**Exhibit10.5**

 

APN:

 

WhenRecorded Return To:

 

Patrick M. Arnold

Powell Coleman & Arnold LLP

8080 North Central Expwy, Suite 1380

Dallas, Texas 75206

 

NOTICEOF CONFIDENTIALITY RIGHTS: IF YOU ARE A NATURAL PERSON, YOU MAY REMOVE ORSTRIKE ANY OR ALL OF THE FOLLOWING INFORMATION FROM ANY INSTRUMENT THATTRANSFERS AN INTEREST IN REAL PROPERTY BEFORE IT IS FILED FOR RECORD IN THEPUBLIC RECORDS: YOUR SOCIAL SECURITY NUMBER OR YOUR DRIVER’S LICENSE NUMBER.

 

**Construction Leasehold Deed of Trust, Assignment,Security Agreement and Fixture Filing**

 

by

 

Rest Easy LLC,

a Delaware limited liability company,

d/b/a PAL Rest Easy LLC,

as Grantor,

 

to and in favor of

 

Stephen J. Hughes,

an individual,

as Trustee,

 

and

 

Behringer Harvard PAL I, LLC,

a Delaware limited liability company,

as Lender

 

This document serves as a Fixture Filing under the Texas UniformCommercial Code.

 

Grantor’s Organizational Identification Number is 26-3013107.

 

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**ConstructionLeasehold Deed of Trust, Assignment,Security Agreement and Fixture Filing**

 

This Construction Leasehold Deed of Trust,Assignment, Security Agreement and Fixture Filing (“**Deed ofTrust**”) is made as of the 14th day of August, 2009, by Rest EasyLLC, a Delaware limited liability company, d/b/a PAL Rest Easy LLC (hereinreferred to as “**Grantor**”), whoseaddress is c/o Actus Lend Lease LLC, 1801 West End Avenue, Suite 1700,Nashville, TN 37203, to Stephen J.Hughes, an individual (“**Trustee**”),whose address is Lincoln Centre, Suite 260, 5430 LBJ Freeway, Dallas,Texas 75240, and **Behringer Harvard PAL I, LLC**,a Delaware limited liability company (together with its successors and assigns,“**Lender**”), whose address is 15601Dallas Parkway, Suite 600, Addison, Texas 75001.

 

**Recitals**

** **

Grantor is the lessee under (i) that certainDepartment of the Army Lease and Conveyance of Improvements DACA65-01-09-47,dated as of August 14, 2009 (as it may be amended from time to time, the “**Ground****Lease**”) withthe United States of America, acting by and through the Secretary of the Army(together with its successors and assigns, the “**Landlord**”)with respect to the real property legally described on Exhibit Aattached hereto, a Memorandum of which is intended to be recorded immediatelyprior hereto, and (ii) certain Ancillary Leases (as defined in the JuniorLoan Agreement) (collectively, the Ground Lease and the Ancillary Leases arereferred to herein as the “**Lease**”) withrespect to the property described on Exhibit B attached hereto andGrantor is justly indebted to Lender in the maximum principal sum of up to$25,000,000 (the “**Junior Loan**”),as evidenced by that certain Junior Loan Note, dated as of the date hereof (asit may be amended from time to time, the “**Junior Note**”)payable by the Grantor to the Lender in said principal amount, and that certainJunior Loan Agreement, dated as of the date hereof, by and between Grantor andLender (as it may be amended from time to time, the “**Junior LoanAgreement**”).  As a conditionprecedent to making the Junior Loan, Lender has required that Grantor executeand deliver this Deed of Trust to Trustee and Lender.  The Junior Note, the Junior Loan Agreement,this Deed of Trust and all other instruments and documents executed by Grantorthat evidence, secure or set forth any of the Grantor’s obligations relating tothe Junior Loan, as the same may from time to time be extended, amended,restated, supplemented or otherwise modified, and whether now in existence orhereafter made and entered into, are collectively referred to as the “**Junior Loan Documents**.” Capitalized terms used herein but not otherwise defined shall have themeanings ascribed to such terms in the Junior Loan Agreement.

 

Now, therefore, in order to induce Lender to makethe Junior Loan to Grantor, Grantor agrees as follows:

 

Article I

Granting Clauses; Conditionof Grant.

 

Section 1.1             Conveyancesand Security Interests.

 

In order to secure the prompt payment andperformance of the Obligations, Grantor:

 

(a)          hereby irrevocably and unconditionally grants,conveys, transfers and assigns to Trustee, in trust under and subject to theterms and conditions set forth herein, for the benefit of Lender, with

 

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power of sale and right of entry andpossession, theleasehold estate created by the Lease and all other tenancy, term, right, titleand interest of Grantor, of whatever character (whether vested or contingent),in and to (1) the real property described on Exhibit A and Exhibit Battached hereto together with any and all rights, privileges and benefits,of whatever character derived by Grantor, or to which Grantor may be entitled,under or by virtue of the Lease, including, without limitation: (i) anyand all rights to exercise options (including, without limitation, options topurchase, renew, extend, terminate, reject or assume), give consents andreceive payments, reimbursements and refunds; (ii) any and all rights tomodify, change, supplement, alter, amend, terminate, cancel, sever or surrenderthe Lease and any and all rights to release or discharge the Landlord of orfrom the obligations, covenants, conditions and agreements by the Landlord tobe kept, observed or performed thereunder; (iii) any and all claims andrights to the payment of damages that may presently exist or hereafter ariseunder or in connection with the Lease or the rights of Grantor thereunder,including, without limitation, any such claim or right that may arise as aresult of the rejection or disaffirmance of the Lease by the Landlord, or byany trustee of the Landlord, pursuant to the United States Bankruptcy Code,11 U.S.C. §§ 101 *et seq.*,as amended (the “**Code**”); (iv) any and allrights, privileges and benefits, of whatever character, to which Grantor mayhereafter be entitled pursuant to Section 365 of the Code, including,without limitation, all of Grantor’s rights to remain in possession afterrejection or disaffirmance of the Lease by the Landlord or by any trustee ofthe Landlord (collectively, the “**Land**”) and (2) allbuildings, structures and other improvements now or hereafter existing, erectedor placed on the Land, together with any on-site improvements and off-siteimprovements in any way used or to be used in connection with the use,enjoyment, occupancy or operation of the Land (collectively, excluding theExcluded Improvements (as defined in the Lease), the “**Improvements**”),together with (i) all estates, title interests, title reversion rights,remainders, increases, issues, profits, rights of way or uses, additions,accretions, servitudes, strips, gaps, gores, liberties, privileges, waterrights, water courses, alleys,  passages,ways, vaults, licenses, tenements, franchises, hereditaments, appurtenances,easements, rights-of-way, rights of ingress or egress, parking rights, timber,crops, mineral interests and other rights, now or hereafter owned by Grantorand belonging or appertaining to the Land or Improvements; (ii) all Claimswhatsoever of Grantor with respect to the Land or Improvements, either in lawor in equity, in possession or in expectancy; (iii) all estate, right,title and interest of Grantor in and to all streets, roads and public places,opened or proposed, now or hereafter adjoining or appertaining to the Land orImprovements; and (iv) all options to purchase the Land or Improvements,or any portion thereof or interest therein, and any greater estate in the Landor Improvements, and all additions to and Proceeds of the foregoing, includingall rents, revenues, bonus money, royalties, rights, and benefits accruing toGrantor under all present and future oil, gas and mineral leases on any partsof the Property (collectively, the “**Real Property**”);

 

(b)           grants to Lender a security interest in all personal property of any kind ornature whatsoever, whether tangible or intangible and whether now owned orhereafter acquired, in which Grantor now has or hereafter acquires an interestand which is used in the construction of, or is placed upon, or is derived fromor used in connection with the maintenance, use, occupancy or enjoyment of, theProperty (as hereinafter defined), including (i) all fixtures, equipment,systems, machinery, furniture, furnishings, appliances, inventory, goods,building and construction materials, supplies and other articles of personalproperty, of every kind and character, tangible and intangible (includingsoftware which is owned by Grantor embedded therein), now owned or hereafteracquired by Grantor, which are now or hereafter attached to or situated in, onor about the Land or Improvements, or used in or necessary to the complete andproper planning, 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 Improvements, and all additions to the foregoing, all ofwhich are hereby declared to be permanent accessions to the Land (collectively,the “**Accessories**”); (ii) subject to theterms of the Lock Box Agreement, all accounts of Grantor within the meaning ofthe Uniform Commercial Code of the State (as defined herein), derived 

