Exhibit 10.103


 


DEED OF TRUST, SECURITY AGREEMENT,

FIXTURE FILING AND ASSIGNMENT OF LEASES AND RENTS


 


 


	
  THE STATE OF TEXAS

  	
  )

  	
   

  
	
   

  	
  )

  	
  KNOW ALL MEN BY THESE
  PRESENTS:

  
	
  COUNTY OF COLLIN

  	
  )

  	
   

  



 


THAT, FRISCO
SQUARE Fl-1, LTD., a Texas limited partnership (“Grantor”),  for
and in consideration of the sum of Ten Dollars ($10.00) to Grantor in hand paid
by Lee Q. Vardaman, Trustee, of Dallas County, Texas (“Trustee”), in order to secure the
payment of the indebtedness hereinafter referred to and the performance of the
obligations, covenants, agreements and undertakings of Grantor hereinafter
described, does hereby GRANT, BARGAIN, SELL, CONVEY, TRANSFER, ASSIGN and SET
OVER to the Trustee the real estate situated in the County of Collin and State
of Texas described in Exhibit A attached hereto and made a part hereof,
together with (i) all the buildings and other improvements now on or hereafter
located thereon; (ii) all materials, equipment, fixtures or other property
whatsoever now or hereafter attached or affixed to or installed in said
buildings and other improvements, including, but not limited to, all heating,
plumbing, lighting, water heating, cooking, laundry, refrigerating,
incinerating, ventilating and air conditioning equipment, disposals,
dishwashers, refrigerators and ranges, recreational equipment and apparatus,
utility lines and equipment (whether owned individually or jointly with
others), sprinkler systems, fire extinguishing apparatus and equipment, water
tanks, swimming pools, engines, machines, elevators, motors, cabinets, shades,
blinds, partitions, window screens, screen doors, storm windows, awnings,
drapes, and rugs and other floor coverings, and all fixtures, accessions and
appurtenances thereto, and all renewals or replacements of or substitutions for
any of the foregoing, all of which materials, equipment, fixtures and other
property are hereby declared to be permanent fixtures and accessions to the
freehold and part of the realty conveyed herein as security for the
indebtedness herein mentioned; (iii) all easements and rights of way now and at
any time hereafter used in connection with any of the foregoing property or as
a means of ingress to or egress from said property or for utilities to said
property; (iv) all interests of Grantor in and to any streets, ways, alleys
and/or strips of land adjoining said land or any part thereof; and (v) all
rights, estates, powers and privileges appurtenant or incident to the
foregoing.


 


TO HAVE AND TO
HOLD the foregoing property (the “Mortgaged
Property”)  unto the
Trustee and his successors or substitutes in this trust and to him or their
successors and assigns, IN TRUST, however, upon the terms, provisions and
conditions herein set forth.


 


In order to secure
the payment of the indebtedness hereinafter referred to and the performance of
the obligations, covenants, agreements and undertakings of Grantor hereinafter
described, Grantor hereby grants to the Beneficiary (as hereinafter defined) a
security interest in all goods, equipment, furnishings, fixtures, furniture, chattels
and personal property of whatever nature owned by Grantor now or hereafter
located or used in and about the building or buildings or other improvements
now erected or hereafter to be erected on the lands described in Exhibit A
attached hereto and made a part hereof, or otherwise located on said lands, and
all fixtures, accessions and appurtenances thereto, and all renewals or
replacements of or substitutions for any of the foregoing, all building
materials and equipment now or hereafter delivered to said premises and
intended to be installed therein, all security deposits and advance rentals
under lease agreements now or at any time hereafter covering or affecting any
of the Property (as hereinafter defined) and held by or for the benefit of
Grantor, all monetary deposits which Grantor has


 


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been required to give to
any public or private utility with respect to utility services furnished to the
Property, all rents and other amounts from and under leases of all or any part
of the Property, all of Grantor’s interest in and to the proceeds of the Note
(hereinafter defined), whether disbursed or not, and any Borrower’s Deposit (as
such term is defined in the Loan Agreement [hereinafter defined]) made by
Grantor in an account with Beneficiary, all issues, profits and proceeds from
all or any part of the Property, all proceeds (including premium refunds) of
each policy of insurance relating to the Property, all proceeds from the taking
of the Property or any part thereof or any interest therein or right or estate
appurtenant thereto by eminent domain or by purchase in lieu thereof, all
amounts deposited in escrow for the payment of ad valorem taxes, assessments
and charges and/or premiums for policies of insurance with respect to the
Property, all contracts related to the Property, all money, funds, accounts,
deposit accounts, instruments, investment property, documents, general
intangibles (including trademarks, trade names and symbols used in connection therewith),
letter of credit rights, commercial tort claims, supporting obligations, all
notes or chattel paper arising from or related to the Property, all permits,
licenses, franchises, certificates, and other rights and privileges obtained in
connection with the Property, all plans, specifications, maps, surveys,
reports, architectural, engineering and construction contracts, books of
account, insurance policies and other documents, of whatever kind or character,
relating to the use, construction upon, occupancy, leasing, sale or operation
of the Property, all proceeds and other amounts paid or owing to Grantor under
or pursuant to any and all contracts and bonds relating to the construction,
erection or renovation of the Property, all oil, gas and other hydrocarbons and
other minerals produced from or allocated to the Property and all products
processed or obtained therefrom, the proceeds thereof, and all accounts and
general intangibles under which such proceeds may arise, together with any sums
of money that may now or at any time hereafter become due and payable to
Grantor by virtue of any and all royalties, overriding royalties, bonuses,
delay rentals and any other amount of any kind or character arising under any
and all present and future oil, gas and mining leases covering the Property or
any part thereof (all of the property described in this paragraph hereinafter
collectively called the “Collateral”)
and all proceeds of the Collateral. (The Mortgaged Property and the Collateral
are herein sometimes collectively called the “Property”.)


 


Notwithstanding
the foregoing, all terms used herein which are defined in the Uniform
Commercial Code as adopted in Texas (the “UCC”)
shall, unless otherwise provided, have the meanings ascribed to them in the UCC
as in effect on the date hereof. The parties intend that the terms used herein
which are defined in the UCC have, at all times, the broadest and most
inclusive meanings possible. Accordingly, if the UCC shall in the future be
amended or held by a court to define any term used herein more broadly or
inclusively than the UCC in effect on the date hereof, then such term as used
herein shall be given such broadened meaning. If the UCC shall in the future be
amended or held by a court to define any term used herein more narrowly, or
less inclusively, than the UCC in effect on the date of this Deed of Trust,
such amendment or holding shall be disregarded in defining terms used in this
Deed of Trust.


 


ARTICLE
I. 

Secured Indebtedness


 


1.1       Secured Indebtedness.
This Deed of Trust, Security Agreement, Fixture Filing and Assignment of Leases
and Rents (this “Deed of Trust”)
is made to secure and enforce the payment of the following note, obligations,
indebtedness and liabilities: (a) one certain Deed of Trust Note of even date
herewith in the principal amount of Eight Million Eight Hundred Eighty Nine
Thousand and No/100 Dollars ($8,889,000.00), made by Grantor, and payable to
the order of COMPASS BANK, with interest at the rate or rates therein provided,
both principal and interest being payable as therein provided and all amounts
remaining unpaid thereon being finally due and payable on the date which is
twenty-four (24)


 


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months from the date
hereof (subject to being extended as provided in the Loan Agreement), and
containing a provision for the payment of a reasonable additional amount as
attorney’s fees, and all other notes given in substitution therefor or in
modification, increase, renewal or extension thereof, in whole or in part, such
note and all other notes given in substitution therefor or in modification,
increase, renewal or extension thereof, in whole or in part, being hereinafter
called the “Note”,  and said payee and all subsequent holders
of the Note or any part thereof or any interest therein or any of the “secured
indebtedness” (as hereinafter defined) being hereinafter called the “Beneficiary”;  and (b) all loans and future advances made by the Beneficiary
to Grantor and all other debts, obligations and liabilities of every kind and
character of Grantor now or hereafter existing in favor of the Beneficiary
(including all indebtedness incurred or arising pursuant to the provisions of
this Deed of Trust or any loan agreement relating to the above described indebtedness
or any other instrument now or hereafter evidencing, governing or securing the
above described indebtedness or any part thereof) whether such debts,
obligations or liabilities be direct or indirect, primary or secondary, joint
or several, fixed or contingent, and whether originally payable to the
Beneficiary or to a third party and subsequently acquired by the Beneficiary
and whether such debts, obligations and liabilities are evidenced by note, open
account, overdraft, endorsement, surety agreement, guaranty or otherwise, it
being contemplated that Grantor may hereafter become indebted to the
Beneficiary in further sum or sums. The indebtedness referred to in this
Paragraph is hereinafter sometimes called the “secured indebtedness” or the “indebtedness secured hereby.”


 


1.2       Certain Terms. The
Note, this Deed of Trust and certain other documents were executed and
delivered pursuant to the Construction Loan Agreement of even date herewith
(the “Loan Agreement”)  between Grantor and the Beneficiary. Terms
used, but not defined, herein are defined in the Loan Agreement and shall have
the meaning given such terms in the Loan Agreement.


 


ARTICLE
II.

Representations, Warranties and Covenants


 


2.1       Representations and
Warranties. Grantor represents and warrants to and with the Beneficiary as
follows:


 


(a) Title
and Authority. Grantor is the lawful owner of good and marketable title to
the Property and has good right and authority to grant, bargain, sell, convey,
transfer, assign and mortgage the Mortgaged Property and to grant a security
interest in the Collateral. Grantor’s exact name is the name set forth for
Grantor in this Deed of Trust. Grantor does not do business with respect to the
Property under any trade name. The Property is free and clear from all liens,
security interests and encumbrances except the lien and security interest
evidenced hereby and the encumbrances set forth in Schedule B of the Mortgagee
Title Policy provided to Beneficiary pursuant to the Loan Agreement (the “Permitted Encumbrances”).


 


(b)       No Financing Statement.
There is no financing statement covering all or any part of the Property or its
proceeds on file in any public office.


 


(c)       Location of Collateral.
All tangible Collateral is located on the property described in Exhibit A
attached hereto and made a part hereof.


 


(d)       Compliance with
Covenants and Laws. The Property and the intended use thereof by Grantor
comply with all applicable restrictive covenants, zoning ordinances and
building codes, flood disaster laws, applicable health, safety and
environmental laws and


 


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regulations, laws
relating to the disabled (including but not limited to The Americans with
Disabilities Act of 1990, 42 U.S.C. §§12101 et seq. and regulations thereunder
[the “ADA”]  and all other applicable laws, statutes,
ordinances, rules, regulations, orders, determinations and court decisions (all
of the foregoing hereinafter sometimes collectively called “Applicable Laws”) without reliance upon
grandfather provisions or adjacent or other properties. Grantor or Grantor’s
tenants have obtained all requisite zoning, utility, building, health and
operating permits from the governmental authority or municipality having
jurisdiction over the Property.


 


(e)       Environmental. Without
limitation of the foregoing, to the best knowledge of Grantor after due and
diligent inquiry and except as specifically disclosed to the Beneficiary in
that certain Phase I Environmental Assessment Report prepared by C&E
Environmental, LLC, dated December 1, 2004, Project No. 04.0490, covering the
Property, the Property and Grantor are not in violation of or subject to any
existing, pending or, to the best knowledge of Grantor, threatened
investigation or inquiry by any governmental authority or to any remedial
obligations under any Applicable Laws pertaining to health, safety or the
environment (such Applicable Laws as they now exist or are hereafter enacted
and/or amended hereinafter sometimes collectively called “Applicable Environmental Laws”),  including without limitation the
Comprehensive Environmental Response, Compensation, and Liability Act of 1980,
as amended (“CERCLA”) and
the Resource Conservation and Recovery Act of 1976, as amended (“RCRA”), and this representation would
continue to be true and correct in all material respects following disclosure
to the applicable governmental authorities of all relevant facts, conditions
and circumstances, if any, pertaining to the Property and Grantor. Grantor has
not obtained and is not required to obtain any permits, licenses or similar
authorizations to construct, occupy, operate or use any buildings,
improvements, fixtures and equipment forming a part of the Property by reason
of any Applicable Environmental Laws. Grantor has taken all commercially reasonable
steps to determine and has determined that no hazardous substances or solid
wastes have been disposed of or otherwise released on or to the Property in
violation of Applicable Environmental Laws. The use which Grantor makes and
intends to make of the Property will not result in the disposal or other
release of any hazardous substance or solid waste on or to the Property. As
used in this Deed of Trust, the term “release”
shall have the meaning specified in CERCLA, the terms “solid  waste”  and “disposal”  (or “disposed”)
shall have the meanings specified in RCRA, and the term “hazardous substance” shall mean (i) any
“hazardous substance” as defined in CERCLA and regulations promulgated
thereunder, (ii) any “hazardous waste” as defined in RCRA and regulations
promulgated thereunder, (iii) any petroleum, including crude oil or any
fraction thereof which is not otherwise specifically listed or designated as a
hazardous substance under the definition of hazardous substance in CERCLA as
well as natural gas, natural gas liquids, liquified natural gas, or synthetic
gas usable for fuel (or mixtures of natural gas and such synthetic gas), and
other petroleum products and by-products (iv) formaldehyde, urea,
polychlorinated biphenyls, radon, and “source”, “special nuclear” and “by-product”
material as defined in the Atomic Energy Act of 1985, 42 U.S.C. §§ 3011 et
seq., (v) any material defined as hazardous or toxic under any statute or
regulation of the State of Texas or any agency thereof and (vi) any other
material or substance which is toxic, ignitable, reactive or corrosive and
which is regulated by any Applicable Environmental Law; provided, (i) all such
terms shall be deemed to include all similar terms used in any Applicable
Environmental Laws or regulations thereunder (including by way of example, but
not limitation, pollutant, contaminant, toxic substance, discharge and
migration), and (ii) to the extent that any Applicable Environmental Laws or
regulations thereunder are amended so as to broaden the meaning, or otherwise
establish a meaning, for “hazardous substance,” “release,” “solid waste,” or “disposal”
(or “disposed”), or any similar terms, which is broader than that specified
above, such broader meaning shall apply.


 


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(f)        Warranty. Grantor
will warrant and forever defend the title to the Property against the claims of
all persons whomsoever lawfully claiming or to claim the same or any part
thereof, subject to the Permitted Encumbrances.


 


2.2       Covenants and Agreements.
So long as the secured indebtedness or any part thereof remains unpaid, Grantor
covenants and agrees with the Beneficiary as follows:


 


(a)       Payment. Grantor
will make prompt payment, as the same becomes due, of the Note and of all
installments of principal and interest thereon and of all other secured
indebtedness.


