of rights or
remedies hereunder. Borrower shall, and does hereby, indemnify Lender for, and
hold Lender harmless from, any and all claims, actions, demands, liabilities,
loss or damage which may or might be incurred by Lender under any such Lease or
under this Deed of Trust or by the exercise of rights or remedies hereunder and
from any and all claims and demands whatsoever which may be asserted against
Lender by reason of any alleged obligations or undertakings on its part to
perform or discharge any of the terms, covenants or agreements contained in any
such Lease other than those finally determined by a court of competent
jurisdiction to have resulted solely from the gross negligence or willful
misconduct of Lender. Should Lender incur any such liability, the amount
thereof, including, without limitation, costs, expenses and reasonable
attorneys’ fees, together with interest thereon at the Default Interest Rate
from the date incurred by Lender until actually paid by Borrower, shall be
immediately due and payable to Lender by Borrower on demand and shall be secured
hereby and by all of the other Loan Documents securing all or any part of the
Debt. Nothing in this Section shall impose on Lender any duty, obligation or
responsibility for the control, care, management or repair of the Property, or
for the carrying out of any of the terms and conditions of any such Lease, nor
shall it operate to make Lender responsible or liable for any waste committed on
the Property by the Tenants or by any other parties or for any dangerous or
defective condition of the Property, or for any negligence in the management,
upkeep, repair or control of the Property. Borrower hereby assents to, ratifies
and confirms any and all actions of Lender with respect to the Property taken
under this Section.

2.9 Alienation and Further Encumbrances.

(a) Borrower acknowledges that Lender has relied upon the principals of Borrower
and their experience in owning and operating the Property and properties similar
to the Property in connection with the closing of the loan evidenced by the
Note. Accordingly, except as specifically allowed hereinbelow in this Section
and notwithstanding anything to the contrary contained in Section 6.6 hereof, in
the event that the Property or any part thereof or direct or indirect interest
therein or direct or indirect interest in Borrower shall be sold, conveyed,
disposed of, alienated, hypothecated, leased (except to Tenants of space in the
Improvements in accordance with the provisions of Section 2.8 hereof), assigned,
pledged, mortgaged, further encumbered or otherwise transferred or Borrower
shall be divested of its title to the Property or any direct or indirect
interest therein, in any manner or way, whether voluntarily or involuntarily
(each, a “Transfer”), without the prior written consent of Lender being first
obtained, which consent may be withheld in Lender’s sole discretion, then the
same shall constitute an Event of Default and Lender shall have the right, at
its option, to declare any or all of the Debt, 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 V hereof. A Transfer
within the meaning of this Section 2.9 shall be deemed to include, among other
things: (i) an installment sales agreement wherein Borrower agrees to sell the
Property or any part thereof for a price to be paid in installments; and (ii) an
agreement by Borrower leasing all or a substantial part of the Property for
other than actual occupancy by a space tenant thereunder or a sale, assignment
or other transfer of, or the grant of a security interest in, Borrower’s right,
title and interest in and to any Leases or any Rents and Profits.

(b) Notwithstanding the foregoing, the following Transfers shall be permitted
under this Section 2.9 without the prior consent of Lender: (i) a Transfer of
corporate stock, limited partnership interests and/or non-managing member
interests in Borrower, or in any partner or member of Borrower, or any direct or
indirect legal or beneficial owner of Borrower, so long as following such
Transfer (whether in one or a series of transactions) or, with respect to any
creation or issuance of new limited partnership interests or membership
interests, not more than 49% of the beneficial economic interest in Borrower
(whether directly or indirectly) has been transferred in the aggregate, there is
no Change of Control and the persons responsible for the day to day management
of the Property and Borrower remain unchanged following such Transfer, (ii) any
involuntary Transfer caused by the death of Borrower, or any partner,
shareholder, joint venturer, member or beneficial owner of a trust, or any
direct or indirect legal or beneficial owner of Borrower, so long as Borrower is
promptly reconstituted, if required, following such death and so long as there
is no Change of Control and those persons responsible for the day to day
management of the Property and Borrower remain unchanged as a result of such
death or any replacement management or controlling parties are approved by
Lender, and (iii) a Transfer comprised of gifts for estate planning purposes of
any individual’s interests in Borrower, or in any of Borrower’s partners,
members, shareholders, beneficial owners of a trust or joint venturers, or any
direct or indirect legal or beneficial owner of Borrower, to the spouse or any
lineal descendant of such individual, or to a trust for the benefit of any one
or more of such individual, spouse or lineal descendant, so long as Borrower is
reconstituted promptly, if required, following such gift and so long as there is
no Change of Control and those persons responsible for the day to day management
of the Property and Borrower remain unchanged following such gift.
Notwithstanding any provision of this Deed of Trust to the contrary, no person
or entity may become an owner of a direct or indirect interest in Borrower,
which interest exceeds forty-nine (49%) percent, without Lender’s prior written
consent unless Borrower has complied with the provisions set forth in Section
2.9(c) below. For purposes of this Section 2.9(b), “Change of Control” shall
mean a change in the identity of the individual or entities or group of
individuals or entities who have the right, by virtue of any partnership
agreement, articles of incorporation, by-laws, articles of organization,
operating agreement or any other agreement, with or without taking any formative
action, to cause Borrower to take some action or to prevent, restrict or impede
Borrower from taking some action which, in either case, Borrower could take or
could refrain from taking were it not for the rights of such individuals.

(c) Notwithstanding the foregoing provisions of this Section, Lender shall
consent to (x) one or more Transfers of the Property in its entirety, or (y) one
or more Transfers of direct or indirect interests in the Borrower for which
consent is required under this Section 2.9 (any such hereinafter, a “Sale”) to
any person or entity provided that, for each Sale, each of the following terms
and conditions are satisfied:

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

(2) Borrower gives Lender written notice of the terms of such prospective Sale
not less than sixty (60) days before the date on which such Sale is scheduled to
close and, concurrently therewith, gives Lender all such information concerning
the proposed transferee of the Property or the proposed owner of the direct or
indirect interest in the Borrower for which consent is required under this
Section 2.9, as applicable (hereinafter, “Buyer”) as Lender would require in
evaluating an initial extension of credit to a borrower and pays to Lender a
non-refundable application fee in the amount of $5,000. Lender shall have the
right to approve or disapprove the proposed Buyer. In determining whether to
give or withhold its approval of the proposed Buyer, Lender shall consider the
Buyer’s experience and track record in owning and operating facilities similar
to the Property, the Buyer’s financial strength, the Buyer’s general business
standing and the Buyer’s relationships and experience with contractors, vendors,
tenants, lenders and other business entities; provided, however, that,
notwithstanding Lender’s agreement to consider the foregoing factors in
determining whether to give or withhold such approval, such approval shall be
given or withheld based on what Lender determines to be commercially reasonable
in Lender’s sole discretion and, if given, may be given subject to such
conditions as Lender may deem appropriate;

(3) Borrower pays Lender, concurrently with the closing of such Sale, a
non-refundable assumption fee in an amount equal to all out-of-pocket costs and
expenses, including, without limitation, reasonable attorneys’ fees and Rating
Agency fees, incurred by Lender in connection with the Sale, plus an amount
equal to one percent (1.0%) of the then outstanding principal balance of the
Note;

(4) In the event that such Sale is a Transfer of the Property in its entirety,
the Buyer assumes and agrees to pay the Debt subject to the provisions of
Section 6.27 hereof and, in all cases (whether such Sale is a Transfer of the
Property in its entirety or a Transfer of direct or indirect interests in the
Borrower for which consent is required under this Section 2.9), prior to or
concurrently with the closing of such Sale, the Buyer executes, without any cost
or expense to Lender, such documents and agreements as Lender shall reasonably
require to evidence and effectuate said assumption and delivers such legal
opinions (including, without limitation, a REMIC opinion) as Lender may require;

(5) A party associated with the Buyer approved by Lender in its sole discretion
assumes the obligations of the current Indemnitor under its guaranty or
indemnity agreement and environmental indemnity agreement and such party
associated with the Buyer executes, without any cost or expense to Lender, a
substitution agreement or a new guaranty or indemnity agreement or environmental
indemnity agreement in form and substance satisfactory to Lender and delivers
such legal opinions as Lender may require;

(6) Borrower and the Buyer execute, without any cost or expense to Lender, new
financing statements or financing statement amendments (and new financing
statements as may be necessary) and any additional documents reasonably
requested by Lender;

(7) Borrower delivers to Lender, without any cost or expense to Lender, such
replacement policy or endorsements to Lender’s title insurance policy, hazard
insurance policy endorsements or certificates and other similar materials as
Lender may deem necessary at the time of the Sale, all in form and substance
satisfactory to Lender, including, without limitation, a replacement policy or
an endorsement or endorsements to Lender’s title insurance policy insuring the
lien of this Deed of Trust, extending the effective date of such policy to the
date of execution and delivery (or, if later, of recording) of the assumption
agreement referenced above in subparagraph (4) of this Section, with no
additional exceptions added to such policy, and, in the event that such Sale is
a Transfer of the Property in its entirety, insuring that fee simple title to
the Property is vested in the Buyer;

(8) Borrower and any current Indemnitor execute and deliver to Lender, without
any cost or expense to Lender, a release of Lender, its officers, directors,
employees and agents, from all claims and liability relating to the transactions
evidenced by the Loan Documents, through and including the date of the closing
of the Sale, which agreement shall be in form and substance satisfactory to
Lender and shall be binding upon the Buyer and any new Indemnitor;

(9) Subject to the provisions of Section 6.27 hereof, such Sale is not construed
so as to relieve Borrower of any personal liability under the Note or any of the
other Loan Documents for any acts or events occurring or obligations arising
prior to or simultaneously with the closing of such Sale, whether or not same is
discovered prior or subsequent to the closing of such Sale, and Borrower
executes, without any cost or expense to Lender, such documents and agreements
as Lender shall reasonably require to evidence and effectuate the ratification
of said personal liability. In the event that such Transfer is a Sale of the
Property in its entirety, Borrower shall be released from and relieved of any
personal liability under the Note or any of the other Loan Documents for any
acts or events occurring or obligations arising after the closing of such Sale
which are not caused by or arising out of any acts or events occurring or
obligations arising prior to or simultaneously with the closing of such Sale;

(10) Such Sale is not construed so as to relieve any current Indemnitor of its
obligations under any guaranty or indemnity agreement for any acts or events
occurring or obligations arising prior to or simultaneously with the closing of
such Sale, and each such current Indemnitor executes, without any cost or
expense to Lender, such documents and agreements as Lender shall reasonably
require to evidence and effectuate the ratification of each such guaranty and
indemnity agreement. In the event that such Transfer is a Sale of the Property
in its entirety, each such current Indemnitor shall be released from and
relieved of any of its obligations under any guaranty or indemnity agreement
executed in connection with the loan secured hereby for any acts or events
occurring or obligations arising after the closing of such Sale which are not
caused by or arising out of any acts or events occurring or obligations arising
prior to or simultaneously with the closing of such Sale;

(11) The Buyer shall furnish, if the Buyer is a corporation, partnership or
other entity, all appropriate papers evidencing the Buyer’s capacity and good
standing, and the qualification of the signers to execute the assumption of the
Debt, which papers shall include certified copies of all documents relating to
the organization and formation of the Buyer and of the entities, if any, which
are partners of the Buyer. In the event that such Sale is a Transfer of the
Property in its entirety, the Buyer shall be a Single Purpose Entity whose
formation documents shall be approved by counsel to Lender, and who shall comply
with the requirements set forth in Section 2.29 hereof;

(12) Borrower delivers to Lender confirmation in writing (a “No-Downgrade
Confirmation”) from each Rating Agency that such Sale will not result in a
qualification, downgrade or withdrawal of any ratings issued in connection with
any Secondary Market Transaction (as hereinafter defined) or, in the event the
Secondary Market Transaction has not yet occurred, Lender shall, in its sole
discretion, have approved the Sale; and

(13) The applicable transfer will not result in an increase in the real property
taxes for the Premises and Improvements that would cause the debt service
coverage ratio of the Debt with respect to the immediately succeeding twelve
(12) month period to be less than the debt service coverage ratio of the Debt
for the twelve (12) month period immediately preceding such transfer, in each
case as determined by Lender.

2.10 Payment of Utilities, Assessments, Charges, Etc. Borrower shall pay when
due all utility charges which are incurred by Borrower or which may become a
charge or lien against any portion of the Property for gas, electricity, water
and sewer services furnished to the Premises and/or the Improvements and all
other assessments or charges of a similar nature, or assessments payable
pursuant to any restrictive covenants, whether public or private, affecting the
Premises and/or the Improvements or any portion thereof, whether or not such
assessments or charges are or may become liens thereon.

2.11 Access Privileges and Inspections. Lender and the agents, representatives
and employees of Lender shall, subject to the rights of Tenants, have full and
free access to the Premises and the Improvements and any other location where
books and records concerning the Property are kept at all reasonable times and,
except in the event of an emergency, upon not less than 24 hours prior notice
(which notice may be telephonic) for the purposes of inspecting the Property and
of examining, copying and making extracts from the books and records of Borrower
relating to the Property. Borrower shall lend assistance to all such agents,
representatives and employees of Lender.

2.12 Waste; Alteration of Improvements. Borrower shall not commit, suffer or
permit any waste on the Property nor take any actions that might invalidate any
insurance carried on the Property. Borrower shall maintain the Property in good
condition and repair. No part of the Improvements may be removed, demolished or
materially altered, without the prior written consent of Lender other than in
connection with non-structural day to day maintenance and except for tenant
improvements under Leases. Without the prior written consent of Lender, Borrower
shall not commence construction of any improvements on the Premises other than
improvements required for the maintenance or repair of the Property. Lender
reserves the right to condition its consent to any material alteration, removal,
demolition or new construction on the following: (i) such conditions as would be
required by a prudent interim construction lender, including, but not limited
to, the prior approval by Lender of plans and specifications, construction
budgets, contractors and form of construction contracts and the furnishing to
Lender of evidence regarding funds, permits, approvals, bonds, insurance, lien
waivers, title endorsements, appraisals, surveys, certificates of occupancy,
certificates regarding completion, invoices, receipts and affidavits from
contractors and subcontractors, in form and substance satisfactory to Lender in
its discretion, (ii) the delivery of an opinion from counsel satisfactory to
Lender in its discretion and in form and substance satisfactory to Lender in its
discretion opining as to such matters as Lender may reasonably require,
including, without limitation, an opinion that such alteration, removal,
demolition or new construction will not have an adverse effect on the status of
any trust formed in connection with a Secondary Market Transaction a “real
estate mortgage investment conduit” within the meaning of Section 860D of the
Code (“REMIC”), and (iii) Borrower’s agreement to pay all fees, costs and
expenses incurred by Lender in granting such consent, including, without
limitation, reasonable attorneys’ fees and expenses.

2.13 Zoning. Without the prior written consent of Lender, Borrower shall not
seek, make, suffer, consent to or acquiesce in any change in the zoning or
conditions of use of the Premises or the Improvements. Borrower shall comply
with and make all payments required under the provisions of any covenants,
conditions or restrictions affecting the Premises or the Improvements. Borrower
shall comply with all existing and future requirements of all governmental
authorities having jurisdiction over the Property. Borrower shall keep all
licenses, permits, franchises and other approvals necessary for the operation of
the Property in full force and effect. Borrower shall operate the Property as an
apartment complex for so long as the Debt is outstanding. If, under applicable
zoning provisions, the use of all or any part of the Premises or the
Improvements is or becomes a nonconforming use, Borrower shall not cause or
permit such use to be discontinued or abandoned without the prior written
consent of Lender. Further, without Lender’s prior written consent, Borrower
shall not file or subject any part of the Premises or the Improvements to any
declaration of condominium or co-operative or convert any part of the Premises
or the Improvements to a condominium, co-operative or other form of multiple
ownership and governance.

