**Exhibit 10.7**

 
| APN:   | 177-35-201-001 |
|--------|----------------|
|   | 177-35-201-002 |
|   | 177-35-201-003 |
|   | 177-35-201-006 |

 

Themailing address to which this Mortgageshould be returned after recordation is:

 

WICK PHILLIPS, LLP

 

2100 Ross Avenue, Suite 950

Dallas, Texas  75201

Attention:  WaltMiller, Esq.

 

**SENIOR MEZZANINE DEED OF TRUST,ASSIGNMENT OF RENTS AND LEASES,**

**SECURITY AGREEMENT, FIXTUREFILING AND FINANCING STATEMENT**

** **

(ThisDocument Serves as a Fixture Filing under

NevadaRevised Statutes Section 104.9502)

 

Dated to be effective as of December 31,2008

 

made by

 

SW 132 ST. ROSE SENIOR BORROWER LLC,

 aDelaware limited liability company (Grantor)

 

to

 

Chicago Title Agency of Nevada, Inc., asTrustee

(Trustee)

 

for the benefit of

 

BEHRINGER HARVARD ST. ROSE REIT, LLC,a Delaware limited liability company (Lender)

 

 

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**SENIOR MEZZANINE DEED OF TRUST,ASSIGNMENT OF RENTS AND LEASES,**

**SECURITY AGREEMENT, FIXTUREFILING AND FINANCING STATEMENT**

** **

Grantor’s Organizational IdentificationNumber: 26-3831531

 

**THIS SENIORMEZZANINE DEED OF TRUST, ASSIGNMENT OF RENTS AND LEASES, SECURITY AGREEMENT,FIXTURE FILING AND FINANCING STATEMENT** (this “Mortgage”) ismade this 31st day of December, 2008, by Grantor, in favor of Trustee for thebenefit of Lender.

 

**RECITALS**

 

A.            This Mortgage is being executed by Grantor for thepurpose of securing a loan from Lender to SW 131 St. Rose Mezzanine BorrowerLLC, a Delaware limited liability company (the “Borrower”).  The Borrower is directly or indirectly thelegal and beneficial owner of all (100%) of the equity interests in Grantor.

 

B.            Grantor is the owner of the Land (as defined below) andis currently pursuing a subdivision of the Land, and Grantor intends to conveyapproximately 6.272 acres of the Land (the “Commercial Tract”) to itsaffiliate, SW 122 St. Rose Senior Borrower LLC, a Delaware limited liabilitycompany (the “Commercial Tract Borrower”).  The Land other than the Commercial Tract (the“Multi-Family Tract”) will be used by Grantor to develop a 430-unitapartment complex.

 

C.            When Commercial Tract Borrower acquires title to theCommercial Tract (the date of such acquisition is referred to herein as the “TransferDate”), Lender will cause the lien of this Mortgage to be released as tothe Commercial Tract.

 

D.            Concurrently with the execution of this Mortgage, Grantoralso is executing (1) that certain Deed of Trust, Assignment of Rents andLeases, Security Agreement, Fixture Filing and Financing Statement to and infavor of PRLAP, Inc., as trustee, for the benefit of Bank of America,N.A., as administrative agent for itself and certain other lenders (the “Multi-FamilyDOT”), to secure, in part, the obligations of the Grantor in connectionwith a $38,600,000 loan (the “Senior Loan”), (2) that certain Deedof Trust, Assignment of Rents and Leases, Security Agreement, Fixture Filingand Financing Statement to and in favor of PRLAP, Inc., as trustee, forthe benefit of Bank of America, N.A., for its own account as lender (the “CommercialDOT”), to secure, in part, the obligations of the Commercial Tract Borrowerin connection with a $2,950,000 loan (the “Commercial Loan”), and (3) thatcertain Junior Mezzanine Deed of Trust, Assignment of Rents and Leases,Security Agreement, Fixture Filing and Financing Statement to and in favor ofTrustee, as trustee, for the benefit of Lender (the “Junior Mezzanine DOT”),to secure, in part, the obligations of the Borrower under the Junior MezzanineLoan Documents.  The Multi-Family DOT andthe Commercial DOT are referred to herein as the “Senior DOTs”).

 

E.             This Mortgage is subject and subordinate to the SeniorDOTs, the obligations of the Grantor and/or Commercial Tract Borrower inrespect of the Senior Loan and the 

 

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Commercial Loan,respectively, and the rights of the administrative agent and/or lenders arisingin connection with the Senior Loan and the Commercial Loan, respectively.

 

**ARTICLE 1Definitions; Granting Clauses; Secured Indebtedness**

** **

Section 1.1.            Principal Secured.  This Mortgage secures the aggregate principalamount of up to TWENTY ONE MILLION FORTY THREE THOUSAND ONE HUNDRED NINETYSEVEN AND NO/100 DOLLARS ($21,043,197.00) together with interest thereon.  This instrument secures future advances asdefined in Nevada Revised Statutes (as amended, NRS) 106.320, and is goverenedby NRS 106.300 to 106.400, inclusive.

 

Section 1.2.            Definitions.

 

(a)           In addition to other terms defined herein, each of thefollowing terms shall have the meaning assigned to it, such definitions to beapplicable equally to the singular and the plural forms of such terms and toall genders:

 

“Grantor”:  SW 132 ST. ROSE SENIOR BORROWER LLC, aDelaware limited liability, whose mailing address is 2001 Bryan Street, Suite 3250,Dallas, Texas 75201, Attention: Tim Hogan, and its permitted successors andassigns.

 

“Lender”:  BEHRINGER HARVARD ST. ROSE REIT, LLC, aDelaware limited liability company, or any subsequent holder(s) of theNotes at the time in question.

 

“Mezzanine Loan Agreement”:  The Senior Mezzanine Loan Agreement dated ofeven date herewith between Lender and Borrower, which is incorporated herein byreference for all purposes.

 

“Promissory Note”:  The Senior Mezzanine Promissory Note made byBorrower pursuant to the Mezzanine Loan Agreement, payable to the order ofLender, in the principal face amount of up to $21,043,197.00, bearing interestas therein provided.

 

“Trustee”:  Chicago Title Agency of Nevada, Inc., aNevada corporation.

 

“UCC”:   The Nevada Uniform Commercial Code,  NRS Section 104.1101 et seq., as amendedfrom time to time.

 

(b)           Any term used or defined in the UCC, as in effect fromtime to time, and not defined in this Mortgage has the meaning given to theterm in the UCC, as in effect from time to time, when used in this Mortgage.However, if a term is defined in NRS Section 104.9101 et seq. of the UCCdifferently than in another title of the UCC, the term has the meaningspecified in said NRS Section 104.9101 et seq.

 

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(c)           Unless otherwise defined herein, capitalized terms usedherein shall have the meanings ascribed to such terms in the Mezzanine LoanAgreement.

 

Section 1.3.            Granting Clause.  In consideration of the provisions of thisMortgage and the sum of TEN AND NO/100 DOLLARS ($10.00) cash in hand paid andother good and valuable consideration the receipt and sufficiency of which areacknowledged by Grantor, Grantor does hereby GRANT, BARGAIN, SELL, CONVEY,TRANSFER, ASSIGN and SET OVER to Trustee, IN TRUST with the power of sale forthe benefit and security of Lender, with GENERAL WARRANTY, the following:  (a)  the real property described in Exhibit Awhich is attached hereto and incorporated herein by reference (the “Land”)together with: (i) any and all buildings, structures, improvements,alterations or appurtenances now or hereafter situated or to be situated on theLand (collectively the “Improvements”); and (ii) all right, titleand interest of Grantor, now owned or hereafter acquired, in and to (1) streets,roads, alleys, easements, rights-of-way, licenses, rights of ingress andegress, vehicle parking rights and public places, existing or proposed,abutting, adjacent, used in connection with or pertaining to the Land or theImprovements; (2) any strips or gores between the Land and abutting oradjacent properties; (3) all options to purchase the Land or theImprovements or any portion thereof or interest therein, and any greater estatein the Land or the Improvements; (4) all water and water rights, ditchesand ditch rights, reservoirs, reservoir rights and storage rights, wells andwell rights, well permits, springs and spring rights, groundwater rights(whether tributary, nontributary or not-nontributary), water contracts, waterallotments, water taps, stock certificates, shares in ditch or reservoir orwater companies, and all other rights of any kind or nature in or to the use ofwater, whether or not adjudicated, which are appurtenant to, historically usedon or in connection with, or located on or under the Land (collectively, “WaterRights”), together with any and all associated structures and facilitiesfor the diversion, carriage, transmission, conveyance, measurement, storage oruse of said Water Rights, and any and all easements, rights of way, fixtures,personal property, contract rights, licenses, permits or decrees associatedwith or used in connection with any such Water Rights or which may be necessaryfor the development, operation or maintenance of such Water Rights; and (5) timber,crops and mineral interests on or pertaining to the Land (the Land,Improvements and other rights, titles and interests referred to in this clause (a) beingherein sometimes collectively called the “Premises”); (b) allfixtures, equipment, systems, machinery, furniture, furnishings, appliances,inventory, goods, building and construction materials, supplies, and articlesof personal property, of every kind and character, tangible and intangible(including software embedded therein), now owned or hereafter acquired byGrantor, which are now or hereafter attached to or situated in, on or about theLand or the Improvements, or used in or necessary to the complete and properplanning, development, use, occupancy or operation thereof, or acquired(whether delivered to the Land or stored elsewhere) for use or installation inor on the Land or the Improvements, and all renewals and replacements of,substitutions for and additions to the foregoing (the properties referred to inthis clause (b) being herein sometimes collectively called the “Accessories,”all of which are hereby declared to be permanent accessions to the Land); (c) Grantor’srights, but not liability for any breach by Grantor, under all (i) plansand specifications for the Improvements; (ii) insurance policies to theextent transferable, or proceeds thereof (to the extent not transferable) (oradditional or supplemental coverage related thereto, including  from an insurance provider meeting the requirementsof the Loan Documents or from or through any state or federal 

 

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government sponsored program or entity), contracts and agreements forthe design, construction, operation or inspection of the Improvements; (iii) Grantor’srights in tenants’ security deposits, deposits with respect to utility servicesto the Premises, rebates or refunds of impact fees or other taxes, assessmentsor charges; (iv) permits, licenses, franchises, certificates, developmentrights, commitments and rights for utilities, and other rights and privilegesobtained in connection with the Premises or the Accessories; (v) leases,rents, royalties, bonuses, issues, profits, revenues and other benefits of thePremises and the Accessories (without derogation of Article 3hereof); (vi) as-extracted collateral produced from or allocated to theLand including, without limitation, oil, gas and other hydrocarbons and otherminerals and all products processed or obtained therefrom, and the proceedsthereof; and (vii) engineering, accounting, title, legal, and othertechnical or business data concerning the Property which are in the possessionof Grantor or in which Grantor can otherwise grant a security interest; and (d) all(i) accounts and proceeds (cash or non-cash and including paymentintangibles) of or arising from the properties, rights, titles and interestsreferred to above in this Section 1.3, including but not limited toproceeds of any sale, lease or other disposition thereof, proceeds of eachpolicy of insurance (or additional or supplemental coverage related thereto,including  from an insurance providermeeting the requirements of the Loan Documents or from or through any state orfederal government sponsored program or entity) relating thereto (includingpremium refunds), proceeds of the taking thereof or of any rights appurtenantthereto, including change of grade of streets, curb cuts or other rights ofaccess, by condemnation, eminent domain or transfer in lieu thereof for publicor quasi-public use under any Law, and proceeds arising out of any damagethereto; (ii) all letter-of-credit rights (whether or not the letter ofcredit is evidenced by a writing) Grantor now has or hereafter acquiresrelating to the properties, rights, titles and interests referred to in this Section 1.3;(iii) all commercial tort claims Grantor now has or hereafter acquiresrelating to the properties, rights, titles and interests referred to in this Section 1.3;and (iv) other interests of every kind and character which Grantor now hasor hereafter acquires in, to or for the benefit of the properties, rights,titles and interests referred to above in this Section 1.3 and allproperty used or useful in connection therewith, including but not limited torights of ingress and egress and remainders, reversions and reversionary rightsor interests; and if the estate of Grantor in any of the property referred toabove in this Section 1.3 is a leasehold estate, this conveyanceshall include, and the lien and security interest created hereby shall encumberand extend to, all other or additional title, estates, interests or rightswhich are now owned or may hereafter be acquired by Grantor in or to theproperty demised under the lease creating the leasehold estate;

 

TO HAVE AND TO HOLD theforegoing rights, interests and properties, and all rights, estates, powers andprivileges appurtenant thereto (herein collectively called the “Property”),unto Trustee, and its successors or substitutes in this trust, in trust, in feesimple forever, subject to the terms, provisions and conditions herein setforth, to secure the obligations of Borrower under the Notes and Loan Documents(as hereinafter defined) and all other indebtedness and matters defined as “SecuredIndebtedness” in Section 1.5 of this Mortgage.

 

Notwithstanding any of theabove, the lien of this Mortgage does not extend to the names “Trammell CrowResidential”, “Alexan” and “TCR” or any variant thereof or the “TCR” logo or toany written or printed material that contains any of such names or such logo,and if Lender forecloses against the Premises, or Lender acquires the Premises(whether through foreclosure, 

 

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deedin lieu of foreclosure or other means), or if Lender takes possession of thePremises, or if a receiver is appointed for the Premises, then Lender will notuse, and any person acquiring the Premises through foreclosure, deed in lieu offoreclosure or other means shall not use, in connection with the Premises anyof the names “Trammell Crow Residential”, “Alexan” or “TCR” or any variantthereof or the “TCR” logo.  Thelimitation of names listed in this Section 1.3 does not imply a license orright to use any other name, service mark, trademark or logo that isproprietary to Grantor or any of its affiliates.

 

Section 1.4.            Security Interest.  Grantor hereby grants to Lender a securityinterest in all of the Property which constitutes personal property orfixtures, all proceeds and products thereof, and all supporting obligationsancillary to or arising in any way in connection therewith (herein sometimescollectively called the “Collateral”) to secure the obligations ofGrantor under the Notes and Loan Documents and all other indebtedness andmatters defined as Secured Indebtedness in Section 1.5 of thisMortgage.  In addition to its rightshereunder or otherwise, Lender shall have all of the rights of a secured partyunder the UCC, as in effect from time to time, or under the Uniform CommercialCode in force, from time to time, in any other state to the extent the same isapplicable Law.

 

Section 1.5.            Secured Indebtedness, Notes, LoanDocuments, Other Obligations.  ThisMortgage is made to secure and enforce the payment and performance of thefollowing promissory notes, obligations, indebtedness, duties and liabilitiesand all renewals, extensions, supplements, increases, and modifications thereofin whole or in part from time to time (collectively the “Secured Indebtedness”):  (a) the Promissory Note and all otherpromissory notes given in substitution therefor or in modification, supplement,increase, renewal or extension thereof, in whole or in part (such promissorynote or promissory notes, whether one or more, as from time to time renewed,extended, supplemented, increased or modified and all other notes given insubstitution therefor, or in modification, renewal or extension thereof, inwhole or in part, being hereinafter called the “Notes”); (b)  allindebtedness, liabilities, duties, covenants, promises and other obligationswhether joint or several, direct or indirect, fixed or contingent, liquidatedor unliquidated, and the cost of collection of all such amounts, owed byBorrower to Lender now or hereafter incurred or arising pursuant to orpermitted by the provisions of the Notes, this Mortgage, or any other documentnow or hereafter evidencing, governing, guaranteeing or securing the loanevidenced by the Notes executed by Borrower or any Guarantor (as defined in theMezzanine Loan Agreement), including but not limited to any loan or creditagreement, letter of credit or reimbursement agreement, tri-party financingagreement or other agreement between Borrower and Lender, or among Borrower,Lender and any other party or parties, pertaining to the repayment or use ofthe proceeds of the loan evidenced by the Notes (the Notes, this Mortgage andsuch other documents, as they or any of them may have been or may be from timeto time renewed, extended, supplemented, increased or modified, being hereinsometimes collectively called the “Loan Documents”; provided, however,the Environmental Indemnity is not a Loan Document); (c) all futureadvances made by Lender to Grantor or Borrower; provided, however, this clause (c) shallnot operate or be effective to constitute or require any assumption or paymentby any person, in any way, of any debt of any other person to the extent thatthe same would violate or exceed the limit provided in any applicable usury orother Law; and (d) the obligations of Grantor under this Mortgage.  Should the Secured 

 

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Indebtedness decrease or increase pursuant to the terms of the Notes orotherwise, at any time or from time to time, this Mortgage shall retain itspriority position of record until (a) the termination of Lender’sobligations to make advances under the Loan Documents and the full, final andcomplete payment of all the Secured Indebtedness then outstanding, or (b) thefull release and termination of the liens and security interests created bythis Mortgage.

 

Section 1.6.            Subordinate Deed of Trust.  This Mortgage, the Promissory Note, theMezzanine Loan Agreement and the other Loan Documents, and all rights of Lenderunder this Mortgage, are subject and subordinate to the Senior DOTs, the otherSenior Loan Documents and the rights of the Senior Lender arisingthereunder.  In the event of a conflictbetween the provisions of the Senior Loan Documents and the provisions of theLoan Documents, the provisions of the Senior Loan Documents shall control.  To the extent that Grantor is required toperform any obligation under both the Senior Loan Documents and this Mortgage,Grantor shall be deemed to have complied with the applicable provision of thisMortgage as long as Grantor has performed the corresponding obligation for thebenefit of the Senior Lender pursuant to the Senior Loan Documents.  Reference is hereby made to that certainIntercreditor and Subordination Agreement executed by Lender and the SeniorLender, acting in its own capacity or as administrative agent on behalf ofitself and/or other lenders (the “Intercreditor Agreement”).  This Mortgage is subject to termination andrelease upon the occurrence of certain events or circumstances as moreparticularly described in Section 7 of the Intercreditor Agreement.

 

**ARTICLE 2**

** **

**Representations, Warrantiesand Covenants**

** **

Section 2.1.            Grantor represents, warrants, andcovenants as follows:

 

(a)           Payment and Performance.  Grantor will timely and properly perform andcomply with all of the covenants, agreements, and conditions imposed upon it bythis Mortgage and will not permit an Event of Default to occur hereunder.  Time shall be of the essence in thisMortgage.

 

(b)           Title and Permitted Encumbrances.  Grantor has, in Grantor’s own right, andGrantor covenants to maintain, lawful, good and marketable title to theProperty, is lawfully seized and possessed of the Property and every partthereof, and has the right to convey the same, free and clear of all liens,charges, claims, security interests, and encumbrances except for (i) thematters, if any, set forth under on Exhibit B attached hereto, butonly to the extent that the same are valid and subsisting and affect the Property,(ii) the liens and security interests evidenced by this Mortgage, (iii) statutoryliens for real estate taxes, assessments and other governmental charges on theProperty which are not yet delinquent or are being contested in accordance withSection 2.1(c) or comparable provisions of the documentsevidencing or securing the Senior Loan or the Commercial Loan, (iv) rightsof tenants under leases, (v)  the liens and security interests evidencedby the Senior DOTs, (vi) other liens and security interests (if any) infavor of Lender or otherwise approved by Lender, (vii) mechanics’ liensbeing 

 

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contested in accordance with Section 2.1(l) orcomparable provisions of the documents evidencing or securing the Senior Loanor the Commercial Loan, and (viii) the Junior Mezzanine DOT (the mattersdescribed in the foregoing clauses (i), (ii), (iii), (iv), (v), (vi), (vii) and(viii) being herein called the “Permitted Encumbrances”).  Grantor, and Grantor’s successors andassigns, will warrant generally and forever defend title to the Property,subject as aforesaid, to Trustee, and its successors or substitutes, againstthe claims and demands of all persons claiming or to claim the same or any partthereof.  Except as permitted in theMezzanine Loan Agreement, Grantor will punctually pay, perform, observe andkeep all covenants, obligations and conditions in or pursuant to any PermittedEncumbrance and will not modify or permit modification of any PermittedEncumbrance without the prior written consent of Lender.  Inclusion of any matter as a PermittedEncumbrance does not constitute approval or waiver by Lender of any existing orfuture violation or other breach thereof by Grantor, by the Property orotherwise.  No part of the Propertyconstitutes all or any part of the homestead of Grantor.  If any right or interest of Lender in theProperty or any part thereof shall be endangered or questioned or shall beattacked directly or indirectly, Trustee and Lender, or either of them (whetheror not named as parties to legal proceedings with respect thereto), are herebyauthorized and empowered to take such steps as in their discretion may beproper for the defense of any such legal proceedings or the protection of suchright or interest of Lender, including the employment of independent counsel,the prosecution or defense of litigation, and the compromise or discharge ofadverse claims.  All reasonableexpenditures so made of every kind and character shall be a demand obligation(which obligation Grantor hereby promises to pay) owing by Grantor to Lender orTrustee (as the case may be) with interest as provided in the Notes, and theparty (Lender or Trustee, as the case may be) making such expenditures shall besubrogated to all rights of the person receiving such payment.

 

(c)           Taxes and Other Impositions.  Grantor will pay, or cause to be paid, alltaxes, assessments and other charges or levies imposed upon or against or withrespect to the Property or the ownership, use, occupancy or enjoyment of anyportion thereof, or any utility service thereto, as the same become due andpayable, including but not limited to all ad valorem taxes assessed against theProperty or any part thereof, and shall deliver promptly to Lender suchevidence of the payment thereof as Lender may require; provided, however, thatGrantor may contest the payment of any such tax or other imposition to theextent and in the manner permitted by Law if and so long as the followingconditions are satisfied: (i) Grantor shall have notified Lender ofGrantor’s contest; (ii) Grantor shall diligently and in good faith contestthe same by appropriate legal proceedings which shall operate to prevent theenforcement or collection of the same and the sale of the Property, or any partthereof, to satisfy the same; (iii) Grantor shall have furnished to Lendera cash deposit reasonably satisfactory to Lender, or an indemnity bondreasonably satisfactory to Lender with a surety reasonably satisfactory to Lender,in the amount of the tax or other imposition plus a reasonable additional sumto pay all costs, interest and penalties that may be imposed or incurred inconnection therewith (or in the statutory amount, in the case of a bondauthorized by statute), to assure payment of the matters under contest and toprevent any sale or forfeiture of the Property or any part thereof, but in eachcase, only to the extent Grantor has not furnished a cash deposit or indemnitybond to the Senior Lender pursuant to the Senior Loan Documents; (iv) Grantorshall promptly upon final determination thereof pay the amount of any such taxor other imposition so determined, together with all costs, interest 

 

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and penalties which may be payable in connection therewith; and (v) thefailure to pay the tax or other imposition does not constitute an event ofdefault under any other deed of trust, mortgage or security interest coveringor affecting any part of the Property and does not subject Lender to any civilor criminal liability or to any damages or expense not reimbursed byGrantor.  Notwithstanding the foregoing,Grantor shall immediately upon request of Lender pay (and if Grantor shall failso to do, Lender may, but shall not be required to, pay or cause to bedischarged or bonded against) any such tax or other imposition notwithstandingsuch contest if in the reasonable opinion of Lender, the Property shall be injeopardy or in danger of being forfeited or foreclosed.  Lender may pay over any such cash deposit orpart thereof to the claimant entitled thereto at any time when, in the judgmentof Lender, the entitlement of such claimant is established.

 

(d)           Insurance. Grantor shall obtain and maintain at no expense to Lender or Trusteeinsurance in respect of the Property by the Mezzanine Loan Agreement.  Grantor shall cause all premiums on policiesrequired hereunder to be paid as they become due and payable and promptlydeliver to Lender evidence reasonably satisfactory to Lender of the timelypayment thereof.  If any loss occurs atany time when Grantor has failed to perform Grantor’s covenants and agreementsin this paragraph with respect to any insurance payable because of losssustained to any part of the Property, whether or not such insurance isrequired by Lender, then subject to the rights of the Senior Lender, Lendershall nevertheless be entitled to the benefit of all insurance covering theloss and held by or for Grantor, to the same extent as if it had been madepayable to Lender.  Upon any foreclosurehereof or transfer of title to the Property in extinguishment of the whole orany part of the Secured Indebtedness, all of Grantor’s right, title andinterest in and to the insurance policies (to the extent transferable) referredto in this Section (including unearned premiums) and all proceeds payablethereunder shall thereupon vest in the purchaser at foreclosure or other suchtransferee, to the extent permissible under such policies, subject to therights of the Senior Lender, Lender shall have the right (but not theobligation) to receive the proceeds of, all insurance for loss of or damage tothe Property, and if an Event of Default exists (after taking intoconsideration applicable notice, grace and cure periods) to make proof of lossfor, settle and adjust any claim under such insurance, regardless of whether ornot such insurance policies are required by Lender, and the reasonable expensesincurred by Lender in the adjustment and collection of insurance proceeds shallbe a part of the Secured Indebtedness and shall be due and payable to Lender ondemand.  Lender shall not be, under anycircumstances, liable or responsible for failure to collect or exercise diligencein the collection of any of such proceeds or for the obtaining, maintaining oradequacy of any insurance or for failure to see to the proper application ofany amount paid over to Grantor or to any third party.  Any such proceeds received by Lender shall beapplied as provided in the applicable provisions of the Mezzanine LoanAgreement.

 

(e)           Reserve for Insurance, Taxes andAssessments.  Upon the occurrence ofan Event of Default (after taking into consideration applicable notice, graceand cure periods), in order to secure the performance and discharge of Grantor’sobligations referred to below, but not in lieu of such payment and performance,Grantor will deposit with Lender a sum equal to real estate taxes, assessmentsand charges (which charges for the purposes of this paragraph shall includewithout limitation any recurring charge which could result in a lien againstthe Property) against 

 

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the Property for the current year and the premiums for such policies ofinsurance for the current year (to the extent such premiums have not beenpaid), all as estimated by Lender and prorated to the end of the calendar monthfollowing the month during which Lender’s request is made, and thereafter willdeposit with Lender, on each date when an installment of principal and/orinterest is due on the Notes, sufficient funds (as estimated from time to timeby Lender) to permit Lender to pay at least fifteen (15) days prior to the duedate thereof, the next maturing real estate taxes, assessments and charges andpremiums for such policies of insurance; provided, however, Grantor shall notbe obligated to make any such deposits to the extent it makes deposits of asimilar character with the Senior Lender under the Senior Loan Documents.  All such funds shall be deposited into aninterest bearing account and, provided that no Event of Default or event which,with notice or passage of time or both, would constitute an Event of Defaulthas occurred and is then continuing, Grantor shall, upon written request toLender, be entitled to receive the interest accrued on such account.  Lender shall have the right to rely upon taxinformation furnished by applicable taxing authorities in the payment of suchtaxes or assessments and shall have no obligation to make any protest of anysuch taxes or assessments.  To the extentpermitted by Law, any excess over the amounts required for such purposes shallbe held by Lender for future credit against amounts due under this paragraph orrefunded to Grantor, at Lender’s option, and any deficiency in such funds sodeposited shall be made up by Grantor upon demand of Lender.  All such funds so deposited (including anyinterest to which Grantor is not entitled under the provisions above) shall beapplied by Lender toward the payment of such taxes, assessments, charges andpremiums when statements therefor are presented to Lender by Grantor (whichstatements shall be presented by Grantor to Lender a reasonable time before theapplicable amount is due); provided, however, that, if an Event of Defaultshall then exist hereunder (after taking into consideration applicable notice,grace and cure periods), such funds shall be applied first to past or currentlydue taxes, assessments, charges or premiums, together with any penalties orlate charges with respect thereto, and the balance may be applied at Lender’soption to the Secured Indebtedness in the order determined by Lender in itssole discretion.  The conveyance ortransfer of Grantor’s interest in the Property for any reason (includingwithout limitation the foreclosure of a subordinate lien or security interestor a transfer by operation of Law) shall constitute an assignment or transferof Grantor’s interest in and rights to such funds held by Lender under thisparagraph but subject to the rights of Lender hereunder.

 

(f)            Condemnation. Immediately upon obtaining knowledge thereof, Grantor shall notifyLender of any threatened or pending proceeding for condemnation affecting theProperty or arising out of damage to the Property, and Grantor shall, atGrantor’s expense, diligently prosecute any such proceedings, and shall consultwith Lender and its attorneys and experts, and cooperate with them in thecarrying on the defense of any such proceedings.  Lender shall have the right (but not theobligation) to participate in any such proceeding and to be represented bycounsel of its own choice.  Subject tothe rights of the administrative agent and/or lenders in respect of the SeniorLoan, the Commercial Loan or the Senior DOTs, as applicable, Lender shall beentitled to receive all sums which may be awarded or become payable to Grantorfor the condemnation of the Property, or any part thereof, for public orquasi-public use, or by virtue of private sale in lieu thereof, and any sumswhich may be awarded or become payable to Grantor for injury or damage to theProperty.  To the extent permitted byapplicable Law and except as otherwise expressly provided herein, Grantorhereby specifically, unconditionally and 

 

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irrevocablywaives all rights of a property owner granted under applicable law whichprovide for allocation of condemnation proceeds between a property owner and alienholder, including the provisions of NRS 37.115.  Grantor shall, promptly upon request ofLender, execute such additional assignments and other documents as may benecessary from time to time to permit such participation and, subject to therights of administrative agent and/or lenders in respect of the Senior Loan,the Commercial Loan or the Senior DOTs, as applicable, to enable Lender tocollect and receipt for any such sums. Subject to the rights of the administrative agent and/or lenders inrespect of the Senior Loan, the Commercial Loan or the Senior DOTs, asapplicable, all such sums are hereby assigned to Lender, and shall be appliedas provided in the applicable provisions of the Mezzanine Loan Agreement.  In any event the unpaid portion of theSecured Indebtedness shall remain in full force and effect and the paymentthereof shall not be excused.  Lendershall not be, under any circumstances, liable or responsible for failure tocollect or to exercise diligence in the collection of any such sum or forfailure to see to the proper application of any amount paid over toGrantor.  Lender is hereby authorized, inthe name of Grantor, to execute and deliver valid acquittances for, and toappeal from, any such award, judgment or decree.  All reasonable costs and expenses (includingbut not limited to reasonable attorneys’ fees) incurred by Lender in connectionwith any condemnation shall be a demand obligation owing by Grantor (whichGrantor hereby promises to pay) to Lender pursuant to this Mortgage.