 


(b)       Existence. Grantor
will continuously maintain its existence and its right to do business in the
State of Texas together with its franchises and trade names.


 


(c)       Taxes on Note and Other
Taxes. Grantor will promptly pay all income, franchise and other taxes
owing by Grantor and any stamp taxes which may be required to be paid with
respect to the Note, this Deed of Trust or any other instrument evidencing or
securing any of the secured indebtedness.


 


(d)       Operation of Property.
Grantor will operate the Property in a good and workmanlike manner and in
accordance with all Applicable Laws and will pay all fees or charges of any
kind in connection therewith. Grantor will not use or occupy, or allow the use
or occupancy of, the Property in any manner which violates any Applicable Law
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. Grantor will comply with and use reasonable efforts to cause all
occupants of the Property to comply with the ADA and shall provide the
Beneficiary with copies of all plans for compliance with the ADA and all
surveys relating to such compliance now in Grantor’s possession or obtained by
Grantor during the term of the loan evidenced by the Note. Grantor will not
initiate or permit any zoning reclassification of the Property or seek any
variance under existing zoning ordinances applicable to the Property or use or
permit the use of the Property in such a manner which would result in such use
becoming a nonconforming use under applicable zoning ordinances or other
Applicable Laws. Grantor will not impose any restrictive covenants or
encumbrances upon the Property, execute or file any subdivision plat affecting
the Property or consent to the annexation of the Property to any municipality,
without the prior written consent of the Beneficiary. Grantor shall not operate
the Property, or permit the Property to be operated, as a cooperative or
condominium building or buildings in which the tenants or occupants participate
in the ownership, control or management of the Property or any part thereof, as
tenant stockholders or otherwise. Grantor shall not cause or permit any
drilling or exploration for, or extraction, removal or production of, minerals
from the surface or subsurface of the Property. Grantor will not do or suffer
to be done any act whereby the value of any part of the Property may be materially
lessened. Beneficiary or its authorized representatives, including but not
limited to third party appraisers, environmental engineers, employees of the
Beneficiary, architects and engineers, shall have the right to inspect and
conduct testing on the Property at any time and Grantor will assist the
Beneficiary and/or said representatives in whatever way necessary to make such
inspections and/or testing. If Grantor receives a notice or claim from any
federal, state or other governmental entity pertaining to the Property,
including specifically but without limitation a notice that the Property is not
in compliance with any Applicable Law, Grantor will promptly furnish a copy of
such notice or claim to the Beneficiary.


 


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(e)       Debts for Construction.
Grantor will cause all debts and liabilities of any character, including
without limitation all debts and liabilities for labor, material and equipment
and all debts and charges for utilities servicing the Property, incurred in the
construction, maintenance, operation and development of the Property to be
promptly paid in accordance with the Loan Agreement.


 


(f)        Ad Valorem Taxes.
Grantor will cause to be paid prior to delinquency all taxes and assessments
heretofore or hereafter levied or assessed against the Property, or any part
thereof, or against the Trustee or the Beneficiary for or on account of the
Note or the other indebtedness secured hereby or the interest created by this
Deed of Trust and will furnish the Beneficiary with receipts showing payment of
such taxes and assessments at least ten (10) days prior to the applicable
default date therefor; except that Grantor may in good faith, by appropriate
proceedings, contest the validity, applicability, or amount of any asserted tax
or assessment, and pending such contest Grantor shall not be deemed in default
hereunder if (i) prior to delinquency of the asserted tax or assessment Grantor
establishes an escrow acceptable to the Beneficiary adequate to cover the payment
of such tax or assessment with interest, costs and penalties and a reasonable
additional sum to cover possible costs, interest and penalties (which escrow
shall be returned to Grantor upon payment of all such taxes, assessments,
interest, costs and penalties); (ii) Grantor pays to the Beneficiary promptly
after demand therefor all costs and expenses incurred by the Beneficiary in
connection with such contest; and (iii) Grantor promptly causes to be paid any
amount adjudged by a court of competent jurisdiction to be due, with all costs,
penalties and interest thereon, promptly after such judgment becomes final;
provided, however, that in any event each such contest shall be concluded and
the tax, assessment, penalties, interest and costs shall be paid prior to the
date any writ or order is issued under which the Property may be sold.


 


(g)       Repair and Maintenance.
After completion of the Improvements, Grantor will keep the Property in good
order, repair, condition and appearance, causing all necessary structural and
non-structural repairs, renewals, replacements, additions and improvements to
be promptly made, and will not allow any of the Property to be misused, abused
or wasted or to deteriorate. Grantor will promptly replace all worn-out or
obsolete fixtures or personal property covered by this Deed of Trust with
fixtures or personal property comparable to the replaced fixtures or personal
property when new, and will repaint the Property when needed. Notwithstanding
the foregoing, Grantor will not, without the prior written consent of the
Beneficiary, and except as contemplated by the Loan Agreement, (i) erect any
new buildings, structures or other improvements on the Property; (ii) remove
from the Property any fixtures or personal property covered by this Deed of
Trust except such as is replaced by Grantor by an article of equal suitability
and value, owned by Grantor, free and clear of any lien or security interest
(except that created by this Deed of Trust), (iii) make any structural or
material alteration to the Property or any other alteration thereto which
impairs the value thereof or (iv) make any alteration to the Property involving
an estimated expenditure exceeding $10,000 except pursuant to plans and
specifications approved in writing by the Beneficiary. Upon request of the
Beneficiary, Grantor will deliver to the Beneficiary an inventory of all
fixtures and personal property used in the management, maintenance and
operation of the Property with a certification by Grantor that said inventory
is a true and complete schedule of all such fixtures and personal property, and
that all such items are owned by Grantor free and clear of any lien or security
interest (except that created by this Deed of Trust).


 


(h)       Insurance and Casualty.
Grantor will keep the Property insured in accordance with the terms, conditions
and provisions of Sections 4.2 and 4.3 of the Loan Agreement, and


 


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Grantor agrees that any
insurance proceeds shall be applied in the manner set forth in Section 4.4  of the Loan Agreement. If any act or
occurrence of any kind or nature (including any casualty on which insurance was
not obtained or obtainable) shall result in damage to or loss or destruction of
the Property, Grantor shall give immediate notice thereof by mail to the
Beneficiary and, unless otherwise so instructed by the Beneficiary, shall
promptly, at Grantor’s sole cost and expense and regardless of whether the
insurance proceeds, if any, 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 damage, loss or destruction in
accordance with plans and specifications submitted to and approved by the
Beneficiary and otherwise in accordance with the provisions of this Deed of
Trust.


 


(i)        Condemnation.
Immediately upon obtaining knowledge of the institution of any proceedings for
the condemnation of the Property or any portion thereof, or any other
proceedings arising out of injury or damage to the Property, or any portion
thereof, Grantor will notify the Beneficiary of the pendency of such
proceedings. The Beneficiary may participate in any such proceedings, and
Grantor shall from time to time deliver to the Beneficiary all instruments
requested by it to permit such participation. Grantor shall, at its expense,
diligently prosecute any such proceedings, and shall consult with the
Beneficiary, its attorneys and experts, and cooperate with them in the carrying
on or defense of any such proceedings. All proceeds of condemnation awards or
proceeds of sale in lieu of condemnation with respect to the Property and all
judgments, decrees and awards for injury or damage to the Property shall be
paid to the Beneficiary and shall be applied, first, to reimburse the
Beneficiary or the Trustee for all costs and expenses, including reasonable
attorney’s fees, incurred in connection with collection of such proceeds and,
second, the remainder of said proceeds shall be applied, at the discretion of
the Beneficiary, to the payment (without premium or penalty) of the secured
indebtedness, either in whole or in part, whether or not then due and payable,
in the order determined by the Beneficiary in its sole discretion or paid out
to repair or restore the Property so affected by such condemnation, injury or
damage in the same manner as provided in subparagraph (h) of this Paragraph
2.2. In any event, notwithstanding such condemnation, the unpaid portion of
the secured indebtedness shall remain in full force and effect (except to the
extent of application of condemnation proceeds as provided above) and Grantor
shall not be excused in the payment thereof. In the event any of the foregoing
proceeds are applied to the repair, restoration or replacement of the Property,
Grantor shall promptly commence and complete such repair, restoration or
replacement of the Property as nearly as possible to its value, condition and
character immediately prior to such damage or taking in accordance with plans
and specifications submitted to and approved by the Beneficiary and otherwise
in accordance with the provisions of this Deed of Trust. Grantor hereby assigns
and transfers all such proceeds, judgments, decrees and awards to the
Beneficiary and agrees to execute such further assignments of all such
proceeds, judgments, decrees and awards as the Beneficiary may request. The
Beneficiary is hereby authorized, in the name of Grantor, to execute and
deliver valid acquittances for, and to appeal from, any such judgment, decree or
award. The Beneficiary shall not be, in any event or circumstances, liable or
responsible for failure to collect, or exercise diligence in the collection of,
any such proceeds, judgments, decrees or awards.


 


(j)        Protection and Defense
of Lien. If the validity or priority of this Deed of Trust or of any
rights, titles, liens or security interests created or evidenced hereby with
respect to the Property or any part thereof shall be endangered or questioned
or shall be attacked directly or indirectly or if any legal proceedings are
instituted against Grantor with respect thereto, Grantor will give prompt
written notice thereof to the Beneficiary and at Grantor’s own cost and expense


 


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will diligently endeavor to
cure any defect that may be developed or claimed, and will take all necessary
and proper steps for the defense of such legal proceedings, including but not
limited to the employment of counsel, the prosecution or defense of litigation
and the release or discharge of all adverse claims, and the Trustee and the
Beneficiary, or either of them (whether or not named as parties to legal
proceedings with respect thereto) are hereby authorized and empowered to take
such additional steps as in their judgment and discretion may be necessary or
proper for the defense of any such legal proceedings or the protection of the
validity or priority of this Deed of Trust and the rights, titles, liens and
security interests created or evidenced hereby, including but not limited to
the employment of counsel, the prosecution or defense of litigation, the
compromise or discharge of any adverse claims made with respect to the
Property, the purchase of any tax title and the removal of prior liens or
security interests (including but not limited to the payment of debts as they
mature or the payment in full of matured or nonmatured debts, which are secured
by these prior liens or security interests), and all expenses so incurred of
every kind and character shall be a demand obligation owing by Grantor and the
party incurring such expenses shall be subrogated to all rights of the person
receiving such payment.


 


(k)       No Other Liens.
Grantor will not, without the prior written consent of the Beneficiary, create,
place or permit to be created or placed, or through any act or failure to act,
acquiesce in the placing of, or allow to remain, any deed of trust, mortgage,
voluntary or involuntary lien, whether statutory, constitutional or contractual
(except for the lien for ad valorem taxes on the Property which are not
delinquent), security interest, encumbrance or charge, or conditional sale or
other title retention document, against or covering the Property, or any part
thereof, other than the Permitted Encumbrances, regardless of whether the same
are expressly or otherwise subordinate to the lien or security interest created
in this Deed of Trust, and should any of the foregoing become attached
hereafter in any manner to any part of the Property without the prior written
consent of the Beneficiary, Grantor will cause the same to be promptly
discharged and released. Grantor will own all parts of the Property and will
not acquire any fixtures, equipment or other property forming a part of the
Property pursuant to a lease, license or similar agreement, without the prior
written consent of the Beneficiary.


 


(l)        Books and Records.
Grantor will keep accurate books and records in accordance with sound
accounting principles in which full, true and correct entries shall be promptly
made as to all operations on the Property, and will permit all such books and
records (including without limitation all contracts, statements, invoices,
bills and claims for labor, materials and services supplied for the
construction and operation of the improvements forming a part of the Property)
to be inspected and copied by the Beneficiary and its duly accredited
representatives at all times during reasonable business hours.


 


(m)      Escrow. In order to
secure the performance and discharge of Grantor’s obligations under subparagraphs
(f) and (h) of this Paragraph 2.2, but not in lieu of such obligations,
upon written demand by the Beneficiary, but only after the occurrence of a
Default hereunder, Grantor will deposit with the Beneficiary a sum equal to ad
valorem taxes, assessments and charges (which charges for the purpose of this
paragraph shall include without limitation ground rents and water and sewer
rents and any other recurring charge which could create or result in a lien
against the Property) against the Property for the then current year and the
premiums for policies of insurance covering the period for the then current
year, all as estimated by the Beneficiary and prorated to the end of the
calendar month following the month during which such demand is made, and thereafter
will deposit with the Beneficiary, on each date when an installment of
principal and/or interest is due on the Note, sufficient funds (as estimated


 


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from time to time by the
Beneficiary) to permit the Beneficiary to pay, at least fifteen (15) days prior
to the due date thereof, the next maturing ad valorem taxes, assessments and
charges and premiums for such policies of insurance. The Beneficiary shall have
the right to rely upon tax information furnished by applicable taxing
authorities in the payment of such taxes or assessments and shall have no
obligation to make any protest of any such taxes or assessments. Any excess
over the amounts required for such purposes shall be held by the Beneficiary for
future use, applied to any secured indebtedness or refunded to Grantor, at the
Beneficiary’s option, and any deficiency in such funds so deposited shall be
made up by Grantor upon demand of the Beneficiary. All such funds so deposited
shall bear no interest whatsoever, may be mingled with the general funds of the
Beneficiary and shall be applied by the Beneficiary toward the payment of such
taxes, assessments, charges and premiums when statements therefor are presented
to the Beneficiary by Grantor (which statements shall be presented by Grantor
to the Beneficiary a reasonable time before the applicable amount is due);
provided, however, that, if a default shall have occurred hereunder, such funds
may at the Beneficiary’s option be applied to the payment of the secured
indebtedness in the order determined by the Beneficiary in its sole discretion,
and that the Beneficiary may at any time, in its discretion, apply all or any
part of such funds toward the payment of any such taxes, assessments, charges
or premiums which are past due, together with any penalties or late charges
with respect thereto. The conveyance or transfer of Grantor’s interest in the
Property for any reason (including without limitation the foreclosure of a
subordinate lien or security interest or a transfer by operation of law) shall
constitute an assignment or transfer of Grantor’s interest in and rights to
such funds held by the Beneficiary under this subparagraph (m) but subject to
the rights of the Beneficiary hereunder.


