**Exhibit10.3**

 

WHEN RECORDED, HOLD FORPICK-UP BY:

 

**FennemoreCraigSuite 26003003 North Central AvenuePhoenix, Arizona 85012Attention: William L. Kurtz**

**LOANNO. 122503**

**DEED OFTRUST, ASSIGNMENT OF LEASES,RENTS AND CONTRACTS, SECURITY AGREEMENTANDFIXTURE FILING**

 

**BETWEEN**

**AMERIVEST CAMELBACK INC., AN ARIZONA CORPORATION, AS TRUSTOR,**

**CHICAGOTITLE INSURANCE COMPANY, A MISSOURI CORPORATION,AS TRUSTEE**

 

**AND**

** **

**ALLSTATELIFE INSURANCE COMPANY, AN ILLINOIS CORPORATION, ANDALLSTATE LIFE INSURANCE COMPANY OF NEW YORK,A NEW YORK CORPORATION,**

**ASBENEFICIARY**

**DATED: AUGUST 19, 2004**

**LOAN AMOUNT: $21,000,000**

 

**PROPERTYADDRESS:2710-2850 EAST CAMELBACK ROADPHOENIX, ARIZONA**

 

 

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**TABLEOF CONTENTS**

 
| **ARTICLE/SECTION**             | **PAGE**                                                              |
|---------------------------------|-----------------------------------------------------------------------|
| ARTICLE I COVENANTS OF  TRUSTOR |                                                                  |
| 1.1                             | Performance of  Obligations Secured                                   |   |
| 1.2                             | Insurance                                                             |   |
| 1.3                             | Condemnation                                                          |   |
| 1.4                             | Damage to Property                                                    |   |
| 1.5                             | Escrow  Fund for Condemnation and Insurance Proceeds                  |   |
| 1.6                             | Taxes, Liens and Other  Items                                         |   |
| 1.7                             | Assignment  of Leases, Contracts, Rents and Profits                   |   |
| 1.8                             | Due on Sale or Encumbrance                                            |   |
| 1.9                             | Preservation  and Maintenance of Property                             |   |
| 1.10                            | Use  of Property                                                      |   |
| 1.11                            | Alterations and Additions                                             |   |
| 1.12                            | Offset Certificates                                                   |   |
| 1.13                            | Trustee’s Costs and  Expenses                                    |   |
| 1.14                            | Protection  of Security; Costs and Expenses                           |   |
| 1.15                            | Trustor’s  Covenants Respecting Collateral                       |   |
| 1.16                            | Covenants  Regarding Financial Statements                             |   |
| 1.17                            | Environmental  Covenants and Indemnities                              |   |
| 1.18                            | Further Assurances                                                    |   |
| 1.19                            | Trustor’s Continued  Existence                                   |   |
| ARTICLE II EVENTS OF  DEFAULT   |                                                                  |
| 2.1                             | Monetary and  Performance Defaults                                    |   |
| 2.2                             | Bankruptcy,  Insolvency, Dissolution                                  |   |
| 2.3                             | Misrepresentation                                                     |   |
| 2.4                             | Default under  Subordinate Loans                                      |   |
| 2.5                             | Breach  of Due on Sale or Encumbrance Provision                       |   |
| ARTICLE III REMEDIES            |                                                                  |
| 3.1                             | Acceleration                                                          |   |
| 3.2                             | Entry                                                                 |   |
| 3.3                             | Judicial  Action                                                      |   |
| 3.4                             | Power  of Sale                                                        |   |
| 3.5                             | Rescission of Notice of  Default                                      |   |
| 3.6                             | Beneficiary’s  Remedies Respecting Collateral                    |   |
| 3.7                             | Proceeds of Sales                                                     |   |
| 3.8                             | Condemnation and  Insurance Proceeds                                  |   |
| 3.9                             | Waiver of Marshaling, Rights of  Redemption, Homestead and Valuation. |   |
| 3.10                            | Remedies Cumulative                                                   |   |
| 3.11                            | Nonrecourse                                                           |   |
| ARTICLE IV MISCELLANEOUS        |                                                                  |
| 4.1                             | Severability                                                          |   |
| 4.2                             | Certain Charges and  Brokerage Fees                                   |   |
|                                 |                                                                       |  |  |  |  |

 

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| 4.3  | Notices                                     |   |
|------|---------------------------------------------|--------|
| 4.4  | Trustor Not  Released; Certain Trustee Acts |   |
| 4.5  | Inspection                                  |   |
| 4.6  | Release or  Reconveyance or Cancellation    |   |
| 4.7  | Statute of Limitations                      |   |
| 4.8  | Interpretation                              |   |
| 4.9  | Captions                                    |   |
| 4.10 | Consent                                     |   |
| 4.11 | Delegation to Subagents                     |   |
| 4.12 | Successors and Assigns                      |   |
| 4.13 | Governing  Law                              |   |
| 4.14 | Substitution of Trustee                     |   |
| 4.15 | Changes in Taxation                         |   |
| 4.16 | Maximum Interest Rate                       |   |
| 4.17 | Time  of Essence                            |   |
| 4.18 | Reproduction of Documents                   |   |
| 4.19 | No Oral Modifications                       |   |
| 4.20 | Trustee Provisions                          |   |

 

 

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**DEED OFTRUST, ASSIGNMENT OF LEASES, RENTS AND CONTRACTS,SECURITY AGREEMENT AND FIXTURE FILING**

 

 

THIS DEED OF TRUST,ASSIGNMENT OF LEASES, RENTS AND CONTRACTS, SECURITY AGREEMENT AND FIXTUREFILING (“Deed of Trust”) is made as of August 19, 2004, from AMERIVESTCAMELBACK INC., an Arizona corporation, whose mailing address is 1780 SouthBellaire Street, Suite 100, Denver, Colorado 80222 (herein “Trustor”), toCHICAGO TITLE INSURANCE COMPANY, a Missouri corporation, whose mailing addressis 2415 East Camelback Road, Suite 300, Phoenix, Arizona 85016 (herein “Trustee”),in favor of ALLSTATE LIFE INSURANCE COMPANY, an Illinois corporation (“ALIC”),and ALLSTATE LIFE INSURANCE COMPANY OF NEW YORK, a New York corporation (“ALNY”),whose mailing address is Allstate Plaza South, 3075 Sanders Road, Suite G5C,Northbrook, Illinois 60062 (ALIC and ALNY are sometimes hereinafter referred tocollectively as “Beneficiary”).

 

TRUSTOR, in consideration ofthe indebtedness herein recited and the trust herein created, herebyirrevocably grants, bargains, sells, mortgages, conveys, transfers and assignsto Trustee, its successors and assigns, in trust, with power of sale and rightof entry and possession, all of Trustor’s estate, right, title and interest in,to and under that certain real property located in Maricopa County, Arizona,more particularly described in Exhibit A attached hereto andincorporated herein by this reference (the “Land”);

 

TOGETHER with all of Trustor’snow or hereafter acquired estate, right, title and interest in, to and underall buildings, structures, improvements and fixtures now existing or hereaftererected on the Land and all right, title and interest, if any, of Trustor inand to the streets and roads, opened or proposed, abutting the Land to thecenter lines thereof, and strips within or adjoining the Land, the air spaceand right to use said air space above the Land, all rights of ingress andegress on or within the Land, all easements, rights and appurtenances theretoor used in connection with the Land, including, without limitation, all lateralsupport, alley and drainage rights, all revenues, income, rents, cash orsecurity deposits, advance rental deposits, and other benefits thereof orarising from the use or enjoyment of all or any portion thereof (subjecthowever to the rights and authorities given herein to Trustor to collect andapply such revenues, and other benefits), all interests in and rights,royalties and profits in connection with all minerals, oil and gas and otherhydrocarbon substances thereon or therein, and water stock, all options topurchase or lease, all development or other rights relating to the Land or theoperation thereof, or used in connection therewith, including all Trustor’sright, title and interest in all fixtures, attachments, partitions, machinery,equipment, building materials, appliances and goods of every nature whatevernow or hereafter located on, or attached to, the Land, all of which, includingreplacements and additions thereto, shall, to the fullest extent permitted bylaw and for the purposes of this Deed of Trust, be deemed to be real propertyand, whether affixed or annexed thereto or not, be deemed conclusively to bereal property; and Trustor agrees to execute and deliver, from time to time,such further instruments and

 

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documents as may be required by Beneficiaryto confirm the legal operation and effect of this Deed of Trust on any of theforegoing. All of the foregoing property described in this section (the “Improvements”)together with the Land, shall be hereinafter referred to as the “Property”.

 

TRUSTOR further herebygrants to Beneficiary a security interest in, and assigns, all of Trustor’s nowexisting or hereafter acquired right, title and interest in the following:

 

(A)          All equipment, fixtures, inventory, goods, instruments,appliances, furnishings, machinery, tools, raw materials, component parts, workin progress and materials, and all other tangible personal property ofwhatsoever kind, used or consumed in the improvement, use or enjoyment of theProperty now or any time hereafter owned or acquired by Trustor, whereverlocated and all products thereof whether in possession of Trustor or whetherlocated on the Property or elsewhere;

 

(B)           To the extent such general intangibles are assignable, allgeneral intangibles relating to design, development, operation, management anduse of the Property, including, but not limited to, (i) all names under whichor by which the Property may at any time be owned and operated or any variantthereof, and all goodwill in any way relating to the Property and all servicemarks and logotypes used in connection therewith, (ii) all permits, licenses,authorizations, variances, land use entitlements, approvals, consents,clearances, and rights obtained from governmental agencies issued or obtainedin connection with the Property, (iii) all permits, licenses, approvals,consents, authorizations, franchises and agreements issued or obtained inconnection with the construction, use, occupation or operation of the Property,(iv) all materials prepared for filing or filed with any governmental agency,and (v) the books and records of Trustor relating to construction or operationof the Property;

 

(C)            All shares of stock or partnership interest or otherevidence of ownership of any part of the Property that is owned by Trustor incommon with others, including all water stock relating to the Property, if any,and all documents or rights of membership in any owners’ or members’association or similar group having responsibility for managing or operatingany part of the Property provided, however, that the foregoing shall not includeany ownership interests in Trustor;

 

(D)            All accounts, deposit accounts, supporting obligations,letter-of-credit rights, tax and insurance escrows held pursuant to this Deedof Trust, accounts receivable, instruments, documents, documents of title, generalintangibles, payment intangibles, rights to payment of every kind, all ofTrustor’s rights, direct or indirect, under or pursuant to any and allconstruction, development, financing, guaranty, indemnity, maintenance,management, service, supply and warranty agreements, commitments, contracts,subcontracts, insurance policies, licenses and bonds now or anytime hereafterarising from construction on the Land or the use or enjoyment of the Propertyto the extent such are assignable;

 

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(E)           All condemnation proceeds (includingpayments in lieu thereof) and insurance proceeds related to the Property;

 

TOGETHER with all additionsto, substitutions for and the products of all of the above, and all proceedstherefrom, whether cash proceeds or noncash proceeds, received when any suchproperty (or the proceeds thereof) is sold, exchanged, leased, licensed, orotherwise disposed of, whether voluntarily or involuntarily. Such proceedsshall include any of the foregoing specifically described property of Trustoracquired with cash proceeds. Together with, and without limiting the aboveitems, all Goods, Accounts, Documents, Instruments, Money, Chattel Paper,Deposit Accounts, Letter-of-Credit Rights, Investment Property, Equipment andGeneral Intangibles arising from or used in connection with the Property, asthose terms are defined in the Uniform Commercial Code from time to time ineffect in the state in which the Property is located. (All of the foregoingincluding such products and proceeds thereof, are collectively referred to as “Collateral”.)

 

The personal property inwhich Beneficiary has a security interest includes goods which are or shallbecome fixtures on the Property. This Deed of Trust is intended to serve as afixture filing pursuant to the terms of the applicable provisions of theUniform Commercial Code of the state in which the Property is located and theprovisions of Exhibit B are, for that purpose, incorporated herein. This filingis to be recorded in the real estate records of the appropriate city, town orcounty in which the Property is located. In that regard, the followinginformation is provided:

 

 
| Name of Debtor:           |   | AmeriVest Camelback Inc.,  an Arizona corporation                    |
|---------------------------|--------|----------------------------------------------------------------------|
|                      |   |                                                                 |
| Address of Debtor:        |   | See Section 4.3 hereof                                               |
|                      |   |                                                                 |
| Taxpayer Identification   |   |                                                                 |
| Number of Debtor:         |   | 84-1240264                                                           |
|                      |   |                                                                 |
| Organizational            |   |                                                                 |
| Identification Number     |   |                                                                 |
| of Debtor:                |   | 1113001-9                                                            |
|                      |   |                                                                 |
| Name of Secured Party:    |   | Allstate Life Insurance  Company,                                    |
|                      |   | an Illinois corporation,  and                                        |
|                      |   | Allstate Life Insurance  Company of New York, a New York corporation |
|                      |   |                                                                 |
| Address of Secured Party: |   | See Section 4.3 hereof.                                              |

 

Trustor warrants and agreesthat, to its knowledge, there is no financing statement covering the foregoingCollateral, the Property, or any part thereof, on file in any public office.