 

(g)           Compliance with Legal Requirements.  Grantor, the Property and the use, operationand maintenance thereof and all activities thereon do and shall comply in allmaterial respects with all applicable Legal Requirements (hereinafter defined).  The Property is not, and shall not be,dependent on any other property or premises or any interest therein other thanthe Property to fulfill any requirement of any Legal Requirement.  Grantor shall not, by act or omission, permitany building or other improvement not subject to the lien of this Mortgage torely on the Property or any interest therein to fulfill any requirement of anyLegal Requirement.  No improvement uponor use of any part of the Property constitutes a nonconforming use under anyzoning Law or similar Law.  The Propertywill contain within its boundaries a sufficient number of parking spaces tosatisfy all Laws.  There are no writtenor oral agreements with any third parties regarding parking, ingress andegress, use or maintenance of common areas or otherwise except as provided inthe Permitted Encumbrances.  Grantor hasobtained or will obtain when required and shall preserve and keep in full forceand effect, all requisite zoning, utility, building, health, environmental andoperating permits from the governmental authorities having jurisdiction overthe Property.  If Grantor receives anotice or claim from any person that the Property, or any use, activity,operation or maintenance thereof or thereon, is not in compliance with any LegalRequirement, Grantor will promptly furnish a copy of such notice or claim toLender.  Without limiting the foregoing,Grantor hereby agrees that upon receipt of any notice of noncompliance withrestrictive covenants affecting the Property because of the encroachment of theImprovements over the building line, Grantor shall immediately (x) provideLender with written notice thereof and (y) commence to cure suchnoncompliance and pursue such cure to completion. Grantor has received nonotice and has no knowledge of any such noncompliance.  As used in this Mortgage:  (i) the term “Legal Requirement” meansany Law (hereinafter defined), agreement, covenant, restriction, easement orcondition (including, without limitation of the foregoing, any condition orrequirement imposed by any insurance or surety company) that is binding onGrantor or the Property, as any of the same now exists or may be 

 

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changed or amended or come into effect in the future; and (ii) theterm “Law” means any federal, state or local law, statute, ordinance, code,rule, regulation, license, permit, authorization, decision, order, injunctionor decree, domestic or foreign.

 

(h)           Condition of Property.  Upon payment of applicable connection fees,the Property will be separately served by electric, gas, storm and sanitarysewers, sanitary water supply, telephone and other utilities required for theuse thereof as represented by Grantor at or within the boundary lines of theProperty or at points from which extensions of facilities contemplated by theMezzanine Loan Agreement will originate. All streets, alleys and easements necessary to serve the Property forthe use represented by Grantor have been completed and are serviceable and (i) suchstreets have been dedicated and accepted by applicable governmental entities, (ii) suchstreets benefit the Property pursuant to valid and binding easement agreementswhich permit Grantor and its successors, assigns and mortgagees, theuninterrupted use of the same for ingress and egress to and from the Propertyor (iii) the right-of-way for such streets have been established and suchstreets will be constructed as part of the improvements provided for in theMezzanine Loan Agreement.  To Grantor’sknowledge, design conditions of the Property are such that no drainage orsurface or other water will, in any actionable way, drain across or rest uponeither the Property or land of others. No portion of any of the buildings that are or are to be part of theProperty is within a flood plain except as shown on a survey delivered toLender, and none of the Improvements creates (or when constructed will create)an encroachment over, across or upon any of the Property boundary lines, rightsof way or easements, and no building or other improvement on adjoining landcreates such an encroachment onto the Property except as shown on a surveydelivered to Lender.

 

(i)            Maintenance, Repair andRestoration.  Grantor will keep theProperty in first class order, repair, operating condition and appearance,causing all necessary repairs, renewals, replacements, additions andimprovements to be promptly made, and will not allow any of the Property to bemisused, abused or wasted or to deteriorate. Notwithstanding the foregoing, Grantor will not, without the priorwritten consent of Lender, (i) remove from the Property any fixtures orpersonal property covered by this Mortgage except such as is replaced byGrantor by an article of equal suitability and value, owned by Grantor, freeand clear of any lien or security interest (except Permitted Encumbrances andthe liens and security interests created by this Mortgage and the other LoanDocuments), or (ii) make any structural alteration to the Property or anyother alteration thereto which impairs the value thereof, or (iii) makeany alteration to the Property involving any single estimated expenditure exceeding $300,000, except pursuant toplans and specifications approved in writing by Lender.  Upon request of Lender but no more often thanonce in any twelve month period (unless Lender determines in its good faithbusiness judgment, that it needs a current inventory more frequently), Grantorwill deliver to Lender an inventory describing and showing the make, model, andlocation of all fixtures and personal property used in the management,maintenance and operation of the Property owned by Grantor with a certificationby Grantor that said inventory is a true and complete schedule of all suchfixtures and personal property owned by Grantor used in the management,maintenance and operation of the Property, that such items specified in theinventory constitute all of the fixtures and personal property required in themanagement, maintenance and operation of the Property except for itemsidentified or leased by Grantor in accordance with this Mortgage and other 

 

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items owned by service providers and that all such items are owned byGrantor free and clear of any lien or security interest (except PermittedEncumbrances and the liens and security interests created by this Mortgage andthe other Loan Documents).  If any act oroccurrence of any kind or nature (including any condemnation or any casualty forwhich insurance has not been obtained or is not obtainable) shall result indamage to or loss or destruction of the Property in excess of $75,000.00,Grantor shall give prompt notice thereof to Lender and, unless Lender agreesotherwise, Grantor shall promptly, at Grantor’s sole cost and expense andregardless of whether insurance or condemnation proceeds (if any) shall beavailable or sufficient for the purpose, secure the Property as necessary andcommence and continue diligently to completion to restore, repair, replace andrebuild the Property as nearly as possible to its value, condition andcharacter immediately prior to the damage, loss or destruction.

 

(j)            No Other Liens.   Grantor will not, without the prior writtenconsent of Lender, create, place or permit to be created or placed, or throughany act or failure to act, acquiesce in the placing of, or allow to remain, anydeed of trust, mortgage, voluntary or involuntary lien, whether statutory,constitutional or contractual, security interest, encumbrance or charge, orconditional sale or other title retention document, against or covering theProperty, or any part thereof, other than the Permitted Encumbrances,regardless of whether the same are expressly or otherwise subordinate to thelien or security interest created in this Mortgage, and should any of theforegoing become attached hereafter in any manner to any part of the Propertywithout the prior written consent of Lender, Grantor will cause the same to bepromptly discharged and released; provided, however, that Grantor may contestinvoluntary mechanics’ and materialmen’s liens to the extent and in the mannerpermitted by Law if and so long as Grantor shall have satisfied all of theconditions of Section 2.1 (c) (regarding contest byGrantor of taxes or other impositions), which conditions shall also apply inall respects to Grantor’s privilege to contest involuntary mechanics’ ormaterialmen’s liens under this paragraph. Grantor will own all parts of the Property and will not acquire anyfixtures, equipment or other property (including software embedded therein)forming a part of the Property pursuant to a lease, license, security agreementor similar agreement, whereby any party has or may obtain the right torepossess or remove same, without the prior written consent of Lender, exceptthat Grantor may lease certain furniture and accessories for display in themodel units on the Property, certain furniture and equipment for the clubhouseand management offices and cable, television, telephone, internet access,laundry and security equipment pursuant to lease agreements approved byLender.  If Lender consents to thevoluntary grant by Grantor of any deed of trust or mortgage, lien, securityinterest, or other encumbrance (other than the Permitted Encumbrances)(hereinafter called “Subordinate Mortgage”) covering any of the Propertyor if the foregoing prohibition is determined by a court of competentjurisdiction to be unenforceable as to a Subordinate Mortgage, any suchSubordinate Mortgage shall contain express covenants to the effect that:

 

(1)           theSubordinate Mortgage is unconditionally subordinate to this Mortgage;

 

(2)           ifany action (whether judicial or pursuant to a power of sale) shall beinstituted to foreclose or otherwise enforce the Subordinate Mortgage, notenant of any of the Leases (hereinafter defined) shall be named as a partydefendant, and no action shall 

 

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be taken that would terminate any occupancy or tenancywithout the prior written consent of Lender;

 

(3)           Rents,(hereinafter defined) if collected by or for the holder of the SubordinateMortgage, shall be applied first to the payment of the Senior Loan and theSecured Indebtedness then due and expenses incurred in the ownership, operationand maintenance of the Property, prior to being applied to any indebtednesssecured by the Subordinate Mortgage;

 

(4)           writtennotice of default under the Subordinate Mortgage and written notice of thecommencement of any action (whether judicial or pursuant to a power of sale) toforeclose or otherwise enforce the Subordinate Mortgage or to seek theappointment of a receiver for all or any part of the Property shall be given toLender with or immediately after the occurrence of any such default orcommencement; and

 

(5)           neitherthe holder of the Subordinate Mortgage, nor any purchaser at foreclosurethereunder, nor anyone claiming by, through or under any of them shall succeedto any of Grantor’s rights hereunder without the prior written consent ofLender.

 

(k)           Operation of Property.  Grantor will operate the Property in a goodand workmanlike manner and in accordance with all Legal Requirements and willpay all fees or charges of any kind in connection therewith (except for feesand charges that Grantor is contesting in good faith in accordance with theprovisions of this Mortgage).  Grantorwill keep the Property occupied so as not to impair the insurance carriedthereon.  Grantor will not use or occupy,or conduct any activity on, or allow the use or occupancy of or the conduct ofany activity on, the Property in any manner which violates any LegalRequirement or which constitutes a public or private nuisance or which makesvoid, voidable or cancelable, or increases the premium of, any insurance thenin force with respect thereto.  Grantorwill not initiate or permit any zoning reclassification of the Property or seekany variance under existing zoning ordinances applicable to the Property or useor permit the use of the Property in such a manner which would result in suchuse becoming a nonconforming use under applicable zoning ordinances or anyother Legal Requirement.  Grantor willnot impose any easement, restrictive covenant or encumbrance upon the Property,execute or file any subdivision plat affecting the Property or consent to theannexation of the Property to any municipality, without the prior writtenconsent of Lender.  Grantor will not door suffer to be done any intentional act whereby the value of any part of theProperty may be lessened; provided, however, this sentence is not intended andshall not be construed, to prohibit Grantor from making adjustments to therental rates for apartment units in the Property that are necessary to meetmarket rental rates for apartment projects of similar quality located in thegeneral vicinity of the Property. Grantor will preserve, protect, renew, extend and retain all materialrights and privileges granted for or applicable to the Property.  Without the prior written consent of Lender,there shall be no drilling or exploration for or extraction, removal orproduction of any mineral, hydrocarbon, gas, natural element, compound orsubstance (including sand and gravel) from the surface or subsurface of theLand regardless of the depth thereof or the method of mining or extractionthereof.

 

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(l)            Debts for Construction, Etc.  Grantor will cause all debts and liabilitiesof any character (including without limitation all debts and liabilities forlabor, material and equipment (including software embedded therein) and alldebts and charges for utilities servicing the Property) incurred in theconstruction, maintenance, operation and development of the Property to bepromptly paid, subject to Grantor’s right to contest the validity or amountsthereof in accordance with procedures like those in Section 2.1(c).

 

(m)          Financial Matters.  Grantor is solvent after giving effect to allborrowings contemplated by the Loan Documents and no proceeding under anyDebtor Relief Law (hereinafter defined) is pending (or, to Grantor’s knowledge,threatened) by or against Grantor, as a debtor.

 

(n)           Status of Grantor; Suits andClaims; Loan Documents.  If Grantoris a corporation, partnership, limited liability company, or other legalentity, Grantor is and will continue to be (i) duly organized, validlyexisting and in good standing under the laws of its state of organization, (ii) authorizedto do business in, and in good standing in, each state in which the Property islocated, and (iii) possessed of all requisite power and authority to carryon its business and to own and operate the Property.  This Mortgage has been duly authorized,executed and delivered by Grantor, and the obligations hereunder and theperformance hereof by Grantor in accordance with its terms are and willcontinue to be within Grantor’s power and authority (without the necessity ofjoinder or consent of any other person), are not and will not be incontravention of any Legal Requirement or any other document or agreement towhich Grantor or the Property is subject, and do not and will not result in thecreation of any encumbrance against any assets or properties of Grantor, exceptfor the liens of the Permitted Encumbrances and as otherwise expresslycontemplated by the Loan Documents. There is no suit, action, claim, investigation, inquiry, proceeding ordemand pending (or, to Grantor’s knowledge, threatened) against Grantor orwhich affects the Property (including, without limitation, any which challengesor otherwise pertains to Grantor’s title to the Property) or the validity,enforceability or priority of any of the Loan Documents, except as has beendisclosed in writing to Lender in connection with the loan evidenced by theNotes.  There is no judicial oradministrative action, suit or proceeding pending (or, to Grantor’s knowledge,threatened) against Grantor, except as has been disclosed in writing to Lenderin connection with the loan evidenced by the Notes.  This Mortgage constitutes a legal, valid andbinding obligation of Grantor enforceable in accordance with its terms, exceptas the enforceability hereof may be limited by Debtor Relief Laws (hereinafterdefined) and except as the availability of certain remedies may be limited bygeneral principles of equity.  Grantor isnot a “foreign person” within the meaning of the Internal Revenue Code of 1986,as amended, Sections 1445 and 7701 (i.e. Grantor is not a non-resident alien,foreign corporation, foreign partnership, foreign trust or foreign estate asthose terms are defined therein and in any regulations promulgated thereunder).  Grantor’s exact legal name is correctly setforth at the end of this Mortgage.  IfGrantor is not an individual, Grantor is an organization of the type and (ifnot an unregistered entity) is incorporated in or organized under the laws ofthe state specified in the introductory paragraph of this Mortgage.  If Grantor is an unregistered entity(including, without limitation, a general partnership) it is organized underthe laws of the state specified in the introductory paragraph of thisMortgage.  Grantor will not cause orpermit any change to be made in its name, identity (including its trade 

 

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name or names), or corporate or partnership structure, unless Grantorshall have notified Lender in writing of such change at least 30 days prior tothe effective date of such change, and shall have first taken all actionreasonably required by Lender for the purpose of further perfecting orprotecting the lien and security interest of Lender in the Property.  In addition, Grantor shall not change itscorporate or partnership structure without first obtaining the prior writtenconsent of Lender.  Grantor’s principalplace of business and chief executive office, and the place where Grantor keepsits 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 Property, will be(unless Grantor notifies Lender of any change in writing at least 30 days priorto the date of such change) the address of Grantor set forth at the end of thisMortgage and such other additional addresses within the United States of whichGrantor has notified Lender.  Grantor’sorganizational identification number, if any, assigned by the state ofincorporation or organization is correctly set forth on the first page ofthis Mortgage.  Grantor shall promptlynotify Lender (i) of any change of its organizational identificationnumber, or (ii) if Grantor does not now have an organizationidentification number and later obtains one, of such organizationalidentification number.

 

(o)           Certain Environmental Matters.  To the extent applicable to Grantor, Grantorshall comply with the terms and covenants and agreements with respect toenvironmental matters of that certain Environmental Indemnity Agreementpertaining to the Property (the “Environmental Indemnity”) amongBorrower and Lender.

 

(p)           Further Assurances.  Grantor will, promptly on request of Lender, (i) correctany defect, error or omission which may be discovered in the contents,execution or acknowledgment of this Mortgage; (ii) execute, acknowledge,deliver, procure and record and/or file such further documents (including,without limitation, further deeds of trust, security agreements, andassignments of rents or leases) and do such further acts as are, in Lender’sreasonable judgment, necessary, desirable or proper to carry out moreeffectively the purposes of this Mortgage, to more fully identify and subjectto the liens and security interests hereof any property intended to be coveredhereby (including specifically, but without limitation, any renewals,additions, substitutions, replacements, or appurtenances to the Property) or asdeemed advisable by Lender to protect the lien or the security interesthereunder against the rights or interests of third persons; and (iii) providesuch certificates, documents, reports, information, affidavits and otherinstruments and do such further acts as may be necessary, desirable or properin the reasonable determination of Lender to enable Lender to comply with therequirements or requests of any agency having jurisdiction over Lender or anyexaminers of such agencies with respect to the Grantor or the Property;provided, however, such further acts shall be consistent with the termscontained in this Mortgage and shall not unreasonably alter the rights andobligations of Grantor under this Mortgage. Grantor shall pay all costs connected with any of the foregoing, whichshall be a demand obligation owing by Grantor (which Grantor hereby promises topay) to Lender pursuant to this Mortgage.

 

(q)           Reserved.

 

(r)            Reserved.

 

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(s)           Taxes on Notes or Mortgage.  In the event of the enactment after this dateof any Law of any governmental entity applicable to Lender, the Notes, theProperty or this Mortgage deducting from the value of property for the purposeof taxation any lien or security interest thereon, or imposing upon Lender thepayment of the whole or any part of the taxes or assessments or charges orliens herein required to be paid by Grantor, or changing in any way the Lawsrelating to the taxation of deeds of trust or mortgages or security agreementsor debts secured by deeds of trust or mortgages or security agreements or theinterest of the mortgagee or secured party in the property covered thereby, orthe manner of collection of such taxes, so as to affect this Mortgage or theSecured Indebtedness or Lender, then, and in any such event, Grantor, upondemand by Lender, shall pay such taxes, assessments, charges or liens, orreimburse Lender therefor; provided, however, that if in the opinion of counselfor Lender (i) it might be unlawful to require Grantor to make suchpayment or (ii) the making of such payment might result in the impositionof interest beyond the maximum amount permitted by Law, then and in such event,Lender may elect, to the extent permitted by applicable law, by notice inwriting given to Grantor, to declare all of the Secured Indebtedness to be andbecome due and payable sixty (60) days from the giving of such notice.

 

(t)            Statement Concerning Mortgage.  Grantor shall at any time and from time totime furnish within seven (7) days of request by Lender a writtenstatement in such form as may be reasonably required by Lender stating that (i) thisMortgage is a valid and binding obligation of Grantor, enforceable againstGrantor in accordance with its terms; (ii) this Mortgage has not beenreleased, subordinated or modified; and (iii) Grantor has no offsets ordefenses against the enforcement of this Mortgage.  If any of the foregoing statements areuntrue, Grantor shall, alternatively, specify the reasons therefor.

 

Section 2.2.            Performance by Lender on Grantor’sBehalf.  Grantor agrees that, ifGrantor fails to perform any act or to take any action which under thisMortgage, Grantor is required to perform or take, and if such failure thenconstitutes an Event of Default hereunder (whether or not the SecuredIndebtedness has been accelerated), Lender, in Grantor’s name or its own name,may, but shall not be obligated to, perform or cause to be performed such actor take such action or pay such money, and any expenses so incurred by Lenderand any money so paid by Lender, shall be a demand obligation owing by Grantorto Lender (which obligation Grantor hereby promises to pay), shall be a part ofthe Secured Indebtedness and Lender, upon making such payment, shall besubrogated to all of the rights of the person, entity or body politic receivingsuch payment.  After the occurrence andduring the continuance of an Event of Default, Lender shall have the right toenter upon the Property at any time and from time to time for any suchpurposes.  No such payment or performanceby Lender shall waive or cure any Event of Default or waive any right, remedyor recourse of Lender.  Any such paymentmay be made by Lender in reliance on any statement, invoice or claim withoutinquiry into the validity or accuracy thereof. Each amount due and owing by Grantor to Lender pursuant to this Mortgageshall bear interest, from the date such amount becomes due until paid, whetherbefore or after a sale as described in Section 5.2 at the DefaultInterest Rate (as defined in the Mezzanine Loan Agreement) but never in excessof the maximum nonusurious amount permitted by applicable Law, which interestshall be payable to Lender on demand; and all such amounts, together with suchinterest thereon, shall automatically and without notice be a part of the 

 

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Secured Indebtedness.  The amountand nature of any expense by Lender hereunder and the time when paid shall befully established by the certificate of Lender or any of Lender’s officers oragents.

 

Section 2.3.            Absence of Obligations of Lenderwith Respect to Property. Notwithstanding anything in this Mortgage to the contrary, including,without limitation, the definition of “Property” and/or the provisions of Article 3hereof, (i) to the extent permitted by applicable Law, the Property iscomposed of Grantor’s rights, title and interests therein but not Grantor’sobligations, duties or liabilities pertaining thereto, (ii) Lender doesnot assume or shall have any obligations, duties or liabilities in connectionwith any portion of the items described in the definition of “Property” herein,either prior to or after obtaining title to such Property, whether byforeclosure sale, the granting of a deed in lieu of foreclosure or otherwise,and (iii) Lender may, at any time prior to or after the acquisition oftitle to any portion of the Property as above described, advise any party inwriting as to the extent of Lender’s interest therein and/or expresslydisaffirm in writing any rights, interests, obligations, duties and/orliabilities with respect to such Property or matters related thereto.  Without limiting the generality of theforegoing, it is understood and agreed that Lender shall not have anyobligations, duties or liabilities prior to or after acquisition of title toany portion of the Property, as lessee under any lease or purchaser or sellerunder any contract or option unless Lender elects otherwise by written notification.

 

Section 2.4.            Authorization to File FinancingStatements; Power of Attorney. Grantor hereby authorizes Lender at any time and from time to time tofile any initial financing statements, amendments thereto and continuationstatements as authorized by applicable Law, required by Lender to establish ormaintain the validity, perfection and priority of the security interestsgranted in this Mortgage.  Grantor alsoratifies its authorization for Lender to have filed any like initial financingstatements, amendments thereto or continuation statements if filed prior to thedate of this Mortgage.  Grantor herebyirrevocably constitutes and appoints Lender and any officer or agent of Lender,with full power of substitution, as its true and lawful attorneys-in-fact withfull irrevocable power and authority in the place and stead of Grantor or inGrantor’s own name to execute in Grantor’s name any such documents and tootherwise carry out the purposes of this Section 2.4, to the extentthat Grantor’s authorization above is not sufficient.  To the extent permitted by law, Grantorhereby ratifies all acts said attorneys-in-fact shall lawfully do, have done inthe past or cause to be done in the future by virtue hereof.  This power of attorney is a power coupledwith an interest and shall be irrevocable.

 

**ARTICLE 3Assignment of Rents and Leases**

** **

Section 3.1.            Assignment.  Subject to the rights of the administrativeagent and/or lenders in respect of the Senior Loan, the Commercial Loan or theSenior DOTs, as applicable, Grantor hereby assigns to Lender all Rents (ashereinafter defined) and all of Grantor’s rights in and under all Leases(hereinafter defined).  So long as noEvent of Default (hereinafter defined) has occurred, Grantor shall have alicense (which license shall terminate automatically and 

 

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without further notice upon the occurrence of an Event of Default) tocollect, but not prior to accrual, the Rents under the Leases and, where applicable,subleases (such Rents to be held in trust for Lender, subject to the rights ofthe administrative agent and/or lenders in respect of the Senior Loan, theCommercial Loan or the Senior DOTs, as applicable) and to otherwise deal withall Leases as permitted by this Mortgage. Each month, provided no Event of Default has occurred, Grantor mayretain such Rents as were collected that month and held in trust for Lender;provided, however, that all Rents collected by Grantor shall be applied solelyto the ordinary and necessary expenses of owning and operating the Property andobligations under the Senior Loan Documents or paid to Lender beforeapplication to any other purpose. Subject to the rights of the administrative agent and/or lenders inrespect of the Senior Loan, the Commercial Loan or the Senior DOTs, asapplicable, upon the revocation of such license, Lender shall have the right,power and privilege (but shall be under no duty) to demand possession of theRents, which demand shall to the fullest extent permitted by applicable Law besufficient action by Lender to entitle Lender to immediate and direct paymentof the Rents (including delivery to Lender of Rents collected for the period inwhich the demand occurs and for any subsequent period), for application asprovided in this Mortgage.  Subject tothe rights of the administrative agent and/or lenders in respect of the SeniorLoan, the Commercial Loan or the Senior DOTs, as applicable, Grantor herebyauthorizes and directs the tenants under the Leases to pay Rents to Lender uponwritten demand by Lender, without further consent of Grantor, without anyobligation of such tenants to determine whether an Event of Default has in factoccurred and regardless of whether Lender has taken possession of any portionof the Property, and the tenants may rely upon any written statement deliveredby Lender to the tenants.  Any suchpayments to Lender shall constitute payments to Grantor under the Leases, and,subject to the rights of the administrative agent and/or lenders in respect ofthe Senior Loan, the Commercial Loan or the Senior DOTs, as applicable, Grantorhereby irrevocably appoints Lender as its attorney-in-fact to do all things,after an Event of Default, which Grantor might otherwise do with respect to theProperty and the Leases thereon, including, without limitation, (i) collectingRents with or without suit and applying the same, less expenses of collection,to the Senior Loan, with any excess applied to any of the obligations securedhereunder or under the Loan Documents or to expenses of operating andmaintaining the Property, at the option of the Lender, all in such manner asmay be determined by Lender, (ii) leasing, in the name of Grantor, thewhole or any part of the Property which may become vacant, and (iii) employingagents therefor and paying such agents reasonable compensation for theirservices.  The curing of such Event ofDefault, unless other Events of Default also then exist, shall entitle Grantorto recover its aforesaid license to do any such things which Grantor mightotherwise do with respect to the Property and the Leases thereon and to againcollect such Rents.  The powers andrights granted in this paragraph shall be in addition to the other remediesherein provided for upon the occurrence of an Event of Default and may beexercised independently of or concurrently with any of said remedies.  Nothing in the foregoing shall be construedto impose any obligation upon Lender to exercise any power or right granted inthis paragraph, or to assume any liability under any Lease of any part of theProperty (and no liability shall attach to Lender for failure or inability tocollect any Rents under any such Lease), or as constituting Lender a mortgageein possession in the absence of the actual taking of possession of the Propertyby Lender, or as constituting an action, rendering any of Grantor’s obligationsto Lender unenforceable, in violation of any of the provisions of NRS Section 40.430or otherwise limiting any rights 

 

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available to Lender.  Theassignment contained in this Section shall become null and void upon therelease of this Mortgage.  As usedherein: (i) “Lease” means each existing or future lease, sublease(to the extent of Grantor’s rights thereunder) or other agreement under theterms of which any person has or acquires any right to occupy or use theProperty, or any part thereof, or interest therein, and each existing or futureguaranty of payment or performance thereunder, and all extensions, renewals,modifications and replacements of each such lease, sublease, agreement orguaranty; and (ii) “Rents” means all of the rents, revenue, income,profits and proceeds derived and to be derived from the Property or arisingfrom the use or enjoyment of any portion thereof or from any Lease, includingbut not limited to the proceeds from any negotiated lease termination or buyoutof such Lease, liquidated damages following default under any such Lease, all proceedspayable under any policy of insurance covering loss of rents resulting fromuntenantability caused by damage to any part of the Property, all of Grantor’srights to recover monetary amounts from any tenant in bankruptcy including,without limitation, rights of recovery for use and occupancy and damage claimsarising out of Lease defaults, including rejections, under any applicableDebtor Relief Laws (as defined in the Loan Agreement), together with any sumsof money that may now or at any time hereafter be or become due and payable toGrantor by virtue of any and all royalties, overriding royalties, bonuses,delay rentals and any other amount of any kind or character arising under anyand all present and all future oil, gas, mineral and mining leases covering theProperty or any part thereof, and all proceeds and other amounts paid or owingto Grantor under or pursuant to any and all contracts and bonds relating to theconstruction or renovation of the Property.

 

Section 3.2.            Reserved.

 

Section 3.3.            No Liability of Lender.Lender’s acceptance of this assignment shall not be deemed to constitute Lendera “mortgagee in possession,” nor obligate Lender to appear in or defend anyproceeding relating to any Lease or to the Property, or to take any action hereunder,expend any money, incur any expenses, or perform any obligation or liabilityunder any Lease, or assume any obligation for any deposit delivered to Grantorby any tenant and not as such delivered to and accepted by Lender.  Lender shall not be liable for any injury ordamage to person or property in or about the Property, or for Lender’s failureto collect or to exercise diligence in collecting Rents, but shall beaccountable only for Rents that it shall actually receive.  Neither the assignment of Leases and Rentsnor enforcement of Lender’s rights regarding Leases and Rents (includingcollection of Rents) nor possession of the Property by Lender nor Lender’sconsent to or approval of any Lease (nor all of the same), shall render Lenderliable on any obligation under or with respect to any Lease or constituteaffirmation of, or any subordination to, any Lease, occupancy, use oroption.  If Lender seeks or obtains anyjudicial relief regarding Rents or Leases, the same shall in no way prevent theconcurrent or subsequent employment of any other appropriate rights or remediesnor shall same constitute an election of judicial relief for any foreclosure orany other purpose.  Lender shall not haveor assume any obligations as lessor or landlord with respect to any Lease.  The rights of Lender under this Article 3shall be cumulative of all other rights of Lender under the Loan Documents orotherwise.