 


(n)       Further Assurances.
Grantor will, on request of the Beneficiary, (i) promptly correct any defect,
error or omission which may be discovered in the contents of this Deed of Trust
or in any other instrument now or hereafter executed in connection herewith or
in the execution or acknowledgment thereof; (ii) execute, acknowledge, deliver
and record or file such further instruments (including without limitation
further deeds of trust, security agreements, financing statements, continuation
statements and assignments of rents or leases) and do such further acts as may
be necessary, desirable or proper to carry out more effectively the purposes of
this Deed of Trust and such other instruments 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; (iii) execute, acknowledge, deliver, procure and
record or file any document or instrument (including specifically any financing
statement) deemed advisable by the Beneficiary to protect the lien or the
security interest hereunder against the rights or interests of third persons;
and (iv) provide such certificates, documents, reports, information, affidavits
and other instruments and do such further acts as may be necessary, desirable
or proper in the reasonable determination of the Beneficiary to enable the
Beneficiary to comply with the requirements or requests of any agency having
jurisdiction over the Beneficiary or any examiners of such agencies with
respect to the indebtedness secured hereby, Grantor or the Property; and
Grantor will pay all costs connected with any of the foregoing.


 


(o)       Fees and Expenses;
Indemnification. Grantor will pay all appraisal fees, filing and recording
fees, inspection fees, survey fees, taxes, brokerage fees and commissions,
abstract fees, title policy fees, uniform commercial code search fees, escrow
fees, attorney’s fees and all other costs and expenses of every character
incurred by Grantor or the Beneficiary in connection with the loan evidenced by
the Note, either at the closing thereof or at any time during the term thereof,
or otherwise attributable or chargeable to Grantor as owner of the Property,
and will


 


9

















 


reimburse the Beneficiary
for all such costs and expenses incurred by it. Grantor shall pay all expenses
and reimburse the Beneficiary for any expenditures, including reasonable
attorney’s fees and legal expenses, incurred or expended in connection with (i)
the breach by Grantor of any covenant herein or in any other instrument
securing the payment of the Note, (ii) the Beneficiary’s exercise of any of its
rights and remedies hereunder or under the Note or any other instrument
securing the payment of the Note or the Beneficiary’s protection of the
Property and its lien and security interest therein, or (iii) any amendments to
this Deed of Trust, the Note or any other Loan Document or any matter requested
by Grantor or any approval required hereunder. Grantor will indemnify and hold
harmless the Trustee and the Beneficiary (for purposes of this paragraph, the
terms “the Trustee” and “the Beneficiary” shall include the directors,
officers, partners, employees and agents of the Trustee and the Beneficiary,
respectively, and any persons or entities owned or controlled by, owning or
controlling, or under common control or affiliated with the Trustee and the
Beneficiary, respectively) from and against, and reimburse them for, all
claims, demands, liabilities, losses, damages, causes of action, judgments,
penalties, costs and expenses (including, without limitation, reasonable
attorney’s fees) which may be imposed upon, asserted against or incurred or
paid by them by reason of, on account of or in connection with any bodily
injury or death or property damage occurring in or upon or in the vicinity of
the Property through any cause whatsoever or asserted against them on account
of any act performed or omitted to be performed hereunder or on account of any
transaction arising out of or in any way connected with the Property or with
this Deed of Trust, the Note or any other instrument securing the payment of
the Note. WITHOUT LIMITATION, IT IS THE
INTENTION OF GRANTOR AND GRANTOR AGREES THAT THE FOREGOING INDEMNITIES SHALL
APPLY TO EACH INDEMNIFIED PARTY WITH RESPECT TO CLAIMS, DEMANDS, LIABILITIES,
LOSSES, DAMAGES, CAUSES OF ACTION, JUDGMENTS, PENALTIES, COSTS AND EXPENSES (INCLUDING
WITHOUT LIMITATION, REASONABLE ATTORNEY’S FEES) WHICH IN WHOLE OR IN PART ARE
CAUSED BY OR ARISE OUT OF THE NEGLIGENCE OF SUCH (AND/OR ANY OTHER) INDEMNIFIED
PARTY OR ANY STRICT LIABILITY. HOWEVER, SUCH INDEMNITIES SHALL NOT APPLY TO ANY
INDEMNIFIED PARTY TO THE EXTENT THE SUBJECT OF THE INDEMNIFICATION IS CAUSED BY
OR ARISES OUT OF THE GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF SUCH INDEMNIFIED
PARTY. The foregoing indemnities shall not terminate upon release,
foreclosure or other termination of this Deed of Trust but will survive
foreclosure of this Deed of Trust or conveyance in lieu of foreclosure and the
repayment of the secured indebtedness and the discharge and release of this
Deed of Trust and the other documents evidencing and/or securing the secured
indebtedness. Any amount to be paid under this subparagraph by Grantor to the
Beneficiary and/or the Trustee shall be a demand obligation owing by Grantor to
the Beneficiary and/or the Trustee and shall be subject to and governed by the
provisions of Paragraph 2.3 hereof.


 


(p)       Liability Insurance.
Grantor shall maintain Commercial General Liability insurance against claims
for bodily injury or death and property damage occurring in or upon or
resulting from the Property, in standard form and with such insurance company
or companies as may be acceptable to the Beneficiary, to the extent required
by, and in accordance with, the terms, conditions and provisions of Sections
4.2 and 4.3 of the Loan Agreement. In the event of a foreclosure of
this Deed of Trust, the purchaser of the Property shall succeed to all the
rights of Grantor, including any right to unearned premiums, in and to all
policies of insurance assigned pursuant to the provisions of this subparagraph,
and Grantor hereby authorizes the Beneficiary to notify any or all insurance
carriers of this assignment.


 


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(q)       Tax on Lien. In the
event of the enactment after this date of any law of the State of Texas or of
any other governmental entity deducting from the value of property for the
purpose of taxation any lien or security interest thereon, or imposing upon the
Beneficiary the payment of the whole or any part of the taxes or assessments or
charges or liens herein required to be paid by Grantor, or changing in any way
the laws relating to the taxation of deeds of trust or mortgages or security
agreements or debts secured by deeds of trust or mortgages or security
agreements or the interest of the mortgagee or secured party in the property
covered thereby, or the manner of collection of such taxes, so as to affect
this Deed of Trust or the indebtedness secured hereby or the Beneficiary, then,
and in any such event, Grantor, upon demand by the Beneficiary, shall pay such
taxes, assessments, charges or liens, or reimburse the Beneficiary therefor;
provided, however, that if in the opinion of counsel for the Beneficiary (i) it
might be unlawful to require Grantor to make such payment or (ii) the making of
such payment might result in the imposition of interest beyond the maximum
amount permitted by law, then and in such event, the Beneficiary may elect, by
notice in writing given to Grantor, to declare all of the indebtedness secured
hereby to be and become due and payable sixty (60) days from the giving of such
notice.


 


(r)        Change of Name,
Identity or Structure. Grantor will not change Grantor’s name, address,
location, identity (including its trade name or names) or, if not an
individual, Grantor’s name, address, location, jurisdiction of incorporation,
organization or formation, corporate, partnership or other structure without
notifying the Beneficiary of such change in writing at least thirty (30) days
prior to the effective date of such change. Grantor will execute and deliver to
the Beneficiary, prior to or contemporaneously with the effective date of any
such change, any financing statement or financing statement change required by
the Beneficiary to establish or maintain the validity, perfection and priority
of the security interest granted herein. At the request of the Beneficiary,
Grantor shall execute a certificate in form satisfactory to the Beneficiary
listing the trade names under which Grantor intends to operate the Property,
and representing and warranting that Grantor does business under no other trade
name with respect to the Property.


 


(s)       Location and Use of
Collateral. All tangible Collateral will be used in the business of Grantor
and shall remain in Grantor’s possession or control at all times at Grantor’s
risk of loss and shall be located on the real property described in Exhibit
A hereto.


 


(t)        Estoppel Certificate.
Grantor shall at any time and from time to time furnish promptly upon request
by the Beneficiary a written statement in such form as may be required by the
Beneficiary stating that the Note, this Deed of Trust and the other instruments
securing the payment of the Note are valid and binding obligations of Grantor,
enforceable against Grantor in accordance with their terms; the unpaid
principal balance of the Note; the date to which interest on the Note is paid;
that the Note, this Deed of Trust and the other Loan Documents have not been
released, subordinated or modified; and that there are no offsets or defenses
against the enforcement of the Note, this Deed of Trust or any other instrument
securing the payment of the Note, or if any of the foregoing statements are
untrue, specifying the reasons therefor.


 


(u)       Proceeds of Collateral.
Grantor shall account fully and faithfully for and, if the Beneficiary so
elects, shall promptly pay or turn over to the Beneficiary the proceeds in
whatever form received from disposition in any manner of any of the Collateral,
except as otherwise specifically authorized herein. Grantor shall at all times
keep the Collateral and its proceeds separate and distinct from other property
of Grantor and shall keep accurate and complete records of the Collateral and
its proceeds.


 


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(v)       Loan Agreement.
Grantor will punctually perform and discharge each and every obligation and
undertaking of Grantor under the Loan Agreement, and will not permit a default
by Grantor to occur thereunder.


 


(w)      Permitted Encumbrances.
Grantor will comply with and will perform all of the covenants, agreements and
obligations imposed upon it or the Property in the Permitted Encumbrances in
accordance with their respective terms and provisions. Grantor will not modify
or permit any modification of any Permitted Encumbrance, without the prior
written consent of the Beneficiary.


 


(x)        Environmental.
Grantor will not cause or permit the Property or Grantor to be in violation of,
or do anything or permit anything to be done which will subject the Property to
any remedial obligations under, any Applicable Environmental Laws, assuming disclosure
to the applicable governmental authorities of all relevant facts, conditions
and circumstances, if any, pertaining to the Property and Grantor and Grantor
will promptly notify the Beneficiary in writing of any existing, pending or, to
the best knowledge of Grantor, threatened investigation or inquiry by any
governmental authority in connection with any Applicable Environmental Laws.
Grantor shall obtain any permits, licenses or similar authorizations to
construct, occupy, operate or use any buildings, improvements, fixtures and
equipment forming a part of the Property by reason of any Applicable
Environmental Laws. Grantor shall take all steps necessary to determine that no
hazardous substances or solid wastes are being disposed of or otherwise released
on or to the Property. Grantor will not cause or permit the disposal or other
release of any hazardous substance or solid waste on or to the Property and
covenants and agrees to keep or cause the Property to be kept free of any
hazardous substance or solid waste and to remove the same (or if removal is
prohibited by law, to take whatever action is required by law) promptly upon
discovery at its sole expense. Without limitation of the Beneficiary’s rights
to declare a default hereunder and to exercise all remedies available by reason
thereof, in the event Grantor fails to comply with or perform any of the
foregoing covenants and obligations, the Beneficiary may (without any
obligation, express or implied) remove any hazardous substance or solid waste
from the Property (or if removal is prohibited by law, take whatever action is
required by law) and the cost of the removal or such other action shall be a
demand obligation owing by Grantor to the Beneficiary pursuant to this Deed of
Trust and shall be subject to and covered by the provisions of Paragraph 2.3
hereof. Grantor grants to the Beneficiary and its agents, employees,
contractors and consultants access to the Property and the license (which is
coupled with an interest and irrevocable while this Deed of Trust is in effect)
to remove the hazardous substance or solid waste (or if removal is prohibited
by law, to take whatever action is required by law). Upon the Beneficiary’s
reasonable request, at any time and from time to time during the existence of
this Deed of Trust, Grantor will provide at Grantor’s sole expense an
inspection or audit of the Property from an engineering or consulting firm
approved by the Beneficiary indicating the presence or absence of hazardous
substances and solid wastes on the Property. If Grantor fails to provide same
after ten (10) days’ notice, the Beneficiary may order same, and Grantor grants
to the Beneficiary and its agents, employees, contractors and consultants
access to the Property and a license (which is coupled with an interest and
irrevocable while this Deed of Trust is in effect) to perform inspections and
tests. The cost of such inspections and tests shall be a demand obligation
owing by Grantor to the Beneficiary pursuant to this Deed of Trust and shall be
subject to and covered by the provisions of Paragraph 2.3 hereof.


 


(y)       Asbestos. Grantor
covenants and agrees that it will not install in the Property, nor permit to be
installed in the Property, asbestos, material containing asbestos which is or
may


 


12

















 


become friable or
material containing asbestos deemed hazardous by Applicable Environmental Law,
and that, if any such asbestos or material containing asbestos exists in or on
the Property, whether installed by Grantor or others, Grantor will remove the
same (or if removal is prohibited by law, will take whatever action is required
by law, including without limitation implementing any required operation and
maintenance program) promptly upon discovery at its sole expense. Without
limitation of the Beneficiary’s rights to declare a default hereunder and to
exercise all remedies available by reason thereof, in the event Grantor fails
to comply with or perform any of the foregoing covenants and obligations, the
Beneficiary may (without any obligation, express or implied) remove such
asbestos or material containing asbestos (or if removal is prohibited by law,
take whatever action is required by law including without limitation
implementing any required operation and maintenance program) and the cost of
removal or such other action shall be a demand obligation owing by Grantor to
the Beneficiary pursuant to this Deed of Trust and shall be subject to and
covered by the provisions of Paragraph 2.3 hereof. Grantor grants to the
Beneficiary and its agents, employees, contractors and consultants access to
the Property and a license (which is coupled with an interest and irrevocable
while this Deed of Trust is in effect) to remove such asbestos or materials
containing asbestos (or if removal is prohibited by law, take whatever action
is required by law including without limitation implementing any required
operation and maintenance program). Upon the Beneficiary’s reasonable request,
at any time and from time to time during the existence of this Deed of Trust,
Grantor shall provide at Grantor’s sole expense an inspection or audit of the
Property from an engineering or consulting firm approved by the Beneficiary,
indicating the presence or absence of asbestos or material containing asbestos
on the Property. If Grantor fails to provide same after ten (10) days’ notice,
the Beneficiary may order same, and Grantor grants to the Beneficiary and its
agents, employees, contractors and consultants access to the Property and a
license (which is coupled with an interest and irrevocable while this Deed of
Trust is in effect) to perform inspections and tests. The cost of such
inspections and tests shall be a demand obligation owing by Grantor to the
Beneficiary pursuant to this Deed of Trust and shall be subject to and covered
by the provisions of Paragraph 2.3 hereof.


 


(z)        Liability of General
Partner. Grantor (if a partnership or a limited partnership, which is or
becomes subject to the provisions of the Texas Revised Partnership Act) agrees
with the Beneficiary that the Beneficiary is not required to comply with Art.
6132b-3.05(d) of the Texas Revised Partnership Act with respect to enforcement
of the liability of Grantor hereunder or under the other Loan Documents against
any general partner of Grantor.