 

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from or arising out of the use, occupancy or enjoyment of the Propertyor for services rendered therein or thereon (collectively, the “**Accounts**”); (iii) all franchise, license, management orother agreements with respect to the operation of the Real Property or thebusiness conducted therein (provided all of such agreements shall besubordinate to this Deed of Trust, and Lender shall have no responsibility forthe performance of Grantor’s obligations thereunder) and all generalintangibles (including payment intangibles, trademarks, trade names, goodwill,software and symbols) related to the Real Property or the operation thereofwhich are owned by Grantor; (iv) all sewer and water taps, appurtenantwater stock or water rights, any Type 2 nonirregation grandfathered waterrights, contractual rights to water, allocations and agreements for utilities,bonds, letters of credit, permits, certificates, licenses, guaranties,warranties, causes of action, judgments, Claims, profits, security deposits,utility deposits, and all rebates or refunds of fees, Taxes, assessments, chargesor deposits paid to any Governmental Authority related to the Real Property orthe operation thereof; (v) all of Grantor’s rights and interests under allSwap Contracts, including all rights to the payment of money from Lender underany Swap Contract and all accounts, deposit accounts and general intangibles,including payment intangibles, described in any Swap Contract; (vi) allinsurance policies held by Grantor with respect to the Property or Grantor’soperation thereof; and (vii) subject to the terms and conditions of theLock Box Agreement, all money, instruments and documents (whether tangibleor electronic) arising from or by virtue of any transactions related to theProperty, and all deposits and deposit accounts of Grantor with Lender related tothe Property, including any such deposit account from which Grantor may fromtime to time authorize Lender to debit and/or credit payments due with respectto the Junior Loan; together with all additions to and proceeds of all of theforegoing (collectively, the “**Personalty**”)(the Real Property and the Personalty shall be collectively referred to hereinas the “**Property**”);

 

(c)           assigns to Lender, and grants to Lender a securityinterest in, Grantor’s right, title and interest in any and all judgments, awards of damages (includingseverance and consequential damages), payments, proceeds, settlements, amountspaid for a taking in lieu of Condemnation, or other compensation heretofore orhereafter made, including interest thereon, and the right to receive the same,as a result of, or in connection with, any Condemnation or threatenedCondemnation (the “**Condemnation Awards**”) and allInsurance Proceeds; and

 

(d)           assigns to Lender, and grants to Lender a securityinterest in, all of Grantor’s right, title and interest in, but not any ofGrantor’s obligations or liabilities under, all (i) contracts for servicesto be rendered, work to be performed or materials to be supplied in thedevelopment of the Land or the construction or repair of Improvements,including all agreements with architects, engineers or contractors for suchservices, work or materials; (ii) all plans, drawings and specificationsfor the development of the Land or the construction or repair of Improvements; (iii) allpermits, licenses, variances and other rights or approvals issued by orobtained from any Governmental Authority or other Person in connection with thedevelopment of the Land or the construction or repair of Improvements; and (iv) allamendments of or supplements to any of the foregoing (collectively, the “**Design and Construction Documents**”).

 

All Persons who may have or acquire an interest inall or any part of the Property will be deemed to have notice of, and will bebound by, the terms of the Obligations and each other agreement or instrumentmade or entered into in connection with each of the Obligations.  Such terms include any provisions in theJunior Note, the Junior Loan Agreement and/or any Swap Contract which providethat the interest rate on one or more of the Obligations may vary from time totime.  The definition of “Obligations”includes future advances.

 

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Section 1.2             AbsoluteAssignment of Rents.

 

In consideration of the making of the Junior Loan byLender to Grantor and other good and valuable consideration, the receipt andsufficiency of which are hereby acknowledged, Grantor absolutely andunconditionally assigns any and all Rents received in connection with theProject to Lender, subject to the terms and conditions of the Lock BoxAgreement.  This assignment is, and isintended to be, an unconditional, absolute and present assignment from Grantorto Lender of all of Grantor’s right, title and interest in and to the Rents andnot an assignment in the nature of a pledge of the Rents or the mere grant of asecurity interest therein.  For so longas this Deed of Trust shall be in effect or until Lender shall otherwiseconsent in writing, all such Rents shall be paid to the Cash Management Agentas set forth in the Lock Box Agreement. All such sums received by Grantor from and after the date hereof shallbe deemed received in trust and shall be turned over immediately to CashManagement Agent.

 

Section 1.3             SecurityAgreement, Fixture Filing and Financing Statement.

 

This Deed of Trust creates a security interest inthe Personalty, and, to the extent the Personalty is not real property, thisDeed of Trust constitutes a security agreement from Grantor to Lender under theUniform Commercial Code of the State.  Inaddition to all of its other rights under this Deed of Trust and otherwise,Lender shall have all of the rights of a secured party under the UniformCommercial Code of the State, 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.  ThisDeed of Trust shall be effective as a financing statement filed as a fixturefiling with respect to all fixtures included within the Property and is to befiled for record in the real estate records of each county where any part ofthe Property (including such fixtures) is situated.  This Deed of Trust shall also be effective asa financing statement with respect to any other Property as to which a securityinterest may be perfected by the filing of a financing statement and may befiled as such in any appropriate filing or recording office.  The respective mailing addresses of Grantorand Lender are set forth in the opening paragraph of this Deed of Trust.  A carbon, photographic or other reproductionof this Deed of Trust or any other financing statement relating to this Deed ofTrust shall be sufficient as a financing statement for any of the purposesreferred to in this Section.  Grantorhereby irrevocably authorizes Lender at any time and from time to time to fileany initial financing statements, amendments thereto and continuationstatements as authorized by applicable Law, reasonably required by Lender toestablish or maintain the validity, perfection and priority of the securityinterests granted in this Deed of Trust. The foregoing authorization includes Grantor’s irrevocable authorizationfor Lender at any time and from time to time to file any initial financingstatements and amendments thereto and continuation statements that indicate thePersonalty (a) as “all assets of Grantor, wherever located” or words ofsimilar effect, regardless of whether any particular asset comprised in thePersonalty falls within the scope of the Uniform Commercial Code of the Stateor the jurisdiction where the initial financing statement or amendment isfiled, or (b) as being of an equal or lesser scope or with greaterdetail.  This Deed of Trust 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 in the Office of the County Clerk where the Property(including said fixtures) is situated, in accordance with Section 9.502and other applicable provisions of the Uniform Commercial Code, as amended fromtime to time.  This Deed of Trust shallalso be effective as a financing statement covering as-extracted collateral (assuch term is defined in Section 9.102(a)(6) of the Uniform CommercialCode), and is to be filed for record in the real estate records of the countywhere the Property is situated.  Themailing address of Grantor and the address of Lender from which informationconcerning the security interest may be obtained are set forth above.

 

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Section 1.4             Reconveyanceof Deed of Trust and Termination of Assignments and Financing Statements.

 

If and when Grantor has paid and performed all ofthe Obligations, and no further advances are to be made under the Junior LoanAgreement, Lender or Trustee, upon request by Lender, will provide areconveyance of the Property from the lien of this Deed of Trust andtermination statements for filed financing statements, if any, to Grantor.  Grantor shall be responsible for therecordation of such reconveyance**andthe payment of any recording and filing costs. Upon the recording of such reconveyance and the filing of suchtermination statements, the absolute assignment set forth in Section 1.2shall automatically terminate and become null and void.

 

Article II

Representations andWarranties.

 

Grantor makes the following representations andwarranties to Lender:

 

Section 2.1             Titleto Real Property.

 

Grantorhas a valid interest in the Real Property, free and clear of all liens,encumbrances and charges (the “**Encumbrances**”) other than (a) any matters set forth in any policy oftitle insurance issued to Lender and insuring Lender’s interest in the Propertywhich are acceptable to Lender as of the date hereof, (b) the liens andinterests of this Deed of Trust, the Senior Loan and the Subordinate Loan, and (c) anyother Encumbrance that Lender shall expressly approve in its sole and absolutediscretion, as******evidencedby a “marked-up” commitment (or pro-forma policy) for title insurance initialedon behalf of Lender (the “**Permitted Encumbrances**”).  Grantor has full power and lawful authorityto grant the Real Property to Lender in the manner and form herein done orintended and forever warrant and defend Grantor’s title in the Real Propertyagainst the claims of all persons, subject to the Permitted Encumbrances.  This Deed of Trust constitutes a valid secondlien upon and security interest in Grantor’s right, title and interest in andto the Real Property.

