Document:

exv10w44

Exhibit
10.44

THIS
INSTRUMENT PREPARED
BY AND WHEN RECORDED RETURN TO:

Kilpatrick Stockton LLP

Hearst Tower, Suite 2500 
214
North Tryon Street 
Charlotte,
North Carolina 28202 
Attn:
John Nicholas Suhr, Jr., Esq.

(SPACE ABOVE THIS LINE FOR RECORDER’S USE)

			
	Loan No.: 50-2857227
	 	Carrollton Building

CAMPUS CREST AT CARROLLTON, LLC, 
as
Borrower

to

WACHOVIA BANK, NATIONAL ASSOCIATION,

as Lender

 

DEED TO SECURE DEBT, SECURITY AGREEMENT

AND FIXTURE FILING

 

Date: September 18, 2006

 

 

TABLE OF CONTENTS

	 	 	 	 	 	 	 
	 	 	 	 	Page	 
	 
	 	 	 	 	 	 
	ARTICLE I.
	 	REPRESENTATIONS AND WARRANTIES OF BORROWER	 	 	5	 
	1.1
	 	Organization; Special Purpose	 	 	5	 
	1.2
	 	Title	 	 	5	 
	1.3
	 	No Bankruptcy Filing	 	 	5	 
	1.4
	 	Full and Accurate Disclosure	 	 	6	 
	1.5
	 	Proceedings; Enforceability	 	 	6	 
	1.6
	 	No Conflicts	 	 	6	 
	1.7
	 	Federal Reserve Regulations; Investment Company Act	 	 	7	 
	1.8
	 	Taxes	 	 	7	 
	1.9
	 	ERISA	 	 	7	 
	1.10
	 	Property Compliance	 	 	8	 
	1.11
	 	Utilities	 	 	8	 
	1.12
	 	Public Access	 	 	8	 
	1.13
	 	Litigation; Agreements	 	 	8	 
	1.14
	 	Physical Condition	 	 	9	 
	1.15
	 	Contracts	 	 	9	 
	1.16
	 	Leases	 	 	9	 
	1.17
	 	Foreign Person	 	 	10	 
	1.18
	 	Management Agreement	 	 	10	 
	1.19
	 	Fraudulent Transfer	 	 	10	 
	1.20
	 	Foreign Assets Control	 	 	10	 
	 
	 	 	 	 	 	 
	ARTICLE II.
	 	COVENANTS OF BORROWER	 	 	11	 
	2.1
	 	Defense of Title	 	 	11	 
	2.2
	 	Performance of Obligations	 	 	12	 
	2.3
	 	Insurance	 	 	12	 
	2.4
	 	Payment of Taxes	 	 	16	 
	2.5
	 	Casualty and Condemnation	 	 	16	 
	2.6
	 	Construction Liens	 	 	20	 
	2.7
	 	Rents and Profits	 	 	20	 
	2.8
	 	Leases	 	 	21	 
	2.9
	 	Alienation and Further Encumbrances	 	 	23	 
	2.10
	 	Payment of Utilities, Assessments, Charges, Etc.	 	 	28	 
	2.11
	 	Access Privileges and Inspections	 	 	28	 
	2.12
	 	Waste; Alteration of Improvements	 	 	28	 
	2 13
	 	Zoning	 	 	29	 
	2.14
	 	Financial Statements and Books and Records	 	 	29	 
	2.15
	 	Further Assurances	 	 	31	 
	2.16
	 	Payment of Costs; Reimbursement to Lender	 	 	31	 
	2.17
	 	Security Interest	 	 	33	 
	2 18
	 	Security Agreement	 	 	33	 
	2.19
	 	Easements and Rights-of-Way	 	 	35	 
	2.20
	 	Compliance with Laws	 	 	35	 

i 

 