 


2.3       Right of the Beneficiary
to Perform. Grantor agrees that, if Grantor fails to perform any act or to
take any action which hereunder Grantor is required to perform or take, or to
pay any money which hereunder Grantor is required to pay, or takes any action
prohibited hereby, the Beneficiary, in Grantor’s name or in its own name, may
but shall not be obligated to perform or cause to be performed such act or take
such action or pay such money or remedy any action so taken, and any expenses
so incurred by the Beneficiary, and any money paid by the Beneficiary in
connection therewith, shall be a demand obligation owing by Grantor to the
Beneficiary and the Beneficiary, upon making such payment, shall be subrogated
to all of the rights of the person, corporation or body politic receiving such
payment. Any amounts due and owing by Grantor to the Beneficiary pursuant to
this Deed of Trust shall bear interest from the date such amount becomes due
until paid at the rate of interest payable on matured but unpaid principal of
or interest on the Note and shall be a part of the secured indebtedness and
shall be secured by this Deed of Trust and by any other instrument securing the
secured indebtedness.


 


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2.4       Indemnification
Regarding Environmental Matters. Grantor agrees to indemnify and hold the
Beneficiary and the Trustee (for purposes of this paragraph, the terms “the
Beneficiary” and “the Trustee” shall include the directors, officers, partners,
employees and agents of the Beneficiary and the Trustee, respectively, and any
persons or entities owned or controlled by, owning or controlling, or under
common control or affiliated with the Beneficiary and the Trustee respectively)
harmless from and against, and to reimburse the Beneficiary and the Trustee
with respect to, any and all claims, demands, losses, damages (including
consequential damages), liabilities, causes of action, judgments, penalties,
costs and expenses (including attorneys’ fees and court costs) of any and every
kind or character, known or unknown, fixed or contingent, imposed on, asserted
against or incurred by the Beneficiary and/or the Trustee at any time and from
time to time by reason of, in connection with or arising out of (a) the breach
of any representation or warranty of Grantor as set forth herein regarding
asbestos, material containing asbestos or Applicable Environmental Laws, (b)
the failure of Grantor to perform any obligation herein required to be
performed by Grantor regarding asbestos, material containing asbestos or
Applicable Environmental Laws, (c) any violation on or before the Release Date
(as hereinafter defined) of any Applicable Environmental Law in effect on or
before the Release Date, (d) the removal of hazardous substances or solid
wastes from the Property (or if removal is prohibited by law, the taking of
whatever action is required by law), (e) the removal of asbestos or material
containing asbestos from the Property (or if removal is prohibited by law, the
taking of whatever action is required by law including without limitation the
implementation of any required operation and maintenance program), (f) any act,
omission, event or circumstance existing or occurring on or prior to the
Release Date (including without limitation the presence on the Property or
release from the Property of hazardous substances or solid wastes disposed of
or otherwise released on or prior to the Release Date), resulting from or in
connection with the ownership, construction, occupancy, operation, use and/or
maintenance of the Property, regardless of whether the act, omission, event or
circumstance constituted a violation of any Applicable Environmental Law at the
time of its existence or occurrence, and (g) any and all claims or proceedings
(whether brought by private party or governmental agency) for bodily injury,
property damage, abatement or remediation, environmental damage or impairment
or any other injury or damage resulting from or relating to any hazardous
substance or solid waste located upon or migrating into, from or through the
Property (whether or not any or all of the foregoing was caused by Grantor or
its tenant or subtenant, or a prior owner of the Property or its tenant or
subtenant, or any third party and whether or not the alleged liability is
attributable to the handling, storage, generation, transportation or disposal
of such substance or waste or the mere presence of such substance or waste on
the Property). WITHOUT LIMITATION, THE
FOREGOING INDEMNITIES SHALL APPLY TO EACH INDEMNIFIED PARTY WITH RESPECT TO
CLAIMS, DEMANDS, LOSSES, DAMAGES (INCLUDING CONSEQUENTIAL DAMAGES),
LIABILITIES, CAUSES OF ACTION, JUDGMENTS, PENALTIES, COSTS AND EXPENSES
(INCLUDING ATTORNEYS’ FEES AND COURT COSTS) WHICH IN WHOLE OR IN PART ARE CAUSED
BY OR ARISE OUT OF THE NEGLIGENCE OF SUCH (AND/OR ANY OTHER) INDEMNIFIED PARTY
OR ANY STRICT LIABILITY. HOWEVER, SUCH INDEMNITIES SHALL NOT APPLY TO ANY
INDEMNIFIED PARTY TO THE EXTENT THE SUBJECT OF THE INDEMNIFICATION IS CAUSED BY
OR ARISES OUT OF THE GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF SUCH INDEMNIFIED
PARTY. The term “Release Date”
as used herein shall mean the earlier of the following two dates: (i) the date
on which the indebtedness and obligations secured hereby have been paid and
performed in full and this Deed of Trust has been released, or (ii) the date on
which the lien of this Deed of Trust is foreclosed or a conveyance by deed in
lieu of such foreclosure is fully effective; provided, if such payment,
performance, release, foreclosure or conveyance is challenged, in bankruptcy
proceedings or otherwise, the Release Date shall be deemed not to have occurred
until such challenge is rejected, dismissed or withdrawn with prejudice. The
foregoing indemnities shall not terminate upon the Release Date or upon the
release, foreclosure or other termination of this Deed of Trust but will
survive the Release Date, foreclosure of this Deed of


 


14

















 


Trust or conveyance in
lieu of foreclosure, and the repayment of the secured indebtedness and the
discharge and release of this Deed of Trust and the other documents evidencing
and/or securing the secured indebtedness. Any amount to be paid under this
Paragraph by Grantor to the Beneficiary and/or the Trustee shall be a demand
obligation owing by Grantor to the Beneficiary and/or the Trustee and shall be
subject to and covered by the provisions of Paragraph 2.3 hereof.
Nothing in this paragraph, elsewhere in this Deed of Trust or in any other
document evidencing, securing or relating to the indebtedness secured hereby
shall limit or impair any rights or remedies of the Beneficiary and/or the
Trustee against Grantor or any third party under Applicable Environmental Laws,
including without limitation any rights of contribution or indemnification
available thereunder.


 


ARTICLE III.

Assignment of Rents


 


3.1       Assignment. Grantor
does hereby absolutely, unconditionally and irrevocably GRANT, CONVEY, ASSIGN,
TRANSFER and SET OVER unto Beneficiary the following:


 


(a)       all rights, title,
interests, estates, powers, privileges, options and other benefits of Grantor
in, to and under the lease agreements which now or hereafter cover or affect
all or any portion of the Property, together with all renewals, extensions,
modifications, amendments, subleases and assignments of such lease agreements
(such lease agreements, renewals, extensions, modifications, amendments,
subleases and assignments are herein collectively called the “Leases”); and


 


(b)       all of the rents, income,
receipts, revenues, issues, profits and other sums of money (collectively, the “Rent”) that are now and/or at any time
hereafter become due and payable to Grantor under the terms of the Leases or
arising or issuing from or out of the Leases or from or out of the Property or
any part thereof, including but not limited to minimum rents, additional rents,
percentage rents, deficiency rents and liquidated damages following default,
payments in consideration for cancellation of a Lease, security deposits,
advance rents, all proceeds payable under any policy of insurance covering loss
of rents resulting from untenantability caused by destruction or damage to the
Property and all of Grantor’s rights to recover monetary amounts from any
lessee in bankruptcy, conservatorship, receivership or similar proceeding
including, without limitation, rights of recovery for use and occupancy and
damage claims arising out of lease defaults, including rejections,
disaffirmances, repudiations, and similar actions, under the Federal Bankruptcy
Code, the Federal Deposit Insurance Act and other statutes governing the rights
of creditors, including specifically the immediate and continuing right to
collect and receive each and all of the foregoing; and


 


(c)       any and all guaranties of
payment of the rent under the Leases.


 


3.2       Grantor hereby represents
and warrants unto Beneficiary that Grantor is the sole owner of the entire
lessor’s interest in the Leases and has good title and good right to assign the
Leases and Rent hereby assigned and no other person or entity has any right,
title or interest therein; that Grantor has duly and punctually performed all
of the terms, covenants, conditions and warranties of the Leases that were to
be kept, observed and performed by it to date; that Grantor has not at any time
prior to the date hereof exercised any right to subordinate any Lease to any
deed of trust or mortgage or any other encumbrance of any kind; that Grantor
has not executed any prior assignments of the Leases or the Rent thereunder;
that no Rent reserved in any Lease has been anticipated and no Rent for any
period subsequent to the date


 


15

















 


of this assignment has
been collected in advance of the time when the same became due under the terms
of the applicable Lease; that Grantor has not performed any act or executed any
other instrument which might prevent Beneficiary from enjoying and exercising
any of its rights and privileges evidenced hereby; that each of the Leases is
valid and subsisting and in full force and effect and unmodified; that there
exists no defense, counterclaim or set-off to the payment of the Rent under the
Leases; and that there are no defaults now existing under the Leases and no
event has occurred which with the passage of time or the giving of notice, or
both, would constitute such a default.


 


3.3       Grantor agrees that, so
long as the indebtedness evidenced by the Note or any part thereof or any other
indebtedness secured by this Deed of Trust shall remain unpaid, Grantor will
make no assignment, pledge or disposition of the Leases or the Rent thereunder;
nor will Grantor subordinate any of the Leases to any deed of trust or mortgage
or any other encumbrance of any kind or permit, consent or agree to such
subordination; nor will Grantor reduce the Rent payable under any of the
Leases, modify, alter or amend the Leases or waive, excuse, condone, discount,
set off, compromise or in any manner release or discharge any lessee under any
Lease of and from any obligations, covenants, conditions and agreements to be
kept, observed and performed by the lessee, including the obligation to pay the
Rent thereunder in the manner and at the place and time specified therein; nor
will Grantor incur any indebtedness to a lessee under or guarantor of any Lease
which may under any circumstance be used as an offset against the Rent or other
payments due under said Lease; nor will Grantor receive or collect any Rent
from any present or future lessee of the Property or any part thereof for a
period of more than one month in advance of the date on which such payment is
due; nor will Grantor cancel or terminate any of the Leases, accept a surrender
thereof, commence an action of ejectment or any summary proceedings for
dispossession of a lessee under any of the Leases, or convey or transfer or
suffer or permit a conveyance or transfer of the premises demised thereby or of
any interest therein so as to effect directly or indirectly, proximately or
remotely, a merger of the estates and rights of, or a termination or diminution
of the obligations of any lessee thereunder; nor will Grantor enter into
additional leases covering any portion of the Property, or renew or extend the
term of any Lease, except in accordance with the applicable provisions of the
Loan Agreement, without first having obtained the written consent of
Beneficiary; and any such acts, if done or permitted to be done without the
prior written consent of Beneficiary where required under the Loan Agreement,
shall be null and void.


 


3.4       Grantor covenants with
Beneficiary, for so long as the indebtedness evidenced by this Note or any part
thereof or any other indebtedness secured by this Deed of Trust shall remain
unpaid, to observe and perform duly and punctually all the obligations imposed
upon any lessor under the Leases and not to do or permit to be done anything to
impair the value thereof; to enforce the performance of each and every term,
provision, covenant, agreement and condition in the Leases to be performed by
any lessee thereunder; to appear in and defend any action or proceeding arising
under, occurring out of or in any manner connected with any of the Leases, or
the obligations, liabilities or duties of Grantor or any lessee under the
Leases and, upon request by Beneficiary, to make appearance in the name and on
behalf of Beneficiary, but at the expense of Grantor; to exercise any option or
election contained in or relating to any of the Leases which Beneficiary shall
require; at Beneficiary’s request to assign and transfer to Beneficiary by
specific Assignment of Leases and Rents, any and all subsequent Leases upon all
or any part of the Property (it being understood and agreed that no such
specific assignment shall be required for such subsequent Leases to be covered
by and included within this Deed of Trust as provided herein); to deliver to
Beneficiary executed copies of any and all Leases, renewals and extensions of
existing Leases and any and all subsequent Leases upon all or any part of the
Property; and to execute and deliver at the request of Beneficiary all such
further assurances and assignments in the premises covered by the Leases as
Beneficiary shall from time to time require and to deliver other records and
instruments, including but not limited to rent rolls and books of account, that
Beneficiary shall from time to time require.


 


16

















 


3.5       Until receipt from
Beneficiary of notice of the occurrence of a default specified herein (a “Notice of Default”),  each lessee under the Leases may pay Rent
directly to Grantor and Grantor shall have the right to receive such Rent
provided that Grantor shall hold such Rent as a trust fund to be applied as
required by Beneficiary and Grantor hereby covenants so to apply the Rent,
before using any part of the same for any other purposes, first, to the payment
of taxes and assessments upon the Property before penalty or interest is due
thereon; second, to the cost of insurance, maintenance and repairs required by
the terms of this Deed of Trust; third, to the satisfaction of all obligations
specifically set forth in the Leases; and, fourth, to the payment of interest
and principal becoming due on the Note and this Deed of Trust. Upon receipt
from Beneficiary of a Notice of Default, each lessee under the Leases is hereby
authorized and directed to pay directly to Beneficiary all Rent thereafter
accruing and the receipt of Rent by Beneficiary shall be a release of such
lessee to the extent of all amounts so paid. The receipt by a lessee under the
Leases of a Notice of Default shall be sufficient authorization for such lessee
to make all future payments of Rent directly to Beneficiary and each such
lessee shall be entitled to rely on such Notice of Default and shall have no
liability to Grantor for any Rent paid to Beneficiary after receipt of such
Notice of Default. Rent so received by Beneficiary for any period prior to
foreclosure under this Deed of Trust or acceptance of a deed in lieu of such
foreclosure shall be applied by Beneficiary to the payment (in such order as
Beneficiary shall determine) of: (a) all expenses of managing the Property,
including but not limited to the salaries, fees and wages of a managing agent
and such other employees as Beneficiary may deem necessary or desirable; all
expenses of operating and maintaining the Property, including but not limited
to all taxes, assessments, charges, claims, utility costs and premiums for
insurance, and the cost of all alterations, renovations, repairs or
replacements; and all expenses incident to taking and retaining possession of
the Property and/or collecting the Rent due and payable under the Leases; and
(b) the Note and other indebtedness secured by this Deed of Trust, principal,
interest, attorneys’ and collection fees and other amounts, in such order as
Beneficiary in its sole discretion may determine. In no event will the
assignment pursuant to this Paragraph reduce the indebtedness evidenced by the
Note or otherwise secured by this Deed of Trust, except to the extent, if any,
that Rent is actually received by Beneficiary and applied upon or after said
receipt to such indebtedness in accordance with the preceding sentence. Without
impairing its rights hereunder, Beneficiary may, at its option, at any time and
from time to time, release to Grantor Rent so received by Beneficiary or any
part thereof. As between Grantor and Beneficiary, and any person claiming
through or under Grantor, other than any lessee under the Leases who has not
received a Notice of Default pursuant to this Paragraph, the assignment
contained in this Paragraph is intended to be absolute, unconditional and
presently effective and the provisions of this Paragraph for notification of
lessees under the Leases upon the occurrence of a default specified in this
Deed of Trust are intended solely for the benefit of each such lessee and shall
never inure to the benefit of Grantor or any person claiming through or under
Grantor, other than a lessee who has not received such notice. It shall never
be necessary for Beneficiary to institute legal proceedings of any kind
whatsoever to enforce the provisions of this Paragraph.