 

Section 2.2             Titleto Other Property.

 

Grantorhas good title to the Personalty, and the Personalty is not subject to anyEncumbrance other than the Permitted Encumbrances.

 

Article III

Affirmative Covenants.

 

Section 3.1             Obligations.

 

Grantor agrees to promptly pay and perform all ofthe Obligations, time being of the essence in each case.

 

Section 3.2             PropertyAssessments; Documentary Taxes.

 

Grantor willpromptly pay in full and discharge on or before the due date thereof all Taxesand assessments of every nature which may be levied or assessed against theProperty.

 

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Section 3.3             Compliancewith Laws.

 

Except as expressly permitted in the Lease withrespect to pre-existing conditions, Grantor will comply with and not violate,and cause to be complied with and not violated, all present and future Lawsapplicable to the Property and its use and operation.

 

Section 3.4             Maintenanceand Repair of the Property.

 

Grantor, at Grantor’s sole expense, will (a) keepand maintain (or cause to be kept and maintained) the Property in goodcondition, working order and repair, and (b) make (or cause to be made)all necessary or appropriate repairs to the Property, so that each part of theProperty shall at all times be in a good condition and fit and proper for therespective purposes for which they were originally intended, erected, orinstalled.

 

Section 3.5             Additionsto Security.

 

All right, title and interest of Grantor in and toall Improvements hereafter constructed or placed on the Property shall, withoutany further deed of trust, conveyance, assignment or other act by Grantor,become subject to the lien of this Deed of Trust as fully and completely, and withthe same effect, as though now owned by Grantor and specifically described inthe granting clauses hereof.  Grantoragrees, however, to execute and deliver to Trustee and/or Lender such furtherdocuments as may be reasonably required by the terms of the Junior LoanAgreement and the other Junior Loan Documents to confirm and evidence suchlien.

 

Section 3.6             Performance of Lease.

 

Grantorshall (i) fulfill, perform and observe in all respects each and everymaterial condition and material covenant of Grantor contained in the Lease; (ii) giveprompt notice to Lender of any claim or event of default or noncompliance underthe Lease given to Grantor by Landlord or given by Grantor to Landlord,together with a complete copy or statement of any information submitted orreferenced in support of such claim or event of default; (iii) at the solecost and expense of Grantor, enforce the performance and observance of each andevery material covenant and material condition of the Lease to be performed orobserved by any other party to the Lease unless such enforcement is waived inwriting by Lender; (iv) appear in and defend any action challenging thevalidity, enforceability or priority of the lien created hereby or the validityor enforceability of the Lease; and (v) timely exercise all renewaloptions under the Lease while any Obligation under the Junior Loan remainsoutstanding.  The Lease shall not bemodified, amended, terminated, cancelled or surrendered by Grantor without Lender’sprior written consent.  Without limitingthe generality of the foregoing, Grantor shall not, without Lender’s priorwritten consent, elect to treat the Lease or the leasehold estate createdthereunder as terminated under Section 365 of the Code, after rejection ordisaffirmance of the Lease by the Landlord (whether as debtor in possession orotherwise) or by any trustee of the Landlord, and any such election madewithout such consent shall be void and ineffective.  Grantor shall not assign, transfer, mortgage,pledge or hypothecate the Lease or any interest therein to any party other thanLender, Senior Lender or Subordinate Lender without first obtaining Lender’sprior written consent.  Grantor shall notwaive or release any person from the observance or performance of any materialobligation to be performed under the terms of the Lease or liability on accountof any material warranty given thereunder. Any modification, amendment, termination, cancellation, surrender,assignment, transfer, mortgage, pledge, hypothecation, waiver or release inviolation of the foregoing shall be null and void and of no force andeffect.  Grantor agrees that if Grantor,at any time while the Obligations are outstanding, acquires fee title or anygreater estate than it holds as of the date of this Deed of Trust in and to theLand or the Real Property, the lien of this Deed of 

 

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Trust shall automatically attach, extend to, cover and encumber suchfee title or other greater estate, and that Grantor shall execute such furtherdocuments and take such further actions as Lender may reasonably request toconfirm such lien.  Without limiting theforegoing sentence, unless Lender otherwise consents or elects, fee title tothe Real Property and the leasehold interest in the Land created by the Leaseshall not merge, but shall always be kept separate and distinct,notwithstanding the union of such estates in Grantor, Lender or any otherperson by purchase, operation of law, foreclosure of this Deed of Trust, saleof the Real Property pursuant to this Deed of Trust or otherwise.

 

Article IV

Negative Covenants.

 

Section 4.1             Encumbrances.

 

Grantor will not permit any of the Property tobecome subject to any Encumbrance other than the Permitted Encumbrances.  Within sixty (60) days after the filing ofany mechanic’s lien or other lien or Encumbrance against the Property, Grantorwill promptly discharge the same by payment or recording a bond or otherwise aspermitted by Law.  So long as Lender’ssecurity has been protected by the recording of a bond or otherwise in a mannersatisfactory to Lender in its sole and absolute discretion, Grantor shall havethe right to contest in good faith any Claim or Encumbrance, provided thatGrantor does so diligently and without prejudice to Lender or delay incompleting construction of the Improvements. Grantor shall give Lender Notice of any default under any lien andNotice of any foreclosure or threat of foreclosure with respect to any of theProperty.

 

Section 4.2             Transferof the Property.

 

Grantor will not, without the prior written consentof Lender, transfer pursuant to a direct or indirect sale, assignment orconveyance, whether made voluntarily or by operation of Law or otherwise, andwhether made with or without consideration, or contract to do so, all or anypart of the Property or any legal or beneficial interest therein (except as maybe permitted in this Deed of Trust). Except as set forth in the Junior Loan Agreement, the transfer of anymembership interest in Grantor (whether in one or more transactions during theterm of the Obligations) shall be deemed to be a prohibited transfer of theProperty.

 

Section 4.3             Removal,Demolition or Alteration of Improvements.

 

Except to the extent permitted by the followingsection, no Improvements shall be removed, demolished or materially alteredwithout the prior written consent of Lender.

 

Section 4.4             AdditionalImprovements.

 

Grantor will not construct, demolish or materiallyalter any Improvements other than those presently on the Land, those describedin the Junior Loan Agreement and those described in the Design/Build Agreementfor the LSCR Phase of the IDP, without the prior written consent ofLender.  Subject to, and in accordancewith, the terms and conditions of the Design/Build Agreement, Grantor willcomplete and pay for, within a reasonable time, any Improvements which Grantoris permitted to construct on the Land. Grantor will construct and erect any permitted Improvements (a) strictlyin accordance with the Lease, any other contracts with Landlord, all applicableLaws (as set forth in the Lease) and any private restrictive covenants, (b) entirelyon lots or parcels of the Land, (c) so as not to 

 

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encroach upon any easement or right of way orupon the land of others, and (d) wholly within any building restrictionand setback lines applicable to the Land.

 

Section 4.5             RestrictiveCovenants, Zoning, etc.

 

Without the prior written consent of Lender, Grantorwill not initiate, join in, or consent to any change in, any restrictivecovenant, easement, zoning ordinance, or other public or private restrictionslimiting or defining the uses which may be made of the Property, or consent toor vote in favor of the inclusion of the Property in any community facilitiesor limited improvement district or any other improvement, assessment or similardistrict.  Grantor (a) will promptlyperform and observe, and cause to be performed and observed, all of thematerial terms and conditions of all agreements affecting the Property, and (b) willdo or cause to be done all things reasonably necessary to preserve intact andunimpaired any and all easements, appurtenances and other interests and rightsin favor of, or constituting any portion of, the Property.

 

Article V

Events of Default.

 

The occurrence or happening, from time to time, ofany one or more of the following shall constitute an Event of Default underthis Deed of Trust:

 

Section 5.1             JuniorLoan Agreement.

 

The occurrence of an Event of Default under theJunior Loan Agreement.

 

Section 5.2             Transfers.