 

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**ARTICLE 4Default**

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Section 4.1.            Events of Default.  The occurrence of any one of the followingshall be a default under this Mortgage (each, an “Event of Default”):

 

(a)           Failure to Pay SecuredIndebtedness.  The failure ofBorrower or Grantor to pay when due any amount required by this Mortgage, thePromissory Note or any other Loan Document which continues, in the case ofmonthly interest payments required under the Note for twenty (20) days or, inthe case of other sums payable under this Mortgage, the Promissory Note or anyother Loan Document, for ten (10) days following written demand forpayment on Borrower by Lender.

 

(b)           Nonperformance of Covenants.  The failure by Borrower or Grantor to performany of its obligations under this Mortgage, the Promissory Note or any otherLoan Document, as and when required, except as specifically set forth otherwiseherein, which continues for a period of thirty (30) days after notice of suchfailure by Lender to Borrower and/or Grantor, if such failure is not reasonablysusceptible of cure within such thirty (30)-day period and, if Borrower and/orGrantor promptly commences such cure within such thirty (30)-day period anddiligently prosecutes the same to completion, then the cure period shall beextended for such period of time as may be reasonably necessary to effect acure but in no event shall such period exceed ninety (90) days.

 

(c)           Default under other Loan Documents.  The occurrence of an Event of Default (aftertaking into consideration applicable notice, grace and cure periods) under anyother Loan Document.

 

Section 4.2.            Notice and Cure.  If any provision of this Mortgage or anyother Loan Document provides for Lender to give to Grantor or Borrower anynotice regarding an Event of Default or incipient Event of Default, then ifLender shall fail to give such notice to Grantor or Borrower as provided, thesole and exclusive remedy of Grantor for such failure shall be to seekappropriate equitable relief to enforce the agreement to give such notice andto have any acceleration of the maturity of the Notes and the SecuredIndebtedness postponed or revoked and foreclosure proceedings in connectiontherewith delayed or terminated pending or upon the curing of such Event ofDefault in the manner and during the period of time permitted by such agreement,if any, and Grantor shall have no right to damages or any other type of reliefnot herein specifically set out against Lender, all of which damages or otherrelief are hereby waived by Grantor. Nothing herein or in any other Loan Document shall operate or beconstrued to add on or make cumulative any cure or grace periods specified inany of the Loan Documents and to the extent that Grantor and Borrower have anycure rights with respect to any event or circumstance which, upon notice or thepassage of time, or both, could constitute an Event of Default hereunder, suchcure periods shall run concurrently and not consecutively.

 

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**ARTICLE 5**

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**Remedies**

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Section 5.1.            Certain Remedies.  If an Event of Default shall occur, Lendermay (but shall have no obligation to) exercise any one or more of the followingremedies, without notice (unless notice is required by applicable Law):

 

(a)           Acceleration; Termination.  Lender may at any time and from time to timedeclare any or all of the Secured Indebtedness immediately due andpayable.  Upon any such declaration, suchSecured Indebtedness shall, subject to NRS Section 107.080, thereupon beimmediately due and payable, without presentment, demand, protest, notice ofprotest, notice of acceleration or of intention to accelerate or any othernotice or declaration of any kind upon Grantor, all of which are herebyexpressly waived by Grantor.

 

(b)           Enforcement of Assignment of Rents.  In addition to the rights of Lender under Article 3hereof, prior or subsequent to taking possession of any portion of the Propertyor taking any action with respect to such possession, Lender may, subject tothe rights of the administrative agent and/or lenders in respect of the SeniorLoan, the Commercial Loan or the Senior DOTs, as applicable: (1) collectand/or sue for the Rents in Lender’s own name, give receipts and releasestherefor, and after deducting all reasonable expenses of collection, includingreasonable attorneys’ fees and expenses, apply the net proceeds thereof to theSecured Indebtedness in such manner and order as Lender may elect and/or to theoperation and management of the Property, including the payment of reasonablemanagement, brokerage and attorney’s fees and expenses; and (2) requireGrantor to transfer all security deposits and records thereof to Lendertogether with original counterparts of the Leases, upon which transfer Lendershall be responsible for returning such deposits to tenants.

 

(c)           Non-Judicial Sale. Subject to the rights of the administrative agent and/or lenders inrespect of the Senior Loan, the Commercial Loan or the Senior DOTs, asapplicable, Lender may (1) dispose of some or all of the Property, in anycombination consisting of both real and personal property, together in one saleto be held in accordance with the Law and procedures applicable to realproperty, as permitted by Section 9604 of the Uniform Commercial Code asenacted in the State of Nevada, NRS Section 104.9604, and other applicablelaws, and Grantor agrees that such a sale of personal property together withreal property constitutes a commercially reasonable sale of the personalproperty and (2) by delivery to Trustee and Grantor (and any other partiesto whom notice is required under NRS Section 107.080) of written notice ofdeclaration of default and demand for sale, cause to be filed of record awritten notice of default and election to sell the Property in accordance withthe requirements of applicable Nevada law.  If required by Trustee, Lender shall alsodeposit with Trustee this Mortgage and Notes or other Loan Documents or otheragreements and such documents as required by Trustee evidencing expenditures oradvances secured hereby and Lender shall comply with the requirements of NRS Section 107.220.  After the lapse of such time as there may berequired by law following recordation of such notice of default, and notice ofsale having been given as then required by Law, Trustee, without demand onGrantor, shall sell the Property, in accordance with 

 

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applicableLaw, either as a whole or in separate parcels, and in such order as it orLender may determine, at public auction to the highest bidder for cash inlawful money of the United States. Lender may, in its sole discretion, elect that the Property be sold inseparate parcels through two or more successive sales.  If Lender elects more than one sale ofseparate parcels of the Property, Lender may, at its option, cause the same tobe conducted simultaneously or successively, on the same day or at suchdifferent days or times and in such order as Lender may deem to be in its bestinterests, and no such sale shall terminate or otherwise effect the first lienof this Mortgage or Trustee’s power of sale hereunder until all indebtednesssecured hereby has been fully paid.  Theplace of sale shall be in the county in which the Property to be sold, or anypart thereof, is situated.  If Lenderelects to dispose of the Property through more than one sale, Grantor shall paythe costs and expenses of each such sale and of any proceedings where the samemay be made or conducted.  Trustee may,subject to applicable Law, postpone and change the time and place of sale ofall or any portion of the Property by public announcement at any time and placefixed by it in said notice of sale and from time to time and place to placethereafter, without any further posting or notice thereof, may postpone suchsale in public announcement to the time and place fixed by such postponement,whether or not said place fixed by any postponement be in the same city orother place as fixed in said notice of sale. Trustee shall deliver to suchpurchaser its deed conveying the Property so sold, but without any covenants orwarranty, express or implied.  Therecital in such deed of any matters of fact or otherwise shall be prima facieevidence of the truthfulness thereof.

 

(d)           UniformCommercial Code.  Withoutlimitation of Lender’s rights of enforcement with respect to the Collateral orany part thereof in accordance with the procedures for foreclosure of realestate, Lender may exercise its rights of enforcement with respect to theCollateral or any part thereof under the UCC, as in effect from time to time,as amended  (or under the UniformCommercial Code in force, from time to time, in any other state to the extentthe same is applicable Law), subject to the rights of the administrative agentand/or lenders in respect of the Senior Loan, the Commercial Loan or the SeniorDOTs, as applicable, and in conjunction with, in addition to or in substitutionfor those rights and remedies:

 

(1)           Subject to the rights of the administrative agent and/orlenders in respect of the Senior Loan, the Commercial Loan or the Senior DOTs,as applicable, Lender may enter upon Grantor’s premises to take possession of,assemble and collect the Collateral or, to the extent and for those items ofthe Collateral permitted under applicable Law, to render it unusable;

 

(2)           Subject to the rights of the administrative agent and/orlenders in respect of the Senior Loan, the Commercial Loan or the Senior DOTs,as applicable, Lender may require Grantor to assemble the Collateral and makeit available at a place Lender designates which is mutually convenient to allowLender to take possession or dispose of the Collateral;

 

(3)           written notice mailed to Grantor as provided herein atleast ten (10) days prior to the date of public sale of the Collateral orprior to the date after which private sale of the Collateral will be made shallconstitute reasonable notice; provided that, if 

 

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Lenderfails to comply with this clause (3) in any respect, its liability forsuch failure shall be limited to the liability (if any) imposed on it as amatter of law under the UCC, as in effect from time to time (or under theUniform Commercial Code, in force from time to time, in any other state to theextent the same is applicable law);

 

(4)           any sale made pursuant to the provisions of this paragraphshall be deemed to have been a public sale conducted in a commerciallyreasonable manner if held contemporaneously with and upon the same notice asrequired for the sale of the Property under power of sale as provided inparagraph (c) above in this Section 5.1;

 

(5)           in the event of a foreclosure sale, whether made byTrustee under the terms hereof, or under judgment of a court, the Collateraland the other Property may, at the option of Lender, be sold as a whole;

 

(6)           it shall not be necessary that Lender take possession ofthe Collateral or any part thereof prior to the time that any sale pursuant tothe provisions of this Section is conducted and it shall not be necessarythat the Collateral or any part thereof be present at the location of suchsale;

 

(7)           with respect to application of proceeds from dispositionof the Collateral under this Section 5.1 hereof, the costs andexpenses incident to disposition shall include the reasonable expenses ofretaking, holding, preparing for sale or lease, selling, leasing and the likeand the reasonable attorneys’ fees and legal expenses (including, withoutlimitation, the allocated costs for in-house legal services) incurred byLender;

 

(8)           any and all statements of fact or other recitals made inany bill of sale or assignment or other instrument evidencing any foreclosuresale hereunder as to nonpayment of the Secured Indebtedness or as to theoccurrence of any default, or as to Lender having declared all of suchindebtedness to be due and payable, or as to notice of time, place and terms ofsale and of the properties to be sold having been duly given, or as to anyother act or thing having been duly done by Lender, shall be taken as prima facieevidence of the truth of the facts so stated and recited;

 

(9)           Lender may appoint or delegate any one or more persons asagent to perform any act or acts necessary or incident to any sale held byLender, including the sending of notices and the conduct of the sale, but inthe name and on behalf of Lender;

 

(10)         Lender may comply with any applicable Laws in connectionwith a disposition of the Collateral, and such compliance will not beconsidered to affect adversely the commercial reasonableness of any sale of theCollateral;

 

(11)         Lender may sell the Collateral without giving any warrantiesas to the Collateral, and specifically disclaim all warranties including,without limitation, warranties relating to title, possession, quiet enjoymentand the like, and all warranties of quality, merchantability and fitness for aspecific purpose, and this procedure will not be 

 

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consideredto affect adversely the commercial reasonableness of any sale of theCollateral;

 

(12)         Grantor acknowledges that a private sale of the Collateralmay result in less proceeds than a public sale (but such acknowledgement doesnot authorize a private sale except when allowed by the UCC); and

 

(13)         Grantor acknowledges that the Collateral may be sold at aloss to Grantor, and that, in such event, Lender shall have no liability orresponsibility to Grantor for such loss so long as Lender has acted as allowedby this Mortgage, the UCC and other applicable Laws.

 

(e)           Lawsuits.  Lender may, to the fullest extent permittedby applicable Law, proceed by a suit or suits in equity or at law, whether forcollection of the Secured Indebtedness, the specific performance of anycovenant or agreement herein contained or in aid of the execution of any powerherein granted, or for any foreclosure hereunder or for the sale of theProperty under the judgment or decree of any court or courts of competentjurisdiction.

 

(f)            Entry on Property.  Lender is authorized, prior or subsequent tothe institution of any foreclosure proceedings, to the fullest extent permittedby applicable Law subject to the rights of the administrative agent and/orlenders in respect of the Senior Loan, the Commercial Loan or the Senior DOTs,as applicable, to enter upon the Property, or any part thereof, and to takepossession of the Property and all books and records, and all recorded data ofany kind or nature, regardless of the medium of recording including, withoutlimitation, all software, writings, plans, specifications and schematicsrelating thereto, and to exercise without interference from Grantor any and allrights which Grantor has with respect to the management, possession, operation,protection or preservation of the Property. Lender shall not be deemed to have taken possession of the Property orany part thereof except upon the exercise of its right to do so, and then onlyto the extent evidenced by its demand and overt act specifically for suchpurpose.  All reasonable costs, expensesand liabilities of every character incurred by Lender in managing, operating,maintaining, protecting or preserving the Property shall constitute a demandobligation of Grantor (which obligation Grantor hereby promises to pay) toLender pursuant to this Mortgage.  Ifnecessary to obtain the possession provided for above, Lender may invoke anyand all legal remedies to dispossess Grantor. In connection with any action taken by Lender pursuant to this Section,Lender shall not be liable for any loss sustained by Grantor resulting from anyfailure to let the Property or any part thereof, or from any act or omission ofLender in managing the Property unless such loss is caused by the grossnegligence or willful misconduct of Lender, nor shall Lender be obligated toperform or discharge any obligation, duty or liability of Grantor arising underany lease or other agreement relating to the Property or arising under anyPermitted Encumbrance or otherwise arising. Grantor hereby assents to, ratifies and confirms any and all actions ofLender with respect to the Property taken under this Section unless by thegross negligence or willful misconduct of Lender.

 

(g)           Receiver.  Subject to the rights of the administrativeagent and/or lenders in respect of the Senior Loan, the Commercial Loan or theSenior DOTs, as applicable, Lender 

 

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shall as a matter of right be entitled to the appointment of a receiveror receivers for all or any part of the Property whether such receivership beincident to a proposed sale (or sales) of such property or otherwise, andwithout regard to the value of the Property or the solvency of any person orpersons liable for the payment of the Secured Indebtedness, and Grantor doeshereby irrevocably consent to the appointment of such receiver or receivers,waives notice of such appointment, of any request therefor or hearing inconnection therewith, and any and all defenses to such appointment, agrees notto oppose any application therefor by Lender, and agrees that such appointmentshall in no manner impair, prejudice or otherwise affect the rights of Lenderto application of Rents as provided in this Mortgage.  Nothing herein is to be construed to depriveLender of any other right, remedy or privilege it may have under the Law tohave a receiver appointed.  Any moneyadvanced by Lender in connection with any such receivership shall be a demandobligation (which obligation Grantor hereby promises to pay) owing by Grantorto Lender pursuant to this Mortgage.

 

(h)           Termination of Commitment to Lend.  Lender may terminate any commitment orobligation to lend or disburse funds under any Loan Document.

 

(i)            Other Rights and Remedies.  Lender may exercise any and all other rightsand remedies which Lender may have under the Loan Documents, or at law or inequity or otherwise.

 

Section 5.2.            Proceeds of Foreclosure.  The proceeds of any sale held by Trustee orLender or any receiver or public officer in foreclosure of the liens andsecurity interests evidenced hereby shall be applied in accordance with therequirements of applicable Laws and to the extent consistent therewith, FIRST,to the payment of all necessary costs and expenses incident to such foreclosuresale, including but not limited to all reasonable attorneys’ fees and legalexpenses, advertising costs, auctioneer’s fees, costs of title rundowns andlien searches, inspection fees, appraisal costs, fees for professionalservices, environmental assessment and remediation fees, all court costs andcharges of every character insurance fees, costs of repairs, maintenance,inspection and testing fees, receivers and management fees, leasing and salescommissions, advertising costs and expenses, taxes and assessments, surveys,engineering studies and reports, engineering fees and expenses, soils tests,space planning costs and expenses, contractors fees, all other costs incurredby Lender to maintain, preserve and protect the Property (not exceeding 5% ofthe gross proceeds of such sale), and to the payment of the other SecuredIndebtedness, including specifically without limitation the principal, accruedinterest and attorneys’ fees due and unpaid on the Notes and the amounts dueand unpaid and owed to Lender under the Mezzanine Loan Agreement, this Mortgage,the Environmental Indemnity, or any other Loan Document, the order and mannerof application to the items in this clause FIRST to be in the sole discretionof Lender; and SECOND, the remainder, if any there shall be, shall be paid toGrantor, or to Grantor’s heirs, devisees, representatives, successors orassigns, or such other persons (including the holder or beneficiary of anyinferior lien) as may be entitled thereto by Law; provided, however, that ifLender is uncertain which person or persons are so entitled, Lender mayinterplead such remainder in any court of competent jurisdiction, and theamount of any reasonable attorneys’ fees, court costs and expenses incurred insuch action shall be a part of the Secured Indebtedness and shall be reimbursable(without limitation) from such remainder.

 

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Section 5.3.            Lender as Purchaser.  Lender shall have the right to become thepurchaser at any sale held by Trustee or substitute or successor or by anyreceiver or public officer or at any public sale, and Lender shall have theright to credit upon the amount of Lender’s successful bid, to the extentnecessary to satisfy such bid, all or any part of the Secured Indebtedness insuch manner and order as Lender may elect.

 

Section 5.4.            Foreclosure as to Matured Debt.  Lender shall have the right to proceed withforeclosure (judicial or nonjudicial) of the liens and security interestshereunder without declaring the entire Secured Indebtedness due, and in suchevent any such foreclosure sale may be made subject to the unmatured part ofthe Secured Indebtedness; and any such sale shall not in any manner affect theunmatured part of the Secured Indebtedness, but as to such unmatured part this Mortgageshall remain in full force and effect just as though no sale had beenmade.  The proceeds of such sale shall beapplied as provided in Section 5.2 hereof except that the amountpaid under clause FIRST thereof shall be only the matured portion of theSecured Indebtedness the remainder, if any, shall be applied as provided inclause SECOND of Section 5.2 hereof.  Several sales may be made hereunder withoutexhausting the right of sale for any unmatured part of the SecuredIndebtedness.

 

Section 5.5.            Remedies Cumulative.  All rights and remedies provided for hereinand in any other Loan Document are cumulative of each other and of any and allother rights and remedies existing at law or in equity, and Trustee and Lendershall, in addition to the rights and remedies provided herein or in any otherLoan Document, be entitled to avail themselves of all such other rights andremedies as may now or hereafter exist at law or in equity for the collectionof the Secured Indebtedness and the enforcement of the covenants herein and theforeclosure of the liens and security interests evidenced hereby, and theresort to any right or remedy provided for hereunder or under any other LoanDocument or provided for by law or in equity shall not prevent the concurrent orsubsequent employment of any other appropriate right or rights or remedy orremedies.

 

Section 5.6.            Discretion as to Security.  Lender may resort to any security given bythis Mortgage or to any other security now existing or hereafter given tosecure the payment of the Secured Indebtedness, in whole or in part, and insuch portions and in such order as may seem best to Lender in its sole anduncontrolled discretion (but subject to any agreements between Lenderapplicable thereto in the Mezzanine Loan Agreement), and any such action shallnot in anywise be considered as a waiver of any of the rights, benefits, liensor security interests evidenced by this Mortgage.

 

Section 5.7.            Grantor’s Waiver of CertainRights.  To the full extent Grantormay do so, and to the fullest extent permitted by applicable Law, Grantoragrees that Grantor will not at any time insist upon, plead, claim or take thebenefit or advantage of any law now or hereafter in force providing for anyappraisement, valuation, stay, extension or redemption, homestead, moratorium,reinstatement, marshaling or forbearance, and Grantor, for Grantor, Grantor’sheirs, devisees, representatives, successors and assigns, and for any and allpersons ever claiming any interest in the Property, to the extent permitted byapplicable Law, hereby waives and releases all rights of redemption, valuation,appraisement, stay of execution, notice of intention to mature or 

 

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declare due the whole of the Secured Indebtedness, notice of electionto mature or declare due the whole of the Secured Indebtedness and all rightsto a marshaling of assets of Grantor, including the Property, or to a sale ininverse order of alienation in the event of foreclosure of the liens and/orsecurity interests hereby created. Grantor shall not have or assert any right under any statute or rule ofLaw pertaining to the marshaling of assets, sale in inverse order ofalienation, the exemption of homestead, the administration of estates ofdecedents, or other matters whatsoever to defeat, reduce or affect the right ofLender under the terms of this Mortgage to a sale of the Property for thecollection of the Secured Indebtedness without any prior or different resortfor collection, or the right of Lender under the terms of this Mortgage to thepayment of the Secured Indebtedness out of the proceeds of sale of the Propertyin preference to every other claimant whatsoever.  Grantor waives any right or remedy whichGrantor may have or be able to assert pursuant to any provision of any statuteor rule of law, pertaining to the rights and remedies of sureties.  If any law referred to in this Section andnow in force, of which Grantor or Grantor’s heirs, devisees, representatives,successors or assigns or any other persons claiming any interest in theProperty might take advantage despite this Section, shall hereafter be repealedor cease to be in force, such law shall not thereafter be deemed to precludethe application of this Section.

 

Section 5.8.            Delivery of Possession AfterForeclosure.  Subject to the rightsof the administrative agent and/or lenders in respect of the Senior Loan, theCommercial Loan or the Senior DOTs, as applicable, in the event there is aforeclosure sale hereunder and at the time of such sale, Grantor or Grantor’sheirs, devisees, representatives, or successors as owners of the Property areoccupying or using the Property, or any part thereof, each and all shallimmediately become the tenant of the purchaser at such sale, which tenancyshall be a tenancy from day to day, terminable at the will of purchaser, at areasonable rental per day based upon the value of the property occupied, suchrental to be due daily to the purchaser; and to the extent permitted byapplicable Law, the purchaser at such sale shall, notwithstanding any languageherein apparently to the contrary, have the sole option to demand immediatepossession following the sale or to permit the occupants to remain as tenantsat will.  Subject to the rights of theadministrative agent and/or lenders in respect of the Senior Loan, theCommercial Loan or the Senior DOTs, as applicable, after such foreclosure, anyLeases to tenants or subtenants that are subject to this Mortgage (either bytheir date, their express terms, or by agreement of the tenant or subtenant)shall, at the sole option of Lender or any purchaser at such sale, either (i) continuein full force and effect, and the tenant(s) or subtenant(s) thereunderwill, upon request, attorn to and acknowledge in writing to the purchaser orpurchasers at such sale or sales as landlord thereunder, or (ii) uponnotice to such effect from Lender, the Trustees or any purchaser or purchasers,terminate within thirty (30) days from the date of sale.  Subject to the rights of the administrativeagent and/or lenders in respect of the Senior Loan, the Commercial Loan or theSenior DOTs, as applicable, in the event the tenant fails to surrenderpossession of said property upon demand, the purchaser shall be entitled toinstitute and maintain a summary action for possession of the Property (such asan action for forcible detainer) in any court having jurisdiction.

 

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**ARTICLE 6Miscellaneous**

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Section 6.1.            Scope of Mortgage.  This Mortgage is a deed of trust and mortgageof both real and personal property, a security agreement, an assignment ofrents and leases, a financing statement and fixture filing and a collateralassignment, and also covers proceeds and fixtures.

 

Section 6.2.            Effective as a FinancingStatement.  This Mortgage shall beeffective as a financing statement filed as a fixture filing with respect toall fixtures included within the Property and is to be filed for record in thereal estate records of each county where any part of the Property (includingsaid fixtures) is situated.  ThisMortgage shall also be effective as a financing statement covering as-extractedcollateral (including oil and gas), accounts and general intangibles under theUCC, as, in effect from time to time, and the Uniform Commercial Code, as ineffect from time to time, in any other state where the Property is situatedwhich will be financed at the wellhead or minehead of the wells or mineslocated on the Property and is to be filed for record in the real estaterecords of each county where any part of the Property is situated.  This Mortgage shall also be effective as afinancing statement covering any other Property and may be filed in any otherappropriate filing or recording office. The mailing address of Grantor is the address of Grantor set forth atthe end of this Mortgage and the address of Lender from which informationconcerning the security interests hereunder may be obtained is the address ofLender set forth at the end of this Mortgage. A carbon, photographic or other reproduction of this Mortgage or of anyfinancing statement relating to this Mortgage shall be sufficient as a financingstatement for any of the purposes referred to in this Section.

 

Section 6.3.            Notice to Account Debtors.  Subject to the rights of the administrativeagent and/or lenders in respect of the Senior Loan, the Commercial Loan or theSenior DOTs, as applicable, in addition to the rights granted elsewhere in thisMortgage, Lender may, from and after the occurrence of an Event of Default, solong as such Event of Default remains uncured hereunder, notify the accountdebtors or obligors of any accounts, chattel paper, general intangibles,negotiable instruments or other evidences of indebtedness included in theCollateral to pay Lender directly.

 

Section 6.4.            Waiver by Lender.  Lender may at any time and from time to timeby a specific writing intended for the purpose: (a) waive compliance byGrantor with any covenant herein made by Grantor to the extent and in themanner specified in such writing; (b) consent to Grantor’s doing any actwhich hereunder Grantor is prohibited from doing, or to Grantor’s failing to doany act which hereunder Grantor is required to do, to the extent and in themanner specified in such writing; (c) release any part of the Property orany interest therein from the lien and security interest of this Mortgage,without the joinder of Trustee; or (d) release any party liable, eitherdirectly or indirectly, for the Secured Indebtedness or for any covenant hereinor in any other Loan Document, without impairing or releasing the liability ofany other party.  No such act shall inany way affect the rights or powers of Lender or Trustee hereunder except tothe extent specifically agreed to by Lender in such writing.

 

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Section 6.5.            No Impairment of Security.  The lien, security interest and othersecurity rights of Lender hereunder or under any other Loan Document shall notbe impaired by any indulgence, moratorium or release granted by Lenderincluding, but not limited to, any renewal, extension or modification whichLender may grant with respect to any Secured Indebtedness, or any surrender,compromise, release, renewal, extension, exchange or substitution which Lendermay grant in respect of the Property, or any part thereof or any interesttherein, or any release or indulgence granted to any endorser, guarantor orsurety of any Secured Indebtedness.  Thetaking of additional security by Lender shall not release or impair the lien,security interest or other security rights of Lender hereunder or affect theliability of Grantor or of any endorser, guarantor or surety, or improve theright of any junior lienholder in the Property (without implying hereby Lender’sconsent to any junior lien).

 

Section 6.6.            Acts Not Constituting Waiver byLender.  Lender may waive any Eventof Default without waiving any other prior or subsequent Event of Default.  Lender may remedy any Event of Defaultwithout waiving the Event of Default remedied. Neither failure by Lender to exercise, nor delay by Lender inexercising, nor discontinuance of the exercise of any right, power or remedy(including but not limited to the right to accelerate the maturity of theSecured Indebtedness or any part thereof) upon or after any Event of Defaultshall be construed as a waiver of such Event of Default or as a waiver of theright to exercise any such right, power or remedy at a later date.  No single or partial exercise by Lender ofany right, power or remedy hereunder shall exhaust the same or shall precludeany other or further exercise thereof, and every such right, power or remedyhereunder may be exercised at any time and from time to time.  No modification or waiver of any provisionhereof nor consent to any departure by Grantor therefrom shall in any event beeffective unless the same shall be in writing and signed by Lender and thensuch waiver or consent shall be effective only in the specific instance, forthe purpose for which given and to the extent therein specified.  No notice to nor demand on Grantor in anycase shall of itself entitle Grantor to any other or further notice or demandin similar or other circumstances. Remittances in payment of any part of the Secured Indebtedness otherthan in the required amount in immediately available U.S. funds shall not,regardless of any receipt or credit issued therefor, constitute payment untilthe required amount is actually received by Lender in immediately availableU.S. funds and shall be made and accepted subject to the condition that anycheck or draft may be handled for collection in accordance with the practice ofthe collecting bank or banks.  Acceptanceby Lender of any payment in an amount less than the amount then due on anySecured Indebtedness shall be deemed an acceptance on account only and shallnot in any way excuse the existence of an Event of Default hereundernotwithstanding any notation on or accompanying such partial payment to thecontrary.

 

Section 6.7.            Grantor’s Successors.  If the ownership of the Property or any partthereof becomes vested in a person other than Grantor, Lender may, withoutnotice to Grantor, deal with such successor or successors in interest withreference to this Mortgage and to the Secured Indebtedness in the same manneras with Grantor, without in any way vitiating or discharging Grantor’sliability hereunder or for the payment of the indebtedness or performance ofthe obligations secured hereby.  Notransfer of the Property, no forbearance on the part of Lender, and noextension of the time for the payment of the Secured Indebtedness given byLender shall operate to release, discharge, modify, change or affect, in wholeor in part, the liability of 

 

DEEDOF TRUST — Page 30

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Grantor hereunder.  Grantoragrees that it shall be bound by any modification of this Mortgage made byLender and any subsequent owner of the Property, with or without notice toGrantor, and no such modifications shall impair the obligations of Grantorunder this Mortgage.  Nothing in this Section shallbe construed to imply Lender’s consent to any transfer of the Property.