 


3.6       At any time during which
Grantor is receiving Rent directly from lessees under the Leases, Grantor
shall, upon receipt of written direction from Beneficiary, make demand and/or
sue for all Rent due and payable under one or more Leases, as directed by
Beneficiary, as it becomes due and payable, including Rent which is past due
and unpaid. In the event Grantor fails to take such action, or at any time
during which Grantor is not receiving Rent directly from lessees under the
Leases, Beneficiary shall have the right (but shall be under no duty) to
demand, collect and sue for, in its own name or in the name of Grantor, all
Rent due and payable under the Leases, as it becomes due and payable, including
Rent which is past due and unpaid.


 


3.7       BENEFICIARY SHALL NOT BE LIABLE FOR ANY LOSS SUSTAINED BY GRANTOR
RESULTING FROM BENEFICIARY’S FAILURE TO LET THE PROPERTY, OR


 


17

















 


ANY PART
THEREOF, OR FROM ANY OTHER ACT OR OMISSION OF BENEFICIARY UNDER OR RELATING TO
THE LEASES (REGARDLESS OF WHETHER SUCH LOSS IS THE RESULT OF BENEFICIARY’S
NEGLIGENCE) UNLESS SUCH LOSS IS CAUSED BY THE GROSS NEGLIGENCE OR WILLFUL
MISCONDUCT OF BENEFICIARY, NOR SHALL BENEFICIARY BE OBLIGATED TO PERFORM OR
DISCHARGE ANY OBLIGATION, DUTY OR LIABILITY UNDER THE LEASES BY REASON OF THIS
INSTRUMENT OR THE EXERCISE OF RIGHTS OR REMEDIES HEREUNDER.
Beneficiary shall not be liable for its failure to collect, or its failure to
exercise diligence in the collection of, Rent under the Leases, but shall be
accountable only for Rent that Beneficiary actually receives. Grantor will
indemnify and hold harmless Beneficiary (for purposes of this paragraph, the
term “Beneficiary” shall include the directors, officers, partners, employees
and agents of Beneficiary and any persons or entities owned or controlled by,
owning or controlling, or under common control or affiliated with Beneficiary)
from and against, and reimburse Beneficiary for, all claims, demands,
liabilities, losses, damages, causes of action, judgments, penalties, costs and
expenses (including, without limitation, reasonable attorneys’ fees) incurred
under the Leases by reason of this instrument or the exercise of rights or
remedies hereunder, or which may be asserted against Beneficiary by reason of
any alleged obligations or undertakings on its part to perform or discharge any
of the terms, covenants or agreements contained in the Leases, including
specifically any obligation or responsibility for any security deposits or
other deposits delivered to Grantor by any lessee under any Lease and not
assigned and delivered to Beneficiary. THE
RELEASES AND INDEMNITIES CONTAINED IN THIS PARAGRAPH SHALL INCLUDE CLAIMS, DEMANDS,
LIABILITIES, LOSSES, DAMAGES, CAUSES OF ACTION, JUDGMENTS, PENALTIES, COSTS AND
EXPENSES (INCLUDING, WITHOUT LIMITATION, REASONABLE ATTORNEYS’ FEES) RESULTING
FROM THE NEGLIGENCE OF BENEFICIARY OR ANY STRICT LIABILITY, BUT NOT THE GROSS
NEGLIGENCE OR WILLFUL MISCONDUCT OF BENEFICIARY. The foregoing
releases and indemnities shall not terminate upon release or other termination
of the assignment pursuant to this paragraph. Any amount to be paid under this
Paragraph by Grantor to Beneficiary shall be a demand obligation owing by
Grantor to Beneficiary, shall bear interest from the date such amount becomes
due until paid at the rate of interest payable on matured but unpaid principal
of or interest on the Note and shall be secured by this Deed of Trust and by
any other instrument securing the Note. The assignment pursuant to this
paragraph shall not operate to place responsibility upon Beneficiary for the
control, care, management or repair of the Property, nor for the carrying out
of any of the terms and conditions of the Leases; nor shall it operate to make
Beneficiary 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 resulting in loss or injury or death to any tenant,
licensee, employee or stranger.


 


3.8       The assignment pursuant to
this paragraph is primary in nature to the obligation evidenced and secured by
the Note, this Deed of Trust and any other document given to secure and
collateralize the indebtedness secured by this Deed of Trust. Grantor agrees
that Beneficiary may enforce this assignment without first resorting to or
exhausting any other security or collateral; provided however, that nothing
herein contained shall prevent Beneficiary from suing on the Note, foreclosing
this Deed of Trust and/or exercising any other right under any document
securing the payment of the Note or at law or equity.


 


3.9       In the event any lessee
under the Leases should be the subject of any proceeding under the Federal
Bankruptcy Code or any other federal, state or local statute which provides for
the possible termination or rejection of any of the Leases assigned hereby,
Grantor covenants and agrees that if any Lease is so rejected, no settlement
for damages shall be made without the prior written consent of Beneficiary, and
any check in payment of damages for rejection of any such Lease will be made
payable


 


18

















 


to both Grantor and
Beneficiary. Grantor hereby assigns any such payment to Beneficiary and further
covenants and agrees that upon the request of Beneficiary, it will duly endorse
to the order of Beneficiary any such check, the proceeds of which will be
applied to the Note and other indebtedness secured by this Deed of Trust in
such order as Beneficiary in its sole discretion may determine.


 


3.10     In the event that any Lease
permits cancellation thereof on payment of consideration and said privilege of
cancellation is exercised, Grantor hereby assigns any such payment to
Beneficiary and further covenants and agrees that, upon the request of
Beneficiary, it will pay the amount so received to Beneficiary, which amount
will be applied to the Note and other indebtedness secured by the Deed of Trust
in such order as Beneficiary in its sole discretion may determine.


 


3.11     Nothing contained herein and
no act done or omitted by Beneficiary pursuant to the powers and rights granted
it hereunder shall be deemed to be a waiver by Beneficiary of its rights and
remedies under the Note or a waiver or curing of any default hereunder or under
the Note, and the assignment pursuant to this paragraph is made and accepted
without prejudice to any of the rights and remedies possessed by Beneficiary
under the terms of the Note. The right of Beneficiary to collect said principal
sum, interest and indebtedness and to enforce any other security therefor held
by it may be exercised by Beneficiary either prior to, simultaneously with, or
subsequent to any action taken by it hereunder.


 


3.12     Notwithstanding (a) the fact
that any Lease or the leasehold estate created thereby may be held, directly or
indirectly, by or for the account of any person or entity which shall have an
interest in the fee estate of the Property, (b) the operation of law or (c) any
other event, lessee’s leasehold estate under such Lease shall not merge into
the fee estate and the lessee shall remain obligated under such lease as
assigned by this assignment.


 


ARTICLE IV. 

Remedies in Event of Default


 


4.1       Defaults. The term “default” as used in this Deed of Trust
shall mean the occurrence of any of the following events:


 


(a)       the failure of Grantor to
make due and punctual payment of the Note or of any other secured indebtedness
or of any installment of principal thereof or interest thereon within five (5)
days after the same shall become due and payable, or of any other amount
required to be paid under the Note, this Deed of Trust or any other instrument
securing the payment of the Note, as the same shall become due and payable,
whether at maturity or when accelerated pursuant to any power to accelerate
contained in the Note or contained herein; or


 


(b)       the failure of Grantor
timely and properly to observe, keep or perform any covenant, agreement,
warranty or condition herein or in any other Loan Document required to be
observed, kept or performed, other than those referred to in Paragraph
4.1(a) or in any other subparagraph of this Paragraph 4.1 except
this subparagraph (b), if such failure continues for thirty (30) days after
receipt by Grantor of written notice and demand for the performance of such
covenant, agreement, warranty or condition; unless Grantor commences such cure
within such 30 day period and thereafter diligently and continuously prosecutes
such cure to completion within no later than sixty (60) days after such notice
from Beneficiary; or


 


19

















 


(c)       any representation
contained herein or in any other Loan Document or otherwise made by Grantor or
any other person or entity to the Beneficiary in connection with the loan
evidenced by the Note is false or misleading in any material respect; or


 


(d)       a default or event of
default occurs under any other instrument securing the payment of the secured
indebtedness or any part thereof or under the Loan Agreement (after expiration
of any applicable grace or cure period); or


 


(e)       Grantor becomes insolvent,
or makes a transfer in fraud of creditors, or makes an assignment for the
benefit of creditors, or admits in writing its inability to pay its debts as
they become due; or


 


(f)        Grantor is generally not
paying its debts as such debts become due; or


 


(g)       a receiver, trustee or
custodian is appointed for, or takes possession of, all or substantially all of
the assets of Grantor or any of the Property, either in a proceeding brought by
Grantor or in a proceeding brought against Grantor and such appointment is not
discharged or such possession is not terminated within sixty (60) days after
the effective date thereof or Grantor consents to or acquiesces in such
appointment or possession; or


 


(h)       Grantor files a petition
for relief under the Federal Bankruptcy Code or any other present or future
federal or state insolvency, bankruptcy or similar law (all of the foregoing
are hereinafter collectively called “applicable
Bankruptcy Law”) or an involuntary petition for relief is filed
against Grantor under any applicable Bankruptcy Law and such petition is not
dismissed within sixty (60) days after the filing thereof, or an order for
relief naming Grantor is entered under any applicable Bankruptcy Law, or any
composition, rearrangement, extension, reorganization or other relief of
debtors now or hereafter existing is requested or consented to by Grantor; or


 


(i)        the Property or any part
thereof is taken on execution or other process of law in any action against
Grantor; or


 


(j)        Grantor fails to have
discharged within a period of thirty (30) days any attachment, sequestration or
similar writ levied upon any property of Grantor; or


 


(k)       Grantor fails to pay within
thirty (30) days any final money judgment against Grantor; or


 


(l)        any of the events referred
to in subheadings (e), (f), (g), (h), (j) or (k) shall occur with respect to
any joint venturer or general partner of Grantor or any guarantor of the
payment of the secured indebtedness or any part thereof and shall not be
remedied within the time set forth in said subheadings; or


 


(m)      Grantor abandons all or a portion
of the Property; or


 


(n)       the holder of any lien or
security interest on the Property (without hereby implying the consent of the
Beneficiary to the existence or creation of any such lien or security interest)
declares a default thereunder or institutes foreclosure or other proceedings
for the enforcement of its remedies thereunder; or


 


20

















 


(o)       without the prior written
consent of the Beneficiary (which consent may be withheld for any reason or for
no reason), except as expressly provided in the Loan Agreement, Grantor sells,
leases, exchanges, assigns, transfers, conveys or otherwise disposes of all or
any part of the Property or any interest therein (except for the disposition of
worn-out or obsolete personal property or fixtures under the circumstances
described in Paragraph 2.2(g) hereof), or legal or equitable title to
the Property, or any part thereof or any interest therein, is vested in any
other party, in any manner whatsoever, by operation of law or otherwise,
whether any of the foregoing is voluntary or involuntary, it being understood
that the consent of the Beneficiary required hereunder may be refused by the
Beneficiary in its sole and absolute discretion or may be predicated upon any
terms, conditions and covenants deemed advisable or necessary in the sole and
absolute discretion of the Beneficiary, including but not limited to the right
to change the interest rate, date of maturity or payments of principal and/or
interest on the Note, to require payment of any amount as additional
consideration as a transfer fee or otherwise and to require assumption of the
obligations under the Loan Documents; or


 


(p)       without the prior written
consent of the Beneficiary (which consent may be withheld for any reason or for
no reason), Grantor creates, places or permits to be created or placed, or
through any act or failure to act, acquiesces in the placing of, or allows to
remain, any deed of trust, mortgage, voluntary or involuntary lien, whether
statutory, constitutional or contractual (except for the lien for ad valorem
taxes on the Property which are not delinquent), security interest, encumbrance
or charge, or conditional sale or other title retention document, against or
covering the Property, or any part thereof, other than encumbrances permitted
by the Beneficiary, regardless of whether the same are expressly or otherwise
subordinate to the lien or security interest created herein or in any other
Loan Document, or acquires any fixtures, equipment or other property forming a
part of the Property pursuant to a lease, license or similar agreement, it
being understood that the consent of the Beneficiary required hereunder may be
refused by the Beneficiary in its sole and absolute discretion or for any
reason or may be predicated upon any terms, conditions and covenants deemed
advisable or necessary in the sole and absolute discretion of the Beneficiary
including but not limited to the right to change the interest rate, date of
maturity or payments of principal and/or interest on the Note, to require
payment of any amount as a fee or other consideration and to require a payment
on the principal of the Note; or


 


(q)       the Property is so
demolished, destroyed or damaged that, in the judgment of the Beneficiary, it
cannot be restored or rebuilt with available funds to a profitable condition
prior to the maturity of the Loan; or


 


(r)        so much of the Property is
taken in condemnation, or sold in lieu of condemnation, or the Property is so
diminished in value due to any injury or damages to the Property, that the
remainder thereof cannot, in the judgment of the Beneficiary, continue to be
operated profitably for the purpose for which it was being used immediately
prior to such taking, sale or diminution; or


 


(s)       Grantor dissolves,
liquidates, merges or consolidates or any interest in Grantor is sold,
assigned, transferred, mortgaged, pledged, encumbered, or otherwise disposed
of, voluntarily or involuntarily, without the prior written consent of the
Beneficiary or, if an individual, Grantor dies or becomes legally
incapacitated; or


 


(t)        any default under any
guaranty of the payment of the secured indebtedness.


 


21

















 


4.2       Acceleration. Upon
the occurrence of a default, the Beneficiary shall have the option of declaring
all secured indebtedness in its entirety to be immediately due and payable, and
the liens and security interests evidenced hereby shall be subject to
foreclosure in any manner provided for herein or provided for by law as the
Beneficiary may elect.