 

Grantor, without the prior written consent ofLender, transfers pursuant to a direct or indirect sale, assignment orconveyance, whether made voluntarily or by operation of Law or otherwise, andwhether made with or without consideration, or contract to do so, all or anypart of the Property or any legal or beneficial interest therein.

 

Section 5.3             OtherObligations.

 

Grantor fails to promptly perform or comply with anyof the Obligations set forth in this Deed of Trust (other than those expresslydescribed in other Sections of this Article V), and such failurecontinues uncured for a period of ninety (90) days after Notice from Lender toGrantor, unless (a) such failure, by its nature, is not capable of beingcured within such period and (b) within such period, Grantor commences tocure such failure and thereafter diligently prosecutes the cure thereof andprovides evidence of such efforts upon request to Lender.

 

Article VI

Rights and Remedies.

 

Upon the happening and during the continuance of anyEvent of Default, Lender, or Trustee at the direction of Lender, shall have theright, in addition to any other rights or remedies available to Lender underany of the Junior Loan Documents or applicable Law, to exercise any one or moreof the following rights, powers or remedies:

 

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Section 6.1             Acceleration.

 

Lendermay accelerate all Obligations under the Junior Loan Documents whereupon suchObligations shall become immediately due and payable, without notice ofdefault, notice of acceleration or intention to accelerate, presentment ordemand for payment, protest, notice of protest, notice of nonpayment ordishonor, or notices or demands of any kind or character (all of which arehereby waived by Grantor).

 

Section 6.2             Foreclosure; Power of Sale.

 

### (a)           Upon the occurrence andcontinuance of an Event of Default, it shall thereupon be the duty of the abovenamed Trustee, or his successor or substitute, as hereinafter provided, toenforce this Deed of Trust at the request of Lender (which request shall bepresumed) and to sell the Property with or without first having takenpossession of the same and in whole or in part, as the acting Trustee may elect(all rights to a marshalling of assets of Grantor being expressly waivedhereby), in compliance with the applicable requirements, at the time of thesale, of Section 51.002 of the Texas Property Code as amended from time totime, to the highest bidder for cash at public auction at the county courthouse(or duly designated nearby area) of any county in which any of the Property issituated, in the area of such courthouse or nearby which has been dulydesignated for real property foreclosure sales in accordance with applicablelaw (or in the absence of any such designation, in the area of such courthouseset forth in the notice of sale hereinafter described) on the first Tuesday ofany month between the hours of 10:00 A.M. and 4:00 P.M. (commencingno earlier than such time as may be designated in the hereinafter describednotice of sale), after giving notice of the time, place and terms of sale andthe Property to be sold by the acting Trustee or any person chosen by himfiling a copy of the notice thereof in the office of the County Clerk of eachcounty where the Property is situated, by posting or causing to be postedwritten or printed notice thereof at least twenty-one (21) days preceding thedate of said sale at the county courthouse door of each county where theProperty is situated, and at least twenty-one (21) days preceding the date ofsaid sale, serving written notice of such proposed sale by certified mail oneach debtor obligated to pay the Obligations evidenced by the Junior Noteaccording to the records of Lender. Service of such notice to each debtor shallbe completed upon deposit of the notice enclosed in a postpaid wrapper,properly addressed to each debtor at the most recent address as shown by therecords of Lender, in a post office or official depository under the care andcustody of the United States Postal Service. The sale must begin at the time stated in the notice of sale or notlater than three hours after that time. Any sale made by Trustee hereunder may be as an entirety or in suchparcels as Lender may request, and any sale may be adjourned by announcement atthe time and place appointed for such sale without further notice except as maybe required by Law.  After such sale, theacting Trustee shall make due conveyance with special warranty to the purchaseror purchasers and the Grantor binds itself, its heirs, assigns, executors,administrators, successors and legal representatives to warrant and foreverdefend the title of such purchaser or purchasers by, through and under Grantorbut not otherwise.  Any abstract of titleto the Property furnished in connection with the loan secured by this Deed ofTrust shall be delivered and become the property of the purchaser at said sale.

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### (b)           Upon the occurrence andcontinuance of an Event of Default, Lender shall have the right and option toproceed with foreclosure in satisfaction of such item or items by directing theTrustee, or his successor or substitute as hereinafter provided, to proceed asif under a full foreclosure, conducting the sale as herein provided, andwithout declaring the whole Obligations due, and provided that if sale is madebecause of default as hereinabove mentioned, such sale may be made subject tothe unmatured part of the Junior Note and the Obligations secured hereby, andit is agreed that such sale, if so made, shall not in any manner affect anyother Obligation or Obligations secured hereby, but as to such other obligationsthis Deed of Trust and the liens created hereby shall remain in full force andeffect just 

 

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### as though no sale had been made under theprovisions of this Section.  It isfurther agreed that several sales may be made hereunder without exhausting theright of sale for any other breach of any of the obligations secured hereby, itbeing the purpose to provide for a foreclosure and sale of the Property for anymatured portion of any of the Obligations secured hereby or other itemsprovided for herein without exhausting the power to foreclose and to sell theProperty for any other part of the Obligations secured hereby whether maturedat the time or subsequently maturing.

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### (c)           The proceeds from any suchsale shall be applied by the acting Trustee as follows:

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FIRST:                                                         To the paymentof all expenses of advertising, selling and conveying the Property, including areasonable fee to the acting Trustee.

 

SECOND:                                          To the paymentto the Lender of all unpaid Obligations, including accrued interest to the dateof sale, in such priority and proportions as Lender in its discretion shalldeem proper.

 

THIRD:                                                     The balance, ifany, shall be paid to Grantor or to any other person legally entitled to samepursuant to applicable Law.

 

### (d)           The acting Trustee hereundershall have the right to sell the Property in whole or in part and in suchparcels and order as he may determine, and the right of sale hereunder shallnot be exhausted by one or more sales, but successive sales may be had untilall of the Property have been legally sold. In the event any sale hereunder is not completed or is defective in theopinion of Lender or the holder of any part of the Obligations, such sale shallnot exhaust the power of sale hereunder, and Lender or such holder shall havethe right to cause a subsequent sale or sales to be made by the Trustee or anysuccessor or substitute Trustee. Likewise, Lender may become the purchaser at any such sale if it is thehighest bidder, and shall have the right, after paying or accounting for allcosts of said sale or sales, to credit the amount of the bid upon the amount ofthe Obligations owing, in lieu of cash payment.

###  

### (e)           It shall not be necessaryfor the acting Trustee to have constructively in his possession any part of thereal or personal property covered by this Deed of Trust, and the title andright of possession of said property shall pass to the purchaser or purchasersat any sale hereunder as fully as if the same had been actually present anddelivered.  Likewise, on foreclosure ofthis Deed of Trust whether by power of sale herein contained or otherwise,Grantor or any person claiming any part of the Property by, through or underGrantor shall not be entitled to a marshalling of assets or a sale in inverseorder of alienation.

###  

### (f)            The recitals and statementsof fact contained in any notice or in any conveyance to the purchaser orpurchasers at any sale hereunder shall be prima facie evidence of the truth ofsuch facts, and all prerequisites and requirements necessary to the validity ofany such sale shall be presumed to have been performed.

###  

### (g)           Any sale under the powersgranted by this Deed of Trust shall be a perpetual bar against Grantor, itssuccessors, assigns and legal representatives.

###  

### (h)           In the event of aforeclosure under the powers granted by this Deed of Trust, Grantor, and allother persons in possession of any part of the Property (other than tenantsunder leases that remain in place after foreclosure), shall be deemed tenantsat will of the purchaser at such foreclosure sale and shall be liable for areasonable rental for the use of the Property; and if any such tenants refuseto surrender possession of the Property upon demand, the purchaser shall beentitled to institute and 

 

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### maintain the statutory action of forcibleentry and detainer and procure a writ of possession thereunder, and Grantorexpressly waives all damages sustained by reason thereof.