 

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HOWEVER, THIS IS A DEED OFTRUST, AND THIS CONVEYANCE IS MADE IN TRUST FOR THE FOLLOWING USES AND TRUST,AND FOR NO OTHER PURPOSES, AND FOR THE PURPOSE OF SECURING, IN SUCH ORDER OFPRIORITY AS BENEFICIARY MAY ELECT:

 

(A)            The repayment of the indebtedness evidenced by (i) thatcertain Mortgage Note (the “ALIC Note”) of even date herewith with a maturitydate of September 5, 2014, executed by Trustor and payable to the order ofALIC, in the principal sum of SIXTEEN MILLION DOLLARS ($16,000,000), withinterest thereon, as provided therein and all late charges, loan fees,commitment fees, Prepayment Premiums (as described in the ALIC Note), and allextensions, renewals, modifications, amendments and replacements thereof; and(ii) that certain Mortgage Note (the “ALNY Note”) of even date herewith with amaturity date of September 5, 2014, executed by Trustor and payable to theorder of ALNY, in the principal sum of FIVE MILLION DOLLARS ($5,000,000), withinterest thereon, as provided therein and all late charges, loan fees,commitment fees, Prepayment Premiums (as described in the ALNY Note), and allextensions, renewals, modifications, amendments and replacements thereof (theALIC Note and the ALNY Note are sometimes hereinafter referred to individuallyas a “Note” and collectively as the “Notes”);

 

(B)            The payment of all other sums which may be advanced by orotherwise be due to Trustee or Beneficiary under any provision of this Deed ofTrust or under any other instrument or document referred to in Clause (C)below, with interest thereon at the rate provided herein or therein;

 

(C)            The performance of each and every covenant and agreementof Trustor contained (i) herein, in the Notes, or in any note evidencing aFuture Advance (as hereinafter defined), and (ii) in the obligations of Trustorupon any and all pledge or other security agreements, loan agreements,disbursement agreements, supplemental agreements (the foregoing shall notinclude the Commitment Letter between Trustor and Beneficiary or that certainEnvironmental Indemnity Agreement of even date herewith, among Trustor,AMERIVEST PROPERTIES INC., a Maryland corporation, and Beneficiary),assignments (both present and collateral) and all instruments of indebtednessor security now or hereafter executed by Trustor in connection with anyindebtedness referred to in clauses (A), (B) or (D) of this section or for thepurpose of supplementing or amending this Deed of Trust or any instrumentsecured hereby (all of the foregoing in this Clause (C), as the same may beamended, modified or supplemented from time to time, being referred tohereinafter as “Related Agreements”) and all costs and expenses, includingreasonable attorneys’ fees with respect to all such documents, including,without limitation, the negotiation and drafting of any loan settlement orworkout agreement; and,

 

(D)            The repayment of any other loans or advances, withinterest thereon, hereafter made to Trustor (or any successor in interest toTrustor as the owner of the Property or any part thereof) by Beneficiary whenthe promissory note evidencing the

 

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loan or advance specifically states that saidnote is secured by this Deed of Trust, together with all extensions, renewals,modifications, amendments and replacements thereof (herein and in the RelatedAgreements “Future Advance”).

 

Trustor makes the foregoinggrant to Trustee to hold the Property and the Collateral in trust for thebenefit of Beneficiary and for the purposes and upon the terms and conditionshereinafter set forth, subject to those exceptions (the “Permitted Exceptions”)shown in the title policy (the “Title Policy”) issued to Beneficiary andinsuring the first lien position of this Deed of Trust.

 

TO HAVE AND TO HOLD THESAME, together with the possession and right of possession of the Property andthe Collateral, unto Beneficiary, its successors and assigns, forever.

 

**ARTICLE ICOVENANTS OF TRUSTOR**

 

To protect the security ofthis Deed of Trust, Trustor covenants and agrees as follows:

 

1.1**Performance of ObligationsSecured****.**Trustorshall promptly pay when due the principal of and interest on the indebtednessevidenced by the Notes, the principal of and interest on any Future Advance,any Prepayment Premium and late charges provided for in the Notes or in anynote evidencing a Future Advance, and shall further perform fully and in atimely manner all other obligations of Trustor contained herein or in the Notesor in any note evidencing a Future Advance or in any of the Related Agreements.

 

1.2**Insurance.**Forall times during the period there remains any indebtedness under the Notes, orany and all other indebtedness (including without limitation Future Advances)secured by this Deed of Trust, Trustor shall keep the Property insured againstall risks or hazards as Beneficiary may require. Such insurance shall be inpolicy form, amount and coverage satisfactory to Beneficiary, including, butnot limited to:

 

(A)            Fire and extended coverage on an “all risk” replacementcost basis, in an amount equal to the insurable value of the Improvements,without coinsurance or deducting for depreciation, containing a waiver ofsubrogation clause and a deductible amount acceptable to Beneficiary;

 

(B)            General public liability insurance, in such form, amountand deductible reasonably satisfactory to Beneficiary, and naming Beneficiaryc/o Beneficiary’s servicing agent, if any, as additional insured coveringBeneficiary’s interest in the Property;

 

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(C)            Business interruption or rent loss insurance endorsementin an amount at least equal to 100% of the sum of: annual debt service on theNotes, the annual debt service on any other financing permitted by Beneficiary,ground rents, if any, and operating expenses (without contribution from Trustorfor a period of twelve (12) months), including, without limitation, real estatetaxes and assessments and insurance, for the Property;

 

(D)            Flood insurance (whether or not available through theNational Flood Insurance Program) sufficient to cover any damage which may beanticipated in the event of flood unless Trustor has provided Beneficiaryevidence satisfactory to Beneficiary that no portion of the Property is locatedwithin the boundaries of the 100 year flood plain (Flood Zone A);

 

(E)           “Dram shop” insurance if alcoholicbeverages are sold on the Property;

 

(F)           Boiler and machinery insurance whenrisks covered thereby are present and Beneficiary requires such insurance; and

 

(G)           Earthquake insurance if Beneficiaryrequires such insurance.

 

The insurance coverages described insubsections (A), (C), (D), (F) and (G) above shall name Beneficiary c/oBeneficiary’s servicing agent, if any, under a standard noncontributorymortgagee loss payable clause (and naming Beneficiary as loss payee for rentloss coverage) or otherwise directly insure Beneficiary’s interest in theProperty. All losses under said insurance shall be payable to Beneficiary inthe manner provided in Sections 1.4 and 1.5 hereof. All policies of insurancerequired under this Section 1.2 shall be with a company or companies with apolicy rating of A- and financial rating of at least Class X in the mostcurrent edition of Best’s Key Rating Guide and authorized to do business in thestate in which the Property is located. All policies of insurance shall providethat they will not be canceled or modified without thirty (30) days’ priorwritten notice to Beneficiary. True copies of the above mentioned insurancepolicies or evidence of such insurance (in the form of Acord Form 28)satisfactory to Beneficiary shall be delivered to and held by Beneficiary. Truecopies of all renewal and replacement policies or evidences of such insuranceforms (Acord Form 28) thereof shall be delivered to Beneficiary at least thirty(30) days before the expiration of the expiring policies. If any renewal orreplacement policy is not obtained as required herein, Beneficiary isauthorized to obtain the same in Trustor’s name and at Trustor’s expense.Beneficiary shall not by the fact of failing to obtain any insurance, incur anyliability for or with respect to the amount of insurance carried, the form orlegal sufficiency of insurance contracts, solvency of insurance companies, orpayment or defense of lawsuits, and Trustor hereby expressly assumes fullresponsibility therefor and all liability, if any, with respect thereto.

 

 

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1.3          **Condemnation****.**

 

(A)          Immediately upon obtaining knowledge of the commencement orthreat of any action in connection with (i) any condemnation, (ii) any othertaking of the Property or any part thereof by any public authority or privateentity having the power of eminent domain, or (iii) any conveyance in lieu ofsuch condemnation or taking of the Property or any part thereof(“Condemnation”), Trustor shall notify Beneficiary in writing but in no eventlater than twenty (20) days after Trustor obtains knowledge of the commencementof or threat of a Condemnation. Beneficiary shall have the right, but not theobligation, to participate in any proceedings relating to any Condemnation andmay, in its sole discretion, consent or withhold its consent to any settlement,adjustment, or compromise of any claims arising from the Condemnation and nosuch settlement, adjustment or compromise shall be final or binding uponBeneficiary without Beneficiary’s prior consent.

 

(B)            If all or part of the Property is taken by Condemnationand Beneficiary in its reasonable judgment determines that the remainder of theProperty, if any, cannot be operated as an economically viable entity atsubstantially the same level of operations as immediately prior to suchCondemnation, then all proceeds of the Condemnation (“Condemnation Proceeds”)shall be paid over to Beneficiary and shall be applied first towardreimbursement of the costs and expenses (including reasonable attorneys’ fees)of Beneficiary, if any, in connection with the recovery of such CondemnationProceeds, and then, in the sole and absolute discretion of Beneficiary andwithout regard to the adequacy of its security under this Deed of Trust, shallbe applied against all amounts due herein or under the Notes and any remainingCondemnation Proceeds shall be released to Trustor. Provided there is no Eventof Default (as defined below) hereunder, full or partial prepayment of theNotes under this Section 1.3(B) shall not be subject to the Prepayment Premium;however, such partial prepayment shall not entitle Trustor to prepay theportion of the Notes remaining unpaid after application of the CondemnationProceeds. Prepayment of the balance shall continue to be subject to the termsand conditions of the Notes, including the No-Prepayment Period and thePrepayment Premium described therein.

 

(C)            If less than all of the Property is taken by Condemnationand Beneficiary in its reasonable judgment determines that the remainder of theProperty can be operated as an economically viable entity at substantially thesame level of operations as immediately prior to such Condemnation, thenTrustor shall diligently restore the Property to a condition and use as closeas possible to its condition immediately prior to the Condemnation and all CondemnationProceeds shall be made available to Trustor for such restoration. If theestimated cost of restoration, as reasonably determined by Beneficiary, isequal to or less than $500,000.00, all Condemnation Proceeds shall be releaseddirectly to Trustor for restoration of the Property. If the estimated cost ofrestoration exceeds $500,000.00, all Condemnation Proceeds shall be depositedinto an escrow fund in accordance with Section 1.5 below. Beneficiary shallhave the right to obtain an opinion of an independent contractor or engineersatisfactory to Beneficiary, at Trustor’s expense, to estimate the cost torestore

 

 

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the remaining portion of theProperty. If the amount of the Condemnation Proceeds is not sufficient torestore the Property based on the opinion of an independent contractor orengineer, subject to revision as restorations are made, Trustor shall beobligated to pay the difference toward the restoration of the Property, priorto the disbursement of any Condemnation Proceeds to, or for the account ofTrustor.

 

(D)      If an Event of Default exists at any timefrom the time of a Condemnation through the completion of restoration andpayment of any Condemnation Proceeds, the use of the Condemnation Proceedsshall be governed by the remedies set forth in Article III below. If an eventhas occurred which with notice, the passage of time, or both, could become anEvent of Default, then, the Condemnation Proceeds shall be held by Beneficiaryor in the Escrow Fund (as defined below), as applicable, pending cure of suchevent prior to the expiration of any applicable cure or grace period. Theapplication of any Condemnation Proceeds to the indebtedness secured herebyshall not cure or waive any Event of Default hereunder, or invalidate any actdone pursuant to any notice thereof.

 

1.4     **Damage to Property.**

 

(A)     Promptly upon obtaining knowledge of anydamage to the Property or any part thereof with an estimated cost ofrestoration in excess of $25,000.00, but in no event later than five (5) daysafter Trustor obtains such knowledge, Trustor shall notify Beneficiary of suchdamage in writing. Trustor shall diligently restore the Property to the samecondition that existed immediately prior to the damage whether or not insuranceproceeds are sufficient for such restoration. All proceeds of any insurance onthe Property (“Insurance Proceeds”) received by Trustor shall be applied tosuch restoration. Beneficiary shall have the right to obtain an opinion of an independentcontractor or engineer satisfactory to Beneficiary, at Trustor’s expense, toestimate the cost to restore the Property to its original condition, whichopinion may be revised as restorations are made. If the amount of the insuranceproceeds is not sufficient to restore the Property based on an independentcontractor’s or engineer’s opinion, subject to revision as restorations aremade, Trustor shall be obligated to pay the difference toward the restorationof the Property, prior to the application of any Insurance Proceeds to suchrestoration as provided herein.

 

(B)      If the estimated cost of restoration isequal to or less than $500,000.00, Trustor shall promptly settle and adjust anyclaims under the insurance policies which insure against such risks and, uponreceipt of the Insurance Proceeds, Trustee and Beneficiary shall deliver suchto Trustor for use in restoration of the Property.

 

(C)       If the estimated cost of restoration isgreater than $500,000.00, Beneficiary shall have the right, but not theobligation, to participate in the settlement of the insurance claims and may,in its commercially reasonable discretion, consent or withhold its consent toany settlement, adjustment, or compromise of such insurance claims and no suchsettlement, adjustment, or compromise shall be final or binding

 

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upon Beneficiary without its prior consent.Upon settlement of insurance claims, and if Trustor can demonstrate to thereasonable satisfaction of Beneficiary that the projected ratio of NetOperating Income, as defined below, to annual debt service due under the Notesand any other notes secured by the Property (“Debt Coverage Ratio”) will be atleast 105% for the twelve months immediately following reconstruction of theProperty, the insurance proceeds shall be deposited into an escrow fund inaccordance with Section 1.5 below, prior to the disbursement of anyCondemnation Proceeds to, or for the account of Trustor.

 

As used in this Deed ofTrust, “Net Operating Income” shall mean: (i) all gross operating revenuesanticipated to be received during the following twelve-month period based onleases in effect as of the date of calculation and only for such time as thoseleases are contracted to remain in effect without expiration by their terms oroptional termination by the tenant (unless the tenant has waived itstermination rights in writing or the term of the lease has been extended inwriting), including without limitation all amounts to be received from tenantsas payment of operating expenses but not including refundable deposits, leasetermination payments, excess tenant improvement and leasing commission paymentsincluded as additional rent, principal or interest payments received by Trustoron loans to tenants, and fees and reimbursements for work performed for tenantsby Trustor, less: (ii) all amounts, calculated on a pro forma basis, forthe operation or maintenance of the Property for the following twelve-monthperiod, including ground rents, the cost of property management (which shall beno less than 4% of gross revenues), maintenance, cleaning, security,landscaping, parking maintenance and utilities, and other costs and expensesapproved in writing by Beneficiary and amounts reasonably estimated byBeneficiary for the payment of real estate taxes and assessments and othertaxes related to the operation of the Property, insurance premiums, necessaryrepairs and future replacements of equipment; payments under the Notes shallnot be included in Net Operating Income. Notwithstanding the foregoing, if anyof the Related Agreements require a historical calculation of Net OperatingIncome, it shall be calculated on a cash basis for the previous twelve-monthperiod as of the date of such calculation.

 

(D)            If in the reasonable judgment of Beneficiary theconditions of Paragraph 1.4(C) cannot be satisfied, then at any time from andafter the occurrence of the damage, upon written notice to Trustor, Beneficiarymay declare the entire balance of the Notes and/or any Future Advances thenoutstanding and accrued and unpaid interest thereon, and all other sums orpayments required thereunder or under this Deed of Trust, without anyPrepayment Premium (provided no Event of Default then exists hereunder), to beimmediately due and payable, and all insurance proceeds shall be applied byBeneficiary first to the reimbursement of any costs or expenses incurred byBeneficiary in connection with the damage or the determination to be madehereunder, and then to the payment of the indebtedness secured by this Deed ofTrust in such order as Beneficiary may determine in its sole discretion.