 

Section 6.8.            Place of Payment; Forum; Waiverof Jury Trial.  All SecuredIndebtedness which may be owing hereunder at any time by Grantor shall bepayable at the address of Lender set forth at the end of this Mortgage.  EACH PARTY HEREBY IRREVOCABLY SUBMITS GENERALLYAND UNCONDITIONALLY FOR ITSELF AND IN RESPECT OF ITS PROPERTY TO THENON-EXCLUSIVE JURISDICTION OF ANY STATE COURT, OR ANY UNITED STATES FEDERALCOURT, SITTING IN THE CITY OF DALLAS, STATE OF TEXAS, AND IN THE COUNTY INWHICH THE LAND IS LOCATED TO THE EXTENT OF ACTIONS REQUIRED TO BE MAINTAINEDWHERE THE LAND IS LOCATED, OVER ANY SUIT, ACTION OR PROCEEDING ARISING OUT OFOR RELATING TO THIS MORTGAGE OR THE SECURED INDEBTEDNESS.  EACH PARTY HEREBY IRREVOCABLY WAIVES, TO THEFULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION THAT THE PARTY MAY NOW ORHEREAFTER HAVE TO THE LAYING OF VENUE IN ANY SUCH COURT AND ANY CLAIM THAT ANYSUCH COURT IS AN INCONVENIENT FORUM. Each Party hereby agrees and consents that, in addition to any methodsof service of process provided for under applicable law, all service of processin any such suit, action or proceeding in any such court may be made bycertified or registered mail, return receipt requested, directed to the otherparty at its address stated at the end of this Mortgage, or at a subsequentaddress of which the other parties received actual notice in accordance withthis Mortgage.  Nothing herein shallaffect the right of a party to serve process in any manner permitted by Law.  TO THE FULLEST EXTENT PERMITTED BY LAW, EACHPARTY KNOWINGLY AND FREELY WAIVES THE RIGHT TO TRIAL BY JURY IN CONNECTION WITHANY ACTION, SUIT OR OTHER PROCEEDING ARISING OUT OF OR RELATING TO THISMORTGAGE.   EACH PARTY ACKNOWLEDGES THATTHE RIGHT TO TRIAL BY JURY IS AN IMPORTANT RIGHT, THAT ITS WAIVER OF THIS RIGHTIS A NEGOTIATED TERM OF THE LOAN AND THAT IT HAS HAD THE OPPORTUNITY TO CONSULTWITH LEGAL COUNSEL OF ITS CHOOSING WITH RESPECT TO THIS WAIVER.

 

Section 6.9.            Subrogation to Existing Liens;Vendor’s Lien. To the extent that proceeds of the Notes are used to payindebtedness secured by any outstanding lien, security interest, charge orprior encumbrance against the Property, Lender shall be subrogated to any andall rights, security interests, and liens and charges or encumbrances owned byany owner or holder of such outstanding liens, security interests, charges orencumbrances, however remote, irrespective of whether said liens, securityinterests, charges or encumbrances are released, and all of the same arerecognized as valid and subsisting and are renewed and continued and mergedherein to secure the Secured Indebtedness, but the terms and provisions of thisMortgage shall govern and control the manner and terms of enforcement of theliens, security interests, charges and encumbrances to which Lender issubrogated hereunder.  It is expresslyunderstood that, in consideration of the payment of such indebtedness byLender, Grantor hereby waives and releases all demands and causes of action foroffsets and payments in connection with the said 

 

DEEDOF TRUST — Page 31

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indebtedness.  If all or anyportion of the proceeds of the loan evidenced by the Notes or of any otherSecured Indebtedness has been advanced for the purpose of paying the purchaseprice for all or a part of the Property, no vendor’s lien or purchase moneylien is waived.  Lender may forecloseunder this Mortgage or under the vendor’s lien or purchase money lien withoutwaiving the other or may foreclose under both.

 

Section 6.10.          Application of Payments to CertainIndebtedness.  If any part of theSecured Indebtedness cannot be lawfully secured by this Mortgage or if any partof the Property cannot be lawfully subject to the lien and security interesthereof to the full extent of such indebtedness, then all payments made shall beapplied on said indebtedness first in discharge of that portion thereof whichis not secured by this Mortgage.

 

Section 6.11.          Nature of Loan; Compliance withUsury Laws.  The loan evidenced bythe Notes is being made solely for the purpose of carrying on or acquiring abusiness or commercial enterprise.  It isthe intent of Grantor and Lender to conform to and contract in strictcompliance with applicable usury law from time to time in effect.  All agreements between Lender and Grantor arehereby limited by the provisions of this Section which shall override andcontrol all such agreements, whether now existing or hereafter arising.  In no way, nor in any event or contingency(including but not limited to prepayment, default, demand for payment, oracceleration of the maturity of any obligation), shall the interest taken,reserved, contracted for, charged, chargeable, or received under this Mortgage,the Notes or any other Loan Document or otherwise, exceed the maximumnonusurious amount permitted by applicable law (the “Maximum Amount”).  If, from any possible construction of thisMortgage, interest would otherwise be payable in excess of the Maximum Amount,any such construction shall be subject to the provisions of this Section andthis Mortgage shall ipso facto be automatically reformed and the interestpayable shall be automatically reduced to the Maximum Amount, without thenecessity of execution of any amendment or new document.  If Lender shall ever receive anything ofvalue which is characterized as interest under applicable law and which wouldapart from this provision be in excess of the Maximum Amount, an amount equalto the amount which would have been excessive interest shall, without penalty,be applied to the reduction of the principal amount owing on the SecuredIndebtedness in the inverse order of its maturity and not to the payment ofinterest, or refunded to Borrower or Grantor or the other payor thereof if andto the extent such amount which would have been excessive exceeds such unpaidprincipal.  The right to acceleratematurity of the Notes or any other Secured Indebtedness does not include theright to accelerate any interest which has not otherwise accrued on the date ofsuch acceleration, and Lender does not intend to charge or receive any unearnedinterest in the event of acceleration. All interest paid or agreed to be paid to Lender shall, to the extentpermitted by applicable law, be amortized, prorated, allocated and spread throughoutthe full stated term (including any renewal or extension) of such indebtednessso that the amount of interest on account of such indebtedness does not exceedthe Maximum Amount.  As used in thisSection, the term “applicable law” shall mean the laws of the State where theProperty is located or where the Secured Indebtedness is payable, or thefederal laws of the United States applicable to this transaction, whicheverlaws allow the greatest interest, as such laws now exist or may be changed or amendedor come into effect in the future.

 

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Section 6.12.          Substitute Trustee.  The Lender may, from time to time, by aninstrument in writing, substitute a successor or successors to any trusteenamed herein or acting hereunder, which instrument, executed and acknowledgedby Lender and recorded in the office of the recorder of the county or countieswhere the Property is situated, shall be conclusive proof of propersubstitution of such successor trustee or trustees, who shall, withoutconveyances from the trustee predecessor, succeed in all its title, estate,rights, powers and duties.  Suchinstrument shall contain the name and address of the new trustee. The procedureherein provided for substitution of trustees shall not be exclusive of otherprovisions for substitution provided by law.

 

Section 6.13.          No Liability of Trustee.  The Trustee shall not be liable for any errorof judgment or act done by Trustee in good faith, or be otherwise responsibleor accountable under any circumstances whatsoever, except for Trustee’s grossnegligence or willful misconduct.  TheTrustee shall have the right to rely on any instrument, document or signatureauthorizing or supporting any action taken or proposed to be taken by himhereunder, believed by him in good faith to be genuine.  All moneys received by Trustee shall, untilused or applied as herein provided, be held in trust for the purposes for whichthey were received, but need not be segregated in any manner from any othermoneys (except to the extent required by Law), and Trustee shall be under noliability for interest on any moneys received by him hereunder.  Grantor hereby ratifies and confirms any andall acts which the herein named Trustee or his successor or successors,substitute or substitutes, in this trust, shall do lawfully by virtue hereof.Grantor will reimburse Trustee for, and save him harmless against, any and allliability and expenses which may be incurred by him in the performance of hisduties, and except those resulting from Trustee’s gross negligence or willfulmisconduct.  The foregoing indemnityshall not terminate upon discharge of the Secured Indebtedness or foreclosure,or release or other termination, of this Mortgage.

 

Section 6.14.          Releases.  If all of the Secured Indebtedness be paid asthe same becomes due and payable and all of the covenants, warranties,undertakings and agreements made in this Mortgage are kept and performed andall obligations, if any, of Lender for further advances have been terminated orGrantor is entitled to a reconveyance of this Mortgage in accordance with theterms of the Loan Documents, then, and in that event only, all rights underthis Mortgage shall terminate (except to the extent expressly provided hereinwith respect to indemnifications, representations and warranties and otherrights which are to continue following the release hereof) and the Propertyshall become wholly clear of the liens, security interests, conveyances andassignments evidenced hereby, and such liens and security interests shall bereleased by Lender in due form at Grantor’s cost.  Without limitation, all provisions herein forindemnity of Lender or Trustee shall survive discharge of the SecuredIndebtedness and any foreclosure, release or termination of this Mortgage.

 

Section 6.15.          Notices. All notices, requests,consents, demands and other communications required or which any party desiresto give hereunder shall be in writing and, unless otherwise specifically providedherein, shall be deemed sufficiently given or furnished if delivered bypersonal delivery, by nationally recognized overnight courier service, or byregistered or certified United States mail, postage prepaid, addressed to theparty to whom 

 

DEEDOF TRUST — Page 33

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directed at the addresses specified in this Mortgage (unless changed bysimilar notice in writing given by the particular party whose address is to bechanged) or by facsimile.  Any such noticeor communication shall be deemed to have been given either at the time ofpersonal delivery or, in the case of courier or mail, as of the date of firstattempted delivery at the address and in the manner provided herein, or, in thecase of facsimile, upon receipt; provided that, service of a notice required byNRS Section 107.080 shall be considered complete when the requirements ofthat statute are met.  Notwithstandingthe foregoing, no notice of change of address shall be effective except uponreceipt.  This Section shall not beconstrued in any way to affect or impair any waiver of notice or demandprovided in this Mortgage or to require giving of notice or demand to or uponany person in any situation or for any reason.

 

Section 6.16.          Invalidity of Certain Provisions.  A determination that any provision of thisMortgage is unenforceable or invalid shall not affect the enforceability orvalidity of any other provision and the determination that the application ofany provision of this Mortgage to any person or circumstance is illegal orunenforceable shall not affect the enforceability or validity of such provisionas it may apply to other persons or circumstances.

 

Section 6.17.          Gender; Titles; Construction.  Within this Mortgage, words of any gender shallbe held and construed to include any other gender, and words in the singularnumber shall be held and construed to include the plural, unless the contextotherwise requires.  Titles appearing atthe beginning of any subdivisions hereof are for convenience only, do notconstitute any part of such subdivisions, and shall be disregarded inconstruing the language contained in such subdivisions.  The use of the words “herein,” “hereof,” “hereunder”and other similar compounds of the word “here” shall refer to this entireMortgage and not to any particular Article, Section, paragraph orprovision.  The term “person” and wordsimporting persons as used in this Mortgage shall include firms, associations,partnerships (including limited partnerships), joint ventures, trusts,corporations, limited liability companies and other legal entities, includingpublic or governmental bodies, agencies or instrumentalities, as well asnatural persons.

 

Section 6.18.          Reporting Compliance.  Grantor agrees to comply with any and allreporting requirements applicable to this Mortgage which are imposed upon it byLaw, including but not limited to The International Investment Survey Act of1976, The Agricultural Foreign Investment Disclosure Act of 1978, The ForeignInvestment in Real Property Tax Act of 1980 and the Tax Reform Act of 1984 andfurther agrees upon request of Lender to furnish Lender with evidence of suchcompliance.

 

Section 6.19.          Reserved.

 

Section 6.20.          Grantor.  Unless the context clearly indicatesotherwise, as used in this Mortgage, “Grantor” means the grantors named in Section 1.2hereof or any of them.  The obligationsof Grantor hereunder shall be joint and several.  If any Grantor, or any signatory who signs onbehalf of any Grantor, is a corporation, partnership or other legal entity,Grantor, represents and warrants to Lender that this instrument is executed,acknowledged and delivered 

 

DEEDOF TRUST — Page 34

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by Grantor’s duly authorized representatives.  If Grantor is an individual, no power ofattorney granted by Grantor herein shall terminate on Grantor’s disability.

 

Section 6.21.          Execution; Recording.  This Mortgage has been executed in severalcounterparts, all of which are identical, and all of which counterpartstogether shall constitute one and the same instrument.  The date or dates reflected in theacknowledgments hereto indicate the date or dates of actual execution of thisMortgage, but such execution is as of the date shown on the first page hereof,and for purposes of identification and reference the date of this Mortgageshall be deemed to be the date reflected on the first page hereof.  Grantor will cause this Mortgage and allamendments and supplements thereto and substitutions therefor and all financingstatements and continuation statements relating thereto to be recorded, filed,re-recorded and refiled in such manner and in such places as Trustee or Lendershall reasonably request and will pay all such recording, filing, re-recordingand refiling taxes, fees and other charges.

 

Section 6.22.          Successors and Assigns.  The terms, provisions, covenants andconditions hereof shall be binding upon Grantor, and the heirs, devisees,representatives, successors and assigns of Grantor, and shall inure to thebenefit of Trustee and Lender shall constitute covenants running with theLand.  All references in this Mortgage toGrantor shall be deemed to include all such heirs, devisees, representatives,successors and assigns of Grantor.

 

Section 6.23.          Modification or Termination.  The Loan Documents may only be modified orterminated by a written instrument or instruments intended for that purpose andexecuted by the party against which enforcement of the modification ortermination is asserted.  Any allegedmodification or termination which is not so documented shall not be effectiveas to any party.

 

Section 6.24.          No Partnership, Etc.  The relationship between Lender and Grantoris solely that of lender and owner of collateral.  Lender does not have a fiduciary or otherspecial relationship with Grantor. Nothing contained in the Loan Documents is intended to create anypartnership, joint venture, association or special relationship between Grantorand Lender or in any way make Lender a co-principal with Grantor with referenceto the Property.  All agreed contractualduties between or among Lender, Trustee and Grantor are set forth herein andany additional implied covenants or duties are hereby disclaimed.  Any inferences to the contrary of any of theforegoing are hereby expressly negated.

 

Section 6.25.          Applicable Law.  THIS MORTGAGE, AND ITS VALIDITY, ENFORCEMENTAND INTERPRETATION, SHALL BE GOVERNED BY AND CONSTRUED, INTERPRETED ANDENFORCED IN ACCORDANCE WITH AND PURSUANT TO THE LAWS OF THE STATE OF NEVADA(WITHOUT REGARD TO ANY CONFLICT OF LAWS PRINCIPLES) AND APPLICABLE UNITEDSTATES FEDERAL LAW, EXCEPT AS OTHERWISE REQUIRED BY MANDATORY PROVISIONS OF LAWAND EXCEPT TO THE EXTENT THAT REMEDIES PROVIDED BY THE LAWS OF ANY JURISDICTIONOTHER THAN THE STATE OF NEVADA ARE GOVERNED BY THE LAWS OF SUCH OTHERJURISDICTION.

 

DEEDOF TRUST — Page 35

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Section 6.26.          Construction Mortgage.  This Mortgage constitutes a “constructionmortgage” as defined in NRS 104.9334 to the extent that it secures anobligation incurred for the construction of the Improvements, including theacquisition cost of the Land.

 

Section 6.27.          Entire Agreement.  This Mortgage, together with the LoanDocuments to which Grantor is a party, constitute the entire understanding andagreement between Grantor and Lender with respect to the transactions arisingin connection with the liens and security interests granted hereby andsupersede all prior written or oral understandings and agreements betweenGrantor and Lender with respect to such matters.  Grantor hereby acknowledges that, except asincorporated in writing in the Loan Documents, there are not, and were not, andno persons are or were authorized by Lender to make, any representations,understandings, stipulations, agreements or promises, oral or written, withrespect to the matters addressed in the Loan Documents.

 

Section 6.28.  Adoption ofStatutory Covenants.  The followingcovenants, Nos. 6 (provided that a default, as referenced in such covenant,shall mean an Event of Default, asdefined in Section 4.1 of this Mortgage), 7 (a reasonable), 8 (providedthat the recital therein shall be prima facie proof of such default) and 9 ofNRS Section 107.030, where not in conflict with the provisions of the LoanDocuments, are hereby adopted and made a part of this Mortgage.

 

THE WRITTEN LOAN DOCUMENTSREPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BECONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORALAGREEMENTS OF THE PARTIES.

 

THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THEPARTIES.

 

**[*Remainder ofPage Intentionally Left Blank*]**

 

 

DEEDOF TRUST — Page 36

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INWITNESS WHEREOF, Grantor has executed this instrument under seal as of the datefirst written on page 1 hereof.

 
| The address of Grantor is:                                | GRANTOR:                                                                                                                                                                                                                                                                                                                       |
|-----------------------------------------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                                      |                                                                                                                                                                                                                                                                                                                           |
| 2001 Bryan Street,  Suite 3250 

Dallas, Texas 75201 | SW 132 ST. ROSE SENIOR  BORROWER LLC,   a Delaware limited liability company                                                                                                                                                                                                                                                   |
| Attention: Tim Hogan                                      |                                                                                                                                                                                                                                                                                                                           |
| Telephone: (214) 922-8575 

Facsimile: (214) 922-8553     | By:           SW 131 St. Rose Mezzanine Borrower  LLC, a Delaware limited liability company, its sole member 

 

By:           SW 130 St. Rose Limited Partnership,  a Delaware limited partnership, its sole member |
|                                                      |                                                                                                                                                                                                                                                                                                                           |
|                                                      | By:          SW 129 St. Rose Limited Partnership,  a Delaware limited partnership, its general partner                                                                                                                                                                            |
|                                                      |                                                                                                                                                                                                                                                                                                                           |
|                                                      | By:           SW 104 Development GP LLC,  a Delaware limited liability company, its general partner                                                                                                                                                                          |

 
|   | By: | /s/ Timothy J. Hogan |   |
|--------|-----|----------------------|--------|

 
|   | Name:        Timothy J. Hogan            |
|--------|-----------------------------------------------------------------------------|
|   | Title:          Vice President |

 

The address of Lender is:

 

Behringer Harvard St. Rose REIT, LLC

15601 Dallas Parkway, Suite 600

Addison, Texas  75001

Attention:  Chief Legal Officer

 
| STATE OF TEXAS   | § |
|------------------|--------|
|             | § |
| COUNTY OF DALLAS | § |

 

Thisinstrument was acknowledged before me on December 30, 2008, by Timothy J.Hogan,  Vice President of SW 104Development GP LLC, a Delaware limited liability company, on behalf of suchcompany, as general partner of SW 129 St. Rose Limited Partnership, a Delawarelimited partnership, general partner of SW 130 St. Rose Limited Partnership, aDelaware limited partnership, sole member of SW 131 St. Rose Mezzanine BorrowerLLC, a Delaware limited liability company, sole member of SW 132 St. RoseSenior Borrower LLC, a Delaware limited liability company.

 
|   | /s/ Tai Lee                    |   |   |
|--------|--------------------------------|--------|--------|
|   | Printed Name:                  | T. Lee |   |
|   | Notary Public, State of  Texas |   |

 

DEEDOF TRUST — Signature Page

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** **

**EXHIBITALAND**

** **

Allthat land situated in the County of Clark, State of Nevada, more particularlydescribed as follows:

 

**PARCEL1**:

 

TheNorth Half (N 1⁄2) of the Northwest Quarter (NW 1⁄4) of the Southwest Quarter (SW1⁄4) of the Northwest Quarter (NW 1⁄4) of Section 35, Township 22 South, Range61 East, M.D.B.&M., Clark County, Nevada.

 

**PARCEL2**:

 

TheSouth Half (S 1⁄2) of the Northeast Quarter (NE 1⁄4) of the Southwest Quarter (SW1⁄4) of the Northwest Quarter (NW 1⁄4) of Section 35, Township 22 South, Range61 East, M.D.B.&M.

 

**EXCEPTINGTHEREFROM** that portion lying within St. Rose Parkway.

 

**PARCEL3**:

 

Thatportion of the Northwest Quarter (NW 1⁄4) of Section 35, Township 22 South,Range 61 East, M.D.M., City of Henderson, Clark County, Nevada, moreparticularly described as follows:

 

TheSouth Half (S 1⁄2) of the Northwest Quarter (NW 1⁄4) of the Southwest Quarter (SW1⁄4) of the Northwest Quarter (NW 1⁄4) of said Section 35.

 

TOGETHERWITH:

 

Thoseportions of the North Half (N 1⁄2) of the South Half (S 1⁄2) of the SouthwestQuarter (SW 1⁄4) of the Northwest Quarter (NW 1⁄4) of said Section 35 lyingNorthwesterly of the Northwesterly right of way of St. Rose Parkway.

 

**PARCEL4**:

 

Beinga portion of the South Half (S 1⁄2) of the Southeast Quarter (SE 1⁄4) of theNorthwest Quarter (NW 1⁄4) of the Northwest Quarter (NW 1⁄4) of Section 35,Township 22 South, Range 61 East, M.D.B.&M., Clark County, Nevada.

 

TOGETHERWITH that portion of the North Half (N 1⁄2) of the Northeast Quarter (NE 1⁄4) ofthe Southwest Quarter (SW 1⁄4) of the Northwest Quarter (NW 1⁄4), also togetherwith that portion of the North Half (N 1⁄2) of the Northwest Quarter (NW 1⁄4) ofsaid Section 35, lying Northwesterly of St. Rose Parkway, furtherdescribed as follows:

 

DEED OF TRUST - EXHIBIT A — Page 1

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BEGINNINGat the Southeast (SE) corner of the Northwest Quarter (NW 1⁄4) of the NorthwestQuarter (NW 1⁄4) of said Section 35, said corner being marked by an aluminumcap marked “PLS 5269, 1994, NW 1/16”;

 

ThenceSouth 41°41’09” East,174.75 feet to the Northwesterly line of St. Rose Parkway as granted in Book250 as Document No. 202951, Official Records, Clark County, Nevada;

 

Thencealong said Northwesterly line, South 46°18’51” West, 297.97 feet toa point of intersection of said Northwesterly line with the South line of theNorth Half (N 1⁄2) of the Northeast Quarter (NE 1⁄4) of the Southwest Quarter (SW1⁄4) of the Northwest Quarter (NW 1⁄4) of said Section 35;

 

Thencealong the lines of said North Half (N 1⁄2) the following Three (3) courses:North 89°22’43” West,553.55 feet; North 00°33’34” West, 330.00 feet;South 89°22’04” East,663.09 feet to the POINT OF BEGINNING;

 

**EXCEPTINGTHEREFROM**:

 

Aportion of the South Half (S 1⁄2) of the Southeast Quarter (SE 1⁄4) of theNorthwest Quarter (NW 1⁄4) of the Northwest Quarter (NW 1⁄4) of said Section 35,described as follows:

 

BEGINNINGat the Southwest (SW) corner of the South Half (S 1⁄2) of the Southeast Quarter(SE 1⁄4) of the Northwest Quarter (NW 1⁄4) of the Northwest Quarter (NW 1⁄4) of said Section 35;Thence North 00°33’55” West,330.09 feet to the Northwest (NW) corner of the South Half (S 1⁄2) of theSoutheast Quarter (SE 1⁄4) of the Northwest Quarter (NW 1⁄4) of the NorthwestQuarter (NW 1⁄4) of said Section 35; Thence South 89°21’56” East,663.21 feet to the Northeast Corner of the South Half (S1/2) of the SoutheastQuarter (SE 1⁄4) of the Northwest Quarter (NW 1⁄4) of the Northwest Quarter (NW 1⁄4)of said Section 35; Thence South 00°32’39” East, 330.06 feet tothe Southeast (SE) corner of the South Half (S 1⁄2) of the Southeast Quarter (SE1⁄4) of the Northwest Quarter (NW 1⁄4) of the Northwest Quarter (NW 1⁄4) of said Section 35;Thence North 41°41’09” West,316.13 feet; Thence South 48°18’51” West, 153.68 feet tothe beginning of a 500 foot radius curve, concave Northwesterly; Thence alongsaid curve to the right, 369.29 feet through a central angle of 42°19’05” to thePOINT OF BEGINNING.

(Deed Reference 20070720 / 2463 and 2464)

 

DEED OF TRUST - EXHIBIT A — Page 2

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**EXHIBITBPERMITTED ENCUMBRANCES**

** **

1.                                       State, Countyand/or City taxes for the fiscal year 2008-2009 a lien not yet due and payable.

 

2.                                       Any taxes thatmay be due, but not assessed, for new construction which can be assessed on theunsecured property rolls, in the Office of the Clark County Assessor, perNevada Statute 361.260.

 

3.                                       Water rights,claims or title to water, whether or not shown by the public record.

 

4.                                       Mineral rights,reservations, easements and exclusions in patent from the United States of America:

 

Recorded:                                                                                          January 24,1962 in Book 339

Document No.:                                                                273895,Official Records, Clark County, Nevada

Affects:                                                                                                     Parcel 1

 

Said patent further reserves, and is subjectto, a right-of-way not exceeding thirty-three (33) feet in width for roadwayand public utility purposes to be located along the boundaries of said land.

 

The above rights of way, not dedicated, havebeen vacated by an instrument recorded August 15, 2007 in Book 20070815,Instrument No. 0002160, Official Records, Clark County, Nevada.

 

5.                                       Mineral rights,reservations, easements and exclusions in patent from the United States ofAmerica:

 

Recorded:                                                                                          January 30,1962 in Book 340

Document No.:                                                                274775,Official Records, Clark County, Nevada.

Affects:                                                                                                     A portion ofParcel 4

 

Said patent further reserves, and is subjectto, a right-of-way not exceeding thirty-three (33) feet in width for roadwayand public utility purposes to be located along the boundaries of said land.

 

The above rights of way, not dedicated, havebeen vacated by an instrument recorded August 15, 2007 in Book 20070815,Instrument No. 0002160, Official Records, Clark County, Nevada.

 

 

DEED OFTRUST - EXHIBIT B — Page 1

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6.                                       Mineral rights,reservations, easements and exclusions in patent from the United States ofAmerica:

 

Recorded:                                                                                          February 10,1970 in Book 10

Document No.:                                                                7408, OfficialRecords, Clark County, Nevada

Affects:                                                                                                     Parcel 3 and aportion of Parcel 4

 

7.                                       Mineral rights,reservations, easements and exclusions in patent from the United States ofAmerica:

 

Recorded:                                                                                          November 28,1979 in Book 1152

Document No.:                                                                1111857,Official Records, Clark County, Nevada

Affects:                                                                                                     Parcel 2

 

Said patent further reserves, and is subjectto, a right-of-way not exceeding thirty-three (33) feet in width for roadwayand public utility purposes to be located along the boundaries of said land.

 

There is also reserved a right of way for aFederal Aid Highway under the Act of November 9, 1921 (42 Stat. 212).

 

The above rights of way, not dedicated, havebeen vacated by an instrument recorded August 15, 2007 in Book 20070815,Instrument No. 0002160, Official Records, Clark County, Nevada.

 

8.                                       The terms,covenants, conditions and provisions as contained in an instrument, entitled “Cityof Henderson Zoning Resolution No. 3635”:

 

Recorded:                                                                                          May 09,2007 in Book 20070509

Document No.:                                                                0002301,Official Records, Clark County, Nevada

 

9.                                       An Easementaffecting a portion of said land for the purpose stated herein, and incidentalpurposes:

 

In Favor of:                                                                                  Cox CommunicationsLas Vegas, Inc.

For:                                                                                                                           Cable andInformation Facilities

Recorded:                                                                                          April 30,2008 in Book 20080430

Document No.:                                                                0000512,Official Records, Clark County, Nevada

 

 

 

 

DEED OFTRUST - EXHIBIT B — Page 2

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APN:                   177-35-201-001

                                                177-35-201-002

                                                177-35-201-003

                                                177-35-201-006

 

The mailing address to whichthis Mortgageshould be returned after recordation is:

 

WICK PHILLIPS, LLP

 

2100 Ross Avenue, Suite 950

Dallas, Texas  75201

Attention:  Walt Miller, Esq.

 

**JUNIOR MEZZANINE DEED OF TRUST, ASSIGNMENT OF RENTS AND LEASES,**

**SECURITY AGREEMENT, FIXTUREFILING AND FINANCING STATEMENT**

** **

(This Document Serves as aFixture Filing under

Nevada Revised Statutes Section 104.9502)

 

Dated to be effective as of December 31, 2008

 

made by

 

SW 132 ST. ROSE SENIOR BORROWER LLC,

a Delaware limited liability company (Grantor)

 

to

 

Chicago Title Agency of Nevada, Inc., as Trustee

(Trustee)

 

for the benefit of

 

BEHRINGER HARVARD ST. ROSE REIT, LLC,a Delaware limited liability company (Lender)

 

DEED OF TRUST — Page 1

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**JUNIOR MEZZANINE DEED OF TRUST, ASSIGNMENT OF RENTS AND LEASES,**

**SECURITY AGREEMENT, FIXTUREFILING AND FINANCING STATEMENT**

** **

Grantor’s Organizational Identification Number: 26-3831531

 

**THIS JUNIOR MEZZANINE DEED OFTRUST, ASSIGNMENT OF RENTS AND LEASES, SECURITY AGREEMENT, FIXTURE FILING ANDFINANCING STATEMENT** (this “Mortgage”) is made this 31st day ofDecember, 2008, by Grantor, in favor of Trustee for the benefit of Lender.

