Exhibit 10.21


 


DEED OF TRUST, ASSIGNMENT OF RENTS,


SECURITY AGREEMENT AND FIXTURE FILING


 


RKB LAKESIDE LLC


(Trustor, as Grantor)


 


Trustor’s Organizational Identification Number: 3641678


 


to


 


RICHARD W. KLEIN, JR.


(Trustee, as Grantee)


 


and


 


ARCHON FINANCIAL, L.P.


(Beneficiary, as Grantee)


 


Dated: As of May 13, 2003


 


Property Location:


14104, 14108, 14116 and 14120 Newbrook Drive


Chantilly, Virginia


 


Loan No. 09-0001741


 


THIS INSTRUMENT IS TO BE
FILED AND INDEXED IN THE REAL ESTATE RECORDS AND IS ALSO TO BE INDEXED IN THE
INDEX OF FINANCING STATEMENTS UNDER THE NAMES OF TRUSTOR, AS “DEBTOR”, AND
BENEFICIARY, AS “SECURED PARTY”.


 


DOCUMENT
PREPARED BY AND WHEN RECORDED, RETURN TO:


 


Kroll McNamara
Evans & Delehanty, LLP


29 South Main
Street


West Hartford, CT
06107


Attn: Edward J.
McNamara, Esq.


 


	
   

  	
  Grantor
  RKB LAKESIDE LLC

  	
  Grantee: RICHARD W KLEIN

  
	
   

  	
  Date
  Time: 05/14/2003 13:44:09

  	
  Instrument: 2003015799.005

  
	
   

  	
  Book/Page:
  14434/2144

  	
  # of
  pages: 74

  
	
   

  	
  Recorded
  in FAIRFAX COUNTY CIRCUIT COURT

  
	
   

  	
   

  
	
   

  	
  TESTE:
  JOHN T. FREY

  



 


Archon Financial,
L.P.


Deed of Trust,
Assignment of Rents,


Security Agreement
and Fixture Filing


Lakeside I &
II, Chantilly VA


 





















 


TABLE OF CONTENTS


 


	
  Paragraph

  	
   

  	
  Heading

  
	
   

  	
   

  	
   

  
	
  1.

  	
   

  	
  Certain
  Representations, Warranties and Covenants of Trustor

  
	
  2.

  	
   

  	
  Insurance

  
	
  3.

  	
   

  	
  Casualty and
  Condemnation

  
	
  4.

  	
   

  	
  Use of the Proceeds of
  Insurance or Award

  
	
  5.

  	
   

  	
  Tax and Insurance
  Impound

  
	
  6.

  	
   

  	
  Escrow Funds

  
	
  7.

  	
   

  	
  Leases and Rents

  
	
  8.

  	
   

  	
  Transfer or Encumbrance
  of the Trust Property

  
	
  9.

  	
   

  	
  Single Purpose
  Entity/Separateness

  
	
  10.

  	
   

  	
  Maintenance of Trust
  Property

  
	
  11.

  	
   

  	
  Defeasance

  
	
  12.

  	
   

  	
  Estoppel Certificates
  and No Default Affidavits

  
	
  13.

  	
   

  	
  Changes in Laws
  Regarding Taxation

  
	
  14.

  	
   

  	
  No Credits on Account
  of the Debt

  
	
  15.

  	
   

  	
  Documentary Stamps

  
	
  16.

  	
   

  	
  Controlling Agreement

  
	
  17.

  	
   

  	
  Financial Statements

  
	
  18.

  	
   

  	
  Performance of Other
  Agreements

  
	
  19.

  	
   

  	
  Further Acts, Etc.

  
	
  20.

  	
   

  	
  Recording of Deed of
  Trust, Etc.

  
	
  21.

  	
   

  	
  Notice of Certain
  Events

  
	
  22.

  	
   

  	
  Events of Default

  
	
  23.

  	
   

  	
  Late Payment Charge

  
	
  24.

  	
   

  	
  Beneficiary’s Right To
  Cure Defaults

  
	
  25.

  	
   

  	
  Remedies

  
	
  26.

  	
   

  	
  Right of Entry and
  Inspection

  
	
  27.

  	
   

  	
  Security Agreement

  
	
  28.

  	
   

  	
  Actions and Proceedings

  
	
  29.

  	
   

  	
  Contest of Certain
  Claims

  
	
  30.

  	
   

  	
  Recovery of Sums
  Required to be Paid

  
	
  31.

  	
   

  	
  Marshalling and Other
  Matters

  
	
  32.

  	
   

  	
  Hazardous Substances

  
	
  33.

  	
   

  	
  Environmental
  Operations

  
	
  34.

  	
   

  	
  Environmental
  Monitoring

  
	
  35.

  	
   

  	
  Compliance with Law;
  Alterations

  
	
  36.

  	
   

  	
  Indemnification

  
	
  37.

  	
   

  	
  Notices

  
	
  38.

  	
   

  	
  Authority

  
	
  39.

  	
   

  	
  Non-Waiver

  
	
  40.

  	
   

  	
  No Oral Change

  



 


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  41.

  	
   

  	
  Liability

  
	
  42.

  	
   

  	
  Inapplicable Provisions

  
	
  43.

  	
   

  	
  Headings, Etc.

  
	
  44.

  	
   

  	
  Duplicate Originals

  
	
  45.

  	
   

  	
  Definitions

  
	
  46.

  	
   

  	
  Homestead

  
	
  47.

  	
   

  	
  Assignments

  
	
  48.

  	
   

  	
  Waiver of Jury Trial

  
	
  49.

  	
   

  	
  Trustee’s Fees;
  Substitute Trustee

  
	
  50.

  	
   

  	
  Power of Sale

  
	
  51.

  	
   

  	
  Recourse Provisions

  
	
  52.

  	
   

  	
  Miscellaneous

  
	
  53.

  	
   

  	
  Reconveyance of Trust
  Property

  
	
  54.

  	
   

  	
  Indemnification
  Paragraphs

  
	
  55.

  	
   

  	
  Special State
  Provisions

  



 


ii





















 


THIS DEED OF TRUST, ASSIGNMENT
OF RENTS, SECURITY AGREEMENT AND FIXTURE
FILING (the “Deed of Trust”), made as of May 13, 2003, by RKB LAKESIDE LLC, a Delaware limited liability company having its principal place
of business at c/o Republic Properties Corporation, 1280 Maryland Avenue, SW, Suite 280,
Washington D.C. 20024 (“Trustor”, as Grantor), to RICHARD W. KLEIN, JR., the
trustee hereunder, having an address at 9404 Ludgate Drive, Alexandria,
Virginia 22309 (“Trustee”, as Grantee), and to ARCHON
FINANCIAL, L.P., a Delaware limited partnership,
having its principal place of business at 600 East Las Colinas Boulevard, Suite 450,
Irving, Texas 75039 (“Beneficiary”, as Grantee).


 


W I T N E S S E T H:


 


To secure (i) the
payment of an indebtedness in the original principal sum of Nineteen Million
Five Hundred Thousand and No/100 Dollars ($19,500,000), lawful money of the
United States of America, to be paid with interest according to a certain deed
of trust note of even date herewith made by Trustor to Beneficiary (the deed of
trust note together with all extensions, renewals, modifications,
substitutions, consolidations and amendments thereof being hereinafter
collectively called the “Note”) and all
other sums due hereunder, under the other Loan Documents (hereinafter defined)
and under the Note, including, without limitation, interest, default interest,
late charges, prepayment premiums and any sums advanced by Beneficiary to
protect or preserve the hereinafter defined Trust Property (said indebtedness
and interest due under the Note and all other sums due hereunder under the Note
and the other Loan Documents being hereinafter collectively referred to as the “Debt”), and (ii) the full and prompt performance of
each and every other obligation of Trustor contained herein or in the Loan
Documents (collectively the “Obligations”), Trustor has deeded, mortgaged, given, granted,
bargained, sold, alienated, enfeoffed, conveyed, confirmed, warranted, pledged,
assigned, and hypothecated and by these presents does hereby irrevocably,
unconditionally and absolutely deed, mortgage, give, grant, bargain, sell,
alien, enfeoff, convey, confirm, warrant, pledge, assign and hypothecate unto
Trustee (in trust, with power of sale), the real property described in Exhibit A
attached hereto (the “Premises”) and the buildings, structures, fixtures, additions,
enlargements, extensions, modifications, repairs, replacements and improvements
now or hereafter located or erected thereon (the “Improvements”);


 


TOGETHER WITH: all right, title, interest and estate
of Trustor now owned, or hereafter acquired, in and to the following property,
rights, interests and estates (the Premises, the Improvements, and the
property, rights, interests and estates hereinafter described are collectively
referred to herein as the “Trust Property”):


 


(a)           all easements,
rights-of-way, strips and gores of land, streets, ways, alleys, passages, sewer
rights, water, water courses, water rights and powers, air rights and
development rights, all rights to as-extracted collateral produced from or
allocated to the Premises including without limitation oil, gas, minerals, coal
and other substances of any kind or character, and all estates, rights, titles,
interests, privileges, liberties, tenements, hereditaments and appurtenances of
any nature whatsoever, in any way belonging, relating or pertaining to the
Premises and the Improvements and the reversion and reversions, remainder and
remainders, and all land lying in the bed of any street, road, highway, alley
or avenue, opened, vacated or proposed, in front of or adjoining the Premises,
to the center line thereof and all the estates, rights, titles, interests, dower


 





















 


and rights of
dower, curtsey and rights of curtsey, property, possession, claim and demand
whatsoever, both at law and in equity, of Trustor of, in and to the Premises
and the Improvements and every part and parcel thereof, with the appurtenances
thereto;


 


(b)                                 all
machinery, furniture, furnishings, equipment, computer software and hardware,
fixtures (including, without limitation, all heating, air conditioning,
plumbing, lighting, communications and elevator fixtures) and other property of
every kind and nature, whether tangible or intangible, (including software
embedded therein), whatsoever owned by Trustor, or in which Trustor has or
shall have an interest, now or hereafter located upon the Premises and the Improvements,
or appurtenant thereto, and usable in connection with the present or future operation
and occupancy of the Premises and the Improvements and all building equipment, materials
and supplies of any nature whatsoever owned by Trustor, or in which Trustor has
or shall have an interest, now or hereafter located upon the Premises and the
Improvements, or appurtenant thereto, or usable in connection with the present
or future operation, enjoyment and occupancy of the Premises and the
Improvements (hereinafter all of the foregoing items in this subparagraph (b) collectively
referred to as the “Equipment”), including any leases of any of the Equipment, any
deposits existing at any time in connection with any of the Equipment, and the proceeds
of any sale or transfer of the foregoing, and the right, title and interest of
Trustor in and to any of the Equipment that may be subject to any “security
interests” as defined in the Uniform Commercial Code, as in effect from time to
time in the State where the Premises are located (the “Uniform Commercial Code”), superior in lien to the lien of
this Deed of Trust;


 


(c)                                  all
awards or payments, including interest thereon, that may heretofore and hereafter
be made with respect to the Premises, Improvements or the Equipment, whether
from the exercise of the right of eminent domain or condemnation (including,
without limitation, any transfer made in lieu of or in anticipation of the
exercise of said rights), or for a change of grade, or for any other injury to
or decrease in the value of the Premises, Improvements or the Equipment;


 


(d)                                 all
leases and other agreements or arrangements heretofore or hereafter entered into
affecting the use, enjoyment or occupancy of, or the conduct of any activity
upon or in, the Premises and the Improvements, including any extensions, renewals,
modifications or amendments thereof (collectively, the “Leases”)
(the tenants, lessees, licensees, occupants or other users under the Leases are
collectively hereinafter referred to as “tenants”) and all rents, rent equivalents,
moneys payable as damages or in lieu of rent or rent equivalents, royalties (including,
without limitation, all oil and gas or other mineral royalties and bonuses),
income, fees, receivables, receipts, revenues, deposits (including, without
limitation, security, utility and other deposits), accounts, cash, issues,
profits, charges for services rendered, and other payment and consideration of
whatever form or nature received by or paid to or for the account of or benefit
of Trustor or its agents or employees from any and all sources arising from or
attributable to the Premises and the Improvements (the “Rents”),
together with all proceeds from the sale or other disposition of the Leases and
the right to receive and apply the Rents to the payment of the Debt;


 


(e)                                  all
proceeds of and any unearned premiums on any insurance policies covering all or
any portion of the Premises, Improvements or Equipment, including, without
limitation, the


 


2





















 


right to receive
and apply the proceeds of any insurance, judgments, or settlements made in lieu
thereof, for damage to the Premises, Improvements or Equipment;


 


(f)                                    all
accounts, escrows, impounds, reserves, documents, instruments, chattel paper (whether
tangible or electronic), claims, deposits and general intangibles, as the
foregoing terms are defined in the Uniform Commercial Code, all promissory
notes, and all franchises, trade names, trademarks, copyrights, symbols,
service marks, books, records, recorded data of any kind or nature (regardless
of the medium), plans, specifications, schematics, designs, drawings, permits, consents,
licenses (including liquor licenses, to the extent assignable), license agreements,
operating contracts, contract rights (including, without limitation, any
contract with any architect or engineer or with any other provider of goods or
services for or in connection with any construction, repair, or other work upon
the Premises, Improvements or Equipment) and all management, franchise,
service, supply and maintenance contracts and agreements, and any other agreements,
permits or contracts of any nature whatsoever now or hereafter obtained or
entered into by or on behalf of Trustor with respect to the operation or
ownership of the Premises, Improvements or Equipment; and all approvals,
actions, refunds, rebates or reductions of real estate taxes and assessments
(and any other governmental impositions related to the Premises, Improvements
or Equipment) resulting as a result of tax certiorari or any applications or proceeding
for reduction; and all causes of action that now or hereafter relate to, are
derived from or are used in connection with the Premises, Improvements or
Equipment, or the use, operation, maintenance, occupancy or enjoyment thereof
or the conduct of any business or activities thereon (hereinafter all of the
items referred to in this subparagraph (f) collectively referred to
as the “Intangibles”);


 


(g)                                 all
letter of credit rights (whether or not the letter of credit is evidenced by a writing)
Trustor now has or hereafter acquires relating to the Premises, Improvements, Equipment,
Intangibles and other properties, rights, title and interests hereinabove
described;


 


(h)                                 all
commercial tort claims Trustor now has or hereafter acquires relating to the Premises,
Improvements, Equipment, Intangibles and other properties, rights, title and
interests hereinabove described;


 


(i)                                     any
and all monies or funds now or hereafter deposited in or with respect to any
impound, escrow or similar funds established pursuant to or held under any of
the Loan Documents, including but not limited to the Tax and Insurance Impound
and the Replacement Escrow Fund (as such terms are hereinafter defined); and


 


(j)                                     all
accounts and proceeds (cash or non-cash), products, offspring, rents and
profits from any of the foregoing, including, without limitation, those from
the conversion (whether voluntary or involuntary), sale, exchange, transfer,
collection, loss, damage, disposition, substitution or replacement of any of
the foregoing.


 


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


 


3





















 


IN TRUST, WITH
POWER OF SALE, to secure the payment to Beneficiary of the Debt at the time and
in the manner provided for its payment in the Note and in this Deed of Trust
and the performance of the Obligations provided for in the Loan Documents;


 


PROVIDED, HOWEVER,
these presents are upon the express condition that, if Trustor shall well and
truly pay to Beneficiary the Debt at the time and in the manner provided in the
Note and this Deed of Trust and shall well and truly abide by and comply with
each and every of the Obligations set forth herein, in the Note and in the
other Loan Documents in a timely manner, these presents and the estate hereby
granted shall cease, terminate and be void; provided however, that
Trustor’s obligation to indemnify and hold harmless Beneficiary pursuant to the
provisions hereof with respect to matters relating to any period of time during
which this Deed of Trust was in effect shall survive any such payment or
release.


 


All of the
covenants, conditions and agreements contained in (i) the Note and (ii) all
and any of the documents other than the Note and this Deed of Trust now or
hereafter executed by Trustor and/or others and by or in favor of Beneficiary,
which evidences, secures or guarantees all or any portion of the Debt or
otherwise is executed and/or delivered in connection with the Note and this
Deed of Trust are hereby made a part of this Deed of Trust to the same extent
and with the same force as if fully set forth herein; provided, however,
that notwithstanding any provision of this Deed of Trust to the contrary, the
obligations of the Trustor under that certain Environmental and Hazardous
Substance Indemnification Agreement of even date herewith executed by Trustor
in favor of Beneficiary (the “Environmental
Indemnity”) shall not be deemed or construed to be secured by the
lien of this Deed of Trust or otherwise restricted or affected by the
foreclosure of the lien hereof or any other exercise by Beneficiary of its
remedies hereunder or under any other Loan Document, such Environmental Indemnity
being intended by the signatories thereto to be its (or their) unsecured
obligation. The Note is evidence of that certain loan made to Trustor by
Beneficiary (the “Loan”). The
term “Loan Documents” as used in
this Deed of Trust means collectively the Note, this Deed of Trust, and any and
all other documents securing, evidencing, or guaranteeing all or any portion of
the Loan or otherwise executed and/or delivered in connection with the Loan.


 


1.                                      Certain Representations, Warranties and Covenants of
Trustor. Trustor represents, warrants, covenants and agrees as
follows:


 


(a)                                  Trustor
covenants and agrees to pay the Debt and perform the Obligations at the time
and in the manner provided in the Note and in this Deed of Trust.


 


(b)                                 Trustor
represents and warrants to Beneficiary that Trustor (i) has good, marketable,
indefeasible and insurable title to the Trust Property, (ii) is duly
organized, validly existing and in good standing under the laws of its state of
organization or incorporation; (iii) is duly qualified to transact
business and is in good standing in the state where the Premises are located, (iv) has,
to its best knowledge and belief, all necessary approvals, governmental and otherwise,
and full power and authority to own, operate and lease the Premises and Improvements,
(v) has full power, authority and legal right to mortgage, grant, bargain,
sell, pledge, assign, warrant, transfer and convey the Trust Property pursuant
to, and to keep and observe all of, the terms of this Deed of Trust and the other
Loan Documents, and (vi) possesses an unencumbered fee estate in the
Premises and the Improvements and owns the Trust Property


 


4





















 


free and clear of
all liens, encumbrances and charges whatsoever except for those exceptions
shown in the title insurance policy insuring the lien of this Deed of Trust.
Trustor represents and warrants that this Deed of Trust is and will remain a
valid and enforceable first lien on and security interest in the Trust
Property, subject only to said exceptions. Trustor further represents and
warrants that it is in compliance with the terms of that certain Declaration of
Protective Covenants and Restrictions for Westfields, The International
Corporate Center at Dulles, dated January 20, 1986 and recorded in Book
309, Page 305 of the Fairfax County land records (the “Records”), as
amended by Amendment dated August 15, 1986 recorded in Book 6463, Page 561,
by Second Amendment dated October 15, 1986 recorded in Book 6528, Page 1862,
by Third Amendment dated February 25, 1988 recorded in Book 7130, Page 1972,
by Fourth Amendment dated April 22, 1988 recorded in Book 7026, Page 1552,
by Supplementary Declaration dated April 6, 1987 recorded in Book 6724, Page 192,
by Supplementary Declaration dated April 16, 1987 recorded in Book 6724, Page 199,
and by Supplementary Declaration dated April 27, 1987 recorded in Book
6724, Page 202 (collectively, the “Declaration”). Trustor shall forever
warrant, defend and preserve such title and the validity and priority of the
lien of this Deed of Trust and shall forever warrant and defend the same to
Beneficiary against the claims of all persons whomsoever.


 


(c)                                  Trustor
covenants and agrees with Beneficiary to pay (i) all taxes, assessments, governmental
impositions, water rates and sewer rents, now or hereafter levied or assessed
or imposed against the Trust Property or any part thereof (the “Taxes”), (ii) all ground rents, maintenance charges,
other impositions, and other charges, including, without limitation, vault charges
and license fees for the use of vaults, chutes and similar areas adjoining the
Premises (the “Other Charges”), now or hereafter levied or assessed or imposed
against the Trust Property or any part thereof, and (iii) all claims and
demands of mechanics, materialmen, laborers and others for any work performed
or materials delivered to the Premises or the Improvements, when the same are
due and payable.  Trustor shall not
suffer and shall promptly cause to be paid and discharged any lien or charge
whatsoever which may be or become a lien or charge against the Trust Property
for the payment of Taxes, Other Charges and the claims and demands of mechanics,
materialmen, laborers and others for any work performed or materials delivered
to the Premises or the Improvements, subject to the provisions of Paragraph
29 below, and shall promptly pay for all utility services provided to the
Trust Property as the same become due and payable. Trustor will deliver to
Beneficiary receipts for payment or other evidence satisfactory to Beneficiary
that the Taxes and Other Charges have been so paid or are not then delinquent
no later than thirty (30) days prior to the date on which the Taxes and/or
Other Charges would otherwise be delinquent if not paid (provided, however,
that Trustor is not required to furnish such receipts for payment of Taxes in
the event that Trustor has previously deposited with Beneficiary sufficient
funds to pay all such Taxes from the Tax and Insurance Impound).


 


(d)                                 Trustor
represents and warrants to Beneficiary that (i) Trustor is not an “investment
company,” or a company “controlled” by an “investment company,” as such terms are
defined in the Investment Company Act of 1940, as amended; (ii) no part of
the proceeds of the Loan will be used for the purpose of purchasing or
acquiring any “margin stock” within the meaning of Regulations T, U or X of the
Board of Governors of the Federal Reserve System or for any other purpose which
would be inconsistent with such Regulations T, U or X or any other Regulations
of such Board of Governors, or for any purpose prohibited by legal requirements
or


 


5





















 


by the terms and
conditions of the Loan Documents; (iii) the Loan is solely for the
business purpose of Trustor, and is not for personal, family, household, or
agricultural purposes; and (iv) the Note, this Deed of Trust and the other
Loan Documents are not subject to any right of rescision, set-off, counterclaim
or defense, including the defense of usury, nor would the operation of any of
the terms of the Note, this Deed of Trust or the other Loan Documents, or the
exercise of any right thereunder, render this Deed of Trust unenforceable, in
whole or in part, or subject to any right of rescission, set-off, counterclaim
or defense, including the defense of usury.


 


(e)                                  Trustor
represents and warrants to Beneficiary that to Trustor’s best knowledge and
belief Trustor (i) has obtained all necessary certificates, licenses and
other approvals, governmental and otherwise, necessary for the operation of the
Premises and Improvements and the conduct of its business and all required
zoning, building code, land use, environmental and other similar permits or
approvals, all of which are in full force and effect as of the date hereof and
none of which are subject to revocation, suspension, forfeiture or
modification, (ii) the Premises and Improvements and the present and
contemplated use and occupancy thereof are in full compliance with all
applicable laws, (iii) the Improvements are served by all utilities
required for the current or contemplated use thereof and all utility services
are provided by public utilities and the Improvements have accepted or are
equipped to accept such utility services, (iv) all public roads and
streets necessary for service of and access to the Premises and Improvements
for the current or contemplated use thereof have been completed, are
serviceable and all-weather and are physically and legally open for use by the
public, (v) the Improvements are served by public water and sewer systems,
(vi) the Improvements are free from damage caused by fire or other casualty,
(vii) all costs and expenses of any and all labor, materials, supplies and
equipment used in the construction of the Improvements have been paid in full, (viii) except
for personal property owned by tenants, Trustor has paid in full for, and is
the owner of, all of the Equipment and other personal property used in
connection with the operation of the Improvements, free and clear of any and
all security interests, liens or encumbrances, except the lien and security
interest created hereby, and (ix) there is no proceeding pending (or
notice of such proceeding received by Trustor) for the total or partial
condemnation of, or affecting, the Premises or Improvements.


 


(f)                                    Trustor
represents and warrants to Beneficiary that to Trustor’s best knowledge and
belief, (i) all of the Improvements which were included in determining the
appraised value of the Trust Property lie wholly within the boundaries and
building restriction lines of the Premises, and no improvements on adjoining
properties encroach upon the Premises or Improvements, and no easements or
other encumbrances, except those which are insured against by title insurance, encroach
upon any of the Improvements so as to affect the value or marketability of the
Trust Property and (ii) the Premises and Improvements are assessed for
real estate tax purposes as one or more wholly independent tax lot or lots,
separate from any adjoining land or improvements not constituting a part of
such lot or lots, and no other land or improvements are assessed and taxed together
with the Premises and Improvements or any portion thereof. Trustor agrees that
if the Premises and Improvements are not taxed and assessed as one or more tax
parcels exclusive of all other real property, the term “Taxes” will include all taxes,
assessments, water rates and sewer rents now or hereafter levied, assessed or
imposed against all other property, whether or not owned by Trustor, that is
taxed and assessed as part of any tax parcel that includes all or any portion
of the Premises or Improvements.


 


6





















 


(g)                                 Trustor
represents and warrants to Beneficiary that to its best knowledge and belief,
except as expressly disclosed in writing in the Leases or the rent roll for the
Improvements delivered to Beneficiary prior to the date hereof, (i) Trustor
is the sole owner of the entire lessor’s interest in the Leases, (ii) the
Leases are valid and enforceable and in full force and effect, (iii) all
of the Leases are arm’s-length agreements with bona fide, independent third
parties, (iv) no party under any Lease is in default in any material
respect, (v) all Rents due have been paid in full, (vi) the terms of
all alterations, modifications and amendments to the Leases are reflected in
the written documents delivered to Beneficiary prior to the date hereof, (vii) none
of the Rents reserved in the Leases have been assigned or otherwise pledged or
hypothecated (except such pledge or hypothecation that will be fully terminated
and released in connection with the filing and recordation of this Deed of
Trust), (viii) none of the Rents have been collected for more than one (1) month
in advance (except a security deposit that shall not be deemed rent collected
in advance), (ix) the premises demised under the Leases have been
completed and the tenants under the Leases have accepted the same and have
taken possession of the same on a rent-paying basis, (x) there exist no offsets
or defenses to the payment of any portion of the Rents and Trustor has no
monetary obligation to any tenant under any Lease, (xi) Trustor has received no
notice from any tenant challenging the validity or enforceability of any Lease,
(xii) there are no agreements with the tenants under the Leases other than
expressly set forth in each Lease, (xiii) no Lease contains an option to
purchase, right of first refusal to purchase, or any other similar provision
respecting the Premises or Improvements, (xiv) no person has any possessory
interest in, or right to occupy, the Premises or Improvements except under and
pursuant to a Lease, (xv) all security deposits relating to the Leases
reflected on the rent roll delivered by Trustor to Beneficiary have been
collected in cash by Trustor, and (xvi) no brokerage commissions or finders
fees are due and payable regarding any Lease.


 


(h)                                 Trustor
represents and warrants to Beneficiary that (i) there is no action, suit
or proceeding, judicial, administrative or otherwise (including any
condemnation or similar proceeding), pending or, to Trustor’s best knowledge
and belief, threatened or contemplated against Trustor, Guarantor, the managing
member of Trustor or the general partner of Guarantor (such managing member of
Trustor or general partner of Guarantor being sometimes referred to as the “Governing Entity”), or any person who owns
or controls, directly or indirectly twenty percent (20%) or more of the
beneficial ownership interests of Trustor, Guarantor or either of their
respective Governing Entities, or against or affecting any portion of the Trust
Property, which has not been disclosed by Trustor in writing to Beneficiary, (ii) Trustor
is not a “foreign person” within the meaning of Section 1445(f)(3) of
the Internal Revenue Code of 1986, as amended and the related Treasury
Department regulations, (iii) during the ten (10) year period
preceding the date hereof, no petition in bankruptcy has been filed by or
against Trustor, any Governing Entity or Guarantor, or any person or entity
that controls or is controlled by Trustor or Guarantor, or any person who owns
or control, directly or indirectly, twenty percent (20%) or more of the
beneficial ownership interests of Trustor, its Governing Entity or Guarantor.