	 	 	 	 	 	 	 
	 	 	 	 	Page	 
	 
	2.21
	 	Additional Taxes	 	 	35	 
	2.22
	 	Secured Indebtedness	 	 	36	 
	2.23
	 	Borrower’s Waivers	 	 	36	 
	2.24
	 	SUBMISSION TO JURISDICTION: WAIVER OF JURY TRIAL	 	 	37	 
	2.25
	 	Attorney-in-Fact Provisions	 	 	37	 
	2.26
	 	Management	 	 	38	 
	2.27
	 	Hazardous Waste and Other Substances	 	 	38	 
	2.28
	 	Indemnification; Subrogation	 	 	43	 
	2.29
	 	Covenants with Respect to
Existence, Indebtedness, Operations, Fundamental Changes of Borrower	 	 	44	 
	2.30
	 	Embargoed Person	 	 	48	 
	2.31
	 	Anti-Money Laundering	 	 	48	 
	2.32
	 	ERISA	 	 	48	 
	 
	 	 	 	 	 	 
	ARTICLE III.
	 	RESERVES AND CASH MANAGEMENT	 	 	49	 
	3.1
	 	Reserves Generally	 	 	49	 
	3.2
	 	Payment Reserve	 	 	51	 
	3.3
	 	Impound Account	 	 	51	 
	3.4
	 	Intentionally Deleted	 	 	52	 
	3.5
	 	Replacement Reserve	 	 	52	 
	 
	 	 	 	 	 	 
	ARTICLE IV.
	 	EVENTS OF DEFAULT	 	 	53	 
	4.1
	 	Events of Default	 	 	53	 
	 
	 	 	 	 	 	 
	ARTICLE V.
	 	REMEDIES	 	 	55	 
	5.1
	 	Remedies Available	 	 	55	 
	5.2
	 	Application of Proceeds	 	 	57	 
	5.3
	 	Right and Authority of Receiver or
Lender in the Event of Default; Power of Attorney	 	 	57	 
	5.4
	 	Occupancy After Foreclosure	 	 	59	 
	5.5
	 	Notice to Account Debtors	 	 	59	 
	5.6
	 	Cumulative Remedies	 	 	59	 
	5.7
	 	Payment of Expenses	 	 	59	 
	 
	 	 	 	 	 	 
	ARTICLE VI.
	 	MISCELLANEOUS TERMS AND CONDITIONS	 	 	60	 
	6.1
	 	Time of Essence	 	 	60	 
	6.2
	 	Release of Security Deed	 	 	60	 
	6.3
	 	Certain Rights of Lender	 	 	60	 
	6.4
	 	Waiver of Certain Defenses	 	 	60	 
	6.5
	 	Notices	 	 	60	 
	6.6
	 	Successors and Assigns; Joint and Several Liability	 	 	61	 
	6.7
	 	Severability	 	 	61	 
	6.8
	 	Gender	 	 	61	 
	6.9
	 	Waiver; Discontinuance of Proceedings	 	 	61	 
	6.10
	 	Section Headings	 	 	62	 
	6 11
	 	GOVERNING LAW	 	 	62	 
	6.12
	 	Counting of Days	 	 	62	 
	6.13
	 	Relationship of the Parties	 	 	62	 
	6.14 .
	 	Application of the Proceeds of the Note	 	 	62	 

ii 

 

	 	 	 	 	 	 	 
	 	 	 	 	Page	 
	 
	6.15
	 	Unsecured Portion of Indebtedness	 	 	62	 
	6.16
	 	Cross Default	 	 	62	 
	6.17
	 	Interest After Sale	 	 	62	 
	6.18
	 	Inconsistency with Other Loan Documents	 	 	63	 
	6.19
	 	Construction of this Document	 	 	63	 
	6 20
	 	No Merger	 	 	63	 
	6.21
	 	Rights With Respect to Junior Encumbrances	 	 	63	 
	6.22
	 	Lender May File Proofs of Claim	 	 	63	 
	6.23
	 	Fixture Filing	 	 	63	 
	6.24
	 	After-Acquired Property	 	 	64	 
	6.25
	 	No Representation	 	 	64	 
	6.26
	 	Counterparts	 	 	64	 
	6.27
	 	Personal Liability	 	 	64	 
	6.28
	 	Recording and Filing	 	 	64	 
	6.29
	 	Entire Agreement and Modifications	 	 	64	 
	6.30
	 	Intentionally Reserved	 	 	65	 
	6.31
	 	Secondary Market	 	 	65	 
	6.32
	 	Dissemination of Information	 	 	65	 
	6.33
	 	Certain Matters Relating to Property Located in the State of Georgia	 	 	65	 
	6.34
	 	REMIC Opinions	 	 	66	 

iii 

 