 

(E)           Notwithstanding any provision hereinto the contrary, if an Event of Default exists at any time from the time ofdamage through the completion of restoration

 

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and the final release of any InsuranceProceeds to Trustor, the use of the insurance proceeds shall be governed by theremedies set forth in Article III below. If an event has occurred which withnotice, the passage of time, or both, could become an Event of Default, thenthe Insurance Proceeds shall be held by Beneficiary or in the Escrow Fund, asapplicable, pending cure of such event prior to the expiration of anyapplicable cure or grace period. The application of any Insurance Proceeds tothe indebtedness secured hereby shall not cure or waive any Event of Defaulthereunder or invalidate any act done pursuant to any notice thereof.

 

1.5**           Escrow Fund for Condemnation and Insurance Proceeds.**

 

(A)            In the circumstances indicated above in Subsections1.3(C) and 1.4(C), all Condemnation Proceeds and Insurance Proceeds(“Proceeds”) shall be deposited in an interest bearing escrow fund (“EscrowFund”). The escrow agent and the form of the escrow agreement shall besatisfactory to Beneficiary and Trustor. The costs and fees of such escrowagent shall be paid by Trustor. If the amount of the Proceeds is not sufficientto restore the Property based on an independent contractor’s or engineer’sopinion obtained by Beneficiary at Trustor’s expense, subject to revision asrestorations are made, Trustor shall be obligated to deposit in the Escrow Fundthe difference between the contractor’s or engineer’s estimate and the amountof the Proceeds or deliver to the escrow agent an irrevocable, unconditionalletter of credit issued in the amount of such difference in a form and by afinancial institution acceptable to Beneficiary or other cash equivalentacceptable to Beneficiary. Trustor’s funds, if necessary, and the Proceedsshall be deposited into the Escrow Fund and shall not be released by the escrowagent unless used to restore the Property to its original condition and unlessa disbursement agent satisfactory to Beneficiary and Trustor approves suchdisbursements from time to time. The escrow agreement shall provide that theescrow agent shall only disburse funds to Trustor so long as the restorationwork is being diligently performed by Trustor and only after: (i) Trustor hasdelivered to Beneficiary and Beneficiary has approved the plans andspecifications for the restoration of the Property; (ii) Trustor has executed acontract acceptable to Beneficiary with a general contractor reasonablyacceptable to Beneficiary for the restoration of the Property; (iii) thegeneral contractor has submitted lien waivers and/or releases, executed by thegeneral contractor and all subcontractors which may be partial to the extent ofpartial payments and which, in the case of releases, may be contingent upon paymentif the escrow agent makes payment directly to such contractor or subcontractor;(iv) Trustor has furnished Beneficiary with an endorsement to the Title Policyshowing no additional exceptions; and (v) Trustor has deposited its funds inthe Escrow Fund as provided in this paragraph and has submitted such otherdocuments and information as may be requested by Beneficiary to determine thatthe work to be paid for has been performed in accordance with the plans andspecifications approved by Beneficiary. If any requisition for payment of workperformed is for an amount which would result in the remaining balance of theEscrow Fund to be insufficient to complete the remainder of the restoration,Trustor shall advance the requisite amount in cash to the Escrow Fundimmediately upon written request from the disbursement agent or Beneficiary.Any failure by Trustor to satisfy any of the

 

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conditions to the disbursement of Proceedsset forth in this Paragraph upon demand by Beneficiary shall constitute aPerformance Default, as hereinafter defined.

 

(B)            Any Proceeds and any interest thereon remaining in theEscrow Fund after payment of the costs to complete the restoration of theProperty pursuant to the approved plans and specifications and the costs of theescrow agent shall be paid first, to Trustor to the extent of any funds ofTrustor’s contributed to the restoration pursuant to Paragraph 1.5, providedthere is no Event of Default or an event which with notice, the passage oftime, or both, could become an Event of Default, and thereafter atBeneficiary’s option, any remaining Proceeds may be applied to the prepaymentof the Notes without payment of any Prepayment Premium. Full or partialprepayment of the Notes under the preceding sentences of this Section 1.5Bshall not be subject to the Prepayment Premium; however, any such partialprepayment shall not entitle Trustor to prepay the portion of the Notesremaining unpaid after application of the Proceeds. Prepayment of the balanceshall continue to be subject to the terms and conditions of the Notes,including the No-Prepayment Period and the Prepayment Premium describedtherein. If an Event of Default exists, the use of the Proceeds shall begoverned by Article III below. If, however, an event exists which with notice,the passage of time, or both, could become an Event of Default, the remainingbalance in the Escrow Fund shall be held by the escrow agent pending cure ofthe event prior to the expiration of any applicable cure or grace period.

 

1.6**            Taxes, Liens and Other Items.**

 

(A)            Trustor shall pay any and all taxes, bonds, assessments,fees, liens, charges, fines, impositions and any accrued interest or penaltythereon, and any and all other items which are attributable to or affect theProperty (collectively, “Impositions”) by making payment prior to delinquencydirectly to the payee thereof and promptly furnish copies of paid receipts forthese to Beneficiary. Trustor shall promptly discharge or bond any lien orencumbrance on the Property whether or not said lien or encumbrance has or mayattain priority over this Deed of Trust. This Deed of Trust shall be the soleencumbrance on the Property (other than the Permitted Exceptions and the lienfor taxes not yet due and payable) and, if with the consent of Beneficiary itis not the sole encumbrance, then it shall be prior to any and all other liensor encumbrances on the Property. Trustor may in good faith and with duediligence protest the payment of any Imposition which it believes unwarrantedor excessive and may defer payment of such Imposition pending conclusion ofsuch contest if legally permitted to do so, provided that the priority of thisDeed of Trust and Beneficiary’s security is not adversely affected and thatTrustor shall have furnished Beneficiary or the taxing authority such securityas may be required.

 

(B)            As further security for the payment of the Notes and thepayment of real estate taxes, regular or special assessments and insurancepremiums, Trustor shall deposit 1/12th of the annual amounts of such items asestimated by Beneficiary, with each monthly payment on the Notes, so thatBeneficiary will hold a sufficient amount to pay all such charges not less thanthirty (30) days prior to the date on which such items

 

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become due and payable. Beneficiary shall befurnished evidence to allow it to estimate such amounts, including paidreceipts or annual insurance premium statements, assessment notices and taxreceipts. All funds so deposited shall, until applied to the payment of theaforesaid items, as hereinafter provided, be held by Beneficiary withoutinterest (except to the extent required under applicable law) and may becommingled with other funds of Beneficiary. All funds so deposited shall beapplied to the payment of the aforesaid items only upon the satisfaction of thefollowing conditions: (i) no Event of Default or event, which with notice orthe passage of time or both could become an Event of Default, shall haveoccurred; (ii) Beneficiary shall have sufficient funds to pay the full amountsof such items (which funds may include amounts paid solely for such purpose byTrustor in addition to the escrowed funds); and (iii) Trustor shall have furnishedBeneficiary with prior written notification that such items are due and withthe bills and invoices therefor in sufficient time to pay the same before anypenalty or interest attaches and before policies of insurance lapse, as thecase may be, and shall have deposited any additional funds as Beneficiary maydetermine as necessary to pay such items.

 

(C)            Beneficiary expressly disclaims any obligation to pay theaforesaid items unless and until Trustor complies with all of the provisionsset forth in Subsections 1.6(A) and (B). Trustor hereby pledges and grants asecurity interest in any and all monies now or hereafter deposited pursuant toSubsection 1.6(B) as additional security for the Notes and Related Agreements.If any Event of Default shall have occurred, or if the Notes shall beaccelerated as herein provided, all funds so deposited may, at Beneficiary’soption, be applied as determined solely by Beneficiary or to cure said Event ofDefault or as provided in this Section 1.6. In no event shall Trustor claim anycredit against the principal and interest due hereunder for any payment ordeposit for any of the aforesaid items.

 

1.7**           Assiqnment of Leases, Contracts, Rents and Profits.**

 

(A)            Trustor hereby absolutely, presently and unconditionallygrants, assigns, transfers, conveys and sets over to Beneficiary, subject toall of the terms, covenants and conditions set forth herein, all of Trustor’sright, title and interest in and to the following whether arising under the“Leases” (as hereinafter defined), by statute, at law, in equity, or in anyother way:

 

(1)             All of the leases of the Propertywhich are in effect on the date hereof and all leases entered into or in effectfrom time to time after the date hereof, including, without limitation, all amendments,extensions, replacements, modifications and renewals thereof and all subleases,concession agreements, and all other agreements affecting the same (the“Leases”) and all guaranties thereunder;

 

(2)             All of the rents, income, profits,revenue, security deposits, judgments, Condemnation Proceeds, InsuranceProceeds, unearned insurance premiums, all termination and/or cancellationpayments received by Trustor in connection with any Lease, proceeds from thesurrender, sale or other disposition of

 

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any Lease, any other fees or sums payable toTrustor or any other person as landlord and any award or payment in connectionwith any enforcement action of any Lease, including, without limitation, anyaward to Trustor made hereafter in any court involving any of the tenants underthe Leases in any bankruptcy, insolvency, or reorganization proceeding in anystate or federal court, and Trustor’s right to appear in any action and/or tocollect any such award or payment, and all payments by any tenant in lieu ofrent (collectively, “Rents and Profits”); and

 

(3)             All contracts, agreements,management, operating and maintenance agreements, warranties, licenses,permits, guaranties and sales contracts relating to the Property and theCollateral entered into by, or inuring to the benefit of, Trustor (the“Contracts”).

 

(B)            Notwithstanding the provisions of Subsection 1.7(A), solong as no Event of Default is continuing, and, subject to Subsection 1.7(F)and Article III, Trustor shall have a license to manage the Property; tocollect, receive and use all Rents and Profits in accordance with the terms ofthe Leases; to let the Property subject to the terms hereof and to take allactions which a reasonable and prudent landlord would take in enforcing theprovisions of the Leases and Contracts; provided, however, that all amounts socollected shall be applied toward operating expenses, real estate taxes andinsurance relating to the Property, capital repair items necessary to theoperation of the Property, and the payment of sums due and owing under theNotes and this Deed of Trust prior to any other expenditure or distribution byTrustor. During the continuation of an Event of Default (whether or notBeneficiary shall have exercised Beneficiary’s option to declare the Notesimmediately due and payable), such license shall be automatically revokedwithout any action required by Beneficiary. Any amounts received by Trustor orits agents in the performance of any acts prohibited by the terms of this Deedof Trust, including but not limited to any amounts received in connection withany cancellation, modification or amendment of any of the Leases prohibited bythe terms of this Deed of Trust and any amounts received by Trustor as rents,income, issues or profits from the Property from and after the occurrence of anEvent of Default under this Deed of Trust, the Notes, or any of the otherRelated Agreements, shall be held by Trustor as trustee for Beneficiary and allsuch amounts shall be accounted for to Beneficiary and shall not be commingledwith other funds of Trustor. Any person acquiring or receiving all or anyportion of such trust funds shall acquire or receive the same in trust forBeneficiary as if such person had actual or constructive notice that such fundswere impressed with a trust in accordance herewith.

 

(C)            During the continuation of an Event of Default,Beneficiary shall have the right but not the obligation to perform as landlordunder the Leases and as a party under the Contracts. The assignment of Rentsand Profits set forth herein constitutes an irrevocable direction andauthorization to all tenants under the Leases to pay all Rents and Profits toBeneficiary upon demand and without further consent or other action by Trustor.Trustor irrevocably appoints Beneficiary its true and lawful attorney, at theoption of Beneficiary at any time, to demand, receive and enforce payment, togive receipts, releases and satisfactions, and to sue, either in the name of

 

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Trustor or in the name of Beneficiary, forall such Rents and Profits and apply the same to the indebtedness secured bythis Deed of Trust.

 

(D)            Neither the foregoing assignment of Rents and Profits,Leases and Contracts to Beneficiary nor the exercise by Beneficiary of any ofits rights or remedies under Article III shall be deemed to make Beneficiary a“mortgagee-in-possession” or otherwise liable in any manner with respect to theProperty, unless Beneficiary, in person or by agent, assumes actual possessionthereof. Nor shall appointment of a receiver for the Property by any court atthe request of Beneficiary or by agreement with Trustor, or the entering intopossession of the Property by such receiver, be deemed to make Beneficiary a“mortgagee-in-possession” or otherwise liable in any manner with respect to theProperty.

 

(E) In the event Beneficiarycollects and receives any Rents and Profits under this Section 1.7 pursuant toany Monetary or Performance Default as defined in Section 2.1 hereof, suchcollection or receipt shall in no way constitute a curing of the Monetary orPerformance Default.

 

(F) Trustor shall not,without the prior written consent of Beneficiary, (i) enter into any lease,extend or renew any Lease (other than extensions or renewals in accordance withthe terms of a lease approved by Beneficiary), or consent to or permit theassignment or subletting of any Leases (other than assignments or subleases inaccordance with the terms of a lease approved by Beneficiary), or amend orterminate any Lease; (ii) alter, modify, change or terminate the terms of anyguaranties of any Leases; (iii) create or permit any lien or encumbrance which,upon foreclosure, would be superior to any such Leases or in any other mannerimpair Beneficiary’s rights and interest with respect to the Rents and Profits;(iv) pledge, transfer, mortgage or otherwise encumber or assign the Leases, theContracts or the Rents and Profits; or (v) collect rents more than 30 days priorto their due date. Notwithstanding the foregoing, so long as no Event ofDefault has occurred hereunder, Trustor may enter into Leases, extend or renewLeases, and permit the assignment or sublease of Leases which demise 20,000rentable square feet or less for a term of five (5) years or less (“Non-materialLeases”), provided they are on rental rates, including rental concessions, atleast equal to that charged for comparable properties within the Property’ssubmarket area, have been negotiated at arm’s length, and do not containmaterial modifications to the form of lease previously approved by Beneficiary.Trustor may also amend Non-material Leases without Beneficiary’s prior writtenconsent if, in Trustor’s prudent business judgment, such amendments are necessaryand do not impair the value of the Property. Beneficiary will not unreasonablywithhold or delay its consent to any lease submitted to it for approval. Anylease submitted for Beneficiary’s consent shall, at Beneficiary’s option, beaccompanied by a Subordination, Non-Disturbance and Attornment Agreement inBeneficiary’s then current form. Trustor may also terminate leases of less than6,500 rentable square feet without Beneficiary’s prior written consent if, inTrustor’s prudent business judgment, such termination is necessary and will notimpair the value of the Property.

 

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(G)            Trustor shall promptly give notice to Beneficiary of anyand all monetary defaults or material non-monetary defaults of any of thetenants under any of the Leases meeting the criteria of a lease for whichBeneficiary’s consent would have been required pursuant to Paragraph 1.7(F)regardless of whether such leases were executed before or after the date ofthis Deed of Trust, together with a complete copy of any notices delivered toor by the tenant as a result of such default. Beneficiary shall have the right,but not the obligation, to cure any default of Trustor under any of the Leasesand all amounts disbursed in connection with said cure shall be deemed to beindebtedness secured hereby.