###  

(i)            In the event an interest in any of theProperty is foreclosed upon pursuant to a judicial or nonjudicial foreclosuresale, Grantor agrees as follows. Notwithstanding the provisions of Sections 51.003, 51.004, and 51.005 ofthe Texas Property Code (as the same may be amended from time to time), and tothe extent permitted by law, Grantor agrees that Lender shall be entitled toseek a deficiency judgment from Grantor and any other party obligated on theNote equal to the difference between the amount upon which Grantor ispersonally liable under the Note and the amount for which the Property was soldpursuant to judicial or nonjudicial foreclosure sale.  Grantor expressly recognizes that thissection constitutes a waiver of the above-cited provisions of the TexasProperty Code which would otherwise permit Grantor and other persons againstwhom recovery of deficiencies is sought (even absent the initiation ofdeficiency proceedings against them) to present competent evidence of the fairmarket value of the Property as of the date of the foreclosure sale and tooffset against any deficiency the amount by which the foreclosure sale price isdetermined to be less than such fair market value.  Grantor further recognizes and agrees thatthis waiver creates an irrebuttable presumption that the foreclosure sale priceis equal to the fair market value of the Property for purposes of calculating deficienciesowed by Grantor and others against whom recovery of a deficiency is sought.

 

### (j)            Alternatively, in the event the waiver provided forin subsection (i) above is determined by a court of competent jurisdictionto be unenforceable, the following shall be the basis for the finder of fact’sdetermination of the fair market value of the Property as of the date of theforeclosure sale in proceedings governed by Sections 51.003, 51.004 and 51.005of the Texas Property Code (as amended from time to time): “fair market value”of the Property shall be determined as of the foreclosure date in order toenforce a deficiency against Grantor, Grantor or any other party liable for therepayment of the Obligations, the term “fair market value” shall include those mattersrequired by law and shall also include the additional factors as follows:

###  

(i)            The Property is to be valued “AS IS, WHERE IS” and “WITH ALL FAULTS” andthere shall be no assumption of restoration of or refurbishment of the Propertyafter the date of foreclosure;

 

(ii)           There shall be an assumption of a prompt resale of the Property for anall cash sales price by the purchaser at the foreclosure so that no extensiveholding period should be factored into the determination of “fair market value”of the Property;

 

(iii)          An offset to the fair market value of the Property, as determinedhereunder, shall be made by deducting from such value the reasonable estimatedclosing costs relating to the sale of the Property including but not limited tobrokerage commissions, title policy expenses, tax prorations, escrow fees, andother common charges which are incurred by a seller of real property similar tothe Property; and

 

(iv)          After consideration of thefactors required by Law and those required above (including the addition of anyincome to be generated by the Property), an additional discount factor shall becalculated based upon the estimated time it will take to effectuate a sale ofthe Property so that the “fair market value” as so determined is discounted tobe as of the date of the foreclosure of the Property.

 

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Section 6.3             Judicial Action.

 

Lendershall have the right from time to time to sue Grantor for any sums (whetherinterest, damages for failure to pay principal or any installments thereof,taxes, or any other sums required to be paid under the terms of this Deed ofTrust, as the same become due), without regard to whether or not any of theother Obligations shall be due, and without prejudice to the right of Lenderthereafter to enforce any appropriate remedy against Grantor, including anaction of foreclosure or an action for specific performance, for a Default (asdefined in the Junior Loan Agreement) or Event of Default existing at the timesuch earlier action was commenced.

 

Section 6.4             Collection ofRents.

 

Uponthe occurrence and during the continuance of an Event of Default, Lender shallhave the right to (i) take possession of any or all of the Property, withthe power to protect and preserve the Property, to operate the Propertypreceding foreclosure or sale, (ii) subject to the terms of the Lock BoxAgreement, to collect all Rents from the Property and apply the proceedsagainst the sums due under this Deed of Trust, and (iii) exercise allother rights with respect to the Property described in this Deed of Trust.  Grantor hereby appoints Lender as Grantor’sattorney-in-fact with full power of substitution, which appointment shall takeeffect upon the occurrence and during the continuance of an Event of Defaultand is coupled with an interest and, subject to a cure of such Event of Defaultin accordance with the terms of the Junior Loan Documents, is irrevocable priorto the full and final payment and performance of the Obligations, in Grantor’sname or in Lender’s name: (a) subject to the terms and conditions of theLock Box Agreement, to endorse all checks and other instruments received inpayment of Rents and to deposit the same in any account selected by Lender; (b) togive receipts and releases in relation thereto; (c) to institute,prosecute and/or settle actions for the recovery of Rents; (d) to modifythe terms of any agreements relating to the Rents payable thereunder; and (e) todo all other acts and things with respect to the Rents which Lender may deemnecessary or desirable to protect the security for the Obligations.

 

Section 6.5             Taking Possessionor Control of the Property.

 

As amatter of right without regard to the adequacy of the security, and to theextent permitted by Law without notice to Grantor, Lender shall be entitled,upon application to a court of competent jurisdiction, to the immediateappointment of a receiver for all or any part of the Property and the Rents,whether such receivership may be incidental to a proposed sale of the Propertyor otherwise, and Grantor hereby consents to the appointment of such a receiverand agrees that such receiver shall have all of the rights and powers grantedto Lender pursuant to Section 6.4. In addition, to the extent permitted by Law, and with or without theappointment of a receiver, or an application therefor, Lender may (a) enterupon, and take possession of (and Grantor shall surrender actual possessionof), the Property or any part thereof, without notice to Grantor and withoutbringing any legal action or proceeding, or, if necessary by force, legalproceedings, ejectment or otherwise, and (b) remove and exclude Grantorand its agents and employees therefrom.

 

Section 6.6             Management of theProperty.

 

Uponobtaining possession of the Property or upon the appointment of a receiver asdescribed in Section 6.5, Lender, Trustee or the receiver, as thecase may be, may, at its sole option, (a) make all necessary or properrepairs to or upon the Property, (b) operate, maintain, control, makesecure and preserve the Property, and (c) complete the construction of anyunfinished Improvements on the Property 

 

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and, in connection therewith, continue any and all outstandingcontracts for the erection and completion of such Improvements and make andenter into any further contracts which may be necessary, either in their or itsown name or in the name of Grantor (the costs of completing such Improvementsshall be Expenses secured by this Deed of Trust and shall accrue interest asprovided in the Junior Loan Agreement and the other Junior LoanDocuments).  Lender, Trustee or suchreceiver shall be under no liability for, or by reason of, any such taking ofpossession, entry, holding, removal, maintaining, operation or management,except for gross negligence or willful misconduct.  The exercise of the remedies provided in thisSection shall not cure or waive any Event of Default, and the enforcementof such remedies, once commenced, shall continue for so long as Lender shallelect, notwithstanding the fact that the exercise of such remedies may have,for a time, cured the original Event of Default.

 

Section 6.7             Uniform CommercialCode.

 

Lendermay proceed under the Uniform Commercial Code as to all or any part of thePersonalty, and in conjunction therewith may exercise all of the rights,remedies and powers of a secured creditor under the Uniform CommercialCode.  Upon the occurrence and during thecontinuation of any Event of Default, Grantor shall assemble all of theAccessories and make the same available within the Improvements.  Any notification required by the UniformCommercial Code shall be deemed reasonably and properly given if sent inaccordance with the Notice provisions of this Deed of Trust at least ten (10) daysbefore any sale or other disposition of the Personalty.  Disposition of the Personalty shall be deemedcommercially reasonable if made pursuant to a public sale advertised at leasttwice in a newspaper of general circulation in the community where the Propertyis located.  It shall be deemedcommercially reasonable for the Trustee to dispose of the Personalty withoutgiving any warranties as to the Personalty and specifically disclaiming alldisposition warranties.  Alternatively,Lender may choose to dispose of some or all of the Property, in any combinationconsisting of both Personalty and Real Property, in one sale to be held in accordancewith the Law and procedures applicable to real property, as permitted by Article 9of the Uniform Commercial Code.  Grantoragrees that such a sale of Personalty together with Real Property constitutes acommercially reasonable sale of the Personalty.

 

Section 6.8**            **Application ofProceeds.

 

Unless otherwise provided by applicable Law, allproceeds from the sale of the Property or any part thereof pursuant to therights and remedies set forth in this Article VI and any otherproceeds received by Lender from the exercise of any of its other rights andremedies hereunder or under the other Junior Loan Documents shall, subject tothe terms and conditions of the Lock Box Agreement, be applied first to pay allExpenses and next in reduction of the other Obligations, in such manner andorder as Lender may elect.

 

Section 6.9             Other Remedies.

 

Lender shall have the right from time to time toprotect, exercise and enforce any legal or equitable remedy against Grantorprovided under the Junior Loan Documents or by applicable Laws.

 

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Article VIITrustee.

 

Section 7.1             Liability of Trustee.