 


(i)                                     Trustor
represents and warrants to Beneficiary that to Trustor’s best knowledge and
belief the Trust Property is, and Trustor covenants and agrees to cause the
Trust Property at all times to remain, in compliance with all statutes,
ordinances, regulations and other governmental or quasi-governmental
requirements and private covenants now or hereafter relating to the ownership,
construction, use or operation of the Trust Property.


 


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(j)                                     The
Property Management Agreement, dated as of April 24, 2003, (the “Management Agreement”) between Trustor and
Republic Properties Corporation, a District of Columbia corporation (the “Manager”) pursuant to which Manager
operates the Trust Property is in full force and effect and there is no default
or violation by any party thereunder. The fee due under the Management
Agreement, and the terms and provisions of the Management Agreement, are
subordinate to this Deed of Trust and the Manager shall attorn to Beneficiary.
Trustor shall not terminate, cancel, modify, renew or extend the Management
Agreement, or enter into any agreement relating to the management or operation
of the Trust Property with Manager or any other party without the express prior
written consent of Beneficiary, which consent shall not be unreasonably
withheld. If at any time Beneficiary consents to the appointment of a new
manager, such new manager and Trustor shall, as a condition of Beneficiary’s
consent, execute a Manager’s Consent and Subordination of Management Agreement
in the form then used by Beneficiary. If Trustor proposes to enter into an
agreement relating to the management or operation of the Trust Property with
any person other than Manager or the Trustor’s Governing Entity, Beneficiary
may condition its consent to such new arrangement upon Beneficiary’s receipt of
written recommendations from the Rating Agencies (as hereinafter defined) to
the effect that the proposed change in property manager will not result in a
requalification, reduction or withdrawal of any rating initially assigned or to
be assigned in a Secondary Market Transaction (as hereinafter defined), if
Beneficiary reasonably determines it necessary or prudent to do so. Trustor
shall reimburse Beneficiary on demand for all of Beneficiary’s actual out-of
pocket costs incurred in processing Trustor request for consent to new property
management arrangements.


 


(k)                                  Trustor’s
exact legal name is correctly set forth above Trustor’s signature at the end of
this Deed of Trust. Trustor is incorporated in or organized under the laws of
the State of Delaware. Trustor will not change or permit any change to be made
in its name, identity, nature of legal form or state of its incorporation or
organization, unless in each instance Trustor shall have notified Beneficiary
in writing of such change at least 30 days prior to the effective date of such
change, and shall have first taken all actions reasonably deemed necessary by
Beneficiary, including without limitation the execution and delivery of additional
financing statements, financing statement amendments, security agreements and
other instruments, to effectively evidence or perfect Beneficiary’s security
interest in the Trust Property as a result of such changes. Trustor’s principal
place of business and its chief executive office, and the place where Trustor
keeps its books and records, including recorded data of any kind or nature,
regardless of the medium of recording, including without limitation software,
writings, plans, specifications and schematics concerning the Trust Property,
has for the preceding four months (or, if less, the entire period of the
existence of Trustor) been and will continue to be (unless Trustor notifies
Beneficiary of any change in writing at least 30 days prior to the date of such
change) at 1280 Maryland Avenue, SW, Suite 280, Washington D.C. 20024.
Trustor’s organizational identification number, if any, assigned by the State
of Delaware, is correctly set forth on the front page of this Deed of
Trust. Trustor shall promptly notify Beneficiary of any change of its
organizational number or, if Trustor does not now have an organizational
identification number but acquires one after the date hereof, of such
organizational number.


 


(l)                                     Trustor
warrants, represents and covenants that neither Trustor nor Guarantor is or
will be an entity or person (i) that is listed in the Annex to, or is
otherwise subject to the provisions of Executive Order 13224 issued on September 24,
2001 (“EO13224”), (ii) whose


 


8





















 


name appears on
the United States Treasury Department’s Office of Foreign Assets Control (“OFAC”) most current list of “Specifically Designated
National and Blocked Persons” (which list may be published from time to time in
various mediums including, but not limited to, the OFAC website,
http:www.treas.gov/ofac/tllsdn.pdf) (iii) who commits, threatens to commit
or supports “terrorism”, as that term is defined in EO 13224, or (iv) who
is otherwise affiliated with any entity or person listed above (any and all
parties or persons described in clauses [i] - [iv] above are herein referred to
as a “Prohibited Person”). Trustor
covenants and agrees that neither Trustor nor Guarantor will (x) knowingly
conduct any business, nor engage in any transaction or dealing, with any
Prohibited Person, including, but not limited to, knowingly making or receiving
any contribution of funds, goods, or services, to or for the benefit of a
Prohibited Person in violation of applicable laws, or (y) knowingly engage in
or conspire to engage in any transaction that evades or avoids, or has the
purpose of evading or avoiding, or attempts to violate, any of the prohibitions
set forth in EO13224. Trustor further covenants and agrees to deliver (from
time to time) to Beneficiary any such certification or other evidence as may be
reasonably requested by Beneficiary, confirming that (i) neither Trustor
nor Guarantor is a Prohibited Person and (ii) neither Trustor nor
Guarantor has knowingly engaged in any business, transaction or dealings with a
Prohibited Person, including, but not limited to, knowingly making or receiving
any contribution of funds, goods, or services, to or for the benefit of a
Prohibited Person in violation of applicable laws.


 


2.                                      Insurance.
Trustor, at its sole cost and expense, for the mutual benefit of Trustor
and Beneficiary, shall obtain and maintain during the entire term of this Deed
of Trust (the “Term”) the following policies of
insurance:


 


(a)                                  All
Risk or Special Causes of Loss Property Form including Business
Interruption.


 


(i)                                     Comprehensive
all risk insurance (including, without limitation, coverage against riot and
civil commotion, vandalism, malicious mischief, water, mold (based on a covered
peril), fire, burglary, theft and terrorism) on the Improvements and all other
insurable portions of the Trust Property and in each case (A) insuring
against any peril now or hereafter included within the classification “Cause of
Loss — Special Form” (also known as “All Risk of Physical Loss”), (B) in
an amount equal to 100% of the “Full
Replacement Cost,” (C) containing an agreed amount endorsement
with respect to the Improvements, Equipment and all other insurable portions of
the Trust Property waiving all co-insurance provisions, and (D) providing
that the deductible shall not exceed the sum of $25,000.00, unless agreed to in
writing by Beneficiary. For the purposes of this Deed of Trust the term “Full Replacement Cost” means the actual
replacement cost of the Improvements and Equipment (without taking into account
any depreciation, and exclusive of excavations, footings and foundations,
landscaping and paving) determined annually by an insurer, a recognized
independent insurance broker or an independent appraiser selected and paid by
Trustor and in no event less than the coverage required pursuant to the terms
of any Lease.


 


(ii)                                  Business
income interruption insurance (A) with loss payable to Beneficiary, (B) covering
losses of income and Rents derived from the Premises and


 


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Improvements and
any non-insured property on or adjacent to the Premises resulting from any risk
or casualty required to be carried under subparagraph (a)(i) of this Paragraph
2, (C) containing an extended period of indemnity endorsement which
provides that after the physical loss to the Improvements and all other
insurable portions of the Trust Property have been repaired, the continued loss
of income will be insured until such income either returns to the same level it
was at prior to the loss, or the expiration of twelve (12) months from the date
of the loss, whichever first occurs, and notwithstanding that the policy may
expire prior to the end of such period, and (D) in an amount equal to one
hundred percent (100%) of the projected gross income from the Trust Property
for a period of twelve (12) months. The amount of such business income
insurance shall be determined by Beneficiary prior to the date hereof and at
least once each year thereafter based on Trustor’s reasonable estimate of the
gross income from the Trust Property for the succeeding twelve (12) month
period. All insurance proceeds payable to Beneficiary pursuant to this Subparagraph
2(a)(ii) shall be held by Beneficiary and shall, subject to the
provisions of Paragraph 3 and Paragraph 4, be applied to the Debt
and/or disbursed to Trustor for payment of the costs and expenses to maintain
and operate the Premises and Improvements in such amounts and at such times as
Beneficiary may determine; provided, however, that nothing herein
contained shall be deemed to relieve Trustor of its obligation to pay the Debt
on the respective dates of payment provided for in the Note except to the
extent such amounts are actually paid out of the proceeds of such business
income insurance. The perils covered by this insurance shall be the same as
those accepted on the real property, including flood and earthquake, as
necessary. This coverage shall be written on the same basis as the property
policy stated in Subparagraph 2(a)(i) above.


 


(iii)                               The policy of insurance
required pursuant to Subparagraph 2(a)(i) above shall contain Demolition
Costs, Increased Cost of Construction and “Ordinance or Law Coverage” or “Enforcement”
endorsements in amounts satisfactory to Beneficiary if any of the Improvements
or the use of the Premises shall at any time constitute legal non-conforming
structures or uses or the ability to rebuild the Improvements is restricted or
prohibited.


 


(iv)                              If
windstorm coverage is excluded from the policy required under Subparagraph 2(a)(i) above,
Trustor must provide separate windstorm insurance in an amount equal to the
lesser of the original principal balance of the Loan and the maximum amount
permitted by law, if the Premises are located in area where Beneficiary
requires such insurance. Deductibles larger than five percent (5%) of the fair
market value of the Trust Property are subject to approval by Beneficiary.


 


(v)                                 At
all times during which structural construction, repairs or alterations are
being made with respect to the Improvements: (A) owner’s contingent or
protective liability insurance covering claims not covered by or under the
terms or provisions of the commercial general liability insurance policy
described in Subparagraph 2(b), and (B) the insurance provided for
in Subparagraph 2(a)(i) written on a so-called builder’s risk
completed value form (1) on a non-reporting basis, (2) against all
risks insured against pursuant to Subparagraph 2(a)(i), (3) including
permission to occupy the Improvements,


 


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and (4) with
an agreed amount endorsement waiving co-insurance provisions.  The amount of such coverage must be approved
by Beneficiary.


 


(b)                                 Commercial
General Liability/Umbrella Liability.  Comprehensive general liability insurance
against claims for personal injury, bodily injury, death or property damage occurring
upon, in or about the Premises and Improvements, such insurance (A) to be
on the so-called “occurrence” form containing minimum limits per occurrence of
$1,000,000.00 and $2,000,000.00 in the aggregate, together with excess and/or
umbrella liability in an amount of at least $10,000,000; (B) to contain a
liquor liability endorsement if any part of the Premises or Improvements are
covered by a liquor license; (C) to continue at not less than the
aforesaid limit until required to be changed by Beneficiary in writing by
reason of changed economic conditions making such protection inadequate; (D) to
cover at least the following hazards, (1) premises and operations, (2) products
and completed operations on an “if any” basis, (3) independent contractors,
(4) blanket contractual liability for all written and oral contracts, (5) contractual
liability covering the indemnities contained in Paragraph 36 hereof to
the extent the same is available, and (6) all legal liability imposed upon
Trustor and all court costs and attorneys’ fee incurred in connection with the
ownership, operation and maintenance of the Trust Property; and (E) to be
without any deductible. If Trustor has a multi-location policy or loan, the
coverage must be maintained on a “per-location basis”.


 


(c)                                  Flood Insurance.  Flood insurance will be required if any
portion of the Improvements is situated in a federally designated “special
flood hazard area” (for example, Zones A and V) as designated by the Federal
Emergency Management Agency, or any successor thereto, as an area having
special flood hazards pursuant to the National Flood Insurance Act of 1968, The
Flood Disaster Protection Act of 1973, or the National Flood Insurance Reform
Act of 1994, as each may be amended, (the “Flood
Insurance Acts”). The
minimum amount of flood insurance required is the lesser of one hundred percent
(100%) of the Full Replacement Cost (plus business interruption coverage) or the
maximum limit of coverage available for the Improvements under the Flood
Insurance Act. The maximum deductible shall be no more than five percent (5%)
of the fair market value of the Trust Property.


 


(d)                                 Sinkhole,
Mine Subsidence and Earthquake. Sinkhole, mine subsidence and earthquake
insurance shall be obtained and maintained if in the opinion of a professional
engineer with experience in this professional area there is a foreseeable risk
of loss due to this hazard. If necessary, as determined by such engineer,
Trustor shall maintain coverage in the full principal amount of the Loan.


 


(e)                                  Boiler and Machinery Coverage.  Comprehensive broad form boiler and machinery
insurance (without exclusion for explosion) covering all steam boilers, heating
and air conditioning equipment, high pressure piping, machinery and equipment,
sprinkler systems, pressure vessels, refrigeration equipment and piping, or
similar apparatus now or hereafter installed in the Improvements (including “system
breakdown coverage”) and insuring against loss of occupancy or use arising from
any breakdown, in an amount at least equal to the lesser of the outstanding
principal amount of the Note or $2,000,000.00, with a deductible no greater
than $25,000, unless approved by Beneficiary.


 


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(f)                                    Worker’s
Compensation and Employer’s Liability. Workers’ compensation, subject
to the statutory limits of the state in which the Premises are located, and
employer’s liability insurance with a limit of at least $1,000,000.00 per
accident and per disease per employee, and $1,000,000.00 for disease aggregate
in respect of any work or operations on or about the Premises and Improvements,
or in connection with the Premises and Improvements or their operation (if
applicable).


 


(g)                                 Miscellaneous.
Such other insurance as may from time to time be reasonably required by
Beneficiary in order to protect its interests, including such insurance as may
now be or hereafter becomes available that Beneficiary reasonably deems prudent
in light of then prevailing market or industry practices or applicable law.


 


All policies of insurance
(the “Policies”) required pursuant
to this Paragraph 2 (i) shall be issued by companies approved by
Beneficiary and licensed to do business in the state where the Trust Property
is located, with a claims paying ability rating of “A” or better by Standard &
Poor’s Ratings or Moody’s Investors Services, Inc. and a rating of “A: IX”
or better in the current Best’s Insurance Reports, (ii) shall with respect
to the policies described in Paragraphs 2(a)(v)(A) and 2(b), name
Beneficiary and its successors and/or assigns as their interest may appear as
an additional insured, and with respect to all other Policies provide that all
proceeds be payable to Beneficiary as loss payee, (iii) shall contain a
non-contributory standard beneficiary clause and a lender’s loss payable
endorsement, or their equivalents, naming Beneficiary as the person to which
all payments made by such insurance company shall be paid, (iv) shall
contain a waiver of subrogation against Beneficiary, (v) shall be
maintained throughout the Term without cost to Beneficiary, (vi) shall be
assigned and the originals delivered to Beneficiary (including certified copies
of the Policies in effect on the date hereof within thirty (30) days after the
closing of the Loan), provided that in lieu of providing original (or certified
copies) of the Policies, Trustor may evidence compliance with the insurance
coverage requirements of this Paragraph 2 by delivering to Beneficiary
ACORD Form 25-S, Certificate of Liability Insurance, and ACORD Form 27,
Evidence of Property Insurance, as of the date of this Deed of Trust and at
least fifteen (15) days prior to the expiration of the referenced Policies in form
and substance acceptable to Beneficiary, and each ACORD form of certificate
must specify the additional insured status and/or waivers of subrogation, state
the amounts of all deductibles and self-insured retentions, if any, set forth
notice requirements for cancellation, material change, or non-renewal of
insurance and be accompanied by copies of all required endorsements, (vii) shall
contain such provisions as Beneficiary deems reasonably necessary or desirable
to protect its interest including, without limitation, endorsements providing
that Beneficiary shall not be liable for the payment of any of the Insurance
Premiums, that neither Trustor, Beneficiary nor any other party shall be a
co-insurer under said Policies, that no act or negligence of Trustor, or anyone
acting for Trustor, or of any tenant under any Lease or other occupant, or
failure to comply with the provisions of any Policy which might otherwise
result in a forfeiture of the insurance or any part thereof, shall in any way
affect the validity or enforceability of the insurance insofar as Beneficiary
is concerned, and that Beneficiary shall receive at least thirty (30) days
prior written notice of any modification, reduction or cancellation, and (viii) shall
be satisfactory in form and substance to Beneficiary and shall be approved by
Beneficiary as to amounts, form, risk coverage, deductibles, loss payees and
insureds. Trustor shall pay the premiums for such Policies (the “Insurance Premiums”) as the same become
due and payable and shall furnish to Beneficiary evidence of the renewal of
each of the Policies with receipts for the payment of the Insurance Premiums or
other evidence of such payment reasonably satisfactory to Beneficiary
(provided, however, that Trustor is not required to furnish such receipts for
payment of Insurance


 


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Premiums in the event
that no Event of Default exists that is then continuing and Trustor has
previously deposited with Beneficiary sufficient funds to pay all such
Insurance Premiums from the Tax and Insurance Impound). If Trustor does not
furnish such evidence and receipts at least thirty (30) days prior to the
expiration of any expiring Policy, then Beneficiary may procure, but shall not
be obligated to procure, such insurance and pay the Insurance Premiums
therefor, and Trustor agrees to reimburse Beneficiary for the cost of such
Insurance Premiums promptly on demand. Trustor covenants and agrees to promptly
forward to Beneficiary a copy of each written notice received by Trustor of any
modification, reduction or cancellation of any of the Policies or of any of the
coverages afforded under any of the Policies. Within thirty (30) days after
request by Beneficiary, Trustor shall obtain such increases in the amounts of
coverage required hereunder as may be reasonably requested by Beneficiary,
taking into consideration changes in the value of money over time, changes in
liability laws, changes in prudent customs and practices, and the like. The
insurance coverages required by this Paragraph 2 may be effected under a
so-called “blanket” insurance policy, which covers other property in addition
to the Trust Property, provided that such blanket policy (or certificate issued
thereunder) shall specify, except in the case of commercial general liability
insurance, the premises address of each building comprising the Improvements
that are covered under such policy and the portion of the total coverage of
such policy that is allocated to the Trust Property. With respect to all blanket
insurance policies, Trustor shall comply with all other terms and conditions of
this Paragraph 2 as if such blanket policies were “Policies.”


 


3.                                      Casualty
and Condemnation.


 


(a)                                  If
the Trust Property shall be damaged or destroyed, in whole or in part, by fire
or other casualty (a “Casualty”) or
if Trustor shall have knowledge of the actual or threatened commencement of any
condemnation or eminent domain proceeding that would affect any portion of the
Premises or Improvements (a “Condemnation”), Trustor
shall give prompt written notice thereof to Beneficiary and, with respect to a
Condemnation, shall deliver to Beneficiary copies of any and all papers served
in connection with such Condemnation.


 


(b)                                 Beneficiary
may participate in any proceedings for any taking by any public or quasi-public
authority accomplished through a Condemnation or any transfer made in lieu of
or in anticipation of a Condemnation (which transfer in lieu and Condemnation
are collectively referred to as a “Taking”) to
the extent permitted by law. Upon Beneficiary’s written request, Trustor shall
deliver to Beneficiary all instruments requested by it to permit such
participation. Trustor shall, at its expense, diligently prosecute any such
proceedings, and shall consult with Beneficiary, its attorneys and experts, and
cooperate with them in the carrying on or defense of any such proceedings.
Trustor shall not make any consent or agree to a Taking without the prior written
consent of Beneficiary in each instance, which consent shall not be
unreasonably withheld or delayed in the case of a Taking of an insubstantial
portion of the Trust Property.


 


(c)                                  Subject
to the terms of Paragraph 4 below, all insurance proceeds payable under the
Policies and all awards or payments payable on account of a Taking (“Award”),
and all causes of action, claims, compensation, awards and recoveries for any
other damage, injury, or loss or diminution in value of the Trust Property, are
hereby assigned to and shall be paid to Beneficiary. Trustor agrees to execute
and deliver from time to time such further instruments as may be requested by
Beneficiary to confirm the foregoing assignment to Beneficiary. Trustor hereby
irrevocably constitutes and appoints Beneficiary as the attorney-in-fact of
Trustor (which


 


13





















 


power of attorney
shall be irrevocable so long as any of the Debt is outstanding, shall be deemed
coupled with an interest, shall survive the voluntary or involuntary
dissolution of Trustor and shall not be affected by any disability or
incapacity suffered by Trustor subsequent to the date hereof), with full power
of substitution, subject to the terms of Paragraph 4, to settle for, collect
and receive all proceeds of insurance and any Award and any other awards,
damages, insurance proceeds, payments or other compensation from the parties or
authorities making the same, to appear in and prosecute any proceedings
therefor and to give receipts and acquittance therefor.


 


(d)                                 Beneficiary
shall not be limited to the interest paid on an Award by the condemning
authority but shall be entitled to receive out of the Award interest at the
rate or rates provided in the Note. Trustor shall cause any Award that is
payable to Trustor to be paid directly to Beneficiary. If the Trust Property is
sold, through foreclosure or otherwise, prior to the receipt by Beneficiary of
the Award, Beneficiary shall have the right, whether or not a deficiency judgment
on the Note (to the extent permitted in the Note or herein) shall have been
sought, recovered or denied, to receive the Award, or a portion thereof, to the
extent sufficient to pay the unpaid portion, if any, of the Debt.


 


(e)                                  The
expenses incurred by Beneficiary in the adjustment and collection of the proceeds
of insurance or an Award shall become part of the Debt and be secured hereby
and shall be reimbursed by Trustor to Beneficiary upon demand or, at
Beneficiary’s election, deducted by and reimbursed to Beneficiary from such
proceeds.


 


4.                                      Use
of the Proceeds of Insurance or Award.


 


(a)                                  In
case of loss or damages covered by any of the Policies and in case of an Award
for any Taking, the following provisions shall apply:


 


(i)                                     In
the event of a Casualty that does not exceed the lesser of ten percent (10%) of
the original principal amount of the Note or $500,000.00, Trustor may settle
and adjust any claim without the consent of Beneficiary and agree with the
insurance company or companies on the amount to be paid upon the loss provided
that such adjustment is carried out in a competent and timely manner. In such
case, Trustor is hereby authorized to collect and receive any such insurance
proceeds.


 


(ii)                                  In
the event of a Casualty that does exceed $500,000.00 but does not exceed ten
percent (10%) of the original principal amount of the Note, Beneficiary may
settle and adjust any claim, provided, however, that any final agreement with
the insurance company or companies of the amount to be paid for the Casualty
shall be subject to the approval of Trustor as hereinafter provided, such approval
not to be unreasonably withheld, delayed or conditioned. In any such case, the
proceeds under the Policies shall be due and payable solely to Beneficiary and
held in escrow by Beneficiary in accordance with the terms of this Deed of
Trust. Trustor shall have the right to participate in the settlement
discussions with the applicable insurance company or companies and Beneficiary
shall keep Trustor apprised of all settlement offers and discussions and the
results thereof. Beneficiary shall provide ten (10) business days advance
written notice to Trustor of the terms and amount of any proposed final


 


14





















 


agreement on any
such claim (such proposed final amount, the “Beneficiary
Approved Settlement Amount”). If Trustor disapproves of Beneficiary’s
settlement of the claim on such terms and at such amount, Trustor must furnish
written notice of such disapproval (any such notice, an “Arbitration Notice”) to Beneficiary within
ten (10) business days after Trustor’s receipt of Beneficiary’s notice,
such notice of disapproval by Trustor to state Trustor’s election to implement
the arbitration procedure set forth in this Paragraph 4 below. Trustor’s
failure to furnish notice of disapproval prior to the expiration of such ten (10) business
day period shall constitute and be deemed Trustor’s consent and approval to
Beneficiary’s settlement of the applicable claim for an amount not less than
the Beneficiary Approved Settlement Amount.


 


(iii)                               In the event of a
Casualty that exceeds ten percent (10%) of the original principal amount of the
Note, Beneficiary may settle and adjust any claim related thereto if carried
out in accordance with standards and practices customary for the settlement and
adjustment of claims in respect of properties similar to the Trust Property
without the consent of Trustor and agree with the insurance company or
companies on the amount to be paid on the loss, and the proceeds of any such
policy shall be due and payable solely to Beneficiary and held in escrow by
Beneficiary in accordance with the terms of this Deed of Trust.


 


(iv)                              In
the event of a Taking where the Award is in an aggregate amount less than
twenty-five percent (25%) of the original principal balance of the Note and the
Taking does not affect any portion of the Improvements or any portion of the
Premises which in Beneficiary’s reasonable determination is integral to the
operation of the Premises and Improvements, or in the event of a Casualty where
the loss is in an aggregate amount less than twenty-five percent (25%) of the
original principal balance of the Note, and (A) no Event of Default has
occurred which is then continuing, and (B) in the reasonable judgment of
Beneficiary (1) the Trust Property can be restored within twelve (12) months
after insurance proceeds or the proceeds of the Award are made available and
not less than six (6) months prior to the stated Maturity Date to a
condition at least equal to the condition thereof that existed prior to the
Casualty or Taking, (2) such restored Trust Property will be such that
income from its operation is reasonably anticipated to be sufficient to pay
operating expenses of the Trust Property and debt service on the Debt in full
(such assessment by Beneficiary to include consideration of the effect of the
termination of any Leases due to such Casualty or Taking), (3) all
necessary government approvals will be obtained to allow the rebuilding and
reoccupancy of the Improvements, (4) there are sufficient sums available
(through insurance proceeds, the Award and contributions by Trustor, the full
amount of which shall at Beneficiary’s option have been deposited with
Beneficiary) for the Repair Work (defined below) (including, without
limitation, for any reasonable costs and expenses of Beneficiary to be incurred
in administering the Repair Work) and for payment of the Debt as it becomes due
and payable during the Repair Work, and (C) Trustor shall have delivered
to Beneficiary, at Trustor’s sole cost and expense, an appraisal report in form
and substance reasonably satisfactory to Beneficiary from an appraiser
reasonably approved by Beneficiary showing the value of the Trust Property as
proposed to be restored or repaired, then, and only then, the proceeds of
insurance or of the Award (after


 


15





















 


reimbursement
of any expenses incurred by Beneficiary) shall be applied in the manner set
forth below to reimburse Trustor for the cost of work of restoring, repairing,
replacing or rebuilding (collectively the “Repair
Work”) the Trust Property or the part thereof subject to the
Casualty or Taking. Trustor hereby covenants and agrees to commence and
diligently to prosecute the Repair Work; provided always, that Trustor shall
pay all costs (and if required by Beneficiary, Trustor shall deposit the total
thereof with Beneficiary in advance) of the Repair Work in excess of the net
proceeds of insurance or Award made available pursuant to the terms hereof.