 

(H)            Beneficiary shall have the right to approve any leaseforms used by Trustor for lease of space in the Property, which approval shallnot be unreasonably withheld, conditioned or delayed.

 

(I)           Trustor hereby represents, warrantsand agrees that:

 

(1)               Trustor has the right, power and capacity to make thisassignment and that no person, firm or corporation or other entity other thanTrustor has or will have any right, title or interest in or to the Leases orthe Rents and Profits.

 

(2)               Trustor shall, at its sole cost and expense, performand discharge all of the obligations and undertakings of the landlord under theLeases. Trustor shall enforce the performance of each obligation of the tenantsunder the Leases and will appear in and prosecute or defend any actionconnected with the Leases or the obligations of the tenants thereunder.

 

(J)             Beneficiary shall not be obligated to perform ordischarge, nor does it hereby undertake to perform or discharge, anyobligation, duty or liability under the Leases or under or by reason of thisassignment. Trustor shall and does hereby agree to indemnify Beneficiary forand to defend and hold Beneficiary harmless from any and all liability, loss ordamage which Beneficiary may or might incur under the Leases or under or byreason of this assignment, and from any and all claims whatsoever which may beasserted against Beneficiary by reason of any alleged obligations orundertakings on Beneficiary’s part to perform or discharge any of the terms,covenants or agreements contained in the Leases. Should Beneficiary incur anyliability, loss or damage under the Leases or under or by reason of thisassignment, or in the defense of any of such claims or demands, the amountthereof, including costs, expenses and reasonable attorneys’ fees, shall besecured by this Deed of Trust; and Trustor shall reimburse Beneficiary thereforimmediately upon demand, and upon failure of Trustor to do so, Beneficiary maydeclare all sums so secured to be immediately due and payable.

 

(K)            Beneficiary may take or release other security, mayrelease any party primarily or secondarily liable for any indebtedness securedhereby, may grant extensions, renewals or indulgences with respect to suchindebtedness, and may apply any other security therefor held by it to thesatisfaction of such indebtedness, without prejudice to any of its rightshereunder.

 

 

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(L)             Nothing herein contained and no act done or omitted byBeneficiary pursuant to the powers and rights granted it herein shall be deemedto be a waiver by Beneficiary of its other rights and remedies under the Notesand this Deed of Trust, and this assignment is made and accepted withoutprejudice to any of the other rights and remedies possessed by Beneficiaryunder the terms thereof. The right of Beneficiary to collect said indebtednessand to enforce any other security therefor held by it may be exercised byBeneficiary either prior to, simultaneously with, or subsequent to any actiontaken by it hereunder. It is the intent of both Trustor and Beneficiary that thisassignment be supplementary to, and not in substitution or derogation of, anyother provision contained in this Deed of Trust giving Beneficiary any interestin or rights with respect to the Leases or Rents and Profits.

 

(M)           Neither this assignment nor pursuit of any remedyhereunder by Beneficiary shall cause or constitute a merger of the interests ofthe tenant and Trustor under any of the Leases such that any of the Leaseshereby assigned are no longer valid and binding legal obligations of the partiesexecuting the same.

 

(N)            Trustor agrees, from time to time, to execute anddeliver, upon demand, all assignments and any and all other writings asBeneficiary may reasonably deem necessary or desirable to carry out the purposeand intent hereof, or to enable Beneficiary to enforce any right or rightshereunder.

 

1.8**Due on Sale or Encumbrance****.**Neither Trustor nor any principalof Trustor shall, without the prior written consent of Beneficiary: (i) create,effect, consent to, suffer to exist, assume, incur, permit (voluntarily orinvoluntarily, by operation of law or otherwise) any direct or indirectconveyance, sale, assignment, transfer, grant, lien, pledge, mortgage, securityinterest or other encumbrance or disposition (each of the foregoing defined as“Transfer”) of the Property or an interest therein; (ii) be divested of itstitle to the Property or any interest therein; (iii) enter into a contract tosell or grant an option to purchase all or any portion of the Property or anyinterest therein that results in a transfer of possession or of equitable titleto the Property or any portion thereof prior to the payment of the Loan inaccordance with its terms; (iv) enter into any lease giving the tenant anyoption to purchase the Property or any part thereof; (v) permit or suffer anyTransfer of any direct or indirect ownership interest in Trustor or anyindemnitor or guarantor under this Deed of Trust or any Related Agreement; (vi)permit or suffer any Transfer of any ownership interest in any direct or indirectowner of a legal or beneficial interest in Trustor (including, withoutlimitation its general partners, members, trustees, beneficiaries orshareholders); (vii) permit or suffer the merger, dissolution, liquidation orconsolidation of Trustor or any of the direct or indirect owners of Trustor orthe conversion of one type of legal entity into another type of legal entity.Except as expressly consented to in writing by Beneficiary, Trustor shall notincur any additional indebtedness (secured or unsecured, direct or contingent)other than unsecured debt or trade payables incurred in the ordinary course ofbusiness in connection with the operation of the Property. Upon the occurrenceof any of the prohibited actions specified herein, then Beneficiary shall havethe right, at its option, to declare the

 

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indebtedness secured by this Deed of Trustimmediately due and payable, irrespective of the maturity date specified in theNotes.

 

Notwithstanding the foregoing, it isunderstood and agreed by Beneficiary that AMERIVEST PROPERTIES INC., a Marylandcorporation (“Properties”), may engage in the issuance and trading of stock inProperties as long as Properties maintains its status as a real estateinvestment trust.

 

1.9**Preservationand Maintenanceof Property****.**Trustor shall hire competent and responsible property managers who shall bereasonably acceptable to Beneficiary. Trustor, at its sole cost and expense,shall keep the Property and every part thereof in good condition and repair(subject to ordinary wear and tear), in such a fashion that the value andutility of the Property will not be diminished and shall promptly andfaithfully comply with and obey all laws, ordinances, rules, regulations,requirements and orders of every duly constituted governmental authority oragent having jurisdiction with respect to the Property. All repairs,replacements and renewals shall be at least equal in quality to the originalImprovements. Trustor shall not permit or commit any waste, impairment, ordeterioration of the Property, nor commit, suffer or permit any act upon or useof the Property in violation of law or applicable order of any governmentalauthority, whether now existing or hereafter enacted, or in violation of anycovenants, conditions or restrictions affecting the Property or bring or keepany article in the Property or cause or permit any condition to exist thereonwhich would be prohibited by or invalidate the insurance coverage required tobe maintained hereunder. Trustor shall promptly bond or discharge anymechanics’ liens against the Property.

 

1.10**Use of Property****.**Except as may have beenpreviously agreed in writing by Beneficiary, Trustor shall continue to operatethe Property for the purposes for which it was used on the date hereof and forno other purpose. Trustor shall not make or suffer any improper or offensiveuse of the Property or any part thereof and will not use or permit to be usedany part of the Property for any dangerous, noxious, offensive or unlawfultrade or business or for any purpose which will reduce the value of theProperty in any respect or will cause the Property or any part thereof orinterest therein to be subject to forfeiture. Trustor at its expense willpromptly comply with all rights of way or use, privileges, franchises,servitudes, licenses, easements, tenements, hereditaments and appurtenancesforming a part of the Property and all instruments relating or evidencing thesame, in each case, to the extent compliance therewith is required of Trustorunder the terms thereof. Trustor will not take any action which results in aforfeiture or termination of the rights afforded to Trustor under any suchinstruments and will not, without the prior written consent of Beneficiary, amendin any material respect any of such instruments. Trustor shall at all timescomply with all laws affecting the Property and comply with any instruments ofrecord at the time in force affecting the Property or any part thereof andshall procure, maintain and comply with all permits, licenses, and otherauthorizations required for any use of the Property or any part thereof thenbeing made, and for the proper erection, installation, operation andmaintenance of the Improvements or any part thereof. Trustor shall notinitiate, join in, acquiesce in, or consent to any change in any privaterestrictive covenant, zoning law or

 

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otherpublic or private restriction, limiting or defining the uses which may be madeof the Property or any part thereof. In furtherance of the foregoing sentence,Trustor will not, by act or omission: (i) impair the integrity of the Propertyas a single zoning lot separate and apart from all other premises; or (ii)permit or suffer to permit the Property to be used by the public or any partyin such manner as might make possible a claim of adverse usage or possession orany implied dedication or easement. If under applicable zoning provisions theuse of all or any portion of the Property is or shall become a nonconforminguse, Trustor will not cause or permit such nonconforming use to be discontinuedor abandoned without the express written consent of Beneficiary.

 

1.11**Alterations and Additions.******Trustor shall not cause, suffer or permit:

 

(A)            Any material alterations of theProperty except (i) as required by any law, statute, ordinance, order, rule,regulation, decree or other requirement of the United States, the applicablestate or county in which the Property is located or any political subdivisionof any of the foregoing, or any agency, department, commission, board, court,bureau or instrumentality of any of them (“Governmental Authority”) or by anycondition of any approval, consent, registration, franchise, permit, license,variance, certificate of occupancy or other authorization with regard tozoning, landmark, ecological, environmental, air quality, subdivision,planning, building or land use required by any Governmental Authority for theconstruction, lawful occupancy and operation of the Property and the actual andcontemplated uses thereof, or (ii) as permitted or required to be made by theterms of any Leases approved by Beneficiary (with respect to work in any spacedemised thereunder);

 

(B)          Any demolition or removal of any portionof the Property;

 

(C)          Any change which would increase therisk of fire or other hazard;

 

(D)         Any zoning, reclassification withrespect to the Property; or

 

(E)          Any unlawful use of, or nuisance toexist upon, the Property.

 

Asused herein, the term “material alteration” shall mean any alteration,improvement or replacement (i) the cost of which (including any relatedalteration, improvement or replacement) shall exceed $420,000 (excluding tenantimprovement work pursuant to Leases), or (ii) which materially and adverselyaffects the mechanical, electrical, heating, ventilating, air-conditioning orother building or operating systems of any of the Improvements, or materiallyand adversely affects the cost of operation or maintenance of any such buildingor operating systems, affects the structure or structural soundness of any ofthe improvements of the Property, or the exterior or appearance of theProperty, or otherwise has a material adverse effect on the Property includingthe use and/or value thereof.

 

1.12 **OffsetCertificates****.**Trustor,within three (3) days upon request in person or within ten (10) days uponrequest by mail, shall furnish a written statement duly

 

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acknowledged and notarized, of all amountsdue on any indebtedness secured hereby or secured by any of the RelatedAgreements, whether for principal or interest on the Notes or otherwise, andstating whether any offsets or defenses exist against the indebtedness securedhereby and covering such other matters with respect to any such indebtedness asBeneficiary may reasonably require.

 

1.13**Trustee’s Costs andExpenses****.**Trustorshall pay all costs, fees and expenses of Trustee, its agents and counsel, inconnection with the performance of its duties hereunder.

 

1.14**Protection of Security;Costs and Expenses.**

 

(A)            In addition to any other rights or remedies ofBeneficiary hereunder, under any of the Related Agreements, or in law or inequity, upon the occurrence and during the continuation of an Event of Default(or prior thereto after notice to Trustor, when possible, if Trustor is notpaying or performing the act itself and Beneficiary determines in its sole goodfaith judgment that the same is necessary to preserve the Property or the lienof this Deed of Trust or any other collateral securing the indebtednessevidenced by the Notes, either before or after acceleration of theindebtedness) Beneficiary may, but shall not be required to, make any paymentor perform any act required to be performed by Trustor hereunder or under anyof the Related Agreements in any form and manner deemed expedient toBeneficiary, including, without limitation, if applicable: (i) paying anyImpositions which remain unpaid; (ii) procuring the release, discharge, compromiseor settlement of any lien filed or otherwise asserted against the Propertywhich has not been discharged by Trustor in accordance with the provisions ofthis Deed of Trust or any of the other Related Agreements, and (iii) obtaininginsurance policies where insurance coverage was required to be obtainedhereunder and the required evidence that Trustor had obtained the same has notbeen delivered to Beneficiary as required hereunder. Nothing herein shall beconstrued to require Beneficiary to advance or expend monies for any purposementioned herein, or for any other purpose.

 

(B)            Trustor and its property manager, if applicable, shallappear in and defend any action or proceeding purporting to affect the securityof this Deed of Trust or any additional or other security for the obligationssecured hereby, or the rights or powers of Beneficiary or Trustee, and shallpay all costs and expenses actually incurred, including, without limitation,cost of evidence of title and actual attorneys’ fees, in any such action orproceeding in which Beneficiary or Trustee may appear, and in any suit broughtby Beneficiary to foreclose this Deed of Trust or to enforce or establish anyother rights or remedies of Beneficiary hereunder or under any other securityfor the obligations secured hereby. If Trustor fails to perform any of thecovenants or agreements contained in this Deed of Trust, or if any action orproceeding is commenced which affects Beneficiary’s interest in the Property orany part thereof, including, eminent domain, code enforcement, or proceedingsof any nature whatsoever under any federal or state law, whether now existingor hereafter enacted or amended, relating to bankruptcy, insolvency,arrangement, reorganization or other form of debtor

 

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relief, or to a decedent, then Beneficiarymay, but without obligation to do so and without notice to or demand uponTrustor, perform such covenant or agreement and compromise any encumbrance,charge or lien which in the judgment of Beneficiary appears to be prior orsuperior hereto. Trustor shall further pay all expenses of Beneficiary actuallyincurred (including reasonable and actual fees and disbursements of counsel)incident to the protection or enforcement of the rights of Beneficiaryhereunder, and enforcement or collection of payment of the Notes or any FutureAdvance whether by judicial or nonjudicial proceedings, or in connection withany bankruptcy, insolvency, arrangement, reorganization or other debtor reliefproceeding of Trustor, or otherwise.

 

(C)           Trustor shall pay to Beneficiary, immediately upon writtennotice from Beneficiary: (i) all recordation, transfer, stamp, documentary orother fees or taxes levied on Beneficiary (exclusive of Beneficiary’s incometaxes) by reason of the making or recording of the Notes, this Deed of Trust orany Related Agreement, and (ii) all intangible property taxes levied upon anyholder of the Notes or Beneficiary under this Deed of Trust or secured partyunder the Related Agreements.