 

Trustee shall have no liability or responsibilityfor, and make no warranties in connection with, the validity or enforceabilityof any of the Junior Loan Documents or the description, value or status oftitle to the Property.  Trustee shall beprotected in acting upon any notice, request, consent, demand, statement, noteor other paper or document believed by Trustee to be genuine and to have beensigned by the party or parties purporting to sign the same.  Trustee shall not be liable for any error ofjudgment, nor for any act done or step taken or omitted, nor for any mistakesof law or fact, nor for anything which Trustee may do or refrain from doing ingood faith, nor generally shall Trustee have any accountability hereunderexcept for its willful misconduct or gross negligence.  The powers and duties of Trustee hereundermay be exercised through such attorneys, agents or servants as Trustee mayappoint, and Trustee shall have no liability or responsibility for any act,failure to act, negligence or willful misconduct of such attorney, agent orservant, so long as the selection was made with reasonable care.  In addition, Trustee may consult with legalcounsel selected by Trustee, and Trustee shall have no liability orresponsibility by reason of any act or failure to act in accordance with theopinions of such counsel.  Trustee mayact hereunder and may sell or otherwise dispose of the Property or any partthereof as herein provided, although Trustee has been, may now be or mayhereafter be, an attorney or agent of Lender, in respect of any matter orbusiness whatsoever.  Trustee, however,shall have no obligation to sell all or any part of the Property following anEvent of Default or to take any other action authorized to be taken by Trusteehereunder except upon the demand of Lender.

 

Section 7.2             Indemnification of Trustee.

 

Grantor agrees to indemnify Trustee and to holdTrustee harmless for, from and against any and all Claims and Expenses directlyor indirectly arising out of or resulting from any transaction, act, omission,event or circumstance in any way connected with the Property or the JuniorLoan, including but not limited to any Claim arising out of or resulting fromany assertion or allegation that Trustee is liable for any act or omission ofGrantor or any other Person in connection with the ownership, development,financing, operation or sale of the Property; provided,however,that Grantor shall not be obligated to indemnify Trustee with respect to anyClaim arising solely from the gross negligence or willful misconduct ofTrustee.  The agreements andindemnifications contained in this Section shall apply to Claims arisingboth before and after the repayment of the Junior Loan and shall survive therepayment of the Junior Loan, any foreclosure or deed in lieu thereof and anyother action by Trustee to enforce the rights and remedies of Lender or Trusteehereunder or under the other Junior Loan Documents.

 

Section 7.3             Substitution of Trustee; MultipleTrustees.

 

Lender shall have, and is hereby granted withwarranty of further assurances, the irrevocable power to appoint a new orreplacement or substitute Trustee.  Suchpower may be exercised at any time without notice, without cause and withoutspecifying any reason therefor, by filing for record in the office where thisDeed of Trust is recorded a substitution of Trustee.  The power of appointment of a successorTrustee may be exercised as often as and whenever Lender may choose, and theexercise of the power of appointment, no matter how often, shall not be anexhaustion thereof.  Upon the recordationof such substitution of Trustee, the Trustee so appointed shall thereupon, withoutany further act or deed of conveyance, become fully vested with identically thesame title and estate in and to the Property and with all the rights, powers,trusts and duties of its predecessor in the trust hereunder with like effect asif originally named as Trustee hereunder. Whenever in this Deed of Trust reference is made to Trustee, it shall beconstrued to mean each Person appointed as Trustee for the time being, whetheroriginal or 

 

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successor in trust.  All title, estate, rights, powers, trusts andduties granted to Trustee shall be in each Person appointed as Trustee so thatany action hereunder by any Person appointed as Trustee shall for all purposesbe deemed to be, and as effective as, the action of all Trustees.

 

Article VIII

Miscellaneous.

 

Section 8.1             Rights, Powers and Remedies Cumulative.

 

Each right, power and remedy of Lender or Trustee asprovided for in this Deed of Trust, or in any of the other Junior LoanDocuments or now or hereafter existing by Law, shall be cumulative andconcurrent and shall be in addition to every other right, power or remedyprovided for in this Deed of Trust, or in any of the other Junior LoanDocuments or now or hereafter existing by Law, and the exercise or beginning ofthe exercise by Lender or Trustee of any one or more of such rights, powers orremedies shall not preclude the simultaneous or later exercise by Lender orTrustee of any or all such other rights, powers or remedies.

 

Section 8.2             No Waiver by Lender or Trustee.

 

No course of dealing or conduct by or among Lender,Trustee and Grantor shall be effective to amend, modify or change anyprovisions of this Deed of Trust or the other Junior Loan Documents.  No failure or delay by Lender or Trustee toinsist upon the strict performance of any term, covenant or agreement of thisDeed of Trust or of any of the other Junior Loan Documents, or to exercise anyright, power or remedy consequent upon a breach thereof, shall constitute awaiver of any such term, covenant or agreement or of any such breach, orpreclude Lender or Trustee from exercising any such right, power or remedy atany later time or times.  By acceptingpayment after the due date of any of the Obligations, neither Lender norTrustee shall be deemed to waive the right either to require prompt paymentwhen due of all other Obligations, or to declare an Event of Default forfailure to make prompt payment of any such other Obligations.  Neither Grantor nor any other Person now orhereafter obligated for the payment of the whole or any part of the Obligationsshall be relieved of such liability by reason of (a) the failure of Lenderto comply with any request of Grantor or of any other Person to take action toforeclose this Deed of Trust or otherwise enforce any of the provisions of thisDeed of Trust, or (b) any agreement or stipulation between any subsequentowner or owners of the Property and Lender, or (c) Lender’s extending thetime of payment or modifying the terms of this Deed of Trust or any of theother Junior Loan Documents without first having obtained the consent of Grantoror such other Person.  Regardless ofconsideration, and without the necessity for any notice to or consent by theholder of any subordinate lien on the Property, Lender may release any Personat any time liable for any of the Obligations or any part of the security forthe Obligations and may extend the time of payment or otherwise modify theterms of this Deed of Trust or any of the other Junior Loan Documents withoutin any way impairing or affecting the lien of this Deed of Trust or thepriority of this Deed of Trust over any subordinate lien.  The holder of any subordinate lien shall haveno right to terminate any Lease regardless of whether or not such Lease issubordinate to this Deed of Trust. Lender may resort to the security or collateral described in this Deedof Trust or any of the other Junior Loan Documents in such order and manner asLender may elect in its sole discretion.

 

Section 8.3             Waivers and Agreements RegardingRemedies.

 

To the full extent Grantor may do so, Grantorhereby:

 

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### (a)           agrees that it will notat any time plead, claim or take advantage of any Laws now or hereafter inforce providing for any appraisement, valuation, stay, extension or redemption,and waives and releases all rights of redemption, valuation, appraisement, stayof execution, extension and notice of election to accelerate the Obligations;

###  

### (b)           waives all rights to amarshalling of the assets of Grantor, including the Property, or to a sale inthe inverse order of alienation in the event of a foreclosure of the Property,and agrees not to assert any right under any Law pertaining to the marshallingof assets, the sale in inverse order of alienation, the exemption of homestead,the administration of estates of decedents, or other matters whatsoever todefeat, reduce or affect the right of Lender under the terms of this Deed ofTrust to a sale of the Property without any prior or different resort forcollection, or the right of Lender to the payment of the Obligations out of theproceeds of sale of the Property in preference to every other claimantwhatsoever;

###  

### (c)           waives any right tobring or utilize any defense, counterclaim or setoff, other than one whichdenies the existence or sufficiency of the facts upon which any foreclosureaction is grounded.  If any defense,counterclaim or setoff, other than one permitted by the preceding clause, istimely raised in a foreclosure action, such defense, counterclaim or setoffshall be dismissed.  If such defense,counterclaim or setoff is based on a Claim which could be tried in an actionfor money damages, such Claim may be brought in a separate action which shallnot thereafter be consolidated with the foreclosure action.  The bringing of such separate action formoney damages shall not be deemed to afford any grounds for staying theforeclosure action;

###  

### (d)           waives and relinquishesany and all rights and remedies which Grantor may have or be able to assert byreason of the provisions of any Laws pertaining to the rights and remedies ofsureties; and

###  

### (e)           to the maximum extentpermitted by Law, Grantor waives any right to assert that the Property wascreated in violation of applicable subdivision ordinances and regulations andagrees to take all actions and execute all documents requested by Lender inconnection with compliance with or exemption from all applicable subdivisionordinances and regulations.