 


(v)                                 Except
as provided above in Subparagraph 4(a)(iv), in the event of any Casualty
or Taking Beneficiary may elect in its absolute sole discretion and without
regard to the adequacy of the security for the Debt, to (A) apply the
proceeds of insurance collected upon any Casualty or Award collected upon any
Taking to the payment of the Debt, with or without accelerating the Maturity
Date of the Note and declaring the entire outstanding Debt to be immediately
due and payable, or (B) hold the insurance proceeds or Award proceeds and
make them available to Trustor for the cost of the Repair Work in the manner
set forth below. If Beneficiary elects under this subparagraph to apply the
proceeds of insurance or Award to the payment of the Debt and no Event of
Default has occurred which is then continuing, any such application to the Debt
shall be considered an Involuntary Prepayment not requiring payment of the
prepayment consideration set forth below. If an Event of Default has occurred
which is then continuing and any proceeds of insurance or of an Award are
applied to the Debt then Trustor shall pay to Beneficiary an additional amount
equal to the greater of (1) the Yield Maintenance Premium (hereinafter
defined), if any, that would be required hereunder if an Involuntary Prepayment
(as hereinafter defined) has been defeased, or (2) three percent (3%) of
the Involuntary Prepayment. The term “Involuntary
Prepayment” shall mean an amount or amounts that Beneficiary
receives representing (i) insurance proceeds or other payments as a result
of a Casualty, or (ii) Awards or other payments made in connection with a
Taking, and applied to the payment of the principal amount of the Debt. If
Beneficiary elects to apply the proceeds of insurance collected upon any
Casualty or Award collected upon any Taking to the payment of the Debt and the
amount of such proceeds so applied do not pay the Debt in full, Trustor shall
have the right on the next regularly scheduled payment date under the Note to
prepay the entire remaining outstanding Debt together with an additional amount
equal to the greater of (1) the Yield Maintenance Premium, if any, that
would be required hereunder if such remaining outstanding portion of the Debt
had been defeased, or (2) three percent (3%) of such remaining outstanding
balance.


 


(vi)                              In
the event Trustor is either entitled to disbursements from the insurance
proceeds or Award proceeds held by Beneficiary or Beneficiary elects to make
such proceeds available to Trustor for the Repair Work, such proceeds shall be
disbursed to Trustor for costs and expenses incurred by Trustor for the Repair
Work following (A) the receipt by Beneficiary of a written request from
Trustor for disbursement and a certification by Trustor to Beneficiary that the
applicable item of Repair Work has been completed, (B) the delivery to Beneficiary
of invoices, receipts or other evidence verifying the cost of performing the
Repair Work, and (C) for disbursement requests in excess of $10,000.00
with respect to any single item of Repair Work, or for any single


 


16





















 


item of Repair
Work that is structural in nature, delivery to Beneficiary of (1) affidavits,
lien waivers or other evidence reasonably satisfactory to Beneficiary showing
that all materialmen, laborers, subcontractors and any other parties who might
or could claim statutory or common law liens and who are furnishing or have
furnished material or labor to the Trust Property have been paid all amounts
due for labor and materials furnished to the Trust Property, (2) a
certification from an inspecting architect or other third party acceptable to
Beneficiary describing the completed Repair Work and verifying its completion
and value, and (3) a new (or amended) certificate of occupancy for the
portion of the Improvements covered by such Repair Work, if said new
certificate of occupancy is required by law, or a certification by Trustor that
no new certificate of occupancy is required by law. Beneficiary shall not be
required to make any such advances more frequently than one time in any calendar
month. Beneficiary may, in any event, require that all plans and specifications
for the Repair Work be submitted to and approved by Beneficiary prior to
commencement of the Repair Work, which approval shall not be unreasonably
withheld, delayed or conditioned. In no event shall Beneficiary assume any duty
or obligation for the adequacy, form or content of any such plans and
specifications, or for the performance, quality or workmanship of any Repair
Work. With respect to disbursements to be made by Beneficiary, no payment made
prior to the final completion of the Repair Work shall exceed ninety percent
(90%) of the value of the Repair Work performed from time to time; funds other
than proceeds of insurance or the Award shall be disbursed prior to disbursement
of such proceeds; and at all times, the undisbursed balance of such proceeds
remaining in the hands of Beneficiary, together with funds deposited for that
purpose or irrevocably committed to the satisfaction of Beneficiary by or on
behalf of Trustor for that purpose, shall be at least sufficient in the
reasonable judgment of Beneficiary to pay for the cost of completion of the
Repair Work, free and clear of all liens or claims for lien. Any surplus which
may remain out of the proceeds of insurance or Award held by Beneficiary after
payment of the costs of the Repair Work shall, in the sole and absolute
discretion of Beneficiary, be retained by Beneficiary and applied to payment of
the Debt or paid to the party or parties legally entitled to such surplus.


 


(vii)                           If Trustor delivers an
Arbitration Notice to Beneficiary, Trustor and Beneficiary shall, within five (5) business
days after Beneficiary’s receipt of any such notice, jointly designate an
independent and unaffiliated individual who has not less than ten (10) years
experience with respect to settlement of claims resulting from casualties in
respect of properties similar to the Premises and Improvements. Not later than
five (5) business days after such joint designation of such individual,
each of Trustor and Beneficiary shall submit to such individual its separate
determinations of the commercially reasonable settlement amount for the
applicable Casualty together with any documentation and other backup therefor
and shall simultaneously therewith provide a copy of such submission to the
other party. The individual so appointed shall review the applicable
submissions and within ten (10) days after such individual’s designation
select one of the submitted settlement amounts as more accurately reflective of
the commercially reasonable settlement amount. Notice of such selection shall
be furnished to Trustor and Beneficiary by the applicable individual prior to
the expiration of such ten-day period. Upon such selection, Beneficiary shall
be authorized to settle the applicable


 


17





















 


claim for an
amount not less than the settlement amount so selected without any further
right of consent of Trustor.


 


(viii)                        In the event that Trustor and
Beneficiary are unable to agree on one individual to act as arbitrator within
the five (5) business day period following Beneficiary’s receipt of the
Arbitration Notice as contemplated under subparagraph (vii) above, then,
in such case, the procedure set forth in this subparagraph (viii) shall be
observed in lieu thereof. Not later than five (5) business days after
Beneficiary’s receipt of the applicable notice to arbitrate, Trustor and
Beneficiary shall each designate an independent and unaffiliated individual who
has not less than ten (10) years experience with respect to settlement of
claims resulting from casualties in respect of properties similar to the
Premises and Improvements and notify the other party of such appointment by
identifying the appointee. Not later than five (5) business days after
both arbitrators are appointed, the two selected arbitrators shall select a
third arbitrator who shall also be an independent and unaffiliated individual
who has not less than ten (10) years experience with respect to settlement
of claims resulting from casualties in respect of properties similar to the
Premises and Improvements, such selection to take place within five (5) business
days after such arbitrator’s appointment. Trustor and Beneficiary shall submit
to such third arbitrator their separate determinations of the commercially
reasonable settlement amount together with any documentation and other backup
therefor and shall simultaneously therewith provide a copy of such submission
to the other party. The third arbitrator so appointed shall review the
applicable submissions and within ten (10) days after such individual’s
designation select one of the submitted settlement amounts as more accurately
reflective of the commercially reasonable settlement amount. Notice of such
selection shall be furnished to Trustor and Beneficiary by the applicable
individual prior to the expiration of such ten-day period. Upon such selection,
Beneficiary shall be authorized to settle the applicable claim for an amount
not less than the settlement amount so selected without any further right of
consent of Trustor.


 


(ix)                                Time
shall be of the essence with respect to the performance of any and all rights
and obligations under this Paragraph 4. The decisions of the
arbitrator(s), if any, engaged under this Paragraph 4, shall be final
and binding and may not be appealed to any court of competent jurisdiction or
otherwise except upon a claim of fraud or corruption. All of the costs and
expenses of the arbitrator(s), if any, engaged under this Paragraph 4,
shall be the sole responsibility of Trustor.


 


(x)                                   Notwithstanding
anything to the contrary contained herein, the proceeds of insurance or Award
disbursed to Trustor in accordance with the terms and provisions of this Deed
of Trust shall be reduced by the reasonable costs (if any) incurred by
Beneficiary in the adjustment and collection thereof and in the reasonable
costs incurred by Beneficiary of paying out such proceeds (including, without
limitation, reasonable attorneys’ fees and costs paid to third parties for inspecting
the Repair Work and reviewing the plans and specifications therefor).


 


(b)                                If
Trustor undertakes the Repair Work, Trustor shall promptly and diligently, at
Trustor’s sole cost and expense and regardless of whether the insurance
proceeds or Award, as


 


18





















 


appropriate, shall
be sufficient for the purpose, complete the Repair Work to restore the Trust
Property as nearly as possible to its value, condition and character
immediately prior to the Casualty or Taking in accordance with the foregoing
provisions.


 


(c)                                  Any
reduction in the Debt resulting from Beneficiary’s application of any sums
received by it under this Paragraph 4 shall take effect only when
Beneficiary actually receives such sums and elects to apply such sums to the
Debt and, in any event, the unpaid portion of the Debt shall remain in full
force and effect and Trustor shall not be excused in the payment thereof.
Partial payments received by Beneficiary, as described in the preceding sentence,
shall be applied against the Note consistent with the prepayment provisions
described therein for casualty or condemnation proceeds.


 


5.                                      Tax
and Insurance Impound. As of the date of this Deed of Trust, Trustor
shall pay to Beneficiary on demand for deposit into the Tax and Insurance
Impound (as defined below) an amount (i) equal to one-twelfth of the Taxes
estimated by Beneficiary to be due to the applicable taxing authorities as of
the date such Taxes are first due and payable without penalty or interest after
the date hereof multiplied by the number of months elapsed from and including
the first month for which such Taxes have been assessed to and including the
first month occurring after the month in which this Deed of Trust becomes
effective, and (ii) one-twelfth of the Insurance Premiums that Beneficiary
estimates will be payable for the renewal of the coverage afforded by the
Policies upon the expiration thereof multiplied by the number of months elapsed
from and including the first month in which the currently effective Policies
became effective to and including the first month occurring after the month in
which this Deed of Trust becomes effective. Thereafter, Trustor shall pay to
Beneficiary on the first day of each calendar month (a) one-twelfth of the
Taxes that Beneficiary estimates will be payable during the next ensuing twelve
(12) months in order to accumulate with Beneficiary sufficient funds to pay all
such Taxes at least thirty (30) days prior to their respective due dates, and (b) one-twelfth
of the Insurance Premiums that Beneficiary estimates will be payable for the
renewal of the coverage afforded by the Policies upon the expiration thereof in
order to accumulate with Beneficiary sufficient funds to pay all such Insurance
Premiums at least thirty (30) days prior to the expiration of the Policies (the
fund into which said amounts in (a) and (b) above shall be deposited
is hereinafter called the “Tax and Insurance Impound”). The monthly payment into the Tax
and Insurance Impound and the payments of interest payable pursuant to the Note
shall be added together and shall be paid as an aggregate sum by Trustor to
Beneficiary. Trustor agrees to notify Beneficiary immediately of any changes to
the amounts, schedules and instructions for payment of any Taxes and Insurance
Premiums of which it has or obtains knowledge and authorizes Beneficiary or its
agent to obtain the bills for Taxes and Other Charges directly from the
appropriate taxing authority. Trustor hereby pledges to Beneficiary and grants
to Beneficiary a security interest in any and all monies now or hereafter
deposited in the Tax and Insurance Impound as additional security for the
payment of the Debt. Provided that there are sufficient amounts on deposit in
the Tax and Insurance Impound and no Event of Default exists that is then
continuing, Beneficiary will apply the Tax and Insurance Impound to payments of
Taxes and Insurance Premiums required to be made by Trustor pursuant hereto. In
making any payment relating to the Tax and Insurance Impound, Beneficiary may
do so according to any bill, statement or estimate procured from the
appropriate public office (with respect to Taxes) or insurer or agent (with
respect to Insurance Premiums), without inquiry into the accuracy of such bill,
statement or estimate or into the validity of any tax, assessment, sale,
forfeiture, tax lien or title or claim thereof. If the amounts on deposit in
the Tax and Insurance Impound shall exceed the amounts due for Taxes and
Insurance Premiums, Beneficiary shall, in its sole discretion, return any
excess to Trustor or


 


19





















 


credit such excess
against future payments to be made to the Tax and Insurance Impound. In
allocating such excess, Beneficiary may deal with the person shown on the
records of Beneficiary to be the owner of the Trust Property. If at any time
Beneficiary determines that the amounts on deposit in the Tax and Insurance
Impound are not or will not be sufficient to pay the Taxes and Insurance
Premiums, Beneficiary shall notify Trustor of such determination and Trustor
shall increase its monthly payments to Beneficiary by the amount that
Beneficiary estimates is sufficient to make up the deficiency at least thirty
(30) days prior to delinquency of the Taxes and/or expiration of the Policies,
as the case may be. Whenever an Event of Default exists that is then
continuing, Beneficiary may apply any sums then present in the Tax and
Insurance Impound to the payment of the Debt in any order in its sole discretion.
Until expended or applied as above provided, any amounts in the Tax and
Insurance Impound shall constitute additional security for the Debt. The Tax
and Insurance Impound shall not constitute a trust fund and may be commingled
with other monies held by Beneficiary. Unless otherwise required by applicable
law, Trustor shall not receive interest or other earnings on the Tax and
Insurance Impound, which shall be held in Beneficiary’s name at a financial
institution selected by Beneficiary in its sole discretion. If Beneficiary so
elects at any time, Trustor shall provide, at Trustor’s expense, a tax service
contract for the Term issued by a tax reporting agency acceptable to
Beneficiary. If Beneficiary does not so elect, Trustor shall reimburse
Beneficiary for the cost of making annual tax searches throughout the Term.


 


6.                                      Escrow
Funds.


 


(a)                                  Replacement
Escrow


 


Trustor shall pay $3,475 to Beneficiary on the first day of each
calendar month, as a reserve for future replacements and repairs required to be
made to the Trust Property (the “Replacement Escrow Fund”). Beginning January 1, 2005, and
every January 1st thereafter for the term of the Loan, Trustor shall pay
Beneficiary an amount equal to one-twelfth of 102.5% of the previously required
annual Replacement Escrow Fund amount on each monthly payment date for one year
(or until the Loan is defeased in full pursuant to this Deed of Trust). Trustor
hereby pledges to Beneficiary any and all monies now or hereafter deposited in
the Replacement Escrow Fund as additional security for the payment of the Debt.
Provided that no Event of Default has occurred which is then continuing,
Beneficiary shall make disbursements from the Replacement Escrow Fund as
requested, in writing, by Trustor, and approved by Beneficiary in its
reasonable discretion, on a quarterly basis in increments of no less than
$5,000 upon delivery by Trustor of copies of paid invoices (or with respect to
requests in excess of $10,000, unpaid invoices) for the amounts requested, a
certification from the Trustor stating: (a) the nature and type of the
related replacement or repair, (b) that the related replacement or repair
(or the portion thereof for which disbursements have been received or
requested) has been completed in a good and workmanlike manner and (c) that
the related replacement or repair (or the portion thereof for which
disbursements have been received or requested) has been paid for in full (or,
with respect to requests in excess of $10,000, will be paid for in full from
the requested disbursement) and, if required by Beneficiary, lien waivers and
releases from all parties furnishing materials and/or services in connection
with the requested payment. Any disbursement by Beneficiary hereunder for a
capital item in excess of $10,000 and not already paid for by Trustor, shall be
made by joint check, payable to Trustor and the applicable contractor,
supplier, materialman, mechanic, subcontractor or other party to whom payment
is due in connection with such capital item. Beneficiary may require an
inspection of the Trust Property at Trustor’s expense prior to making a


 


20





















 


disbursement in
order to verify completion of replacements and repairs (or the portion thereof
for which disbursements have been received or requested) for which
reimbursement is sought. The Replacement Escrow Fund shall be held in an
interest bearing account in Beneficiary’s name at a financial institution
selected by Beneficiary in its sole discretion. All earnings or interest on the
Replacement Escrow Fund shall be and become a part of such Replacement Escrow
Fund and shall be disbursed as provided in this Paragraph 6(a). All
costs and expenses incurred by Beneficiary in establishing and maintaining such
interest bearing account shall be paid by Trustor, Beneficiary may charge such
costs and expenses directly against the Replacement Escrow Fund, and Trustor
shall thereafter promptly pay to Beneficiary for deposit into the Replacement
Escrow Fund the full amount of such charges and expenses. Upon the occurrence
and continuance of an Event of Default, Beneficiary may apply any sums then
present in the Replacement Escrow Fund to the payment of the Debt in any order
in its sole discretion. The Replacement Escrow Fund shall not constitute a
trust fund and may be commingled with other monies held by Beneficiary.
Following the delivery and recording of a satisfaction, release, reconveyance
or discharge of this Deed of Trust duly executed by Beneficiary, any funds
remaining on deposit in the Replacement Escrow Fund will be disbursed to
Trustor.


 


(b)                                  General
Rollover Reserve


 


Trustor shall pay $15,333 (such amount, the “General Rollover Reserve Base Monthly Payment”)
to Beneficiary on the first day of each calendar month, which shall be
deposited with and held by Beneficiary for tenant improvement and leasing
commission obligations incurred following the date hereof (the “Rollover
Escrow Fund”). Beginning
January 1, 2005, and every January 1st thereafter for the term of the
Loan, Trustor shall pay Beneficiary an amount equal to one twelfth of 102.5% of
the previously required annual Rollover Escrow Fund amount on each monthly
payment date for one year (or until the Loan is defeased in full pursuant to Paragraph
11 hereof). Trustor hereby pledges to Beneficiary any and all monies now or
hereafter deposited in the Rollover Escrow Fund as additional security for the
payment of the Debt. If on May 1, 2007, the balance in the Rollover Escrow
Fund is less than Four Hundred Sixty Thousand Dollars ($460,000), then, in
addition to the General Rollover Reserve Base Monthly Payment, Trustor shall
deposit to the Rollover Escrow Fund the General Rollover Monthly Shortfall
(defined below) commencing on May 1, 2007, and continuing on the first day
of each calendar month to and including April 1, 2008. In lieu of payment
of the General Rollover Monthly Shortfall, Trustor may elect to deliver the
Shortfall Letter of Credit (defined below) to Beneficiary.


 


Provided that no Event of Default has occurred which is then continuing,
Beneficiary shall make disbursements from cash deposits held in the Rollover
Escrow Fund for expenses reasonably incurred by Trustor for new Leases entered
into by Trustor in accordance with the provisions of Paragraph 7 below.
All such expenses shall be approved by Beneficiary in its reasonable
discretion. Provided that no Event of Default shall exist and remain uncured,
Beneficiary shall make disbursements as requested by Trustor on a monthly basis
in increments of no less than $1,000.00 upon delivery by Trustor of copies of
paid invoices (or with respect to requests in excess of $10,000.00, unpaid
invoices) for the amounts requested for tenant improvements and leasing
commissions, the newly executed Lease, extension, renewal, or modification, with
a certification for tenant improvement disbursements from the Trustor stating (i) the
nature and type of the related improvement, (ii) that the related
improvement (or the


 


21





















 


portion thereof
for which disbursements have been received or requested) has been completed in
a good and workmanlike manner and (iii) that the related improvement (or
the portion thereof for which disbursements have been received or requested)
has been paid in full (or, with respect to requests in excess of $10,000.00,
will be paid for in full from the requested disbursement) or a certification
for leasing commission disbursements stating that such leasing commission has
been paid in full (or, with respect to requests in excess of $10,000.00, will
be paid for in full from the requested disbursement) and, if required by
Beneficiary, lien waivers and releases from all parties furnishing materials
and/or services in connection with the requested payment. Any disbursement by
Beneficiary hereunder in excess of $10,000.00 and not already paid for by
Trustor, shall be made by joint check, payable to Trustor and the applicable
contractor, supplier, materialman, mechanic, subcontractor, broker or other
party to whom payment is due in connection with such disbursement. Beneficiary
may require an inspection of the Trust Property at Trustor’s expense prior to
making a disbursement in order to verify completion of improvements (or the
portion thereof for which disbursements have been received or requested) for
which reimbursement is sought. The Rollover Escrow Fund shall be held in an
interest bearing account in Beneficiary’s name at a financial institution
selected by Beneficiary in its sole discretion. All earnings or interest on the
Rollover Escrow Fund shall be and become a part of such Rollover Escrow Fund
and shall be disbursed as provided in this Paragraph 6(b). All costs and
expenses incurred by Beneficiary in establishing and maintaining such interest
bearing account shall be paid by Trustor, Beneficiary may charge such costs and
expenses directly against the Rollover Escrow Fund, and Trustor shall
thereafter promptly pay to Beneficiary for deposit into the Rollover Escrow
Fund the full amount of such charges and expenses. Upon the occurrence of an
Event of Default that is then continuing, Beneficiary may apply any sums then
present in the Rollover Escrow Fund to the payment of the Debt in any order in
its sole discretion. The Rollover Escrow Fund shall not constitute a trust fund
and may be commingled with other monies held by Beneficiary. Following the
delivery and recording of a satisfaction, release, reconveyance or discharge of
this Deed of Trust duly executed by Beneficiary, any funds remaining on deposit
in the Rollover Escrow Fund will be disbursed to Trustor.


 


(c)                                  Cancellation
Funds Escrow


 


Trustor shall pay to Beneficiary all funds received by Trustor from
tenants in connection with the cancellation of any Leases (hereinafter “Cancelled Lease”), including, but not limited to, any cancellation
fees, penalties, tenant improvements, leasing commissions or other charges
(together the “Cancellation Payments”), and such funds shall be held and
disbursed by Beneficiary pursuant to the terms of this subparagraph (the “Cancelled
Lease Escrow Fund”). Notwithstanding the foregoing, at its
sole election Beneficiary may cause all or any portion of the Cancellation
Payments to be deposited into the Rollover Escrow Fund and disbursed, in
accordance with the terms governing the Rollover Escrow Fund, for expenses
relating to the releasing of the space with respect to which they were paid,
provided that upon execution of a New Lease (hereafter defined) Beneficiary
shall cause all or a part of the balance in the Cancelled Lease Escrow Fund to
be deposited (to the extent funds are available therefor) into the Rollover
Escrow Fund and held pursuant to the terms thereof in an amount equal to the
leasing commissions, tenant improvement and other allowances and other costs
related to the New Lease required to be paid by the landlord thereunder.
Trustor hereby pledges to Beneficiary any and all monies now or hereafter
deposited in the Cancelled Lease Escrow Fund as additional security for


 


22





















 


the payment of the
Debt. Provided that no Event of Default has occurred that is then continuing,
Beneficiary shall make disbursements from the Cancelled Lease Escrow Fund as
follows: (i) the entire amount on deposit in the Cancelled Lease Escrow
Fund shall be disbursed to Trustor following receipt by Beneficiary of a fully
executed Lease covering the space that had been covered by the Cancelled Lease
and which otherwise complies with the requirements for Leases entered into by
Trustor in accordance with Paragraph 7 below and the separate Assignment
of Leases and Rents from Trustor to Beneficiary (a “New Lease”), a signed tenant
estoppel certificate in form and substance reasonably satisfactory to
Beneficiary from the tenant under the New Lease to the effect that (1) Trustor
has delivered possession of the space covered by such New Lease to such tenant,
(2) all tenant improvements obligations of landlord under such New Lease
have been satisfied, (3) tenant knows of no defaults on such landlord’s
part under such New Lease, and (4) tenant is paying rent as required under
such New Lease without setoff or deduction, and (ii) prior to the time, if
ever, that Trustor satisfies the conditions of clause (i) immediately
preceding, Beneficiary shall disburse to Trustor on the first day of each
calendar month commencing the first full calendar month after Beneficiary’s
receipt from Trustor of the Cancellation Payments an amount equal to the
monthly base rental payment that was last payable under the Cancelled Lease,
which disbursement shall continue each month until the earlier of either the
disbursement of all funds in the Cancelled Lease Escrow Fund or the occurrence
of an Event of Default and until such Event of Default is cured. The Cancelled
Lease Escrow Fund shall be held in an interest bearing account in Beneficiary’s
name at a financial institution selected by Beneficiary in its sole discretion.
All earnings or interest on the Cancelled Lease Escrow Fund shall be and become
a part of such Cancelled Lease Escrow Fund and shall be disbursed as provided
in this Paragraph 6(c). All costs and expenses charged by the financial
institution where the Cancelled Lease Escrow Fund account is held shall be paid
by Trustor; Beneficiary may charge such costs and expenses directly against the
Cancelled Lease Escrow Fund; and Trustor shall thereafter pay to Beneficiary on
demand for deposit into the Cancelled Lease Escrow Fund the full amount of such
costs and expenses. Upon the occurrence of an Event of Default that is then
continuing, Beneficiary may apply any sums then present in the Cancelled Lease
Escrow Fund to the payment of the Debt in any order in its sole discretion. The
Cancelled Lease Escrow Fund shall not constitute a trust fund and may be
commingled with other monies held by Beneficiary. Following the delivery and
recording of a satisfaction, release, reconveyance or discharge of this Deed of
Trust duly executed by Beneficiary, any funds remaining on deposit in the
Cancelled Lease Escrow Fund will be disbursed to Trustor.


 


(d)                                  Ford
- Failure to Renew; Letter of Credit


 


Trustor shall deliver the Ford Letter of Credit (defined below) to
Beneficiary on May 1, 2004, provided, however, that if Trustor has
furnished to Beneficiary a copy of a notice executed by Ford unconditionally
exercising it option to renew the term of the Ford Lease (defined below)
through May 31, 2010, in accordance with and on the terms of such lease,
the aforesaid obligation to deliver the Ford Letter of Credit, shall be null
and void. In the event that Trustor is required to deliver the Ford Letter of
Credit, Beneficiary shall release such letter of credit to Trustor upon the
satisfaction of the Release Condition (defined below) in respect of the
premises demised under the Ford Lease.


 


23





















 


(e)                                  Lakeside
II Datatrac - Failure to Renew; Letter of Credit


 


Trustor shall deliver the Lakeside II Datatrac Letter of Credit
(defined below) to Beneficiary on January 1, 2006, provided, however,
that if Trustor has furnished to Beneficiary a copy of a notice executed by
Datatrac unconditionally exercising it option to renew the term of the Lakeside
II Datatrac Lease (defined below) through January 31, 2012, in accordance
with and on the terms of such lease, the aforesaid obligation to deliver the
Lakeside II Datatrac Letter of Credit, shall be null and void. In the event
that Trustor is required to deliver the Lakeside II Datatrac Letter of Credit,
Beneficiary shall release such letter of credit to Trustor upon the
satisfaction of the Release Condition in respect of the premises demised under
the Lakeside II Datatrac Lease.


 


(f)                                    Lakeside
I Datatrac - Failure to Renew; Letter of Credit


 


Trustor shall
deliver the Lakeside I Datatrac Letter of Credit (defined below) to Beneficiary
on June 1, 2007, provided, however, that if Trustor has furnished
to Beneficiary a copy of a notice executed by Datatrac unconditionally
exercising it option to renew the term of the Lakeside I Datatrac Lease
(defined below) through August 31, 2013, in accordance with and on the
terms of such lease, the aforesaid obligation to deliver the Lakeside I
Datatrac Letter of Credit, shall be null and void. In the event that Trustor is
required to deliver the Lakeside I Datatrac Letter of Credit, Beneficiary shall
release such letter of credit to Trustor upon the satisfaction of the Release
Condition in respect of the premises demised under the Lakeside I Datatrac
Lease.