 


4.3       Possession. Upon the
occurrence of a default, or any event or circumstance which, with the lapse of
time or the giving of notice, or both, would constitute a default hereunder,
the Beneficiary is authorized prior or subsequent to the institution of any
foreclosure proceedings to enter upon the Property, or any part thereof, and to
take possession of the Property and of all books, records and accounts relating
thereto and to exercise without interference from Grantor any and all rights
which Grantor has with respect to the management, possession, operation,
protection or preservation of the Property, including the right to rent the
same for the account of Grantor and to deduct from such rents all costs,
expenses and liabilities of every character incurred by the Beneficiary in
collecting such rents and in managing, operating, maintaining, protecting or
preserving the Property and to apply the remainder of such rents on the
indebtedness secured hereby in such manner as the Beneficiary may elect. All
such costs, expenses and liabilities incurred by the Beneficiary in collecting
such rents and in managing, operating, maintaining, protecting or preserving
the Property, if not paid out of rents as hereinabove provided, shall constitute
a demand obligation owing by Grantor and shall bear interest from the date of
expenditure until paid at the rate of interest payable on matured but unpaid
principal of or interest on the Note, all of which shall constitute a portion
of the secured indebtedness. If necessary to obtain the possession provided for
above, the Beneficiary may invoke any and all legal remedies to dispossess
Grantor, including specifically one or more actions for forcible entry and
detainer, trespass to try title and restitution. IN  CONNECTION WITH ANY
ACTION TAKEN BY THE BENEFICIARY PURSUANT TO THIS  PARAGRAPH 4.3, THE BENEFICIARY SHALL NOT BE
LIABLE FOR ANY LOSS  SUSTAINED BY GRANTOR
RESULTING FROM ANY FAILURE TO LET THE PROPERTY,  OR ANY PART THEREOF, OR FROM ANY OTHER ACT OR OMISSION
OF THE  BENEFICIARY IN MANAGING THE
PROPERTY (REGARDLESS OF WHETHER SUCH  LOSS IS CAUSED BY THE NEGLIGENCE OF THE BENEFICIARY) UNLESS SUCH LOSS IS
CAUSED BY THE WILLFUL MISCONDUCT AND BAD
FAITH OF THE BENEFICIARY, NOR  SHALL
THE BENEFICIARY BE OBLIGATED TO PERFORM OR DISCHARGE ANY  OBLIGATION, DUTY OR LIABILITY UNDER ANY LEASE
AGREEMENT COVERING THE  PROPERTY OR
ANY PART THEREOF OR UNDER OR BY REASON OF THIS INSTRUMENT  OR THE EXERCISE OF RIGHTS OR REMEDIES HEREUNDER.
GRANTOR SHALL AND  DOES HEREBY
AGREE TO INDEMNIFY THE BENEFICIARY FOR, AND TO HOLD THE  BENEFICIARY HARMLESS FROM, ANY AND ALL LIABILITY, LOSS
OR DAMAGE  WHICH MAY OR MIGHT BE
INCURRED BY THE BENEFICIARY UNDER ANY SUCH  LEASE AGREEMENT OR UNDER OR BY REASON OF THIS DEED OF
TRUST OR THE  EXERCISE OF RIGHTS OR
REMEDIES HEREUNDER AND FROM ANY AND ALL CLAIMS  AND DEMANDS WHATSOEVER WHICH MAY BE ASSERTED AGAINST
THE  BENEFICIARY 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
AGREEMENT, REGARDLESS OF  WHETHER
SUCH LIABILITY, LOSS, DAMAGE, CLAIMS OR DEMANDS ARE THE RESULT  OF THE NEGLIGENCE OF THE BENEFICIARY OR ANY STRICT
LIABILITY. Should the Beneficiary incur any such liability, the
amount thereof, including costs, expenses and reasonable attorney’s fees, shall
be secured hereby and Grantor shall reimburse the Beneficiary therefor
immediately upon demand. Nothing in this Paragraph 4.3 shall impose any
duty, obligation or responsibility upon the Beneficiary for the control, care,
management or repair of the Property, nor for the carrying out of any of the
terms and conditions of any such lease agreement; nor shall it operate to make
the Beneficiary


 


22

















 


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 RESULTING IN LOSS OR INJURY OR DEATH TO ANY
TENANT, LICENSEE, EMPLOYEE OR STRANGER OR ANY STRICT LIABILITY. Grantor
hereby assents to, ratifies and confirms any and all actions of the Beneficiary
with respect to the Property taken under this Paragraph 4.3. For purposes
of this paragraph, the term “Beneficiary” shall include the directors,
officers, employees, attorneys and agents of the Beneficiary and any persons or
entities owned or controlled by, owning or controlling, or under common control
or affiliated with the Beneficiary.


 


4.4       Foreclosure. Upon
the occurrence of a default, the Trustee, his successor or substitute, is
authorized and empowered and it shall be his special duty at the request of the
Beneficiary to sell the Mortgaged Property or any part thereof situated in the
State of Texas at the courthouse of any county in the State of Texas in which
any part of the Mortgaged Property is situated, at public vendue to the highest
bidder for cash between the hours of 10 o’clock a.m. and 4 o’clock p.m. on the
first Tuesday in any month after having given notice of such sale in accordance
with the statutes of the State of Texas then in force governing sales of real
estate under powers conferred by deed of trust. Any sale made by the Trustee
hereunder may be as an entirety or in such parcels as the Beneficiary may
request, and any sale may be adjourned by announcement at the time and place
appointed for such sale without further notice except as may be required by
law. The sale by the Trustee of less than the whole of the Mortgaged Property
shall not exhaust the power of sale herein granted, and the Trustee is
specifically empowered to make successive sale or sales under such power until
the whole of the Mortgaged Property shall be sold; and, if the proceeds of such
sale of less than the whole of the Mortgaged Property shall be less than the
aggregate of the indebtedness secured hereby and the expense of executing this
trust as provided herein, this Deed of Trust and the lien hereof shall remain
in full force and effect as to the unsold portion of the Mortgaged Property
just as though no sale had been made; provided, however, that Grantor shall
never have any right to require the sale of less than the whole of the
Mortgaged Property but the Beneficiary shall have the right, at its sole
election, to request the Trustee to sell less than the whole of the Mortgaged
Property. After each sale, the Trustee shall make to the purchaser or
purchasers at such sale good and sufficient conveyances in the name of Grantor,
conveying the property so sold to the purchaser or purchasers in fee simple
with general warranty of title, and shall receive the proceeds of said sale or
sales and apply the same as herein provided. Payment of the purchase price to
the Trustee shall satisfy the obligation of purchaser at such sale therefor,
and such purchaser shall not be responsible for the application thereof. The
power of sale granted herein shall not be exhausted by any sale held hereunder
by the Trustee or his substitute or successor, and such power of sale may be
exercised from time to time and as many times as the Beneficiary may deem
necessary until all of the Mortgaged Property has been duly sold and all
secured indebtedness has been fully paid. In the event any sale hereunder is
not completed or is defective in the opinion of the Beneficiary, such sale
shall not exhaust the power of sale hereunder and the Beneficiary shall have
the right to cause a subsequent sale or sales to be made hereunder. Any and all
statements of fact or other recitals made in any deed or deeds given by the
Trustee or any successor or substitute appointed hereunder as to nonpayment of
the indebtedness secured hereby, or as to the occurrence of any default, or as
to the Beneficiary having declared all of such indebtedness to be due and
payable, or as to the request to sell, or as to notice of time, place and terms
of sale and of the properties to be sold having been duly given, or as to the
refusal, failure or inability to act of the Trustee or any substitute or successor,
or as to the appointment of any substitute or successor trustee, or as to any
other act or thing having been duly done by the Beneficiary or by such Trustee,
substitute or successor, shall be taken as prima facie evidence of the truth of
the facts so stated and recited. The Trustee, his successor or substitute, may
appoint or delegate any one or more persons as agent to perform any act or acts
necessary


 


23

















 


or incident to any sale
held by the Trustee, including the posting of notices and the conduct of sale,
but in the name and on behalf of the Trustee, his successor or substitute.


 


4.5       Judicial Foreclosure.
This instrument shall be effective as a mortgage as well as a deed of trust and
upon the occurrence of a default may be foreclosed as to any of the Property in
any manner permitted by the laws of the State of Texas or of any other state in
which any part of the Property is  situated,
and any foreclosure suit may be brought by the Trustee or by the Beneficiary.
In the event a foreclosure hereunder shall be commenced by the Trustee, or his
substitute or successor, the Beneficiary may at any time before the sale of the
Property direct the said Trustee to abandon the sale, and may then institute
suit for the collection of the Note and the other secured indebtedness, and for
the foreclosure of this Deed of Trust. It is agreed that if the Beneficiary
should institute a suit for the collection of the Note or any other secured
indebtedness and for the foreclosure of this Deed of Trust, the Beneficiary may
at any time before the entry of a final judgment in said suit dismiss the same,
and require the Trustee, his substitute or successor to sell the property in
accordance with the provisions of this Deed of Trust.


 


4.6       Receiver. In
addition to all other remedies herein provided for, Grantor agrees that upon
the occurrence of a default, or any event or circumstance which, with the lapse
of time or the giving of notice, or both, would constitute a default hereunder,
the Beneficiary shall as a matter of right be entitled to the appointment of a
receiver or receivers for all or any part of the Property, whether such
receivership be incident to a proposed sale of such property or otherwise, and
without regard to the value of the Property or the solvency of any person or
persons liable for the payment of the indebtedness secured hereby, and Grantor
does hereby consent to the appointment of such receiver or receivers, waives
any and all defenses to such appointment and agrees not to oppose any
application therefor by the Beneficiary, but nothing herein is to be construed
to deprive the Beneficiary of any other right, remedy or privilege it 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 the Beneficiary to receive payment of the rents and income pursuant
to Paragraph 3.1 hereof. Any money advanced by the Beneficiary in
connection with any such receivership shall be a demand obligation owing by
Grantor to the Beneficiary and shall bear interest from the date of making such
advancement by the Beneficiary until paid at the rate of interest payable on
matured but unpaid principal of or interest on the Note and shall be a part of
the secured indebtedness and shall be secured by this Deed of Trust and by any
other instrument securing the secured indebtedness.


 


4.7       Proceeds of Sale.
The proceeds of any sale held by the Trustee or any receiver or public officer
in foreclosure of the liens evidenced hereby shall be applied:


 


FIRST,
to the payment of all necessary costs and expenses incident to such foreclosure
sale, including but not limited to all court costs and charges of every
character in the event foreclosed by suit, and a reasonable fee to the Trustee
acting under the provisions of Paragraph 4.4 if foreclosed by power of
sale as provided in said paragraph, not exceeding five percent (5%) of the
proceeds of such sale;


 


SECOND,
to the payment in full of the secured indebtedness (including specifically
without limitation the principal, interest and attorney’s fees due and unpaid
on the Note and the amounts due and unpaid and owed to the Beneficiary under
this Deed of Trust) in such order as the Beneficiary may elect; and


 


THIRD,
the remainder, if any there shall be, shall be paid to Grantor or to such other
party or parties as may be entitled thereto by law.


 


24

















 


Further, Grantor
agrees that Beneficiary shall be under no obligation to accept any noncash
proceeds unless failure to do so would be commercially unreasonable. If
Beneficiary agrees in its sole discretion to accept noncash proceeds, Beneficiary
may ascribe any reasonable value to such proceeds. Beneficiary may apply any
discount factor in determining the present value of proceeds to be received in
the future.


 


4.8       The Beneficiary as
Purchaser. The Beneficiary shall have the right to become the purchaser at
any sale held by any Trustee or substitute or successor or by any receiver or
public officer, and any Beneficiary purchasing at any such sale shall have the
right to credit upon the amount of the bid made therefor, to the extent necessary
to satisfy such bid, the secured indebtedness owing to such Beneficiary, or if
such Beneficiary holds less than all of such indebtedness the pro rata part
thereof owing to such Beneficiary, accounting to all other lenders not joining
in such bid in cash for tie portion of such bid or bids apportionable to such
nonbidding lender or lenders.


 


4.9       Uniform Commercial Code.
Upon the occurrence of a default, the Beneficiary may exercise its rights of
enforcement with respect to the Collateral under the Texas Business and
Commerce Code, as amended, and in conjunction with, in addition to or in
substitution for those rights and remedies:


 


(a)       the Beneficiary may enter
upon the Property to take possession of, assemble and collect the Collateral or
to render it unusable; and


 


(b)       the Beneficiary may require
Grantor to assemble the Collateral and make it available at a place the
Beneficiary designates which is mutually convenient to allow the Beneficiary to
take possession or dispose of the Collateral; and


 


(c)       written notice mailed to
Grantor as provided herein ten (10) days prior to the date of public sale of
the Collateral or prior to the date after which private sale of the Collateral
will be made shall constitute reasonable notice; and


 


(d)       any sale made pursuant to
the provisions of this paragraph, shall be deemed to have been a public sale
conducted in a commercially reasonable manner if held contemporaneously with
the sale of the Mortgaged Property under power of sale as provided herein upon
giving the same notice with respect to the sale of the Collateral hereunder as
is required for such sale of the Mortgaged Property under power of sale; and


 


(e)       in the event of a
foreclosure sale, whether made by the Trustee under the terms hereof, or under
judgment of a court, the Collateral and the Mortgaged Property may, at the
option of the Beneficiary, be sold as a whole; and


 


(f)        it shall not be necessary
that the Beneficiary take possession of the Collateral or any part thereof
prior to the time that any sale pursuant to the provisions of this paragraph is
conducted and it shall not be necessary that the Collateral or any part thereof
be present at the location of such sale; and


 


(g)       prior to application of
proceeds of disposition of the Collateral to the secured indebtedness, such
proceeds shall be applied to the reasonable expenses of retaking, holding,
preparing for sale or lease, selling, leasing and the like and the reasonable
attorney’s fees and legal expenses incurred by the Beneficiary; and


 


25

















 


(h)       any and all statements of
fact or other recitals made in any bill of sale or assignment or other
instrument evidencing any foreclosure sale hereunder as to nonpayment of the
indebtedness or as to the occurrence of any default, or as to the Beneficiary
having declared all of such indebtedness to be due and payable, or as to notice
of time, place and terms of sale and of the properties to be sold having been
duly given, or as to any other act or thing having been duly done by the
Beneficiary, shall be taken as prima facie evidence of the truth of the facts
so stated and recited; and


 


(i)        the Beneficiary 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 the Beneficiary, including the
sending of notices and the conduct of the sale, but in the name and on behalf
of the Beneficiary.


 


4.10     Partial Foreclosure.
In the event of a default in the payment of any part of the secured
indebtedness, the Beneficiary shall have the right to proceed with foreclosure
of the liens and security interests evidenced hereby without declaring the
entire secured indebtedness due, and in such event any such foreclosure sale
may be made subject to the unmatured part of the secured indebtedness; and any
such sale shall not in any manner affect the unmatured part of the secured
indebtedness, but as to such unmatured part this Deed of Trust shall remain in
full force and effect just as though no sale had been made. The proceeds of any
such sale shall be applied as provided in Paragraph 4.7 except that the
amount paid under subparagraph SECOND thereof shall be only the matured portion
of the secured indebtedness and any proceeds of such sale in excess of those
provided for in subparagraphs FIRST and SECOND (modified as provided above)
shall be applied to installments of principal of and interest on the Note in
the inverse order of maturity. Several sales may be made hereunder without
exhausting the right of sale for any unmatured part of the secured
indebtedness.