###  

Section 8.4             Successors and Assigns*.*

 

All of the grants, covenants, terms, provisions andconditions of this Deed of Trust shall run with the Land and shall apply to andbind the successors and assigns of Grantor (including any permitted subsequentowner of the Property), and inure to the benefit of Lender, its successors andassigns and to the successors in trust of Trustee.

 

Section 8.5             No Warranty by Lender or Trustee.

 

By inspecting the Property or by accepting orapproving anything required to be observed, performed or fulfilled by Grantoror to be given to Lender or Trustee pursuant to this Deed of Trust or any ofthe other Junior Loan Documents, Lender and Trustee shall not be deemed to havewarranted or represented the condition, sufficiency, legality, effectiveness orlegal effect of the same, and such acceptance or approval shall not constituteany warranty or representation with respect thereto by Lender or Trustee.

 

Section 8.6             Amendments.

 

This Deed of Trust may not be modified or amendedexcept by an agreement in writing, signed by the party against whom enforcementof the change is sought.

 

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Section 8.7             Severability.

 

In the event any one or more of the provisions ofthis Deed of Trust shall for any reason be held to be invalid, illegal orunenforceable, in whole or in part or in any other respect, or in the event anyone or more of the provisions of the Junior Loan Documents operates or wouldprospectively operate to invalidate this Deed of Trust, then and in either ofthose events, at the option of Lender, such provision or provisions only shallbe deemed null and void and shall not affect the validity of the remainingObligations, and the remaining provisions of the Junior Loan Documents shallremain operative and in full force and effect and shall in no way be affected,prejudiced or disturbed thereby.

 

Section 8.8             Notices.

 

All Notices, demands or documents to be deliveredunder this Deed of Trust shall be given in writing in the manner provided forthe giving of notices under the Junior Loan Agreement.

 

Section 8.9             Rules of Construction.

 

The words “hereof,” “herein,” “hereunder,” “hereto,”and other words of similar import refer to this Deed of Trust in its entirety.  The terms “agree” and “agreements” mean andinclude “covenant” and “covenants.”  Thewords “include” and “including” shall be interpreted as if followed by thewords “without limitation.”  The headingsof this Deed of Trust are for convenience of reference only and shall not beconsidered a part hereof and are not in any way intended to define, limit orenlarge the terms hereof.  All references(a) made in the neuter, masculine or feminine gender shall be deemed tohave been made in all such genders, (b) made in the singular or pluralnumber shall be deemed to have been made, respectively, in the plural orsingular number as well, (c) to the Junior Loan Documents are to the sameas extended, amended, restated, supplemented or otherwise modified from time totime unless expressly indicated otherwise, (d) to the Land, Improvements,Personalty, Real Property or Property shall mean all or any portion of each ofthe foregoing, respectively, and (e) to Articles or Sections are to therespective Articles or Sections contained in this Deed of Trust unlessexpressly indicated otherwise.  Any termused or defined in the Uniform Commercial Code of the State, as in effect fromtime to time, which is not defined in this Deed of Trust shall have the meaningascribed to that term in the Uniform Commercial Code of the State.  If a term is defined in Article 9 of theUniform Commercial Code of the State differently than in another Article ofthe Uniform Commercial Code of the State, the term shall have the meaning specifiedin Article 9.

 

Section 8.10           Governing Law.   This Deed of Trust shall be construed,governed and enforced in accordance with the Laws in effect from time to timein the State.

 

Section 8.11           Entire Agreement.  The Junior Loan Documents constitute theentire understanding and agreement between Grantor and Lender with respect tothe transactions arising in connection with the Obligations, and supersede allprior written or oral understandings and agreements between Grantor and Lenderwith respect to the matters addressed in the Junior Loan Documents.  In particular, and without limitation, theterms of any commitment by Lender to make the Junior Loan are merged into theJunior Loan Documents.  Except asincorporated in writing into the Junior Loan Documents, there are norepresentations, understandings, stipulations, agreements or promises, oral orwritten, with respect to the matters addressed in the Junior Loan Documents.

 

Section 8.12           Certain Provisions Incorporated byReference.

 

The provisions of the Junior Loan Agreement and theJunior Note (and any other Junior Loan Document) that govern adjustments, ifany, to the interest rate and payment amount, the accrual of 

 

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interest and increases, if any, in the principal balance, areincorporated in this Deed of Trust by reference as though fully set forthherein.

 

Section 8.13           Nature of Obligations.

 

Except as provided in that certain Guaranty andIndemnity (as defined in the Junior Loan agreement) of even date herewith, theobligations of Grantor hereunder to pay and perform the Obligations (including,without limitation, such Obligations as are evidenced by the Junior Note) shallbe without recourse to Grantor’s members, shareholders, officers, affiliates,directors, partners, agents, employees or consultants, or any affiliate of anysuch person, or to the property or assets of any such person.  Notwithstandinganything to the contrary herein, nothing herein shall be deemed to be a waiverof any right which Lender may have under Sections 506(a), 506(b), 1111(b) orany other provision of the Federal Bankruptcy Code or any similar federal orstate statute to file a claim for the full amount of the Obligations securedhereby or to require that all Collateral shall continue to secure allObligations owing to Lender in accordance with the Junior Note, this Deed ofTrust and the other Junior Loan Documents. The foregoing will in no way limit Lender’s recourse to the Collateralfollowing an Event of Default or limit the liability under any Contract towhich any Affiliate of Grantor is a party and which has been assigned to JuniorLender as Collateral for the Junior Loan, including but not limited to theConstruction Guaranty of even date herewith and any Contract assigned asCollateral under the Assignment of Contracts, Permits and Approvals of evendate herewith executed by Grantor and the other parties thereto and theCollateral Assignment of Lodging Management Agreement also of even dateherewith executed by Grantor and the other parties thereto**.**

 

Section 8.14           Use of Loan Proceeds.

 

Grantor will use the proceeds of the Junior Loan andother Obligations secured hereby solely for the purpose of carrying on abusiness or commercial enterprise and not for personal, family or householdpurposes.  The Property forms no part ofany property owned, used or claimed by Grantor as a residence or businesshomestead and is not exempt from forced sale under the laws of the State ofTexas.  Grantor hereby disclaims andrenounces each and every claim to the Property as a homestead.

 

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# Article IX

State Specific Provisions

 

Section 9.1             Principles of Construction.

 

In the event of any inconsistencies between the termsand conditions of this Article IX and the other provisions of this Deed ofTrust, the terms and conditions of this Article IX shall control and bebinding.

 

Section 9.2             Definitions.

 

The term “**State**” as usedherein shall mean the State of Texas.

 

Section 9.3             Usury Laws.

 

It is the intention of the parties hereto to conformstrictly to applicable usury laws. Accordingly, if the transactions contemplated hereby would be usuriousunder any such applicable Law, then, and in that event, notwithstandinganything to the contrary in this Deed of Trust, the Junior Loan Agreement, theJunior Note, the other Junior Loan Documents, and any other instrument oragreement entered into in connection therewith, whether now existing orhereafter arising and whether written or oral, it is agreed as follows:

 

### (a)           the aggregate of allinterest and any other charges constituting interest or adjudicated asconstituting interest and that is contracted for, charged or received under theJunior Note, or under any of the aforesaid instruments or agreements orotherwise in connection with the Junior Note (whether designated as interest,fees, late charges, payments or otherwise) shall under no circumstances exceedthe maximum amount of interest permitted by any such Law and any excessive rateshall automatically be reduced so as not to exceed the maximum legal rate andany excess interest charged or contracted for shall be cancelled automaticallyand, if theretofore paid, shall be credited on the principal amount owing onthe Junior Note by Lender (or, if the Junior Note has been paid in full,refunded to Grantor); and

###  

### (b)           in the event that thematurity of the Junior Note is accelerated by reason of an Event of Defaultunder the Junior Loan Documents, or otherwise, then such consideration thatconstitutes interest may never include more than the maximum rate of interestpermitted by any such Law computed from the dates of each advance of the loanproceeds outstanding until payment.  Iffrom any circumstance Lender shall ever receive interest or any other chargesconstituting interest or adjudicated as constituting interest, the amount, ifany, which would exceed the maximum rate of interest permitted by such Lawshall be applied to the reduction of the principal amount owing on the JuniorNote or on account of any other principal indebtedness of Grantor to Lender,and not to the payment of interest; or if such excessive interest exceeds theunpaid balance of the principal and such other indebtedness, the amount of suchexcessive interest that exceeds the unpaid principal and such otherindebtedness shall be refunded to Grantor.