 


(g)                                 Letter
of Credit Provisions; Release Conditions


 


For purposes
hereof, the following terms shall have the following meanings:


 


“Ford Lease” shall mean that certain Lease dated
July 24, 1989 between FORD MOTOR LAND DEVELOPMENT CORPORATION), as
landlord, and FORD MOTOR COMPANY (“Ford”), as tenant, for premises in 14104 -14108
Newbrook Drive, as amended by Lease Amendment No. 1 dated May 28,
1998 between CP/HERS Lakeside, L.P., as landlord, and Ford.


 


“Ford Letter of Credit” shall mean a Letter of Credit in
the amount of $1,000,000.


 


“General Rollover Monthly Shortfall” shall mean the amount obtained by
subtracting (x) the sum of (i) the amount
held in the Rollover Escrow Fund established and funded in accordance with
subparagraph (b) above as of May 1, 2007 (giving effect to any
deposits thereto by Trustor on May 1, 2007) and (ii) the aggregate
amount of monthly deposits scheduled to be deposited to the Rollover Escrow
Fund for the period June 1, 2007, through May 1, 2008, from (y) $460,000, and then dividing such amount by twelve (12).


 


“Lakeside I Datatrac Letter of Credit” shall mean a Letter of Credit in
the amount of $1,000,000.


 


“Lakeside II Datatrac Letter of Credit” shall mean a Letter of Credit in
the amount of $1,000,000.


 


24





















 


“Lakeside I Datatrac Lease” shall mean that certain Deed of
Lease dated August 7, 2001 between CP/HERS LAKESIDE, L.P. as landlord, and
DATATRAC INFORMATION SERVICES, INC., as tenant, for premises in 14104-14116
Newbrook Drive.


 


“Lakeside II Datatrac Lease” shall mean that certain Deed of
Lease dated June 29, 1999 between CP/HERS LAKESIDE, L.P. (“Landlord”), as
landlord, and DATATRAC INFORMATION SERVICES, INC. (“Datatrac”) as tenant, for
premises in 14120 Newbrook Drive, as amended by (i) First Amendment to
Deed of Lease dated August 23, 2001, between Landlord and Datatrac, and
Second Amendment to Deed of Lease dated August 7, 2001 between Landlord
and Datatrac.


 


“Letter of Credit” shall mean an unconditional
irrevocable letter of credit naming Beneficiary as the party entitled to demand
payment thereunder, issued by a national bank or other financial institution
with a claims paying ability rating of “A” or better by Standard &
Poor’s Ratings or Moody’s Investors Services, Inc., otherwise in form and
substance satisfactory in all respects to Beneficiary in its sole discretion.


 


“Release Condition” shall mean with respect to any new
or renewal Lease in respect of the premises demised pursuant to the Ford Lease,
the Lakeside II Datatrac Lease or the Lakeside I Datatrac Lease, as applicable,
Beneficiary’s receipt and approval of (i) a new or renewal Lease which
shall have an initial term of not less than five (5) years, shall provide
for effective rentals rates and economic terms at least as favorable as
provided during the final year of the Ford Lease, the Lakeside II Datatrac
Lease or the Lakeside I Datatrac Lease, as applicable, and otherwise satisfying
the terms, provisions and conditions of this Deed of Trust; (ii) an
estoppel certificate or certificate for the benefit of Beneficiary from the new
or renewal tenant certifying for the benefit of Beneficiary that Trustor has
delivered possession of the applicable premises to such tenant, that any and
all tenant improvement allowances, lease extension incentive fees and any and
all other similar allowances, fees or payments payable by Trustor pursuant to
such new or renewal lease have been paid in full, that such tenant is paying
rent on a current basis, that no default under its lease exists, and which is
otherwise consistent with the form of estoppel certificate utilized by
Beneficiary in connection with the origination of the Loan; and (iii) a
certificate for the benefit of Beneficiary from the broker (if any) confirming
that any and all fees, commission and other charges due and payable to such
broker in respect of the applicable lease has been paid in full.


 


“Shortfall Letter of Credit” shall mean a Letter of Credit in
the amount of the General Rollover Monthly Shortfall, multiplied by twelve
(12).


 


Each Letter of
Credit delivered by Trustor shall be held by Beneficiary as additional security
for the Loan, subject to release in accordance with the terms, provisions and
conditions of this subparagraph. By and upon delivery of any Letter of Credit,
Trustor shall thereby be deemed to have pledged to Beneficiary such Letter of
Credit as additional security for the payment of the Debt without the
requirement for the execution and delivery of any other document or instrument.
Trustor shall execute and deliver to Beneficiary such documents and instruments
as Beneficiary may require to create and perfect such security interest.
Without limiting the generality of any other provisions of this Deed of Trust,
time is of the essence with respect to Trustor’s delivery of each Letter of
Credit on or before the applicable date required under this Deed of Trust. If
Trustor fails to timely deliver any Letter of Credit as


 


25





















 


required hereby, Trustor
shall have the right to declare an immediate Event of Default hereunder without
any requirement of notice, grace or cure periods.


 


Prior to the
occurrence of the Release Condition (defined below) applicable to a delivered
Letter of Credit, Trustor shall maintain such Letter of Credit in full force
and effect. If, at any time, either the issuer of the Letter of Credit
furnishes notice of its election not to renew the Letter of Credit or,
alternatively, the Letter of Credit shall expire by its terms as of a date
certain and Trustor has failed to deliver to Beneficiary, on or before the date
which is thirty (30) days prior to such expiration date, a substitute letter of
credit satisfying the conditions and requirements hereof, then, in either such
case, Beneficiary shall have the right, at any time thereafter, without the
requirement of any notice to Trustor and without regard to the existence of any
Event of Default hereunder, to draw on such outstanding Letter of Credit and
deposit the proceeds thereof in an interest bearing account in Beneficiary’s
name at a financial institution selected by Beneficiary in its sole discretion.
The aforesaid right of Beneficiary shall be exercised in its sole and absolute
discretion, and the granting of such right shall not be deemed or construed in
any manner as conferring any benefit to Trustor or imposing any restriction on
Beneficiary in the exercise of such discretion. Following any such draw and
deposit, the proceeds shall thereupon become funds subject to the terms,
provisions and conditions hereof, including the pledge thereof as additional
security for the Debt without the requirement for the execution and delivery of
any other document or instrument. All interest or other earnings on such funds
shall be and become part of such escrow fund. In addition, upon the occurrence
of an Event of Default that is then continuing, Beneficiary may draw and apply
the proceeds of the Letter of Credit, or the escrow funds to the extent the
Letter of Credit has previously been drawn, to the payment of the Debt in such
order as Beneficiary shall determine in its sole discretion. Promptly following
the satisfaction of the Release Condition applicable to any delivered Letter of
Credit, and provided that no Event of Default, or event which with notice, the
passage of time, or both, would constitute an Event of Default, exists
hereunder that is then continuing, Beneficiary shall release such applicable
Letter of Credit (or any funds held in the escrow established following a draw
under the applicable Letter of Credit) to Trustor. Following the delivery and
recording of a satisfaction, release, reconveyance or discharge of this Deed of
Trust duly executed by Beneficiary, all such Letters of Credit will be returned
to Trustor


 


7.                                      Leases
and Rents.


 


(a)                                  For
Ten Dollars ($10.00) and other good and valuable consideration, including the
indebtedness evidenced by the Note, the receipt and sufficiency of which are
hereby acknowledged and confessed, Trustor has absolutely GRANTED, BARGAINED,
SOLD, and CONVEYED, and by these presents does absolutely and unconditionally
GRANT, BARGAIN, SELL, and CONVEY the Rents unto Beneficiary, in order to
provide a source of future payment of the Debt subject only to the permitted
exceptions applicable thereto and the License (herein defined), it being the
intention of Trustor and Beneficiary that this conveyance be presently and
immediately effective; TO HAVE AND TO HOLD the Rents unto Beneficiary, forever,
and Trustor does hereby bind itself, its successors, and assigns to warrant and
forever defend the title to the Rents unto Beneficiary against every person
whomsoever lawfully claiming or to claim the same or any part thereof;
provided, however, that if Trustor shall pay or cause to be paid the Debt as
and when the same shall become due and payable and shall perform and discharge
or cause to be performed and discharged the Obligations on or before the date
the same are to be performed


 


26





















 


and discharged,
then this assignment shall terminate and be of no further force and effect, and
all rights, titles, and interests conveyed pursuant to this assignment of rents
shall become vested in Trustor without the necessity of any further act or
requirement by Trustor, Trustee, or Beneficiary.


 


(b)                                 Beneficiary
hereby grants to Trustor a limited license (the “License”) subject to termination of the License in accordance
with the applicable terms and provisions of Paragraph 25 hereof, to
exercise and enjoy all incidences of the status of a lessor with respect to the
Rents, including without limitation, the right to collect, demand, sue for,
attach, levy, recover, and receive the Rents, and to give proper receipts,
releases, and acquittances therefor. Trustor hereby agrees to receive all Rents
and hold the same as a trust fund to be applied, and to apply the Rents so
collected, first to the payment of the Debt, next to the performance and
discharge of the Obligations, and next to the payment of all expenses
associated with the ownership and operation of the Premises and Improvements.  Thereafter, Trustor may use the balance of the
Rents collected in any manner not inconsistent with the Loan Documents. Neither
this Assignment nor the receipt of Rents by Beneficiary shall effect a pro
tanto payment of any portion of the Debt, and such Rents shall be applied as
provided in this Paragraph 7.  Furthermore,
and notwithstanding the provisions of this Paragraph 7, no credit shall
be given by Beneficiary for any Rents until the money collected is actually
received by Beneficiary, and no such credit shall be given for any Rents after
termination or revocation of the License (except to the extent, if any, that
Rents are actually received by Beneficiary and applied upon or after said
receipt to the Debt), after foreclosure or other transfer of the Trust Property
(or part thereof from which Rents are derived pursuant to this Deed of Trust)
to Beneficiary or any other third party.


 


(c)                                  Upon
receipt from Beneficiary of a Lease Rent Notice (as defined in Paragraph 25
hereof), each lessee under the Leases is hereby authorized and directed to pay
directly to Beneficiary all Rents thereafter accruing, and the receipt of Rents
by Beneficiary shall be a release of such lessee to the extent of all amounts
so paid. The receipt by a lessee under the Leases of a Lease Rent Notice shall
be sufficient authorization for such lessee to make all future payments of
Rents directly to Beneficiary and each such lessee shall be entitled to rely on
such Lease Rent Notice and shall have no liability to Trustor for any Rents
paid to Beneficiary after receipt of such Lease Rent Notice. Rents so received
by Beneficiary for any period prior to foreclosure under this Deed of Trust or
acceptance of a deed in lieu of such foreclosure shall be applied by
Beneficiary to the payment of the following in such order and priority as
Beneficiary shall determine: (i) the Debt and all expenses incident to
taking and retaining possession of the Trust Property and/or collecting Rent as
it becomes due and payable and (ii) all expenses associated with the
ownership and operation of the Premises and Improvements. In no event will this
Paragraph 7 reduce the Debt except to the extent, if any, that Rents are
actually received by Beneficiary and applied upon or after said receipt to the
Debt in accordance with the preceding sentence. Without impairing its rights
hereunder, Beneficiary may, at its option, at any time and from time to time,
release to Trustor Rents so received by Beneficiary or any part thereof. As between
Trustor and Beneficiary, and any person claiming through or under Trustor,
other than any lessee under the Leases who has not received a Lease Rent
Notice, this Assignment of Rents is intended to be absolute, unconditional and
presently effective (and not an assignment for additional security), and the
Lease Rent Notice hereof is intended solely for the benefit of each such lessee
and shall never inure to the benefit of Trustor or any person claiming through
or


 


27





















 


under Trustor,
other than a lessee who has not received such notice. It shall never be
necessary for Beneficiary to institute legal proceedings of any kind whatsoever
to enforce the provisions of this Deed of Trust with respect to Rents. TRUSTOR SHALL HAVE NO RIGHT OR CLAIM AGAINST ANY
LESSEE FOR THE PAYMENT OF ANY RENTS TO BENEFICIARY HEREUNDER, AND TRUSTOR
HEREBY INDEMNIFIES AND AGREES TO HOLD FREE AND HARMLESS EACH LESSEE FROM AND
AGAINST ALL LIABILITY, LOSS, COST, DAMAGE OR EXPENSE SUFFERED OR INCURRED BY
SUCH LESSEE BY REASON OF SUCH LESSEE’S COMPLIANCE WITH ANY DEMAND FOR PAYMENT OF RENTS MADE BY BENEFICIARY
CONTEMPLATED BY THIS DEED OF TRUST.


 


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


 


(e)                                  All
security deposits of tenants, whether held in cash or any other form, shall not
be commingled with any other funds of Trustor and, if cash, shall be deposited
by Trustor at such commercial or savings bank or banks as may be reasonably
satisfactory to Beneficiary. Any bond or other instrument which Trustor is
permitted to hold in lieu of cash security deposits under any applicable legal
requirements shall be maintained in full force and effect in the full amount of
such deposits unless replaced by cash deposits as hereinabove described, shall
be issued by an institution reasonably satisfactory to Beneficiary, shall, if
permitted pursuant to any legal requirements, name Beneficiary as payee or
beneficiary thereunder (or at Beneficiary’s option, be fully assignable to
Beneficiary) and shall, in all respects, comply with any applicable legal requirements
and otherwise be reasonably satisfactory to Beneficiary.  Trustor shall, upon request, provide
Beneficiary with evidence reasonably satisfactory to Beneficiary of Trustor’s compliance
with the foregoing. Whenever an Event of Default exists that is then
continuing, Trustor shall, upon Beneficiary’s request, if permitted by any
applicable legal requirements, turn over to Beneficiary the security deposits
(and any interest theretofore earned thereon) with respect to all or any
portion of the Trust Property, to be held by Beneficiary subject to the terms of
the Leases.


 


(f)                                    Trustor
covenants and agrees (i) to the extent reasonably necessary to avoid a Material
Adverse Effect, to perform punctually all obligations and agreements to be
performed by it as lessor or party thereto under any Lease, and under any
operating agreement, reciprocal easement agreement or similar such agreement; (ii) to
the extent reasonably necessary to avoid a Material Adverse Effect, to do all
things necessary or appropriate in the ordinary course of its business to
compel performance by each other party to each of such instruments of such
other party’s obligations and agreements thereunder; (iii) not to collect
any of the Rents more than one (1) month in advance; (iv) not to
execute any other assignment of lessor’s interest in the Leases or


 


28





















 


the Rents and (v) not
to permit any subletting of any space covered by a Lease or an assignment of
the tenant’s rights under a Lease except in strict accordance with the terms of
such Lease. Except as otherwise permitted hereunder, Trustor shall not give any
notice, approval or consent or exercise any rights under or in respect of any
Lease or any of such other instruments, which action, omission, notice,
approval, consent or exercise of rights would release any tenant or other party
from, or reduce any tenant’s or any other party’s obligations or liabilities
under, or would result in the termination, surrender or assignment of, or the
amendment or modification of in any material adverse respect, or would impair
the validity of, any Lease or any of such other instruments, if any of the
foregoing would result in a Material Adverse Effect, without the prior written
consent of Beneficiary, and any attempt to do any of the foregoing without such
consent shall be of no force and effect. For purposes hereof, “Material Adverse Effect” means a material
adverse effect upon (i) the business operations, assets or condition
(financial or otherwise) of Trustor, (ii) the ability of Trustor to
perform, or of Beneficiary to enforce, any material provision of any Loan
Document, or (iii) the value, use or enjoyment of the Trust Property or
the operation thereof.


 


(g)                                 Trustor
will promptly deliver to Beneficiary a copy of any notice from any other party
to an operating agreement, reciprocal easement agreement or similar such
agreement, or any tenant under any Lease (other than any Lease covering a
residential dwelling unit), in any such case claiming that Trustor is in
default in the performance or observance of any of the terms, covenants or
conditions thereof to be performed or observed by Trustor and Trustor will use
commercially reasonable efforts to provide in each Lease (other than any Lease
covering a residential dwelling unit) executed after the date hereof to which
Trustor is a party that any tenant delivering any such notice shall send a copy
of such notice directly to Beneficiary. Following Beneficiary’s written
request, Trustor shall deliver to Beneficiary a duplicate original or certified
copy of each Lease covering any portion of the Premises or Improvements.


 


(h)                                 Trustor
shall not enter into any Lease after the date hereof that would, evaluated
alone or in conjunction with any then existing Leases, result in any Material
Adverse Effect of the fair market value, as of the date such Lease is executed
by Trustor, of the Premises or Improvements. Trustor may enter into any Lease
which is not inconsistent with the provisions of this Paragraph 7 and
the other applicable provisions of this Deed of Trust and the Loan Documents,
if any. Each Lease entered into after the date hereof and each renewal or
extension on or after the date hereof of any Lease (a “Renewal Lease”) shall (i) be
with a tenant whom Trustor has reasonably determined is creditworthy in light
of the financial obligations to be assumed by such tenant under the Lease or
Renewal Lease, (ii) have an initial term of not less than three (3) or
more than ten (10) years, except Leases covering residential dwelling
units, (iii) provide for rent and other items to be payable in amounts at
least equal to the fair market rental value (taking into account the type and
quality of the tenant and the space covered by such Lease), as of the date such
Lease or Renewal Lease is executed by Trustor (unless, in the case of a Renewal
Lease, the rent payable during such renewal, or a formula or other method to
compute such rent, is provided for in the original Lease), (iv) not have a
Material Adverse Effect on the value of the Premises and Improvements as a
whole or the ability of Trustor to pay the Debt, (v) constitute an arm’s-length
transaction with a bona fide, independent third-party tenant, (vi) be
expressly subject and subordinate to this Deed of Trust and contain provisions
for the agreement by the tenant thereunder to attorn to Beneficiary and any
purchaser at a foreclosure sale, such


 


29





















 


attornment to be
self-executing and effective upon acquisition of title to the Premises and
Improvements by any purchaser at a foreclosure sale, provided that, if
Beneficiary has approved such Lease, the aforesaid subordination may be
conditioned upon Beneficiary executing a non-disturbance agreement in
Beneficiary’s customary form (vii) require the tenant thereunder to
execute and deliver to Trustor an estoppel certificate addressing the issues
set forth in Paragraph 12(b) of this Deed of Trust, and (viii) be
written on the standard form of lease (without any material changes) approved
in writing by Beneficiary (or in the case of any renewal or extension, on the
form of the lease previously executed by such tenant prior to such renewal or
extension) or otherwise approved in writing by Beneficiary. Subject to the
provisions below covering Material Leases, Trustor may, without the consent of
Beneficiary, amend, modify or waive the provisions of any Lease, provided that such
action is in the normal course of Trustor’s business in a manner which is
consistent with sound and customary leasing and management practices for
similar properties in the community in which the Improvements are located, does
not have a Material Adverse Effect upon the value of any of the Premises and
Improvements, and provided further that such Lease, as amended, modified or
waived, is otherwise in compliance with the requirements of this Deed of Trust
and the other Loan Documents, as applicable. Following Beneficiary’s written
request, Trustor shall deliver to Beneficiary a duplicate original or certified
copy of the amendment, modification or waiver. Subject to the provisions below
covering Material Leases, Trustor may terminate or permit the termination of
any Lease or accept surrender of all or any portion of the space demised under
any Lease or acquire any Lease or reduce the rentals reserved under or shorten
the term of any Lease so long as such action is in the normal course of Trustor’s
business in a manner which is consistent with sound and customary leasing and
management practices for similar properties in the community in which the
Improvements are located, and does not materially adversely affect the value of
the Premises and Improvements (taking into account the planned alternative uses
of the space) or the ability of Trustor to pay the Debt. All Leases and Renewal
Leases, and amendments, modifications, terminations or waivers thereof not
meeting the foregoing requirements may not be entered into by Trustor without
the prior written approval of Beneficiary.


 


(i)                                     Trustor
shall not enter into any Lease with an affiliate of Trustor without the prior
written consent of Beneficiary. Trustor shall not enter into any Lease that
grants the tenant thereunder a right or option to purchase all or any portion
of the Premises and Improvements.


 


(j)                                     Notwithstanding
anything contained herein to the contrary, Trustor shall not, without the prior
written consent of Beneficiary, enter into, renew, extend, amend, modify, waive
any provisions of, terminate, permit the termination of, or accept surrender of
all or any portion of the space demised under, any Material Lease. The term “Material Lease” shall mean any existing
Lease that covers or proposed lease agreement that would cover more than 17,000
rentable square feet of the Premises or Improvements. Nothing in this
subparagraph shall prohibit Trustor from accepting a tenant’s election of a
right to extend the term of any Material Lease existing as of the date hereof
or which Material Lease is subsequently approved by Beneficiary pursuant to the
terms hereof if such right to extend is expressly provided for in such Material
Lease, the exercise of such right is at the sole option of the tenant
thereunder and the length of the extended term and the rental to be paid during
the extended term are fixed amounts or formula amounts set forth in such
Material Lease.


 


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(k)                                  Any
Lease, Renewal Lease, Material Lease, or modification, amendment, wavier,
renewal or extension of a Lease or Material Lease that may not be entered into
by Trustor under this Deed of Trust without the prior approval of the
Beneficiary (a “Lease Under Review”) must
be submitted to Beneficiary together with a comparison of such Lease Under
Review compared against the standard form of lease then being used by Trustor.
Beneficiary shall have fifteen (15) business days after its acknowledged
receipt of a Lease Under Review to approve or disapprove the same or to request
additional information or materials in connection with its review (the “Additional Due Diligence Material”). If
Beneficiary disapproves a Lease Under Review, Beneficiary shall provide Trustor
with a written explanation of the reasons for disapproval. If Beneficiary has
not approved or disapproved a Lease Under Review within fifteen (15) business
days of its acknowledged receipt of such Lease Under Review or of the
Additional Due Diligence Material, if any, Beneficiary requested as provided
above, then such Lease Under Review shall be deemed approved.


 


8.                                      Transfer
or Encumbrance of the Trust Property.


 


(a)                                  The
term “Transfer” means (i) any
direct, indirect, voluntary or involuntary, sale, conveyance, assignment,
alienation, disposition, mortgage, encumbrance, pledge or other transfer of all
or any part of the Trust Property, or of all or any portion of the controlling ownership
interests in the Governing Entities of Trustor or Guarantor (including any
transfer of any such controlling ownership interests resulting from the death
of a natural person or by operation of law), or (ii) Trustor shall be
divested of its title to the Trust Property or any interest therein, in any
manner or way, whether voluntarily or involuntarily. A Transfer includes, without
limitation, (A) an installment sales agreement wherein Trustor agrees to
sell the Trust Property or any part thereof for a price to be paid in
installments and possession and incidents of ownership are transferred to the
purchaser; (B) an agreement by Trustor leasing all or a substantial part
of the Premises or Improvements for other than actual occupancy by a space
tenant thereunder pursuant to a Lease in accordance with the terms of the
applicable Loan Documents; (C) a sale, assignment, pledge, encumbrance or
other transfer of, or the grant of a security interest in, Trustor’s right,
title and interest in and to any Leases or any Rents; (D) any change in
control of Trustor, Guarantor or either of their respective Governing Entities,
or (E) any pledge, hypothecation, assignment, transfer or other
encumbrance of any ownership interest in Trustor, Guarantor or either of their
respective Governing Entities. The term “Transfer” shall not include a lease
that is not a lease described in the preceding clause (B) and shall not
include any easement, covenant, condition or restriction executed in the
ordinary course of the Trustor’s business.


 


(b)                                 Beneficiary
shall not be required to demonstrate any actual impairment of its security or
any increased risk of default hereunder in order to declare the Debt
immediately due and payable upon any Transfer made without Beneficiary’s prior
written consent. This provision shall apply to every Transfer whether voluntary
or not, or whether or not Beneficiary has consented to any previous Transfer.


 


(c)                                  Beneficiary’s
consent to any Transfer shall not be deemed to be a waiver of Beneficiary’s
right to require such consent to any future Transfer.  Any Transfer made in contravention of this Paragraph
8 shall be null and void and of no force and effect.


 


31





















 


(d)                                 In
connection with the review, approval and documentation of any Transfer Trustor
shall pay or reimburse Beneficiary on demand all reasonable out-of-pocket
expenses (including, without limitation, reasonable attorneys’ fees and
disbursements, title search costs and title insurance endorsement premiums,
rating agency fees, and the cost of legal opinions relating to REMIC or similar
tax issues) incurred by Beneficiary in connection with the review, approval and
documentation of such Transfer.


 


(e)                                  Transfers
of controlling ownership interests in Trustor or Guarantor or any Governing
Entity of Trustor or Guarantor occurring solely by devise, descent or by
operation of law upon the death of a natural person will nevertheless not
constitute an Event of Default if (i) all transferees are Family Members, (ii) none
of the transferees is then or ever has been a debtor in a bankruptcy or
reorganization proceeding or is then or ever has been a defendant in a criminal
enforcement proceeding involving any matter classified as a felony under
applicable law or involving charges of moral turpitude or fraud, (iii) the
person or entity in control of Trustor (or Guarantor, if applicable) following
the Transfer and the day-to-day operations of the Trust Property is acceptable
to Beneficiary in all respects based upon Beneficiary’s then applicable underwriting
criteria and requirements, (iv) Trustor shall give Beneficiary notice of
such Transfer together with copies of all instruments effecting such Transfer, (v) Beneficiary
shall have received payment of all out-of-pocket costs and expenses, if any,
incurred by Beneficiary in connection with such Transfer, and no Event of
Default shall have occurred which is then continuing.


 


(f)                                    For
purposes of this Paragraph 8, (i) ”control” means the power to
direct the management and policies of Trustor, directly or indirectly, whether
through the ownership of voting securities or other beneficial interests, by
contract or otherwise, and (ii) a “Family Member” means a spouse, child,
grandchild or other lineal descendant of the transferor or transferee, as the
case may be, and any trust established for the benefit of a spouse, child, grandchild
or other lineal descendant of the transferor or transferee, as the case may be.


 


(g)                                 Notwithstanding
anything to the contrary in this Paragraph 8, Trustor shall have the
right to transfer the Trust Property in its entirety (a “Property Transfer”) without complying with
the other provisions of this Paragraph 8 if, and only if, all of the
following conditions are first satisfied:


 


(i)                                     No
Event of Default or event which with the giving of notice or the passage of
time would constitute an Event of Default shall exist that is then continuing.


 


(ii)                                  Trustor
gives Beneficiary written notice of the terms of such prospective Property
Transfer not less than sixty (60) days before the date on which such Property
Transfer is scheduled to be consummated and, concurrently therewith, gives
Beneficiary all reasonable information concerning the proposed transferee of
the Trust Property (“Transferee”) and
the proposed person or entity that will assume Guarantor’s obligations under
the Guaranty (“Transferee Guarantor”) as
Beneficiary would require in evaluating an initial extension of credit to a
borrower and pays to Beneficiary a non-refundable application fee in the amount
of $5,000.00 (the “Application Fee”).


 


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(iii)                               Beneficiary approves in
writing the Transferee and, if applicable, the Transferee Guarantor, which
approval Beneficiary may withhold in its reasonable discretion. In determining
whether to give or withhold its approval of the Transferee and Transferee
Guarantor, Beneficiary may consider the Transferee’s experience in owning and
operating facilities similar to the Premises and Improvements, the Transferee’s
entity structure, the Transferee’s and, if applicable, the Transferee Guarantor’s
financial strength and creditworthiness, and the Transferee’s and, if
applicable, the Transferee Guarantor’s general business standing and their
relationships with contractors, vendors, tenants, lenders and other business
entities. In connection with such consideration by Beneficiary, Beneficiary may
review such financial statements, credit reports, tax returns and other
information reasonably requested by Beneficiary.