 

Any amounts disbursed byBeneficiary pursuant to this section or Section 1.13, including, withoutlimitation, reasonable attorneys’ fees, whether or not the indebtedness as aresult thereof shall exceed the face amount of the Notes, shall be additionalindebtedness of Trustor secured by this Deed of Trust and each of the RelatedAgreements as of the date of disbursement shall become immediately due andpayable on demand and shall bear interest at the Default Rate set forth in theNotes, from demand until paid. All such amounts shall be payable by Trustorimmediately upon demand. Nothing contained in this section shall be construedto require Beneficiary to incur any expense, make any appearance, or take anyother action.

 

1.15**Trustor’sCovenants Respecting Collateral****.**

 

(A)            Trustor authorizes Beneficiary to file financing andcontinuation statements covering the Collateral from time to time and in suchform as Beneficiary may require to perfect and continue the perfection ofBeneficiary’s security interest with respect to such property, and Trustorshall pay all reasonable costs and expenses of any record searches forfinancing statements Beneficiary may require. For purpose of such filings,Trustor agrees to furnish any information requested by Beneficiary promptlyupon request by Beneficiary describing the Collateral. Trustor hereby ratifiesand approves all filings of financing statements, amendments, and continuationsapplicable to the Collateral made or filed by Beneficiary prior to the date ofthis Deed of Trust.

 

(B)            Without the prior written consent of Beneficiary, Trustorshall not create or suffer to be created any other security interest in theCollateral, including replacements and additions thereto.

 

(C)           Without the prior written consent ofBeneficiary or except in the ordinary course of business, Trustor shall notsell, transfer or encumber any of the

 

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Collateral, or remove any of the Collateralfrom the Property unless Trustor shall promptly substitute and replace theproperty removed with similar property of at least equivalent value on whichBeneficiary shall have a continuing security interest ranking at least equal inpriority to Beneficiary’s security interest in the property removed.

 

(D)            Trustor shall (i) upon reasonable notice (unless anemergency or Event of Default exists) permit Beneficiary and itsrepresentatives to enter upon the Property to inspect the Collateral andTrustor’s books and records relating to the Collateral and make extractstherefrom and to arrange for verification of the amount of Collateral, underprocedures acceptable to Beneficiary, directly with Trustor’s debtors orotherwise at Trustor’s expense; (ii) promptly notify Beneficiary of anyattachment or other legal process levied against any of the Collateral and anyinformation received by Trustor relative to the Collateral, Trustor’s debtorsor other persons obligated in connection therewith, which may in any way affectthe value of the Collateral or the rights and remedies of Beneficiary inrespect thereto; (iii) reimburse Beneficiary upon demand for any and all costsactually incurred, including, without limitation, reasonable and actualattorneys’ and accountants’ fees, and other expenses incurred in collecting anysums payable by Trustor under any obligation secured hereby, or in thechecking, handling and collection of the Collateral and the preparation andenforcement of any agreement relating thereto; (iv) notify Beneficiary of eachlocation at which the Collateral is or will be kept, other than for temporaryprocessing, storage or similar purposes, and of any removal thereof to a newlocation, including, without limitation, each office of Trustor at whichrecords relating to the Collateral are kept; (v) provide, maintain and deliverto Beneficiary originals or certified copies of the policies of insurance andcertificates of insurance insuring the Collateral against loss or damage bysuch risks and in such amounts, form and by such companies as Beneficiary mayrequire and with loss payable to Beneficiary, and in the event Beneficiarytakes possession of the Collateral, the insurance policy or policies and anyunearned or returned premium thereon shall at the option of Beneficiary becomethe sole property of Beneficiary; and (vi) do all acts necessary to maintain,preserve and protect all Collateral, keep all Collateral in good condition andrepair and prevent any waste or unusual or unreasonable depreciation thereof.

 

(E)             Until Beneficiary exercises its right to collectproceeds of the Collateral pursuant hereto, Trustor will collect with diligenceany and all proceeds of the Collateral. If an Event of Default exists, anyproceeds received by Trustor shall be held in trust for Beneficiary, and Trustorshall keep all such collections separate and apart from all other funds andproperty so as to be capable of identification as the property of Beneficiaryand shall deliver to Beneficiary such collections at such time as Beneficiarymay request in the identical form received, properly endorsed or assigned whenrequired to enable Beneficiary to complete collection thereof.

 

(F)             Beneficiary shall have all of the rights and remediesgranted to a secured party under the Uniform Commercial Code of the state in whichthe Collateral is located, as well as all other rights and remedies availableat law or in equity. During the continuation of any Event of Default hereunderor under either of the Notes, Beneficiary

 

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shall have the right to take possession ofall or any part of the Collateral, to receive directly or through its agent(s)collections of proceeds of the Collateral (including notification of thepersons obligated to make payments to Trustor in respect of the Collateral), torelease persons liable on the Collateral and compromise disputes in connectiontherewith, to exercise all rights, powers and remedies which Trustor wouldhave, but for the security agreement contained herein, to all of the Collateraland proceeds thereof, and to do all other acts and things and execute alldocuments in the name of Trustor or otherwise, deemed by Beneficiary asnecessary, proper and convenient in connection with the preservation,perfection or enforcement of its rights hereunder; and

 

(G)            During the continuation of any Event of Default hereunderor under either of the Notes, Trustor shall, at the request of Beneficiary,assemble and deliver the Collateral and books and records pertaining to theProperty at a place designated by Beneficiary, and Beneficiary may, withreasonable notice to Trustor (unless an emergency or Event of Default exists,in which case no notice shall be required), enter onto the Property and takepossession of the Collateral. It is agreed that public or private sales, forcash or on credit to a wholesaler or retailer or investor, or user ofcollateral of the types subject to the security agreement, or public auction,are all commercially reasonable since differences in the sales prices generallyrealized in the different kinds of sales are ordinarily offset by thedifferences in the costs and credit risks of such sales. The proceeds of anysale of the Collateral shall be applied first to the expenses of Beneficiaryactually incurred in retaking, holding, preparing for sale, or selling theCollateral or similar matters, including reasonable and actual attorneys’ fees,and then, as Beneficiary shall solely determine.

 

(H)            Trustor represents and warrants to Beneficiary that (i)Trustor’s exact legal name is as set forth in the heading to the Deed of Trust;(ii) if Trustor is an organization, Trustor’s type of organization andjurisdiction of organization are as set forth in the heading to this Deed ofTrust, and Trustor’s chief executive office is located at the address set forthfor notices to Trustor in this Deed of Trust; (iii) if Trustor is anindividual, Trustor’s principal residence is at Trustor’s address for noticesset forth in the Deed of Trust; (iv) except as specifically disclosed byTrustor to Beneficiary prior to the execution of this Deed of Trust, during thefive (5) years and six months prior to the date of this Deed of Trust, Trustorhas not been known by any legal name different from the one set forth in theheading of the Deed of Trust nor has Trustor been the subject of any merger,consolidation, or other corporate or organizational reorganization.

 

(I)              Trustor agrees that so long as this Deed of Trustremains in effect, it will notify Beneficiary in writing at least sixty (60)days in advance of: (i) any change whatsoever in the name of Trustor; (ii) anychange whatsoever in the state or jurisdiction in which Trustor is formed or,if Trustor is an individual, in which Trustor’s principal residence is located,or (iii) any change whatsoever in the name(s) under which Trustor conductsbusiness, any new names under which Trustor intends to do business; or, (iv)any new addresses at or from which Trustor intends to do business or

 

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to keep collateral of any kind. Trustor shallin any event keep all collateral within one or more of the United States ofAmerica.

 

1.16**CovenantsRegarding Financial Statements.**

 

(A)            Trustor shall keep true books of record and account inwhich full, true and correct entries in accordance with sound accountingpractice and principles applied on a consistent basis from year to year shallbe made of all dealings or transactions with respect to the Property.

 

(B)           (1)           Trustor shall deliver to Beneficiary:

 

(a)               Within sixty (60) days after the last day of eachfiscal year of Trustor during the term of the Notes, unaudited annual financialreports prepared on an accrual basis, including balance sheets, incomestatements and cash flow statements covering the operation of the Property, thefinancial condition of Trustor, Trustor’s general partners(s), shareholder(s),member(s) and such principals of Trustor as Beneficiary may from time to timedesignate, for the previous fiscal year, all certified to Beneficiary to becomplete, correct and accurate by the individual, managing general partner,manager or chief financial officer of the party whom the report concerns; and

 

(b)              if available, within thirty (30) days after receipt byTrustor, original annual audit reports of an independent certified publicaccountant prepared in accordance with generally accepted accounting principlescontaining an unqualified opinion, including balance sheets, income statementsand cash flow statements covering the operation of the Property and the financialcondition of Trustor, Trustor’s general partner(s), shareholder(s), member(s)and such principals of Trustor as Beneficiary may from time to time designate,for the previous fiscal year;

 

(2)               If, in Beneficiary’s reasonable opinion, the loan tovalue ratio is then seventy-five percent (75%) or greater, Trustor shall alsodeliver, at Beneficiary’s request from time to time (but no more often thanonce in each fiscal quarter of Trustor during the term of the Notes), unauditedfinancial reports prepared on an accrual basis, including balance sheets,income statements and cash flow statements covering the operation of theProperty and the financial condition of Trustor, Trustor’s general partner(s),shareholder(s), member(s) and such principals of Trustor as Beneficiary mayfrom time to time request, for the previous fiscal quarter, a portfolioanalysis report covering the operation of all properties of which Trustor orany of Trustor’s general partners, shareholder(s), member(s) or principalsdesignated by Beneficiary is the owner or a general partner of the owner,setting out a cash flow statement (including debt service payments) for eachsuch property, and a current rent roll of the Property, all certified toBeneficiary to be complete, correct and accurate by the individual, managinggeneral partner or chief financial officer of the party whom the reportconcerns.

 

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(3) All reports shallinclude, without limitation, balance sheets and statements of income and ofpartner’s equity, if applicable, setting forth in each case in comparative formthe figures for the previous fiscal quarter or year, as the case may be. The interimquarterly reports shall also include a breakdown of all categories of revenuesand expenses, and any supporting schedules and data requested by Beneficiary.Each set of annual or quarterly financial reports or quarterly rent rollsdelivered to Beneficiary pursuant to this Section 1.16 shall also beaccompanied by a certificate of the chief financial officer or the managinggeneral partner of Trustor, stating whether any condition or event exists orhas existed during the period covered by the annual or quarterly reports whichthen constituted or now constitutes an Event of Default under either of theNotes or this Deed of Trust, and if any such condition or event then existed ornow exists, specifying its nature and period of existence and what Trustor didor proposes to do with respect to such condition or event.

 

(C)            In the event such statements are not in a form reasonablyacceptable to Beneficiary or Trustor fails to furnish such statements andreports, then Beneficiary shall have the immediate and absolute right to auditthe respective books and records of the Property and Trustor at the expense ofTrustor.

 

1.17**EnvironmentalCovenants and Indemnities.******Trustorcovenants:

 

(A)            That no Hazardous Materials (as defined below) shall beinstalled, used, generated, manufactured, treated, handled, refined, produced,processed, stored or disposed of, in, on or under the Property other thanHazardous Materials in quantities and of types reasonably and customarilyassociated with general office use which have been and are stored, used anddisposed of in compliance with Hazardous Material Laws (as defined below) andthe presence of which do not require compliance with any reporting requirementsunder any Hazardous Material Laws;

 

(B)          That no activity shall be undertakenon the Property which would cause:

 

(1)           the Property to become a hazardouswaste treatment, storage or disposal facility under any Hazardous Material Law,

 

(2)           a release or threatened release ofHazardous Material from the Property in violation of any Hazardous MaterialLaw, or

 

(3)           the discharge of Hazardous Materialinto any watercourse, body of surface or subsurface water or wetland, or thedischarge into the atmosphere of any Hazardous Material which would require apermit under any Hazardous Material Law and for which no such permit has beenissued;

 

(C)          That no activity shall be undertakenor permitted to be undertaken, by Trustor on the Property which would result ina violation under any Hazardous Material Law;

 

 

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(D)            To obtain and deliver to Beneficiary, within a reasonabletime following completion of actions required by an appropriate governmentalagency, certifications of engineers or other professionals reasonablyacceptable to Beneficiary, in form and substance satisfactory to Beneficiary,certifying that all necessary and required actions to clean up, remove,contain, prevent and eliminate all releases or threats of release of HazardousMaterials on or about the Property to the levels required by the appropriategovernmental agencies have been taken and, to the knowledge of suchprofessional, the Property is then in compliance with applicable HazardousMaterial Laws as then in effect and applicable to such actions. For purposes ofthis Deed of Trust, “Hazardous Materials” means and includes asbestos or anysubstance containing asbestos, polychlorinated biphenyls, any explosives,radioactive materials, chemicals known or suspected to cause cancer orreproductive toxicity, pollutants, effluents, contaminants, emissions,infectious wastes, any petroleum or petroleum-derived waste or product orrelated materials and any items defined as hazardous, special or toxicmaterials, substances or waste under any Hazardous Material Law, or any materialwhich shall be removed from the Property pursuant to any administrative orderor enforcement proceeding or in order to place the Property in a condition thatis suitable for ordinary use. “Hazardous Material Laws” means all federal,state and local laws (whether under common law, statute or otherwise),ordinances, rules, regulations and guidance documents now in force, as amendedfrom time to time, in any way relating to or regulating human health or safety,industrial hygiene or environmental conditions, protection of the environment,pollution or contamination of the air, soil, surface water or groundwater, andincludes, without limitation, the Comprehensive Environmental Response,Compensation, and Liability Act of 1980, 42 U.S.C. §9601, et seq., the ResourceConservation and Recovery Act, 42 U.S.C. §6901, et seq., the Clean Water Act,33 U.S.C. §1251, et seq., the Clean Air Act, 42 U.S.C. §7401, et seq., theOccupational Safety and Health Act, 29 U.S.C. §651, et seq., the HazardousMaterials Transportation Act, 49 U.S.C. §1801, et seq., the Federal WaterPollution Control Act, 33 U.S.C. §1321, et seq., and the Toxic SubstancesControl Act, 15 U.S.C. §2601, et seq.