###  

Allsums paid or agreed to be paid to Lender for the use, forbearance or detentionof the indebtedness evidenced hereby shall, to the extent permitted byapplicable law, be amortized, prorated, allocated and spread throughout thefull term of such indebtedness so that the rate or amount of interest onaccount of any such indebtedness does not exceed the applicable usury ceiling.

 

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Section 9.4             Future Advances.

 

This Deed of Trust shall also secure such future oradditional indebtedness of Grantor to Lender or such future or additionaladvances for construction, improvements, preservation, maintenance andoperation of the Property and the security for payment of the Obligations asmay be made by Lender, whether such future advances are obligatory or are to bemade at Lender’s option, to Grantor, for any purpose.

 

Section 9.5             WAIVER OF CONSUMER RIGHTS.

 

TO THE EXTENT NOW OR HEREAFTER APPLICABLE, GRANTORHEREBY WAIVES GRANTOR’S RIGHTS UNDER THE DECEPTIVE TRADE PRACTICES - CONSUMERPROTECTION ACT, SECTION 17.41 ET SEQ., TEXAS BUSINESS & COMMERCECODE, A LAW THAT GIVES CONSUMERS SPECIAL RIGHTS AND PROTECTIONS.  AFTER CONSULTATION WITH AN ATTORNEY OFGRANTOR’S OWN SELECTION, GRANTOR VOLUNTARILY CONSENTS TO THIS WAIVER.

 

Section 9.6             TEXAS FINANCE CODE SECTION 307.052COLLATERAL PROTECTION INSURANCE NOTICE:

 

(A) GRANTOR IS REQUIRED TO: (I) KEEP THEPROPERTY INSURED AGAINST DAMAGE IN THE AMOUNT SPECIFIED IN THE JUNIOR LOANDOCUMENTS; (II) PURCHASE THE INSURANCE FROM AN INSURER THAT IS AUTHORIZEDTO DO BUSINESS IN THE STATE OF TEXAS OR AN ELIGIBLE SURPLUS LINES INSURER; AND (III) NAMELENDER AS THE PERSON TO BE PAID UNDER THE POLICY IN THE EVENT OF A LOSS AS ANDTO THE EXTENT REQUIRED IN THE JUNIOR LOAN AGREEMENT; (B) GRANTOR MUST, IFREQUIRED BY LENDER PURSUANT TO THE JUNIOR LOAN AGREEMENT, DELIVER TO LENDER ACOPY OF THE POLICY AND PROOF OF THE PAYMENT OF PREMIUMS, PROVIDED THAT EVIDENCEOF ANY RENEWAL POLICY SHALL NOT BE REQUIRED TO BE PROVIDED MORE THAN 15 DAYSPRIOR TO THE EXPIRATION OF THE TERM OF THE THEN EXISTING INSURANCE POLICY; AND (C) IFGRANTOR FAILS TO MEET ANY REQUIREMENT LISTED IN PARAGRAPH (A) OR (B),LENDER MAY OBTAIN COLLATERAL PROTECTION INSURANCE ON BEHALF OF GRANTOR ATTHE GRANTTOR’S EXPENSE AS AND TO THE EXTENT EXPLICITLY PERMITTED BY THE JUNIORLOAN AGREEMENT.

 

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Section 9.7             INDEMNITY.

 

IT IS THE EXPRESS INTENTION OF GRANTOR AND GRANTORHEREBY AGREES THAT THE INDEMNITIES SET FORTH IN THIS DEED OF TRUST AND THEOTHER JUNIOR LOAN DOCUMENTS WILL APPLY TO AND FULLY PROTECT EACH INDEMNIFIEDPARTY EVEN THOUGH ANY CLAIMS, DEMANDS, LIABILITIES, LOSSES, DAMAGES, CAUSES OFACTION, JUDGMENTS, PENALTIES, COSTS AND EXPENSES (INCLUDING WITHOUT LIMITATIONREASONABLE ATTORNEYS’ FEES) THEN THE SUBJECT OF INDEMNIFICATION MAY HAVEBEEN CAUSED BY, ARISE OUT OF, OR ARE OTHERWISE ATTRIBUTABLE TO, DIRECTLY ORINDIRECTLY, THE NEGLIGENCE (EXCLUDING GROSS NEGLIGENCE OR WILLFUL MISCONDUCT)IN WHOLE OR IN PART OF SUCH INDEMNIFIED PARTY AND/OR ANY OTHER PARTY.

 
|   | Initials  of signatory of Marc Sierra: | /s/  MDS |
|--------|----------------------------------------|----------|

 

Section 9.8             SECTION 26.02 NOTICE.

 

IN ACCORDANCE WITH SECTION 26.02 OF THE TEXASBUSINESS AND COMMERCE CODE, THIS DEED OF TRUST AND THE OTHER DOCUMENTSEVIDENCING, SECURING OR PERTAINING TO ALL OR ANY PORTION OF THE OBLIGATIONSREPRESENT THE FINAL AGREEMENT BETWEEN GRANTOR AND LENDER AS TO THE SUBJECTMATTER THEREOF AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF SUCH PARTIES.  THERE ARE NO UNWRITTEN ORAL AGREEMENTSBETWEEN SUCH PARTIES.

 
|   | Initials  of signatory of Marc Sierra: | /s/  MDS |
|--------|----------------------------------------|----------|

 

Section 9.9             Actions of Trustee.

 

Notwithstanding anything to the contrary set forth inthis Deed of Trust, the role of the Trustee in executing any remedies set forthin this Deed of Trust shall be limited to performing the Trustee’s duties withrespect to exercise of the power of sale granted in this Deed of Trust, andnotwithstanding anything to the contrary set forth herein, the Trustee may notdelegate the obligation to conduct any non-judicial foreclosure sale to anagent of the Trustee.

 

[*Remainder ofpage intentionally left blank; signature page follows*]

 

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IN WITNESS WHEREOF, Grantorhas caused this Deed of Trust to be executed as of the day and year firstwritten above.

 
|   | GRANTOR:                                                    |
|--------|-------------------------------------------------------------|
|   |                                                        |
|   | **REST EASY LLC, a Delaware limited****liability  company** |
|   |                                                        |
|   | By:                                                         | RE  MANAGING MEMBER LLC, its managing member |
|   |                                                        |
|   |                                                        | By: | Actus Lend Lease Holdings LLC,its sole member |
|   |                                                        |   |   |
|   |                                                        |   |   |
|   |                                                        |   | By: | /s/  Marc Sierra |
|   |                                                        |   |   | Mark  Sierra |
|   |                                                        |   |   | Executive  Vice President |

 

 
| STATE OF  | )     |
|-----------|-------|
|      | ) ss. |
| COUNTY OF | )     |

 

Thisinstrument was acknowledged before me this           day of August, 2009, by                                                                  ,as                                               of Actus Lend Lease Holdings LLC, the sole member of RE Managing Member LLC,the managing member of Rest Easy LLC, on behalf of said limited liabilitycompany.

 
| [SEAL] | /s/  Susan Gaw Henderson  |
|--------|---------------------------|
|   | Notary  Public in and for |
|   | the  State of             |
|   |                      |
|   |                      |
|   | Susan  Gaw Henderson      |
|   | Print  name of Notary     |
|   |                      |
|   |                      |
|   | My  Commission Expires:   |

 

**[Signature page toJunior Lender Deed of Trust (Fort Hood)]**

 

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**Exhibit A**

 

**Legal Description**

 

[Ground Lease]

 

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**Exhibit B**

 

**Description of Ancillary Leases**

 

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**Scheduleto Exhibit 10.5**

 

**SubstantiallyIdentical Deeds of Trust Omitted**

** **
| **State  Filed** | ** ** | **County** | ** ** | **Subject U.S. Army Installation** |
|------------------|------------|------------|------------|------------------------------------|
| Arizona          |       | Yuma       |       | Yuma                               |
| Texas            |       | Bexar      |       | Fort Sam Houston                   |
| Virginia         |       | Arlington  |       | Fort Myer                          |

 

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