 


(iv)                              Beneficiary
shall have determined in its reasonable discretion that Transferee’s proposed
property manager has sufficient experience in the ownership and management of
properties similar to the Premises and Improvements, and Beneficiary shall have
received reasonable evidence thereof (and Beneficiary reserves the right to
approve the Transferee without approving the substitution of the property
manager).


 


(v)                                 To
the extent Beneficiary determines it necessary or prudent to do so, Beneficiary
shall have received written recommendations from the Rating Agencies (as
hereinafter defined) to the effect that the proposed Property Transfer will not
result in a requalification, reduction or withdrawal of any rating initially
assigned or to be assigned in a Secondary Market Transaction (as hereinafter
defined). The term “Rating Agencies” as used herein shall mean each of Standard &
Poor’s Ratings Services, a division of McGraw-Hill Companies, Inc., Moody’s
Investors Service, Inc., and Fitch, Inc., or any other
nationally-recognized statistical rating agency which has been approved by
Beneficiary;


 


(vi)                              Without
any cost or expense to Beneficiary, Transferee and, if applicable, Transferee
Guarantor execute and deliver to Beneficiary an assumption agreement in form
and substance acceptable to Beneficiary evidencing such Transferee’s agreement
to abide and be bound by the terms of the Note, this Deed of Trust and the
other Loan Documents (subject to the provisions of Paragraph 51) and, if
applicable, such Transferee Guarantor’s agreement to abide and be bound by the
terms of the Guaranty, and Transferee executes and delivers new financing
statements or financing statement amendments, and Transferee and Transferee
Guarantor deliver such additional documents and legal opinions as reasonably
requested by Beneficiary to evidence and effectuate said assumption.


 


(vii)                           If Transferee is other than
a natural person, Beneficiary is in receipt of all documents evidencing the
Transferee’s capacity and good standing, and the qualification of the signers
to execute the assumption of the Debt, which documents shall include, without
limitation, certified copies of all documents relating to the organization and
formation of the Transferee and Transferee’s Governing Entity. Transferee and
such Governing Entity must satisfy all of the applicable requirements of Paragraph
9 of this Deed of Trust.


 


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(viii)                        Trustor executes and delivers
to Beneficiary, without any cost or expense to Beneficiary, a release of
Beneficiary, its officers, directors, employees and agents, from all claims and
liability relating to the transactions evidenced by the Loan Documents, through
and including the date of the consummation of the Property Transfer, which
agreement shall be in form and substance reasonably satisfactory to
Beneficiary.


 


(ix)                                Trustor
delivers to Beneficiary, without any cost or expense to Beneficiary, such
endorsements to Beneficiary’s mortgagee policy of title insurance, hazard
insurance endorsements or certificates and other similar materials as
Beneficiary may deem reasonably necessary at the time of the Property Transfer,
all in form and substance reasonably satisfactory to Beneficiary, including,
without limitation, an endorsement or endorsements to Beneficiary’s title
insurance policy insuring the lien of this Deed of Trust, extending the
effective date of such policy to the date of execution and delivery (or, if
later, of recording) of the assumption agreement referenced above, with no
additional exceptions added to such policy, and insuring that fee simple title
to the Premises and Improvements are vested in the Transferee.


 


(x)                                   Concurrently
with the consummation of the Property Transfer, Trustor pays to Beneficiary in
cash a non-refundable transfer fee equal to one percent (1%) of the then
outstanding amount of the Debt (the “Transfer
Fee”), which Transfer Fee is in
addition to the Application Fee. The Application Fee shall be used to pay
Beneficiary’s reasonable and customary out-of-pocket costs and expenses,
including, without limitation, reasonable attorneys’ fees and disbursements,
title search costs and title insurance endorsement premiums, Rating Agency fees
and the cost of legal opinions relating to REMIC or similar tax issues,
incurred by Beneficiary in connection with the Property Transfer. Trustor’s
obligation to pay such out-of-pocket costs and expenses and attorneys’ fees of
Beneficiary in connection with such Property Transfer shall not exceed the
Application Fee.


 


(h)                                 Without
limiting the foregoing, if a Property Transfer has been consummated following
satisfaction of all of the conditions precedent set forth in Subparagraph 8(i) above
and Beneficiary has received from Transferee and, if applicable, Transferee
Guarantor, the written assumption agreement described in Subsection 8(i)(vi) above,
then, and only then, the parties who have executed this Deed of Trust shall be
relieved of all obligations under the Note, this Deed of Trust and the other
Loan Documents, and the Guarantor, if applicable, shall be relieved of all
obligations under the Guaranty, but in each instance only as to acts or events
occurring, or obligations arising, after consummation of such Property
Transfer.


 


(j)                                     Notwithstanding
any other term or provision of this Paragraph 8 to the contrary,
Transfers of controlling ownership interests in Trustor or of controlling
ownership interests in any Governing Entity of Trustor or Guarantor may not be
consummated without the prior consent of Beneficiary for the period ending upon
the first to occur of (i) a Secondary Market Transaction or (ii) one
hundred eighty (180) days after the date of this Deed of Trust, upon which date
this subparagraph shall terminate and be of no further force or effect.


 


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9.                                      Single
Purpose Entity/Separateness. Trustor represents, warrants and
covenants as follows:


 


(a)                                  Trustor
does not own and will not own any asset or property other than (i) the Trust
Property, and (ii) incidental personal property necessary for the
ownership or operation of the Trust Property.


 


(b)                                 Trustor
will not engage in any business other than the ownership, management and
operation of the Trust Property and Trustor will conduct and operate its
business as presently conducted and operated.


 


(c)                                  Trustor
will not enter into any contract or agreement with any affiliate of the Trustor,
any constituent party of Trustor, any guarantor (a “Guarantor”) of the Debt or any part thereof or any affiliate
of any constituent party or Guarantor, except upon terms and conditions that
are intrinsically fair and substantially similar to those that would be
available on an arms-length basis with third parties other than any such party.


 


(d)                                 Trustor
has not incurred and will not incur any indebtedness, secured or unsecured,
direct or indirect, absolute or contingent (including guaranteeing any
obligation), other than (i) the Debt, (ii) unsecured trade and
operational debt incurred in the ordinary course of business with trade creditors
and in amounts as are normal and reasonable under the circumstances, and (iii) debt
incurred in the financing of equipment and other personal property used on the
Premises. No indebtedness other than the Debt may be secured (subordinate or pari
passu) by the Trust Property.


 


(e)                                  Trustor
has not made and will not make any loans or advances to any third party (including
any affiliate or constituent party, any Guarantor or any affiliate of any
constituent party or Guarantor), and shall not acquire obligations or
securities of its affiliates or any constituent party.


 


(f)                                    Trustor
is and will remain solvent and Trustor will pay its debts and liabilities (including,
as applicable, shared personnel and overhead expenses) from its assets as the
same shall become due.


 


(g)                                 Trustor
has done or caused to be done and will do all things necessary to observe organizational
formalities and preserve its existence, good standing and right to do business
in the state where it is organized or registered and in the state where the
Premises are located, and Trustor will not, and will not permit its Governing
Entity, or Guarantor (if Guarantor is other than a natural person), to amend, modify
or otherwise change the partnership certificate, partnership agreement,
articles of incorporation and bylaws, articles or organization and operating
agreement, trust or other organizational documents of Trustor or the Governing
Entity without the prior written consent of Beneficiary.


 


(h)                                 Trustor
will maintain all of its books, records, financial statements and bank accounts
separate from those of its affiliates and any constituent party and, unless
treated as a division for tax purposes of another taxpayer, Trustor will file
its own tax returns, provided, however, that Trustor’s assets may be
included in a consolidated financial statement with its affiliates provided
that the appropriate notations shall be made on such consolidated financial


 


35





















 


statement to
indicate the separateness of Trustor and such affiliates and to indicate that
none of such affiliates assets and credit are available to satisfy the debts
and other obligations of Trusor.


 


(i)                                     Trustor
shall maintain its books, records, resolutions and agreements as official
records.


 


(j)                                     Trustor
will be, and at all times will hold itself out to the public as, a legal entity
separate and distinct from any other entity (including any affiliate of Trustor,
any constituent party of Trustor, any Guarantor or any affiliate of any
constituent party of Trustor or Guarantor), shall correct any known
misunderstanding regarding its status as a separate entity, shall conduct
business in its own name, shall not identify itself or any of its affiliates as
a division or part of the other and shall maintain and utilize a separate
telephone number and separate stationery, invoices and checks.


 


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


 


(l)                                     Neither
Trustor, Guarantor nor any Governing Entity of Trustor or Guarantor, will seek
the dissolution, winding up, liquidation, consolidation or merger, in whole or
in part, of the Trustor, Guarantor or such Governing Entity.


 


(m)                               Trustor
will not commingle the funds and other assets of Trustor with those of any
affiliate or constituent party, any Guarantor, or any affiliate of any
constituent party of Trustor or Guarantor, or any other person.


 


(n)                                 Trustor
has and will maintain its assets in such a manner that it will not be costly or
difficult to segregate, ascertain or identify its individual assets from those
of any affiliate or constituent party, any Guarantor, or any affiliate of any
constituent party of Trustor or Guarantor, or any other person.


 


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


 


(p)                                 If
Trustor is a limited partnership or a limited liability company, its Governing
Entity, shall be an entity whose sole asset is its interest in Trustor and each
such Governing Entity will at all times comply, and will cause Trustor to
comply, with each of the representations, warranties, and covenants contained
in this Paragraph 9 as if such representation, warranty or covenant was
made directly by such Governing Entity.


 


10.                               Maintenance
of Trust Property. Trustor shall cause the Trust Property to be
maintained in a good and safe condition and repair and in keeping with the
condition and repair of properties of a similar use, value, age, nature and
construction. Trustor shall not use, maintain or operate the Trust Property in
any manner which constitutes a public or private nuisance or which makes void,
voidable, or cancelable, or increases the premium of, any insurance then in
force with respect thereto. Trustor shall comply in all material respects with
all of the recommendations (if any) concerning the maintenance and repair of
the Trust Property which are contained in the inspection and engineering report
which was


 


36





















 


delivered to Beneficiary
in connection with the origination of the Loan. The Improvements and the
Equipment shall not be removed, demolished or materially altered (except for
normal replacement of the Equipment with items of the same utility and of equal
or greater value) without the prior written consent of Beneficiary. Trustor
shall promptly comply with all laws, orders and ordinances affecting the Trust
Property, or the use thereof. Trustor shall promptly repair, replace or rebuild
any part of the Improvements or Equipment that is destroyed by any Casualty, or
becomes damaged, worn or dilapidated or that is affected by any Taking and
shall complete and pay for any structure at any time in the process of
construction or repair on the Premises. Trustor shall not initiate, join in,
acquiesce in, or consent to any change in any private restrictive covenant,
zoning law or other public or private restriction, limiting or defining the
uses which may be made of the Premises or Improvements or any part thereof. If
under applicable zoning provisions the use of all or any portion of the
Premises or Improvements is or shall become a nonconforming use, Trustor will
not cause or permit such nonconforming use to be discontinued or abandoned
without the express written consent of Beneficiary. Trustor shall not (i) change
the use of the Premises or Improvements or (ii) take any steps whatsoever
to convert the Premises or Improvements, or any portion thereof, to a
condominium or cooperative form of management. Trustor will not install or
permit to be installed on the Premises any underground storage tank. Trustor
shall not commit or suffer any waste of the Trust Property or make any change
in the use of the Trust Property which will in any way materially increase the
risk of fire or other hazard arising out of the operation of the Trust
Property, or take any action that might invalidate or give cause for
cancellation of any of the Policies, or do or permit to be done thereon
anything that may in any way impair the value of the Trust Property in any
material respect or the lien of this Deed of Trust. Trustor will not, without
the prior written consent of Beneficiary, permit any drilling or exploration
for or extraction, removal, or production of any minerals from the surface or
the subsurface of the Premises, regardless of the depth thereof or the method
of mining or extraction thereof.


 


11.                               Defeasance.


 


(a)                                  At
any time after the date which is the earlier of four years following the date
hereof or two years after the date of a Secondary Market Transaction (as
defined in Paragraph 19(b)), and provided no Event of Default exists
that is then continuing, Trustor may obtain the release of the Trust Property
from the lien of this Deed of Trust upon the satisfaction of the following
conditions precedent:


 


(i)                                     not
less than thirty (30) days prior written notice to Beneficiary specifying a
regularly scheduled payment date (the “Release
Date”) on which the Defeasance Deposit (hereinafter defined) is to
be made;


 


(ii)                                  the
payment to Beneficiary of interest accrued and unpaid on the principal balance
of the Note to and including the Release Date;


 


(iii)                               the payment to
Beneficiary of all other sums, not including scheduled interest or principal
payments, due under the Note, this Deed of Trust, the Assignment of Leases, and
the other Loan Documents;


 


(iv)                              the
payment to Beneficiary of the Defeasance Deposit; and


 


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(v)                                 the
delivery to Beneficiary of:


 


(A)                              a
security agreement, in form and substance satisfactory to Beneficiary, creating
a first priority lien on the Defeasance Deposit and the U.S. Obligations (hereinafter
defined) purchased on behalf of Trustor with the Defeasance Deposit in
accordance with this provision of this paragraph (the “Security Agreement”);


 


(B)                                a
release of the Trust Property from the lien of this Deed of Trust (for
execution by Beneficiary) in a form appropriate for the jurisdiction in which the
Trust Properly is located;


 


(C)                                an
officer’s certificate of Trustor certifying that the requirements set forth in
this Subparagraph (a) have been satisfied;


 


(D)                               an
opinion of counsel for Trustor in form and substance and delivered by counsel
satisfactory to Beneficiary stating, among other things (x) that Beneficiary
has a perfected first priority security interest in the Defeasance Deposit and
the U.S. Obligations purchased by Beneficiary on behalf of Trustor, (y) that
the Security Agreement is enforceable against Trustor in accordance with its
terms and (z) that the defeasance will not cause any trust to fail to qualify
as a “real estate mortgage investment conduit” (a “REMIC”), within the meaning of Section 860D of the
Internal Revenue Code of 1986, as amended from time to time or any successor
statute;


 


(E)                                 evidence
in writing from the applicable Rating Agencies to the effect that such release will
not result in a re-qualification, reduction or withdrawal of any rating in
effect immediately prior to such defeasance for any securities issued in
connection with a Secondary Market Transaction; and


 


(F)                                 such
other certificates, opinions, documents or instruments as Beneficiary may
reasonably request.


 


In connection with the conditions set forth in Subparagraph ll(a)(v) above,
Trustor hereby appoints Beneficiary as its agent and attorney-in-fact for the
purpose of using the Defeasance Deposit to purchase U.S. Obligations which
provide payments on or prior to, but as close as possible to, all successive
scheduled payment dates after the Release Date upon which interest and
principal payments are required under the Note and in amounts equal to the
scheduled payments due on such dates under the Note (the “Scheduled Defeasance Payments”). Trustor,
pursuant to the Security Agreement or other appropriate document, shall
authorize and direct that the payments received from the U.S. Obligations may
be made directly to Beneficiary and applied to satisfy the obligations of the
Trustor under the Note.


 


(b) Upon compliance with the requirements of this Paragraph 11,
the Trust Property shall be released from the lien of this Deed of Trust and
the pledged U.S. Obligations shall be the sole source of collateral securing
the Note. Any portion of the Defeasance Deposit in excess of the amount
necessary to purchase the U.S. Obligations required by Subparagraph (a) above
and


 


38





















 


satisfy the
Trustor’s obligations under this paragraph shall be remitted to the Trustor
with the release of the Trust Property from the lien of this Deed of Trust. In
connection with such release, Beneficiary may establish or designate a
successor entity (the “Successor Trustor”) and
Trustor shall transfer and assign all obligations, rights and duties under and
to the Note together with the pledged U.S. Obligations to such Successor
Trustor. The right of Beneficiary to establish or designate a Successor Trustor
shall be retained by Beneficiary notwithstanding the sale or transfer of this
Deed of Trust unless such obligation is specifically assumed by the transferee.
Such Successor Trustor shall assume the obligations under the Note and the
Security Agreement and Trustor shall be relieved of its obligations thereunder.
The Trustor shall pay $1,000.00 to any such Successor Trustor as consideration
for assuming the obligations under the Note and the Security Agreement.
Notwithstanding anything in this Deed of Trust to the contrary, no other
assumption fee shall be payable upon a transfer of the Note in accordance with
this paragraph, but Trustor shall pay all costs and expenses incurred by
Beneficiary, including Beneficiary’s attorneys’ fees and expenses, incurred in
connection with this Paragraph 11.


 


(c)                                  For
purposes of this paragraph, the following terms shall have the following
meanings:


 


(i)                                     The
term “Defeasance Deposit” shall
mean an amount equal to the sum of one-hundred percent (100%) of the entire
unpaid principal balance of the Note, the Yield Maintenance Premium, any costs
and expenses incurred or to be incurred in the purchase of U.S. Obligations
necessary to meet the Scheduled Defeasance Payments and any revenue,
documentary stamp or intangible taxes or any other tax or charge due in connection
with the transfer of the Note or otherwise required to accomplish the
agreements of this paragraph;


 


(ii)                                  The
term “Yield Maintenance Premium” shall
mean the amount (if any) which, when added to the remaining principal amount of
the Note, will be sufficient to purchase U.S. Obligations providing the
required Scheduled Defeasance Payments; and


 


(iii)                               The term “U.S. Obligations” shall
mean direct, non-callable obligations of the United States of America.


 


12.                               Estoppel
Certificates and No Default Affidavits.


 


(a)                                  After
written request by Beneficiary, Trustor, within ten (10) days, shall
furnish Beneficiary or any proposed assignee with a statement, duly
acknowledged and certified, setting forth (i) the original principal
amount of the Note, (ii) the unpaid principal amount of the Note, (iii) the
rate of interest of the Note, (iv) the terms of payment and maturity date
of the Note, (v) the date installments of interest and/or principal were
last paid, (vi) that, except as provided in such statement, no Events of
Default or events which, with the passage of time or the giving of notice or
both, would constitute an Event of Default exist under any of the Loan
Documents that is then continuing, (vii) that, except as expressly set
forth in such statement, all representations and warranties of Trustor set
forth herein and in the other Loan Documents are true and correct in all
material respects as of the date of such statement, (viii) that the Loan
Documents are valid,


 


39





















 


legal and binding
obligations and have not been modified or if modified, giving particulars of
such modification, (ix) whether any offsets or defenses exist against the
Debt or Obligations and, if any are alleged to exist, a detailed description
thereof, (x) that all Leases are in full force and effect and (provided the
Improvements are not a residential multifamily property) have not been modified
(or if modified, setting forth all modifications), (xi) the date to which the
Rents thereunder have been paid pursuant to the Leases, (xii) whether or not,
to the best knowledge of Trustor, any of the lessees under the Leases are in
default under the Leases, and, if any of the lessees are in material default,
setting forth the specific nature of all such material defaults, (xiii) the
amount of security deposits held by Trustor under each Lease and that such
amounts are consistent with the amounts required under each Lease, and (xiv) as
to any other matters reasonably requested by Beneficiary and reasonably related
to the Leases, the Debt and Obligations, the Trust Property or this Deed of
Trust.


 


(b)                                 Upon
Beneficiary’s written request, subject to the provisions of the Leases, Trustor
shall request from each tenant whose Lease requires such tenant to execute and
deliver an estoppel certificate (and with respect to any tenant whose Lease
does not require the same Trustor shall use its best efforts to obtain such
certificate), and shall thereafter promptly deliver to Beneficiary duly
executed estoppel certificates from any one or more tenants under the Leases as
received by Beneficiary from any one or more of such tenants. Subject to the
provisions of any such Leases that specify the contents of such estoppel
certificates, such estoppel certificates shall attest to such facts regarding
the Leases as Beneficiary may reasonably require, including, but not limited
to, to the extent accurate, attestations that each Lease covered thereby is in
full force and effect with no material defaults thereunder on the part of any
party, that none of the Rents have been paid more than one month in advance,
except as security, and that the lessee claims no defense or offset against the
full and timely performance of its obligations under the Lease. Trustor shall
not be required to deliver such certificates more frequently than one (1) time
in any calendar year, other than the calendar year during which a Secondary
Market Transaction occurs.


 


13.                               Changes
in Laws Regarding Taxation. If any law is enacted or adopted or amended
after the date of this Deed of Trust which deducts the Debt from the value of
the Trust Property for the purpose of taxation or which imposes a tax, either
directly or indirectly, on the Debt or Beneficiary’s interest in the Trust
Property, Trustor will pay such tax, with interest and penalties thereon, if
any. In the event Beneficiary is advised by counsel chosen by it that the
payment of such tax or interest and penalties by Trustor would be unlawful or
taxable to Beneficiary or unenforceable or provide the basis for a defense of usury,
then in any such event, Beneficiary shall have the option, by written notice of
not less than ninety (90) days, to declare the Debt immediately due and
payable, in which event the payment of the Debt shall be without any prepayment
or yield maintenance premium or penalty.


 


14.                               No
Credits on Account of the Debt. Trustor will not claim or demand or be
entitled to any credit or credits on account of the Debt for any part of the
Taxes or Other Charges assessed against the Trust Property, or any part
thereof, and no deduction shall otherwise be made or claimed from the assessed
value of the Trust Property, or any part thereof, for real estate tax purposes
by reason of this Deed of Trust or the Debt. In the event such claim, credit or
deduction shall be required by law, Beneficiary shall have the option, by
written notice of not less than ninety (90) days, to declare the Debt immediately
due and payable, in which event the payment of the Debt shall be without any
prepayment or yield maintenance premium or penalty.


 


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15.                               Documentary
Stamps. If at any time the United States of America, any State thereof
or any subdivision of any such State shall require revenue or other stamps to
be affixed to the Note or this Deed of Trust, or impose any other tax or charge
on the same, Trustor will pay for the same, with interest and penalties
thereon, if any.


 


16.                               Controlling
Agreement. It is expressly stipulated and agreed to be the intent of
Trustor, and Beneficiary at all times to comply with applicable state law or
applicable United States federal law (to the extent that it permits Beneficiary
to contract for, charge, take, reserve, or receive a greater amount of interest
than under state law) and that this Paragraph 16 shall control every
other covenant and agreement in this Deed of Trust and the other Loan
Documents. If the applicable law (state or federal) is ever judicially
interpreted so as to render usurious any amount called for under the Note or
under any of the other Loan Documents, or contracted for, charged, taken,
reserved, or received with respect to the Debt, or if Beneficiary’s exercise of
the option to accelerate the maturity of the Note, or if any prepayment by Trustor
results in Trustor having paid any interest in excess of that permitted by
applicable law, then it is Trustor’s and Beneficiary’s express intent that all
excess amounts theretofore collected by Beneficiary shall be credited on the
principal balance of the Note and all other Debt, and the provisions of the
Note and the other Loan Documents immediately be deemed reformed and the
amounts thereafter collectible hereunder and thereunder reduced, without the
necessity of the execution of any new documents, so as to comply with the applicable
law, but so as to permit the recovery of the fullest amount otherwise called
for hereunder or thereunder. All sums paid or agreed to be paid to Beneficiary
for the use, forbearance, or detention of the Debt shall, to the extent
permitted by applicable law, be amortized, prorated, allocated, and spread
throughout the full stated term of the Debt until payment in full so that the
rate or amount of interest on account of the Debt does not exceed the maximum
lawful rate from time to time in effect and applicable to the Debt for so long
as the Debt is outstanding. Notwithstanding anything to the contrary contained
herein or in any of the other Loan Documents, it is not the intention of
Beneficiary to accelerate the maturity of any interest that has not accrued at
the time of such acceleration or to collect unearned interest at the time of
such acceleration.


 


17.                               Financial
Statements.


 


(a)                                 Trustor
represents and warrants to Beneficiary that the financial statements heretofore
furnished to Beneficiary are, as of the dates specified therein, complete and
correct in all material respects and fairly present the financial condition of
the Trustor and any other persons or entities that are the subject of such
financial statements, and are prepared in accordance with sound accounting
principles consistently applied. Trustor does not have any contingent
liabilities, liabilities for taxes, unusual forward or long-term commitments or
unrealized or anticipated losses from any unfavorable commitments that are
known to Trustor and reasonably likely to have a materially adverse effect on
the Trust Property or the operation of the Improvements, except as referred to
or reflected in said financial statements. Since the date of such financial statements,
there has been no materially adverse change in the financial condition,
operation or business of Trustor from that set forth in said financial
statements.


 


(b)                                 Trustor
will maintain full and accurate books and records of accounts in accordance
with sound accounting principles consistently applied in which full, true and
correct entries shall be promptly made with respect to Trustor, the Trust
Property and the operation thereof, and will permit all such books and records
(including without limitation all contracts,


 


41





















 


statements,
invoices, bills and claims for labor, materials and services supplied for the
construction, repair or operation of the Improvements) to be inspected or
audited and copies made by Beneficiary and its representatives during normal
business hours and at any other reasonable times. Trustor will furnish, or
cause to be furnished, to Beneficiary on or before forty-five (45) calendar
days after the end of each calendar quarter the following items, each certified
by Trustor as being true and correct, in such format and in such detail as
Beneficiary may request: (i) a written statement (rent roll) dated as of
the last day of each such calendar quarter identifying each of the Leases by
the term, space occupied, rental required to be paid, security deposit paid,
any rental concessions, commencement date, expiration date, options to renew or
expand, expense recovery provisions, and identifying any defaults or payment
delinquencies thereunder; (ii) monthly and year-to-date operating
statements prepared for each calendar month during each such calendar quarter
reporting period detailing the total revenues received, total expenses
incurred, total cost of all capital improvements, total debt service and total
cash flow. From the date hereof through the earlier of the date twelve (12)
months after the date hereof or the date of disposition of the Loan by
Beneficiary in a Secondary Market Transaction (defined in Paragraph 19(b)),
the Trustor shall furnish on a monthly basis each of the items listed in the
immediately preceding sentence (collectively, the “Pre-Securitization
Financials”) within twenty (20) days after the end of each calendar
month. Trustor’s annual financial statements shall include, except with respect
to tenants occupying and Leases covering residential dwelling units, (i) a
list of the tenants, if any, occupying more than twenty (20%) percent of the
total floor area of the Improvements, and (ii) a breakdown showing the
year in which each Lease then in effect expires and the percentage of total
floor area of the Improvements and the percentage of base rent with respect to
which Leases shall expire in each such year, each such percentage to be
expressed on both a per year and a cumulative basis. Within ninety (90) days
following the end of each calendar year, Trustor shall furnish statements of
its financial affairs and condition including a balance sheet and a statement
of profit and loss for the Trustor in such detail and format as Beneficiary may
request, and setting forth the financial condition and the income and expenses
for the Trust Property for the immediately preceding calendar year. Trustor’s
annual financial statements shall be accompanied by a certificate executed by
its chief financial officer, or by an authorized representative of its
Governing Entity, as applicable, stating that each such annual financial
statement presents fairly the financial condition of the Trust Property being
reported upon and has been prepared in accordance with sound accounting principles
consistently applied. At any time and from time to time Trustor shall deliver
to Beneficiary or its agents such other financial data as Beneficiary or its
agents shall reasonably request with respect to the ownership, maintenance, use
and operation of the Trust Property.