 

(E)             Trustor hereby agrees, at its sole cost and expense, tounconditionally indemnify, defend, and hold Beneficiary, its directors,officers, employees and agents harmless against any loss, liability, damage(whether direct or consequential), expenses, claims, penalties, fines,injunctions, suits, proceedings, disbursements or expenses (including, withoutlimitation, attorneys’ and experts’ fees and disbursements and court costs)(collectively, the “Liabilities”) arising under any Hazardous Material Law, orany other Liabilities which may be incurred by or asserted against Beneficiarydirectly or indirectly resulting from the presence of Hazardous Material on theProperty. Trustor shall assume the burden and expense of defending all suits,administrative proceedings and disputes of any description with all persons,entities, political subdivisions or government agencies arising out of thematters to be indemnified under this Deed of Trust. Trustor shall pay, promptlyupon entry, any nonappealable order, judgment or other final resolution of anyclaim or dispute arising out of the matters to be indemnified under this Deedof Trust and shall pay promptly

 

 

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when due any fines, penalties or agreedsettlements arising out of the matters to be indemnified under this Deed ofTrust. In the event that such payment is not made, Beneficiary, at its solediscretion, may proceed to file suit against Trustor to compel such payment.Promptly following completion of any actions imposed upon Trustor under anyHazardous Material Law, Trustor shall obtain and deliver to Beneficiary, anenvironmental report in form and substance reasonably acceptable to Beneficiaryfrom an environmental consultant acceptable to Beneficiary, stating that allrequired action has been taken, and that upon completion of such action, theProperty is, to the knowledge of such professional, then in compliance with theapplicable Hazardous Material Laws. Such indemnification shall survive paymentof the Notes, but shall become null and void and of no further force or effectin the event Beneficiary or any other party obtains title to the Propertythrough foreclosure or exercise of power of sale under this Deed of Trust ordeed in lieu of foreclosure or exercise of power of sale.

 

1.18**Further Assurances.******Trustor, from time to time, will execute, acknowledge,subscribe and deliver to or at the direction of Beneficiary such documents andfurther assurances as Beneficiary may reasonably require for the purpose ofevidencing, perfecting or confirming the lien and security interest created bythis Deed of Trust or the security to be afforded by the Related Agreements, orboth. Without limiting the foregoing and notwithstanding anything in this Deedof Trust or the Related Agreements to the contrary, Trustor will defend,indemnify and hold Beneficiary harmless with respect to any suit or proceedingin which the validity, enforceability or priority of any such lien or securityinterest, or both, is endangered or contested, directly or indirectly. IfTrustor fails to undertake the defense of any such claim in a timely manner,or, in Beneficiary’s sole determination, fails to prosecute such defense withdue diligence, then Beneficiary is authorized to take, at the sole expense ofTrustor, all necessary and proper action in defense of any such claim,including, without limitation, the retention of legal counsel, the prosecutionor defense of litigation and the compromise or discharge of claims, includingpayment of all costs and attorneys’ and paralegals’ fees. All cost, expensesand losses, if any, so incurred by Beneficiary, including all attorneys’ andparalegals’ fees, regardless of whether suit is brought, for alladministrative, trial and appellate proceedings, if any, will constituteadvances by Beneficiary as provided in Section 1.14 hereinabove.

 

1.19**Trustor’s ContinuedExistence.******Trustor shallat all times during the term of the Loan maintain its legal existence andqualification to do or transact business in the state in which the Property orany of the Collateral is located and shall maintain its legal existence andgood standing in the state in which Trustor was created.

 

**ARTICLE II**

**EVENTSOF DEFAULT**

 

Each of the following shallconstitute an event of default (“Event of Default”) hereunder:

 

2.1 **Monetary and Performance Defaults****.**

** **

 

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(A)            Failure to make any payment due under either of the Notesor any note evidencing a Future Advance, other than the final payment andPrepayment Premium, or to make any payment due under this Deed of Trust toBeneficiary or any other party, including without limitation, payment of escrowdeposits, real estate taxes, insurance premiums and ground rents, if any, on orbefore the fourth day after such payment is due; or,

 

(B)            Failure to make the final payment or the PrepaymentPremium due under either of the Notes or any note evidencing a Future Advance whensuch payment is due whether at maturity, by reason of acceleration, as part ofa prepayment or otherwise (the defaults in (A) and (B) hereinafter “MonetaryDefault”); or

 

(C)            Breach or default in the performance of any of thecovenants or agreements of Trustor contained herein or in any Related Agreement(“Performance Default”), if such Performance Default shall continue for fifteen(15) days or more after written notice to Trustor from Beneficiary specifyingthe nature of the Performance Default; provided, however, that if suchPerformance Default is of a nature that it cannot be cured within the 15 dayperiod, then Trustor shall not be in default if it commences good faith effortsto cure the Performance Default within the 15 day period, demonstrates continuousdiligent efforts to cure the Performance Default in a manner satisfactory toBeneficiary and, within a reasonable period, not to exceed 180 days after thedate of the original written notice of the Performance Default, completes thecure of such Performance Default. Notwithstanding the foregoing, if the breachor default is one which is defined as an Event of Default elsewhere in thisArticle II or in the default definition of any Related Agreement, then Trustorshall not be entitled to any notice or cure period upon the occurrence of suchbreach or default except for such notice and cure periods, if any, as may beexpressly granted in such other defined Event of Default.

 

2.2 **Bankruptcy, Insolvency, Dissolution.**

 

(A)            Any court of competent jurisdiction shall sign an order(i) adjudicating Trustor, or any person, partnership or corporation holding anownership interest in Trustor or in any partnership comprising Trustor, or anyguarantor (which term when used in this Deed of Trust shall mean guarantor ofpayment of the indebtedness) bankrupt or insolvent, (ii) appointing a receiver,trustee or liquidator of the Property or of a substantial part of the propertyof Trustor, or any person, partnership or corporation holding an ownershipinterest in Trustor, or in any partnership comprising Trustor, or anyguarantor, or (iii) approving a petition for, or effecting an arrangement inbankruptcy, or any other judicial modification or alteration of the rights ofBeneficiary or of other creditors of Trustor, or any person, partnership orcorporation holding an ownership interest in Trustor, or in any partnershipcomprising Trustor or any guarantor; or

 

 

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(B)            Trustor, any person, partnership or corporation holdingan ownership interest in Trustor or in any partnership comprising Trustor,shall (i) apply for or consent to the appointment of a receiver, trustee orliquidator for it or for any of its property, (ii) as debtor, file a voluntarypetition in bankruptcy, or petition or answer seeking reorganization or anarrangement with creditors or to take advantage of any bankruptcy,reorganization, insolvency, readjustment of debt, dissolution or liquidationlaw or statute, or an answer admitting the material allegations of a petitionfiled against it and any proceeding under such law, (iii) admit in writing aninability to pay its debts as they mature, or (iv) make a general assignmentfor the benefit of creditors; or

 

(C)            An involuntary petition in bankruptcy is filed againstTrustor, or any person, partnership or corporation holding an ownershipinterest in Trustor or in any partnership comprising Trustor and the same isnot vacated or stayed within 30 days of the filing date.

 

2.3**Misrepresentation****.**Trustor makes or furnishes arepresentation, warranty, statement, certificate, schedule and/or report toBeneficiary in or pursuant to this Deed of Trust or any of the RelatedAgreements which is false or misleading in any material respect as of the datemade or furnished.

 

2.4**Default under SubordinateLoans****.**Anoccurrence of a default under any loan subordinate to this Deed of Trust whichis not an independent default under this Deed of Trust which results in thecommencement of foreclosure proceedings or the taking of any other remedialaction under such subordinate loan.

 

2.5**Breach of Due on Sale orEncumbrance Provision****.**Anyoccurrence of a prohibited Transfer under Section 1.8 hereof.

 

**ARTICLE III****REMEDIES**

 

Notwithstanding anyprovision to the contrary in the Notes, this Deed of Trust, or any of theRelated Agreements, upon the occurrence of an Event of Default, such Event ofDefault shall be deemed to exist and be continuing unless and until (a)applicable law requires Beneficiary to accept a cure by Trustor of such Eventof Default or (b) Beneficiary elects, in its sole and absolute discretion, toaccept a cure by Trustor of such Event of Default. During the continuation ofany Event of Default, Trustee and Beneficiary shall have the following rightsand remedies set forth in Sections 3.1 through 3.8:

 

3.1**Acceleration****.**Notwithstanding the statedmaturity date in the Notes, or any note evidencing any Future Advance,Beneficiary may without notice or demand, declare the entire principal amountof the Notes and/or any Future Advances then outstanding and accrued and unpaidinterest thereon, and all other sums or payments required thereunder including,but not limited to the Prepayment Premium described in the Notes, to be due andpayable immediately.

 

 

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3.2**Entry****.**Irrespective of whether Beneficiary exercises the option provided inSection 3.1 above, Beneficiary in person or by agent or by court-appointedreceiver may, at its option, without any action on its part being required,without in any way waiving such Event of Default, with or without theappointment of a receiver, or an application therefor:

 

(A)            Take possession of the Property and conduct tests of,manage or hire a manager to manage, lease and operate the Property or any partthereof, on such terms and for such period of time as Beneficiary may deemproper, with full power to make, from time to time, all alterations,renovations, repairs or replacements thereto as may seem proper to Beneficiary;

 

(B)            With or without taking possession of the Property,collect and receive all Rents and Profits, notify tenants under the Leases orany other parties in possession of the Property to pay Rents and Profitsdirectly to Beneficiary, its agent or a court-appointed receiver and apply suchRents and Profits to the payment of:

 

(1)all costs and expenses incident to taking and retaining possession of theProperty (including the cost of any receivership), management and operation ofthe Property, keeping the Property properly insured and all alterations,renovations, repairs and replacements to the Property;

 

(2)all taxes, charges, claims, assessments, and any other liens which may be priorin lien or payment to this Deed of Trust or the Notes, and premiums forinsurance, with interest on all such items; and

 

(3)the indebtedness secured hereby together with all costs and attorneys’ fees, insuch order or priority as to any of such items as Beneficiary in its solediscretion may determine, any statute, law, custom or use to the contrarynotwithstanding;

 

(C)           Exclude Trustor, its agents andservants, wholly from the Property;

 

(D)           Have joint access with Trustor to thebooks, papers and accounts of Trustor relating to the Property, at the expenseof Trustor;

 

(E)             Commence, appear in and/or defend any action orproceedings purporting to affect the interests, rights, powers and/or duties ofBeneficiary hereunder, whether brought by or against Trustor or Beneficiary;and

 

(F)             Pay, purchase, contest or compromise any claim, debt, lien,charge or encumbrance which in the judgment of Beneficiary may affect or appearto affect the interest of Beneficiary or the rights, powers and/or duties ofBeneficiary hereunder.

 

 

 

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Trustee or Beneficiary, as amatter of right without notice to Trustor or anyone claiming under it andwithout regard to the then value of the Property or the interest of Trustortherein, shall have the right to apply to any court having jurisdiction toappoint a receiver or receivers to take charge of the Property or any portionthereof. Any such receiver or receivers shall have all of the usual andcustomary powers and duties of receivers in like or similar cases and all ofthe powers and duties of Beneficiary in case of entry as provided hereinabove,including without limitation, the right to collect and receive Rents andProfits. All such Rents and Profits paid to Trustee or Beneficiary or collectedby such receiver shall be applied as provided for in subparagraph 3.2(B) above.Trustor for itself and any subsequent owner of the Property hereby waives anyand all defenses to the application for such receiver and hereby irrevocablyconsents to such appointment without notice of any application therefor.

 

The receipt by Beneficiary of any Rents andProfits pursuant to this Deed of Trust after the institution of foreclosure orother proceedings under the Deed of Trust shall not cure any such Event ofDefault or affect such proceedings or any sale pursuant thereto. After deductingthe expenses and amounts set forth above in this Section 3.2, as well as justand reasonable compensation for all Beneficiary’s employees and other agents(including, without limitation, reasonable and actual attorneys’ fees andmanagement and rental commissions) engaged and employed, the moneys remaining,at the option of Beneficiary, may be applied to the indebtedness securedhereby. Whenever all amounts due on the Notes and under this Deed of Trustshall have been paid and all Events of Default have been cured and any suchcure has been accepted by Beneficiary, Beneficiary shall surrender possessionto Trustor. The same right of entry, however, shall exist if any subsequentEvent of Default shall occur; provided, however, neither Trustee nor Beneficiaryshall be under any obligation to make any of the payments or do any of the actsreferred to in this Section 3.2.

 

3.3**Judicial Action****.**Beneficiary may bring an actionin any court of competent jurisdiction to foreclose this instrument or toenforce any of the covenants and agreements hereof. The Property may beforeclosed in parts or as an entirety.

 

3.4**Power of Sale****.**Beneficiary may elect to causethe Property or any part thereof to be sold under the power of sale hereingranted in any manner permitted by applicable law. Should Beneficiary elect tosell the Property, or any part thereof, which is real property as providedabove, Beneficiary or Trustee shall give such notice of default and election tosell as may then be required by law. Thereafter, upon the expiration of suchtime and the giving of such notice of sale as may then be required by law, andwithout the necessity of any demand on Trustor, Trustee, at the time and placespecified in the notice of sale, shall sell the Property or any part thereof atpublic auction to the highest bidder for cash in lawful money of the UnitedStates payable at time of sale, or as otherwise provided by applicable law.Trustee may, and upon request of Beneficiary shall, from time to time, postponeany sale hereunder in the manner required by law. If the Property consists ofseveral lots, parcels or items of property, Beneficiary may designate the orderin which such lots, parcels or items shall be offered for sale or sold. Anyperson, including Trustor, Trustee or Beneficiary, may purchase at

 

 

 

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any sale hereunder, and Beneficiary shallhave the right to purchase at any sale hereunder by crediting upon the bidprice the amount of all or any part of the indebtedness hereby secured plusinterest, late charges, prepayment fees, and reasonable attorneys’ fees andtrustees’ fees, as herein provided. Should Beneficiary desire that more thanone sale or other disposition of the Property be conducted, Beneficiary may, atits option, cause the same to be conducted simultaneously, or successively, onthe same day, or at such different times and in such order as Beneficiary maydeem to be in its best interests, and no such sale shall terminate or otherwiseaffect the lien of this Deed of Trust on any part of the Property not solduntil all indebtedness secured hereby has been fully paid. In the event ofdefault of any purchaser, Trustee shall have the right to resell the Propertyas set forth above. Upon any sale hereunder, Trustee shall execute and deliverto the purchaser or purchasers a deed or deeds conveying the property so sold,but without any covenant or warranty whatever, express or implied, whereuponsuch purchaser or purchasers shall be let into immediate possession; and therecitals of facts in any such deed or deeds such as default, the giving ofnotice of default and notice of sale, and other facts affecting the regularityor validity of such sale or disposition, shall be conclusive proof of the truthof such facts and any such deed or deeds shall be conclusive against allpersons as to such facts recited therein.