 

**R E C IT A L S**

 

A.            ThisMortgage is being executed by Grantor for the purpose of securing a loan fromLender to SW 131 St. Rose Mezzanine Borrower LLC, a Delaware limited liabilitycompany (the “Borrower”).  TheBorrower is directly or indirectly the legal and beneficial owner of all (100%)of the equity interests in Grantor.

 

B.            Grantoris the owner of the Land (as defined below) and is currently pursuing asubdivision of the Land, and Grantor intends to convey approximately 6.272acres of the Land (the “Commercial Tract”) to its affiliate, SW 122 St.Rose Senior Borrower LLC, a Delaware limited liability company (the “CommercialTract Borrower”).  The Land otherthan the Commercial Tract (the “Multi-Family Tract”) will be used byGrantor to develop a 430-unit apartment complex.

 

C.            WhenCommercial Tract Borrower acquires title to the Commercial Tract (the date ofsuch acquisition is referred to herein as the “Transfer Date”), Lenderwill cause the lien of this Mortgage to be released as to the Commercial Tract.

 

D.            Concurrentlywith the execution of this Mortgage, Grantor also is executing (1) thatcertain Deed of Trust, Assignment of Rents and Leases, Security Agreement,Fixture Filing and Financing Statement to and in favor of PRLAP, Inc., astrustee, for the benefit of Bank of America, N.A., as administrative agent foritself and certain other lenders (the “Multi-Family DOT”), to secure, inpart, the obligations of the Grantor in connection with a $38,600,000 loan (the“Senior Loan”), (2) that certain Deed of Trust, Assignment of Rentsand Leases, Security Agreement, Fixture Filing and Financing Statement to andin favor of PRLAP, Inc., as trustee, for the benefit of Bank of America,N.A., for its own account as lender (the “Commercial DOT”), to secure,in part, the obligations of the Commercial Tract Borrower in connection with a$2,950,000 loan (the “Commercial Loan”), and (3) that certainSenior Mezzanine Deed of Trust, Assignment of Rents and Leases, SecurityAgreement, Fixture Filing and Financing Statement to and in favor of Trustee,as trustee, for the benefit of Lender (the “Senior Mezzanine DOT”), tosecure, in part, the obligations of the Borrower under the Senior MezzanineLoan Documents.  The Multi-Family DOT andthe Commercial DOT are referred to herein as the “Senior DOTs”).

 

E.             ThisMortgage is subject and subordinate to (1) the Senior DOTs, theobligations of the Grantor and/or Commercial Tract Borrower in respect of theSenior Loan and the Commercial Loan, respectively, and the rights of theadministrative agent and/or lenders arising 

 

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in connection with theSenior Loan and the Commercial Loan, respectively, and (2) the SeniorMezzanine DOT, the obligations of the Grantor and/or the Borrower in respect ofthe obligations under the Senior Mezzanine Loan Documents, and the rights ofthe Lender arising in connection therewith.

 

**ARTICLE1Definitions; Granting Clauses; Secured Indebtedness**

** **

Section 1.1.            Principal Secured.  This Mortgage secures the aggregate principalamount of up to TWENTY ONE MILLION FORTY THREE THOUSAND ONE HUNDRED NINETYSEVEN AND NO/100 DOLLARS ($21,043,197.00) together with interest thereon.  This instrument secures future advances asdefined in Nevada Revised Statutes (as amended, NRS) 106.320, and is goverenedby NRS 106.300 to 106.400, inclusive.

 

Section 1.2.            Definitions.

 

(a)           Inaddition to other terms defined herein, each of the following terms shall havethe meaning assigned to it, such definitions to be applicable equally to thesingular and the plural forms of such terms and to all genders:

 

“Grantor”:  SW 132 ST. ROSE SENIOR BORROWER LLC, aDelaware limited liability, whose mailing address is 2001 Bryan Street, Suite 3250,Dallas, Texas 75201, Attention: Tim Hogan, and its permitted successors andassigns.

 

“Lender”:  BEHRINGER HARVARD ST. ROSE REIT, LLC, aDelaware limited liability company, or any subsequent holder(s) of theNotes at the time in question.

 

“Mezzanine Loan Agreement”:  The Junior Mezzanine Loan Agreement dated ofeven date herewith between Lender and Borrower, which is incorporated herein byreference for all purposes.

 

“Promissory Note”:  The Junior Mezzanine Promissory Note made byBorrower pursuant to the Mezzanine Loan Agreement, payable to the order ofLender, in the principal face amount of up to $21,043,197.00, bearing interestas therein provided.

 

“Trustee”:  Chicago TitleAgency of Nevada, Inc., a Nevada corporation.

 

“UCC”:   The NevadaUniform Commercial Code,  NRS Section 104.1101et seq., as amended from time to time.

 

(b)           Anyterm used or defined in the UCC, as in effect from time to time, and notdefined in this Mortgage has the meaning given to the term in the UCC, as ineffect from time to time, when used in this Mortgage. However, if a term isdefined in NRS Section 104.9101 et seq. of the UCC differently than inanother title of the UCC, the term has the meaning specified in said NRS Section 104.9101et seq.

 

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(c)           Unlessotherwise defined herein, capitalized terms used herein shall have the meaningsascribed to such terms in the Mezzanine Loan Agreement.

 

Section 1.3.            Granting Clause.  In consideration of the provisions of thisMortgage and the sum of TEN AND NO/100 DOLLARS ($10.00) cash in hand paid andother good and valuable consideration the receipt and sufficiency of which areacknowledged by Grantor, Grantor does hereby GRANT, BARGAIN, SELL, CONVEY,TRANSFER, ASSIGN and SET OVER to Trustee, IN TRUST with the power of sale forthe benefit and security of Lender, with GENERAL WARRANTY, the following:  (a)  the real property described in Exhibit Awhich is attached hereto and incorporated herein by reference (the “Land”)together with: (i) any and all buildings, structures, improvements,alterations or appurtenances now or hereafter situated or to be situated on theLand (collectively the “Improvements”); and (ii) all right, titleand interest of Grantor, now owned or hereafter acquired, in and to (1) streets,roads, alleys, easements, rights-of-way, licenses, rights of ingress andegress, vehicle parking rights and public places, existing or proposed,abutting, adjacent, used in connection with or pertaining to the Land or theImprovements; (2) any strips or gores between the Land and abutting oradjacent properties; (3) all options to purchase the Land or theImprovements or any portion thereof or interest therein, and any greater estatein the Land or the Improvements; (4) all water and water rights, ditchesand ditch rights, reservoirs, reservoir rights and storage rights, wells andwell rights, well permits, springs and spring rights, groundwater rights(whether tributary, nontributary or not-nontributary), water contracts, waterallotments, water taps, stock certificates, shares in ditch or reservoir orwater companies, and all other rights of any kind or nature in or to the use ofwater, whether or not adjudicated, which are appurtenant to, historically usedon or in connection with, or located on or under the Land (collectively, “WaterRights”), together with any and all associated structures and facilitiesfor the diversion, carriage, transmission, conveyance, measurement, storage oruse of said Water Rights, and any and all easements, rights of way, fixtures,personal property, contract rights, licenses, permits or decrees associatedwith or used in connection with any such Water Rights or which may be necessaryfor the development, operation or maintenance of such Water Rights; and (5) timber,crops and mineral interests on or pertaining to the Land (the Land,Improvements and other rights, titles and interests referred to in this clause (a) beingherein sometimes collectively called the “Premises”); (b) allfixtures, equipment, systems, machinery, furniture, furnishings, appliances,inventory, goods, building and construction materials, supplies, and articlesof personal property, of every kind and character, tangible and intangible(including software embedded therein), now owned or hereafter acquired byGrantor, which are now or hereafter attached to or situated in, on or about theLand or the Improvements, or used in or necessary to the complete and properplanning, development, use, occupancy or operation thereof, or acquired (whetherdelivered to the Land or stored elsewhere) for use or installation in or on theLand or the Improvements, and all renewals and replacements of, substitutionsfor and additions to the foregoing (the properties referred to in this clause (b) beingherein sometimes collectively called the “Accessories,” all of which arehereby declared to be permanent accessions to the Land); (c) Grantor’srights, but not liability for any breach by Grantor, under all (i) plansand specifications for the Improvements; (ii) insurance policies to theextent transferable, or proceeds thereof (to the extent not transferable) (oradditional or supplemental coverage related thereto, including  from an insurance provider meeting therequirements of the Loan Documents or from or through any state or federal 

 

DEEDOF TRUST — Page 4

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governmentsponsored program or entity), contracts and agreements for the design,construction, operation or inspection of the Improvements; (iii) Grantor’srights in tenants’ security deposits, deposits with respect to utility servicesto the Premises, rebates or refunds of impact fees or other taxes, assessmentsor charges; (iv) permits, licenses, franchises, certificates, developmentrights, commitments and rights for utilities, and other rights and privilegesobtained in connection with the Premises or the Accessories; (v) leases,rents, royalties, bonuses, issues, profits, revenues and other benefits of thePremises and the Accessories (without derogation of Article 3hereof); (vi) as-extracted collateral produced from or allocated to theLand including, without limitation, oil, gas and other hydrocarbons and otherminerals and all products processed or obtained therefrom, and the proceedsthereof; and (vii) engineering, accounting, title, legal, and othertechnical or business data concerning the Property which are in the possessionof Grantor or in which Grantor can otherwise grant a security interest; and (d) all(i) accounts and proceeds (cash or non-cash and including paymentintangibles) of or arising from the properties, rights, titles and interestsreferred to above in this Section 1.3, including but not limited toproceeds of any sale, lease or other disposition thereof, proceeds of eachpolicy of insurance (or additional or supplemental coverage related thereto,including  from an insurance providermeeting the requirements of the Loan Documents or from or through any state orfederal government sponsored program or entity) relating thereto (includingpremium refunds), proceeds of the taking thereof or of any rights appurtenantthereto, including change of grade of streets, curb cuts or other rights ofaccess, by condemnation, eminent domain or transfer in lieu thereof for publicor quasi-public use under any Law, and proceeds arising out of any damagethereto; (ii) all letter-of-credit rights (whether or not the letter ofcredit is evidenced by a writing) Grantor now has or hereafter acquiresrelating to the properties, rights, titles and interests referred to in this Section 1.3;(iii) all commercial tort claims Grantor now has or hereafter acquiresrelating to the properties, rights, titles and interests referred to in this Section 1.3;and (iv) other interests of every kind and character which Grantor now hasor hereafter acquires in, to or for the benefit of the properties, rights,titles and interests referred to above in this Section 1.3 and allproperty used or useful in connection therewith, including but not limited torights of ingress and egress and remainders, reversions and reversionary rightsor interests; and if the estate of Grantor in any of the property referred toabove in this Section 1.3 is a leasehold estate, this conveyanceshall include, and the lien and security interest created hereby shall encumberand extend to, all other or additional title, estates, interests or rightswhich are now owned or may hereafter be acquired by Grantor in or to theproperty demised under the lease creating the leasehold estate;

 

TO HAVE AND TO HOLD the foregoing rights,interests and properties, and all rights, estates, powers and privilegesappurtenant thereto (herein collectively called the “Property”), untoTrustee, and its successors or substitutes in this trust, in trust, in feesimple forever, subject to the terms, provisions and conditions herein setforth, to secure the obligations of Borrower under the Notes and Loan Documents(as hereinafter defined) and all other indebtedness and matters defined as “SecuredIndebtedness” in Section 1.5 of this Mortgage.

 

Notwithstanding any of the above, the lien ofthis Mortgage does not extend to the names “Trammell Crow Residential”, “Alexan”and “TCR” or any variant thereof or the “TCR” logo or to any written or printedmaterial that contains any of such names or such logo, and if Lender foreclosesagainst the Premises, or Lender acquires the Premises (whether throughforeclosure,

 

DEEDOF TRUST — Page 5

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deed in lieu of foreclosureor other means), or if Lender takes possession of the Premises, or if areceiver is appointed for the Premises, then Lender will not use, and anyperson acquiring the Premises through foreclosure, deed in lieu of foreclosureor other means shall not use, in connection with the Premises any of the names “TrammellCrow Residential”, “Alexan” or “TCR” or any variant thereof or the “TCR”logo.  The limitation of names listed inthis Section 1.3 does not imply a license or right to use any other name,service mark, trademark or logo that is proprietary to Grantor or any of itsaffiliates.

 

Section 1.4.            Security Interest.  Grantor hereby grants to Lender a securityinterest in all of the Property which constitutes personal property orfixtures, all proceeds and products thereof, and all supporting obligationsancillary to or arising in any way in connection therewith (herein sometimescollectively called the “Collateral”) to secure the obligations ofGrantor under the Notes and Loan Documents and all other indebtedness andmatters defined as Secured Indebtedness in Section 1.5 of thisMortgage.  In addition to its rightshereunder or otherwise, Lender shall have all of the rights of a secured partyunder the UCC, as in effect from time to time, or under the Uniform CommercialCode in force, from time to time, in any other state to the extent the same isapplicable Law.

 

Section 1.5.            Secured Indebtedness, Notes, LoanDocuments, Other Obligations.  ThisMortgage is made to secure and enforce the payment and performance of thefollowing promissory notes, obligations, indebtedness, duties and liabilitiesand all renewals, extensions, supplements, increases, and modifications thereofin whole or in part from time to time (collectively the “SecuredIndebtedness”):  (a) thePromissory Note and all other promissory notes given in substitution thereforor in modification, supplement, increase, renewal or extension thereof, inwhole or in part (such promissory note or promissory notes, whether one ormore, as from time to time renewed, extended, supplemented, increased ormodified and all other notes given in substitution therefor, or inmodification, renewal or extension thereof, in whole or in part, beinghereinafter called the “Notes”); (b)  all indebtedness,liabilities, duties, covenants, promises and other obligations whether joint orseveral, direct or indirect, fixed or contingent, liquidated or unliquidated,and the cost of collection of all such amounts, owed by Borrower to Lender nowor hereafter incurred or arising pursuant to or permitted by the provisions ofthe Notes, this Mortgage, or any other document now or hereafter evidencing,governing, guaranteeing or securing the loan evidenced by the Notes executed byBorrower or any Guarantor (as defined in the Mezzanine Loan Agreement), includingbut not limited to any loan or credit agreement, letter of credit orreimbursement agreement, tri-party financing agreement or other agreementbetween Borrower and Lender, or among Borrower, Lender and any other party orparties, pertaining to the repayment or use of the proceeds of the loanevidenced by the Notes (the Notes, this Mortgage and such other documents, asthey or any of them may have been or may be from time to time renewed,extended, supplemented, increased or modified, being herein sometimescollectively called the “Loan Documents”; provided, however, theEnvironmental Indemnity is not a Loan Document); (c) all future advancesmade by Lender to Grantor or Borrower; provided, however, this clause (c) shallnot operate or be effective to constitute or require any assumption or paymentby any person, in any way, of any debt of any other person to the extent thatthe same would violate or exceed the limit provided in any applicable usury orother Law; and (d) the obligations of Grantor under this Mortgage.  Should the Secured 

 

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Indebtednessdecrease or increase pursuant to the terms of the Notes or otherwise, at anytime or from time to time, this Mortgage shall retain its priority position ofrecord until (a) the termination of Lender’s obligations to make advancesunder the Loan Documents and the full, final and complete payment of all theSecured Indebtedness then outstanding, or (b) the full release andtermination of the liens and security interests created by this Mortgage.

 

Section 1.6.            Subordinate Deed of Trust.  This Mortgage, the Promissory Note, theMezzanine Loan Agreement and the other Loan Documents, and all rights of Lenderunder this Mortgage, are subject and subordinate to (a) the Senior DOTs,the other Senior Loan Documents and the rights of the Senior Lender arisingthereunder, and (b) the Senior Mezzanine DOT, the other Senior MezzanineLoan Documents and the rights of the Lender arising thereunder.  In the event of a conflict between theprovisions of the Senior Loan Documents and the provisions of the LoanDocuments, the provisions of the Senior Loan Documents shall control.  To the extent that Grantor is required to performany obligation under (i) both the Senior Loan Documents and this Mortgageor (ii) both the Senior Mezzanine Loan Documents and this Mortgage,Grantor shall be deemed to have complied with the applicable provision of thisMortgage as long as Grantor has performed the corresponding obligation for thebenefit of the Senior Lender pursuant to the Senior Loan Documents or for thebenefit of the Lender pursuant to the Senior Mezzanine Loan Documents, asapplicable.  Reference is hereby made tothat certain Intercreditor and Subordination Agreement executed by Lender andthe Senior Lender, acting in its own capacity or as administrative agent onbehalf of itself and/or other lenders (the “Intercreditor Agreement”).  This Mortgage is subject to termination andrelease upon the occurrence of certain events or circumstances as moreparticularly described in Section 7 of the Intercreditor Agreement.

 

**ARTICLE2**

** **

**Representations,Warranties and Covenants**

** **

Section 2.1.            Grantor represents, warrants, andcovenants as follows:

 

(a)           Payment and Performance.  Grantor will timely and properly perform andcomply with all of the covenants, agreements, and conditions imposed upon it bythis Mortgage and will not permit an Event of Default to occur hereunder.  Time shall be of the essence in thisMortgage.

 

(b)           Title and Permitted Encumbrances.  Grantor has, in Grantor’s own right, andGrantor covenants to maintain, lawful, good and marketable title to theProperty, is lawfully seized and possessed of the Property and every partthereof, and has the right to convey the same, free and clear of all liens,charges, claims, security interests, and encumbrances except for (i) thematters, if any, set forth under on Exhibit B attached hereto, butonly to the extent that the same are valid and subsisting and affect theProperty, (ii) the liens and security interests evidenced by thisMortgage, (iii) statutory liens for real estate taxes, assessments andother governmental charges on the Property which are not yet delinquent or arebeing contested in accordance with Section 2.1(c) orcomparable provisions of the documents evidencing or

 

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securingthe Senior Loan or the Commercial Loan, (iv) rights of tenants underleases, (v)  the liens and security interests evidenced by the SeniorDOTs, (vi) other liens and security interests (if any) in favor of Lenderor otherwise approved by Lender, (vii) mechanics’ liens being contested inaccordance with Section 2.1(l) or comparable provisions of thedocuments evidencing or securing the Senior Loan or the Commercial Loan, and (viii) theSenior Mezzanine DOT (the matters described in the foregoing clauses (i), (ii),(iii), (iv), (v), (vi), (vii) and (viii) being herein called the “PermittedEncumbrances”).  Grantor, and Grantor’ssuccessors and assigns, will warrant generally and forever defend title to theProperty, subject as aforesaid, to Trustee, and its successors or substitutes,against the claims and demands of all persons claiming or to claim the same orany part thereof.  Except as permitted inthe Mezzanine Loan Agreement, Grantor will punctually pay, perform, observe andkeep all covenants, obligations and conditions in or pursuant to any PermittedEncumbrance and will not modify or permit modification of any PermittedEncumbrance without the prior written consent of Lender.  Inclusion of any matter as a PermittedEncumbrance does not constitute approval or waiver by Lender of any existing orfuture violation or other breach thereof by Grantor, by the Property or otherwise.  No part of the Property constitutes all orany part of the homestead of Grantor.  Ifany right or interest of Lender in the Property or any part thereof shall beendangered or questioned or shall be attacked directly or indirectly, Trusteeand Lender, or either of them (whether or not named as parties to legalproceedings with respect thereto), are hereby authorized and empowered to takesuch steps as in their discretion may be proper for the defense of any suchlegal proceedings or the protection of such right or interest of Lender,including the employment of independent counsel, the prosecution or defense oflitigation, and the compromise or discharge of adverse claims.  All reasonable expenditures so made of everykind and character shall be a demand obligation (which obligation Grantorhereby promises to pay) owing by Grantor to Lender or Trustee (as the case maybe) with interest as provided in the Notes, and the party (Lender or Trustee,as the case may be) making such expenditures shall be subrogated to all rightsof the person receiving such payment.

 

(c)           Taxes and Other Impositions.  Grantor will pay, or cause to be paid, alltaxes, assessments and other charges or levies imposed upon or against or withrespect to the Property or the ownership, use, occupancy or enjoyment of anyportion thereof, or any utility service thereto, as the same become due andpayable, including but not limited to all ad valorem taxes assessed against theProperty or any part thereof, and shall deliver promptly to Lender suchevidence of the payment thereof as Lender may require; provided, however, thatGrantor may contest the payment of any such tax or other imposition to theextent and in the manner permitted by Law if and so long as the followingconditions are satisfied: (i) Grantor shall have notified Lender ofGrantor’s contest; (ii) Grantor shall diligently and in good faith contestthe same by appropriate legal proceedings which shall operate to prevent theenforcement or collection of the same and the sale of the Property, or any partthereof, to satisfy the same; (iii) Grantor shall have furnished to Lendera cash deposit reasonably satisfactory to Lender, or an indemnity bondreasonably satisfactory to Lender with a surety reasonably satisfactory toLender, in the amount of the tax or other imposition plus a reasonableadditional sum to pay all costs, interest and penalties that may be imposed orincurred in connection therewith (or in the statutory amount, in the case of abond authorized by statute), to assure payment of the matters under contest andto prevent any sale or forfeiture of the Property or any part thereof, but ineach case, only to the 

 

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extentGrantor has not furnished a cash deposit or indemnity bond to either the SeniorLender pursuant to the Senior Loan Documents or the Lender pursuant to theSenior Mezzanine Loan Documents; (iv) Grantor shall promptly upon finaldetermination thereof pay the amount of any such tax or other imposition sodetermined, together with all costs, interest and penalties which may bepayable in connection therewith; and (v) the failure to pay the tax orother imposition does not constitute an event of default under any other deedof trust, mortgage or security interest covering or affecting any part of theProperty and does not subject Lender to any civil or criminal liability or toany damages or expense not reimbursed by Grantor.  Notwithstanding the foregoing, Grantor shallimmediately upon request of Lender pay (and if Grantor shall fail so to do,Lender may, but shall not be required to, pay or cause to be discharged orbonded against) any such tax or other imposition notwithstanding such contestif in the reasonable opinion of Lender, the Property shall be in jeopardy or indanger of being forfeited or foreclosed. Lender may pay over any such cash deposit or part thereof to theclaimant entitled thereto at any time when, in the judgment of Lender, theentitlement of such claimant is established.

 

(d)           Insurance. Grantor shall obtain and maintain at no expense to Lender or Trusteeinsurance in respect of the Property by the Mezzanine Loan Agreement.  Grantor shall cause all premiums on policiesrequired hereunder to be paid as they become due and payable and promptlydeliver to Lender evidence reasonably satisfactory to Lender of the timelypayment thereof.  If any loss occurs atany time when Grantor has failed to perform Grantor’s covenants and agreementsin this paragraph with respect to any insurance payable because of losssustained to any part of the Property, whether or not such insurance isrequired by Lender, then subject to the rights of the Senior Lender and withoutduplication of Lender’s rights under the Senior Mezzanine DOT or other SeniorMezzanine Loan Documents, Lender shall nevertheless be entitled to the benefitof all insurance covering the loss and held by or for Grantor, to the sameextent as if it had been made payable to Lender.  Upon any foreclosure hereof or transfer oftitle to the Property in extinguishment of the whole or any part of the SecuredIndebtedness, all of Grantor’s right, title and interest in and to theinsurance policies (to the extent transferable) referred to in this Section (includingunearned premiums) and all proceeds payable thereunder shall thereupon vest inthe purchaser at foreclosure or other such transferee, to the extentpermissible under such policies, subject to the rights of the Senior Lender andwithout duplication of Lender’s rights under the Senior Mezzanine DOT or otherSenior Mezzanine Loan Documents, Lender shall have the right (but not theobligation) to receive the proceeds of, all insurance for loss of or damage tothe Property, and if an Event of Default exists (after taking into considerationapplicable notice, grace and cure periods) to make proof of loss for, settleand adjust any claim under such insurance, regardless of whether or not suchinsurance policies are required by Lender, and the reasonable expenses incurredby Lender in the adjustment and collection of insurance proceeds shall be apart of the Secured Indebtedness and shall be due and payable to Lender ondemand.  Lender shall not be, under anycircumstances, liable or responsible for failure to collect or exercise diligencein the collection of any of such proceeds or for the obtaining, maintaining oradequacy of any insurance or for failure to see to the proper application ofany amount paid over to Grantor or to any third party.  Any such proceeds received by Lender shall beapplied as provided in the applicable provisions of the Mezzanine LoanAgreement.

 

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(e)           Reserve for Insurance, Taxes and Assessments.  Upon the occurrence of an Event of Default(after taking into consideration applicable notice, grace and cure periods), inorder to secure the performance and discharge of Grantor’s obligations referredto below, but not in lieu of such payment and performance, Grantor will depositwith Lender a sum equal to real estate taxes, assessments and charges (whichcharges for the purposes of this paragraph shall include without limitation anyrecurring charge which could result in a lien against the Property) against theProperty for the current year and the premiums for such policies of insurancefor the current year (to the extent such premiums have not been paid), all asestimated by Lender and prorated to the end of the calendar month following themonth during which Lender’s request is made, and thereafter will deposit withLender, on each date when an installment of principal and/or interest is due onthe Notes, sufficient funds (as estimated from time to time by Lender) topermit Lender to pay at least fifteen (15) days prior to the due date thereof,the next maturing real estate taxes, assessments and charges and premiums forsuch policies of insurance; provided, however, Grantor shall not be obligatedto make any such deposits to the extent it makes deposits of a similarcharacter with the Senior Lender under the Senior Loan Documents or has madesuch deposits to the Lender under the Senior Mezzanine DOT.  All such funds shall be deposited into aninterest bearing account and, provided that no Event of Default or event which,with notice or passage of time or both, would constitute an Event of Defaulthas occurred and is then continuing, Grantor shall, upon written request toLender, be entitled to receive the interest accrued on such account.  Lender shall have the right to rely upon taxinformation furnished by applicable taxing authorities in the payment of suchtaxes or assessments and shall have no obligation to make any protest of anysuch taxes or assessments.  To the extentpermitted by Law, any excess over the amounts required for such purposes shallbe held by Lender for future credit against amounts due under this paragraph orrefunded to Grantor, at Lender’s option, and any deficiency in such funds sodeposited shall be made up by Grantor upon demand of Lender.  All such funds so deposited (including anyinterest to which Grantor is not entitled under the provisions above) shall beapplied by Lender toward the payment of such taxes, assessments, charges andpremiums when statements therefor are presented to Lender by Grantor (whichstatements shall be presented by Grantor to Lender a reasonable time before theapplicable amount is due); provided, however, that, if an Event of Defaultshall then exist hereunder (after taking into consideration applicable notice,grace and cure periods), such funds shall be applied first to past or currentlydue taxes, assessments, charges or premiums, together with any penalties orlate charges with respect thereto, and the balance may be applied at Lender’soption to the Secured Indebtedness in the order determined by Lender in itssole discretion.  The conveyance ortransfer of Grantor’s interest in the Property for any reason (includingwithout limitation the foreclosure of a subordinate lien or security interestor a transfer by operation of Law) shall constitute an assignment or transferof Grantor’s interest in and rights to such funds held by Lender under thisparagraph but subject to the rights of Lender hereunder.

 

(f)            Condemnation. Immediately upon obtaining knowledge thereof, Grantor shall notifyLender of any threatened or pending proceeding for condemnation affecting theProperty or arising out of damage to the Property, and Grantor shall, atGrantor’s expense, diligently prosecute any such proceedings, and shall consultwith Lender and its attorneys and experts, and cooperate with them in thecarrying on the defense of any such proceedings.  Lender shall have the right (but not theobligation) to participate in any such proceeding and to be represented by

 

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counsel of its ownchoice.  Subject to the rights of theadministrative agent and/or lenders in respect of the Senior Loan, the CommercialLoan or the Senior DOTs, as applicable, and without duplication of Lender’srights under the Senior Mezzanine DOT or other Senior Mezzanine Loan Documents,Lender shall be entitled to receive all sums which may be awarded or becomepayable to Grantor for the condemnation of the Property, or any part thereof,for public or quasi-public use, or by virtue of private sale in lieu thereof,and any sums which may be awarded or become payable to Grantor for injury ordamage to the Property.  To the extent permittedby applicable Law and except as otherwise expressly provided herein, Grantorhereby specifically, unconditionally and irrevocably waives all rights of aproperty owner granted under applicable law which provide for allocation ofcondemnation proceeds between a property owner and a lienholder, including theprovisions of NRS 37.115.  Grantor shall,promptly upon request of Lender, execute such additional assignments and otherdocuments as may be necessary from time to time to permit such participationand, subject to the rights of administrative agent and/or lenders in respect ofthe Senior Loan, the Commercial Loan or the Senior DOTs, as applicable, andwithout duplication of Lender’s rights under the Senior Mezzanine DOT or otherSenior Mezzanine Loan Documents, to enable Lender to collect and receipt forany such sums.  Subject to the rights ofthe administrative agent and/or lenders in respect of the Senior Loan, theCommercial Loan or the Senior DOTs, as applicable, and without duplication ofLender’s rights under the Senior Mezzanine DOT or other Senior Mezzanine LoanDocuments, all such sums are hereby assigned to Lender, and shall be applied asprovided in the applicable provisions of the Mezzanine Loan Agreement.  In any event the unpaid portion of theSecured Indebtedness shall remain in full force and effect and the paymentthereof shall not be excused.  Lendershall not be, under any circumstances, liable or responsible for failure tocollect or to exercise diligence in the collection of any such sum or forfailure to see to the proper application of any amount paid over toGrantor.  Lender is hereby authorized, inthe name of Grantor, to execute and deliver valid acquittances for, and toappeal from, any such award, judgment or decree.  All reasonable costs and expenses (includingbut not limited to reasonable attorneys’ fees) incurred by Lender in connectionwith any condemnation shall be a demand obligation owing by Grantor (whichGrantor hereby promises to pay) to Lender pursuant to this Mortgage.