2.14 Financial Statements and Books and Records. Borrower shall keep accurate
books and records of account of the Property and its own financial affairs
sufficient to permit the preparation of financial statements therefrom in
accordance with sound accounting practices relating to the real estate industry,
on a Cash/Tax basis, consistently applied. Lender and its duly authorized
representatives shall have the right to examine, copy and audit Borrower’s
records and books of account at all reasonable times. So long as this Deed of
Trust continues in effect, Borrower shall provide to Lender, in addition to any
other financial statements required hereunder or under any of the other Loan
Documents, the following financial statements and information, all of which must
be certified to Lender as being true and correct by Borrower or the person or
entity to which they pertain, as applicable, and be prepared in accordance with
sound accounting practices relating to the real estate industry, on a Cash/Tax
basis, consistently applied, and be in form and substance acceptable to Lender:

(a) copies of all tax returns filed by Borrower, within thirty (30) days after
the date of filing;

(b) monthly operating statements for the Property and a Rent Roll, within sixty
(60) days after the end of each calendar month commencing with the first full
month after the date hereof and continuing until the earlier of (X) twelve
(12) calendar months following the date hereof or (Y) the date of a Secondary
Market Transaction;

(c) quarterly balance sheets, operating statements for the Property and a Rent
Roll, within sixty (60) days after the end of each March, June, September and
December commencing with the calendar quarter during which the Borrower is
permitted to cease submitting monthly operating statements under subsection
(b) above;

(d) annual balance sheets for the Property and annual financial statements for
Borrower, and each Indemnitor, within one hundred twenty (120) days after the
end of each calendar year;

(e) such other information with respect to the Property, Borrower, the
principals or general partners in Borrower and each Indemnitor, which may be
reasonably requested from time to time by Lender, within a reasonable time after
the applicable request; and

(f) if, at the time one or more Disclosure Documents are being prepared for a
securitization, Lender expects that Borrower alone or Borrower and one or more
affiliates of Borrower collectively, or the Property alone or the Property and
any other parcel(s) of real property, together with improvements thereon and
personal property related thereto, that is “related”, within the meaning of the
definition of Significant Obligor, to the Property (a “Related Property”)
collectively, will be a Significant Obligor, Borrower shall furnish to Lender
upon request (i) the selected financial data or, if applicable, net operating
income, required under Item 1112(b)(1) of Regulation AB and meeting the
requirements thereof, if Lender expects that the principal amount of the Loan,
together with any loans made to an affiliate of Borrower or secured by a Related
Property that is included in a securitization with the Loan (a “Related Loan”),
as of the cut-off date for such securitization may, or if the principal amount
of the Loan together with any Related Loans as of the cut-off date for such
securitization and at any time during which the Loan and any Related Loans are
included in a securitization does, equal or exceed ten percent (10%) (but less
than twenty percent (20%)) of the aggregate principal amount of all mortgage
loans included or expected to be included, as applicable, in the securitization
or (ii) the financial statements required under Item 1112(b)(2) of Regulation AB
and meeting the requirements thereof, if Lender expects that the principal
amount of the Loan together with any Related Loans as of the cut-off date for
such securitization may, or if the principal amount of the Loan together with
any Related Loans as of the cut-off date for such securitization and at any time
during which the Loan and any Related Loans are included in a securitization
does, equal or exceed twenty percent (20%) of the aggregate principal amount of
all mortgage loans included or expected to be included, as applicable, in the
securitization. Such financial data or financial statements shall be furnished
to Lender (A) within ten (10) Business Days after notice from Lender in
connection with the preparation of Disclosure Documents for the securitization,
(B) not later than thirty (30) days after the end of each fiscal quarter of
Borrower and (C) not later than seventy-five (75) days after the end of each
fiscal year of Borrower; provided, however, that Borrower shall not be obligated
to furnish financial data or financial statements pursuant to clauses (B) or
(C) of this sentence with respect to any period for which a filing pursuant to
the Securities Exchange Act of 1934, as amended (the “Exchange Act”) in
connection with or relating to the securitization (an “Exchange Act Filing”) is
not required. As used herein, “Regulation AB” shall mean Regulation AB under the
Securities Act of 1933, as amended and the Exchange Act. As used herein,
“Disclosure Document” shall mean a prospectus, prospectus supplement, private
placement memorandum, or similar offering memorandum or offering circular, in
each case in preliminary or final form, used to offer securities in connection
with a securitization. As used herein, “Significant Obligor” shall have the
meaning set forth in Item 1101(k) of Regulation AB.

If any of the aforementioned materials are not furnished to Lender within the
applicable time periods, are not prepared in accordance with the foregoing
requirements or Lender is dissatisfied with the form of any of the foregoing and
has notified Borrower of its dissatisfaction, in addition to any other rights
and remedies of Lender contained herein and provided Lender has given Borrower
at least thirty (30) days notice of such failure and opportunity to cure,
(i) Borrower shall pay to Lender upon demand, at Lender’s option and in its sole
discretion, an amount equal to $2,500 per reporting period, and (ii) Lender
shall have the right, but not the obligation, to obtain the same by means of an
audit by an independent certified public accountant selected by Lender, in which
event Borrower agrees to pay, or to reimburse Lender for, any expense of such
audit and further agrees to provide all necessary information to said accountant
and to otherwise cooperate in the making of such audit.

2.15 Further Assurances. Borrower shall, on the request of Lender and at the
expense of Borrower: (a) 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; (b) 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;
(c) promptly execute, acknowledge, deliver, procure and record or file any
document or instrument (including specifically, without limitation, any
financing statement) deemed advisable by Lender to protect, continue or perfect
the liens or the security interests hereunder against the rights or interests of
third persons; and (d) promptly furnish to Lender, upon Lender’s request, a duly
acknowledged written statement and estoppel certificate addressed to such party
or parties as directed by Lender and in form and substance supplied by Lender,
setting forth all amounts due under the Note, stating whether any Default or
Event of Default has occurred hereunder, stating whether any offsets or defenses
exist against the Debt and containing such other matters as Lender may
reasonably require.

2.16 Payment of Costs; Reimbursement to Lender. Borrower shall pay all costs and
expenses of every character reasonably incurred in connection with the closing
of the loan evidenced by the Note and secured hereby, attributable or chargeable
to Borrower as the owner of the Property or otherwise attributable to any
consent requested of Lender or any Rating Agency under the terms hereof or any
other Loan Document, including, without limitation, appraisal fees, recording
fees, documentary, stamp, mortgage or intangible taxes, brokerage fees and
commissions, title policy premiums and title search fees, uniform commercial
code/tax lien/litigation search fees, escrow fees, consultants’ fees,
No-Downgrade Confirmations and reasonable attorneys’ fees. If Borrower defaults
in any such payment, which default is not cured within any applicable grace or
cure period, Lender may pay the same and Borrower shall reimburse Lender on
demand for all such costs and expenses incurred or paid by Lender, together with
such interest thereon at the Default Interest Rate from and after the date of
Lender’s making such payment until reimbursement thereof by Borrower. Any such
sums disbursed by Lender, together with such interest thereon, shall be
additional indebtedness of Borrower secured by this Deed of Trust and by all of
the other Loan Documents securing all or any part of the Debt. Further, Borrower
shall promptly notify Lender in writing of any litigation or threatened
litigation affecting the Property, or any other demand or claim which, if
enforced, could impair or threaten to impair Lender’s security hereunder.
Without limiting or waiving any other rights and remedies of Lender hereunder,
if Borrower fails to perform any of its covenants or agreements contained in
this Deed of Trust or in any of the other Loan Documents and such failure is not
cured within any applicable grace or cure period, or if any action or proceeding
of any kind (including, but not limited to, any bankruptcy, insolvency,
arrangement, reorganization or other debtor relief proceeding) is commenced
which might affect Lender’s interest in the Property or Lender’s right to
enforce its security, then Lender may, at its option, with or without notice to
Borrower, make any appearances, disburse any sums and take any actions as may be
necessary or desirable to protect or enforce the security of this Deed of Trust
or to remedy the failure of Borrower to perform its covenants and agreements
(without, however, waiving any default of Borrower). Borrower agrees to pay on
demand all expenses of Lender or Trustee incurred with respect to the foregoing
(including, but not limited to, reasonable fees and disbursements of counsel),
together with interest thereon at the Default Interest Rate from and after the
date on which Lender or Trustee incurs such expenses until reimbursement thereof
by Borrower. Any such expenses so incurred by Lender, together with interest
thereon as provided above, shall be additional indebtedness of Borrower secured
by this Deed of Trust and by all of the other Loan Documents securing all or any
part of the Debt. The necessity for any such actions and of the amounts to be
paid shall be determined by Lender in its discretion. Lender is hereby empowered
to enter and to authorize others to enter upon the Property or any part thereof
for the purpose of performing or observing any such defaulted term, covenant or
condition without thereby becoming liable to Borrower or any person in
possession holding under Borrower. Borrower hereby acknowledges and agrees that
the remedies set forth in this Section 2.16 shall be exercisable by Lender, and
any and all payments made or costs or expenses incurred by Lender in connection
therewith shall be secured hereby and shall be, without demand, immediately
repaid by Borrower with interest thereon at the Default Interest Rate,
notwithstanding the fact that such remedies were exercised and such payments
made and costs incurred by Lender after the filing by Borrower of a voluntary
case or the filing against Borrower of an involuntary case pursuant to or within
the meaning of the Bankruptcy Reform Act of 1978, as amended, Title 11 U.S.C.,
or after any similar action pursuant to any other debtor relief law (whether
statutory, common law, case law or otherwise) of any jurisdiction whatsoever,
now or hereafter in effect, which may be or become applicable to Borrower,
Lender, any Indemnitor, the Debt or any of the Loan Documents. Borrower hereby
indemnifies and holds Lender harmless from and against all loss, cost and
expenses with respect to any Event of Default hereof, 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 Premises or the Improvements or any nuisance made or
suffered thereon, except those that are due to Lender’s gross negligence or
willful misconduct as finally determined by a court of competent jurisdiction,
including, without limitation, in any case, reasonable attorneys’ fees, costs
and expenses as aforesaid, whether at pretrial, trial or appellate level, and
such indemnity shall survive payment in full of the Debt. This Section shall not
be construed to require Lender to incur any expenses, make any appearances or
take any actions.

2.17 Security Interest. This Deed of Trust is also intended to encumber and
create a security interest in, and Borrower has GRANTED, BARGAINED, CONVEYED,
ASSIGNED, TRANSFERRED, and SET OVER and by these presents does GRANT, BARGAIN,
CONVEY, ASSIGN, TRANSFER and SET OVER, unto Trustee and Lender, a first and
prior security interest in, all of Borrower’s right, title and interest in, to,
under and with respect to all sums on deposit with Lender pursuant to the
provisions of Article III hereof or any other Section hereof or of any other
Loan Document and all fixtures, chattels, accounts, equipment, inventory,
contract rights, general intangibles and other personal property included within
the Property, all renewals, replacements of any of the aforementioned items, or
articles in substitution therefor or in addition thereto or the proceeds thereof
(said property is hereinafter referred to collectively as the “Collateral”),
whether or not the same shall be attached to the Premises or the Improvements in
any manner. It is hereby agreed that to the extent permitted by law, all of the
foregoing property is to be deemed and held to be a part of and affixed to the
Premises and the Improvements. The foregoing security interest shall also cover
Borrower’s fee simple interest in any of the foregoing property which is leased
by Borrower. Notwithstanding the foregoing, all of the foregoing property shall
be owned by Borrower and no leasing or installment sales or other financing or
title retention agreement in connection therewith shall be permitted without the
prior written approval of Lender. Borrower shall, from time to time upon the
request of Lender, supply Lender with a current inventory of all of the property
in which Lender is granted a security interest hereunder, in such detail as
Lender may reasonably require. Borrower shall promptly replace all of the
Collateral subject to the lien or security interest of this Deed of Trust when
worn or obsolete with Collateral comparable to the worn out or obsolete
Collateral when new and will not, without the prior written consent of Lender,
remove from the Premises or the Improvements any of the Collateral subject to
the lien or security interest of this Deed of Trust except such as is replaced
by an article of equal suitability and value as above provided, owned by
Borrower free and clear of any lien or security interest except that created by
this Deed of Trust and the other Loan Documents. All of the Collateral shall be
kept at the location of the Premises except as otherwise required by the terms
of the Loan Documents. Borrower shall not use any of the Collateral in violation
of any applicable statute, ordinance or insurance policy.

2.18 Security Agreement. This Deed of Trust constitutes a security agreement
between Borrower and Lender with respect to the Collateral in which Lender is
granted a security interest hereunder, and, cumulative of all other rights and
remedies of Lender hereunder, Lender shall have all of the rights and remedies
of a secured party under any applicable Uniform Commercial Code. Borrower hereby
agrees to execute and deliver on demand and hereby irrevocably constitutes and
appoints Lender the attorney-in-fact of Borrower to execute and deliver and, if
appropriate, to file with the appropriate filing officer or office, such
security agreements, financing statements, continuation statements or other
instruments as Lender may request or require in order to impose, perfect or
continue the perfection of the lien or security interest created hereby. To the
extent specifically provided herein, Lender shall have the right of possession
of all cash, securities, instruments, negotiable instruments, documents,
certificates and any other evidences of cash or other property or evidences of
rights to cash rather than property, which are now or hereafter a part of the
Property, and Borrower shall promptly deliver the same to Lender, endorsed to
Lender, without further notice from Lender. Borrower agrees to furnish Lender
with notice of any change in the name, identity, organizational structure,
residence, or principal place of business or mailing address of Borrower within
ten (10) days of the effective date of any such change. Upon the occurrence of
any Event of Default, Lender shall have the rights and remedies as prescribed in
this Deed of Trust, or as prescribed by general law, or as prescribed by any
applicable Uniform Commercial Code, all at Lender’s election. Any disposition of
the Collateral may be conducted by an employee or agent of Lender. Any person,
including both Borrower and Lender, shall be eligible to purchase any part or
all of the Collateral at any such disposition. Expenses of retaking, holding,
preparing for sale, selling or the like (including, without limitation, Lender’s
reasonable attorneys’ fees and legal expenses), together with interest thereon
at the Default Interest Rate from the date incurred by Lender until actually
paid by Borrower, shall be paid by Borrower 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 Debt. Lender shall have the right to enter upon the Premises and the
Improvements or any real property where any of the property which is the subject
of the security interest granted herein is located to take possession of,
assemble and collect the same or to render it unusable, or Borrower, upon demand
of Lender, shall assemble such property and make it available to Lender at the
Premises, or at a place which is mutually agreed upon or, if no such place is
agreed upon, at a place reasonably designated by Lender to be reasonably
convenient to Lender and Borrower. If notice is required by law, Lender shall
give Borrower at least ten (10) days’ prior written notice of the time and place
of any public sale of such property, or adjournments thereof, or of the time of
or after which any private sale or any other intended disposition thereof is to
be made, and if such notice is sent to Borrower, as the same is provided for the
mailing of notices herein, it is hereby deemed that such notice shall be and is
reasonable notice to Borrower. No such notice is necessary for any such property
which is perishable, threatens to decline speedily in value or is of a type
customarily sold on a recognized market. Any sale made pursuant to the
provisions of this Section shall be deemed to have been a public sale conducted
in a commercially reasonable manner if held contemporaneously with a foreclosure
sale as provided in Section 5.1(e) hereof upon giving the same notice with
respect to the sale of the Property hereunder as is required under said
Section 5.1(e). Furthermore, to the extent permitted by law, in conjunction
with, in addition to or in substitution for the rights and remedies available to
Lender pursuant to any applicable Uniform Commercial Code:

(a) In the event of a foreclosure sale, the Property may, at the option of
Lender, be sold as a whole; and

(b) It shall not be necessary that Lender take possession of the aforementioned
Collateral, or any part thereof, prior to the time that any sale pursuant to the
provisions of this Section is conducted and it shall not be necessary that said
Collateral, or any part thereof, be present at the location of such sale; and

(c) Lender may appoint or delegate any one or more persons as agent to perform
any act or acts necessary or incident to any sale held by Lender, including the
sending of notices and the conduct of the sale, but in the name and on behalf of
Lender. The name and address of Borrower (as Debtor under any applicable Uniform
Commercial Code) are as set forth on the first page hereof. The name and address
of Lender (as Secured Party under any applicable Uniform Commercial Code) are as
set forth on the first page hereof.

2.19 Easements and Rights-of-Way. Borrower shall not grant any easement or
right-of-way with respect to all or any portion of the Premises or the
Improvements without the prior written consent of Lender. Borrower shall comply
with all easements affecting the Property. The purchaser at any foreclosure sale
hereunder may, at its discretion, disaffirm any easement or right-of-way granted
in violation of any of the provisions of this Deed of Trust and may take
immediate possession of the Property free from, and despite the terms of, such
grant of easement or right-of-way. If Lender consents to the grant of an
easement or right-of-way, Lender agrees to grant such consent without charge to
Borrower other than expenses, including, without limitation, reasonable
attorneys’ fees, incurred by Lender in the review of Borrower’s request and in
the preparation of documents effecting the subordination.

2.20 Compliance with Laws. Borrower shall at all times comply with all statutes,
ordinances, regulations and other governmental or quasi-governmental
requirements and private covenants now or hereafter relating to the ownership,
construction, use or operation of the Property, including, but not limited to,
those concerning employment and compensation of persons engaged in operation and
maintenance of the Property and any environmental or ecological requirements,
even if such compliance shall require structural changes to the Property;
provided, however, that, Borrower may, upon providing Lender with security
satisfactory to Lender, proceed diligently and in good faith to contest the
validity or applicability of any such statute, ordinance, regulation or
requirement so long as during such contest the Property shall not be subject to
any lien, charge, fine or other liability and shall not be in danger of being
forfeited, lost or closed. Borrower shall not use or occupy, or allow the use or
occupancy of, the Property in any manner which violates any Lease of or any
other agreement applicable to the Property or any applicable law, rule,
regulation or order or which constitutes a public or private nuisance or which
makes void, voidable or cancelable, or increases the premium of, any insurance
then in force with respect thereto.