 

3.5**Rescission of Notice ofDefault****.**Beneficiary,from time to time before Trustee’s sale, public sale or deed in lieu offoreclosure, may rescind any such notice of breach or default and of electionto cause the Property to be sold by executing and delivering to Trustee awritten notice of such rescission, which notice, when recorded, shall alsoconstitute a cancellation of any prior declaration of default and demand forsale or such documents as may be required by the laws of the state in which theProperty is located to effect such rescission. The exercise by Beneficiary ofsuch right of rescission shall not constitute a waiver of any breach or Eventof Default then existing or subsequently occurring, or impair the right ofBeneficiary to execute and deliver to Trustee, as above provided, otherdeclarations of default and demand for sale, and notices of breach or default,and of election to cause the Property to be sold to satisfy the obligationshereof, nor otherwise affect any provision, agreement, covenant or condition ofthe Notes and/or of this Deed of Trust or any of the rights, obligations orremedies of the parties hereunder.

 

3.6**Beneficiary’sRemedies Respecting Collateral****.**Beneficiary may realize upon the Collateral, enforce and exercise all ofTrustor’s rights, powers, privileges and remedies in respect of the Collateral,dispose of or otherwise deal with the Collateral in such order as Beneficiarymay in its discretion determine, and exercise any and all other rights, powers,privileges and remedies afforded to a secured party under the laws of the statein which the Property is located as well as all other rights and remediesavailable at law or in equity.

 

 

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3.7**Proceeds of Sales****.**The proceeds of any sale madeunder or by virtue of this Article III, together with all other sums which thenmay be held by Trustee or Beneficiary under this Deed of Trust, whether underthe provisions of this Article III or otherwise, shall be applied as follows:

 

(A)            To the payment of the costs, fees and expenses of saleand of any judicial proceedings wherein the same may be made, including thecost of evidence of title in connection with the sale, compensation to Trusteeand Beneficiary, and to the payment of all expenses, liabilities and advancesmade or incurred by Trustee under this Deed of Trust, together with interest onall advances made by Trustee at the interest rate applicable under the Notes,but limited to any maximum rate permitted by law to be charged by Trustee;

 

(B)            To the payment of any and all sums expended byBeneficiary under the terms hereof, not then repaid, with accrued interest atthe Default Rate set forth in the Notes, and all other sums (except advances ofprincipal and interest thereon) required to be paid by Trustor pursuant to anyprovisions of this Deed of Trust, or the Notes, or any note evidencing anyFuture Advance, or any of the Related Agreements, including, withoutlimitation, all expenses, liabilities and advances made or incurred byBeneficiary under this Deed of Trust or in connection with the enforcementthereof, together with interest thereon as herein provided; and

 

(C)            To the payment of the entire amount then due, owing orunpaid for principal and interest upon the Notes, any notes evidencing anyFuture Advance, and any other obligation secured hereby, with interest on theunpaid principal at the rate set forth therein from the date of advancementthereof until the same is paid in full; and then

 

(D)          The remainder, if any, to the personor persons, including Trustor, legally entitled thereto.

 

3.8**Condemnation and InsuranceProceeds****.**AllProceeds and any interest earned thereon shall be paid over either by thecondemning authority, insurance company or escrow agent to Beneficiary andshall be applied first toward reimbursement of the costs and expenses ofBeneficiary (including reasonable attorneys’ fees), if any, in connection withthe recovery of such Proceeds, and then shall be applied in the sole andabsolute discretion of Beneficiary and without regard to the adequacy of itssecurity under this Deed of Trust:

 

(A)         to the payment or prepayment of all orany portion of the Notes including the Prepayment Premium described in theNotes;

 

(B)          to the reimbursement of expensesincurred by Beneficiary in connection with the restoration of the Property; or

 

 

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(C)            to the performance of any of the covenants contained inthis Deed of Trust as Beneficiary may determine. Any prepayment of the Notes orportion thereof pursuant to Beneficiary’s election under this section shall besubject to the Prepayment Premium described in the Notes.

 

**3.9 Waiver of Marshaling,Rightsof Redemption,Homestead andValuation.**

 

(A)            Trustor, for itself and for all persons hereafterclaiming through or under it or who may at any time hereafter become holders ofliens junior to the lien of this Deed of Trust, hereby expressly waives andreleases all rights to direct the order in which any of the Property shall besold in the event of any sale or sales pursuant hereto and to have any of theProperty and/or any other property now or hereafter constituting security forany of the indebtedness secured hereby marshalled upon any foreclosure of thisDeed of Trust or of any other security for any of said indebtedness.

 

(B)            To the fullest extent permitted by law, Trustor, foritself and all who may at any time claim through or under it, hereby expresslywaives, releases and renounces all rights of redemption from any foreclosuresale, all rights of homestead, exception, monitoring reinstatements,forbearance, appraisement, valuation, stay and all rights under any other lawswhich may be enacted extending the time for or otherwise affecting enforcementor collection of the Notes, the debt evidenced thereby, or this Deed of Trust.

 

3.10**Remedies Cumulative****.**No remedy herein conferred uponor reserved to Trustee or Beneficiary is intended to be exclusive of any otherremedy herein or by law provided, but each shall be cumulative and shall be inaddition to every other remedy given hereunder or now or hereafter existing atlaw or in equity or by statute. No delay or omission of Trustee or Beneficiaryto exercise any right or power accruing upon any Event of Default shall impairany right or power or shall be construed to be a waiver of any Event of Defaultor any acquiescence therein. Every power and remedy given by this Deed of Trustto Trustee or Beneficiary may be exercised separately, successively orconcurrently from time to time as often as may be deemed expedient by Trusteeor Beneficiary. If there exists additional security for the performance of theobligations secured hereby, Beneficiary, at its sole option, and withoutlimiting or affecting any of its rights or remedies hereunder, may exercise anyof the rights and remedies to which it may be entitled hereunder eitherconcurrently with whatever rights and remedies it may have in connection withsuch other security or in such order as it may determine. Any application ofany amounts or any portion thereof held by Beneficiary at any time asadditional security or otherwise, to any indebtedness secured hereby shall notextend or postpone the due dates of any payments due from Trustor toBeneficiary hereunder or under the Notes, any Future Advance, or under any ofthe Related Agreements, or change the amounts of any such payments or otherwisebe construed to cure or waive any default or notice of default hereunder orinvalidate any act done pursuant to any such default or notice.

 

 

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3.11**Nonrecourse****.**Beneficiary acknowledges andagrees that the liability of Trustor under the Notes, this Deed of Trust andthe Related Agreements is limited as provided in the Notes, the provisions ofwhich are hereby incorporated by this reference.

 

**ARTICLE IV**

**MISCELLANEOUS**

 

4.1**Severability****.**In the event any one or more ofthe provisions contained in this Deed of Trust shall for any reason be held tobe invalid, illegal or unenforceable in any respect, such invalidity,illegality or unenforceability shall not affect any other provision of thisDeed of Trust, but this Deed of Trust shall be construed as if such invalid,illegal or unenforceable provision had never been contained herein, but only tothe extent that it is invalid, illegal or unenforceable.

 

4.2**Certain Charges andBrokerage Fees.**

 

(A)            Trustor agrees to pay Beneficiary a commerciallyreasonable charge for each written statement requested of Beneficiary as to theobligations secured hereby, furnished at Trustor’s request. Trustor furtheragrees to pay the charges of Beneficiary for any other service renderedTrustor, or on its behalf, connected with this Deed of Trust or theindebtedness secured hereby, including, without limitation, the delivery to anescrow holder of a request for full or partial release or reconveyance of thisDeed of Trust, transmittal to an escrow holder of moneys secured hereby,changing its records pertaining to this Deed of Trust and indebtedness securedhereby to show a new owner of the Property, and replacing an existing policy ofinsurance held hereunder with another such policy.

 

(B)            Trustor agrees to indemnify and hold Beneficiary harmlessfrom any responsibility and/or liability for the payment of any commissioncharge or brokerage fees to anyone which may be payable in connection with thefunding of the loan evidenced by the Notes and this Deed of Trust orrefinancing of any prior indebtedness, if applicable, based upon any actiontaken by Trustor. It is understood that any such commission charge or brokeragefees shall be paid directly by Trustor to the entitled parties.

 

4.3 **Notices.**

 

(A)            All notices expressly provided hereunder to be given byBeneficiary to Trustor and all notices, demands and other communications of anykind or nature whatever which Trustor may be required or may desire to give toor serve on Beneficiary shall be in writing and shall be (i) hand-delivered,effective upon receipt, (ii) sent by United States Express Mail or by privateovernight courier, effective upon receipt, or (iii) served by certified mail,to the appropriate address set forth below, or at such other place as Trustor,Beneficiary or Trustee, as the case may be, may from time to time designate inwriting by ten (10) days prior written notice thereof. Any such notice ordemand served by certified mail, return receipt requested, shall be deposited

 

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in the United States mail, with postagethereon fully prepaid and addressed to the party so to be served at its addressabove stated or at such other address of which said party shall havetheretofore notified in writing, as provided above, the party giving suchnotice. Service of any such notice or demand so made shall be deemed effectiveon the day of actual delivery as shown by the addressee’s return receipt or theexpiration of three (3) business days after the date of mailing, whichever isthe earlier in time. Any notice required to be given by Beneficiary shall beequally effective if given by Beneficiary’s agent, if any.

 

(B)            Trustor hereby requests that any notice, demand, requestor other communication (including any notice of an Event of Default and noticeof sale as may be required by law) desired to be given or required pursuant tothe terms hereof be addressed to Trustor as follows:

 

AmeriVest Camelback Inc.

1780 South Bellaire StreetSuite 100

Denver, Colorado 80222

 

With a copy to:

 

Stephen R. Voelker, Esq.

Jenkens & Gilchrist

1445 Ross Avenue

Suite 3200

Dallas, Texas 75202

 

All notices and othercommunications to Beneficiary shall be addressed as follows:

 

Allstate Investments, LLC

Allstate Plaza South, SuiteG5C

3075 Sanders Road

Northbrook, Illinois 60062

Attention:  Commercial Mortgage Loan Servicing Manager

 

With a copy to:

 

Allstate Investments, LLC

Investment Law Division

Allstate Plaza South, SuiteG5A

3075 Sanders Road

Northbrook, Illinois 60062

 

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All notices to Trustee shallbe addressed as follows:

 

Chicago Title InsuranceCompany

2415 East Camelback Road

Suite 300

Phoenix, Arizona 85012

 

By acceptance of this Deed of Trust,Beneficiary collectively represent and warrant to Trustor that they haveappointed Allstate Investments, LLC as their agent, investment advisor andmanager of their investment assets. Notwithstanding any contrary term orprovision in this Deed of Trust or in any Related Agreement, and until Trustorreceives written notice signed by Allstate Investments, LLC, (i) Trustor willcommunicate only to Allstate Investments, LLC with respect to any and allnotices, consents, approvals, requests, modifications and agreements requiredor otherwise relating to this Deed of Trust or the Loan (collectively “Approvalsand Requests”) and Allstate Investments, LLC shall communicate and act onbehalf of Beneficiary with respect to all Approvals and Requests, and (ii)Trustor shall be entitled to rely on any communications from or actions byAllstate Investments, LLC with respect to Beneficiary and all Approvals andRequests made to Allstate Investments, LLC by Trustor or made by AllstateInvestments, LLC to Trustor shall be deemed to be made to or by Beneficiary, asthe case may be, and binding upon Beneficiary. In the event AllstateInvestments, LLC ceases to be the agent, investment advisor and investmentmanager for one or more of the companies comprising Beneficiary, Beneficiarycollectively agree that they shall appoint another agent or shall designate oneof the companies comprising Beneficiary to communicate and act on behalf ofBeneficiary. Additionally, Beneficiary collectively represent and warrant that:(i) there will always be one loan servicer in connection with the Loan; (ii)Trustor shall be consistently directed to make all payments due under the Notesto a single loan servicer; and (iii) Trustor shall have no responsibility forallocating any such payments among the holders of the Notes. The Notes shall bepari passu and the interests of each company comprising the Beneficiary or theLender under this Deed of Trust and the Related Agreements and in and to allLoan Collateral shall be co-equal without any preference or priority over theinterests of any other company comprising Beneficiary.

 

4.4**Trustor Not Released;Certain Trustee Acts.**

 

(A)            Extension of the time for payment or modification of theterms of payment of any sums secured by this Deed of Trust granted byBeneficiary to any successor in interest of Trustor shall not operate torelease, in any manner, the liability of Trustor. Beneficiary shall not berequired to: commence proceedings against such successor or refuse to extendtime for payment or otherwise modify the terms of payment of the sums securedby this Deed of Trust, by reason of any demand made by Trustor. Withoutaffecting the liability of any person, including Trustor, but subject to theterms and provisions of Section 3.11, for the payment of any indebtednesssecured hereby, or the legal operation and effect of this Deed of Trust on theremainder of the Property for the full amount of any such indebtedness andliability unpaid, Beneficiary

 

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and Trustee are respectively empowered asfollows: Beneficiary may from time to time and without notice (i) release anyperson liable for the payment of any of the indebtedness; (ii) extend the timeor otherwise alter the terms of payment of any of the indebtedness; (iii)accept additional real or personal property of any kind as security therefor,whether evidenced by deeds of trust, mortgages, security agreements or anyother instruments of security; or (iv) alter, substitute or release anyproperty securing the indebtedness.

 

(B)            Beneficiary may, at any time, and from time to time, (i)consent to the making of any map or plan of the Property or any part thereof;(ii) join in granting any easement or creating any restriction thereon; (iii)join in any subordination or other agreement affecting this Deed of Trust orthe legal operation and effect or charge hereof; or (iv) release or reconvey,without any warranty, all or part of the Property from the lien of this Deed ofTrust.

 

4.5**Inspection****.**Upon reasonable prior notice andsubject to the rights of tenants under the Leases, Beneficiary may at anyreasonable time make or cause to be made entry upon and make inspections,reappraisals, surveys, construction and environmental testing of the Propertyor any part thereof in person or by agent, and if Beneficiary has a reasonablebasis to believe that Trustor is in breach of any covenant of this Deed ofTrust in regard to the Property, the cost of any such inspection shall be borneby Trustor.

 

4.6**Releaseor Reconveyance or Cancellation****.**Upon the payment in full of all sums secured by this Deed of Trust,Beneficiary shall cancel this Deed of Trust or request Trustee to release thisDeed of Trust or reconvey the Property and shall surrender this Deed of Trustand all notes evidencing indebtedness secured by this Deed of Trust to Trustee.Upon payment of its fees and any other sums owing to it under this Deed ofTrust, Trustee shall release this Deed of Trust or reconvey the Propertywithout warranty to the person or persons legally entitled thereto. The dulyrecorded release or reconveyance of the Property shall constitute areassignment of the Leases by Beneficiary to Trustor. Such person or personsshall pay all fees of Trustee and costs of recordation, if any. The recitals insuch release or reconveyance of any matters or facts shall be conclusive proofof the truthfulness thereof.