 

(g)           Compliance with Legal Requirements.  Grantor, the Property and the use, operationand maintenance thereof and all activities thereon do and shall comply in allmaterial respects with all applicable Legal Requirements (hereinafter defined).  The Property is not, and shall not be,dependent on any other property or premises or any interest therein other thanthe Property to fulfill any requirement of any Legal Requirement.  Grantor shall not, by act or omission, permitany building or other improvement not subject to the lien of this Mortgage torely on the Property or any interest therein to fulfill any requirement of anyLegal Requirement.  No improvement uponor use of any part of the Property constitutes a nonconforming use under anyzoning Law or similar Law.  The Propertywill contain within its boundaries a sufficient number of parking spaces tosatisfy all Laws.  There are no writtenor oral agreements with any third parties regarding parking, ingress andegress, use or maintenance of common areas or otherwise except as provided inthe Permitted Encumbrances.  Grantor hasobtained or will obtain when required and shall preserve and keep in full forceand effect, all requisite zoning, utility, building, health, environmental andoperating permits from the governmental authorities having jurisdiction overthe Property.  If Grantor receives anotice or claim from any person that 

 

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theProperty, or any use, activity, operation or maintenance thereof or thereon, isnot in compliance with any Legal Requirement, Grantor will promptly furnish acopy of such notice or claim to Lender. Without limiting the foregoing, Grantor hereby agrees that upon receiptof any notice of noncompliance with restrictive covenants affecting theProperty because of the encroachment of the Improvements over the buildingline, Grantor shall immediately (x) provide Lender with written noticethereof and (y) commence to cure such noncompliance and pursue such cureto completion. Grantor has received no notice and has no knowledge of any suchnoncompliance.  As used in thisMortgage:  (i) the term “LegalRequirement” means any Law (hereinafter defined), agreement, covenant,restriction, easement or condition (including, without limitation of theforegoing, any condition or requirement imposed by any insurance or suretycompany) that is binding on Grantor or the Property, as any of the same nowexists or may be changed or amended or come into effect in the future; and (ii) theterm “Law” means any federal, state or local law, statute, ordinance, code,rule, regulation, license, permit, authorization, decision, order, injunctionor decree, domestic or foreign.

 

(h)           Condition of Property.  Upon payment of applicable connection fees,the Property will be separately served by electric, gas, storm and sanitarysewers, sanitary water supply, telephone and other utilities required for theuse thereof as represented by Grantor at or within the boundary lines of the Propertyor at points from which extensions of facilities contemplated by the MezzanineLoan Agreement will originate.  Allstreets, alleys and easements necessary to serve the Property for the userepresented by Grantor have been completed and are serviceable and (i) suchstreets have been dedicated and accepted by applicable governmental entities, (ii) suchstreets benefit the Property pursuant to valid and binding easement agreementswhich permit Grantor and its successors, assigns and mortgagees, the uninterrupteduse of the same for ingress and egress to and from the Property or (iii) theright-of-way for such streets have been established and such streets will beconstructed as part of the improvements provided for in the Mezzanine LoanAgreement.  To Grantor’s knowledge,design conditions of the Property are such that no drainage or surface or otherwater will, in any actionable way, drain across or rest upon either theProperty or land of others.  No portionof any of the buildings that are or are to be part of the Property is within aflood plain except as shown on a survey delivered to Lender, and none of theImprovements creates (or when constructed will create) an encroachment over,across or upon any of the Property boundary lines, rights of way or easements,and no building or other improvement on adjoining land creates such anencroachment onto the Property except as shown on a survey delivered to Lender.

 

(i)            Maintenance, Repair and Restoration.  Grantor will keep the Property in first classorder, repair, operating condition and appearance, causing all necessaryrepairs, renewals, replacements, additions and improvements to be promptlymade, and will not allow any of the Property to be misused, abused or wasted orto deteriorate.  Notwithstanding theforegoing, Grantor will not, without the prior written consent of Lender, (i) removefrom the Property any fixtures or personal property covered by this Mortgageexcept such as is replaced by Grantor by an article of equal suitability andvalue, owned by Grantor, free and clear of any lien or security interest(except Permitted Encumbrances and the liens and security interests created bythis Mortgage and the other Loan Documents), or (ii) make any structuralalteration to the Property or any other alteration thereto which impairs thevalue thereof, or (iii) make any alteration to the 

 

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Property involving  any singleestimated expenditure exceeding $300,000, except pursuant to plans andspecifications approved in writing by Lender. Upon request of Lender but no more often than once in any twelve monthperiod (unless Lender determines in its good faith business judgment, that itneeds a current inventory more frequently), Grantor will deliver to Lender aninventory describing and showing the make, model, and location of all fixturesand personal property used in the management, maintenance and operation of theProperty owned by Grantor with a certification by Grantor that said inventoryis a true and complete schedule of all such fixtures and personal propertyowned by Grantor used in the management, maintenance and operation of theProperty, that such items specified in the inventory constitute all of thefixtures and personal property required in the management, maintenance andoperation of the Property except for items identified or leased by Grantor inaccordance with this Mortgage and other items owned by service providers andthat all such items are owned by Grantor free and clear of any lien or securityinterest (except Permitted Encumbrances and the liens and security interestscreated by this Mortgage and the other Loan Documents).  If any act or occurrence of any kind ornature (including any condemnation or any casualty for which insurance has notbeen obtained or is not obtainable) shall result in damage to or loss ordestruction of the Property in excess of $75,000.00, Grantor shall give promptnotice thereof to Lender and, unless Lender agrees otherwise, Grantor shallpromptly, at Grantor’s sole cost and expense and regardless of whetherinsurance or condemnation proceeds (if any) shall be available or sufficientfor the purpose, secure the Property as necessary and commence and continuediligently to completion to restore, repair, replace and rebuild the Propertyas nearly as possible to its value, condition and character immediately priorto the damage, loss or destruction.

 

 

(j)            NoOther Liens.   Grantor will not,without the prior written consent of Lender, create, place or permit to becreated or placed, or through any act or failure to act, acquiesce in theplacing of, or allow to remain, any deed of trust, mortgage, voluntary orinvoluntary lien, whether statutory, constitutional or contractual, securityinterest, encumbrance or charge, or conditional sale or other title retentiondocument, against or covering the Property, or any part thereof, other than thePermitted Encumbrances, regardless of whether the same are expressly orotherwise subordinate to the lien or security interest created in thisMortgage, and should any of the foregoing become attached hereafter in anymanner to any part of the Property without the prior written consent of Lender,Grantor will cause the same to be promptly discharged and released; provided,however, that Grantor may contest involuntary mechanics’ and materialmen’sliens to the extent and in the manner permitted by Law if and so long asGrantor shall have satisfied all of the conditions of Section 2.1 (c) (regardingcontest by Grantor of taxes or other impositions), which conditions shall alsoapply in all respects to Grantor’s privilege to contest involuntary mechanics’or materialmen’s liens under this paragraph. Grantor will own all parts of the Property and will not acquire anyfixtures, equipment or other property (including software embedded therein)forming a part of the Property pursuant to a lease, license, security agreementor similar agreement, whereby any party has or may obtain the right torepossess or remove same, without the prior written consent of Lender, exceptthat Grantor may lease certain furniture and accessories for display in themodel units on the Property, certain furniture and equipment for the clubhouseand management offices and cable, television, telephone, internet access,laundry and security equipment pursuant to lease agreements approved byLender.  If Lender consents to thevoluntary grant by Grantor of any deed of trust or mortgage, lien, security

 

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interest, or other encumbrance (other than the Permitted Encumbrances)(hereinafter called “Subordinate Mortgage”) covering any of the Propertyor if the foregoing prohibition is determined by a court of competentjurisdiction to be unenforceable as to a Subordinate Mortgage, any suchSubordinate Mortgage shall contain express covenants to the effect that:

 

(1)           theSubordinate Mortgage is unconditionally subordinate to this Mortgage;

 

(2)           if anyaction (whether judicial or pursuant to a power of sale) shall be instituted toforeclose or otherwise enforce the Subordinate Mortgage, no tenant of any ofthe Leases (hereinafter defined) shall be named as a party defendant, and noaction shall be taken that would terminate any occupancy or tenancy without theprior written consent of Lender;

 

(3)           Rents,(hereinafter defined) if collected by or for the holder of the SubordinateMortgage, shall be applied first to the payment of the Senior Loan and theSecured Indebtedness then due and expenses incurred in the ownership, operationand maintenance of the Property, prior to being applied to any indebtednesssecured by the Subordinate Mortgage;

 

(4)           writtennotice of default under the Subordinate Mortgage and written notice of thecommencement of any action (whether judicial or pursuant to a power of sale) toforeclose or otherwise enforce the Subordinate Mortgage or to seek theappointment of a receiver for all or any part of the Property shall be given toLender with or immediately after the occurrence of any such default orcommencement; and

 

(5)           neitherthe holder of the Subordinate Mortgage, nor any purchaser at foreclosurethereunder, nor anyone claiming by, through or under any of them shall succeedto any of Grantor’s rights hereunder without the prior written consent ofLender.

 

(k)           Operation of Property.  Grantor will operate the Property in a goodand workmanlike manner and in accordance with all Legal Requirements and willpay all fees or charges of any kind in connection therewith (except for feesand charges that Grantor is contesting in good faith in accordance with theprovisions of this Mortgage).  Grantorwill keep the Property occupied so as not to impair the insurance carriedthereon.  Grantor will not use or occupy,or conduct any activity on, or allow the use or occupancy of or the conduct ofany activity on, the Property in any manner which violates any LegalRequirement or which constitutes a public or private nuisance or which makesvoid, voidable or cancelable, or increases the premium of, any insurance thenin force with respect thereto.  Grantorwill not initiate or permit any zoning reclassification of the Property or seekany variance under existing zoning ordinances applicable to the Property or useor permit the use of the Property in such a manner which would result in suchuse becoming a nonconforming use under applicable zoning ordinances or anyother Legal Requirement.  Grantor willnot impose any easement, restrictive covenant or encumbrance upon the Property,execute or file any subdivision plat affecting the Property or consent to theannexation of the Property to any municipality, without the prior writtenconsent of Lender.  Grantor will not door suffer to be done any intentional act whereby the value of any part of the Propertymay be lessened; provided, however, this sentence is not

 

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intendedand shall not be construed, to prohibit Grantor from making adjustments to therental rates for apartment units in the Property that are necessary to meetmarket rental rates for apartment projects of similar quality located in thegeneral vicinity of the Property. Grantor will preserve, protect, renew, extend and retain all materialrights and privileges granted for or applicable to the Property.  Without the prior written consent of Lender,there shall be no drilling or exploration for or extraction, removal orproduction of any mineral, hydrocarbon, gas, natural element, compound orsubstance (including sand and gravel) from the surface or subsurface of theLand regardless of the depth thereof or the method of mining or extractionthereof.

 

(l)            Debts for Construction, Etc.  Grantor will cause all debts and liabilitiesof any character (including without limitation all debts and liabilities forlabor, material and equipment (including software embedded therein) and alldebts and charges for utilities servicing the Property) incurred in theconstruction, maintenance, operation and development of the Property to bepromptly paid, subject to Grantor’s right to contest the validity or amountsthereof in accordance with procedures like those in Section 2.1(c).

 

(m)          Financial Matters. Grantor is solvent after giving effect to all borrowings contemplated bythe Loan Documents and no proceeding under any Debtor Relief Law (hereinafterdefined) is pending (or, to Grantor’s knowledge, threatened) by or againstGrantor, as a debtor.

 

(n)           Status of Grantor; Suits and Claims; Loan Documents.  If Grantor is a corporation, partnership,limited liability company, or other legal entity, Grantor is and will continueto be (i) duly organized, validly existing and in good standing under thelaws of its state of organization, (ii) authorized to do business in, andin good standing in, each state in which the Property is located, and (iii) possessedof all requisite power and authority to carry on its business and to own andoperate the Property.  This Mortgage hasbeen duly authorized, executed and delivered by Grantor, and the obligationshereunder and the performance hereof by Grantor in accordance with its termsare and will continue to be within Grantor’s power and authority (without thenecessity of joinder or consent of any other person), are not and will not bein contravention of any Legal Requirement or any other document or agreement towhich Grantor or the Property is subject, and do not and will not result in thecreation of any encumbrance against any assets or properties of Grantor, exceptfor the liens of the Permitted Encumbrances and as otherwise expresslycontemplated by the Loan Documents. There is no suit, action, claim, investigation, inquiry, proceeding ordemand pending (or, to Grantor’s knowledge, threatened) against Grantor orwhich affects the Property (including, without limitation, any which challengesor otherwise pertains to Grantor’s title to the Property) or the validity,enforceability or priority of any of the Loan Documents, except as has beendisclosed in writing to Lender in connection with the loan evidenced by theNotes.  There is no judicial oradministrative action, suit or proceeding pending (or, to Grantor’s knowledge,threatened) against Grantor, except as has been disclosed in writing to Lenderin connection with the loan evidenced by the Notes.  This Mortgage constitutes a legal, valid andbinding obligation of Grantor enforceable in accordance with its terms, exceptas the enforceability hereof may be limited by Debtor Relief Laws (hereinafterdefined) and except as the availability of certain remedies may be limited bygeneral principles of equity.  Grantor isnot a “foreign person” within the meaning

 

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ofthe Internal Revenue Code of 1986, as amended, Sections 1445 and 7701 (i.e.Grantor is not a non-resident alien, foreign corporation, foreign partnership,foreign trust or foreign estate as those terms are defined therein and in anyregulations promulgated thereunder). Grantor’s exact legal name is correctly set forth at the end of thisMortgage.  If Grantor is not anindividual, Grantor is an organization of the type and (if not an unregisteredentity) is incorporated in or organized under the laws of the state specifiedin the introductory paragraph of this Mortgage. If Grantor is an unregistered entity (including, without limitation, ageneral partnership) it is organized under the laws of the state specified inthe introductory paragraph of this Mortgage. Grantor will not cause or permit any change to be made in its name,identity (including its trade name or names), or corporate or partnershipstructure, unless Grantor shall have notified Lender in writing of such changeat least 30 days prior to the effective date of such change, and shall havefirst taken all action reasonably required by Lender for the purpose of furtherperfecting or protecting the lien and security interest of Lender in theProperty.  In addition, Grantor shall notchange its corporate or partnership structure without first obtaining the priorwritten consent of Lender.  Grantor’sprincipal place of business and chief executive office, and the place whereGrantor keeps its books and records, including recorded data of any kind ornature, regardless of the medium of recording including, without limitation,software, writings, plans, specifications and schematics concerning theProperty, will be (unless Grantor notifies Lender of any change in writing atleast 30 days prior to the date of such change) the address of Grantor setforth at the end of this Mortgage and such other additional addresses withinthe United States of which Grantor has notified Lender.  Grantor’s organizational identificationnumber, if any, assigned by the state of incorporation or organization iscorrectly set forth on the first page of this Mortgage.  Grantor shall promptly notify Lender (i) ofany change of its organizational identification number, or (ii) if Grantordoes not now have an organization identification number and later obtains one,of such organizational identification number.

 

(o)           Certain Environmental Matters.  To the extent applicable to Grantor, Grantorshall comply with the terms and covenants and agreements with respect toenvironmental matters of that certain Environmental Indemnity Agreementpertaining to the Property (the “Environmental Indemnity”) amongBorrower and Lender.

 

(p)           Further Assurances. Grantor will, promptly on request of Lender, (i) correct anydefect, error or omission which may be discovered in the contents, execution oracknowledgment of this Mortgage; (ii) execute, acknowledge, deliver,procure and record and/or file such further documents (including, withoutlimitation, further deeds of trust, security agreements, and assignments ofrents or leases) and do such further acts as are, in Lender’s reasonablejudgment, necessary, desirable or proper to carry out more effectively thepurposes of this Mortgage, to more fully identify and subject to the liens andsecurity interests hereof any property intended to be covered hereby (includingspecifically, but without limitation, any renewals, additions, substitutions,replacements, or appurtenances to the Property) or as deemed advisable byLender to protect the lien or the security interest hereunder against therights or interests of third persons; and (iii) provide such certificates,documents, reports, information, affidavits and other instruments and do suchfurther acts as may be necessary, desirable or proper in the reasonabledetermination of Lender to enable Lender to comply with the requirements orrequests of any agency having jurisdiction over Lender or any examiners of suchagencies with respect to the

 

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Grantor or the Property; provided, however, such further acts shall beconsistent with the terms contained in this Mortgage and shall not unreasonablyalter the rights and obligations of Grantor under this Mortgage.  Grantor shall pay all costs connected withany of the foregoing, which shall be a demand obligation owing by Grantor(which Grantor hereby promises to pay) to Lender pursuant to this Mortgage.

 

(q)           Reserved.

 

(r)            Reserved.

 

(s)           Taxes on Notes or Mortgage.  In the event of the enactment after this dateof any Law of any governmental entity applicable to Lender, the Notes, theProperty or this Mortgage deducting from the value of property for the purposeof taxation any lien or security interest thereon, or imposing upon Lender thepayment of the whole or any part of the taxes or assessments or charges or liensherein required to be paid by Grantor, or changing in any way the Laws relatingto the taxation of deeds of trust or mortgages or security agreements or debtssecured by deeds of trust or mortgages or security agreements or the interestof the mortgagee or secured party in the property covered thereby, or themanner of collection of such taxes, so as to affect this Mortgage or theSecured Indebtedness or Lender, then, and in any such event, Grantor, upondemand by Lender, shall pay such taxes, assessments, charges or liens, orreimburse Lender therefor; provided, however, that if in the opinion of counselfor Lender (i) it might be unlawful to require Grantor to make suchpayment or (ii) the making of such payment might result in the impositionof interest beyond the maximum amount permitted by Law, then and in such event,Lender may elect, to the extent permitted by applicable law, by notice inwriting given to Grantor, to declare all of the Secured Indebtedness to be andbecome due and payable sixty (60) days from the giving of such notice.

 

(t)            Statement Concerning Mortgage.  Grantor shall at any time and from time totime furnish within seven (7) days of request by Lender a writtenstatement in such form as may be reasonably required by Lender stating that (i) thisMortgage is a valid and binding obligation of Grantor, enforceable againstGrantor in accordance with its terms; (ii) this Mortgage has not beenreleased, subordinated or modified; and (iii) Grantor has no offsets ordefenses against the enforcement of this Mortgage.  If any of the foregoing statements areuntrue, Grantor shall, alternatively, specify the reasons therefor.

 

Section 2.2.            Performance by Lender on Grantor’sBehalf.  Grantor agrees that, ifGrantor fails to perform any act or to take any action which under thisMortgage, Grantor is required to perform or take, and if such failure thenconstitutes an Event of Default hereunder (whether or not the SecuredIndebtedness has been accelerated), Lender, in Grantor’s name or its own name,may, but shall not be obligated to, perform or cause to be performed such actor take such action or pay such money, and any expenses so incurred by Lenderand any money so paid by Lender, shall be a demand obligation owing by Grantorto Lender (which obligation Grantor hereby promises to pay), shall be a part ofthe Secured Indebtedness and Lender, upon making such payment, shall besubrogated to all of the rights of the person, entity or body politic receivingsuch payment.  After the occurrence andduring the continuance of an Event of 

 

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Default,Lender shall have the right to enter upon the Property at any time and fromtime to time for any such purposes.  Nosuch payment or performance by Lender shall waive or cure any Event of Defaultor waive any right, remedy or recourse of Lender.  Any such payment may be made by Lender inreliance on any statement, invoice or claim without inquiry into the validityor accuracy thereof.  Each amount due andowing by Grantor to Lender pursuant to this Mortgage shall bear interest, fromthe date such amount becomes due until paid, whether before or after a sale asdescribed in Section 5.2 at the Default Interest Rate (as definedin the Mezzanine Loan Agreement) but never in excess of the maximum nonusuriousamount permitted by applicable Law, which interest shall be payable to Lenderon demand; and all such amounts, together with such interest thereon, shallautomatically and without notice be a part of the Secured Indebtedness.  The amount and nature of any expense byLender hereunder and the time when paid shall be fully established by thecertificate of Lender or any of Lender’s officers or agents.

 

Section 2.3.            Absence of Obligations of Lenderwith Respect to Property. Notwithstanding anything in this Mortgage to the contrary, including,without limitation, the definition of “Property” and/or the provisions of Article 3hereof, (i) to the extent permitted by applicable Law, the Property iscomposed of Grantor’s rights, title and interests therein but not Grantor’sobligations, duties or liabilities pertaining thereto, (ii) Lender doesnot assume or shall have any obligations, duties or liabilities in connectionwith any portion of the items described in the definition of “Property” herein,either prior to or after obtaining title to such Property, whether byforeclosure sale, the granting of a deed in lieu of foreclosure or otherwise,and (iii) Lender may, at any time prior to or after the acquisition oftitle to any portion of the Property as above described, advise any party inwriting as to the extent of Lender’s interest therein and/or expresslydisaffirm in writing any rights, interests, obligations, duties and/orliabilities with respect to such Property or matters related thereto.  Without limiting the generality of theforegoing, it is understood and agreed that Lender shall not have anyobligations, duties or liabilities prior to or after acquisition of title toany portion of the Property, as lessee under any lease or purchaser or sellerunder any contract or option unless Lender elects otherwise by writtennotification.

 

Section 2.4.            Authorization to File FinancingStatements; Power of Attorney. Grantor hereby authorizes Lender at any time and from time to time tofile any initial financing statements, amendments thereto and continuationstatements as authorized by applicable Law, required by Lender to establish ormaintain the validity, perfection and priority of the security interests grantedin this Mortgage.  Grantor also ratifiesits authorization for Lender to have filed any like initial financingstatements, amendments thereto or continuation statements if filed prior to thedate of this Mortgage.  Grantor herebyirrevocably constitutes and appoints Lender and any officer or agent of Lender,with full power of substitution, as its true and lawful attorneys-in-fact withfull irrevocable power and authority in the place and stead of Grantor or inGrantor’s own name to execute in Grantor’s name any such documents and tootherwise carry out the purposes of this Section 2.4, to the extentthat Grantor’s authorization above is not sufficient.  To the extent permitted by law, Grantorhereby ratifies all acts said attorneys-in-fact shall lawfully do, have done inthe past or cause to be done in the future by virtue hereof.  This power of attorney is a power coupledwith an interest and shall be irrevocable.

 

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**ARTICLE 3Assignment of Rents and Leases**

 

Section 3.1.                                   Assignment.  Subject to the rights of the administrativeagent and/or lenders in respect of the Senior Loan, the Commercial Loan or theSenior DOTs, as applicable, and without duplication of Lender’s rights underthe Senior Mezzanine DOT or other Senior Mezzanine Loan Documents, Grantorhereby assigns to Lender all Rents (as hereinafter defined) and all of Grantor’srights in and under all Leases (hereinafter defined).  So long as no Event of Default (hereinafterdefined) has occurred, Grantor shall have a license (which license shallterminate automatically and without further notice upon the occurrence of anEvent of Default) to collect, but not prior to accrual, the Rents under theLeases and, where applicable, subleases (such Rents to be held in trust forLender, subject to the rights of the administrative agent and/or lenders inrespect of the Senior Loan, the Commercial Loan or the Senior DOTs, asapplicable, and without duplication of Lender’s rights under the SeniorMezzanine DOT or other Senior Mezzanine Loan Documents) and to otherwise dealwith all Leases as permitted by this Mortgage. Each month, provided no Event of Default has occurred, Grantor may retainsuch Rents as were collected that month and held in trust for Lender; provided,however, that all Rents collected by Grantor shall be applied solely to theordinary and necessary expenses of owning and operating the Property andobligations under the Senior Loan Documents or paid to Lender beforeapplication to any other purpose. Subject to the rights of the administrative agent and/or lenders inrespect of the Senior Loan, the Commercial Loan or the Senior DOTs, asapplicable, and without duplication of Lender’s rights under the Senior MezzanineDOT or other Senior Mezzanine Loan Documents, upon the revocation of suchlicense, Lender shall have the right, power and privilege (but shall be underno duty) to demand possession of the Rents, which demand shall to the fullestextent permitted by applicable Law be sufficient action by Lender to entitleLender to immediate and direct payment of the Rents (including delivery toLender of Rents collected for the period in which the demand occurs and for anysubsequent period), for application as provided in this Mortgage.  Subject to the rights of the administrativeagent and/or lenders in respect of the Senior Loan, the Commercial Loan or theSenior DOTs, as applicable, and without duplication of Lender’s rights underthe Senior Mezzanine DOT or other Senior Mezzanine Loan Documents, Grantorhereby authorizes and directs the tenants under the Leases to pay Rents toLender upon written demand by Lender, without further consent of Grantor,without any obligation of such tenants to determine whether an Event of Defaulthas in fact occurred and regardless of whether Lender has taken possession ofany portion of the Property, and the tenants may rely upon any writtenstatement delivered by Lender to the tenants. Any such payments to Lender shall constitute payments to Grantor underthe Leases, and, subject to the rights of the administrative agent and/orlenders in respect of the Senior Loan, the Commercial Loan or the Senior DOTs,as applicable, and without duplication of Lender’s rights under the Senior MezzanineDOT or other Senior Mezzanine Loan Documents, Grantor hereby irrevocablyappoints Lender as its attorney-in-fact to do all things, after an Event ofDefault, which Grantor might otherwise do with respect to the Property and theLeases thereon, including, without limitation, (i) collecting Rents withor without suit and applying the same, less expenses of collection, to theSenior Loan, with any excess applied to any of the obligations securedhereunder, under the Loan Documents or the Senior Mezzanine Loan Documents orto expenses 

 

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of operating and maintainingthe Property, at the option of the Lender, all in such manner as may bedetermined by Lender, (ii) leasing, in the name of Grantor, the whole orany part of the Property which may become vacant, and (iii) employingagents therefor and paying such agents reasonable compensation for theirservices.  The curing of such Event ofDefault, unless other Events of Default also then exist, shall entitle Grantorto recover its aforesaid license to do any such things which Grantor mightotherwise do with respect to the Property and the Leases thereon and to againcollect such Rents.  The powers andrights granted in this paragraph shall be in addition to the other remediesherein provided for upon the occurrence of an Event of Default and may beexercised independently of or concurrently with any of said remedies.  Nothing in the foregoing shall be construedto impose any obligation upon Lender to exercise any power or right granted inthis paragraph, or to assume any liability under any Lease of any part of theProperty (and no liability shall attach to Lender for failure or inability tocollect any Rents under any such Lease), or as constituting Lender a mortgageein possession in the absence of the actual taking of possession of the Propertyby Lender, or as constituting an action, rendering any of Grantor’s obligationsto Lender unenforceable, in violation of any of the provisions of NRS Section 40.430or otherwise limiting any rights available to Lender.  The assignment contained in this Section shallbecome null and void upon the release of this Mortgage.  As used herein: (i) “Lease” meanseach existing or future lease, sublease (to the extent of Grantor’s rightsthereunder) or other agreement under the terms of which any person has oracquires any right to occupy or use the Property, or any part thereof, orinterest therein, and each existing or future guaranty of payment or performancethereunder, and all extensions, renewals, modifications and replacements ofeach such lease, sublease, agreement or guaranty; and (ii) “Rents”means all of the rents, revenue, income, profits and proceeds derived and to bederived from the Property or arising from the use or enjoyment of any portionthereof or from any Lease, including but not limited to the proceeds from anynegotiated lease termination or buyout of such Lease, liquidated damagesfollowing default under any such Lease, all proceeds payable under any policyof insurance covering loss of rents resulting from untenantability caused bydamage to any part of the Property, all of Grantor’s rights to recover monetaryamounts from any tenant in bankruptcy including, without limitation, rights ofrecovery for use and occupancy and damage claims arising out of Lease defaults,including rejections, under any applicable Debtor Relief Laws (as defined inthe Loan Agreement), together with any sums of money that may now or at anytime hereafter be or become due and payable to Grantor by virtue of any and allroyalties, overriding royalties, bonuses, delay rentals and any other amount ofany kind or character arising under any and all present and all future oil,gas, mineral and mining leases covering the Property or any part thereof, andall proceeds and other amounts paid or owing to Grantor under or pursuant toany and all contracts and bonds relating to the construction or renovation ofthe Property.

 

Section 3.2.                                   Reserved.