2.21 Additional Taxes. In the event of the enactment after the date hereof of
any law of the state in which the Property is located or of any other
governmental entity deducting from the value of the Property for the purpose of
taxing any lien or security interest thereon, or imposing upon Lender the
payment of the whole or any part of the taxes or assessments or charges or liens
herein required to be paid by Borrower, or changing in any way the laws relating
to the taxation of deeds of trust, mortgages or security agreements or debts
secured by deeds of trust, mortgages or security agreements or the interest of
the beneficiary, mortgagee or secured party in the property covered thereby, or
the manner of collection of such taxes, so as to adversely affect this Deed of
Trust or the Debt or Lender, then, and in any such event, Borrower, upon demand
by Lender, shall pay such taxes, assessments, charges or liens, or reimburse
Lender therefor; provided, however, that if in the opinion of counsel for Lender
(a) it might be unlawful to require Borrower to make such payment, or (b) the
making of such payment might result in the imposition of interest beyond the
maximum amount permitted by law, then and in either such event, Lender may
elect, by notice in writing given to Borrower, to declare all of the Debt to be
and become due and payable in full thirty (30) days from the giving of such
notice, and, in connection with the payment of such Debt, no prepayment premium
or fee shall be due unless, at the time of such payment, an Event of Default or
a Default shall have occurred, which Default or Event of Default is unrelated to
the provisions of this Section 2.21, in which event any applicable prepayment
premium or fee in accordance with the terms of the Note shall be due and
payable.

2.22 Secured Indebtedness. It is understood and agreed that this Deed of Trust
shall secure payment of not only the indebtedness evidenced by the Note but also
any and all substitutions, replacements, renewals and extensions of the Note,
any and all indebtedness and obligations arising pursuant to the terms hereof
and any and all indebtedness and obligations arising pursuant to the terms of
any of the other Loan Documents, all of which indebtedness is equally secured
with and has the same priority as any amounts advanced as of the date hereof. It
is agreed that any future advances made by Lender to or for the benefit of
Borrower from time to time under this Deed of Trust or the other Loan Documents
and whether or not such advances are obligatory or are made at the option of
Lender, or otherwise, made for any purpose, and all interest accruing thereon,
shall be equally secured by this Deed of Trust and shall have the same priority
as all amounts, if any, advanced as of the date hereof and shall be subject to
all of the terms and provisions of this Deed of Trust.

2.23 Borrower’s Waivers. To the full extent permitted by law, Borrower agrees
that Borrower shall not at any time insist upon, plead, claim or take the
benefit or advantage of any law now or hereafter in force providing for any
appraisement, valuation, stay, moratorium or extension, or any law now or
hereafter in force providing for the reinstatement of the Debt prior to any sale
of the Property to be made pursuant to any provisions contained herein or prior
to the entering of any decree, judgment or order of any court of competent
jurisdiction, or any right under any statute to redeem all or any part of the
Property so sold. Borrower, for Borrower and Borrower’s successors and assigns,
and for any and all persons ever claiming any interest in the Property, to the
full extent permitted by law, hereby knowingly, intentionally and voluntarily,
with and upon the advice of competent counsel: (a) waives, releases,
relinquishes and forever forgoes all rights of valuation, appraisement, stay of
execution, reinstatement and notice of election or intention to mature or
declare due the Debt (except such notices as are specifically provided for
herein); (b) waives, releases, relinquishes and forever forgoes all right to a
marshaling of the assets of Borrower, including the Property, to a sale in the
inverse order of alienation, or to direct the order in which any of the Property
shall be sold in the event of foreclosure of the liens and security interests
hereby created and agrees that any court having jurisdiction to foreclose such
liens and security interests may order the Property sold as an entirety; and
(c) waives, releases, relinquishes and forever forgoes all rights and periods of
redemption provided under applicable law. To the full extent permitted by law,
Borrower shall not have or assert any right under any statute or rule of law
pertaining to the exemption of homestead or other exemption under any federal,
state or local law now or hereafter in effect, the administration of estates of
decedents or other matters whatever to defeat, reduce or affect the right of
Lender under the terms of this Deed of Trust to a sale of the Property, for the
collection of the Debt without any prior or different resort for collection, or
the right of Lender under the terms of this Deed of Trust to the payment of the
Debt out of the proceeds of sale of the Property in preference to every other
claimant whatever. Furthermore, Borrower hereby knowingly, intentionally and
voluntarily, with and upon the advice of competent counsel, waives, releases,
relinquishes and forever forgoes all present and future statutes of limitations
as a defense to any action to enforce the provisions of this Deed of Trust or to
collect any of the Debt to the fullest extent permitted by law. Borrower
covenants and agrees that upon the commencement of a voluntary or involuntary
bankruptcy proceeding by or against Borrower, Borrower shall not seek a
supplemental stay or otherwise shall not seek pursuant to 11 U.S.C. §105 or any
other provision of the Bankruptcy Reform Act of 1978, as amended, or any other
debtor relief law (whether statutory, common law, case law, or otherwise) of any
jurisdiction whatsoever, now or hereafter in effect, which may be or become
applicable, to stay, interdict, condition, reduce or inhibit the ability of
Lender to enforce any rights of Lender against any guarantor or indemnitor of
the secured obligations or any other party liable with respect thereto by virtue
of any indemnity, guaranty or otherwise.

In the event an interest in any of the Property is foreclosed upon pursuant to a
judicial or nonjudicial foreclosure sale, Borrower agrees as follows:
notwithstanding the provisions of Sections 51.003, 51.004, and 51.005 of the
Texas Property Code (as the same may be amended from time to time), and only to
the extent permitted by law and to the extent set forth in the Note, Borrower
agrees that Lender shall be entitled to seek a deficiency judgment from Borrower
and any other party obligated on the indebtedness secured hereby equal to the
difference between the amount owing on the indebtedness Debt and the amount for
which the Property was sold pursuant to judicial or nonjudicial foreclosure
sale, subject, however, in all respects to the limitations in Section 2.6 of the
Note and Costs (as defined in the Indemnity and Guaranty Agreement and the
Environmental Indemnity Agreement). Borrower expressly recognizes that this
section constitutes a waiver of the above-cited provisions of the Texas Property
Code which would otherwise permit Borrower and other persons against whom
recovery of deficiencies is sought or Indemnitor independently (even absent the
initiation of deficiency proceedings against them) to present competent evidence
of the fair market value of the Property as of the date of the foreclosure sale
and offset against any deficiency the amount by which the foreclosure sale price
is determined to be less than such fair market value. Borrower further
recognizes and agrees that this waiver creates an irrebuttable presumption that
the foreclosure sale price is equal to the fair market value of the Property for
purposes of calculating deficiencies owed by Borrower, Indemnitor, and others
against whom recovery of a deficiency is sought.

Alternatively, in the event the waiver provided for above is determined by a
court of competent jurisdiction to be unenforceable, the following shall be the
basis for the finder of fact’s determination of the fair market value of the
Property as of the date of the foreclosure sale in proceedings governed by
Sections 51.003, 51.004 and 51.005 of the Texas Property Code (as amended from
time to time): (i) the Property shall be valued in an “as is” condition as of
the date of the foreclosure sale, without any assumption or expectation that the
Property will be repaired or improved in any manner before a resale of the
Property after foreclosure; (ii) the valuation shall be based upon an assumption
that the foreclosure purchaser desires a resale of the Property for cash
promptly (but no later than twelve (12) months) following the foreclosure sale;
(iii) all reasonable closing costs customarily borne by the seller in commercial
real estate transactions should be deducted from the gross fair market value of
the Property, including, without limitation, brokerage commissions, title
insurance, a survey of the Property, tax prorations, attorneys’ fees, and
marketing costs; (iv) the gross fair market value of the Property shall be
further discounted to account for any actual holding costs associated with
maintaining the Property pending sale, including, without limitation, utilities
expenses, property management fees, taxes and assessments (to the extent not
accounted for in (iii) above), and other maintenance, operational and ownership
expenses; and (v) any expert opinion testimony given or considered in connection
with a determination of the fair market value of the Property must be given by
persons having at least five (5) years experience in appraising property similar
to the Property and who have conducted and prepared a complete written appraisal
of the Property taking into consideration the factors set forth above.

2.24 SUBMISSION TO JURISDICTION; WAIVER OF JURY TRIAL.

(a) BORROWER, TO THE FULL EXTENT PERMITTED BY LAW, HEREBY KNOWINGLY,
INTENTIONALLY AND VOLUNTARILY, WITH AND UPON THE ADVICE OF COMPETENT COUNSEL,
(i) SUBMITS TO PERSONAL JURISDICTION IN THE STATE IN WHICH THE PREMISES IS
LOCATED OVER ANY SUIT, ACTION OR PROCEEDING BY ANY PERSON ARISING FROM OR
RELATING TO THE NOTE, THIS DEED OF TRUST OR ANY OTHER OF THE LOAN DOCUMENTS,
(ii) AGREES THAT ANY SUCH ACTION, SUIT OR PROCEEDING MAY BE BROUGHT IN ANY STATE
OR FEDERAL COURT OF COMPETENT JURISDICTION SITTING IN THE COUNTY IN WHICH THE
PREMISES IS LOCATED, (iii) SUBMITS TO THE JURISDICTION OF SUCH COURTS, AND
(iv) TO THE FULLEST EXTENT PERMITTED BY LAW, AGREES THAT IT WILL NOT BRING ANY
ACTION, SUIT OR PROCEEDING IN ANY OTHER FORUM (BUT NOTHING HEREIN SHALL AFFECT
THE RIGHT OF LENDER TO BRING ANY ACTION, SUIT OR PROCEEDING IN ANY OTHER FORUM).

(b) BORROWER, TO THE FULL EXTENT PERMITTED BY LAW, HEREBY KNOWINGLY,
INTENTIONALLY AND VOLUNTARILY, WITH AND UPON THE ADVICE OF COMPETENT COUNSEL,
WAIVES, RELINQUISHES AND FOREVER FORGOES THE RIGHT TO A TRIAL BY JURY IN ANY
ACTION OR PROCEEDING BASED UPON, ARISING OUT OF, OR IN ANY WAY RELATING TO THE
DEBT OR ANY CONDUCT, ACT OR OMISSION OF LENDER OR BORROWER, OR ANY OF THEIR
RESPECTIVE DIRECTORS, OFFICERS, PARTNERS, MEMBERS, EMPLOYEES, AGENTS OR
ATTORNEYS, OR ANY OTHER PERSONS AFFILIATED WITH LENDER OR BORROWER, IN EACH OF
THE FOREGOING CASES, WHETHER SOUNDING IN CONTRACT, TORT OR OTHERWISE.

2.25 Attorney-in-Fact Provisions. With respect to any provision of this Deed of
Trust or any other Loan Document whereby Borrower grants to Lender a
power-of-attorney, provided no Default or Event of Default has occurred under
this Deed of Trust, Lender shall first give Borrower written notice at least
three (3) days prior to acting under such power, which notice shall demand that
Borrower first take the proposed action within such period and advising Borrower
that if it fails to do so, Lender will so act under the power; provided,
however, that, in the event that a Default or an Event of Default has occurred,
or if necessary to prevent imminent death, serious injury, damage, loss,
forfeiture or diminution in value to the Property or any surrounding property or
to prevent any adverse affect on Lender’s interest in the Property, Lender may
act immediately and without first giving such notice. In such event, Lender will
give Borrower notice of such action as soon thereafter as reasonably practical.

2.26 Management. The management of the Property shall be by either: (a) Borrower
or an entity affiliated with Borrower approved by Lender for so long as Borrower
or said affiliated entity is managing the Property in a first class manner; or
(b) a professional property management company approved by Lender. Such
management by an affiliated entity or a professional property management company
shall be pursuant to a written agreement approved by Lender. In no event shall
any manager be removed or replaced or the terms of any management agreement
modified or amended without the prior written consent of Lender which approval
may be conditioned upon, among other things, receipt by Lender of a No-Downgrade
Confirmation from each Rating Agency. After an Event of Default or a default
under any management contract then in effect, which default is not cured within
any applicable grace or cure period or if at any time during the term of the
Loan the Debt Service Coverage Ratio (as hereinafter defined) of the Property is
ever less than 1.15:1, as determined by Lender, Lender shall have the right to
terminate, or to direct Borrower to terminate, such management contract upon
thirty (30) days’ notice and to retain, or to direct Borrower to retain, a new
management agent approved by Lender which approval may be conditioned upon,
among other things, receipt by Lender of a No-Downgrade Confirmation from each
Rating Agency. All Rents and Profits generated by or derived from the Property
shall first be utilized solely for current expenses directly attributable to the
ownership and operation of the Property, including, without limitation, current
expenses relating to Borrower’s liabilities and obligations with respect to this
Deed of Trust and the other Loan Documents, and none of the Rents and Profits
generated by or derived from the Property shall be diverted by Borrower and
utilized for any other purposes unless all such current expenses attributable to
the ownership and operation of the Property have been fully paid and satisfied.

2.27 Hazardous Waste and Other Substances.

(a) Except as otherwise may be disclosed in that certain Phase I Environmental
Site Assessment of the Property, dated October 16, 2006 and prepared by Jones,
Hill, McFarland & Ellis (the “Phase I”), Borrower hereby represents and warrants
to Lender that, as of the date hereof: (i) to the best of Borrower’s knowledge,
information and belief, none of Borrower nor the Property nor any Tenant at the
Premises nor 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.) (“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.), 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.) and the Hazardous Materials Transportation Act (49 U.S.C. §1801 et seq.),
the Texas Solid Waste Disposals Act (V.T.C.A. Health and Safety Code §361 et
seq.) and the Texas Water Code/Water Quality Control (V.T.C.A. Water Code
§26.001 et seq.), regulations promulgated pursuant to said laws, all as amended
from time to time (collectively, “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 Borrower; (ii) no hazardous,
toxic or harmful substances, wastes, materials, pollutants or contaminants
(including, without limitation, asbestos or asbestos-containing materials, lead
based paint, Toxic Mold (as hereinafter defined) polychlorinated biphenyls,
petroleum or petroleum products or byproducts, flammable explosives, radioactive
materials, infectious substances or raw materials which include hazardous
constituents) 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 Borrower or any
Tenant in the ordinary course of their respective businesses and in compliance
with all Environmental Laws and where such Hazardous Substances could not
reasonably be expected to give rise to liability under Environmental Laws;
(iii) 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; (iv) the Property is not subject to
any private or governmental lien or judicial or administrative notice or action
arising under Environmental Laws; (v) there is no pending, nor, to Borrower’s
knowledge, information or belief, threatened litigation arising under
Environmental Laws affecting Borrower or the Property; (vi) 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; (vii) Borrower has received no notice of, and to the best of
Borrower’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 Borrower know of any basis for such an investigation,
action, proceeding or claim; and (viii) Borrower has received no notice of and,
to the best of Borrower’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 Borrower know of any basis for such an investigation, action, proceeding or
claim. For the purposes hereof, “Toxic Mold” shall mean any mold or fungus at
the Property which is of a type (i) that might pose a significant risk to human
health or the environment or (ii) that would negatively impact the value of the
Property.

(b) Borrower has not received nor to the best of Borrower’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 Borrower’s knowledge, information
and belief, any property to which Borrower 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 Borrower’s knowledge, information and belief, proposed for listing on
the National Priorities List promulgated pursuant to CERCLA or CERCLIS (as
defined in CERCLA) or on any similar federal or state list of sites requiring
environmental investigation or clean-up.

(d) Borrower shall comply with all applicable Environmental Laws. Except as to
those items disclosed by the Phase I, if any (unless further action is required
under applicable Environmental Laws), Borrower shall keep the Property or cause
the Property to be kept free from Hazardous Substances (except those substances
used by Borrower or any Tenant in the ordinary course of their respective
businesses and except in compliance with all Environmental Laws and where such
Hazardous Substances could not reasonably be expected to give rise to liability
under Environmental Laws) and in compliance with all Environmental Laws,
Borrower 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, Borrower shall not install in
the Improvements or permit to be installed in the Improvements any asbestos or
asbestos-containing materials.