 


(c)                                  In
the event that Trustor fails to provide to Beneficiary or its designee any of
the financial statements, certificates, reports or information (the “Required Records”) required by this Paragraph 17
within thirty (30) days after the date upon which such Required Record is due,
Trustor shall pay to Beneficiary, at Beneficiary’s option and in its sole
discretion, an amount equal to $5,000; provided that, Beneficiary has
given at least fifteen (15) days prior written notice to Trustor of such
failure by Trustor to timely submit the applicable Required Record and the
opportunity to cure such default by delivering the applicable Required Record
during such fifteen (15) day period. Notwithstanding the foregoing, in the
event that Trustor fails to provide Beneficiary with Pre-Securitization
Financials on or before the date they are due, Trustor shall


 


42





















 


pay to Beneficiary
at Beneficiary’s option and in its sole discretion, an amount equal to $5,000
for each month that Trustor fails to deliver the required Pre-Securitization
Financials.


 


18.                               Performance
of Other Agreements. Trustor shall observe and perform each and every
term to be observed or performed by Trustor pursuant to the terms of any of the
Intangibles or any other agreement or recorded instrument affecting or
pertaining to the Trust Property. Trustor further covenants and agrees to (a) give
prompt notice to the Beneficiary of any notice received by the Trustor
concerning any of the Intangibles or any such other agreement or recorded
instruments, together with a complete copy of any such notice, (b) enforce,
short of termination thereof, the performance and observance of each and every
term, covenant and provision of the Intangibles and any such other agreement
and recorded instrument to be performed or observed, if any, and (c) not
terminate any of the Intangibles or any such other agreement or recorded
statement without the prior written consent of the Beneficiary.


 


19.                               Further
Acts, Etc.


 


(a)                                 Trustor
will, at the cost of Trustor, and without expense to Beneficiary, do, execute,
acknowledge and deliver all and every such further acts, deeds, conveyances,
mortgages, assignments, notices of assignment, Uniform Commercial Code financing
statements, financing statement amendments or continuation statements,
transfers and assurances as Beneficiary shall, from time to time, require, for
the better assuring, conveying, assigning, transferring, and confirming unto
Beneficiary the property and rights hereby deeded, mortgaged, given, granted, bargained,
sold, alienated, enfeoffed, conveyed, confirmed, pledged, assigned and
hypothecated or intended now or hereafter so to be, or which Trustor may be or
may hereafter become bound to convey or assign to Beneficiary, or for carrying
out the intention or facilitating the performance of the terms of this Deed of
Trust or for filing, registering or recording this Deed of Trust or for facilitating
the sale of the Loan and the Loan Documents as described in Paragraph 19(b) below.
Trustor, on demand, will execute and deliver and hereby authorizes Beneficiary
to execute in the name of Trustor or without the signature of Trustor to the
extent Beneficiary may lawfully do so, one or more financing statements,
financing statement amendments, chattel mortgages or other instruments, to
evidence more effectively the security interest of Beneficiary in the Trust Property.
Upon foreclosure, the appointment of a receiver or any other relevant action,
Trustor will, at the cost of Trustor and without expense to Beneficiary,
cooperate fully and completely to effect the assignment or transfer of any
license, permit, agreement or any other right necessary or useful to the
operation of the Trust Property. Trustor grants to Beneficiary and Trustee an irrevocable
power of attorney coupled with an interest for the purpose of exercising and perfecting
any and all rights and remedies available to Beneficiary and Trustee at law and
in equity, including, without limitation, such rights and remedies available to
Beneficiary and Trustee pursuant to this paragraph.


 


(b)                                 Trustor
acknowledges that Beneficiary and its successors and assigns may (i) sell,
assign or transfer this Deed of Trust, the Note and other Loan Documents to one
or more investors as a whole loan, (ii) grant participation interests in
the Loan to investors or issue to investors mortgage pass-through certificates
or other securities evidencing a beneficial interest in a rated or unrated
public offering or private placement to one or more investors, (iii) deposit
this Deed of Trust, the Note and other Loan Documents with a trust, which trust
may sell certificates to investors evidencing an ownership interest in the
trust assets, (vi) transfer any and all of the


 


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servicing rights
with respect to the Loan, or delegate any or all of its responsibilities as
Beneficiary under the Loan Documents, or (v) otherwise sell the Loan or
interest therein to investors (the transactions referred to in clauses (i) through
(v) are hereinafter each referred to as “Secondary
Market Transaction”); provided, however, notwithstanding
anything to the contrary contained herein or in any of the other Loan
Documents, Trustor shall not be obligated to take any action nor shall any such
requirements be imposed in connection with a Secondary Market Transaction that
would: (i) change the outstanding principal balance of the Loan; (ii) increase
the interest rate or payments on the Loan; (iii) increase the rate of
amortization of the Loan; (iv) shorten the maturity date of the Loan; (v) alter
in any material way the transfer restrictions relating to direct or indirect
interests in the Trust Property (including any equity interests in the direct
or indirect owners of Trustor); (vi) affect the limitations on recourse
against Trustor; (vii) increase the amounts of reserves or escrows; (viii) violate
any existing agreement to which Trustor, Guarantor or any of their affiliates
is a party or any applicable law; or (ix) materially change any obligation
of Trustor under the other Loan Documents. Trustor shall cooperate with
Beneficiary in effecting any such Secondary Market Transaction and shall
cooperate to implement all requirements imposed by any Rating Agency involved
in any Secondary Market Transaction, provided, however, that Trustor
shall not be required to (A) incur any additional liability under the Loan
Documents, (B) suffer any increased obligation under the Loan Documents or
(C) suffer any diminishment of its rights under the Loan Documents.
Trustor shall provide such information, legal opinions and documents relating
to Trustor, Guarantor, if any, the Trust Property and any tenants of the
Improvements (to the extent in Trustor’s possession or control) as Beneficiary
may reasonably request in connection with such Secondary Market Transaction.
Beneficiary shall bear the reasonable out of pocket expense incurred by Trustor
to third parties (but not Trustor’s general and administrative overhead) in
providing any such information, opinions and documents so long as Trustor
notifies Beneficiary in writing promptly after receipt of Beneficiary’s request
for the aforesaid information, opinions and documents of the nature and
specific amount of the third party expenditure that will be incurred in
complying with Beneficiary’s request. In addition, Trustor shall make available
to Beneficiary all information concerning its business and operations that
Beneficiary may reasonably request. Beneficiary shall be permitted to share all
such information with the investment banking firms, Rating Agencies, accounting
firms, law firms and other third-party advisory firms involved with the Loan
and the Loan Documents or the applicable Secondary Market Transaction. It is
understood that the information provided by Trustor to Beneficiary may
ultimately be incorporated into the offering documents for the Secondary Market
Transaction and thus various investors may also see some or all of the
information. Beneficiary and all of the aforesaid third-party advisors and
professional firms shall be entitled to rely on the information supplied by, or
on behalf of, Trustor and Trustor indemnifies Beneficiary as to any losses,
claims, damages or liabilities that arise out of or are based upon any untrue
statement or alleged untrue statement of any material fact contained in any
Sanctioned Information or arise out of or are based upon the omission or
alleged omission to state therein a material fact required to be stated in such
information or necessary in order to make the statements in such information,
or in light of the circumstances under which they were made, not misleading.
Beneficiary may publicize the existence of the Loan in connection with its
marketing for a Secondary Market Transaction or otherwise as part of its
business development. For purposes hereof, the term “Sanctioned Information
means written disclosure materials prepared by Beneficiary for use in
connection with a Secondary Market Transaction, but only that portion of such
disclosure materials that contain information about


 


44





















 


Trustor’s
financial condition, business or operations or about the Trust Property, and
which disclosure materials Trustor has expressly approved in writing for such
use after having had not less than five (5) business days, to review the
final forms of such disclosure materials.


 


20.                               Recording
of Deed of Trust, Etc. Trustor forthwith upon the execution and
delivery of this Deed of Trust and thereafter, from time to time, will cause
this Deed of Trust, and any security instrument creating a lien or security
interest or evidencing the lien hereof upon the Trust Property and each instrument
of further assurance to be filed, registered or recorded in such manner and in
such places as may be required by any present or future law in order to publish
notice of and fully to protect the lien or security interest hereof upon, and
the interest of Beneficiary in, the Trust Property. Trustor will pay all filing,
registration or recording fees, and all expenses incident to the preparation,
execution and acknowledgment of this Deed of Trust, any deed of trust
supplemental hereto, any security instrument with respect to the Trust Property
and any instrument of further assurance, and all federal, state, county and
municipal, taxes, duties, imposts, assessments and charges arising out of or in
connection with the execution and delivery of this Deed of Trust, any deed of
trust supplemental hereto, any security instrument with respect to the Trust
Property or any instrument of further assurance, except where prohibited by law
so to do. TRUSTOR HEREBY AGREES, AT ITS SOLE
COST AND EXPENSE,  TO PROTECT, DEFEND, INDEMNIFY, RELEASE AND HOLD HARMLESS
THE INDEMNIFIED PARTIES (AS DEFINED BELOW) FROM AND AGAINST ANY AND ALL LOSSES
(AS DEFINED BELOW) IMPOSED UPON OR INCURRED BY OR ASSERTED AGAINST ANY
INDEMNIFIED PARTIES AND DIRECTLY OR INDIRECTLY ARISING OUT OF OR IN ANY  WAY RELATING TO ANY
TAX ON THE MAKING AND/OR RECORDING OF ANY OF THE LOAN DOCUMENTS.


 


21.                               Notice
of Certain Events.  Trustor
agrees to give prompt notice to Beneficiary of the insolvency or bankruptcy
filing of Trustor or the death, insolvency or bankruptcy filing of any
Guarantor.


 


22.                               Events
of Default. The Debt shall become immediately due and payable at the
option of Beneficiary upon the happening of any one or more of the following
events of default (each an “Event of Default”):


 


(a)                                 failure
to make payment of (1) interest or principal within five (5) days
after the same is due, or (2) the entire Debt on or before the Maturity
Date;


 


(b)                                 subject
to Trustor’s right to contest as provided herein, if any of the Taxes or Other
Charges are not paid when the same are due and payable (unless and to the
extent such failure is due to Beneficiary’s failure to pay Taxes when sums
sufficient for such purpose are on deposit in the Tax and Insurance Impound and
no other Event of Default exits that is then continuing);


 


(c)                                  if
the Policies are not kept in full force and effect (unless the same results
from Beneficiary’s failure to pay the applicable premiums therefor when sums
sufficient for such purpose are on deposit in the Tax and Insurance Impound and
no other Event of Default exits that is then continuing), or if the evidence of
the Policies are not delivered to Beneficiary when required under Paragraph
2 and such failure continues for fifteen (15) days after written notice thereof
from Beneficiary to Grantor;


 


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(d)                                 if
Trustor, Guarantor or either of their respective Governing Entities consummates
a Transfer that is not expressly permitted under the terms of this Deed of
Trust without Beneficiary’s prior written consent;


 


(e)                                  if
any representation or warranty of Trustor, or of any Guarantor, made herein or in
any other Loan Document or in any certificate, report, financial statement or
other instrument or document furnished to Beneficiary shall have been false or
misleading in any material respect when made, and such representation or warranty
shall, if the condition that gave rise to the breach of representation or
warranty is susceptible of being cured, remain untrue or incorrect in a material
respect for a period ending thirty (30) days after Trustor shall receive
written notice of the falsity or inaccuracy of such representation or warranty
from Beneficiary; provided, however, that if the breach of the representation
or warranty is susceptible of cure but cannot reasonably be cured within such
thirty (30)-day period and Trustor shall have commenced to cure such breach within
such thirty (30)-day period and thereafter diligently and expeditiously
proceeds to cure the same, Trustor shall have such additional time as is
reasonably necessary to effect such cure, but in no event in excess of one
hundred twenty (120) days from the original notice;


 


(f)                                   if
Trustor or any Guarantor shall make an assignment for the benefit of creditors or
if Trustor or any Guarantor shall generally not be paying its debts as they
become due;


 


(g)                                  if
a receiver, liquidator or trustee of Trustor or of any Guarantor shall be appointed
or if Trustor or any Guarantor shall be adjudicated a bankrupt or insolvent, or
if any petition for bankruptcy, reorganization or arrangement pursuant to
federal bankruptcy law, or any similar federal or state law, shall be filed by
or against, consented to, or acquiesced in by, Trustor or any Guarantor or if
any proceeding for the dissolution or liquidation of Trustor or of any Guarantor
shall be instituted; however, if such appointment, adjudication, petition or
proceeding was involuntary and not consented to by Trustor or such Guarantor,
upon the same not being discharged, stayed or dismissed within sixty (60) days;


 


(h)                                 if
Trustor shall be in default under any other deed of trust or security agreement
covering any part of the Trust Property whether it be superior or junior in
lien to this Deed of Trust;


 


(i)                                     subject
to Trustor’s right to contest certain liens as provided for in this Deed of
Trust, if the Trust Property becomes subject to any lien, except a lien for
local real estate taxes and assessments not then due and payable, and such lien
is not discharged of record (by payment, bonding or otherwise) within thirty
(30) calendar days after the date Trustor receives written notice that the same
is filed of record;


 


(j)                                    if
any federal tax lien is filed against Trustor, Guarantor or either of their
respective Governing Entities, or any of the Trust Property, and the same is
not discharged of record within thirty (30) calendar days after the date the
same is filed of record;


 


(k)                                 if
Trustor fails to cure properly any violations of laws or ordinances affecting
or which may be interpreted to affect the Trust Properly within thirty (30)
days after Trustor first receives notice of any such violations; provided,
however, if such default is reasonably


 


46





















 


susceptible of
cure, but not within such thirty (30) day period, then Trustor may be permitted
up to an additional one hundred twenty (120) days to cure such default provided
that Trustor commences a cure within such initial thirty (30) day period and
thereafter diligently and continuously pursues such cure;


 


(l)                                     except
as permitted in this Deed of Trust or required pursuant to the terms of any
Lease, the alteration, improvement, demolition or removal of any of the
Improvements, or any construction on the Premises, without the prior consent of
Beneficiary;


 


(m)                             if
Trustor fails to cure a default under any other term, covenant or provision of
this Deed of Trust or in the Note or any of the other Loan Documents, other
than those referred to in subsections (a), (b), (c), (d), (e), (f), (g), (h),
(i), (j), (k), (1), (n) or (o) of this Paragraph 22, and such default is
susceptible of being cured, such default shall remain uncured for a period
ending thirty (30) days after Trustor first receives notice of any such
default; provided, however, that if the default is reasonably susceptible of
cure but cannot reasonably be cured within such thirty (30)-day period and
Trustor shall have commenced to cure such default within such thirty (30)-day
period and thereafter diligently and expeditiously proceeds to cure the same,
Trustor shall have such additional time as is reasonably necessary to effect
such cure, but in no event in excess of one hundred twenty (120) days from the
original notice;


 


(n)                                 if,
without Beneficiary’s prior written consent or in connection with the
engagement of a replacement Manager reasonably satisfactory to Beneficiary, (i) the
Management Agreement is terminated by Trustor, (ii) Trustor permits or
consents to a transfer of the ownership, management or control of Manager other
than to Trustor’s Governing Entity or any affiliate thereof or any affiliate of
Republic Properties Corporation, or (iii) there is a material change in
the Management Agreement; or


 


(o)                                 if
Trustor ceases to continuously operate the Improvements or any material portion
thereof for any reason whatsoever (other than temporary cessation in connection
with any repair or renovation thereof undertaken pursuant to the terms of this
Deed of Trust or with the prior written consent of Beneficiary).


 


23.                               Late
Payment Charge. If any portion of the Debt is not paid within five (5) days
of (and including) the date on which it is due, Trustor shall pay to
Beneficiary upon demand an amount equal to the lesser of five percent (5%) of
such unpaid portion of the Debt or the maximum amount permitted by applicable
law in order to defray a portion of the expenses incurred by Beneficiary in
handling and processing such delinquent payment and to compensate Beneficiary
for the loss of the use of such delinquent payment, and such amount shall be
secured by this Deed of Trust.


 


24.                               Beneficiary’s
Right To Cure Defaults. Upon the occurrence of any Event of Default or
if Trustor fails to make any payment or to do any act as herein provided,
Beneficiary may, so long as such Event of Default or failure is then
continuing, but without any obligation to do so and without notice to or demand
on Trustor and without releasing Trustor from any obligation hereunder, make or
do the same in such manner and to such extent as Beneficiary may deem necessary
to protect the security hereof. Beneficiary is authorized to enter upon the
Trust Property for such purposes or appear in, defend, or bring any action or
proceeding to protect its interest in the Trust Property or to foreclose this
Deed of Trust or


 


47





















 


collect the Debt, and the
cost and expense thereof (including reasonable attorneys’ fees and
disbursements to the extent permitted by law), with interest at the Default
Rate (as defined in the Note) for the period after notice from Beneficiary that
such cost or expense was incurred to the date of payment to Beneficiary, shall constitute
a portion of the Debt, shall be secured by this Deed of Trust and the other
Loan Documents and shall be due and payable to Beneficiary upon demand.


 


25.                               Remedies.


 


(a)                                 Upon
the occurrence and during the continuance of any Event of Default, Beneficiary
or Trustee may take such action, without notice or demand, as it deems
advisable to protect and enforce its rights against Trustor and in and to the
Trust Property by Beneficiary itself or through Trustee or otherwise,
including, without limitation, the following actions, each of which may be
pursued concurrently or otherwise, at such time and in such order as
Beneficiary may determine, in its sole discretion, without impairing or
otherwise affecting the other rights and remedies of Beneficiary:


 


(i)                                     Declare
the entire Debt to be immediately due and payable.


 


(ii)                                  Institute
a proceeding or proceedings, judicial or nonjudicial, by advertisement or
otherwise, for the complete foreclosure of this Deed of Trust in which case the
Trust Property or any interest therein may be sold for cash or upon credit in
one or more parcels or in several interests or portions and in any order or
manner.


 


(iii)                               With or without entry,
to the extent permitted and pursuant to the procedures provided by applicable
law, institute proceedings for the partial foreclosure of this Deed of Trust
for the portion of the Debt then due and payable, subject to the continuing
lien of this Deed of Trust for the balance of the Debt not then due.


 


(iv)                              Sell
for cash or upon credit the Trust Property or any part thereof and all estate,
claim, demand, right, title and interest of Trustor therein and rights of
redemption thereof, pursuant to the power of sale contained herein or
otherwise, at one or more sales, as an entirety or in parcels, at such time and
place, upon such terms and after such notice thereof as may be required or
permitted by law.


 


(v)                                 Institute
an action, suit or proceeding in equity for the specific performance of any
covenant, condition or agreement contained herein, or in any of the other Loan
Documents.


 


(vi)                              Recover
judgment on the Note either before, during or after any proceedings for the
enforcement of this Deed of Trust.


 


(vii)                           Apply for the appointment of
a trustee, receiver, liquidator or conservator of the Trust Property, without
notice and without regard for the adequacy of the security for the Debt and
without regard for the solvency of the Trustor, any Guarantor or of any person,
firm or other entity liable for the payment of the Debt.


 


48





















 


(viii)                        At any time, and without
notice, either in person, by agent, or by receiver to be appointed by a court,
enter and take possession of the Trust Property or any part thereof, and in its
own name, sue for or otherwise collect the Rents. Trustor hereby agrees that
Beneficiary shall have the right (in its sole discretion), whenever an Event of
Default has occurred and is then continuing, to terminate the License granted
to Trustor in Paragraph 7 hereof, and thereafter direct by written
notice to the lessees under the Leases (“Lease Rent Notice”)
to pay directly to Beneficiary the Rents due and to become due under the Leases
and attorn in respect of all other obligations thereunder directly to
Beneficiary, or Trustee on Beneficiary’s behalf, without any obligation on the
part of lessees to determine whether an Event of Default does in fact exist or
has in fact occurred. All Rents collected by Beneficiary, or Trustee acting on
Beneficiary’s behalf, shall be applied as provided for in Paragraph 7 of
this Deed of Trust; provided, however, that if the costs, expenses, and
attorneys’ fees shall exceed the amount of Rents collected, the excess shall be
added to the Debt, shall bear interest at the Default Rate, and shall be
immediately due and payable. The entering upon and taking possession of the
Trust Property, the collection of Rents, and the application thereof as
aforesaid shall not cure or waive any Event of Default or notice of default, if
any, hereunder nor invalidate any act done pursuant to such notice, except to
the extent any such default is fully cured. Failure or discontinuance by
Beneficiary, or Trustee on Beneficiary’s behalf, at any time or from time to
time, to collect said Rents shall not in any manner impair the subsequent enforcement
by Beneficiary, or Trustee on Beneficiary’s behalf, of the right, power and
authority herein conferred upon it. Nothing contained herein, nor the exercise
of any right, power, or authority herein granted to Beneficiary, or Trustee on
Beneficiary’s behalf, shall be, or shall be construed to be, an affirmation by
it of any tenancy, lease, or option, nor an assumption of liability under, nor
the subordination of, the lien or charge of this Deed of Trust, to any such
tenancy, lease, or option, nor an election of judicial relief, if any such
relief is requested or obtained as to Leases or Rents, with respect to the
Trust Property or any collateral given by Trustor to Beneficiary. In addition,
from time to time Beneficiary may elect, and notice hereby is given to each
lessee under any Lease, to subordinate the lien of this Deed of Trust to any
Lease by unilaterally executing and recording an instrument of subordination,
and upon such election the lien of this Deed of Trust shall be subordinate to
the Lease identified in such instrument of subordination; provided, however, in
each instance such subordination will not affect or be applicable to, and
expressly excludes any lien, charge, encumbrance, security interest, claim,
easement, restriction, option, covenant and other rights, titles, interests or
estates of any nature whatsoever with respect to all or any portion of the
Trust Property to the extent that the same may have arisen or intervened during
the period between the recordation of this Deed of Trust and the execution of
the Lease identified in such instrument of subordination.


 


(ix)                              Enter
into or upon the Trust Property, either personally or by its agents, nominees
or attorneys and dispossess Trustor and its agents and servants therefrom, and
thereupon Beneficiary may (A) use, operate, manage, control, insure,
maintain, repair, restore and otherwise deal with all and every part of the
Trust Property and conduct the business thereat; (B) complete any
construction on the Trust Property in such manner and form as Beneficiary deems
advisable; (C) make alterations, additions, renewals,


 


49





















 


replacements and
improvements to or on the Trust Property; (D) exercise all rights and
powers of Trustor with respect to the Trust Property, whether in the name of
Trustor or otherwise.


 


(x)                                 Pursue
such other rights and remedies as may be available at law or in equity or under
the Uniform Commercial Code.


 


In the event of a
sale, by foreclosure or otherwise, of less than all of the Trust Property, this
Deed of Trust shall continue as a lien on the remaining portion of the Trust
Property.


 


(b)                                 The
proceeds of any sale made under or by virtue of this paragraph, together with any
other sums which then may be held by Beneficiary under this Deed of Trust,
whether under the provisions of this paragraph or otherwise, shall be applied
by Beneficiary to the payment of the Debt in such priority and proportion as
Beneficiary in its sole discretion shall deem proper.


 


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


 


(d)                                 Upon
the completion of any sale or sales pursuant hereto, Beneficiary, or an officer
of any court empowered to do so, shall execute and deliver to the accepted
purchaser or purchasers a good and sufficient instrument, or good and
sufficient instruments, conveying, assigning and transferring all estate,
right, title and interest in and to the property and rights sold. Any sale or
sales made under or by virtue of this paragraph, whether made under the power
of sale herein granted or under or by virtue of judicial proceedings or of a
judgment or decree of foreclosure and sale, shall operate to divest all the
estate, right, title, interest, claim and demand whatsoever, whether at law or
in equity, of Trustor in and to the properties and rights so sold, and shall be
a perpetual bar both at law and in equity against Trustor and against any and
all persons claiming or who may claim the same, or any part thereof from,
through or under Trustor.


 


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


 


(f)                                   No
recovery of any judgment by Beneficiary and no levy of an execution under any
judgment upon the Trust Property or upon any other property of Trustor shall
affect in any manner or to any extent the lien of this Deed of Trust upon the
Trust Property or any part thereof, or any liens, rights, powers or remedies of
Beneficiary hereunder, but such liens, rights, powers and remedies of
Beneficiary shall continue unimpaired as before.


 


50





















 


(g)                                  Beneficiary
may terminate or rescind any proceeding or other action brought in connection
with its exercise of the remedies provided in this paragraph at any time before
the conclusion thereof, as determined in Beneficiary’s sole discretion and
without prejudice to Beneficiary.


 


(h)                                 Beneficiary
or Trustee may resort to any remedies and the security given by the Note, this
Deed of Trust or in any of the other Loan Documents in whole or in part, and in
such portions and in such order as determined by Beneficiary’s sole discretion.
No such action shall in any way be considered a waiver of any rights, benefits
or remedies evidenced or provided by the Note, this Deed of Trust or in any of
the other Loan Documents. The failure of Beneficiary or Trustee to exercise any
right, remedy or option provided in the Note, this Deed of Trust or in any of
the other Loan Documents shall not be deemed a waiver of such right, remedy or
option or of any covenant or obligation secured by the Note, this Deed of Trust
or the other Loan Documents. No acceptance by Beneficiary of any payment after
the occurrence of any Event of Default and no payment by Beneficiary of any
obligation for which Trustor is liable hereunder shall be deemed to waive or
cure any Event of Default with respect to Trustor, or Trustor’s liability to
pay such obligation. No sale of all or any portion of the Trust Property, no
forbearance on the part of Beneficiary or Trustee, and no extension of time for
the payment of the whole or any portion of the Debt or any other indulgence
given by Beneficiary or Trustee to Trustor, shall operate to release or in any
manner affect the interest of Beneficiary in the remaining Trust Property or
the liability of Trustor to pay the Debt. No waiver by Beneficiary or Trustee
shall be effective unless it is in writing and then only to the extent
specifically stated. All costs and expenses of Beneficiary in exercising its
rights and remedies under this Paragraph 25 (including reasonable
attorneys’ fees and disbursements to the extent permitted by law), shall be
paid by Trustor immediately upon notice from Beneficiary or Trustee, with
interest at the Default Rate for the period after notice from Beneficiary or
Trustee and such costs and expenses shall constitute a portion of the Debt and
shall be secured by this Deed of Trust.


 


(i)                                     The
interests and rights of Beneficiary under the Note, this Deed of Trust or in
any of the other Loan Documents shall not be impaired by any indulgence,
including (i) any renewal, extension or modification which Beneficiary may
grant with respect to any of the Debt, (ii) any surrender, compromise,
release, renewal, extension, exchange or substitution which Beneficiary may
grant with respect to the Trust Property or any portion thereof; or (iii) any
release or indulgence granted to any maker, endorser, Guarantor or surety of
any of the Debt.