 

4.7 **Statute of Limitations****.**Trustor hereby expressly waivesand releases to the fullest extent permitted by law, the pleading of anystatute of limitations as a defense to any and all obligations secured by thisDeed of Trust.

 

4.8**Interpretation****.**Wherever used in this Deed ofTrust, unless the context otherwise indicates a contrary intent, or unlessotherwise specifically provided herein, the word “Trustor” shall mean andinclude both Trustor and any subsequent owner or owners of the Property, andthe word “Beneficiary” shall mean and include not only the original Beneficiaryhereunder but also any future owner and holder, including pledgees, of theNotes or other obligations secured hereby. In this Deed of Trust, the Notes andthe Related Agreements, whenever the context so requires, the masculine gender

 

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includes the feminine and/or neuter, and theneuter includes the feminine and/or masculine, and the singular number includesthe plural. In this Deed of Trust, the Notes and the Related Agreements, theuse of the word “including” shall not be deemed to limit the generality of theterm or clause to which it has reference, whether or not non-limiting language(such as “without limitation,” or “but not limited to,” or words of similarimport) is used with reference thereto.

 

4.9**Captions****.**The captions and headings of theArticles and sections of this Deed of Trust, the Notes and the RelatedAgreements, are for convenience only and are not to be used to interpret,define or limit the provisions hereof.

 

4.10**Consent****.**The granting or withholding ofconsent by Beneficiary to any transaction as required by the terms hereof shallnot be deemed a waiver of the right to require consent to future or successivetransactions. Trustor covenants and agrees to reimburse Beneficiary promptly ondemand for all legal and other expenses incurred by Beneficiary or itsservicing agent in connection with all requests by Trustor for consent orapproval under this Deed of Trust.

 

4.11**Delegation to Subagents****.**Wherever a power of attorney isconferred upon Beneficiary hereunder, it is understood and agreed that suchpower is conferred with full power of substitution, and Beneficiary may electin its sole discretion to exercise such power itself or to delegate such power,or any part thereof, to one or more subagents.

 

4.12**Successors and Assigns****.**All of the grants, obligations,covenants, agreements, terms, provisions and conditions herein shall run withthe land and shall apply to, bind and inure to the benefit of, the heirs,administrators, executors, legal representatives, successors and assigns ofTrustor (but this shall not permit any assignment prohibited hereby) and thesuccessors in trust of Trustee and the endorsees, transferees, successors andassigns of Beneficiary. In the event Trustor is composed of more than oneparty, the obligations, covenants, agreements, and warranties contained hereinand in the Related Agreements as well as the obligations arising therefrom areand shall be joint and several as to each such party.

 

4.13**Governing Law****.**THIS DEED OF TRUST AND THERELATED AGREEMENTS ARE INTENDED TO BE GOVERNED BY AND CONSTRUED UNDER THE LAWSOF THE STATE IN WHICH THE PROPERTY IS LOCATED. TRUSTOR HEREBY WAIVES ITS RIGHTTO A TRIAL BY JURY.

 

4.14**Substitution of Trustee****.**Beneficiary may remove Trustee atany time or from time to time and appoint a successor trustee, and upon suchappointment, all powers, rights, duties and authority of Trustee, as aforesaid,shall thereupon become vested in such successor. Such substitute trustee shallbe appointed by written instrument duly recorded in the county or countieswhere the real property covered hereby is located, which appointment may beexecuted by any authorized agent of Beneficiary or in any other mannerpermitted by applicable law.

 

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4.15**Changes in Taxation****.**If, after the date of this Deedof Trust, any law is passed by the state in which the Property is located or byany other governing entity, imposing upon Beneficiary any tax against theProperty, or changing in any way the laws for the taxation of mortgages ordeeds of trust or debts secured by mortgages or deeds of trust so that anadditional or substitute tax is imposed on Beneficiary or the holders of theNotes, Trustor shall reimburse Beneficiary for the amount of such taxesimmediately upon receipt of written notice from Beneficiary. Provided, however,that such requirement of payment shall be ineffective if Trustor is permittedby law to pay the whole of such tax in addition to all other payments requiredhereunder, without any penalty or charge thereby accruing to Beneficiary and ifTrustor in fact pays such tax prior to the date upon which payment is requiredby such notice.

 

4.16**Maximum Interest Rate****.**Trustor agrees to pay aneffective rate of interest which is the stated rate provided for in the Notes,plus any additional rate of interest resulting from any charges of interest orin the nature of interest paid or to be paid in connection with the loansevidenced by the Notes, including without limitation, any amounts paid pursuantto the provisions of the Notes, this Deed of Trust and that certain CommitmentLetter dated July 30, 2004, by and between Beneficiary and Trustor. Noprovision of this Deed of Trust or of the Notes or of any note evidencing aFuture Advance shall require the payment or permit the collection of interestin excess of the maximum non-usurious rate permitted by applicable law. In theevent such interest does exceed the maximum legal rate, it shall be canceledautomatically to the extent that such interest exceeds the maximum legal rateand if theretofore paid, credited on the principal amount of the Notes or, ifthe Notes have been prepaid, then such excess shall be rebated to Trustor andTrustor hereby agrees to accept such rebate.

 

4.17**Time of Essence****.**Time is of the essence of theobligations of Trustor in this Deed of Trust and each and every term, covenantand condition made herein by or applicable to Trustor.

 

4.18**Reproduction of Documents****.**This Deed of Trust and alldocuments relating thereto, specifically excluding the Notes but including,without limitation, consents, waivers and modifications which may hereafter beexecuted, financial and operating statements, certificates and otherinformation previously or hereafter furnished to Beneficiary, may be reproducedby Beneficiary by any photographic, photostatic, microfilm, micro-card,miniature photographic or other similar process and Beneficiary may destroy anyoriginal document (“Master”) so reproduced. Trustor agrees and stipulates thatany such reproduction is an original and shall be admissible in evidence as theMaster in any judicial or administrative proceeding (whether or not the Masteris in existence and whether or not such reproduction was made or preserved byBeneficiary in the regular course of business) and any enlargement, facsimileor further reproduction of such a reproduction shall be no less admissible.

 

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4.19**No Oral Modifications.******This Deed of Trust may not be amended or modified orally,but only by an agreement in writing signed by the party against whomenforcement of any amendment or modification is sought.

 

4.20**Trustee Provisions****.**Trustee accepts this Trust whenthis Deed of Trust, duly executed and acknowledged is made a public record asprovided by law. The Trust created hereby is irrevocable by Trustor. Trustee,upon presentation to it of an affidavit signed by or on behalf of Beneficiary,setting forth any facts showing a default by Trustor under any of the terms orconditions of this Deed of Trust, is authorized to accept as true andconclusive all facts and statements in such affidavit and to act hereunder incomplete reliance thereon. Trustee shall be under no obligation to notify anyparty hereof of any action or proceeding of any kind in which Trustor,Beneficiary and/or Trustee shall be a party, unless brought by Trustee, or ofany pending sale under any other deed of trust. The necessity of Trustee’smaking oath, filing inventory or giving bond as security for the execution ofthis Deed of Trust, as may now be or hereafter required by the laws of thestate in which the Property is located, is hereby expressly waived.

 

IN WITNESS WHEREOF, theundersigned has executed this Deed of Trust as of the day and year firsthereinabove written.

 
|   | AMERIVEST CAMELBACK INC.,  an |
|--------|-------------------------------|
|   | Arizona corporation           |
|   |                          |
|   | By                            | /s/ John B. Groonman |
|   |                          | John B. Groonman |
|   |                          | Its | Vice President |

 

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| STATE OF COLORADO | )     |
|-------------------|-------|
|              | ) ss. |
| County of Denver  | )     |

 

                Theforegoing instrument was acknowledged before me this 20th day of August, 2004,by John B. Groonman, the Vice President of AMERIVEST CAMELBACK INC., an Arizonacorporation, on behalf of the corporation.

 

                Witnessmy hand and official seal.

 
| [SEAL]                 | /s/ Loretta J. Zerbe |
|------------------------|----------------------|
|                   | Notary Public        |
|                   |                 |
| My Commission Expires: |                 |
|                   |                 |
| 3/17/2005              |                 |   |
|                        |                      |  |

 

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**EXHIBIT“A”**(Property Description)

 

The land referred to in this document issituated in the State of Arizona, County of Maricopa, and described as follows:

 

PARCEL NO. 1:

 

Parcel 40, ARIZONA BILTMORE ESTATES, asubdivision recorded in Book 183 of Maps, page 35, records of Maricopa County,Arizona

 

PARCEL NO. 2:

 

Lot 2, CAMELBACK LAKES CORPORATE CENTER -PARCEL 38, a subdivision recorded in Book 449 of Maps, page 14, records ofMaricopa County, Arizona

 

PARCEL NO. 3:

 

Non-exclusive easement for vehicular andpedestrian ingress and egress and parking for the benefit of Parcel 2, as setforth in EASEMENT AGREEMENT recorded in Docket 13151, page 1055.

 

PARCEL NO. 4:

 

Non-exclusive easement for ingress and egressfor reasonable vehicular and pedestrian traffic and parking for the benefit ofParcel 1 and 2, as set forth in GRANT OF EASEMENT recorded in Docket 14716,page 929.

 

PARCEL NO. 5:

 

Non-exclusive easement for ingress and egressfor vehicular traffic and for surface water drainage and for existing stop signas set forth in RESTATED DECLARATION OF EASEMENTS AND MAINTENANCE, recorded inRecording No. 97-639191.

 

PARCEL NO. 6:

 

All easements, rights and benefits set forthin Parking Easement and Agreement recorded May 18, 1998 in Recording No.98-0412811.

 

PARCEL NO. 7:

 

All easements, rights and benefits set forthin Declaration of Covenants, Conditions and Restrictions recorded in Docket12246, page 1155.

 

 

 

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**EXHIBIT“B” (Fixture Filing)**

 

 

Pursuant to the securityagreement contained in this Deed of Trust (“Security Agreement”) and theappropriate Uniform Commercial Code (“UCC”) sections in the State in which theFixtures are located, as amended and recodified from time to time, this Deed ofTrust shall constitute a Fixture Filing.

 

1.               **Description of Fixtures**“Fixtures” shall include all articles of personal property now or hereafterattached to, placed upon for an indefinite term or used in connection with saidreal property, appurtenances and improvements together with all goods and otherproperty which are or at any time become so related to the Property that aninterest in them arises under real estate law.

 

2.               **Description of Collateral**The Collateral, as defined in the Security Agreement, includes, withoutlimitation, the following items and types of Collateral as well as certainother items and types of Collateral:

 

All equipment, fixtures, goods, inventory andall present and future accessions and products thereof and thereto as definedin the UCC, now or at any time acquired, used, or to be used for or inconnection with the construction, use or enjoyment of the Property by Trustor,whether in the possession of Trustor, warehousemen, bailees or any other personand whether located at the Property or elsewhere, including without limitation:

 

(A)            all building, maintenance or service equipment; building,maintenance or raw materials or supplies; component parts or work in process;appliances; furnishings; machinery; and tools; and

 

(B)            all goods and property covered by any warehouse receipts,bills of lading and other documents evidencing any goods or other tangiblepersonal property of any kind (including any Collateral) in which Trustor nowor at any time hereafter has any interest in connection with any or all of theProperty or Collateral; and

 

(C)          any and all products of any accessionsto any such Collateral which may exist at any time.

 

Part of the above described goods are or areto become Fixtures on the Property. As used in this Exhibit to qualify thescope of Beneficiary’s security interest in any of the Collateral, the phrase “inconnection with any or all of the Property or Collateral” shall be used in itsbroadest and most comprehensive sense and shall include without limitationproperty used or acquired (or to be used or acquired) in connection with theimprovement, development, construction, repair or remodeling of any or all ofthe Property, property arising from or in connection with the operation, use,maintenance, occupancy, sale, lease or disposition of any or all of theProperty or Collateral, property

 

 

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used or acquired (or to be used or acquired)in connection with Trustor’s performance of any of its obligations toBeneficiary, and property acquired with any loan proceeds. If any property isused (or to be used) for multiple or different purposes, and one such purposerelates to any aspect of the Property or collateral, such property shallconstitute Collateral hereunder, unless Beneficiary shall release such propertyfrom this Fixture Filing and Beneficiary’s security interest in a duly executedwritten instrument.

 

3.             **Relation of Fixture filingto Deed of Trust:**Some or all of the Collateral described inSection 2 above may be or become Fixtures in which Beneficiary has a securityinterest under the Security Agreement. However, nothing herein shall be deemedto create any lien or interest in favor of Trustee under this Deed of Trust inany such Collateral which is not a fixture, and the purpose of this Exhibit Bis to create a fixture filing under the appropriate Uniform Commercial Codesections in the State in which the Fixtures are located, as amended orrecodified from time to time. The rights, remedies and interests of Beneficiaryunder this Deed of Trust are independent and cumulative, and there shall be nomerger of any lien hereunder with any security interest created by the SecurityAgreement. Beneficiary may elect to exercise or enforce any of its rights,remedies, or interests under this Deed of Trust as Beneficiary may from time totime deem appropriate.

 

4.**             Name and Addressof Beneficiary:**

 

AllstateLife Insurance CompanyAllstate Life Insurance Company of New York c/o Allstate Investments, LLCAllstate Plaza South, Suite G5C 3075 Sanders RoadNorthbrook, Illinois 60062Attention: Commercial Mortgage Loan Servicing Manager

 

5.**             Other FixtureFinancing and Removal of Fixtures**

 

(A)          Beneficiary has not consented to anyother security interest of any other person in any Fixtures and has notdisclaimed any interest in any Fixtures; and

 

(B)            Beneficiary has not agreed or consented to the removal ofany Fixtures from the Property, and any such consent by Trustor shall not bebinding on Beneficiary. Beneficiary reserves the right to prohibit the removalof any Fixtures by any person with the legal right to remove any Fixtures from theProperty unless and until such person makes arrangements with (and satisfactoryto) Beneficiary for the payment to Beneficiary of all costs of repairing anyphysical injury to the Property which may be caused by the removal of suchFixtures. Any such payment shall be made directly to Beneficiary at itsrequest, and Beneficiary may hold such payment as additional collateral underthis Deed of Trust. Failure by Trustor to cause the delivery to Beneficiary ofany such payment shall constitute both: (i) waste under (and breach of)

 

 

ii

 

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this Deed of Trust; and (ii) conversion ofCollateral under (and a breach of) the Security Agreement.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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