 

Section 3.3.                                   No Liability ofLender. Lender’s acceptance of this assignment shall not be deemed toconstitute Lender a “mortgagee in possession,” nor obligate Lender to appear inor defend any proceeding relating to any Lease or to the Property, or to takeany action hereunder, expend any money, incur any expenses, or perform anyobligation or liability under any Lease, or assume any obligation for anydeposit delivered to Grantor by any tenant and not as such delivered to andaccepted by Lender.  Lender shall not beliable for any injury or damage to 

 

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person or property in orabout the Property, or for Lender’s failure to collect or to exercise diligencein collecting Rents, but shall be accountable only for Rents that it shallactually receive.  Neither the assignmentof Leases and Rents nor enforcement of Lender’s rights regarding Leases andRents (including collection of Rents) nor possession of the Property by Lendernor Lender’s consent to or approval of any Lease (nor all of the same), shallrender Lender liable on any obligation under or with respect to any Lease orconstitute affirmation of, or any subordination to, any Lease, occupancy, useor option.  If Lender seeks or obtainsany judicial relief regarding Rents or Leases, the same shall in no way preventthe concurrent or subsequent employment of any other appropriate rights orremedies nor shall same constitute an election of judicial relief for anyforeclosure or any other purpose.  Lendershall not have or assume any obligations as lessor or landlord with respect toany Lease.  The rights of Lender underthis Article 3 shall be cumulative of all other rights of Lenderunder the Loan Documents or otherwise.

 

**ARTICLE 4Default**

 

Section 4.1.                                   Events ofDefault.  The occurrence of any one ofthe following shall be a default under this Mortgage (each, an “Event ofDefault”):

 

(a)                                  Failure to PaySecured Indebtedness.  The failureof Borrower or Grantor to pay when due any amount required by this Mortgage,the Promissory Note or any other Loan Document which continues, in the case ofmonthly interest payments required under the Note for twenty (20) days or, inthe case of other sums payable under this Mortgage, the Promissory Note or anyother Loan Document, for ten (10) days following written demand forpayment on Borrower by Lender.

 

(b)                                 Nonperformanceof Covenants.  The failureby Borrower or Grantor to perform any of its obligations under this Mortgage,the Promissory Note or any other Loan Document, as and when required, except asspecifically set forth otherwise herein, which continues for a period of thirty(30) days after notice of such failure by Lender to Borrower and/or Grantor, ifsuch failure is not reasonably susceptible of cure within such thirty (30)-dayperiod and, if Borrower and/or Grantor promptly commences such cure within suchthirty (30)-day period and diligently prosecutes the same to completion, thenthe cure period shall be extended for such period of time as may be reasonablynecessary to effect a cure but in no event shall such period exceed ninety (90)days.

 

(c)                                  Default underother Loan Documents.  Theoccurrence of an Event of Default (after taking into consideration applicablenotice, grace and cure periods) under any other Loan Document.

 

Section 4.2.                                   Notice and Cure.  If any provision of this Mortgage or anyother Loan Document provides for Lender to give to Grantor or Borrower anynotice regarding an Event of Default or incipient Event of Default, then ifLender shall fail to give such notice to Grantor or Borrower as provided, thesole and exclusive remedy of Grantor for such failure shall be to seek 

 

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appropriate equitable reliefto enforce the agreement to give such notice and to have any acceleration ofthe maturity of the Notes and the Secured Indebtedness postponed or revoked andforeclosure proceedings in connection therewith delayed or terminated pendingor upon the curing of such Event of Default in the manner and during the periodof time permitted by such agreement, if any, and Grantor shall have no right todamages or any other type of relief not herein specifically set out againstLender, all of which damages or other relief are hereby waived by Grantor.  Nothing herein or in any other Loan Documentshall operate or be construed to add on or make cumulative any cure or graceperiods specified in any of the Loan Documents and to the extent that Grantorand Borrower have any cure rights with respect to any event or circumstancewhich, upon notice or the passage of time, or both, could constitute an Eventof Default hereunder, such cure periods shall run concurrently and notconsecutively.

 

**ARTICLE 5Remedies**

 

Section 5.1.                                   CertainRemedies.  If an Eventof Default shall occur, Lender may (but shall have no obligation to) exerciseany one or more of the following remedies, without notice (unless notice isrequired by applicable Law):

 

(a)                                  Acceleration;Termination.  Lender mayat any time and from time to time declare any or all of the SecuredIndebtedness immediately due and payable. Upon any such declaration, such Secured Indebtedness shall, subject toNRS Section 107.080, thereupon be immediately due and payable, withoutpresentment, demand, protest, notice of protest, notice of acceleration or ofintention to accelerate or any other notice or declaration of any kind uponGrantor, all of which are hereby expressly waived by Grantor.

 

(b)                                 Enforcement ofAssignment of Rents.  In additionto the rights of Lender under Article 3 hereof, prior or subsequentto taking possession of any portion of the Property or taking any action withrespect to such possession, Lender may, subject to the rights of theadministrative agent and/or lenders in respect of the Senior Loan, theCommercial Loan or the Senior DOTs, as applicable, and without duplication ofLender’s rights under the Senior Mezzanine DOT or other Senior Mezzanine LoanDocuments: (1) collect and/or sue for the Rents in Lender’s own name, givereceipts and releases therefor, and after deducting all reasonable expenses ofcollection, including reasonable attorneys’ fees and expenses, apply the netproceeds thereof to the Secured Indebtedness in such manner and order as Lendermay elect and/or to the operation and management of the Property, including thepayment of reasonable management, brokerage and attorney’s fees and expenses;and (2) require Grantor to transfer all security deposits and recordsthereof to Lender together with original counterparts of the Leases, upon whichtransfer Lender shall be responsible for returning such deposits to tenants.

 

(c)                                  Non-JudicialSale.  Subject to the rights of theadministrative agent and/or lenders in respect of the Senior Loan, theCommercial Loan or the Senior DOTs, as applicable, and without duplication ofLender’s rights under the Senior Mezzanine DOT or other Senior Mezzanine LoanDocuments, Lender may (1) dispose of some or all of the Property, in any 

 

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combination consisting ofboth real and personal property, together in one sale to be held in accordancewith the Law and procedures applicable to real property, as permitted by Section 9604of the Uniform Commercial Code as enacted in the State of Nevada, NRS Section 104.9604,and other applicable laws, and Grantor agrees that such a sale of personalproperty together with real property constitutes a commercially reasonable saleof the personal property and (2) by delivery to Trustee and Grantor (andany other parties to whom notice is required under NRS Section 107.080) ofwritten notice of declaration of default and demand for sale, cause to be filedof record a written notice of default and election to sell the Property inaccordance with the requirements of applicable Nevada law.  If required by Trustee, Lender shall alsodeposit with Trustee this Mortgage and Notes or other Loan Documents or otheragreements and such documents as required by Trustee evidencing expenditures oradvances secured hereby and Lender shall comply with the requirements of NRS Section 107.220.  After the lapse of such time as there may berequired by law following recordation of such notice of default, and notice ofsale having been given as then required by Law, Trustee, without demand onGrantor, shall sell the Property, in accordance with applicable Law, either asa whole or in separate parcels, and in such order as it or Lender maydetermine, at public auction to the highest bidder for cash in lawful money ofthe United States.  Lender may, in itssole discretion, elect that the Property be sold in separate parcels throughtwo or more successive sales.  If Lenderelects more than one sale of separate parcels of the Property, Lender may, atits option, cause the same to be conducted simultaneously or successively, onthe same day or at such different days or times and in such order as Lender maydeem to be in its best interests, and no such sale shall terminate or otherwiseeffect the first lien of this Mortgage or Trustee’s power of sale hereunderuntil all indebtedness secured hereby has been fully paid.  The place of sale shall be in the county inwhich the Property to be sold, or any part thereof, is situated.  If Lender elects to dispose of the Propertythrough more than one sale, Grantor shall pay the costs and expenses of eachsuch sale and of any proceedings where the same may be made or conducted.  Trustee may, subject to applicable Law,postpone and change the time and place of sale of all or any portion of theProperty by public announcement at any time and place fixed by it in saidnotice of sale and from time to time and place to place thereafter, without anyfurther posting or notice thereof, may postpone such sale in publicannouncement to the time and place fixed by such postponement, whether or notsaid place fixed by any postponement be in the same city or other place asfixed in said notice of sale. Trustee shall deliver to such purchaser its deedconveying the Property so sold, but without any covenants or warranty, expressor implied.  The recital in such deed ofany matters of fact or otherwise shall be prima facie evidence of thetruthfulness thereof.

 

(d)                                 UniformCommercial Code.  Withoutlimitation of Lender’s rights of enforcement with respect to the Collateral orany part thereof in accordance with the procedures for foreclosure of realestate, Lender may exercise its rights of enforcement with respect to theCollateral or any part thereof under the UCC, as in effect from time to time,as amended  (or under the UniformCommercial Code in force, from time to time, in any other state to the extentthe same is applicable Law), subject to the rights of the administrative agentand/or lenders in respect of the Senior Loan, the Commercial Loan or the SeniorDOTs, as applicable, and without duplication of Lender’s rights under theSenior Mezzanine DOT or other Senior Mezzanine Loan Documents, and inconjunction with, in addition to or in substitution for those rights andremedies:

 

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(1)                                  Subject to therights of the administrative agent and/or lenders in respect of the SeniorLoan, the Commercial Loan or the Senior DOTs, as applicable, and withoutduplication of Lender’s rights under the Senior Mezzanine DOT or other SeniorMezzanine Loan Documents, Lender may enter upon Grantor’s premises to takepossession of, assemble and collect the Collateral or, to the extent and forthose items of the Collateral permitted under applicable Law, to render itunusable;

 

(2)                                  Subject to therights of the administrative agent and/or lenders in respect of the SeniorLoan, the Commercial Loan or the Senior DOTs, as applicable, and withoutduplication of Lender’s rights under the Senior Mezzanine DOT or other SeniorMezzanine Loan Documents, Lender may require Grantor to assemble the Collateraland make it available at a place Lender designates which is mutually convenientto allow Lender to take possession or dispose of the Collateral;

 

(3)                                  written noticemailed to Grantor as provided herein at least ten (10) days prior to thedate of public sale of the Collateral or prior to the date after which privatesale of the Collateral will be made shall constitute reasonable notice;provided that, if Lender fails to comply with this clause (3) in anyrespect, its liability for such failure shall be limited to the liability (ifany) imposed on it as a matter of law under the UCC, as in effect from time totime (or under the Uniform Commercial Code, in force from time to time, in anyother state to the extent the same is applicable law);

 

(4)                                  any sale madepursuant to the provisions of this paragraph shall be deemed to have been apublic sale conducted in a commercially reasonable manner if heldcontemporaneously with and upon the same notice as required for the sale of theProperty under power of sale as provided in paragraph (c) above in this Section 5.1;

 

(5)                                  in the event ofa foreclosure sale, whether made by Trustee under the terms hereof, or underjudgment of a court, the Collateral and the other Property may, at the optionof Lender, be sold as a whole;

 

(6)                                  it shall not benecessary that Lender take possession of the Collateral or any part thereofprior to the time that any sale pursuant to the provisions of this Section isconducted and it shall not be necessary that the Collateral or any part thereofbe present at the location of such sale;

 

(7)                                  with respect toapplication of proceeds from disposition of the Collateral under this Section 5.1hereof, the costs and expenses incident to disposition shall include thereasonable expenses of retaking, holding, preparing for sale or lease, selling,leasing and the like and the reasonable attorneys’ fees and legal expenses(including, without limitation, the allocated costs for in-house legalservices) incurred by Lender;

 

(8)                                  any and allstatements of fact or other recitals made in any bill of sale or assignment orother instrument evidencing any foreclosure sale hereunder as to nonpayment ofthe Secured Indebtedness or as to the occurrence of any default, or as toLender having declared all of such indebtedness to be due and payable, or as tonotice of 

 

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time, place and terms ofsale and of the properties to be sold having been duly given, or as to anyother act or thing having been duly done by Lender, shall be taken as primafacie evidence of the truth of the facts so stated and recited;

 

(9)                                  Lender mayappoint or delegate any one or more persons as agent to perform any act or actsnecessary or incident to any sale held by Lender, including the sending ofnotices and the conduct of the sale, but in the name and on behalf of Lender;

 

(10)                            Lender maycomply with any applicable Laws in connection with a disposition of theCollateral, and such compliance will not be considered to affect adversely thecommercial reasonableness of any sale of the Collateral;

 

(11)                            Lender may sellthe Collateral without giving any warranties as to the Collateral, and specificallydisclaim all warranties including, without limitation, warranties relating totitle, possession, quiet enjoyment and the like, and all warranties of quality,merchantability and fitness for a specific purpose, and this procedure will notbe considered to affect adversely the commercial reasonableness of any sale ofthe Collateral;

 

(12)                            Grantoracknowledges that a private sale of the Collateral may result in less proceedsthan a public sale (but such acknowledgement does not authorize a private saleexcept when allowed by the UCC); and

 

(13)                            Grantoracknowledges that the Collateral may be sold at a loss to Grantor, and that, insuch event, Lender shall have no liability or responsibility to Grantor forsuch loss so long as Lender has acted as allowed by this Mortgage, the UCC andother applicable Laws.

 

(e)                                  Lawsuits.  Lender may, to the fullest extent permittedby applicable Law, proceed by a suit or suits in equity or at law, whether forcollection of the Secured Indebtedness, the specific performance of anycovenant or agreement herein contained or in aid of the execution of any powerherein granted, or for any foreclosure hereunder or for the sale of theProperty under the judgment or decree of any court or courts of competentjurisdiction.

 

(f)                                    Entry onProperty.  Lender isauthorized, prior or subsequent to the institution of any foreclosureproceedings, to the fullest extent permitted by applicable Law subject to therights of the administrative agent and/or lenders in respect of the Senior Loan,the Commercial Loan or the Senior DOTs, as applicable, and without duplicationof Lender’s rights under the Senior Mezzanine DOT or other Senior MezzanineLoan Documents, to enter upon the Property, or any part thereof, and to takepossession of the Property and all books and records, and all recorded data ofany kind or nature, regardless of the medium of recording including, withoutlimitation, all software, writings, plans, specifications and schematicsrelating thereto, and to exercise without interference from Grantor any and allrights which Grantor has with respect to the management, possession, operation,protection or preservation of the Property. Lender shall not be deemed to have taken possession of the Property orany part thereof except upon the exercise of its right to do so, and then onlyto the extent evidenced by its demand and overt act 

 

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specifically for suchpurpose.  All reasonable costs, expensesand liabilities of every character incurred by Lender in managing, operating,maintaining, protecting or preserving the Property shall constitute a demandobligation of Grantor (which obligation Grantor hereby promises to pay) toLender pursuant to this Mortgage.  Ifnecessary to obtain the possession provided for above, Lender may invoke anyand all legal remedies to dispossess Grantor. In connection with any action taken by Lender pursuant to this Section,Lender shall not be liable for any loss sustained by Grantor resulting from anyfailure to let the Property or any part thereof, or from any act or omission ofLender in managing the Property unless such loss is caused by the grossnegligence or willful misconduct of Lender, nor shall Lender be obligated toperform or discharge any obligation, duty or liability of Grantor arising underany lease or other agreement relating to the Property or arising under anyPermitted Encumbrance or otherwise arising. Grantor hereby assents to, ratifies and confirms any and all actions ofLender with respect to the Property taken under this Section unless by thegross negligence or willful misconduct of Lender.

 

(g)                                 Receiver.  Subject to the rights of the administrativeagent and/or lenders in respect of the Senior Loan, the Commercial Loan or theSenior DOTs, as applicable, and without duplication of Lender’s rights underthe Senior Mezzanine DOT or other Senior Mezzanine Loan Documents, Lender shallas a matter of right be entitled to the appointment of a receiver or receiversfor all or any part of the Property whether such receivership be incident to aproposed sale (or sales) of such property or otherwise, and without regard tothe value of the Property or the solvency of any person or persons liable forthe payment of the Secured Indebtedness, and Grantor does hereby irrevocablyconsent to the appointment of such receiver or receivers, waives notice of suchappointment, of any request therefor or hearing in connection therewith, andany and all defenses to such appointment, agrees not to oppose any applicationtherefor by Lender, and agrees that such appointment shall in no manner impair,prejudice or otherwise affect the rights of Lender to application of Rents asprovided in this Mortgage.  Nothingherein is to be construed to deprive Lender of any other right, remedy orprivilege it may have under the Law to have a receiver appointed.  Any money advanced by Lender in connectionwith any such receivership shall be a demand obligation (which obligationGrantor hereby promises to pay) owing by Grantor to Lender pursuant to thisMortgage.

 

(h)                                 Termination ofCommitment to Lend.  Lender mayterminate any commitment or obligation to lend or disburse funds under any LoanDocument.

 

(i)                                     Other Rightsand Remedies.  Lender mayexercise any and all other rights and remedies which Lender may have under theLoan Documents, or at law or in equity or otherwise.

 

Section 5.2.                                   Proceeds ofForeclosure.  Theproceeds of any sale held by Trustee or Lender or any receiver or publicofficer in foreclosure of the liens and security interests evidenced herebyshall be applied in accordance with the requirements of applicable Laws and tothe extent consistent therewith, FIRST, to the payment of all necessary costsand expenses incident to such foreclosure sale, including but not limited toall reasonable attorneys’ fees and legal expenses, advertising costs,auctioneer’s fees, costs of title rundowns and lien searches, inspection fees,appraisal costs, fees for professional services, environmental assessment and 

 

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remediation fees, all courtcosts and charges of every character insurance fees, costs of repairs,maintenance, inspection and testing fees, receivers and management fees,leasing and sales commissions, advertising costs and expenses, taxes andassessments, surveys, engineering studies and reports, engineering fees andexpenses, soils tests, space planning costs and expenses, contractors fees, allother costs incurred by Lender to maintain, preserve and protect the Property(not exceeding 5% of the gross proceeds of such sale), and to the payment ofthe other Secured Indebtedness, including specifically without limitation theprincipal, accrued interest and attorneys’ fees due and unpaid on the Notes andthe amounts due and unpaid and owed to Lender under the Mezzanine LoanAgreement, this Mortgage, the Environmental Indemnity, or any other LoanDocument, the order and manner of application to the items in this clause FIRSTto be in the sole discretion of Lender; and SECOND, the remainder, if any thereshall be, shall be paid to Grantor, or to Grantor’s heirs, devisees,representatives, successors or assigns, or such other persons (including theholder or beneficiary of any inferior lien) as may be entitled thereto by Law;provided, however, that if Lender is uncertain which person or persons are soentitled, Lender may interplead such remainder in any court of competentjurisdiction, and the amount of any reasonable attorneys’ fees, court costs andexpenses incurred in such action shall be a part of the Secured Indebtednessand shall be reimbursable (without limitation) from such remainder.

 

Section 5.3.                                   Lender asPurchaser.  Lendershall have the right to become the purchaser at any sale held by Trustee orsubstitute or successor or by any receiver or public officer or at any publicsale, and Lender shall have the right to credit upon the amount of Lender’ssuccessful bid, to the extent necessary to satisfy such bid, all or any part ofthe Secured Indebtedness in such manner and order as Lender may elect.

 

Section 5.4.                                   Foreclosure asto Matured Debt.  Lendershall have the right to proceed with foreclosure (judicial or nonjudicial) ofthe liens and security interests hereunder without declaring the entire SecuredIndebtedness due, and in such event any such foreclosure sale may be madesubject to the unmatured part of the Secured Indebtedness; and any such saleshall not in any manner affect the unmatured part of the Secured Indebtedness,but as to such unmatured part this Mortgage shall remain in full force andeffect just as though no sale had been made. The proceeds of such sale shall be applied as provided in Section 5.2hereof except that the amount paid under clause FIRST thereof shall beonly the matured portion of the Secured Indebtedness the remainder, if any,shall be applied as provided in clause SECOND of Section 5.2hereof.  Several sales may be madehereunder without exhausting the right of sale for any unmatured part of the SecuredIndebtedness.

 

Section 5.5.                                   RemediesCumulative.  All rightsand remedies provided for herein and in any other Loan Document are cumulativeof each other and of any and all other rights and remedies existing at law orin equity, and Trustee and Lender shall, in addition to the rights and remediesprovided herein or in any other Loan Document, be entitled to avail themselvesof all such other rights and remedies as may now or hereafter exist at law orin equity for the collection of the Secured Indebtedness and the enforcement ofthe covenants herein and the foreclosure of the liens and security interestsevidenced hereby, and the resort to any right or remedy provided for hereunderor under any other Loan Document or provided for by law or in equity shall not 

 

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prevent the concurrent orsubsequent employment of any other appropriate right or rights or remedy orremedies.

 

Section 5.6.                                   Discretion asto Security.  Lender mayresort to any security given by this Mortgage or to any other security nowexisting or hereafter given to secure the payment of the Secured Indebtedness,in whole or in part, and in such portions and in such order as may seem best toLender in its sole and uncontrolled discretion (but subject to any agreementsbetween Lender applicable thereto in the Mezzanine Loan Agreement), and anysuch action shall not in anywise be considered as a waiver of any of therights, benefits, liens or security interests evidenced by this Mortgage.

 

Section 5.7.                                   Grantor’sWaiver of Certain Rights.  Tothe full extent Grantor may do so, and to the fullest extent permitted byapplicable Law, Grantor agrees that Grantor will not at any time insist upon,plead, claim or take the benefit or advantage of any law now or hereafter inforce providing for any appraisement, valuation, stay, extension or redemption,homestead, moratorium, reinstatement, marshaling or forbearance, and Grantor,for Grantor, Grantor’s heirs, devisees, representatives, successors andassigns, and for any and all persons ever claiming any interest in theProperty, to the extent permitted by applicable Law, hereby waives and releasesall rights of redemption, valuation, appraisement, stay of execution, notice ofintention to mature or declare due the whole of the Secured Indebtedness,notice of election to mature or declare due the whole of the SecuredIndebtedness and all rights to a marshaling of assets of Grantor, including theProperty, or to a sale in inverse order of alienation in the event offoreclosure of the liens and/or security interests hereby created.  Grantor shall not have or assert any rightunder any statute or rule of Law pertaining to the marshaling of assets,sale in inverse order of alienation, the exemption of homestead, theadministration of estates of decedents, or other matters whatsoever to defeat,reduce or affect the right of Lender under the terms of this Mortgage to a saleof the Property for the collection of the Secured Indebtedness without anyprior or different resort for collection, or the right of Lender under theterms of this Mortgage to the payment of the Secured Indebtedness out of theproceeds of sale of the Property in preference to every other claimantwhatsoever.  Grantor waives any right orremedy which Grantor may have or be able to assert pursuant to any provision ofany statute or rule of law, pertaining to the rights and remedies ofsureties.  If any law referred to in thisSection and now in force, of which Grantor or Grantor’s heirs, devisees,representatives, successors or assigns or any other persons claiming anyinterest in the Property might take advantage despite this Section, shallhereafter be repealed or cease to be in force, such law shall not thereafter bedeemed to preclude the application of this Section.

 

Section 5.8.                                   Delivery ofPossession After Foreclosure.  Subject to the rights of the administrativeagent and/or lenders in respect of the Senior Loan, the Commercial Loan or theSenior DOTs, as applicable, and without duplication of Lender’s rights underthe Senior Mezzanine DOT or other Senior Mezzanine Loan Documents, in the eventthere is a foreclosure sale hereunder and at the time of such sale, Grantor orGrantor’s heirs, devisees, representatives, or successors as owners of theProperty are occupying or using the Property, or any part thereof, each and allshall immediately become the tenant of the purchaser at such sale, whichtenancy shall be a tenancy from day to day, terminable at the will of purchaser,at a reasonable rental per 

 

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day based upon the value ofthe property occupied, such rental to be due daily to the purchaser; and to theextent permitted by applicable Law, the purchaser at such sale shall,notwithstanding any language herein apparently to the contrary, have the soleoption to demand immediate possession following the sale or to permit theoccupants to remain as tenants at will.  Subjectto the rights of the administrative agent and/or lenders in respect of theSenior Loan, the Commercial Loan or the Senior DOTs, as applicable, and withoutduplication of Lender’s rights under the Senior Mezzanine DOT or other SeniorMezzanine Loan Documents, after such foreclosure, any Leases to tenants orsubtenants that are subject to this Mortgage (either by their date, theirexpress terms, or by agreement of the tenant or subtenant) shall, at the soleoption of Lender or any purchaser at such sale, either (i) continue infull force and effect, and the tenant(s) or subtenant(s) thereunderwill, upon request, attorn to and acknowledge in writing to the purchaser orpurchasers at such sale or sales as landlord thereunder, or (ii) uponnotice to such effect from Lender, the Trustees or any purchaser or purchasers,terminate within thirty (30) days from the date of sale.  Subject to the rights of the administrativeagent and/or lenders in respect of the Senior Loan, the Commercial Loan or theSenior DOTs, as applicable, and without duplication of Lender’s rights underthe Senior Mezzanine DOT or other Senior Mezzanine Loan Documents, in the eventthe tenant fails to surrender possession of said property upon demand, thepurchaser shall be entitled to institute and maintain a summary action forpossession of the Property (such as an action for forcible detainer) in anycourt having jurisdiction.

 

**ARTICLE 6**

 

**Miscellaneous**

 

Section 6.1.                                   Scope ofMortgage.  ThisMortgage is a deed of trust and mortgage of both real and personal property, asecurity agreement, an assignment of rents and leases, a financing statementand fixture filing and a collateral assignment, and also covers proceeds andfixtures.

 

Section 6.2.                                   Effective as aFinancing Statement.  ThisMortgage shall be effective as a financing statement filed as a fixture filingwith respect to all fixtures included within the Property and is to be filedfor record in the real estate records of each county where any part of theProperty (including said fixtures) is situated. This Mortgage shall also be effective as a financing statement coveringas-extracted collateral (including oil and gas), accounts and generalintangibles under the UCC, as, in effect from time to time, and the UniformCommercial Code, as in effect from time to time, in any other state where theProperty is situated which will be financed at the wellhead or minehead of thewells or mines located on the Property and is to be filed for record in thereal estate records of each county where any part of the Property is situated.  This Mortgage shall also be effective as afinancing statement covering any other Property and may be filed in any otherappropriate filing or recording office. The mailing address of Grantor is the address of Grantor set forth atthe end of this Mortgage and the address of Lender from which informationconcerning the security interests hereunder may be obtained is the address ofLender set forth at the end of this Mortgage. A carbon, photographic or other reproduction of this Mortgage or of anyfinancing statement relating to this Mortgage shall be sufficient as afinancing statement for any of the purposes referred to in this Section.

 

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Section 6.3.            Notice to Account Debtors.  Subject to the rights of the administrativeagent and/or lenders in respect of the Senior Loan, the Commercial Loan or theSenior DOTs, as applicable, in addition to the rights granted elsewhere in thisMortgage (but without duplication of any of Lender’s rights under the SeniorMezzanine DOT or other Senior Mezzanine Loan Documents), Lender may, from andafter the occurrence of an Event of Default, so long as such Event of Defaultremains uncured hereunder, notify the account debtors or obligors of anyaccounts, chattel paper, general intangibles, negotiable instruments or otherevidences of indebtedness included in the Collateral to pay Lender directly.

 

Section 6.4.            Waiver by Lender.  Lender may at any time and from time to timeby a specific writing intended for the purpose: (a) waive compliance byGrantor with any covenant herein made by Grantor to the extent and in themanner specified in such writing; (b) consent to Grantor’s doing any actwhich hereunder Grantor is prohibited from doing, or to Grantor’s failing to doany act which hereunder Grantor is required to do, to the extent and in themanner specified in such writing; (c) release any part of the Property orany interest therein from the lien and security interest of this Mortgage,without the joinder of Trustee; or (d) release any party liable, eitherdirectly or indirectly, for the Secured Indebtedness or for any covenant hereinor in any other Loan Document, without impairing or releasing the liability ofany other party.  No such act shall inany way affect the rights or powers of Lender or Trustee hereunder except tothe extent specifically agreed to by Lender in such writing.

 

Section 6.5.            No Impairment of Security.  The lien, security interest and othersecurity rights of Lender hereunder or under any other Loan Document shall notbe impaired by any indulgence, moratorium or release granted by Lenderincluding, but not limited to, any renewal, extension or modification whichLender may grant with respect to any Secured Indebtedness, or any surrender,compromise, release, renewal, extension, exchange or substitution which Lendermay grant in respect of the Property, or any part thereof or any interesttherein, or any release or indulgence granted to any endorser, guarantor orsurety of any Secured Indebtedness.  Thetaking of additional security by Lender shall not release or impair the lien,security interest or other security rights of Lender hereunder or affect theliability of Grantor or of any endorser, guarantor or surety, or improve theright of any junior lienholder in the Property (without implying hereby Lender’sconsent to any junior lien).

 

Section 6.6.            Acts Not Constituting Waiver byLender.  Lender may waive any Eventof Default without waiving any other prior or subsequent Event of Default.  Lender may remedy any Event of Defaultwithout waiving the Event of Default remedied. Neither failure by Lender to exercise, nor delay by Lender inexercising, nor discontinuance of the exercise of any right, power or remedy(including but not limited to the right to accelerate the maturity of theSecured Indebtedness or any part thereof) upon or after any Event of Defaultshall be construed as a waiver of such Event of Default or as a waiver of theright to exercise any such right, power or remedy at a later date.  No single or partial exercise by Lender ofany right, power or remedy hereunder shall exhaust the same or shall precludeany other or further exercise thereof, and every such right, power or remedyhereunder may be exercised at any time and from time to time.  No modification or waiver of any provisionhereof nor consent to any departure by Grantor therefrom shall in any event beeffective unless the same shall be in writing and signed 

 

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byLender and then such waiver or consent shall be effective only in the specificinstance, for the purpose for which given and to the extent thereinspecified.  No notice to nor demand onGrantor in any case shall of itself entitle Grantor to any other or furthernotice or demand in similar or other circumstances.  Remittances in payment of any part of theSecured Indebtedness other than in the required amount in immediately availableU.S. funds shall not, regardless of any receipt or credit issued therefor,constitute payment until the required amount is actually received by Lender inimmediately available U.S. funds and shall be made and accepted subject to thecondition that any check or draft may be handled for collection in accordancewith the practice of the collecting bank or banks.  Acceptance by Lender of any payment in anamount less than the amount then due on any Secured Indebtedness shall bedeemed an acceptance on account only and shall not in any way excuse theexistence of an Event of Default hereunder notwithstanding any notation on oraccompanying such partial payment to the contrary.