 


4.11     Remedies Cumulative.
All remedies herein expressly provided for are cumulative of any and all other
remedies existing at law or in equity and are cumulative of any and all other
remedies provided for in any other instrument securing the payment of the
secured indebtedness, or any part thereof, or otherwise benefiting the
Beneficiary, and the Trustee and the Beneficiary shall, in addition to the
remedies herein provided, be entitled to avail themselves of all such other remedies
as may now or hereafter exist at law or in equity for the collection of the
secured indebtedness and the enforcement of the covenants herein and the
foreclosure of the liens and security interests evidenced hereby, and the
resort to any remedy provided for hereunder or under any such other instrument
or provided for by law shall not prevent the concurrent or subsequent
employment of any other appropriate remedy or remedies.


 


4.12     Resort to Any Security.
The Beneficiary may resort to any security given by this Deed of Trust or to
any other security now existing or hereafter given to secure the payment of the
secured indebtedness, in whole or in part, and in such portions and in such
order as may seem best to the Beneficiary in its sole and uncontrolled discretion,
and any such action shall not in anywise be considered as a waiver of any of
the rights, benefits, liens or security interests evidenced by this Deed of
Trust.


 


4.13     Waiver. To the full
extent Grantor may do so, Grantor agrees that Grantor will not at any time
insist upon, plead, claim or take the benefit or advantage of any law now or
hereafter in force pertaining to the rights and remedies of sureties or
redemption, and Grantor, for Grantor and Grantor’s heirs, devisees,
representatives, successors and assigns, and for any and all persons ever
claiming any interest in the Property, to the extent permitted by law, hereby
waives and releases all rights of redemption, valuation, appraisement, stay of
execution, notice of intention to mature or declare due the whole of the
secured indebtedness, notice of election to mature or declare due the whole of
the secured indebtedness and all rights to a marshaling of the assets of
Grantor, including the Property, or to a sale in


 


26

















 


inverse order of
alienation in the event of foreclosure of the liens and security interests
hereby created. Grantor shall not have or assert any right under any statute or
rule of law pertaining to the marshaling of assets, sale in inverse order of
alienation, the exemption of homestead, the administration of estates of
decedents or other matters whatever to defeat, reduce or affect the right of
the Beneficiary under the terms of this Deed of Trust to a sale of the Property
for the collection of the secured indebtedness without any prior or different
resort for collection, or the right of the Beneficiary under the terms of this
Deed of Trust to the payment of such indebtedness out of the proceeds of sale
of the Property in preference to every other claimant whatever. If any law
referred to in this paragraph and now in force, of which Grantor or Grantor’s
heirs, devisees, representatives, successors and assigns and such other persons
claiming any interest in the Property might take advantage despite this
Paragraph, shall hereafter be repealed or cease to be in force, such law shall
not thereafter be deemed to preclude the application of this Paragraph.


 


4.14     Delivery of Possession
After Foreclosure. In the event there is a foreclosure sale hereunder and
at the time of such sale Grantor or Grantor’s heirs, devisees, representatives,
successors or assigns or any other persons claiming any interest in the
Property by, through or under Grantor are occupying or using the Property, or
any part thereof, each and all shall immediately become the tenant of the
purchaser at such sale. Subject to the terms of any applicable non-disturbance
and/or attornment agreement between the Beneficiary and any tenant(s) of the
Property, such 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, such rental to be due daily to the
purchaser. In the event the tenant fails to surrender possession of said
property upon demand, the purchaser shall be entitled to institute and maintain
an action for forcible entry and detainer of said property in the Justice of
the Peace Court in the Justice Precinct in which such property, or any part
thereof, is situated.


 


4.15     Tender After Acceleration.
If, following the occurrence of a default and the acceleration of the secured
indebtedness but prior to the foreclosure of this Deed of Trust against the
Property, Grantor shall tender to the Beneficiary payment of an amount
sufficient to pay the entire secured indebtedness, such tender shall be deemed
to be a voluntary prepayment under the Note and, consequently, Grantor shall
also pay to the Beneficiary any charge or premium required under the Note to be
paid in order to prepay principal and, if such principal payment is made during
any period when prepayment is prohibited by this Deed of Trust or the Note, the
applicable charge or premium shall be the maximum prepayment penalty provided
for in the Note; provided, however, that in no event shall any amount payable
under this paragraph, when added to the interest otherwise payable on the Note
and the other secured indebtedness, exceed the maximum interest permitted under
applicable law.


 


4.16     Collection Expenses.
Upon the occurrence of a default, Grantor shall reimburse the Beneficiary for
all expenses incurred by the Beneficiary as a result of such default,
including, but not limited to, all travel costs, third-party appraisal fees,
environmental report preparation and testing fees, architectural and
engineering expenses, and legal fees and expenses.


 


ARTICLE V.

Miscellaneous


 


5.1       Defeasance. If all
of the secured indebtedness be paid as the same becomes due and payable and if
all of the covenants, warranties, undertakings and agreements made in this Deed
of Trust are kept and performed, then and in that event only, all rights under
this Deed of Trust shall terminate and the Property shall become wholly clear
of the liens, security interests, conveyances and assignments evidenced hereby,
which shall be released by the Beneficiary in due form at Grantor’s cost.


 


27

















 


5.2       Successor Trustee.
The Trustee may resign by an instrument in writing addressed to the
Beneficiary, or the Trustee may be removed at any time with or without cause by
an instrument in writing executed by the Beneficiary. In case of the death,
resignation, removal or disqualification of the Trustee or if for any reason
the Beneficiary shall deem it desirable to appoint a substitute or successor
trustee to act instead of the herein named trustee or any substitute or
successor trustee, then the Beneficiary shall have the right and is hereby
authorized and empowered to appoint a successor trustee, or a substitute trustee,
without other formality than appointment and designation in writing executed by
the Beneficiary and the authority hereby conferred shall extend to the
appointment of other successor and substitute trustees successively until the
indebtedness secured hereby has been paid in full or until the Property is sold
hereunder. In the event the indebtedness secured hereby is owned by more than
one person or entity, the holder or holders of not less than a majority in the
amount of such indebtedness shall have the right and authority to make the
appointment of a successor or substitute trustee provided for in the preceding
sentence. Such appointment and designation by the Beneficiary or by the holder
or holders of not less than a majority of the indebtedness secured hereby shall
be full evidence of the right and authority to make the same and of all facts
therein recited. If the Beneficiary is a corporation and such appointment is
executed in its behalf by an 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. Upon the making of any such appointment
and designation, all of the estate and title of the Trustee in the Property
shall vest in the named successor or substitute trustee and he shall thereupon
succeed to and shall hold, possess and execute all the rights, powers,
privileges, immunities and duties herein conferred upon the Trustee; but
nevertheless, upon the written request of the Beneficiary or of the successor
or substitute Trustee, the Trustee ceasing to act shall execute and deliver an
instrument transferring to such successor or substitute Trustee all of the
estate and title in the Property of the Trustee so ceasing to act, together
with all the rights, powers, privileges, immunities and duties herein conferred
upon the Trustee, and shall duly assign, transfer and deliver any of the
properties and moneys held by said Trustee hereunder to said successor or
substitute Trustee. All references herein to the Trustee shall be deemed to
refer to the Trustee (including any successor or substitute appointed and
designated as herein provided) from time to time acting hereunder. Grantor
hereby ratifies and confirms any and all acts which the herein named Trustee or
his successor or successors, substitute or substitutes, in this trust, shall do
lawfully by virtue hereof.


 


5.3       Liability and Indemnification of Trustee. THE
TRUSTEE SHALL NOT BE LIABLE FOR ANY ERROR OF JUDGMENT OR ACT DONE BY THE
TRUSTEE IN GOOD FAITH, OR BE OTHERWISE RESPONSIBLE OR ACCOUNTABLE UNDER ANY
CIRCUMSTANCES WHATSOEVER (INCLUDING THE TRUSTEE’S NEGLIGENCE), EXCEPT FOR THE
TRUSTEE’S GROSS NEGLIGENCE OR WILLFUL MISCONDUCT. The Trustee shall
have the right to rely on any instrument, document or signature authorizing or
supporting any action taken or proposed to be taken by him hereunder, believed
by him in good faith to be genuine. All moneys received by the Trustee shall,
until used or applied as herein provided, be held in trust for the purposes for
which they were received, but need not be segregated in any manner from any
other moneys (except to the extent required by law), and the Trustee shall be
under no liability for interest on any moneys received by him hereunder. GRANTOR WILL REIMBURSE THE TRUSTEE FOR, AND INDEMNIFY
AND SAVE HIM HARMLESS AGAINST, ANY AND ALL LIABILITY AND EXPENSES (INCLUDING
REASONABLE ATTORNEYS’ FEES) WHICH MAY BE INCURRED BY HIM IN THE PERFORMANCE OF
HIS DUTIES HEREUNDER (INCLUDING ANY LIABILITY AND EXPENSES RESULTING FROM THE
TRUSTEE’S OWN NEGLIGENCE). The foregoing indemnity shall not
terminate upon release, foreclosure or other termination of this Deed of Trust.


 


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5.4          Waiver
by the Beneficiary.   The Beneficiary may at any time and from time
to time (a) waive or not enforce compliance by Grantor with any covenant herein
made by Grantor (b) consent to Grantor doing any act which hereunder Grantor is
prohibited from doing, or consent to Grantor failing to do any act which
hereunder Grantor is required to do, (c) release any part of the Property, or
any interest therein, from the lien and security interest of this Deed of Trust
without the joinder of the Trustee, or (d) release any party liable, either
directly or indirectly, for the secured indebtedness or for any covenant herein
or in any other instrument now or hereafter securing the payment of the secured
indebtedness, without impairing or releasing the liability of any other party.
No such act shall in any way impair the rights of the Beneficiary hereunder
except to the extent specifically agreed to by the Beneficiary in writing.


 


5.5          Actions
by the Beneficiary.   The lien, security interest and other
security rights of the Beneficiary hereunder shall not be impaired by any
indulgence, moratorium or release granted by the Beneficiary, including but not
limited to (a) any renewal, extension, increase or modification which the
Beneficiary may grant with respect to any secured indebtedness, (b) any
surrender, compromise, release, renewal, extension, exchange or substitution
which the Beneficiary may grant in respect of the Property, or any part thereof
or any interest therein, or (c) any release or indulgence granted to any
endorser, guarantor or surety of any secured indebtedness. The taking of
additional security by the Beneficiary shall not release or impair the lien,
security interest or other security rights of the Beneficiary hereunder or
affect the liability of Grantor or of any endorser or guarantor or other surety
or improve the right of any permitted junior lienholder in the Property.


 


5.6       Rights
of the Beneficiary.   The
Beneficiary may waive any default without waiving any other prior or subsequent
default. The Beneficiary may remedy any default without waiving the default
remedied. Neither the failure by the Beneficiary to exercise, nor the delay by
the Beneficiary in exercising, any right, power or remedy upon any default
shall be construed as a waiver of such 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 the Beneficiary 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 Grantor therefrom shall in any event be effective
unless the same shall be in writing and signed by the Beneficiary and then such
waiver or consent shall be effective only in the specific instances, for the
purpose for which given and to the extent therein specified. No notice to nor
demand on Grantor in any case shall of itself entitle Grantor to any other or
further notice or demand in similar or other circumstances. Acceptance by the
Beneficiary of any payment in an amount less than the amount then due on any
secured indebtedness shall be deemed an acceptance on account only and shall
not in any way affect the existence of a default hereunder.


 


5.7       Notification of Account Debtors.   The Beneficiary may at any
time after default by Grantor notify the account debtors or obligors of any
accounts, chattel paper, negotiable instruments or other evidences of
indebtedness included in the Collateral to pay the Beneficiary directly.


 


5.8       Reproduction as Financing Statement.   A carbon, photographic or
other reproduction of this Deed of Trust or of any financing statement relating
to this Deed of Trust shall be sufficient as a financing statement.


 


5.9       Fixture Filing.   This Deed of Trust shall
be effective as a financing statement filed as a fixture filing with respect to
all fixtures included within the Property and is to be filed for record in the
real estate records in the Office of the County Clerk where the Property
(including said fixtures) is


 


29

















 


situated. This Deed of
Trust shall also be effective as a financing statement covering as-extracted
collateral, and is to be filed for record in the real estate records of the
county where the Property is situated. The mailing address of Grantor is set
forth below opposite the signature of Grantor to this Deed of Trust and the address
of the Beneficiary from which information concerning the security interest may
be obtained is the address of the Beneficiary set forth at the end of this Deed
of Trust.


 


5.10     Filing and Recordation.   Grantor will cause this
Deed of Trust and all amendments and supplements thereto and substitutions
therefor and all financing statements and continuation statements relating
hereto to be recorded, filed, re-recorded and refilled in such manner and in
such places as the Trustee or the Beneficiary shall reasonably request, and
will pay all such recording, filing, re-recording and refiling taxes, fees and
other charges. Grantor hereby authorizes the Beneficiary or the Trustee to file
any financing statement or financing statement amendment covering the Collateral
or relating to the security interest created herein.


 


5.11     Dealing with Successor.   In the event the ownership
of the Property or any part thereof becomes vested in a person other than
Grantor, the Beneficiary may, without notice to Grantor, deal with such
successor or successors in interest with reference to this Deed of Trust and to
the indebtedness secured hereby in the same manner as with Grantor, without in
any way vitiating or discharging Grantor’s liability hereunder or for the
payment of the indebtedness secured hereby. No sale of the Property, no
forbearance on the part of the Beneficiary and no extension of the time for the
payment of the indebtedness secured hereby given by the Beneficiary shall
operate to release, discharge, modify, change or affect, in whole or in part,
the liability of Grantor hereunder or for the payment of the indebtedness
secured hereby or the liability of any other person hereunder or for the
payment of the indebtedness secured hereby, except as agreed to in writing by
the Beneficiary.


 


5.12     Place of Payment.   The Note and all other
secured indebtedness which may be owing hereunder at any time by Grantor shall
be payable at the place designated in the Note, or if no such designation is
made, at the office of the Beneficiary at the address indicated in this Deed of
Trust, or at such other place in Dallas County, Texas as the Beneficiary may
designate in writing.