(e) Borrower shall promptly notify Lender if Borrower 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 Borrower’s
business and 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 Borrower 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 Borrower 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, Borrower, shall
deliver to Lender copies of any and all requests for information, complaints,
citations, summonses, orders, notices, reports 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 Environmental Laws
and relating to the Property or to Borrower. Borrower 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, Borrower shall, promptly and regardless of the
source of the contamination or threat to the environment or human health, at its
own 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 Lender) and shall further pay or cause to
be paid, at no expense to Lender, all clean-up, administrative and enforcement
costs of applicable governmental agencies which may be asserted against the
Property. In the event Borrower fails to do so, Lender 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 Lender in connection
therewith, together with interest thereon at the Default Interest Rate from the
date incurred by Lender until actually paid by Borrower, shall be immediately
paid by Borrower 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 Debt. Borrower
hereby grants to Lender and its agents and employees access to the Property and
a license to remove any items deemed by Lender to be Hazardous Substances and to
do all things Lender shall deem necessary to bring the Property into conformance
with Environmental Laws.

(f) BORROWER COVENANTS AND AGREES, AT BORROWER’S SOLE COST AND EXPENSE, TO
INDEMNIFY, DEFEND (AT TRIAL AND APPELLATE LEVELS, AND WITH ATTORNEYS,
CONSULTANTS AND EXPERTS ACCEPTABLE TO LENDER), AND HOLD LENDER 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
LENDER 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 OR RADON 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 BORROWER; (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 BORROWER OR ANY OPERATIONS CONDUCTED ON THE PROPERTY AT ANY
TIME; (IV) THE FAILURE BY BORROWER TO COMPLY FULLY WITH THE TERMS AND CONDITIONS
OF THIS SECTION 2.27; (V) THE BREACH OF ANY REPRESENTATION OR WARRANTY CONTAINED
IN THIS SECTION 2.27; OR (VI) THE ENFORCEMENT OF THIS SECTION 2.27, 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 ENVIRONMENTAL LAWS IN CONNECTION WITH ALL OR ANY PORTION OF THE
PROPERTY OR ANY SURROUNDING AREAS. THE INDEMNITY SET FORTH IN THIS SECTION 2.27
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 2.27. 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 LENDER OR ITS SUCCESSOR OR ASSIGNS. LENDER’S
RIGHTS UNDER THIS SECTION SHALL SURVIVE PAYMENT IN FULL OF THE DEBT AND SHALL BE
IN ADDITION TO ALL OTHER RIGHTS OF LENDER UNDER THIS DEED OF TRUST, THE NOTE AND
THE OTHER LOAN DOCUMENTS.

(g) Upon Lender’s request, at any time after the occurrence of an Event of
Default or at such other time as Lender has reasonable grounds to believe that
Hazardous Substances are or have been released, stored or disposed of on the
Property, or on property contiguous with the Property, or that the Property may
be in violation of the Environmental Laws, Borrower shall perform or cause to be
performed, at Borrower’s sole cost and expense and in scope, form and substance
satisfactory to Lender, an inspection or audit of the Property prepared by a
hydrogeologist or environmental engineer or other appropriate consultant
approved by Lender 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 Lender indicating the presence or absence of friable asbestos
or substances containing asbestos or lead or substances containing lead or lead
based paint (“Lead Based Paint”) on the Property. If Borrower fails to provide
reports of such inspection or audit within thirty (30) days after such request,
Lender may order the same, and Borrower hereby grants to Lender 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 Interest Rate from the date
incurred by Lender until actually paid by Borrower, shall be immediately paid by
Borrower 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 Debt.

(h) Reference is made to that certain Environmental Indemnity Agreement of even
date herewith by Triple Net Properties, LLC, a Virginia limited liability
company in favor of Lender (the “Environmental Indemnity Agreement”). The
provisions of this Deed of Trust and the Environmental Indemnity Agreement shall
be read together to maximize the coverage with respect to the subject matter
thereof, as determined by Lender.

(i) If prior to the date hereof, it was determined that the Property contains
asbestos-containing materials (“ACM’s”), Borrower covenants and agrees to
institute, within thirty (30) days after the date hereof, an operations and
maintenance program (the “Maintenance Program”) designed by an environmental
consultant, satisfactory to Lender, with respect to ACM’s, consistent with
“Guidelines for Controlling Asbestos-Containing Materials in Buildings” (USEPA,
1985) and other relevant guidelines, and such Maintenance Program will hereafter
continuously remain in effect until the Debt secured hereby is repaid in full.
In furtherance of the foregoing, Borrower shall inspect and maintain all ACM’s
on a regular basis and ensure that all ACM’s shall be maintained in a condition
that prevents exposure of residents to ACM’s at all times. Without limiting the
generality of the preceding sentence, Lender may require (i) periodic notices or
reports to Lender in form, substance and at such intervals as Lender may
specify, (ii) an amendment to such operations and maintenance program to address
changing circumstances, laws or other matters, (iii) at Borrower’s sole expense,
supplemental examination of the Property by consultants specified by Lender, and
(iv) variation of the operations and maintenance program in response to the
reports provided by any such consultants.

(j) If, prior to the date hereof, it was determined that the Property contains
Lead Based Paint, Borrower had prepared an assessment report describing the
location and condition of the Lead Based Paint (a “Lead Based Paint Report”).
If, at any time hereafter, Lead Based Paint is suspected of being present on the
Property, Borrower agrees, at its sole cost and expense and within twenty
(20) days thereafter, to cause to be prepared a Lead Based Paint Report prepared
by an expert, and in form, scope and substance, acceptable to Lender. Borrower
agrees that if it has been, or if at any time hereafter it is, determined that
the Property contains Lead Based Paint, 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,
Borrower shall, at its sole cost and expenses, 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 on the
Property, which plan shall be prepared by an expert, and be in form, scope and
substance, acceptable to Lender (together with any Lead Based Paint Report, the
“O&M Plan”). If an O&M Plan has been prepared prior to the date hereof, Borrower
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.

2.28 Indemnification; Subrogation.

(a) BORROWER SHALL INDEMNIFY, DEFEND AND HOLD LENDER HARMLESS AGAINST: (I) ANY
AND ALL CLAIMS FOR BROKERAGE, LEASING, FINDERS OR SIMILAR FEES WHICH MAY BE MADE
RELATING TO THE PROPERTY OR THE DEBT, AND (II) ANY AND ALL LIABILITY,
OBLIGATIONS, LOSSES, DAMAGES, PENALTIES, CLAIMS, ACTIONS, SUITS, COSTS AND
EXPENSES (INCLUDING LENDER’S REASONABLE ATTORNEYS’ FEES) OF WHATEVER KIND OR
NATURE WHICH MAY BE ASSERTED AGAINST, IMPOSED ON OR INCURRED BY LENDER IN
CONNECTION WITH THE DEBT, THIS DEED OF TRUST, THE PROPERTY, OR ANY PART THEREOF,
OR THE EXERCISE BY LENDER OF ANY RIGHTS OR REMEDIES GRANTED TO IT UNDER THIS
DEED OF TRUST OR ARISE FROM THE INFORMATION PROVIDED IN ACCORDANCE WITH THE
TERMS HEREOF; PROVIDED, HOWEVER, THAT NOTHING HEREIN SHALL BE CONSTRUED TO
OBLIGATE BORROWER TO INDEMNIFY, DEFEND AND HOLD HARMLESS LENDER FROM AND AGAINST
ANY AND ALL LIABILITIES, OBLIGATIONS, LOSSES, DAMAGES, PENALTIES, CLAIMS,
ACTIONS, SUITS, COSTS AND EXPENSES ENACTED AGAINST, IMPOSED ON OR INCURRED BY
LENDER BY REASON OF LENDER’S WILLFUL MISCONDUCT OR GROSS NEGLIGENCE.

(b) IF LENDER IS MADE A PARTY DEFENDANT TO ANY LITIGATION OR ANY CLAIM IS
THREATENED OR BROUGHT AGAINST LENDER CONCERNING THE DEBT, THIS DEED OF TRUST,
THE PROPERTY, OR ANY PART THEREOF, OR ANY INTEREST THEREIN, OR THE CONSTRUCTION,
MAINTENANCE, OPERATION OR OCCUPANCY OR USE THEREOF, THEN BORROWER SHALL
INDEMNIFY, DEFEND AND HOLD LENDER HARMLESS FROM AND AGAINST ALL LIABILITY BY
REASON OF SAID LITIGATION OR CLAIMS, INCLUDING REASONABLE ATTORNEYS’ FEES AND
EXPENSES INCURRED BY LENDER IN ANY SUCH LITIGATION OR CLAIM, WHETHER OR NOT ANY
SUCH LITIGATION OR CLAIM IS PROSECUTED TO JUDGMENT. If Lender commences an
action against Borrower to enforce any of the terms hereof or to prosecute any
breach by Borrower of any of the terms hereof or to recover any sum secured
hereby, Borrower shall pay to Lender its reasonable attorneys’ fees and
expenses. The right to such attorneys’ fees and expenses shall be deemed to have
accrued on the commencement of such action, and shall be enforceable whether or
not such action is prosecuted to judgment. If Borrower breaches any term of this
Deed of Trust, Lender may engage the services of an attorney or attorneys to
protect its rights hereunder, and in the event of such engagement following any
breach by Borrower, Borrower shall pay Lender reasonable attorneys’ fees and
expenses incurred by Lender, whether or not an action is actually commenced
against Borrower by reason of such breach. All references to “attorneys” in this
Subsection and elsewhere in this Deed of Trust shall include, without
limitation, any attorney or law firm engaged by Lender and Lender’s in-house
counsel, and all references to “fees and expenses” in this Subsection and
elsewhere in this Deed of Trust shall include, without limitation, any fees of
such attorney or law firm, any appellate counsel fees, if applicable, and any
allocation charges and allocation costs of Lender’s in-house counsel.

(c) A waiver of subrogation shall be obtained by Borrower from its insurance
carrier and, consequently, Borrower waives any and all right to claim or recover
against Lender, its officers, employees, agents and representatives, for loss of
or damage to Borrower, the Property, Borrower’s property or the property of
others under Borrower’s control from any cause insured against or required to be
insured against by the provisions of this Deed of Trust.

2.29 Covenants with Respect to Existence, Indebtedness, Operations, Fundamental
Changes of Borrower. (a) Borrower has, since the date of its formation, and
shall do or cause to be done all things necessary to (i) preserve, renew and
keep in full force and effect its existence, rights, and franchises,
(ii) continue to engage in the business presently conducted by it, (iii) obtain
and maintain all licenses, and (iv) qualify to do business and remain in good
standing under the laws of each jurisdiction, in each case as and to the extent
required for the ownership, maintenance, management and operation of the
Property. Borrower hereby represents, warrants and covenants as of the date
hereof and until such time as the Debt is paid in full, that Borrower has been,
since the date of its formation, is, and shall remain a Single-Purpose Entity
(as hereinafter defined). A “Single-Purpose Entity” or “SPE” means a
corporation, limited partnership or limited liability company that:

(1) if a corporation, must have at least one Independent Director (as
hereinafter defined), or if requested by Lender (which request Borrower shall
comply with within five (5) business days) in connection with a Secondary Market
Transaction, two Independent Directors, and must not take any action that, under
the terms of any certificate or articles of incorporation, by-laws, or any
voting trust agreement with respect to such entity’s common stock, requires the
unanimous affirmative vote of 100% of the members of the board of directors
unless all of the directors, including, without limitation, all Independent
Directors, shall have participated in such vote (“SPE Corporation”);

(2) if a limited partnership, must have each general partner be an SPE
Corporation;

(3) if a limited liability company, must have one managing member (the “SPE
Member”) and such managing member must be an SPE Corporation. Only the SPE
Member may be designated as a manager under Borrower’s operating agreement and
pursuant to the law where Borrower is organized. Borrower may be a single member
Delaware limited liability company without an SPE Corporation managing member so
long as Borrower complies with the provisions set forth in Sections 2.29(b) and
(c) below;

(4) was and will be organized solely for the purpose of (i) owning an interest
in the Property, (ii) acting as a general partner of a limited partnership that
owns an interest in the Property, or (iii) acting as the managing member of a
limited liability company that owns an interest in the Property;

(5) will not, nor will 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 material term or manner, or in a manner which
adversely affects Borrower’s existence as a Single Purpose Entity;

(6) will not liquidate or dissolve (or suffer any liquidation or dissolution),
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;

(7) will not, nor will any partner, limited or general, member or shareholder
thereof, as applicable, violate the terms of its partnership certificate,
partnership agreement, articles of incorporation, by-laws, operating agreement,
articles of organization, or other formation agreement or document, as
applicable;

(8) has not and will not guarantee, pledge its assets for the benefit of, or
otherwise become liable on or in connection with, any obligation of any other
person or entity;

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

(10) is not engaged and will not engage, either directly or indirectly, in any
business other than the ownership, management and operation of the Property;

(11) will not enter into any contract or agreement with any general partner,
principal, affiliate or member of Borrower, as applicable, or any affiliate of
any general partner, principal or member of Borrower, except upon terms and
conditions that are intrinsically fair and substantially similar to those that
would be available on an arms-length basis with third parties other than an
affiliate;

(12) has not and will not incur any debt, secured or unsecured, direct or
contingent (including guaranteeing any obligation), other than (i) the Debt, and
(ii) trade payables or accrued expenses incurred in the ordinary course of
business of operating the Property customarily satisfied within thirty (30) days
not evidenced by a note and in an aggregate amount not to exceed two percent
(2.0%) of the existing principal balance of the Note, and no other debt will be
secured (senior, subordinate or pari passu) by the Property;

(13) has not made and will not make any loans or advances to any third party
(including any affiliate);

(14) is and will be solvent and pay its debts from its assets as the same shall
become due;

(15) has done or caused to be done and will do all things necessary to preserve
its existence, and will observe all formalities applicable to it;

(16) will conduct and operate its business in its own name and as presently
conducted and operated;

(17) will maintain financial statements, books and records and bank accounts
separate from those of its affiliates, including, without limitation, its
general partners or members, as applicable;

(18) will be, and at all times will hold itself out to the public as, a legal
entity separate and distinct from any other entity (including, without
limitation, any affiliate, general partner, or member, as applicable, or any
affiliate of any general partner or member of Borrower, as applicable) and will
correct any known misunderstanding concerning its separate identity;

(19) will file its own tax returns;

(20) will maintain adequate capital for the normal obligations reasonably
foreseeable in a business of its size and character and in light of its
contemplated business operations;

(21) will establish and maintain an office through which its business will be
conducted separate and apart from those of its affiliates or shall allocate
fairly and reasonably any overhead and expense for shared office space;

(22) will not commingle the funds and other assets of Borrower with those of any
general partner, member, affiliate, principal or any other person;

(23) has and will 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 any other person;

(24) does not and will not hold itself out to be responsible for the debts or
obligations of any other person;

(25) will pay the salaries of its own employees (if any) from its own funds and
maintain a sufficient number of employees (if any) in light of its contemplated
business operations;

(26) will pay any liabilities out of its own funds, including salaries of its
employees, not funds of any affiliate; and

(27) will use stationery, invoices, and checks separate from its affiliates.

(b) In addition to the foregoing, for any Borrower that is a single member
Delaware limited liability company (a “SMLLC”), the limited liability company
agreement of the SMLLC (the “LLC Agreement”) shall provide that (i) upon the
occurrence of any event that causes the sole member of the SMLLC (“Member”) to
cease to be the member of the SMLLC (other than (A) upon an assignment by Member
of all of its limited liability company interest in the SMLLC and the admission
of the transferee, or (B) the resignation of Member and the admission of an
additional member in either case in accordance with the terms of the Loan
Documents and the LLC Agreement), any person acting as a springing or special
member of the SMLLC shall without any action of any other Person and
simultaneously with the Member ceasing to be the member of the SMLLC,
automatically be admitted to the SMLLC (“Special Member”) and shall continue the
SMLLC without dissolution, (ii) Special Member may not resign from the SMLLC or
transfer its rights as Special Member unless a successor Special Member has been
admitted to the SMLLC as Special Member in accordance with requirements of
Delaware law, and (iii) the board of directors or managers of the SMLLC must
have at least one Independent Director. The LLC Agreement shall further provide
that (i) Special Member shall automatically cease to be a member of the SMLLC
upon the admission to the SMLLC of a substitute Member, (ii) Special Member
shall be a member of the SMLLC that has no interest in the profits, losses and
capital of the SMLLC and has no right to receive any distributions of the
SMLLC’s assets, (iii) pursuant to Section 18-301 of the Delaware Limited
Liability Company Act (the “Act”), Special Member shall not be required to make
any capital contributions to the SMLLC and shall not receive a limited liability
company interest in the SMLLC, (iv) Special Member, in its capacity as Special
Member, may not bind the SMLLC, and (v) except as required by any mandatory
provision of the Act, Special Member, in its capacity as Special Member, shall
have no right to vote on, approve or otherwise consent to any action by, or
matter relating to, the SMLLC, including, without limitation, the merger,
consolidation or conversion of the SMLLC. In order to implement the admission to
the SMLLC of Special Member, Special Member shall execute a counterpart to the
LLC Agreement. Prior to its admission to the SMLLC as Special Member, Special
Member shall not be a member of the SMLLC.