 


26.                               Right
of Entry and Inspection.  In
addition to any other rights or remedies granted under this Deed of Trust,
Beneficiary, Trustee and their agents shall have the right to enter and inspect
the Premises, Improvements and Equipment at any reasonable time during the
Term, and inspect, examine, audit and copy Trustor’s books and records,
including all recorded data of any kind or nature, regardless of the medium of
recording. The cost of such inspections, examinations, copying or audits shall
be borne by Trustor should Beneficiary determine that an Event of Default
exists that is then continuing, including the cost of all follow up or
additional investigations, audits or inquiries deemed reasonably necessary by
Beneficiary. The cost of such inspections, examinations, audits and copying, if
not paid for by Trustor following demand, may be added to the Debt and shall
bear interest thereafter until paid at the Default Rate. If Trustor prohibits,
bars or fails to permit Beneficiary, Trustee or their agents from entering and
inspecting the Premises, Improvements and Equipment at any reasonable time
during the Term, or from


 


51





















 


inspecting, examining,
auditing and copying Trustor’s books and records, including all recorded data
of any kind or nature, regardless of the medium of recording, for more than
five (5) days after a request is made by Beneficiary to do so, Trustor
agrees to pay Beneficiary on demand the sum of $1,000.00 for each day after
such five (5) day period that Trustor so prohibits, bars or fails, and
such sum or sums shall be part of the Debt.


 


27.                               Security
Agreement.  This Deed of Trust is
both a real property deed of trust and a “security agreement” within the
meaning of the Uniform Commercial Code. The Trust Property includes both real
and personal property and all other assets, rights and interests, whether
tangible or intangible in nature, including all proceeds and products thereof,
and all supporting obligations ancillary to or arising in any way in connection
therewith, of Trustor in the Trust Property. It is the intent of Trustor,
Beneficiary, and Trustee that the lien and security interest granted in this
Deed of Trust encumber all Leases and that all items contained in the
definition of “Leases” which are included within the Uniform Commercial Code be
covered by the security interest granted in this Paragraph 27; and all
items contained in the definition of “Leases” which are excluded from the
Uniform Commercial Code be covered by the grant of a deed of trust lien against
the Trust Property contained in this Deed of Trust. Trustor by executing and
delivering this Deed of Trust has granted and hereby grants to Beneficiary and
Trustee, as security for the Debt, a security interest in the Trust Property to
the full extent that the Trust Property may be subject to the Uniform
Commercial Code (said portion of the Trust Property so subject to the Uniform
Commercial Code being called in this paragraph the “Collateral”). Trustor
hereby agrees with Beneficiary to execute and deliver to Beneficiary, in form
and substance satisfactory to Beneficiary, such financing statements, financing
statement amendments and such further assurances as Beneficiary may from time
to time, reasonably consider necessary to create, perfect, and preserve Beneficiary’s
security interest herein granted. This Deed of Trust shall also constitute a “fixture
filing” for the purposes of the Uniform Commercial Code. As such, this Deed of
Trust covers all items of the Collateral that are or are to become fixtures.
Information concerning the security interest herein granted may be obtained
from the parties at the addresses of the parties set forth in the first
paragraph of this Deed of Trust. If an Event of Default shall occur that is
then continuing, Beneficiary and Trustee, in addition to any other rights and
remedies which it may have, shall have and may exercise immediately and without
demand, any and all rights and remedies granted to a secured party upon default
under the Uniform Commercial Code, including, without limiting the generality
of the foregoing, the right to take possession of the Collateral or any part
thereof, and to take such other measures as Beneficiary or Trustee may deem
necessary for the care, protection and preservation of the Collateral. Upon request
or demand of Beneficiary or Trustee, Trustor shall at its expense assemble the
Collateral and make it available to Beneficiary and Trustee at a convenient
place acceptable to Beneficiary. Trustor shall pay to Beneficiary and Trustee
on demand any and all expenses, including fees and disbursements, incurred or
paid by Beneficiary and Trustee in protecting the interest in the Collateral
and in enforcing the rights hereunder with respect to the Collateral. Any
notice of sale, disposition or other intended action by Beneficiary and Trustee
with respect to the Collateral sent to Trustor in accordance with the
provisions hereof at least five (5) days prior to such action, shall
constitute commercially reasonable notice to Trustor; provided that if
Beneficiary fails to comply with this sentence in any respect, its liability
for such failure shall be limited to the liability (if any) imposed on it as a
matter of law under the Uniform Commercial Code. The proceeds of any
disposition of the Collateral, or any part thereof, may be applied by
Beneficiary to the payment of the Debt in such priority and proportions as
Beneficiary in its sole discretion shall deem proper. Beneficiary may comply
with any applicable state or federal law or regulatory requirements in connection
with a disposition of the Collateral, and such compliance will not be
considered or deemed to affect adversely the commercial reasonableness of any


 


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sale of the Collateral.
Beneficiary may sell the Collateral without giving any warranties as to the
Collateral, and specifically disclaim any warranties of title, merchantability,
fitness for a specific purpose or the like, and this procedure will not be
considered or deemed to affect adversely the commercial reasonableness of any
sale of the Collateral. Trustor acknowledges that a private sale of the
Collateral may result in less proceeds than a public sale, and Trustor
acknowledges that the Collateral may be sold at a loss to Trustor, and that, in
such event, Beneficiary shall have no liability or responsibility to Trustor or
any other party for such loss. If Beneficiary shall require the filing or
recording of additional Uniform Commercial Code financing statements,
amendments thereto or continuation statements, Trustor shall, promptly after
request, execute, file and record such Uniform Commercial Code financing
statements, amendments thereto or continuation statements as Beneficiary shall
deem necessary, and shall pay all expenses and fees in connection with the
filing and recording thereof, it being understood and agreed, however, that no
such additional documents shall increase Trustor’s obligations under the Note,
this Deed of Trust or any of the other Loan Documents. Trustor hereby
authorizes Beneficiary at any time and from time to time to file any initial
financing statements, amendments thereto and continuation statements with or
without the signature of Trustor as authorized by applicable law, including any
statements describing the collateral as being all assets of Trustor, it being
acknowledged that all such assets subject to the Uniform Commercial Code are
intended to be included in the Collateral. For purposes of such filings,
Trustor agrees to furnish promptly any information reasonably requested by
Beneficiary. Trustor also hereby ratifies its authorization for Beneficiary to
have filed any like initial financing statements, amendments thereto or
continuation statements if filed prior to the date of this Deed of Trust.
Trustor hereby irrevocably appoints Beneficiary and any officer or agent of
Beneficiary, with full power of substitution, as its true and lawful
attorney-in-fact, coupled with an interest, with full irrevocable power and
authority in the place and stead of Trustor or in Trustor’s name to execute in
Trustor’s name any such documents and to otherwise carry out the purposes of
this Paragraph, to the extent that Trustor’s authorization above is
deemed not to be sufficient as a matter of law. To the extent permitted by law,
Trustor hereby ratifies all acts said attorneys-in-fact shall lawfully do, have
done in the past or cause to be done in the future by virtue hereof.


 


28.                               Actions
and Proceedings.  Beneficiary or
Trustee has the right to appear in and defend any action or proceeding brought
with respect to the Trust Property and to bring any action or proceeding, in the
name and on behalf of Trustor, which Beneficiary, in its sole discretion,
decides should be brought to protect their interest in the Trust Property.
Beneficiary shall, at its option, be subrogated to the lien of any deed of
trust or other security instrument discharged in whole or in part by the Debt,
and any such subrogation rights shall constitute additional security for the
payment of the Debt.


 


29.                               Contest
of Certain Claims.  At its own
expense, Trustor may contest by appropriate legal proceeding, promptly
initiated and conducted in good faith and with due diligence, the amount or
validity or application in whole or in part of any Taxes, Other Charges or
mechanic’s or materialman’s lien asserted against the Trust Property if, and so
long as, (a) such Lien is not being foreclosed or such legal proceedings
shall operate to prevent the enforcement or collection of the same and the sale
of the Trust Property or any part thereof, to satisfy the same and either (i) within
sixty (60) days of the inception of such Lien such Lien is released or
discharged of record or is fully insured over by the title issuer that issued
the title insurance policy that insures the lien of this Deed of Trust such
that the Lien is not an exception to Beneficiary’s title to the Trust Property
pursuant to this Deed of Trust, or (ii) Trustor deposits with Beneficiary,
by the expiration of such sixty (60)-day period, a cash deposit, or an
indemnity bond satisfactory to Beneficiary with a surety satisfactory to
Beneficiary, in the amount of the Taxes,


 


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Other Charges or mechanic’s
or materialman’s lien claim, plus a reasonable additional sum to pay all costs,
interest and penalties that may be imposed or incurred in connection therewith,
to assure payment of the matters under contest and to prevent any sale or
forfeiture of the Trust Property or any part thereof; (d) Trustor shall
promptly upon final determination thereof pay the amount of any such Taxes,
Other Charges or claim so determined, together with all costs, interest and
penalties which may be payable in connection therewith. Notwithstanding the
foregoing, Trustor shall immediately upon request of Beneficiary pay (and if
Trustor shall fail so to do, Beneficiary may, but shall not be required to, pay
or cause to be discharged or bonded against) any such Taxes, Other Charges or
claim notwithstanding such contest, if in the reasonable opinion of Beneficiary,
the Trust Property or any part thereof or interest therein may be in danger of
being sold, forfeited, foreclosed, terminated, canceled or lost. Beneficiary
may pay over any such cash deposit or part thereof to the claimant entitled
thereto at any time when, in the reasonable judgment of Beneficiary, the
entitlement of such claimant is established.


 


30.                               Recovery
of Sums Required to be Paid.  Beneficiary
shall have the right from time to time to take action to recover any sum or
sums which constitute a part of the Debt as the same become due, without regard
to whether or not the balance of the Debt shall be due, and without prejudice
to the right of Beneficiary or Trustee thereafter to bring an action of
foreclosure, or any other action, for a default or defaults by Trustor existing
at the time such earlier action was commenced.


 


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


 


32.                               Hazardous
Substances.  All of the terms and
provisions of Article II of the Environmental Indemnity are hereby
incorporated into this Deed of Trust for all purposes as if set verbatim
herein.


 


33.                               Environmental
Operations.  All of the terms and
provisions of Section 3.1 of the Environmental Indemnity are hereby
incorporated into this Deed of Trust for all purposes as if set verbatim
herein.


 


34.                               Environmental
Monitoring.  All of the terms and
provisions of Section 3.2 of the Environmental Indemnity are hereby
incorporated into this Deed of Trust for all purposes as if set verbatim
herein.


 


35.                               Compliance
with Law; Alterations.


 


(a)                                 Trustor
agrees that the Trust Property shall at all times comply in all material respects
with applicable with all Access Laws.


 


(b)                                 Notwithstanding
any provisions set forth herein or in any other document regarding Beneficiary’s
approval of alterations of the Premises or Improvements, Trustor shall not alter
the Premises or Improvements in any manner which would increase Trustor’s
responsibilities for compliance with the applicable Access Laws without the
prior written approval of Beneficiary


 


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except to the
extent that such increased responsibilities cannot reasonably be expected to
have a Material Adverse Effect. Beneficiary’s approval of the plans,
specifications, or working drawings for alterations of the Premises or
Improvements shall create no responsibility or liability on behalf of
Beneficiary for their completeness, design, sufficiency or their compliance
with the Access Laws. The foregoing shall apply to tenant improvements
constructed by Trustor or by any of its tenants. Beneficiary may condition any
such approval upon receipt of a certificate of Access Law compliance from an
independent architect, engineer, or other person acceptable to Beneficiary.


 


(c)                                  Trustor
agrees to give prompt notice to Beneficiary of the receipt by Trustor of any
complaints related to violation of any Access Laws and of the commencement of
any proceedings or investigations which relate to compliance with applicable
Access Laws.


 


(d)                                 Trustor
shall take all appropriate measures to prevent, and will not engage in or knowingly
permit any party to engage in, any criminal or illegal activities at the
Premises or Improvements.


 


36.                               Indemnification.


 


(a)                                 TRUSTOR,
AT ITS SOLE COST AND EXPENSE, SHALL PROTECT, DEFEND, INDEMNIFY AND SAVE
HARMLESS THE INDEMNIFIED PARTIES
(DEFINED BELOW) FROM AND AGAINST ALL LOSSES (AS DEFINED BELOW) IMPOSED UPON OR
INCURRED BY OR ASSERTED AGAINST ANY OF THE INDEMNIFIED PARTIES BY REASON OF (A) OWNERSHIP
OF THIS DEED OF TRUST, THE TRUST PROPERTY OR ANY INTEREST THEREIN OR RECEIPT OF
ANY RENTS; (B) ANY ACCIDENT, INJURY TO OR DEATH OF PERSONS OR LOSS OF OR
DAMAGE TO PROPERTY OCCURRING IN, ON OR ABOUT THE PREMISES OR IMPROVEMENTS OR
ANY PART THEREOF OR ON THE ADJOINING SIDEWALKS, CURBS, ADJACENT PROPERTY
OR ADJACENT PARKING AREAS, STREETS OR WAYS; (C) ANY USE, NONUSE OR CONDITION IN, ON OR ABOUT THE PREMISES OR
IMPROVEMENTS OR ANY PART THEREOF OR ON ADJOINING SIDEWALKS, CURBS,
ADJACENT PROPERTY OR ADJACENT PARKING AREAS, STREETS OR WAYS; (D) ANY
FAILURE ON THE PART OF TRUSTOR OR TRUSTEE TO PERFORM OR COMPLY WITH
ANY OF THE TERMS OF THIS DEED OF TRUST; (E) PERFORMANCE OF ANY LABOR OR
SERVICES OR THE FURNISHING OF ANY MATERIALS OR OTHER PROPERTY IN RESPECT OF THE
TRUST PROPERTY OR ANY PART THEREOF; (F) ANY FAILURE OF THE TRUST
PROPERTY TO COMPLY WITH ANY APPLICABLE LAW, INCLUDING ACCESS LAWS; (G) ANY
REPRESENTATION OR WARRANTY MADE IN THE
NOTE, THIS DEED OF TRUST OR ANY OF THE OTHER LOAN DOCUMENTS BEING FALSE OR
MISLEADING IN ANY MATERIAL RESPECT AS OF THE DATE SUCH REPRESENTATION OR
WARRANTY WAS MADE; (H) ANY CLAIM BY BROKERS, FINDERS OR SIMILAR PERSONS
CLAIMING TO BE ENTITLED TO A COMMISSION IN CONNECTION WITH ANY LEASE OR OTHER
TRANSACTION INVOLVING THE TRUST PROPERTY OR ANY PART THEREOF UNDER ANY
LEGAL REQUIREMENT OR ANY LIABILITY ASSERTED AGAINST ANY INDEMNIFIED PARTY WITH
RESPECT THERETO; AND (I) ANY AND ALL CLAIMS


 


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AND
DEMANDS WHATSOEVER WHICH MAY BE ASSERTED AGAINST ANY INDEMNIFIED PARTY BY
REASON OF ANY ALLEGED OBLIGATIONS OR UNDERTAKINGS ON SUCH PARTY’S PART TO
PERFORM OR DISCHARGE ANY OF THE TERMS, COVENANTS, OR AGREEMENTS CONTAINED
IN ANY LEASE. HOWEVER, NOTHING HEREIN SHALL BE CONSTRUED TO OBLIGATE TRUSTOR TO
INDEMNIFY, DEFEND AND HOLD HARMLESS ANY INDEMNIFIED PARTY FROM AND AGAINST ANY
AND ALL LIABILITIES, OBLIGATIONS, LOSSES, DAMAGES, PENALTIES, CLAIMS, ACTIONS,
SUITS, COSTS AND EXPENSES  ENACTED AGAINST, IMPOSED ON OR INCURRED BY ANY
INDEMNIFIED PARTY BY REASON OF SUCH PARTY’S WILLFUL MISCONDUCT OR GROSS
NEGLIGENCE. THIS INDEMNITY SHALL SURVIVE PAYMENT IN FULL OF THE DEBT, THE
TERMINATION, SATISFACTION, RELEASE OR ASSIGNMENT
OF THIS DEED OF TRUST AND THE EXERCISE BY
BENEFICIARY OF ANY OF ITS RIGHTS OR REMEDIES HEREUNDER, INCLUDING, BUT NOT
LIMITED TO, THE ACQUISITION OF THE TRUST PROPERTY BY FORECLOSURE OR A
CONVEYANCE IN LIEU OF FORECLOSURE.


 


(b)                                 As
 used  in this herein,  the term (i)  “Indemnified Parties”  means
(A) Beneficiary, (B) Trustee, (C) any officers, directors, shareholders,
partners, members, employees, agents, attorneys, servants, representatives,
contractors, subcontractors, affiliates or subsidiaries of any and all of the
foregoing, and (D) the heirs, legal representatives, successors and
assigns of any and all of the foregoing (including, without limitation, any
successors by merger, consolidation or acquisition of all or a substantial
portion of an Indemnified Party’s assets and business), in all cases whether
during the term of the Loan or as part of or following a foreclosure of the
Loan; and (ii) the term “Losses” means
any and all claims, suits, liabilities (including, without limitation, strict
liabilities), actions, proceedings, obligations, debts, demands, causes of
action, damages, losses, costs, expenses, fines, penalties, charges, fees,
judgments, awards, amounts paid in settlement of whatever kind or nature (including
but not limited to reasonable attorneys’ fees and other costs of defense).


 


(c)                                  Upon
written request by any Indemnified Party, Trustor shall defend such Indemnified
Party (if requested by any Indemnified Party, in the name of the Indemnified
Party) by attorneys and other professionals approved by such Indemnified Party.
Notwithstanding the foregoing, any Indemnified Party may, in its sole
discretion, engage its own attorneys and other professionals to defend or
assist it, and, at the option of such Indemnified Party, its attorneys shall control
the resolution of any claim or proceeding. Upon demand, Trustor shall pay or,
in the sole discretion of the Indemnified Parties, reimburse, the Indemnified
Parties for the payment of reasonable fees and disbursements of attorneys, engineers,
environmental consultants, laboratories and other professionals in connection
therewith.


 


(d)                                 Any
amounts payable to Beneficiary or Trustee by reason of the application of this Paragraph
36 shall be secured by this Deed of Trust and shall become immediately due
and payable and shall bear interest at the Default Rate from the date loss or
damage is sustained by the Indemnified Parties until paid.


 


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37.                               Notices.
 Any notice, demand, statement,
request or consent made hereunder shall be in writing, addressed to the
address, as set forth below, of the party to whom such notice is to be given,
or to such other address as Trustor, Beneficiary or Trustee, as the case may
be, shall designate in writing, and shall be deemed to be received by the
addressee on (i) the day such notice is personally delivered to such addressee,
(ii) the day on which such notice is delivered to the addressee if
deposited with the United States postal service first class certified mail,
return receipt requested (as indicated by the return receipt), (iii) the
day on which such notice is delivered to the addressee if delivered by a
nationally recognized overnight courier delivery service (as indicated by the
records of the delivery service), or (iv) the day facsimile transmission
is confirmed after transmission of such notice by telecopy to such telecopier number
as Trustor, Trustee or Beneficiary, as the case may be, shall have previously
designated in writing. Until further changes by notice delivered in accordance
with the provisions of this Paragraph, notices shall be delivered as follows:


 


(a)                                 If
to Trustor, to RKB Lakeside LLC, c/o Republic Properties Corporation, 1280 Maryland
Avenue, SW, Suite 280, Washington, D.C 20024, with a copy to Arent Fox
Kintner Plotkin & Kahn PLLC (Attention: Joseph M. Fries, Esquire),
1050 Connecticut Avenue, NW, Washington, D.C. 20036-5339; and


 


(b)                                 If
to Beneficiary, to Archon Financial, L.P., 600 East Las Colinas Boulevard, Suite 450,
Irving, Texas 75039.


 


38.                               Authority.
 Trustor (and the undersigned
representative of Trustor, if any) represent and warrant that it (or they, as
the case may be) has full power, authority and right to execute, deliver and perform
its obligations pursuant to this Deed of Trust, and to deed, mortgage, give,
grant, bargain, sell, alien, enfeoff, convey, confirm, warrant, pledge,
hypothecate and assign the Trust Property pursuant to the terms hereof and to
keep and observe all of the terms of this Deed of Trust on Trustor’s part to be
performed.


 


39.                               Non-Waiver.
The failure of Beneficiary or Trustee to insist upon strict performance of
any term hereof shall not be deemed to be a waiver of any term of this Deed of
Trust. Any consent or approval by Beneficiary in any single instance shall not
be deemed or construed to be Beneficiary’s consent or approval in any like
matter arising at a subsequent date. Trustor shall not be relieved of Trustor’s
obligations hereunder by reason of (a) the failure of Beneficiary or
Trustee to comply with any request of Trustor or Guarantor to take any action
to foreclose this Deed of Trust or otherwise enforce any of the provisions
hereof or of the Note, or the other Loan Documents, (b) the release,
regardless of consideration, of the whole or any part of the Trust Property, or
of any person liable for the Debt or any portion thereof, or (c) any
agreement or stipulation by Beneficiary extending the time of payment or otherwise
modifying or supplementing the terms of the Note, this Deed of Trust or any of
the other Loan Documents. Beneficiary may resort for the payment of the Debt to
any other security held by Beneficiary in such order and manner as Beneficiary,
in its sole discretion, may elect. Beneficiary or Trustee may take action to
recover the Debt, or any portion thereof, or to enforce any covenant hereof
without prejudice to the right of Beneficiary or Trustee thereafter to
foreclose this Deed of Trust. The rights and remedies of Beneficiary or Trustee
under this Deed of Trust shall be separate, distinct and cumulative and none
shall be given effect to the exclusion of the others. No act of Beneficiary or
Trustee shall be construed as an election to proceed under any one provision
herein to the exclusion of any other


 


57





















 


provision. Beneficiary
and Trustee shall not be limited exclusively to the rights and remedies herein
stated but shall be entitled to every right and remedy now or hereafter
afforded at law or in equity.


 


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


 


41.                               Liability.
 If Trustor consists of more than one
person, the obligations and liabilities of each such person hereunder shall be
joint and several. Subject to the provisions hereof requiring Beneficiary’s consent
to any transfer of the Trust Property, this Deed of Trust shall be binding upon
and inure to the benefit of Trustor and Beneficiary and their respective
successors and assigns forever.


 


42.                               Inapplicable
Provisions.  If any term,
covenant or condition of the Note or this Deed of Trust is held to be invalid,
illegal or unenforceable in any respect, the Note and this Deed of Trust shall
be construed without such provision.


 


43.                               Headings,
Etc.  The headings and captions
of various paragraphs of this Deed of Trust are for convenience of reference
only and are not to be construed as defining or limiting, in any way, the scope
or intent of the provisions hereof.


 


44.                               Duplicate
Originals.  This Deed of Trust
may be executed in any number of duplicate originals and each such duplicate
original shall be deemed to be an original.


 


45.                               Definitions.
 Unless the context clearly indicates
a contrary intent or unless otherwise specifically provided herein, words used
in this Deed of Trust may be used interchangeably in singular or plural form.
The word “Trustor” shall mean “each
Trustor and any subsequent owner or owners of the Trust Property or any part
thereof or any interest therein;” the word “Beneficiary”
shall mean “Beneficiary and any subsequent holder of the Note;” the
word “Trustee” shall mean ““Trustee
and any substitute Trustee of the estates, properties, powers, trusts and
rights conferred upon Trustee pursuant to this Deed of Trust;” the word “Note”
shall mean “the Note and any other evidence of indebtedness secured by this
Deed of Trust together with all extensions, renewals, modifications,
substitutions and amendments thereof;” the word “person” shall include an individual, corporation,
partnership, limited liability company, trust, unincorporated association,
government, governmental authority, and any other entity; the words “Trust Property” shall include any portion
of the Trust Property and any interest therein; the words “Access
Laws” shall refer to “all federal,
state and local laws, orders, ordinances, governmental rules and
regulations, and court orders affecting or which may be interpreted to affect
the Trust Property, or the use thereof, including, without limitation, the
Americans with Disabilities Act, the Americans with Disabilities Act
Accessibility Guidelines for Buildings and Facilities, and the Fair Housing
Amendments Act of 1988;” the words “attorneys’
fees” shall include any and all attorney, paralegal and law clerk
fees and disbursements, including, without limitation, fees and disbursements
at the pre-trial, trial and appellate levels incurred or paid by Beneficiary in
protecting its interest in the Trust Property and Collateral and enforcing its
rights hereunder, whether with respect to retained firms, the reimbursement for
the expenses of in-house staff or otherwise; and the words “Loan Documents” shall include any and all
extensions, renewals, substitutions, replacements, amendments, modifications
and/or


 


58





















 


restatements of any of
the Loan Documents. Whenever the context may require, any pronouns used herein
shall include the corresponding masculine, feminine or neuter forms, and the
singular form of nouns and pronouns shall include the plural and vice versa.


 


46.                               Homestead.
 Trustor hereby waives and renounces
all homestead and exemption rights provided by the Constitution and the laws of
the United States and of any state, in and to the Trust Property as against the
collection of the Debt, or any part hereof.


 


47.                               Assignments.
 Beneficiary shall have the right to
assign or transfer its rights under this Deed of Trust without limitation. Any
assignee or transferee shall be entitled to all the benefits afforded Beneficiary
under this Deed of Trust.


 


48.                               Waiver
of Jury Trial.  TRUSTOR AND
BENEFICIARY HEREBY EACH AGREES NOT TO ELECT A TRIAL BY JURY OF ANY ISSUE TRIABLE OF
RIGHT BY JURY, AND WAIVES ANY RIGHT TO TRIAL BY JURY FULLY TO THE EXTENT THAT ANY
SUCH RIGHT SHALL NOW OR HEREAFTER EXIST WITH REGARD TO THE NOTE, THIS DEED OF
TRUST, OR THE OTHER LOAN DOCUMENTS, OR ANY CLAIM, COUNTERCLAIM OR OTHER ACTION
ARISING IN CONNECTION THEREWITH. THIS WAIVER OF RIGHT TO TRIAL BY JURY IS GIVEN
KNOWINGLY AND VOLUNTARILY BY TRUSTOR AND BENEFICIARY, AND IS INTENDED TO
ENCOMPASS INDIVIDUALLY EACH INSTANCE AND EACH ISSUE AS TO WHICH THE RIGHT TO A TRIAL BY JURY WOULD OTHERWISE  ACCRUE.  
BENEFICIARY  AND  TRUSTOR  ARE  EACH  HEREBY AUTHORIZED TO FILE A COPY OF THIS
PARAGRAPH IN ANY PROCEEDING AS CONCLUSIVE
EVIDENCE OF THIS WAIVER BY TRUSTOR AND BENEFICIARY.


 


49.                               Trustee’s
Fees; Substitute Trustee.


 


(a)                                 Trustor
shall pay all costs, fees and expenses incurred by Trustee and Trustee’s agents
and counsel in connection with the performance by Trustee of Trustee’s duties
hereunder and all such costs, fees and expenses shall be secured by this Deed
of Trust.


 


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


 


59





















 


of Trustee
hereunder unless required by Beneficiary. The procedure provided for in this
paragraph for substitution of Trustee shall be in addition to and not in
exclusion of any other provisions for substitution, by law or otherwise.