 


5.13     Subrogation.   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 the
Beneficiary at Grantor’s request and the Beneficiary shall be subrogated to any
and all rights, security interests and liens owned or held 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; provided, however, that the terms and provisions of this Deed of
Trust shall govern the rights and remedies of the Beneficiary and shall
supersede the terms, provisions, rights and remedies under and pursuant to the
instruments creating the lien or liens to which the Beneficiary is subrogated
hereunder.


 


5.14     Application of Indebtedness.   If any part of the secured
indebtedness 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 or if the lien and security
interest of the secured indebtedness of this Deed of Trust are invalid or
unenforceable as to any part of the secured indebtedness or as to any part of
the Property, then all payments made on the secured indebtedness, whether voluntary
or under foreclosure or other enforcement action or procedure, shall be applied
on said indebtedness first in discharge of that portion thereof which is
unsecured in whole or in part by this Deed of Trust.


 


30

















 


5.15     Usury.   It
is the intent of the Beneficiary and Grantor in the execution of the Note, this
Deed of Trust and all other instruments now or hereafter securing the Note or
executed in connection therewith or under any other written or oral agreement
by Grantor in favor of the Beneficiary to contract in strict compliance with
applicable usury law. In furtherance thereof, the Beneficiary and Grantor
stipulate and agree that none of the terms and provisions contained in the
Note, this Deed of Trust or any other instrument securing the Note or executed
in connection herewith, or in any other written or oral agreement by Grantor in
favor of the Beneficiary, shall ever be construed to create a contract to pay
for the use, forbearance or detention of money, interest at a rate in excess of
the maximum interest rate permitted to be charged by applicable law; that
neither Grantor nor any guarantors, endorsers or other parties now or hereafter
becoming liable for payment of the Note or the other indebtedness secured
hereby shall ever be obligated or required to pay interest on the Note or on
indebtedness arising under any instrument securing the Note or executed in
connection therewith, or in any other written or oral agreement by Grantor in
favor of the Beneficiary, at a rate in excess of the maximum interest that may
be lawfully charged under applicable law; and that the provisions of this
paragraph shall control over all other provisions of the Note, this Deed of
Trust and any other instruments now or hereafter securing the Note or executed
in connection herewith or any other oral or written agreements which may be in
apparent conflict herewith. The Beneficiary expressly disavows any intention to
charge or collect excessive unearned interest or finance charges in the event
the maturity of the Note is accelerated. If the maturity of the Note shall be
accelerated for any reason or if the principal of the Note is paid prior to the
end of the term of the Note, and as a result thereof the interest received for
the actual period of existence of the loan evidenced by the Note exceeds the
applicable maximum lawful rate, the Beneficiary shall, at its option, either
refund to Grantor the amount of such excess or credit the amount of such excess
against the principal balance of the Note then outstanding and thereby shall
render inapplicable any and all penalties of any kind provided by applicable
law as a result of such excess interest. In the event that the Beneficiary
shall contract for, charge or receive any amount or amounts and/or any other
thing of value which are determined to constitute interest which would increase
the effective interest rate on the Note or the other indebtedness secured
hereby to a rate in excess of that permitted to be charged by applicable law,
all such amounts determined to constitute interest in excess of the lawful rate
shall, upon such determination, at the option of the Beneficiary, be either
immediately returned to Grantor or credited against the principal balance of
the Note then outstanding or the other indebtedness secured hereby, in which
event any and all penalties of any kind under applicable law as a result of
such excess interest shall be inapplicable. By execution of this Deed of Trust,
Grantor acknowledges that it believes the loan evidenced by the Note to be
non-usurious and agrees that if, at any time, Grantor should have reason to
believe that such loan is in fact usurious, it will give the Beneficiary notice
of such condition and Grantor agrees that the Beneficiary shall have ninety
(90) days after receipt of such notice in which to make appropriate refund or
other adjustment in order to correct such condition if in fact such exists. The
term “applicable law” as used in this paragraph shall mean the laws of the
State of Texas or the laws of the United States, whichever laws allow the
greater rate of interest, as such laws now exist or may be changed or amended
or come into effect in the future.


 


5.16     Notice.   Any notice, request, demand or other communication
required or permitted hereunder, or under the Note, or under any other
instrument securing the payment of the Note (unless otherwise expressly
provided therein) shall be given in writing by (a) personal delivery, or (b)
expedited delivery service with proof of delivery, or (c) United States Mail,
postage prepaid, registered or certified mail, return receipt requested, or (d)
prepaid telegram, sent to the intended addressee at the address shown on the
signature page of this Deed of Trust, or to such different address as the addressee
shall have designated by written notice sent in accordance herewith, and shall
be deemed to have been given and received either at the time of personal
delivery or, in the case of delivery service or mail, as of the date of first
attempted delivery at the address and in the manner provided herein, or in the
case of telegram, upon


 


31

















 


receipt;
provided that, service of a notice required by Tex. Property Code § 51.002
shall be considered complete when the requirements of that statute are met.


 


5.17     Heirs, Successors and Assigns.   The terms, provisions,
covenants and conditions hereof shall be binding upon Grantor, and the heirs,
devisees, representatives, successors and assigns of Grantor including all successors
in interest of Grantor in and to all or any part of the Property, and shall
inure to the benefit of the Trustee and the Beneficiary and their respective
heirs, successors, substitutes and assigns and shall constitute covenants
running with the land. All references in this Deed of Trust to Grantor, Trustee
or the Beneficiary shall be deemed to include all such heirs, devisees,
representatives, successors, substitutes and assigns.


 


5.18     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.


 


5.19     Gender and Number.   Within this Deed of Trust,
words of any gender shall be held and construed to include any other gender,
and words in the singular number shall be held and construed to include the
plural, and words in the plural number shall be held and construed to include
the singular, unless in each instance the context otherwise requires.


 


5.20     Counterparts.   This Deed of Trust may be
executed in any number of counterparts with the same effect as if all parties
hereto had signed the same document. All such counterparts shall be construed
together and shall constitute one instrument, but in making proof hereof it
shall only be necessary to produce one such counterpart.


 


5.21     Joint and Several.   Where two or more persons
or entities have executed this Deed of Trust, unless the context clearly
indicates otherwise, the term “Grantor” as used in this Deed of Trust means the
grantors hereunder or either or any of them and the obligations of Grantor
hereunder shall be joint and several.


 


5.22     Reporting Requirements.   Grantor agrees to comply
with any and all reporting requirements applicable to the transaction evidenced
by the Note and secured by this Deed of Trust which are set forth in any law,
statute, ordinance, rule, regulation, order or determination of any
governmental authority, including but not limited to The International
Investment Survey Act of 1976, The Agricultural Foreign Investment Disclosure
Act of 1978, The Foreign Investment in Real Property Tax Act of 1980 and the
Tax Reform Act of 1984 and further agrees upon request of the Beneficiary to
furnish the Beneficiary with evidence of such compliance.


 


5.23     Headings. The paragraph
headings contained in this Deed of Trust are for convenience only and shall in
no way enlarge or limit the scope or meaning of the various and several
paragraphs hereof.


 


5.24     Construction Deed of Trust.   This Deed of Trust is a
construction mortgage (as that term is defined in Section 9.334(h) of the Texas
Business and Commerce Code) in that it secures an obligation incurred for the
construction of an improvement on land including the acquisition cost of the
land. It is understood and agreed that funds to be advanced upon the Note are
to be used in the construction of certain improvements on the land herein
described in accordance with the Loan Agreement.


 


32

















 


5.25     Consent of the Beneficiary.   Except where otherwise
provided herein, in any instance hereunder where the approval, consent or the
exercise of judgment of the Beneficiary is required, the granting or denial of
such approval or consent and the exercise of such judgment shall be within the
sole discretion of the Beneficiary, and the Beneficiary shall not, for any
reason or to any extent, be required to grant such approval or consent or
exercise such judgment in any particular manner, regardless of the
reasonableness of either the request or the Beneficiary’s judgment.


 


5.26     Modification or Termination.   The Loan Documents may
only be modified or terminated by a written instrument or instruments executed
by the party against which enforcement of the modification or termination is
asserted. Any alleged modification or termination which is not so documented
shall not be effective as to any party.


 


5.27     Negation of Partnership.   Nothing contained in the
Loan Documents is intended to create any partnership, joint venture or
association between Grantor and the Beneficiary, or in any way make the
Beneficiary a co-principal with Grantor with reference to the Property, and any
inferences to the contrary are hereby expressly negated.


 


5.28     Modification by Subsequent Owners.   Grantor agrees that it
shall be bound by any modification of this Deed of Trust or any of the other
Loan Documents made by the Beneficiary and any subsequent owner of the
Property, with or without notice to Grantor, and no such modification shall
impair the obligations of Grantor under this Deed of Trust or under any Loan
Document. Nothing in this paragraph shall be construed as permitting any
transfer of the Property which would constitute a default under this Deed of
Trust.


 


5.29     Entire Agreement.   The Loan Documents
constitute the entire understanding and agreement between Grantor and the
Beneficiary with respect to the transactions arising in connection with the
indebtedness secured hereby and supersede all prior written or oral
understandings and agreements between Grantor and the Beneficiary with respect
thereto. Grantor hereby acknowledges that, except as incorporated in writing in
the Loan Documents, there are not, and were not, and no persons are or were
authorized by the Beneficiary to make, any representations, understandings,
stipulations, agreements or promises, oral or written, with respect to the
transaction which is the subject of the Loan Documents.


 


5.30     Applicable Law.   THIS DEED OF TRUST AND THE OTHER LOAN DOCUMENTS AND THE RIGHTS AND
OBLIGATIONS OF THE PARTIES HEREUNDER AND THEREUNDER SHALL IN ALL RESPECTS BE
GOVERNED BY, AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE
STATE OF TEXAS (WITHOUT GIVING EFFECT TO TEXAS’ PRINCIPLES OF CONFLICTS OF LAW)
AND THE LAW OF THE UNITED STATES APPLICABLE TO TRANSACTIONS IN SUCH STATE.
GRANTOR HEREBY IRREVOCABLY SUBMITS TO THE NON-EXCLUSIVE JURISDICTION OF ANY
TEXAS OR FEDERAL COURT SITTING IN DALLAS, TEXAS (OR ANY COUNTY IN TEXAS WHERE
ANY PORTION OF THE PROPERTY IS LOCATED) OVER ANY SUIT, ACTION OR PROCEEDING
ARISING OUT OF OR RELATING TO ANY OF THE LOAN DOCUMENTS, AND GRANTOR HEREBY
AGREES AND CONSENTS THAT, IN ADDITION TO ANY METHODS OF SERVICE OF PROCESS
PROVIDED FOR UNDER APPLICABLE LAW, ALL SERVICE OF PROCESS IN ANY SUCH SUIT,
ACTION OR PROCEEDING IN ANY TEXAS OR FEDERAL COURT SITTING IN DALLAS, TEXAS (OR
SUCH OTHER COUNTY IN TEXAS) MAY BE MADE BY CERTIFIED OR REGISTERED MAIL, RETURN
RECEIPT REQUESTED, DIRECTED TO GRANTOR AT THE ADDRESS OF GRANTOR FOR THE GIVING
OF NOTICES PURSUANT TO PARAGRAPH 5.16 HEREOF, AND SERVICE SO


 


33

















 


MADE
SHALL BE COMPLETE FIVE (5) DAYS AFTER THE SAME SHALL HAVE BEEN SO MAILED.


 


5.31     Waiver of Judicial Procedural Matters.   GRANTOR
AND BENEFICIARY, BY ACCEPTANCE OF THIS DEED OF TRUST, ACKNOWLEDGE THAT THE
RIGHT TO TRIAL BY JURY IS A CONSTITUTIONAL ONE, BUT THAT IT MAY BE WAIVED. EACH
PARTY, AFTER CONSULTING (OR HAVING HAD THE OPPORTUNITY TO CONSULT) WITH COUNSEL
OF THEIR CHOICE, KNOWINGLY AND VOLUNTARILY, AND FOR THEIR MUTUAL BENEFIT, WAIVES
ANY RIGHT TO TRIAL BY JURY IN THE EVENT OF LITIGATION REGARDING THE PERFORMANCE
OR ENFORCEMENT OF, OR IN ANY WAY RELATED TO, THIS DEED OF TRUST, ANY OF THE
LOAN DOCUMENTS OR THE SECURED INDEBTEDNESS.


 


[End of Text –Signatures on next page]


 


34

















 


IN WITNESS WHEREOF, Grantor has executed this Deed of Trust, Security
Agreement, Fixture Filing and Assignment of Leases and Rents on the date of
acknowledgement below but effective as of the 8
day of March, 2007.


 


	
   

  	
   

  	
   

  	
   

  	
  FRISCO SQUARE F1-1, LTD.,

  
	
   

  	
   

  	
   

  	
   

  	
  a
  Texas limited partnership

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  By:

  	
  Fairways
  FS F1-1, LLC, a Texas limited liability

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
  company,
  Its General Partner

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
  By:

  	
  /s/ Cathy Sweeney

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
  Name:

  	
  Cathy
  Sweeney

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
  Title:

  	
  Manager

  	
   

  
										



 


The address of Grantor
is:


 


Frisco Square F1-1, Ltd. 

16250 Dallas Parkway, Suite 102 

Dallas, Texas 75248 

Attention: Cathy R. Sweeney


 


The address of the
Beneficiary is:


 


Compass Bank

8080 N. Central Expressway

Suite 370

Dallas, Texas 75206

Attention:  Commercial Real Estate, Craig
Davis


 


	
  THE STATE OF TEXAS

  	
  )

  
	
   

  	
  )

  
	
  COUNTY OF DALLAS

  	
  )

  



 


This instrument
was acknowledged before me on March 6, 2007 by Cathy Sweeney Manager of
Fairways FS Fl-1, LLC, a Texas limited liability company, on behalf of said
limited liability company, in its capacity as General Partner of Frisco Square
Fl-1, Ltd., a Texas limited partnership, on behalf of said limited partnership.


 


	
   

  	
   

  	
  /s/ Michelle Sims

  	
   

  
	
   

  	
   

  	
  Notary Public, State of
  Texas

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  /s/ Michelle Sims

  	
   

  
	
   

  	
   

  	
  (printed name)

  



 


	
  My commission expires:

  
	
   

  
	
  8/2/09

  	
   

  	
   

  



 


	
   

  	
  [SEAL]

  	
  MICHELLE C. SIMS

  
	
   

  	
  Notary Public, State of Texas

  My Commission Expires

  August 02, 2009

  



[SIGNATURE PAGE TO DEED OF TRUST]


 

















 


EXHIBIT A


 


Lot 1, Block Fl of FRISCO
SQUARE PHASE 2, an addition to the City of Frisco, as recorded in Cabinet P,
Page 724, Deed Records, Collin County, Texas.