(c) Upon the occurrence of any event that causes the Member to cease to be a
member of the SMLLC, to the fullest extent permitted by law, the personal
representative of Member shall, within ninety (90) days after the occurrence of
the event that terminated the continued membership of Member in the SMLLC, agree
in writing (i) to continue the SMLLC and (ii) to the admission of the personal
representative or its nominee or designee, as the case may be, as a substitute
member of the SMLLC, effective as of the occurrence of the event that terminated
the continued membership of Member of the SMLLC in the SMLLC. Any action
initiated by or brought against Member or Special Member under any creditors
rights laws shall not cause Member or Special Member to cease to be a member of
the SMLLC and upon the occurrence of such an event, the business of the SMLLC
shall continue without dissolution. The LLC Agreement shall provide that each of
Member and Special Member waives any right it might have to agree in writing to
dissolve the SMLLC upon the occurrence of any action initiated by or brought
against Member or Special Member under any creditors rights laws, or the
occurrence of an event that causes Member or Special Member to cease to be a
member of the SMLLC.

(d) As used in this Section 2.29, “Independent Director” shall mean a duly
appointed member of the board of directors of any SPE Corporation or board of
managers or of a SMLLC who is provided by a nationally-recognized company that
provides professional independent directors who shall not have been at the time
of initial appointment or at any time while serving as an Independent Director,
and may not have been at any time during the preceding five years (i) a
stockholder, director, officer, employee, partner, attorney or counsel of such
SPE Corporation, SMLLC, Borrower or any affiliate of any of them, (ii) a
customer, supplier or other Person who derives any of its purchases or revenues
from its activities with such SPE Corporation, SMLLC, Borrower or any affiliate
of any of them, (iii) a Person or other entity controlling or under common
control with any such stockholder, partner, customer, supplier or other Person,
or (iv) a member of the immediate family of any such stockholder, director,
officer, employee, partner, customer, supplier or other Person. As used in this
definition, the term “control” means the possession, directly or indirectly, of
the power to direct or cause the direction of the management, policies or
activities of a Person, whether through ownership of voting securities, by
contract or otherwise. As used herein, the term “affiliate” shall mean: (1) any
person or entity directly or indirectly owning, controlling or holding with
power to vote ten percent (10%) or more of the outstanding voting securities or
interests of such other person or entity; (2) any person or entity ten percent
(10%) or more of whose outstanding voting securities are directly or indirectly
owned, controlled or held with power to vote by such other person or entity;
(3) any person or entity directly or indirectly controlling, controlled by or
under common control with such other person or entity; (4) any officer, director
or partner of such other person or entity; (5) if such other person or entity is
an officer, director or partner, any company for which such person or entity
acts in any such capacity; and (6) any close relative or spouse of the specified
person.

2.30 Embargoed Person. At all times throughout the term of the Loan, including
after giving effect to any Sale hereunder, (a) none of the funds or assets of
Indemnitor that are used to repay the Loan or of Borrower shall constitute
property of, or shall be beneficially owned directly or, to Borrower’s best
knowledge, indirectly, by any person subject to sanctions or trade restrictions
under United States law (“Embargoed Person” or “Embargoed Persons”) that are
identified on (1) the “List of Specially Designated Nationals and Blocked
Persons” maintained by the Office of Foreign Assets Control (OFAC), U.S.
Department of the Treasury, and/or to Borrower’s best knowledge, as of the date
thereof, based upon reasonable inquiry by Borrower, on any other similar list
maintained by OFAC pursuant to any authorizing statute including, but not
limited to, the International Emergency Economic Powers Act, 50 U.S.C. §§ 1701
et seq., The Trading with the Enemy Act, 50 U.S.C. App. 1 et seq., and any
Executive Order or regulation promulgated thereunder, with the result that the
investment in Borrower or any Indemnitor, as applicable (whether directly or
indirectly), is prohibited by law, or the Loan made by Lender would be in
violation of law, or (2) Executive Order 13224 (September 23, 2001) issued by
the President of the United States (“Executive Order Blocking Property and
Prohibiting Transactions with Persons Who Commit, Threaten to Commit, or Support
Terrorism”), any related enabling legislation or any other similar Executive
Orders, and (b) no Embargoed Person shall have any direct interest, and to
Borrower’s best knowledge, as of the date hereof, based upon reasonable inquiry
by Borrower, indirect interest, of any nature whatsoever in Borrower or any
Indemnitor, as applicable, with the result that the investment in Borrower or
any Indemnitor, as applicable (whether directly or indirectly), is prohibited by
law or the Loan is in violation of law.

2.31 Anti-Money Laundering. At all times throughout the term of the Loan,
including after giving effect to any Transfer permitted pursuant to the Loan
Documents, none of the funds of Borrower or any Indemnitor, as applicable, that
are used to repay the Loan shall be derived from any unlawful activity, with the
result that the investment in Borrower or any Indemnitor, as applicable (whether
directly or indirectly), is prohibited by law or the Loan is in violation of
law.

2.32 ERISA.

(a) Borrower shall not engage in any transaction which would cause any
obligation, or action taken or to be taken, hereunder (or the exercise by Lender
of any of its rights under the Note, this Deed of Trust or any of the other Loan
Documents) to be a non-exempt (under a statutory or administrative class
exemption) prohibited transaction under ERISA.

(b) Borrower further covenants and agrees to deliver to Lender such
certifications or other evidence from time to time throughout the term of this
Deed of Trust, as requested by Lender in its sole discretion, that (i) Borrower
is not an “employee benefit plan” as defined in Section 3(3) of ERISA, which is
subject to Title I of ERISA, or a “governmental plan” within the meaning of
Section 3(32) of ERISA; (ii) Borrower is not subject to Federal or state
statutes regulating investments and fiduciary obligations with respect to
governmental plans; and (iii) one or more of the following circumstances is
true:

(1) Equity interests in Borrower are publicly offered securities within the
meaning of 29 C.F.R. Section 2510.3-101(b)(2);

(2) Less than 25 percent of each outstanding class of equity interests in
Borrower are held by “benefit plan investors” within the meaning of 29 C.F.R.
Section 2510.3-101(f)(2); or

(3) Borrower qualifies as an “operating company” within the meaning of 29 C.F.R.
Section 2510.3-101 or an investment company registered under the Investment
Company Act of 1940.

(c) BORROWER SHALL INDEMNIFY LENDER AND DEFEND AND HOLD LENDER HARMLESS FROM AND
AGAINST ALL CIVIL PENALTIES, EXCISE TAXES, OR OTHER LOSS, COST DAMAGE AND
EXPENSE (INCLUDING, WITHOUT LIMITATION, REASONABLE ATTORNEYS’ FEES AND
DISBURSEMENTS AND COSTS INCURRED IN THE INVESTIGATION, DEFENSE AND SETTLEMENT OF
CLAIMS AND LOSSES INCURRED IN CORRECTING ANY PROHIBITED TRANSACTION OR IN THE
SALE OF A PROHIBITED LOAN, AND IN OBTAINING ANY INDIVIDUAL PROHIBITED
TRANSACTION EXEMPTION UNDER ERISA THAT MAY BE REQUIRED, IN LENDER’S SOLE
DISCRETION) THAT LENDER MAY INCUR, DIRECTLY OR INDIRECTLY, AS A RESULT OF A
DEFAULT UNDER THIS SECTION. THIS INDEMNITY SHALL SURVIVE ANY TERMINATION,
SATISFACTION OR FORECLOSURE OF THIS DEED OF TRUST.

2.33 Opinion Assumptions. Borrower shall at all times conduct its business so
that the assumptions made with respect to Borrower in the Non-Consolidation
Opinion shall be true and correct in all respects.

ARTICLE III.
RESERVES AND CASH MANAGEMENT

3.1 Reserves Generally.

(a) As additional security for the payment and performance by Borrower of all
duties, responsibilities and obligations under the Note and the other Loan
Documents, Borrower hereby unconditionally and irrevocably assigns, conveys,
pledges, mortgages, transfers, delivers, deposits, sets over and confirms unto
Lender, and hereby grants to Lender a security interest in, (i) the Impound
Account, the Replacement Reserve, as applicable (each as hereinafter defined)
and any other reserve or escrow account established pursuant to the terms hereof
or of any other Loan Document (collectively, the “Reserves”), (ii) the accounts
into which the Reserves have been deposited, (iii) all insurance on said
accounts, (iv) all accounts, contract rights and general intangibles or other
rights and interests pertaining thereto, (v) all sums now or hereafter held
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. Borrower hereby authorizes
and consents to the account into which the Reserves have been deposited being
held in Lender’s name or the name of any entity servicing the Note for Lender
and hereby acknowledges and agrees that Lender, or at Lender’s election, such
servicing agent, shall have exclusive control over said account. Notice of the
assignment and security interest granted to Lender herein may be delivered by
Lender at any time to the financial institution wherein the Reserves have been
established, and Lender, or such servicing entity, shall have possession of all
passbooks or other evidences of such accounts. Borrower hereby assumes all risk
of loss with respect to amounts on deposit in the Reserves. Funds on deposit in
the Replacement Reserve (collectively, if more than one, the “Interest Bearing
Reserves”) shall bear interest at a rate equal to the then prevailing commercial
money market rate. All amounts deemed earned on funds contributed to the
Interest Bearing Reserves at the rate referenced in the immediately preceding
sentence shall be retained by Lender and accumulated for the benefit of Borrower
and added to the balances in the Interest Bearing Reserves and shall be
disbursed for payment of the items for which other funds in the Interest Bearing
Reserves are to be disbursed. Borrower shall not be entitled to earn any
interest with respect to funds on deposit in the Impound Account. Borrower
hereby knowingly, voluntarily and intentionally stipulates, acknowledges and
agrees that the advancement of the funds from the Reserves as set forth herein
is at Borrower’s direction and is not the exercise by Lender of any right of
set-off or other remedy upon a Default or an Event of Default. Borrower hereby
waives all right to withdraw funds from the Reserves except as provided for in
this Deed of Trust. If an Event of Default shall occur hereunder or under any
other of the Loan Documents Lender may, without notice or demand on Borrower, 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, reasonable attorneys’ fees, costs and expenses) to the Debt or any
other obligations of Borrower under the other Loan Documents in such manner as
Lender shall deem appropriate in its sole discretion, and the excess, if any,
shall be paid to Borrower, (B) exercise any and all rights and remedies of a
secured party under any applicable Uniform Commercial Code, 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.

(b) The Reserves shall not, unless otherwise explicitly required by applicable
law, be or be deemed to be escrow or trust funds, but, at Lender’s option and in
Lender’s discretion, may either be held in a separate account or be commingled
by Lender with the general funds of Lender. The Reserves are solely for the
protection of Lender and entail no responsibility on Lender’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. Upon
assignment of this Deed of Trust by Lender, any funds in the Reserves shall be
turned over to the assignee and any responsibility of Lender, as assignor, with
respect thereto shall terminate. If the funds in the applicable Reserve shall
exceed the amount of payments actually applied by Lender for the purposes and
items for which the applicable Reserve is held, such excess may be credited by
Lender on subsequent payments to be made hereunder or, at the option of Lender,
refunded to Borrower. 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, Borrower shall, within ten (10) days
after receipt of written notice thereof, deposit with Lender the full amount of
any such deficiency. If Borrower shall fail to deposit with Lender the full
amount of such deficiency as provided above, Lender shall have the option, but
not the obligation, to make such deposit, and all amounts so deposited by
Lender, together with interest thereon at the Default Interest Rate from the
date so deposited by Lender until actually paid by Borrower, shall be
immediately paid by Borrower 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
Debt. If there is an Event of Default under this Deed of Trust, Lender may, but
shall not be obligated to, apply at any time the balance then remaining in any
or all of the Reserves against the Debt in whatever order Lender shall
subjectively determine. No such application of any or all of the Reserves shall
be deemed to cure any Event of Default. Upon full payment of the Debt in
accordance with its terms or at such earlier time as Lender may elect, the
balance of any or all of the Reserves then in Lender’s possession shall be paid
over to Borrower and no other party shall have any right or claim thereto.

3.2 Intentionally Deleted.

3.3 Impound Account. Borrower shall establish and maintain at all times while
this Deed of Trust continues in effect an impound account (the “Impound
Account”) with Lender for payment of real estate taxes and assessments and
insurance on the Property and as additional security for the Debt.
Simultaneously with the execution hereof, Borrower shall deposit in the Impound
Account an amount determined by Lender to be necessary to ensure that there will
be on deposit with Lender an amount which, when added to the monthly payments
subsequently required to be deposited with Lender hereunder on account of real
estate taxes, assessments and insurance premiums, will result in there being on
deposit with Lender in the Impound Account an amount sufficient to pay the next
due installment of real estate taxes and assessments on the Property at least
one (1) month prior to the earlier of (a) the due date thereof or (b) any such
date by which Borrower or Lender is required by law to pay same and the next due
annual insurance premiums with respect to the Property at least one (1) month
prior to the due date thereof. Commencing on the first monthly payment date
under the Note and continuing thereafter on each monthly payment date under the
Note, Borrower shall pay to Lender, concurrently with and in addition to the
monthly payment due under the Note and until the Debt is fully paid and
performed, deposits in an amount equal to one-twelfth (1/12) of the amount of
the annual real estate taxes and assessments that will next become due and
payable on the Property, plus one-twelfth (1/12) of the amount of the annual
premiums that will next become due and payable on insurance policies which
Borrower is required to maintain hereunder, each as estimated and determined by
Lender. So long as no Default or Event of Default has occurred, and 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”), all sums in
the Impound Account shall be held by Lender in the Impound Account to pay said
taxes, assessments and insurance premiums before the same become delinquent.
Borrower shall be responsible for ensuring the receipt by Lender, at least
thirty (30) days prior to the respective due date for payment thereof, of all
bills, invoices and statements for all taxes, assessments and insurance premiums
to be paid from the Impound Account, and so long as no Event of Default has
occurred, Lender shall pay the governmental authority or other party entitled
thereto directly to the extent funds are available for such purpose in the
Impound Account. In making any payment from the Impound Account, Lender 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.

3.4 Intentionally Deleted.

3.5 Replacement Reserve. As additional security for the Debt, Borrower shall
establish and maintain at all times while this Deed of Trust continues in effect
a repair reserve (the “Replacement Reserve”) with Lender for payment of costs
and expenses incurred by Borrower in connection with the performance of work to
the roofs, chimneys, gutters, downspouts, paving, curbs, ramps, driveways,
balconies, porches, patios, exterior walls, exterior doors and doorways,
windows, elevators and mechanical and HVAC equipment (collectively, the
“Repairs”). Commencing on the first monthly Payment Date under the Note and
continuing thereafter on each monthly Payment Date under the Note, Borrower
shall pay to Lender, concurrently with and in addition to the monthly payment
due under the Note and until the Debt is fully paid and performed, a deposit to
the Replacement Reserve in an amount equal to $5,416.67 per month. So long as no
Event of Default has occurred, all sums in the Replacement Reserve shall be held
by Lender in the Replacement Reserve to pay the costs and expenses of Repairs.
So long as no Default or Event of Default has occurred, Lender shall, to the
extent funds are available for such purpose in the Replacement Reserve, disburse
to Borrower the amount paid or incurred by Borrower in performing such Repairs
within ten (10) days following: (a) the receipt by Lender of a written request
from Borrower for disbursement from the Replacement Reserve and a certification
by Borrower in a form approved in writing by Lender that the applicable item of
Repair has been completed; (b) the delivery to Lender of invoices, receipts or
other evidence satisfactory to Lender, verifying the cost of performing the
Repairs; (c) for disbursement requests in excess of $25,000.00, the delivery to
Lender of affidavits, lien waivers or other evidence reasonably satisfactory to
Lender 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; (d) for
disbursement requests in excess of $25,000.00, delivery to Lender of a
certification from an inspecting architect or other third party acceptable to
Lender describing the completed Repairs and verifying the completion of the
Repairs and the value of the completed Repairs; and (e) for disbursement
requests in excess of $25,000.00, delivery to Lender of a new certificate of
occupancy for the portion of the Improvements covered by such Repairs, if said
new certificate of occupancy is required by law, or a certification by Borrower
that no new certificate of occupancy is required. Lender shall not be required
to make advances from the Replacement Reserve more frequently than once in any
thirty (30) day period. In making any payment from the Replacement Reserve,
Lender shall be entitled to rely on such request from Borrower without any
inquiry into the accuracy, validity or contestability of any such amount. Lender
may, at Borrower’s expense, make or cause to be made during the term of this
Deed of Trust an annual inspection of the Property to determine the need, as
determined by Lender in its reasonable judgment, for further Repairs of the
Property. In the event that such inspection reveals that further Repairs of the
Property are required, Lender shall provide Borrower with a written description
of the required Repairs and Borrower shall complete such Repairs to the
reasonable satisfaction of Lender within ninety (90) days after the receipt of
such description from Lender, or such later date as may be approved by Lender in
its sole discretion.