 

Section 6.7.            Grantor’s Successors.  If the ownership of the Property or any partthereof becomes vested in a person other than Grantor, Lender may, withoutnotice to Grantor, deal with such successor or successors in interest withreference to this Mortgage and to the Secured Indebtedness in the same manneras with Grantor, without in any way vitiating or discharging Grantor’sliability hereunder or for the payment of the indebtedness or performance ofthe obligations secured hereby.  Notransfer of the Property, no forbearance on the part of Lender, and noextension of the time for the payment of the Secured Indebtedness given byLender shall operate to release, discharge, modify, change or affect, in wholeor in part, the liability of Grantor hereunder. Grantor agrees that it shall be bound by any modification of thisMortgage made by Lender and any subsequent owner of the Property, with orwithout notice to Grantor, and no such modifications shall impair theobligations of Grantor under this Mortgage. Nothing in this Section shall be construed to imply Lender’sconsent to any transfer of the Property.

 

Section 6.8.            Place of Payment; Forum; Waiverof Jury Trial.  All SecuredIndebtedness which may be owing hereunder at any time by Grantor shall bepayable at the address of Lender set forth at the end of this Mortgage.  EACH PARTY HEREBY IRREVOCABLY SUBMITSGENERALLY AND UNCONDITIONALLY FOR ITSELF AND IN RESPECT OF ITS PROPERTY TO THENON-EXCLUSIVE JURISDICTION OF ANY STATE COURT, OR ANY UNITED STATES FEDERALCOURT, SITTING IN THE CITY OF DALLAS, STATE OF TEXAS, AND IN THE COUNTY INWHICH THE LAND IS LOCATED TO THE EXTENT OF ACTIONS REQUIRED TO BE MAINTAINEDWHERE THE LAND IS LOCATED, OVER ANY SUIT, ACTION OR PROCEEDING ARISING OUT OFOR RELATING TO THIS MORTGAGE OR THE SECURED INDEBTEDNESS.  EACH PARTY HEREBY IRREVOCABLY WAIVES, TO THEFULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION THAT THE PARTY MAY NOW ORHEREAFTER HAVE TO THE LAYING OF VENUE IN ANY SUCH COURT AND ANY CLAIM THAT ANYSUCH COURT IS AN INCONVENIENT FORUM. Each Party hereby agrees and consents that, in addition to any methodsof service of process provided for under applicable law, all service of processin any such suit, action or proceeding in any such court may be made bycertified or registered mail, return receipt requested, directed to the otherparty at its address stated at the end of this Mortgage, or at a subsequentaddress of which the other parties received actual notice in accordance withthis Mortgage.  Nothing herein shallaffect the right of a party to serve process 

 

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inany manner permitted by Law.  TO THEFULLEST EXTENT PERMITTED BY LAW, EACH PARTY KNOWINGLY AND FREELY WAIVES THERIGHT TO TRIAL BY JURY IN CONNECTION WITH ANY ACTION, SUIT OR OTHER PROCEEDINGARISING OUT OF OR RELATING TO THIS MORTGAGE.  EACH PARTY ACKNOWLEDGES THAT THE RIGHT TO TRIAL BY JURY IS AN IMPORTANTRIGHT, THAT ITS WAIVER OF THIS RIGHT IS A NEGOTIATED TERM OF THE LOAN AND THATIT HAS HAD THE OPPORTUNITY TO CONSULT WITH LEGAL COUNSEL OF ITS CHOOSING WITHRESPECT TO THIS WAIVER.

 

Section 6.9.            Subrogation to Existing Liens;Vendor’s Lien. To the extent that proceeds of the Notes are used to payindebtedness secured by any outstanding lien, security interest, charge orprior encumbrance against the Property, Lender shall be subrogated to any andall rights, security interests, and liens and charges or encumbrances owned byany owner or holder of such outstanding liens, security interests, charges orencumbrances, however remote, irrespective of whether said liens, security interests,charges or encumbrances are released, and all of the same are recognized asvalid and subsisting and are renewed and continued and merged herein to securethe Secured Indebtedness, but the terms and provisions of this Mortgage shallgovern and control the manner and terms of enforcement of the liens, securityinterests, charges and encumbrances to which Lender is subrogatedhereunder.  It is expressly understoodthat, in consideration of the payment of such indebtedness by Lender, Grantorhereby waives and releases all demands and causes of action for offsets andpayments in connection with the said indebtedness.  If all or any portion of the proceeds of theloan evidenced by the Notes or of any other Secured Indebtedness has beenadvanced for the purpose of paying the purchase price for all or a part of theProperty, no vendor’s lien or purchase money lien is waived.  Lender may foreclose under this Mortgage orunder the vendor’s lien or purchase money lien without waiving the other or mayforeclose under both.

 

Section 6.10.          Application of Payments to CertainIndebtedness.  If any part of theSecured Indebtedness cannot be lawfully secured by this Mortgage or if any partof the Property cannot be lawfully subject to the lien and security interest hereofto the full extent of such indebtedness, then all payments made shall beapplied on said indebtedness first in discharge of that portion thereof whichis not secured by this Mortgage.

 

Section 6.11.          Nature of Loan; Compliance withUsury Laws.  The loan evidenced bythe Notes is being made solely for the purpose of carrying on or acquiring abusiness or commercial enterprise.  It isthe intent of Grantor and Lender to conform to and contract in strictcompliance with applicable usury law from time to time in effect.  All agreements between Lender and Grantor arehereby limited by the provisions of this Section which shall override andcontrol all such agreements, whether now existing or hereafter arising.  In no way, nor in any event or contingency(including but not limited to prepayment, default, demand for payment, oracceleration of the maturity of any obligation), shall the interest taken,reserved, contracted for, charged, chargeable, or received under this Mortgage,the Notes or any other Loan Document or otherwise, exceed the maximumnonusurious amount permitted by applicable law (the “Maximum Amount”).  If, from any possible construction of thisMortgage, interest would otherwise be payable in excess of the Maximum Amount,any such construction shall be subject 

 

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tothe provisions of this Section and this Mortgage shall ipso facto beautomatically reformed and the interest payable shall be automatically reducedto the Maximum Amount, without the necessity of execution of any amendment ornew document.  If Lender shall everreceive anything of value which is characterized as interest under applicablelaw and which would apart from this provision be in excess of the Maximum Amount,an amount equal to the amount which would have been excessive interest shall,without penalty, be applied to the reduction of the principal amount owing onthe Secured Indebtedness in the inverse order of its maturity and not to thepayment of interest, or refunded to Borrower or Grantor or the other payorthereof if and to the extent such amount which would have been excessiveexceeds such unpaid principal.  The rightto accelerate maturity of the Notes or any other Secured Indebtedness does notinclude the right to accelerate any interest which has not otherwise accrued onthe date of such acceleration, and Lender does not intend to charge or receiveany unearned interest in the event of acceleration.  All interest paid or agreed to be paid toLender shall, to the extent permitted by applicable law, be amortized,prorated, allocated and spread throughout the full stated term (including anyrenewal or extension) of such indebtedness so that the amount of interest onaccount of such indebtedness does not exceed the Maximum Amount.  As used in this Section, the term “applicablelaw” shall mean the laws of the State where the Property is located or wherethe Secured Indebtedness is payable, or the federal laws of the United Statesapplicable to this transaction, whichever laws allow the greatest interest, assuch laws now exist or may be changed or amended or come into effect in thefuture.

 

Section 6.12.          Substitute Trustee.  The Lender may, from time to time, by aninstrument in writing, substitute a successor or successors to any trusteenamed herein or acting hereunder, which instrument, executed and acknowledgedby Lender and recorded in the office of the recorder of the county or countieswhere the Property is situated, shall be conclusive proof of propersubstitution of such successor trustee or trustees, who shall, withoutconveyances from the trustee predecessor, succeed in all its title, estate,rights, powers and duties.  Suchinstrument shall contain the name and address of the new trustee. The procedureherein provided for substitution of trustees shall not be exclusive of otherprovisions for substitution provided by law.

 

Section 6.13.          No Liability of Trustee.  The Trustee shall not be liable for any errorof judgment or act done by Trustee in good faith, or be otherwise responsibleor accountable under any circumstances whatsoever, except for Trustee’s grossnegligence or willful misconduct.  TheTrustee shall have the right to rely on any instrument, document or signatureauthorizing or supporting any action taken or proposed to be taken by himhereunder, believed by him in good faith to be genuine.  All moneys received by Trustee shall, untilused or applied as herein provided, be held in trust for the purposes for whichthey were received, but need not be segregated in any manner from any othermoneys (except to the extent required by Law), and Trustee shall be under noliability for interest on any moneys received by him hereunder.  Grantor hereby ratifies and confirms any andall acts which the herein named Trustee or his successor or successors,substitute or substitutes, in this trust, shall do lawfully by virtue hereof.Grantor will reimburse Trustee for, and save him harmless against, any and allliability and expenses which may be incurred by him in the performance of hisduties, and except those resulting from Trustee’s gross negligence or willfulmisconduct.  The foregoing indemnityshall 

 

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notterminate upon discharge of the Secured Indebtedness or foreclosure, or releaseor other termination, of this Mortgage.

 

Section 6.14.          Releases.  If all of the Secured Indebtedness be paid asthe same becomes due and payable and all of the covenants, warranties,undertakings and agreements made in this Mortgage are kept and performed andall obligations, if any, of Lender for further advances have been terminated orGrantor is entitled to a reconveyance of this Mortgage in accordance with theterms of the Loan Documents, then, and in that event only, all rights underthis Mortgage shall terminate (except to the extent expressly provided hereinwith respect to indemnifications, representations and warranties and otherrights which are to continue following the release hereof) and the Propertyshall become wholly clear of the liens, security interests, conveyances andassignments evidenced hereby, and such liens and security interests shall bereleased by Lender in due form at Grantor’s cost.  Without limitation, all provisions herein forindemnity of Lender or Trustee shall survive discharge of the SecuredIndebtedness and any foreclosure, release or termination of this Mortgage.

 

Section 6.15.          Notices. All notices, requests,consents, demands and other communications required or which any party desiresto give hereunder shall be in writing and, unless otherwise specificallyprovided herein, shall be deemed sufficiently given or furnished if deliveredby personal delivery, by nationally recognized overnight courier service, or byregistered or certified United States mail, postage prepaid, addressed to theparty to whom directed at the addresses specified in this Mortgage (unlesschanged by similar notice in writing given by the particular party whoseaddress is to be changed) or by facsimile. Any such notice or communication shall be deemed to have been giveneither at the time of personal delivery or, in the case of courier or mail, asof the date of first attempted delivery at the address and in the mannerprovided herein, or, in the case of facsimile, upon receipt; provided that,service of a notice required by NRS Section 107.080 shall be consideredcomplete when the requirements of that statute are met.  Notwithstanding the foregoing, no notice ofchange of address shall be effective except upon receipt.  This Section shall not be construed inany way to affect or impair any waiver of notice or demand provided in thisMortgage or to require giving of notice or demand to or upon any person in anysituation or for any reason.

 

Section 6.16.          Invalidity of Certain Provisions.  A determination that any provision of thisMortgage is unenforceable or invalid shall not affect the enforceability orvalidity of any other provision and the determination that the application ofany provision of this Mortgage to any person or circumstance is illegal orunenforceable shall not affect the enforceability or validity of such provisionas it may apply to other persons or circumstances.

 

Section 6.17.          Gender; Titles; Construction.  Within this Mortgage, words of any gendershall be held and construed to include any other gender, and words in thesingular number shall be held and construed to include the plural, unless thecontext otherwise requires.  Titlesappearing at the beginning of any subdivisions hereof are for convenience only,do not constitute any part of such subdivisions, and shall be disregarded inconstruing the language contained in such subdivisions.  The use of the words “herein,” “hereof,” “hereunder”and other similar compounds of the word “here” shall refer to this entireMortgage and not to any particular 

 

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Article,Section, paragraph or provision.  Theterm “person” and words importing persons as used in this Mortgage shallinclude firms, associations, partnerships (including limited partnerships),joint ventures, trusts, corporations, limited liability companies and otherlegal entities, including public or governmental bodies, agencies orinstrumentalities, as well as natural persons.

 

Section 6.18.          Reporting Compliance.  Grantor agrees to comply with any and allreporting requirements applicable to this Mortgage which are imposed upon it byLaw, including but not limited to The International Investment Survey Act of1976, The Agricultural Foreign Investment Disclosure Act of 1978, The ForeignInvestment in Real Property Tax Act of 1980 and the Tax Reform Act of 1984 andfurther agrees upon request of Lender to furnish Lender with evidence of suchcompliance.

 

Section 6.19.          Reserved.

 

Section 6.20.          Grantor.  Unless the context clearly indicatesotherwise, as used in this Mortgage, “Grantor” means the grantors named in Section 1.2hereof or any of them.  The obligationsof Grantor hereunder shall be joint and several.  If any Grantor, or any signatory who signs onbehalf of any Grantor, is a corporation, partnership or other legal entity,Grantor, represents and warrants to Lender that this instrument is executed,acknowledged and delivered by Grantor’s duly authorized representatives.  If Grantor is an individual, no power ofattorney granted by Grantor herein shall terminate on Grantor’s disability.

 

Section 6.21.          Execution; Recording.  This Mortgage has been executed in severalcounterparts, all of which are identical, and all of which counterpartstogether shall constitute one and the same instrument.  The date or dates reflected in theacknowledgments hereto indicate the date or dates of actual execution of thisMortgage, but such execution is as of the date shown on the first page hereof,and for purposes of identification and reference the date of this Mortgageshall be deemed to be the date reflected on the first page hereof.  Grantor will cause this Mortgage and allamendments and supplements thereto and substitutions therefor and all financingstatements and continuation statements relating thereto to be recorded, filed,re-recorded and refiled in such manner and in such places as Trustee or Lendershall reasonably request and will pay all such recording, filing, re-recordingand refiling taxes, fees and other charges.

 

Section 6.22.          Successors and Assigns.  The terms, provisions, covenants andconditions hereof shall be binding upon Grantor, and the heirs, devisees,representatives, successors and assigns of Grantor, and shall inure to thebenefit of Trustee and Lender shall constitute covenants running with theLand.  All references in this Mortgage toGrantor shall be deemed to include all such heirs, devisees, representatives,successors and assigns of Grantor.

 

Section 6.23.          Modification or Termination.  The Loan Documents may only be modified orterminated by a written instrument or instruments intended for that purpose andexecuted by the party against which enforcement of the modification ortermination is asserted.  Any allegedmodification or termination which is not so documented shall not be effectiveas to any party.

 

DEEDOF TRUST — Page 35

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Section 6.24.          No Partnership, Etc.  The relationship between Lender and Grantoris solely that of lender and owner of collateral.  Lender does not have a fiduciary or otherspecial relationship with Grantor. Nothing contained in the Loan Documents is intended to create anypartnership, joint venture, association or special relationship between Grantorand Lender or in any way make Lender a co-principal with Grantor with referenceto the Property.  All agreed contractualduties between or among Lender, Trustee and Grantor are set forth herein andany additional implied covenants or duties are hereby disclaimed.  Any inferences to the contrary of any of theforegoing are hereby expressly negated.

 

Section 6.25.          Applicable Law.  THIS MORTGAGE, AND ITS VALIDITY, ENFORCEMENTAND INTERPRETATION, SHALL BE GOVERNED BY AND CONSTRUED, INTERPRETED ANDENFORCED IN ACCORDANCE WITH AND PURSUANT TO THE LAWS OF THE STATE OF NEVADA(WITHOUT REGARD TO ANY CONFLICT OF LAWS PRINCIPLES) AND APPLICABLE UNITEDSTATES FEDERAL LAW, EXCEPT AS OTHERWISE REQUIRED BY MANDATORY PROVISIONS OF LAWAND EXCEPT TO THE EXTENT THAT REMEDIES PROVIDED BY THE LAWS OF ANY JURISDICTIONOTHER THAN THE STATE OF NEVADA ARE GOVERNED BY THE LAWS OF SUCH OTHERJURISDICTION.

 

Section 6.26.          Construction Mortgage.  This Mortgage constitutes a “constructionmortgage” as defined in NRS 104.9334 to the extent that it secures anobligation incurred for the construction of the Improvements, including theacquisition cost of the Land.

 

Section 6.27.          Entire Agreement.  This Mortgage, together with the LoanDocuments to which Grantor is a party, constitute the entire understanding andagreement between Grantor and Lender with respect to the transactions arisingin connection with the liens and security interests granted hereby andsupersede all prior written or oral understandings and agreements betweenGrantor and Lender with respect to such matters.  Grantor hereby acknowledges that, except asincorporated in writing in the Loan Documents, there are not, and were not, andno persons are or were authorized by Lender to make, any representations,understandings, stipulations, agreements or promises, oral or written, withrespect to the matters addressed in the Loan Documents.

 

Section 6.28.          Adoptionof Statutory Covenants.  Thefollowing covenants, Nos. 6 (provided that a default, as referenced in suchcovenant, shall mean an Event of Default, as defined in Section 4.1 ofthis Mortgage), 7 (a reasonable), 8 (provided that the recital therein shall beprima facie proof of such default) and 9 of NRS Section 107.030, where notin conflict with the provisions of the Loan Documents, are hereby adopted andmade a part of this Mortgage.

 

THE WRITTEN LOAN DOCUMENTS REPRESENT THE FINALAGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OFPRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES.

 

THEREARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.

 

DEED OF TRUST — Page 36

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**[*Remainder of Page Intentionally Left Blank*]**

** **

 

DEED OF TRUST — Page 37

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INWITNESS WHEREOF, Grantor has executed this instrument under seal as of the datefirst written on page 1 hereof.

 

| The address of Grantor is:                                                    |   | GRANTOR:                                                                   |
|-------------------------------------------------------------------------------|--------|----------------------------------------------------------------------------|
|                                                                          |   |                                                                       |
| 2001 Bryan Street, Suite 3250

Dallas, Texas 75201  Attention: Tim Hogan |   | SW 132 ST. ROSE SENIOR BORROWER LLC,  a Delaware limited liability company |
| Telephone: (214) 922-8575                                                     |   | By:                                                                        | SW 131 St. Rose Mezzanine Borrower LLC, a Delaware |
| Facsimile: (214) 922-8553                                                     |   |                                                                       | limited liability company, its sole member |
|                                                                          |   |                                                                       |   |
|                                                                          |   |                                                                       | By: | SW 130 St. Rose Limited Partnership, a Delaware |
|                                                                          |   |                                                                       |   | limited partnership, its sole member |
|                                                                          |   |                                                                       |   |   |
|                                                                          |   |                                                                       |   | By: | SW 129 St. Rose Limited Partnership, a Delaware |
|                                                                          |   |                                                                       |   |   | limited partnership, its general partner |
|                                                                          |   |                                                                       |   |   |   |
|                                                                          |   |                                                                       |   |   | By: | SW 104 Development GP LLC, a Delaware |
|                                                                          |   |                                                                       |   |   |   | limited liability company, its general partner |
|                                                                          |   |                                                                       |   |   |   |   |
|                                                                          |   |                                                                       |   |   |   | By: | /s/ Timothy J. Hogan |   |
|                                                                          |   |                                                                       |   |   |   | Name:     Timothy J. Hogan |
|                                                                          |   |                                                                       |   |   |   | Title:       Vice President |

 

The address of Lender is:

 

Behringer Harvard St. RoseREIT, LLC

15601 Dallas Parkway, Suite 600

Addison, Texas  75001

Attention:  Chief Legal Officer

 

| STATE OF TEXAS   |   | § |
|------------------|--------|--------|
|             |   | § |
| COUNTY OF DALLAS |   | § |

 

Thisinstrument was acknowledged before me on December 30, 2008, by Timothy J.Hogan,  Vice President of SW 104Development GP LLC, a Delaware limited liability company, on behalf of suchcompany, as general partner of SW 129 St. Rose Limited Partnership, a Delawarelimited partnership, general partner of SW 130 St. Rose Limited Partnership, aDelaware limited partnership, sole member of SW 131 St. Rose Mezzanine BorrowerLLC, a Delaware limited liability company, sole member of SW 132 St. RoseSenior Borrower LLC, a Delaware limited liability company.

 

|   |   | /s/ Tai Lee                   |
|--------|--------|-------------------------------|
|   |   | Printed Name:                 | T. Lee |
|   |   | Notary Public, State of Texas |

 

DEED OF TRUST — Signature Page

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** **

**EXHIBITALAND**

** **

Allthat land situated in the County of Clark, State of Nevada, more particularlydescribed as follows:

 

**PARCEL1**:

 

TheNorth Half (N 1⁄2) of the Northwest Quarter (NW 1⁄4) of the Southwest Quarter (SW1⁄4) of the Northwest Quarter (NW 1⁄4) of Section 35, Township 22 South, Range61 East, M.D.B.&M., Clark County, Nevada.

 

**PARCEL2**:

 

TheSouth Half (S 1⁄2) of the Northeast Quarter (NE 1⁄4) of the Southwest Quarter (SW1⁄4) of the Northwest Quarter (NW 1⁄4) of Section 35, Township 22 South, Range61 East, M.D.B.&M.

 

**EXCEPTINGTHEREFROM** that portion lying within St. Rose Parkway.

 

**PARCEL3**:

 

Thatportion of the Northwest Quarter (NW 1⁄4) of Section 35, Township 22 South,Range 61 East, M.D.M., City of Henderson, Clark County, Nevada, moreparticularly described as follows:

 

TheSouth Half (S 1⁄2) of the Northwest Quarter (NW 1⁄4) of the Southwest Quarter (SW1⁄4) of the Northwest Quarter (NW 1⁄4) of said Section 35.

 

TOGETHERWITH:

 

Thoseportions of the North Half (N 1⁄2) of the South Half (S 1⁄2) of the SouthwestQuarter (SW 1⁄4) of the Northwest Quarter (NW 1⁄4) of said Section 35 lyingNorthwesterly of the Northwesterly right of way of St. Rose Parkway.

 

**PARCEL4**:

 

Beinga portion of the South Half (S 1⁄2) of the Southeast Quarter (SE 1⁄4) of theNorthwest Quarter (NW 1⁄4) of the Northwest Quarter (NW 1⁄4) of Section 35,Township 22 South, Range 61 East, M.D.B.&M., Clark County, Nevada.

 

TOGETHERWITH that portion of the North Half (N 1⁄2) of the Northeast Quarter (NE 1⁄4) ofthe Southwest Quarter (SW 1⁄4) of the Northwest Quarter (NW 1⁄4), also togetherwith that portion of the North Half (N 1⁄2) of the Northwest Quarter (NW 1⁄4) ofsaid Section 35, lying Northwesterly of St. Rose Parkway, furtherdescribed as follows:

 

DEED OF TRUST — EXHIBIT A — Page 1

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BEGINNINGat the Southeast (SE) corner of the Northwest Quarter (NW 1⁄4) of the NorthwestQuarter (NW 1⁄4) of said Section 35, said corner being marked by an aluminumcap marked “PLS 5269, 1994, NW 1/16”;

 

ThenceSouth 41°41’09” East,174.75 feet to the Northwesterly line of St. Rose Parkway as granted in Book250 as Document No. 202951, Official Records, Clark County, Nevada;

 

Thencealong said Northwesterly line, South 46°18’51” West, 297.97 feet toa point of intersection of said Northwesterly line with the South line of theNorth Half (N 1⁄2) of the Northeast Quarter (NE 1⁄4) of the Southwest Quarter (SW1⁄4) of the Northwest Quarter (NW 1⁄4) of said Section 35; Thence along thelines of said North Half (N 1⁄2) the following Three (3) courses: North 89°22’43” West,553.55 feet; North 00°33’34” West, 330.00 feet;South 89°22’04” East,663.09 feet to the POINT OF BEGINNING;

 

**EXCEPTINGTHEREFROM**:

 

Aportion of the South Half (S 1⁄2) of the Southeast Quarter (SE 1⁄4) of theNorthwest Quarter (NW 1⁄4) of the Northwest Quarter (NW 1⁄4) of said Section 35,described as follows:

 

BEGINNINGat the Southwest (SW) corner of the South Half (S 1⁄2) of the Southeast Quarter(SE 1⁄4) of the Northwest Quarter (NW 1⁄4) of the Northwest Quarter (NW 1⁄4) of said Section 35;Thence North 00°33’55” West,330.09 feet to the Northwest (NW) corner of the South Half (S 1⁄2) of theSoutheast Quarter (SE 1⁄4) of the Northwest Quarter (NW 1⁄4) of the NorthwestQuarter (NW 1⁄4) of said Section 35; Thence South 89°21’56” East,663.21 feet to the Northeast Corner of the South Half (S1/2) of the SoutheastQuarter (SE 1⁄4) of the Northwest Quarter (NW 1⁄4) of the Northwest Quarter (NW 1⁄4)of said Section 35; Thence South 00°32’39” East, 330.06 feet tothe Southeast (SE) corner of the South Half (S 1⁄2) of the Southeast Quarter (SE1⁄4) of the Northwest Quarter (NW 1⁄4) of the Northwest Quarter (NW 1⁄4) of said Section 35;Thence North 41°41’09” West,316.13 feet; Thence South 48°18’51” West, 153.68 feet tothe beginning of a 500 foot radius curve, concave Northwesterly; Thence alongsaid curve to the right, 369.29 feet through a central angle of 42°19’05” to thePOINT OF BEGINNING.

(DeedReference 20070720 / 2463 and 2464)

 

DEED OF TRUST — EXHIBIT A — Page 2

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** **

**EXHIBITBPERMITTED ENCUMBRANCES**

** **

1.                                       State, Countyand/or City taxes for the fiscal year 2008-2009 a lien not yet due and payable.

 

2.                                       Any taxes thatmay be due, but not assessed, for new construction which can be assessed on theunsecured property rolls, in the Office of the Clark County Assessor, perNevada Statute 361.260.

 

3.                                       Water rights,claims or title to water, whether or not shown by the public record.

 

4.                                       Mineral rights,reservations, easements and exclusions in patent from the United States of America:

 

Recorded:                                          January 24,1962 in Book 339

DocumentNo.:                273895, Official Records,Clark County, Nevada

Affects:                                                     Parcel 1

 

Saidpatent further reserves, and is subject to, a right-of-way not exceedingthirty-three (33) feet in width for roadway and public utility purposes to belocated along the boundaries of said land.

 

Theabove rights of way, not dedicated, have been vacated by an instrument recordedAugust 15, 2007 in Book 20070815, Instrument No. 0002160, OfficialRecords, Clark County, Nevada.

 

5.                                       Mineral rights,reservations, easements and exclusions in patent from the United States ofAmerica:

 

Recorded:                                          January 30,1962 in Book 340

DocumentNo.:                274775, Official Records,Clark County, Nevada.

Affects:                                                     A portion ofParcel 4

 

Saidpatent further reserves, and is subject to, a right-of-way not exceedingthirty-three (33) feet in width for roadway and public utility purposes to belocated along the boundaries of said land.

 

Theabove rights of way, not dedicated, have been vacated by an instrument recordedAugust 15, 2007 in Book 20070815, Instrument No. 0002160, OfficialRecords, Clark County, Nevada.

 

DEED OF TRUST — EXHIBIT B — Page 1

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6.                                       Mineral rights,reservations, easements and exclusions in patent from the United States ofAmerica:

 

Recorded:                                          February 10,1970 in Book 10

DocumentNo.:                7408, Official Records,Clark County, Nevada

Affects:                                                     Parcel 3 and aportion of Parcel 4

 

7.                                       Mineral rights,reservations, easements and exclusions in patent from the United States ofAmerica:

 

Recorded:                                          November 28,1979 in Book 1152

DocumentNo.:                1111857, Official Records,Clark County, Nevada

Affects:                                                     Parcel 2

 

Saidpatent further reserves, and is subject to, a right-of-way not exceedingthirty-three (33) feet in width for roadway and public utility purposes to belocated along the boundaries of said land.

 

Thereis also reserved a right of way for a Federal Aid Highway under the Act of November 9,1921 (42 Stat. 212).

 

Theabove rights of way, not dedicated, have been vacated by an instrument recordedAugust 15, 2007 in Book 20070815, Instrument No. 0002160, OfficialRecords, Clark County, Nevada.

 

8.                                       The terms,covenants, conditions and provisions as contained in an instrument, entitled “Cityof Henderson Zoning Resolution No. 3635”:

 

Recorded:                                          May 09,2007 in Book 20070509

DocumentNo.:                0002301, Official Records,Clark County, Nevada

 

9.                                       An Easementaffecting a portion of said land for the purpose stated herein, and incidentalpurposes:

 

InFavor of:                                  Cox CommunicationsLas Vegas, Inc.

For:                                                                           Cable andInformation Facilities

Recorded:                                          April 30,2008 in Book 20080430

DocumentNo.:                0000512, Official Records,Clark County, Nevada

 

DEED OF TRUST — EXHIBIT B — Page 2

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