 


50.                               Power
of Sale.


 


(a)                                 Upon
the occurrence and during the continuance of an Event of Default, Trustee, or
the agent or successor of Trustee, at the request of Beneficiary, shall sell or
offer for sale the Trust Property in such portions, order and parcels as
Beneficiary may determine with or without having first taken possession of
same, to the highest bidder for cash at one or more public auctions in
accordance with the terms and provisions of the law of the State in which the
Trust Property is located. Such sale shall be made at the area within the
courthouse of the county in which the Trust Property (or any portion thereof to
be sold) is situated (whether the parts or parcels thereof, if any, in
different counties are contiguous or not, and without the necessity of having
any personal property hereby secured present at such sale) which is designated
by the applicable court of such County as the area in which public sales are to
take place, or, if no such area is designated, at the area at the courthouse
designated in the notice of sale as the area in which the sale will take place,
on such day and at such times as permitted under applicable law of the State
where the Trust Property is located, after advertising the time, place and
terms of sale and that portion of the Trust Property in accordance with such
law, and after having served written or printed notice of the proposed sale by
certified mail on each Trustor obligated to pay the Note and other secured
indebtedness secured by this Deed of Trust according to the records of Beneficiary
in accordance with applicable law. The affidavit of any person having knowledge
of the facts to the effect that such service was completed shall be prima facie
evidence of the fact of service.


 


At any such public
sale, Trustee may execute and deliver in the name of Trustor to the purchaser a
conveyance of the Trust Property or any part of the Trust Property in fee
simple. In the event of any sale under this Deed of Trust by virtue of the
exercise of the powers herein granted, or pursuant to any order in any judicial
proceeding or otherwise, the Trust Property may be sold in its entirety or in
separate parcels and in such manner or order as Beneficiary in its sole
discretion may elect, and if Beneficiary so elects, Trustee may sell the
personal property covered by this Deed of Trust at one or more separate sales
in any manner permitted by the Uniform Commercial Code of the State in which
the Trust Property is located, and one or more exercises of the powers herein
granted shall not extinguish or exhaust such powers, until all the Trust
Property is sold or the Note and other secured indebtedness is paid in full. If
the Note and other secured indebtedness is now or hereafter further secured by
any chattel Deed of Trusts, pledges, contracts or guaranty, assignments of
lease, or other security instruments, Beneficiary at its option may exhaust the
remedies granted under any of said security instruments either concurrently or
independently, and in such order as Beneficiary may determine.


 


(b)                                 Upon
any foreclosure sale or sales of all or any portion of the Trust Property under
the power herein granted, Beneficiary may bid for and purchase the Trust
Property and shall be entitled to apply all or any part of the Debt as a credit
to the purchase price.


 


60





















 


(c)                                  In
the event of a foreclosure or a sale of all or any portion of the Trust
Property under the power herein granted, the proceeds of said sale shall be
applied, in whatever order Beneficiary in its sole discretion may decide, to
the expenses of such sale and of all proceedings in connection therewith
(including, without limitation, attorneys’ fees and expenses), to fees and
expenses of Trustee (including, without limitation, Trustee’s attorneys’ fees
and expenses), to insurance premiums, liens, assessments, taxes and charges
(including, without limitation, utility charges advanced by Beneficiary), to
payment of the outstanding principal balance of the Debt, and to the accrued
interest on all of the foregoing; and the remainder, if any, shall be paid to
Trustor, or to the person or entity lawfully entitled thereto.


 


51.                               Recourse
Provisions.  Subject to the
qualifications below, Beneficiary shall not enforce the liability and
obligation of Trustor to perform and observe the obligations contained in the
Note, this Deed of Trust or in any of the other Loan Documents by any action or
proceeding wherein a money judgment shall be sought against Trustor, except
that Beneficiary may bring a foreclosure action, an action for specific
performance or any other appropriate action or proceeding to enable Beneficiary
to enforce and realize upon its interests under the Note, this Deed of Trust
and the other Loan Documents, or in the Trust Property, the Rents (as defined
in this Deed of Trust), or any other collateral given to Beneficiary pursuant
to the Loan Documents; provided, however, that, except as specifically
provided herein, any judgment in any such action or proceeding shall be
enforceable against Trustor only to the extent of Trustor’s interest in the
Trust Property, in the Rents and in any other collateral given to Beneficiary.
By accepting the Note, this Deed of Trust and the other Loan Documents,
Beneficiary agrees that it shall not except as otherwise herein provided, sue
for, seek or demand any deficiency judgment or other monetary judgment against
Trustor in any such action or proceeding under or by reason of or under or in
connection with the Note, this Deed of Trust or the other Loan Documents. The
provisions of this paragraph shall not, however, (a) constitute a waiver,
release or impairment of any obligation evidenced or secured by any of the Loan
Documents; (b) impair the right of Beneficiary to name Trustor as a party
defendant in any action or suit for foreclosure and sale under this Deed of
Trust; (c) affect the validity or enforceability of any guaranty or
indemnity made in connection with the Loan or any of the rights and remedies of
the Beneficiary thereunder; (d) impair the right of Beneficiary to obtain
the appointment of a receiver; (e) impair the enforcement of the
Assignment of Leases; or (f) constitute a waiver of the right of
Beneficiary to enforce the liability and obligation of Trustor, by money
judgment or otherwise, to the extent of, but
only to the extent of, any loss, damage, cost, expense, liability,
claim or other obligation incurred by Beneficiary (including attorneys’ fees
and costs reasonably incurred) arising out of or in connection with the
following:


 


(i)                                     Actual
fraud and intentional misrepresentation by Trustor or any of its partners,
officers, principals, members, any guarantor or any other person authorized to
make statements or representations, or act, on behalf of Trustor in connection
with the Loan;


 


(ii)                                  Affirmative
acts of physical waste committed on the Trust Property; damage to the Trust
Property as a result of the intentional misconduct of Trustor or any of its
principals, officers, general partners or members, or any agent or employee of
any such persons; or the removal of any portion of the Trust Property in
violation of the terms of the Loan Documents following and during the
continuance of an Event of Default;


 


61





















 


(iii)                               subject
to any right to contest such matters, as provided in this Deed of Trust,
failure to pay any valid taxes and assessments, mechanic’s liens, materialmen’s
liens or other liens which could create liens on any portion of the Trust
Property which would be superior to the lien or security title of this Deed of
Trust or the other Loan Documents, to the full extent of the amount claimed by
any such lien claimant;


 


(iv)                              all
legal costs and expenses (including attorneys’ fees) reasonably incurred by
Beneficiary in connection with litigation or other legal proceedings involving
the collection or enforcement of the Loan or preservation of Beneficiary’s
rights under the Loan Documents, including any costs incurred by Beneficiary
arising from or relating to the filing of a petition under the U.S. Bankruptcy
Code by or against Trustor, other than those customarily incurred by a
Beneficiary in realizing upon its lien in an uncontested foreclosure sale after
an undisputed default; provided, however, that no liability for any such
costs and expenses shall arise in connection with a bona fide good faith
litigation;


 


(v)                                 the
breach in any material respect of any representation, warranty, covenant or
indemnification provision in that certain Environmental and Hazardous Substance
Indemnification Agreement of even date herewith given by Trustor to Beneficiary
or in this Deed of Trust concerning environmental laws, hazardous substances or
asbestos;


 


(vi)                              the
misapplication or conversion by Trustor of (A) any insurance proceeds paid
by reason of any loss, damage or destruction to the Trust Property, (B) any
awards or other amounts received in connection with the condemnation of all or
a portion of the Trust Property, or (C) any Rents following and during the
continuance of an Event of Default;


 


(vii)                           any
security deposits or other refundable deposits collected with respect to the
Trust Property which are not delivered to Beneficiary upon a sale or
foreclosure of the Trust Property or other action in lieu thereof, except to
the extent any such security deposits were applied in accordance with the terms
and conditions of any of the Leases (as defined in this Deed of Trust) prior to
the occurrence of the Event of Default that gave rise to such sale or
foreclosure or action in lieu thereof; and


 


(viii)                        failure
to maintain any Policies required under Paragraph 2 of this Deed of Trust, or
to pay or provide the amount of any insurance deductible, to the extent of the
applicable deductible, following a Casualty (as defined in this Deed of Trust)
or other insured event (other than a circumstance of non-conformity arising by
reason of a change in insurance market circumstance subsequent to the
origination of the Loan which prevents such maintenance).


 


With respect to
liability arising under clauses (iii) and (viii) above, such
liability shall not arise to the extent, but only the extent, the required
amounts had been paid by Trustor to Beneficiary pursuant to this Deed of Trust
or the failure to pay, maintain or provide in any such case is due to the
operation of the Trust Property failing to generate revenues sufficient, on a
first priority basis, for the payment or maintenance thereof.


 


Notwithstanding
anything to the contrary in the Note or any of the Loan Documents, (A) Beneficiary
shall not be deemed to have waived any right which Beneficiary may have under


 


62





















 


Section 506(a),
506(b), 1111(b) or any other provisions of the U.S. Bankruptcy Code to
file a claim for the full amount of the Debt secured by this Deed of Trust or
to require that all collateral shall continue to secure all of the Debt owing
to Beneficiary in accordance with the Loan Documents, and (B) the Debt
shall be fully recourse to Trustor in the event that: (i) Trustor fails to
pay the first full monthly payment of interest under the Note when due; (ii) the
Trust Property or any part thereof becomes an asset in a voluntary bankruptcy
or voluntary insolvency proceeding under the U.S. Bankruptcy Code; (iii) Trustor
engages in any business activities other than those related to the Trust
Property or violates the restrictions on indebtedness set forth in this Deed of
Trust; (iv) Trustor fails to obtain Beneficiary’s prior written consent to
any subordinate financing or other voluntary lien encumbering the Trust
Property or any interests in Trustor; (v) Trustor fails to obtain
Beneficiary’s prior written consent to any assignment, transfer, or conveyance
of the Trust Property or any interest therein as required by this Deed of
Trust; or (vi) there is an intentional breach of, or deliberate failure to
perform, any of the representations, covenants and agreements of Section 1(1) of
this Deed of Trust occurs.


 


52.                               Miscellaneous.


 


(a)                                 Trustor
covenants and agrees not to engage in any transaction which would cause any
obligation, or action taken or to be taken, hereunder (or the exercise by
Beneficiary of any of its rights under the Loan Documents) to be a non-exempt
(under a statutory or administrative class exemption) prohibited transaction
under the Employee Retirement Income Security Act of 1974, as amended (“ERISA”). Trustor further covenants and agrees to deliver to
Beneficiary such certifications or other evidence from time to time throughout
the Term, as REASONABLY requested by Beneficiary, that (i) Trustor is not
an “employee benefit plan” as defined in Section 3(3) of ERISA, which
is subject to Title I of ERISA, or a “governmental plan” within the meaning of Section 3(32)
of ERISA; (ii) Trustor is not subject to state statutes regulating investments
and fiduciary obligations with respect to governmental plans; and (iii) one
or more of the following circumstances is true: (A) Equity interests in
Trustor are publicly offered securities, within the meaning of 29 C.F.R. § 2510.3-101(b)(2);
(B) Less than twenty-five percent (25%) of each outstanding class of
equity interests in Trustor are held by “benefit plan investors” within the meaning
of 29 C.F.R. § 2510.3-101(f)(2); or (C) Trustor qualifies as an “operating
company” or a “real estate operating company” within the meaning of 29 C.F.R. § 2510.3-101(c) or
(e) or an investment company registered under the Investment Company Act
of 1940.  TRUSTOR FURTHER COVENANTS AND AGREES TO PROTECT, DEFEND, INDEMNIFY AND HOLD
THE INDEMNIFIED PARTIES HARMLESS FROM AND AGAINST ALL LOSSES THAT ANY INDEMNIFIED
PARTY MAY INCUR AS A RESULT OF TRUSTOR’S BREACH OF THE COVENANTS IN THIS
PARAGRAPH. The covenants and indemnity contained in this Paragraph
shall survive the extinguishment of the lien of this Deed of Trust by
foreclosure or action in lieu thereof; furthermore, the foregoing indemnity
shall supersede any limitations on Trustor’s liability under any of the Loan
Documents.


 


(b)                                 The
Loan Documents contain the entire agreement between Trustor and Beneficiary
relating to or connected with the Loan.  Any other agreements relating to or connected
with the Loan not expressly set forth in the Loan Documents are null and void
and superseded in their entirety by the provisions of the Loan Documents.


 


63





















 


(c)                                  Trustor
represents and warrants to Beneficiary that there has not been committed by
Trustor or any other person in occupancy of or involved with the operation or
use of the Trust Property any act or omission affording the federal government
or any state or local government the right of forfeiture as against the Trust
Property or any part thereof or any monies paid in performance of Trustor’s
obligations under the Note or under any of the other Loan Documents. Trustor
hereby covenants and agrees not to commit, permit or suffer to exist any act,
omission or circumstance affording such right of forfeiture. IN FURTHERANCE THEREOF,
TRUSTOR HEREBY INDEMNIFIES THE INDEMNIFIED PARTIES AND AGREES TO DEFEND AND
HOLD THE INDEMNIFIED PARTIES HARMLESS FROM AND AGAINST ANY AND ALL LOSSES
INCURRED BY ANY INDEMNIFIED PARTY BY REASON OF THE BREACH OF THE COVENANTS AND
AGREEMENTS OR THE REPRESENTATIONS AND WARRANTIES SET FORTH IN THIS PARAGRAPH. Without
limiting the generality of the foregoing, the filing of formal charges or the
commencement of proceedings against Trustor or all or any part of the Trust
Property under any federal or state law for which forfeiture of the Trust
Property or any part thereof or of any monies paid in performance of Trustor’s obligations
under the Loan Documents is a potential result, shall, at the election of
Beneficiary, constitute an Event of Default hereunder without notice or
opportunity to cure.


 


(d)                                 Trustor
acknowledges that, with respect to the Loan, Trustor is relying solely on its
own judgment and advisors in entering into the Loan without relying in any
manner on any statements, representations or recommendations of Beneficiary or
any parent, subsidiary or affiliate of Beneficiary. Trustor acknowledges that
Beneficiary engages in the business of real estate financings and other real
estate transactions and investments which may be viewed as adverse to or
competitive with the business of the Trustor or its affiliates. Trustor
acknowledges that it is represented by competent counsel and has consulted
counsel before executing the Loan Documents.


 


(e)                                  Trustor
covenants and agrees to pay Beneficiary upon receipt of written notice from
Beneficiary, all reasonable costs and expenses (including, without limitation,
reasonable attorneys’ fees and disbursements and the costs and expenses of any
title insurance company, appraisers, engineers or surveyors) incurred by
Beneficiary in connection with (i) the preparation, negotiation, execution
and delivery of this Deed of Trust and the other Loan Documents; (ii) Trustor’s
performance of and compliance with Trustor’s respective agreements and
covenants contained in this Deed of Trust and the other Loan Documents on its
part to be performed or complied with after the date hereof; (iii) Beneficiary’s
performance and compliance with all agreements and conditions contained in this
Deed of Trust and the other Loan Documents on its part to be performed or
complied with after the date hereof; (iv) the negotiation, preparation, execution,
delivery and administration of any consents, amendments, waivers or other modifications
to this Deed of Trust and the other Loan Documents; and (v) the filing and
recording fees and expenses, title insurance fees and expenses, and other
similar expenses incurred in creating and perfecting the lien in favor of
Beneficiary pursuant to this Deed of Trust and the other Loan Documents.


 


(f)                                   THIS
DEED OF TRUST, AND ITS VALIDITY, ENFORCEMENT AND INTERPRETATION, SHALL BE
GOVERNED BY AND CONSTRUED, INTERPRETED AND ENFORCED IN ACCORDANCE WITH THE LAWS
OF THE STATE IN WHICH


 


64





















 


THE
PREMISES ARE LOCATED (WITHOUT REGARD TO ANY CONFLICT OF LAWS PRINCIPLES) AND
APPLICABLE UNITED STATES FEDERAL LAW.


 


53.                               Reconveyance
of Trust Property.  Upon the
performance of all obligations and the payment in full of all sums secured by
this Deed of Trust, Beneficiary shall request Trustee to reconvey the Trust Property.
Upon payment of its fees and any other sums owing to it under this Deed of
Trust, Trustee shall reconvey the Trust Property without warranty to the person
or persons legally entitled thereto. Such person or persons shall pay all costs
of recordation, if any. The recitals in such conveyance of any matters or facts
shall be conclusive of the truthfulness thereof. The grantee in such
reconveyance may be described as “the person or persons legally entitled
thereto.”


 


54.                               Indemnification
Paragraphs.  TRUSTOR HEREBY
ACKNOWLEDGES AND AGREES THAT THIS DEED OF TRUST CONTAINS CERTAIN INDEMNIFICATION
PROVISIONS PURSUANT TO PARAGRAPHS 7, 19, 20, 36 and 52.


 


55.                               Special
State Provisions.  In the event
of any inconsistencies between the terms and conditions of any other Paragraph
of this Deed of Trust with applicable law or with this Paragraph of this
Deed of Trust, the terms and conditions of this Paragraph shall control
and be binding.


 


(a)                                 In
the event of any conflict between the terms and provisions of this paragraph
and any other provision of this Deed of Trust, the terms and provisions of this
paragraph shall govern and control.


 


(b)                                 Upon
the occurrence and during the continuance of any Event of Default, in addition
to any other rights or remedies provided in the Loan Documents, at law, in
equity or otherwise, Beneficiary shall have the right to cause the Trust
Property or any part thereof to be sold in order to accomplish the object of
these trusts and upon demand by Beneficiary, Trustee, without demand on
Trustor, shall sell the Trust Property or such part thereof as Trustee in its
sole discretion may deem necessary to accomplish the objects of these trusts
having first given notice of the time and place of such sale as required by law
for the sale of real property under Sections 55-59.1 et  seq. of
the Virginia Code (1950).


 


(c)                                  Trustee
may postpone such sale from time to time by giving advertisement of such postponed
sale in the same manner in which any original sale was advertised, and on the
date of such sale or the date to which such sale may have been postponed
Trustee may sell the Trust Property to the highest bidder. Beneficiary or the
holder or holders of said Note or their agents may bid and purchase at such
sale. Trustee in conducting said sale may act either in person or through the
agency of an auctioneer and may establish as one of the conditions of such sale
that all bids and payments for said Trust Property be made in cash.


 


(d)                                 The
following provisions of Section 55-60, Code of Virginia (1950), as
amended, are hereby made applicable to this Deed of Trust:


 


Exemptions Waived;


Subject to (call)
all upon default (subject to any notice and opportunity to cure set forth
herein);


 


65





















 


Renewal
or extension permitted;


Substitution
of trustee permitted; and


Any
trustee may act.


 


(e)                                  Any
action, suit or proceeding arising out of or relating to this Deed of Trust or
any of the other Loan Documents may be instituted in the Circuit Court of the
city or county in which the Trust Property is located or in the United States
District Court for the district in which the Trust Property is located
(assuming such Court has jurisdiction), at the option of Beneficiary, and Trustor
waives all objections it may have to such venue and irrevocably submits to the jurisdiction
of either of such Courts in any such action, suit or proceeding. Nothing herein
shall affect the right of Beneficiary to proceed in any other court having
jurisdiction over any such action, suit or proceeding.


 


(f)                                   On
the first line of Paragraph 25(d), the word “Beneficiary” shall be deleted and
replaced with the phrase “the Trustee, at the direction of Beneficiary,”.


 


(g)                                  At
the end of Paragraph 49(b), after the words “by law or otherwise.”, insert the following
sentence:


 


“In
the event that the term “Trustee” includes more than one trustee, the rights,
powers, duties and obligations conferred or imposed upon the Trustee hereunder
may be exercised separately or jointly by the Trustee as directed by
Beneficiary, except to the extent that any law of any jurisdiction requires any
act by the Trustee hereunder to be performed by the trustees jointly.”


 


(h)                                 The
words “county” and “County” in Paragraph 50(a) are hereby deleted and
replaced with the phrase “city or county (as applicable)”.


 


(i) In Paragraph
50(a), after the phrase “after advertising the time, place and terms of sale”,
insert the phrase “not less than once a week for two weeks or, if such
advertisement is to run in a daily newspaper having a general circulation in
the city or county wherein the Trust Property or the portion being sold lies,
not less than once a day for three days, which may be consecutive days,”.


 


Remainder of page intentionally
blank


Signature page(s) follow


 


66





















 


EXECUTED on the
date set forth in the acknowledgment below, to be effective on and as of the
date first above written.


 


	
   

  	
  TRUSTOR:

  
	
   

  	
   

  
	
   

  	
  RKB
  LAKESIDE LLC

  
	
   

  	
   

  
	
   

  	
  By:

  	
  RKB Lakeside Manager
  LLC

  
	
   

  	
   

  	
  Its Managing Member

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ Steven A.
  Grigg

  	
   

  
	
   

  	
   

  	
   

  	
  Name:

  	
  Steven A. Grigg

  
	
   

  	
   

  	
   

  	
  Title:

  	
  President

  
						



 


Signature page to Deed of Trust,
Assignment of Rents,


Security Agreement and Fixture Filing


 





















 


	
  CITY OF WASHINGTON

  	
  )

  	
   

  
	
  DISTRICT OF COLUMBIA

  	
  )

  	
  ss:

  
	
   

  	
  )

  	
   

  
	
   

  	
  )            TO
  WIT:

  	
   

  
	
   

  	
  )

  	
   

  
					



 


The
foregoing instrument was acknowledged before me this 24th day of April, 2003 by
Steven A. Grigg as President of RKB Lakeside Manager LLC, a Delaware limited liability
company, the Managing Member of RKB Lakeside LLC, a Delaware limited liability
company, on behalf of said limited liability companies.


 


 


	
   

  	
  /s/ Melissa T. Jones

  	
   

  
	
   

  	
  Notary Public

  
	
   

  	
   

  
	
   

  	
  Melissa T. Jones,
  Notary Public

  
	
  [Notarial Seal]

  	
  Washington, D. C.

  
	
   

  	
   

  
	
  My term of office
  expires 01/31/2005

  	
   

  



 


Acknowledgment page to Deed of
Trust, Assignment of Rents,


Security Agreement and Fixture Filing


 





















 


EXHIBIT A


 


Legal Description


 


All those certain lots or
parcels of land, situate and lying in Fairfax County, Virginia, and being more
particularly described as follows:


 


PART 1:


 


Parcels 18A and 18B,
Westfields, The International Corporate Center at Dulles, as shown on plat
attached to Deed of Redivision recorded in Deed Book 7189 at page 250,
among the Land Records of Fairfax County, Virginia.


 


The said Parcels 18A and
18B are also described by metes and bounds as follows:


 


Parcel 18A:


 


BEGINNING AT A
POINT AT THE SOUTHERLY PROPERTY CORNER OF PARCEL 18B, WESTFIELDS, SAID POINT
ALSO LYING ON THE EASTERLY RIGHT-OF-WAY LINE OF NEWBROOK DRIVE, ROUTE NUMBER
8411 (VARIABLE WIDTH) AND BEING 0.43+/- MILES IN A SOUTHERLY DIRECTION FROM THE
POINT OF CURVATURE AT WESTFIELDS BOULEVARD; THENCE, RUNNING WITH THE SOUTHERLY
PROPERTY LINE OF PARCEL 18B, WESTFIELDS, THE FOLLOWING COURSES AND DISTANCES:


N85°49’11”E,
115.71 FEET TO A POINT;


N51°49’26”E, 746.95 FEET TO A POINT ON THE WESTERLY PROPERTY LINE OF
LOT 9, WALNEY ESTATES; THENCE RUNNING WITH THE WESTERLY LINE OF LOT 9 AND
CONTINUING WITH LOTS 8, 7, 6, 39, 38, 37, 36, 35 AND 34 OF WALNEY ESTATES THE
FOLLOWING COURSES AND DISTANCES:


S39°17’59”E, 66.30
FEET TO A POINT;


S12°10’51”E,
466.02 FEET TO A POINT;


S08°56’34”E, 248.50 FEET TO A POINT AT THE NORTHEASTERLY PROPERTY
CORNER OF LOT 2, PARKEAST; THENCE RUNNING WITH THE NORTHERLY PROPERTY LINE OF
LOT 2 AND CONTINUING WITH LOTS 1 AND 5, PARKEAST, AND THE CENTER LINE OF
LAKESIDE ROAD (PIVATE STREET) THE FOLLOWING COURSES AND DISTANCES:


N76°02’36”W,
515.50 FEET TO A POINT;


ALONG THE ARC OF A
CURVE TO THE LEFT, 700.00 FEET IN RADIUS, AN


ARC DISTANCE OF
214.50 FEET, THE CHORD OF SAID ARC RUNNING


N84°49’18”W,
213.66 FEET TO A POINT;


S86°23’59”W, 141.90 FEET TO A POINT LYING ON THE EASTERLY RIGHT OF-WAY
LINE OF NEWBROOK DRIVE, ROUTE 8411 (VARIABLE WIDTH); THENCE RUNNING WITH THE
EASTERLY RIGHT-OF-WAY LINE OF NEWBROOK DRIVE THE FOLLOWING COURSES AND
DISTANCES:


N03°36’01”W, 18.67
FEET TO A POINT;


ALONG THE ARC OF A
CURVE TO THE LEFT, 506.00 FEET IN RADIUS, AN


ARC DISTANCE OF
132.00 FEET, THE CHORD OF SAID ARC RUNNING


N11°04’25”W, 131.63 FEET TO THE POINT OF BEGINNING AND CONTAINING
7.67749 ACRES OF LAND, MORE OR LESS.


 


1





















 


Parcel 18B:


 


BEGINNING AT A
POINT AT THE SOUTHWESTERLY PROPERTY CORNER OF LOT 1 GLENBROOK, SAID POINT ALSO
LYING ON THE EASTERLY RIGHT-OF-WAY OF NEWBROOK DRIVE (VARIABLE WIDTH) AND BEING
1893.43 FEET IN A SOUTHERLY DIRECTION OF ITS POINT OF CURVATURE AT WESTFIELDS
BOULEVARD; THENCE, RUNNING WITH LOT 1 AND CONTINUING WITH PARCEL A, WALNEY
VILLAGE, SECTION 2 THE FOLLOWING COURSES AND DISTANCES:


N55°17’48”E 536.67
FEET TO A POINT;


N54°47’25”E 310.32 FEET TO A POINT AT A NORTHWESTERLY PROPERTY CORNER
OF PARCEL C, WALNEY ESTATES, THENCE S39°17’59”E 383.70 FEET RUNNING WITH THE
WESTERLY LINE OF PARCEL C AND CONTINUING WITH LOT 10 AND LOT 9, WALNEY ESTATES
TO A POINT AT THE NORTHEASTERLY PROPERTY CORNER OF PARCEL 18A, WESTFIELDS;
THENCE, WITH PARCEL 18A, WESTFIELDS, THE FOLLOWING COURSES AND DISTANCES:


S51°49’26”W,
746.45 FEET TO A POINT;


S85°49’11”W, 115.71 FEET TO A POINT LYING ON THE EASTERLY RIGHT-OF-WAY
OF NEWBROOK DRIVE; THENCE, WITH NEWBROOK DRIVE ALONG THE ARC OF A CURVE TO THE
LEFT, 506.00 FEET IN RADIUS, AN ARC DISTANCE OF 376.26 FEET, THE CHORD OF SAID
ARC RUNNING N39°50’58”W, 367.65 FEET TO THE POINT OF BEGINNING AND CONTAINING
7.60619 ACRES OF LAND, MORE OR LESS.


 


PART 2:


 


The right of
ingress and egress as provided in Ingress-Egress Easement Agreement recorded in
Deed Book 6665 at page 841 among the Land Records of Fairfax County,
Virginia.


 


2