ARTICLE IV.
EVENTS OF DEFAULT

4.1 Events of Default. The occurrence of any of the following events shall be an
Event of Default hereunder:

(a) Borrower (x) fails to pay any payments due under the Note or to the Reserves
on the date when the same is due and payable, or (y) fails to pay any money to
Lender required hereunder at the time or within any applicable grace period set
forth herein, or if no grace period is set forth herein, then within seven
(7) days of the date such payment is due (except those regarding payments to be
made under the Note or to the Reserves, which failure is not subject to any
grace or cure period).

(b) Borrower fails to provide insurance as required by Section 2.3 hereof or
fails to perform any covenant, agreement, obligation, term or condition set
forth in Section 2.27 or Section 2.29 hereof.

(c) Borrower fails to perform any other covenant, agreement, obligation, term or
condition set forth herein, other than those otherwise described in this
Section 4.1, and, to the extent such failure or default is susceptible of being
cured, the continuance of such failure or default for thirty (30) days after
written notice thereof from Lender to Borrower; provided, however, that if such
default is susceptible of cure but such cure cannot be accomplished with
reasonable diligence within said period of time, and if Borrower commences to
cure such default promptly after receipt of notice thereof from Lender, and
thereafter prosecutes the curing of such default with reasonable diligence, such
period of time shall be extended for such period of time as may be necessary to
cure such default with reasonable diligence, but not to exceed an additional
sixty (60) days.

(d) Any representation or warranty made herein, in or in connection with any
application or commitment relating to the Loan evidenced by the Note, or in any
of the other Loan Documents to Lender by Borrower, by any principal, general
partner, manager or member in Borrower, or by any Indemnitor is determined by
Lender to have been false or misleading in any material respect at the time
made.

(e) There shall be a sale, conveyance, disposition, alienation, hypothecation,
leasing, assignment, pledge, mortgage, granting of a security interest in or
other transfer or further encumbrancing of the Property, Borrower or its general
partners or managing members, or any portion thereof or any interest therein, in
violation of Section 2.9 hereof.

(f) A default occurs under any of the other Loan Documents which has not been
cured within any applicable grace or cure period therein provided.

(g) Borrower, general partner or managing member in Borrower or any Indemnitor
becomes insolvent, or makes a transfer in fraud of creditors, or makes an
assignment for the benefit of creditors, or files a petition in bankruptcy, or
is voluntarily adjudicated insolvent or bankrupt or admits in writing the
inability to pay its debts as they mature, or petitions or applies to any
tribunal for or consents to or fails to contest the appointment of a receiver,
trustee, custodian or similar officer for Borrower, for any such general partner
or managing member of Borrower or for any Indemnitor or for a substantial part
of the assets of Borrower, of any such general partner or managing member of
Borrower or of any Indemnitor, or commences any case, proceeding or other action
under any bankruptcy, reorganization, arrangement, readjustment or debt,
dissolution or liquidation law or statute of any jurisdiction, whether now or
hereafter in effect.

(h) A petition is filed or any case, proceeding or other action is commenced
against Borrower, against any general partner or managing member of Borrower or
against any Indemnitor seeking to have an order for relief entered against it as
debtor or seeking reorganization, arrangement, adjustment, liquidation,
dissolution or composition of it or its debts or other relief under any law
relating to bankruptcy, insolvency, arrangement, reorganization, receivership or
other debtor relief under any law or statute of any jurisdiction, whether now or
hereafter in effect, or a court of competent jurisdiction enters an order for
relief against Borrower, against any general partner or managing member of
Borrower or against any Indemnitor, as debtor, or an order, judgment or decree
is entered appointing, with or without the consent of Borrower, of any such
general partner or managing member of Borrower or of any Indemnitor, a receiver,
trustee, custodian or similar officer for Borrower, for any such general partner
or managing member of Borrower or for any Indemnitor, or for any substantial
part of any of the properties of Borrower, of any such general partner or
managing member of Borrower or of any Indemnitor, and if any such event shall
occur, such petition, case, proceeding, action, order, judgment or decree is not
dismissed within sixty (60) days after being commenced.

(i) The Property or any part thereof is taken on execution or other process of
law in any action against Borrower.

(j) Borrower abandons all or a portion of the Property.

(k) The holder of any lien or security interest on the Property (without
implying the consent of Lender to the existence or creation of any such lien or
security interest), whether superior or subordinate to this Deed of Trust or any
of the other Loan Documents, declares a default and such default is not cured
within any applicable grace or cure period set forth in the applicable document
or such holder institutes foreclosure or other proceedings for the enforcement
of its remedies thereunder.

(l) The Property, or any part thereof, is subjected to waste or to removal,
demolition or material alteration so that the value of the Property is
materially diminished thereby and Lender determines that it is not adequately
protected from any loss, damage or risk associated therewith.

(m) Any dissolution, termination, partial or complete liquidation, merger or
consolidation of Borrower, any general partner or any managing member, or any
Indemnitor.

ARTICLE V.
REMEDIES

5.1 Remedies Available. If there shall occur an Event of Default under this Deed
of Trust, then this Deed of Trust is subject to foreclosure as provided by law
and Lender may, at its option and by or through a trustee, nominee, assignee or
otherwise (including, without limitation, the Trustee), to the fullest extent
permitted by law, exercise any or all of the following rights, remedies and
recourses, either successively or concurrently:

(a) Acceleration. Accelerate the maturity date of the Note and declare any or
all of the Debt to be immediately due and payable without any presentment,
demand, protest, notice or action of any kind whatever (each of which is hereby
expressly waived by Borrower), whereupon the same shall become immediately due
and payable. Upon any such acceleration, payment of such accelerated amount
shall constitute a prepayment of the principal balance of the Note and any
applicable prepayment fee provided for in the Note shall then be immediately due
and payable.

(b) Entry on the Property. Either in person or by agent, with or without
bringing any action or proceeding, or by a receiver appointed by a court and
without regard to the adequacy of its security, enter upon and take possession
of the Property, or any part thereof, without force or with such force as is
permitted by law and without notice or process or with such notice or process as
is required by law, unless such notice and process is waivable, in which case
Borrower hereby waives such notice and process, and do any and all acts and
perform any and all work which may be desirable or necessary in Lender’s
judgment to complete any unfinished construction on the Premises, to preserve
the value, marketability or rentability of the Property, to increase the income
therefrom, to manage and operate the Property or to protect the security hereof,
and all sums expended by Lender therefor, together with interest thereon at the
Default Interest Rate, shall be immediately due and payable to Lender by
Borrower on demand and shall be secured hereby and by all of the other Loan
Documents securing all or any part of the Debt.

(c) Collect Rents and Profits. With or without taking possession of the
Property, sue or otherwise collect the Rents and Profits, including those past
due and unpaid.

(d) Appointment of Receiver. Upon, or at any time prior or after, initiating the
exercise of any power of sale, instituting any judicial foreclosure or
instituting any other foreclosure of the liens and security interests provided
for herein or any other legal proceedings hereunder, to the extent permitted by
law, make application to a court of competent jurisdiction for appointment of a
receiver for all or any part of the Property, as a matter of strict right and
without notice to Borrower and without regard to the adequacy of the Property
for the repayment of the Debt or the solvency of Borrower or any person or
persons liable for the payment of the Debt, and Borrower does hereby irrevocably
consent to such appointment, waive any and all notices of and defenses to such
appointment and agree not to oppose any application therefor by Lender, but
nothing herein is to be construed to deprive Lender of any other right, remedy
or privilege Lender may now have under the law to have a receiver appointed,
provided, however, that the appointment of such receiver, trustee or other
appointee by virtue of any court order, statute or regulation shall not impair
or in any manner prejudice the rights of Lender to receive payment of the Rents
and Profits pursuant to other terms and provisions hereof. Any such receiver
shall have all of the usual powers and duties of receivers in similar cases,
including, without limitation, the full power to hold, develop, rent, lease,
manage, maintain, operate and otherwise use or permit the use of the Property
upon such terms and conditions as said receiver may deem to be prudent and
reasonable under the circumstances as more fully set forth in Section 5.3 below.
Such receivership shall, at the option of Lender, continue until full payment of
all of the Debt or until title to the Property shall have passed by foreclosure
sale under this Deed of Trust or deed in lieu of foreclosure.

(e) Foreclosure. Immediately commence an action to foreclose this Deed of Trust
or to specifically enforce its provisions with respect to any of the Debt,
pursuant to the statutes in such case made and provided, and sell the Property
or cause the Property to be sold in accordance with the requirements and
procedures provided by said statutes in a single parcel or, to the extent
permitted by law, in several parcels at the option of Lender. In the event
foreclosure proceedings are instituted by Lender, all expenses incident to such
proceedings, including, but not limited to, reasonable attorneys’ fees and
costs, shall be paid by Borrower and secured by this Deed of Trust and by all of
the other Loan Documents securing all or any part of the Debt. The Debt and all
other obligations secured by this Deed of Trust, including, without limitation,
interest at the Default Interest Rate any prepayment charge, fee or premium
required to be paid under the Note in order to prepay principal (to the extent
permitted by applicable law), reasonable attorneys’ fees and any other amounts
due and unpaid to Lender under the Loan Documents, may be bid by Lender in the
event of a foreclosure sale hereunder. In the event of a judicial sale pursuant
to a foreclosure decree, it is understood and agreed that Lender or its assigns
may become the purchaser of the Property or any part thereof.

(f) Judicial Remedies. Proceed by suit or suits, at law or in equity, instituted
by or on behalf of Lender, to enforce the payment of the Debt or the other
obligations of Borrower hereunder or pursuant to the Loan Documents, to
foreclose the liens and security interests of this Deed of Trust as against all
or any part of the Property, and to have all or any part of the Property sold
under the judgment or decree of a court of competent jurisdiction. This remedy
shall be cumulative of any other non-judicial remedies available to Lender with
respect to the Loan Documents. Proceeding with the request or receiving a
judgment for legal relief shall not be or be deemed to be an election of
remedies or bar any available non-judicial remedy of Lender.

(g) Sale of Property. (i) Trustee, at the request of Lender, shall have the
power to sell the Property or any part thereof at public auction to the highest
bidder for cash, in such manner, at such time, and place, upon such terms and
notice to Borrower as provided in Section 51.002 of the Texas Property Code, as
amended, or if and to the extent such statute is not then in force, with the
applicable requirements at the time of sale of the successor statute or
statutes, if any governing sales of Texas real property under power of sale
conferred by deeds of trust. If there is no statute in force at the time of sale
governing sales of Texas real property under powers of sale conferred by deeds
of trust, such sale shall comply with applicable law at the time of sale. The
Property shall be conveyed in fee simple by trustee’s deed with special warranty
of title to and at the cost of the purchaser, who shall not be liable to see to
the application of the purchase money. The proceeds or avails of any sale made
under or by virtue of this paragraph, together with any other sums which then
may be held by Lender under this Deed of Trust, whether under the provisions of
this paragraph or otherwise, shall be applied as provided in Section 5.2 hereof.
Lender, Trustee and any receiver or custodian of the Property or any part
thereof shall be liable to account for only those rents, issues, proceeds and
profits actually received by it.

(ii) Lender and Trustee, as applicable, may adjourn from time to time any sale
by it to be made under or by virtue of this Deed of Trust by announcement at the
time and place appointed for such sale or for such adjourned sale or sales and,
except as otherwise provided by any applicable law, Lender or Trustee, without
further notice or publication, may make such sale at the time and place to which
the same shall be so adjourned.

(iii) Upon the completion of any sale or sales ordered by Lender and made by
Trustee under or by virtue of this paragraph, Lender or Trustee, or any officer
of any court empowered to do so, shall execute and deliver to the accepted
purchaser or purchasers a good and sufficient instrument, or good and sufficient
instruments, granting, conveying, assigning and transferring all estate, right,
title and interest in and to the property and rights sold. Trustee is hereby
irrevocably appointed the true and lawful attorney-in-fact for Borrower (coupled
with an interest), in its name and stead, to make all necessary conveyances,
assignments, transfers and deliveries of the property and rights so sold and for
that purpose Trustee may execute all necessary instruments of conveyance,
assignment, transfer and delivery, and may substitute one or more persons with
like power, Borrower hereby ratifying and confirming all that its said
attorney-in-fact or such substitute or substitutes shall lawfully do by virtue
hereof. Nevertheless, Borrower, if so requested by Trustee or Lender, shall
ratify and confirm any such sale or sales by executing and delivering to Lender,
or to such purchaser or purchasers all such instruments as may be advisable, in
the sole judgment of Lender, for such purpose, and as may be designated in such
request. Any such sale or sales made under or by virtue of this paragraph,
whether made under the power of sale herein granted or under or by virtue of
judicial proceedings or a judgment or decree of foreclosure and sale, shall
operate to divest all the estate, right, title, interest, claim and demand
whatsoever, whether at law or in equity, of Borrower in and to the property and
rights so sold, and shall, to the fullest extent permitted under law, be a
perpetual bar both at law and in equity against Borrower and against any and all
persons claiming or who may claim the same, or any part thereof, from, through
or under Borrower.

(iv) In the event of any sale made under or by virtue of this Deed of Trust
(whether made under the power of sale herein granted or under or by virtue of
judicial proceedings or a judgment or decree of foreclosure and sale), the
entire Debt relative to the Property, immediately thereupon shall, anything in
the Note, this Deed of Trust or any other of the Loan Documents to the contrary
notwithstanding, become due and payable.

(v) Upon any sale under or by virtue of this Deed of Trust (whether made under
the power of sale herein granted or under or by virtue of judicial proceedings
or a judgment or decree of foreclosure and sale), Lender may bid for and acquire
the Property or any part thereof and in lieu of paying cash therefor may make
settlement for the purchase price by crediting the Debt to and against the net
sales price after deducting therefrom the expenses of the sale and the costs of
the action.

(vi) No recovery of any judgment by Lender and no levy of an execution under any
judgment upon the Property or any part thereof or upon any other property of
Borrower shall release the lien of this Deed of Trust upon the Property or any
part thereof, or any liens, rights, powers or remedies of Lender hereunder, but
such liens, rights, powers and remedies of Lender shall continue unimpaired
until the entire Debt is paid in full.

(h) Other. Exercise any other right or remedy available hereunder, under any of
the other Loan Documents or at law or in equity.

5.2 Application of Proceeds. To the fullest extent permitted by law, the
proceeds of any sale under this Deed of Trust shall be applied, to the extent
funds are so available, to the following items in such order as Lender in its
discretion may determine:

(a) To payment of the reasonable costs, expenses and fees of taking possession
of the Property, and of holding, operating, maintaining, using, leasing,
repairing, improving, marketing and selling the same and of otherwise enforcing
Lender’s rights and remedies hereunder and under the other Loan Documents,
including, but not limited to, receivers’ fees, court costs, attorneys’,
accountants’, appraisers’, managers’ and other professional fees, title charges
and transfer taxes.

(b) To payment of all sums expended by Lender under the terms of any of the Loan
Documents and not yet repaid, together with interest on such sums at the Default
Interest Rate.

(c) To payment of the Debt and all other obligations secured by this Deed of
Trust, including, without limitation, interest at the Default Interest Rate and,
to the extent permitted by applicable law, any prepayment fee, charge or premium
required to be paid under the Note in order to prepay principal, in any order
that Lender chooses in its sole discretion.

(d) The remainder, if any, of such funds shall be disbursed to Borrower or to
the person or persons legally entitled thereto.

5.3 Right and Authority of Receiver or Lender in the Event of Default; Power of
Attorney. Upon the occurrence of an Event of Default, and entry upon the
Property pursuant to Section 5.1(b) hereof or appointment of a receiver pursuant
to Section 5.1(d) hereof, and under such terms and conditions as may be prudent
and reasonable under the circumstances in Lender’s or the receiver’s sole
discretion, all at Borrower’s expense, Lender or said receiver, or such other
persons or entities as they shall hire, direct or engage, as the case may be,
may do or permit one or more of the following, successively or concurrently:
(a) enter upon and take possession and control of any and all of the Property;
(b) take and maintain possession of all documents, books, records, papers and
accounts relating to the Property; (c) exclude Borrower and its agents, servants
and employees wholly from the Property; (d) manage and operate the Property;
(e) preserve and maintain the Property; (f) make repairs and alterations to the
Property; (g) complete any construction or repair of the Improvements, with such
changes, additions or modifications of the plans and specifications or intended
disposition and use of the Improvements as Lender may in its sole discretion
deem appropriate or desirable to place the Property in such condition as will,
in Lender’s sole discretion, make it or any part thereof readily marketable or
rentable; (h) conduct a marketing or leasing program with respect to the
Property, or employ a marketing or leasing agent or agents to do so, directed to
the leasing or sale of the Property under such terms and conditions as Lender
may in its sole discretion deem appropriate or desirable; (i) employ such
contractors, subcontractors, materialmen, architects, engineers, consultants,
managers, brokers, marketing agents, or other employees, agents, independent
contractors or professionals, as Lender may in its sole discretion deem
appropriate or desirable to implement and effectuate the rights and powers
herein granted; (j) execute and deliver, in the name of Lender as
attorney-in-fact and agent of Borrower or in its own name as Lender, such
documents and instruments as are necessary or appropriate to consummate
authorized transactions; (k) enter such leases, whether of real or personal
property, or tenancy agreements, under such terms and conditions as Lender may
in its sole discretion deem appropriate or desirable; (1) collect and receive
the Rents and Profits from the Property; (m) eject tenants or repossess personal
property, as provided by law, for breaches of the conditions of their leases or
other agreements; (n) initiate a cause of action for unpaid Rents and Profits,
payments, income or proceeds in the name of Borrower or Lender; (o) maintain
actions in forcible entry and detainer, ejectment for possession and actions in
distress for rent; (p) compromise or give acquittance for Rents and Profits,
payments, income or proceeds that may become due; (q) delegate or assign any and
all rights and powers given to Lender by this Deed of Trust; and (r) do any acts
which Lender in its sole discretion deems appropriate or desirable to protect
the security hereof and use such measures, legal or equitable, as Lender may in
its sole discretion deem appropriate or desirable to implement and effectuate
the provisions of this Deed of Trust. This Deed of Trust shall constitute a
direction to and full authority to any lessee, or other third party who has
heretofore dealt or contracted or may hereafter deal or contract with Borrower
or Lender, at the request of Lender, to pay all amounts owing under any Lease,
contract, concession, license or other agreement to Lender without proof of the
Event of Default relied upon. Any such lessee or third party is hereby
irrevocably authorized to rely upon and comply with (and shall be fully
protected by Borrower in so doing) any request, notice or demand by Lender for
the payment to Lender of any Rents and Profits or other sums which may be or
thereafter become due under its Lease, contract, concession, license or other
agreement, or for the performance of any undertakings under any such Lease,
contract, concession, license or other agreement, and shall have no right or
duty to inquire whether any Event of Default under this Deed of Trust or under
any of the other Loan Documents has actually occurred or is then existing.
Borrower hereby constitutes and appoints Lender, its assignees, successors,
transferees and nominees, as Borrower’s true and lawful attorney-in-fact and
agent, with full power of substitution in the Property, in Borrower’s name,
place and stead, to do or permit any one or more of the foregoing described
rights, remedies, powers and authorities, successively or concurrently, and said
power of attorney shall be deemed a power coupled with an interest and
irrevocable so long as any portion of the Debt is outstanding. Any money
advanced by Lender in connection with any action taken under this Section 5.3,
together with interest thereon at the Default Interest Rate from the date of
making such advancement by Lender until actually paid by Borrower, shall be a
demand obligation owing by Borrower to Lender and shall be secured by this Deed
of Trust and by every other instrument securing all or any portion of the Debt.

5.4 Occupancy After Foreclosure. In the event there is a foreclosure sale
hereunder and at the time of such sale, Borrower or Borrower’s representatives,
successors or assigns, or any other persons claiming any interest in the
Property by, through or under Borrower (except tenants of space in the
Improvements subject to leases entered into prior to the date hereof), are
occupying or using the Property, or any part thereof, then, to the extent not
prohibited by applicable law, each and all shall, at the option of Lender or the
purchaser at such sale, as the case may be, immediately become the tenant of the
purchaser at such sale, which tenancy shall be a tenancy from day-to-day,
terminable at the will of either landlord or tenant, at a reasonable rental per
day based upon the value of the Property occupied or used, such rental to be due
daily to the purchaser. Further, to the extent permitted by applicable law, in
the event the tenant fails to surrender possession of the Property upon the
termination of such tenancy, the purchaser shall be entitled to institute and
maintain an action for unlawful detainer of the Property in the appropriate
court of the county in which the Premises is located.

5.5 Notice to Account Debtors. Lender may, at any time after an Event of
Default, notify the account debtors and obligors of any accounts, chattel paper,
negotiable instruments or other evidences of indebtedness to Borrower included
in the Property to pay Lender directly. Borrower shall at any time or from time
to time upon the request of Lender provide to Lender a current list of all such
account debtors and obligors and their addresses.

5.6 Cumulative Remedies. All remedies contained in this Deed of Trust are
cumulative and Lender shall also have all other remedies provided at law and in
equity or in any other Loan Documents. Such remedies may be pursued separately,
successively or concurrently at the sole subjective direction of Lender and may
be exercised in any order and as often as occasion therefor shall arise. No act
of Lender shall be construed as an election to proceed under any particular
provisions of this Deed of Trust to the exclusion of any other provision of this
Deed of Trust or as an election of remedies to the exclusion of any other remedy
which may then or thereafter be available to Lender. No delay or failure by
Lender to exercise any right or remedy under this Deed of Trust shall be
construed to be a waiver of that right or remedy or of any Event of Default.
Lender may exercise any one or more of its rights and remedies at its option
without regard to the adequacy of its security.

5.7 Payment of Expenses. Borrower shall pay on demand all of Lender’s expenses
incurred in any efforts to enforce any terms of this Deed of Trust, whether or
not any lawsuit is filed and whether or not foreclosure is commenced but not
completed, including, but not limited to, reasonable legal fees and
disbursements, fees of any Rating Agency, fees related to any No-Downgrade
Confirmation, foreclosure costs and title charges, together with interest
thereon from and after the date incurred by Lender until actually paid by
Borrower at the Default Interest Rate, and the same shall be secured by this
Deed of Trust and by all of the other Loan Documents securing all or any part of
the Debt.

ARTICLE VI.
MISCELLANEOUS TERMS AND CONDITIONS

6.1 Time of Essence. Time is of the essence with respect to all provisions of
this Deed of Trust.

6.2 Release of Deed of Trust. If all of the Debt shall be paid, then and in that
event only, all rights under this Deed of Trust, except for those provisions
hereof which by their terms survive, shall terminate and the Property shall
become wholly clear of the liens, security interests, conveyances and
assignments evidenced hereby, which shall be promptly released of record by
Lender in due form at Borrower’s cost. No release of this Deed of Trust or the
lien hereof shall be valid unless executed by Lender.

6.3 Certain Rights of Lender. Without affecting Borrower’s liability for the
payment of any of the Debt, Lender may from time to time and without notice to
Borrower: (a) release any person liable for the payment of the Debt; (b) extend
or modify the terms of payment of the Debt; (c) accept additional real or
personal property of any kind as security or alter, substitute or release any
property securing the Debt; (d) recover any part of the Property; (e) consent in
writing to the making of any subdivision map or plat thereof; (f) join in
granting any easement therein; or (g) join in any extension agreement of this
Deed of Trust or any agreement subordinating the lien hereof.

6.4 Waiver of Certain Defenses. No action for the enforcement of the lien hereof
or of any provision hereof shall be subject to any defense which would not be
good and available to the party interposing the same in an action at law upon
the Note or any of the other Loan Documents.

6.5 Notices. All notices, demands, requests or other communications to be sent
by one party to the other hereunder or required by law shall be in writing and
shall be deemed to have been validly given or served by delivery of the same in
person to the intended addressee, or by depositing the same with Federal Express
or another reputable private courier service for next business day delivery, or
by depositing the same in the United States mail, postage prepaid, registered or
certified mail, return receipt requested, in any event addressed to the intended
addressee at its address set forth on the first page of this Deed of Trust or at
such other address as may be designated by such party as herein provided. All
notices, demands and requests shall be effective upon such personal delivery, or
one (1) business day after being deposited with the private courier service, or
two (2) business days after being deposited in the United States mail as
required above. Rejection or other refusal to accept or the inability to deliver
because of changed address of which no notice was given as herein required shall
be deemed to be receipt of the notice, demand or request sent. By giving to the
other party hereto at least fifteen (15) days’ prior written notice thereof in
accordance with the provisions hereof, the parties hereto shall have the right
from time to time to change their respective addresses and each shall have the
right to specify as its address any other address within the United States of
America.

6.6 Successors and Assigns; Joint and Several Liability. The terms, provisions,
indemnities, covenants and conditions hereof shall be binding upon Borrower and
the successors and assigns of Borrower, including all successors in interest of
Borrower in and to all or any part of the Property, and shall inure to the
benefit of Lender, 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 Borrower or
Lender shall be deemed to include all such parties’ successors and assigns, and
the term “Lender” as used herein shall also mean and refer to any lawful holder
or owner, including pledgees and participants, of any of the Debt. If Borrower
consists of more than one person or entity, each is jointly and severally liable
to perform the obligations of Borrower hereunder and all representations,
warranties, covenants and agreements made by Borrower hereunder are joint and
several.

6.7 Severability. A determination that any provision of this Deed of Trust is
unenforceable or invalid shall not affect the enforceability or validity of any
other provision, and any determination that the application of any provision of
this Deed of Trust to any person or circumstance is illegal or unenforceable
shall not affect the enforceability or validity of such provision as it may
apply to any other persons or circumstances.

6.8 Gender. Within this Deed of Trust, words of any gender shall be held and
construed to include any other gender, and words in the singular shall be held
and construed to include the plural, and vice versa, unless the context
otherwise requires.

6.9 Waiver; Discontinuance of Proceedings. Lender may waive any single Event of
Default by Borrower hereunder without waiving any other prior or subsequent
Event of Default. Lender may remedy any Event of Default by Borrower hereunder
without waiving the Event of Default remedied. Neither the failure by Lender to
exercise, nor the delay by Lender in exercising, any right, power or remedy upon
any Event of Default by Borrower hereunder shall be construed as a waiver of
such Event of Default or as a waiver of the right to exercise any such right,
power or remedy at a later date. No single or partial exercise by Lender of any
right, power or remedy hereunder shall exhaust the same or shall preclude any
other or further exercise thereof, and every such right, power or remedy
hereunder may be exercised at any time and from time to time. No modification or
waiver of any provision hereof nor consent to any departure by Borrower
therefrom shall in any event be effective unless the same shall be in writing
and signed by Lender, and then such waiver or consent shall be effective only in
the specific instance and for the specific purpose given. No notice to nor
demand on Borrower in any case shall of itself entitle Borrower to any other or
further notice or demand in similar or other circumstances. Acceptance by Lender
of any payment in an amount less than the amount then due on any of the Debt
shall be deemed an acceptance on account only and shall not in any way affect
the existence of an Event of Default. In case Lender shall have proceeded to
invoke any right, remedy or recourse permitted hereunder or under the other Loan
Documents and shall thereafter elect to discontinue or abandon the same for any
reason, Lender shall have the unqualified right to do so and, in such an event,
Borrower and Lender shall be restored to their former positions with respect to
the Debt, the Loan Documents, the Property and otherwise, and the rights,
remedies, recourses and powers of Lender shall continue as if the same had never
been invoked.

6.10 Section Headings. The headings of the sections and paragraphs of this Deed
of Trust are for convenience of reference only, are not to be considered a part
hereof and shall not limit or otherwise affect any of the terms hereof.

6.11 GOVERNING LAW. THIS DEED OF TRUST WILL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE IN WHICH THE PREMISES IS LOCATED, PROVIDED
THAT TO THE EXTENT THAT ANY OF SUCH LAWS MAY NOW OR HEREAFTER BE PREEMPTED BY
FEDERAL LAW, SUCH FEDERAL LAW SHALL SO GOVERN AND BE CONTROLLING, AND PROVIDED
FURTHER THAT THE LAWS OF THE STATE IN WHICH THE PREMISES IS LOCATED SHALL GOVERN
AS TO THE CREATION, PRIORITY AND ENFORCEMENT OF LIENS AND SECURITY INTERESTS IN
THE PROPERTY LOCATED IN SUCH STATE.

6.12 Counting of Days. The term “days” when used herein shall mean calendar
days. If any time period ends on a Saturday, Sunday or holiday officially
recognized by the state within which the Premises is located, the period shall
be deemed to end on the next succeeding business day. The term “business day”
when used herein shall mean a weekday, Monday through Friday, except a legal
holiday or a day on which banking institutions in New York, New York are
authorized by law to be closed.

6.13 Relationship of the Parties. The relationship between Borrower and Lender
is that of a borrower and a lender only and neither of those parties is, nor
shall it hold itself out to be, the agent, employee, joint venturer or partner
of the other party.

6.14 Application of the Proceeds of the Note. To the extent that proceeds of the
Note are used to pay indebtedness secured by any outstanding lien, security
interest, charge or prior encumbrance against the Property, such proceeds have
been advanced by Lender at Borrower’s request and Lender shall be subrogated to
any and all rights, security interests and liens owned by any owner or holder of
such outstanding liens, security interests, charges or encumbrances,
irrespective of whether said liens, security interests, charges or encumbrances
are released.

6.15 Unsecured Portion of Indebtedness. If any part of the Debt cannot be
lawfully secured by this Deed of Trust or if any part of the Property cannot be
lawfully subject to the lien and security interest hereof to the full extent of
such indebtedness, then all payments made shall be applied on said indebtedness
first in discharge of that portion thereof which is unsecured by this Deed of
Trust.

6.16 Cross Default. An Event of Default hereunder which has not been cured
within any applicable grace or cure period shall be a default under each of the
other Loan Documents.

6.17 Interest After Sale. In the event the Property or any part thereof shall be
sold upon foreclosure as provided hereunder, to the extent permitted by law, the
sum for which the same shall have been sold shall, for purposes of redemption
(pursuant to the laws of the state in which the Premises is located), bear
interest at the Default Interest Rate.

6.18 Inconsistency with Other Loan Documents. In the event of any inconsistency
between the provisions hereof and the provisions in any of the other Loan
Documents, it is intended that the provisions of the Note shall control over the
provisions of this Deed of Trust, and that the provisions of this Deed of Trust
shall control over the provisions of the Lease Assignment, the Indemnity and
Guaranty Agreement, the Environmental Indemnity Agreement, and the other Loan
Documents.

6.19 Construction of this Document. This document may be construed as a
mortgage, security deed, deed of trust, chattel mortgage, conveyance,
assignment, security agreement, pledge, financing statement, hypothecation or
contract, or any one or more of the foregoing, in order to fully effectuate the
liens and security interests created hereby and the purposes and agreements
herein set forth.

6.20 No Merger. It is the desire and intention of the parties hereto that this
Deed of Trust and the lien hereof do not merge in fee simple title to the
Property. It is hereby understood and agreed that should Lender acquire any
additional or other interests in or to the Property or the ownership thereof,
then, unless a contrary intent is manifested by Lender as evidenced by an
appropriate document duly recorded, this Deed of Trust and the lien hereof shall
not merge in such other or additional interests in or to the Property, toward
the end that this Deed of Trust may be foreclosed as if owned by a stranger to
said other or additional interests.

6.21 Rights With Respect to Junior Encumbrances. Any person or entity purporting
to have or to take a junior mortgage or other lien upon the Property or any
interest therein shall be subject to the rights of Lender to amend, modify,
increase, vary, alter or supplement this Deed of Trust, the Note or any of the
other Loan Documents, and to extend the maturity date of the Debt, and to
increase the amount of the Debt, and to waive or forebear the exercise of any of
its rights and remedies hereunder or under any of the other Loan Documents and
to release any collateral or security for the Debt, in each and every case
without obtaining the consent of the holder of such junior lien and without the
lien or security interest of this Deed of Trust losing its priority over the
rights of any such junior lien.

6.22 Lender May File Proofs of Claim. In the case of any receivership,
insolvency, bankruptcy, reorganization, arrangement, adjustment, composition or
other proceedings affecting Borrower or the principals, general partners or
managing members in Borrower, or their respective creditors or property, Lender,
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 the claims
of Lender allowed in such proceedings for the entire Debt at the date of the
institution of such proceedings and for any additional amount which may become
due and payable by Borrower hereunder after such date.

6.23 Fixture Filing. This Deed of Trust shall be effective from the date of its
recording as a financing statement filed as a fixture filing with respect to all
goods constituting part of the Property which are or are to become fixtures.
This Deed of Trust shall also be effective as a financing statement covering
as-extracted collateral as defined in Section 9.102(a)(6) of the Texas Business
and Commerce Code, as amended, and is to be filed for record in the real estate
records of the county where the Premises is situated. The mailing address of
Borrower and the address of Lender from which information concerning the
security interests may be obtained are set forth in first page hereof.

6.24 After-Acquired Property. All property acquired by Borrower after the date
of this Deed of Trust which by the terms of this Deed of Trust shall be subject
to the lien and the security interest created hereby, shall immediately upon the
acquisition thereof by Borrower and without further mortgage, conveyance or
assignment become subject to the lien and security interest created by this Deed
of Trust. Nevertheless, Borrower shall execute, acknowledge, deliver and record
or file, as appropriate, all and every such further mortgages, security
agreements, financing statements, assignments and assurances as Lender shall
require for accomplishing the purposes of this Deed of Trust.

6.25 No Representation. By accepting delivery of any item required to be
observed, performed or fulfilled or to be given to Lender pursuant to the Loan
Documents, including, but not limited to, any officer’s certificate, balance
sheet, statement of profit and loss or other financial statement, survey,
appraisal or insurance policy, Lender shall not be deemed to have warranted,
consented to, or affirmed the sufficiency, legality, effectiveness or legal
effect of the same, or of any term, provision or condition thereof, and such
acceptance of delivery thereof shall not be or constitute any warranty, consent
or affirmation with respect thereto by Lender.

6.26 Counterparts. This Deed of Trust may be executed in any number of
counterparts, each of which shall be effective only upon delivery and thereafter
shall be deemed an original, and all of which shall be taken to be one and the
same instrument, for the same effect as if all parties hereto had signed the
same signature page. Any signature page of this Deed of Trust may be detached
from any counterpart of this Deed of Trust without impairing the legal effect of
any signatures thereon and may be attached to another counterpart of this Deed
of Trust identical in form hereto but having attached to it one or more
additional signature pages.

6.27 Personal Liability. Notwithstanding anything to the contrary contained in
this Deed of Trust, the liability of Borrower and its officers, directors,
general partners, managers, members and principals for the Debt and for the
performance of the other agreements, covenants and obligations contained herein
and in the Loan Documents shall be limited as set forth in the Note.

6.28 Recording and Filing. Borrower will cause the Loan Documents and all
amendments and supplements thereto and substitutions therefor to be recorded,
filed, re-recorded and re-filed in such manner and in such places as Lender
shall reasonably request, and will pay on demand all such recording, filing,
re-recording and re-filing taxes, fees and other charges. Borrower shall
reimburse Lender, or its servicing agent, for the costs incurred in obtaining a
tax service company to verify the status of payment of taxes and assessments on
the Property.

6.29 Intentionally Deleted.

6.30 Maximum Interest.

(a) Savings Clause. It is expressly stipulated and agreed to be the intent of
Borrower and Lender at all times to comply strictly with the applicable Texas
law governing the maximum rate or amount of interest payable on the Note or the
Related Indebtedness (as hereinafter defined), or applicable United States
federal law to the extent that it permits Lender to contract for, charge, take,
reserve or receive a greater amount of interest than under Texas law. If the
applicable law is ever judicially interpreted so as to render usurious any
amount (i) contracted for, charged, taken, reserved or received pursuant to the
Note, any of the other Loan Documents or any other communication or writing by
or between Borrower and Lender related to the transaction or transactions that
are the subject matter of the Loan Documents, (ii) contracted for, charged or
received by reason of Lender’s exercise of the option to accelerate the maturity
of the Note and/or the Related Indebtedness, or (iii) Borrower will have paid or
Lender will have received by reason of any voluntary prepayment by Borrower of
the Note and/or the Related Indebtedness, then it is Borrower’s and Lender’s
express intent that all amounts charged in excess of the Maximum Lawful Rate
shall be automatically cancelled, ab initio, and all amounts in excess of the
Maximum Lawful Rate theretofore collected by Lender shall be credited on the
principal balance of the Note and/or the Related Indebtedness (or, if the Note
and all Related Indebtedness have been or would thereby be paid in full,
refunded to Borrower), and the provisions of the Note and the other Loan
Documents immediately be deemed reformed and the amounts thereafter collectible
hereunder and thereunder reduced, without the necessity of the execution of any
new document, so as to comply with the applicable law, but so as to permit the
recovery of the fullest amount otherwise called for hereunder and thereunder;
provided, however, if the Note has been paid in full before the end of the
stated term of the Note, then Borrower and Lender agree that Lender shall, with
reasonable promptness after Lender discovers or is advised by Borrower that
interest was received in an amount in excess of the Maximum Lawful Rate, either
refund such excess interest to, Borrower and/or credit such excess interest
against the Note and/or any Related Indebtedness then owing by Borrower to
Lender. Borrower hereby agrees that as a condition precedent to any claim
seeking usury penalties against Lender, Borrower will provide written notice to
Lender, advising Lender in reasonable detail of the nature and amount of the
violation, and Lender shall have sixty (60) days after receipt of such notice in
which to correct such usury violation, if any, by either refunding such excess
interest to Borrower or crediting such excess interest against the Note and/or
the Related Indebtedness then owing by Borrower to Lender. All sums contracted
for, charged or received by Lender for the use, forbearance or detention of any
debt evidenced by the Note and/or the Related Indebtedness shall, to the extent
permitted by applicable law, be amortized, or spread, using the actuarial
method, throughout the stated term of the Note and/or the Related Indebtedness
(including any and all renewal and extension periods) until payment in full so
that the rate or amount of interest on account of the Note and/or the Related
Indebtedness does not exceed the Maximum Lawful Rate from time to time in effect
and applicable to the Note and/or the Related Indebtedness for so long as debt
is outstanding. In no event shall the provisions of Chapter 346 of the Texas
Finance Code (which regulates certain revolving credit loan accounts and
revolving triparty accounts) apply to the Note and/or the Related Indebtedness.
Notwithstanding anything to the contrary contained herein or in any of the other
Loan Documents, it is not the intention of Lender to accelerate the maturity of
any interest that has not accrued at the time of such acceleration or to collect
unearned interest at the time of such acceleration.

(b) Definitions. As used herein, the term “Maximum Lawful Rate” shall mean the
maximum lawful rate of interest which may be contracted for, charged, taken,
received or reserved by Lender in accordance with the applicable laws of the
State of Texas (or applicable United States federal law to the extent that it
permits Lender to contract for, charge, take, receive or reserve a greater
amount of interest than under Texas law), taking into account all Charges (as
herein defined) made in connection with the transaction evidenced by the Note
and the other Loan Documents. As used herein, the term “Charges” shall mean all
fees, charges and/or any other things of value, if any, contracted for, charged,
received, taken or reserved by Lender in connection with the transactions
relating to the Note and the other Loan Documents, which are treated as interest
under applicable law. As used herein, the term “Related Indebtedness” shall mean
any and all debt paid or payable by Borrower to Lender pursuant to the Loan
Documents or any other communication or writing by or between Borrower and
Lender related to the transaction or transactions that are the subject matter of
the Loan Documents, except such debt which has been paid or is payable by
Borrower to Lender under the Note.

(c) Ceiling Election. To the extent that Lender is relying on Chapter 303 of the
Texas Finance Code to determine the Maximum Lawful Rate payable on the Note
and/or the Related Indebtedness, Lender will utilize the weekly ceiling from
time to time in effect as provided in such Chapter 303, as amended. To the
extent United States federal law permits Lender to contract for, charge, take,
receive or reserve a greater amount of interest than under Texas law, Lender
will rely on United States federal law instead of such Chapter 303 for the
purpose of determining the Maximum Lawful Rate. Additionally, to the extent
permitted by applicable law now or hereafter in effect, Lender may, at its
option and from time to time, utilize any other method of establishing the
Maximum Lawful Rate under such Chapter 303 or under other applicable law by
giving notice, if required, to Borrower as provided by applicable law now or
hereafter in effect.

6.31 Secondary Market. Lender may sell, transfer and deliver the Note and the
Loan Documents to one or more investors in the secondary mortgage market (a
“Secondary Market Transaction”). In connection with such sale, Lender may retain
or assign responsibility for servicing the loan evidenced by the Note or may
delegate some or all of such responsibility and/or obligations to a servicer,
including, but not limited to, any subservicer or master servicer, on behalf of
the Investors (as hereinafter defined). All references to Lender herein shall
refer to and include, without limitation, any such servicer, to the extent
applicable.

6.32 Dissemination of Information. If Lender determines at any time to sell,
transfer or assign the Note, this Deed of Trust and the other Loan Documents,
and any or all servicing rights with respect thereto, or to grant participations
therein (the “Participations”) or issue mortgage pass-through certificates or
other securities evidencing a beneficial interest in a rated or unrated public
offering or private placement (the “Securities”), Lender may forward to each
purchaser, transferee, assignee, servicer, participant, investor, or their
respective successors in such Participations and/or Securities (collectively,
the “Investors”) or any rating agency rating such Securities (each a “Rating
Agency”), each prospective Investor and each of the foregoing’s respective
counsel, all documents and information which Lender now has or may hereafter
acquire relating to the Debt, to Borrower, any guarantor, any indemnitor, and
the Property, which shall have been furnished by Borrower and any Indemnitor, as
Lender determines necessary or desirable.

6.33 Intentionally Deleted.

6.34 REMIC Opinions. In the event Borrower requests Lender’s consent with
respect to any proposed action or Borrower proposes to take any action not
otherwise requiring Lender’s specific consent under the Loan Documents, which
Lender determines, in its discretion, may affect (i) the “REMIC” status of
Lender, its successors or assigns, or (ii) the status of this Deed of Trust as a
“qualified mortgage” as defined in Section 860G of the Internal Revenue Code of
1986 (or any succeeding provision of such law), Lender reserves the right to
require Borrower, at Borrower’s sole expense, to obtain, from counsel
satisfactory to Lender in its discretion, an opinion, in form and substance
satisfactory to Lender in its discretion, that no adverse tax consequences will
arise as a result of the proposed course of action.

ARTICLE VII.
CONCERNING THE TRUSTEE

7.1 Certain Rights. With the approval of Lender, Trustee shall have the right to
take any and all of the following actions: (i) to select, employ and consult
with counsel (who may be, but need not be, counsel for Lender) upon any matters
arising hereunder, including the preparation, execution and interpretation of
the Loan Documents, and shall be fully protected in relying as to legal matters
on the advice of counsel, (ii) to execute any of the trusts and powers hereof
and to perform any duty hereunder either directly or through his or her agents
or attorneys, (iii) to select and employ, in and about the execution of his or
her duties hereunder, suitable accountants, engineers and other experts, agents
and attorneys-in-fact, either corporate or individual, not regularly in the
employ of Trustee (and Trustee shall not be answerable for any act, default,
negligence, or misconduct of any such accountant, engineer or other expert,
agent or attorney-in-fact, if selected with reasonable care, or for any error of
judgment or act done by Trustee in good faith, or be otherwise responsible or
accountable under any circumstances whatsoever, except for Trustee’s gross
negligence or bad faith), and (iv) any and all other lawful action that Lender
may instruct Trustee to take to protect or enforce Lender’s rights hereunder.
Trustee shall not be personally liable in case of entry by Trustee, or anyone
entering by virtue of the powers herein granted to Trustee, upon the Property
for debts contracted for or liability or damages incurred in the management or
operation of the Property. Trustee shall have the right to rely on any
instrument, document, or signature authorizing or supporting any action taken or
proposed to be taken by Trustee hereunder, believed by Trustee in good faith to
be genuine. Trustee shall be entitled to reimbursement for expenses incurred by
Trustee in the performance of Trustee’s duties hereunder and to reasonable
compensation for such of Trustee’s services hereunder as shall be rendered.
Borrower will, from time to time, pay the compensation due to Trustee hereunder
and reimburse Trustee for, and save and hold Trustee harmless against, any and
all liability and expenses which may be incurred by Trustee in the performance
of Trustee’s duties.

7.2 Retention of Money. All moneys received by Trustee shall, until used or
applied as herein provided, be held in trust for the purposes for which they
were received, and shall be segregated from any other moneys of Trustee.

7.3 Successor Trustees. Trustee may resign by the giving of notice of such
resignation in writing to Lender. If Trustee shall die, resign or become
disqualified from acting in the execution of this trust, or if, for any reason,
Lender, in Lender’s sole discretion and with or without cause, shall prefer to
appoint a substitute trustee or multiple substitute trustees, or successive
substitute trustees or successive multiple substitute trustees, to act instead
of the aforenamed Trustee, Lender shall have full power to appoint a substitute
trustee (or, if preferred, multiple substitute trustees) in succession who shall
succeed (and if multiple substitute trustees are appointed, each of such
multiple substitute trustees shall succeed) to all the estates, rights, powers
and duties of the aforenamed Trustee. Such appointment may be executed by any
authorized agent of Lender, and if such Lender be a corporation and such
appointment be executed on its behalf by any officer of such corporation, such
appointment shall be conclusively presumed to be executed with authority and
shall be valid and sufficient without proof of any action by the board of
directors or any superior officer of the corporation. Borrower hereby ratifies
and confirms any and all acts which the aforenamed Trustee, or his or her
successor or successors in this trust, shall do lawfully by virtue hereof. If
multiple substitute trustees are appointed, each of such multiple substitute
trustees shall be empowered and authorized to act alone without the necessity of
the joinder of the other multiple substitute trustees, whenever any action or
undertaking of such substitute trustees is requested or required under or
pursuant to this Deed of Trust or applicable law. Any prior election to act
jointly or severally shall not prevent either or both of such multiple
substitute Trustees from subsequently executing, jointly or severally, any or
all of the provisions hereof.

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

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

7.6 No Representation by Trustee or Lender. By accepting or approving anything
required to be observed, performed, or fulfilled or to be given to Trustee or
Lender pursuant to the Loan Documents, including, without limitation, any
officer’s certificate, balance sheet, statement of profit and loss or other
financial statement, survey, appraisal or insurance policy, neither Trustee nor
Lender shall be deemed to have warranted, consented to, or affirmed the
sufficiency, legality, effectiveness or legal effect of the same, or of any
term, provision, or condition thereof, and such acceptance or approval thereof
shall not be or constitute any warranty or affirmation with respect thereto by
Trustee or Lender.

[The Remainder of the Page is Intentionally Blank]

3

7.7 Entire Agreement and Modifications. THIS DEED OF TRUST AND THE OTHER LOAN
DOCUMENTS EMBODY THE FINAL, ENTIRE AGREEMENT AMONG THE PARTIES HERETO AND
SUPERSEDE ANY AND ALL PRIOR COMMITMENTS, AGREEMENTS, REPRESENTATIONS AND
UNDERSTANDINGS, WHETHER WRITTEN OR ORAL, RELATING TO THE SUBJECT MATTER HEREOF
AND THEREOF AND MAY NOT BE CONTRADICTED OR VARIED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OR DISCUSSIONS OF THE PARTIES
HERETO. THERE ARE NO ORAL AGREEMENTS AMONG THE PARTIES HERETO. This Deed of
Trust and the other Loan Documents may not be amended, revised, waived,
discharged, released or terminated orally but only by a written instrument or
instruments executed by the party against which enforcement of the amendment,
revision, waiver, discharge, release or termination is asserted. Any alleged
amendment, revision, waiver, discharge, release or termination which is not so
documented shall not be effective as to any party.

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

BORROWER:

         
 
  APARTMENT REIT WALKER RANCH, LP,

 
  a Texas limited partnership

 
  By: Apartment REIT Walker Ranch GP, LLC,

NOTICE OF
  a Delaware limited liability company,

INDEMNIFICATION:
  its General Partner

BORROWER HEREBY
  By: NNN Apartment REIT Holdings, L.P.,

ACKNOWLEDGES AND
  a Virginia limited partnership,

AGREES THAT THIS
  its Manager

DEED OF TRUST
  By: NNN Apartment REIT, Inc.,

CONTAINS
  a Maryland corporation,

INDEMNIFICATION
  its General Partner

PROVISIONS PURSUANT
  By: /s/ Andrea R. Biller

TO SECTIONS 2.8,
    —  
2.16, 2.27(f),
  Name: Andrea R. Biller

2.28, 2.32(c) AND
    —  
ARTICLE V HEREOF.
  Title: Secretary

4

STATE OF CALIFORNIA

COUNTY OF ORANGE

Before me, J. Hu, Notary Public, on this day personally appeared Andrea R.
Biller, known to me to be the person whose name is subscribed to the foregoing
instrument as Secretary of NNN Apartment REIT, Inc., a Maryland corporation, the
General Partner of NNN Apartment REIT Holdings, L.P., a Virginia limited
partnership, the Manager of Apartment REIT Walker Ranch GP, LLC, a Delaware
limited liability company, the General Partner of APARTMENT REIT WALKER RANCH,
LP, a Texas limited partnership, and acknowledged to me that he/she executed the
same on behalf of said limited partnership, for the purposes and consideration
therein expressed, as the act and deed of said limited partnership.

Given under my hand and seal of office this 10th day of April, 2007.

     
 
  /s/ J. Hu
 
   
 
  Printed Name: J. Hu
 
   
[SEAL]
  Notary Public for the State of Californa

    My Commission Expires: September 30, 2009

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