DEED TO SECURE DEBT, SECURITY AGREEMENT AND FIXTURE FILING

     THIS DEED TO SECURE DEBT, SECURITY AGREEMENT AND FIXTURE FILING (as the same may from time to
time be amended, consolidated, renewed or replaced, this “Security Deed”) is made as of September
18, 2006 by CAMPUS CREST AT CARROLLTON, LLC, a Delaware limited liability company, as grantor
(“Borrower”), whose address is 3 Centerview Drive, Suite 200, Greensboro, North Carolina 27407, to
WACHOVIA BANK, NATIONAL ASSOCIATION, a national banking association, as grantee (together with its
successors and assigns, “Lender”), whose address is Commercial Real Estate Services, 8739 Research
Drive URP — 4, NC 1075, Charlotte, North Carolina 28262.

WITNESSETH:

     THAT FOR AND IN CONSIDERATION OF THE SUM OF TEN AND NO/100 DOLLARS ($10.00), AND OTHER
VALUABLE CONSIDERATION, THE RECEIPT AND SUFFICIENCY OF WHICH ARE HEREBY ACKNOWLEDGED, BORROWER HAS
GRANTED, BARGAINED, SOLD, ALIENED, CONVEYED, CONFIRMED AND TRANSFERRED AND BY THESE PRESENTS,
BORROWER HEREBY IRREVOCABLY GRANTS, BARGAINS, SELLS, ALIENS, CONVEYS, TRANSFERS, PLEDGES, SETS
OVER AND ASSIGNS AND GRANTS A SECURITY INTEREST, TO GRANTEE, ITS SUCCESSORS AND ASSIGNS, with
power of sale, all of Borrower’s estate, right, title and interest in, to and under any and all of
the following described property, whether now owned or hereafter acquired by Borrower
(collectively, the “Property”):

     (A) All that certain real property situated in the County of Carroll, State of Georgia, more
particularly described on Exhibit A attached hereto and incorporated herein by this
reference (the “Premises”), together with all of the easements, rights, privileges, franchises,
tenements, hereditaments and appurtenances now or hereafter thereunto belonging or in any way
appertaining thereto, and all of the estate, right, title, interest, claim and demand whatsoever of
Borrower therein or thereto, either at law or in equity, in possession or in expectancy, now or
hereafter acquired;

     (B) All structures, buildings and improvements of every kind and description now or at any
time hereafter located or placed on the Premises (the “Improvements”);

     (C) All furniture, furnishings, fixtures, goods, equipment, inventory or personal property
owned by Borrower and now or hereafter located on, attached to or used in and about the
Improvements, including, but not limited to, all machines, engines, boilers, dynamos, elevators,
stokers, tanks, cabinets, awnings, screens, shades, blinds, carpets, draperies, lawn mowers, and
all appliances, plumbing, heating, air conditioning, lighting, ventilating, refrigerating, disposal
and incinerating equipment, and all fixtures and appurtenances thereto, and such other goods and
chattels and personal property owned by Borrower as are now or hereafter used or furnished in
operating the Improvements, or the activities conducted therein, and all building materials and
equipment hereafter situated on or about the Premises or Improvements, and all warranties and
guaranties relating thereto, and all additions thereto and

 

 

substitutions and replacements therefor (exclusive of any of the foregoing owned or leased by
tenants of space in the Improvements);

     (D) All easements, rights-of-way, strips and gores of land, vaults, streets, ways, alleys,
passages, sewer rights, and other emblements now or hereafter located on the Premises or under or
above the same or any part or parcel thereof, and all estates, rights, titles, interests,
tenements, hereditaments and appurtenances, reversions and remainders whatsoever, in any way
belonging, relating or appertaining to the Property or any part thereof, or which hereafter shall
in any way belong, relate or be appurtenant thereto, whether now owned or hereafter acquired by
Borrower;

     (E) All water, ditches, wells, reservoirs and drains and all water, ditch, well, reservoir and
drainage rights which are appurtenant to, located on, under or above or used in connection with the
Premises or the Improvements, or any part thereof, whether now existing or hereafter created or
acquired;

     (F) All minerals, crops, timber, trees, shrubs, flowers and landscaping features now or
hereafter located on, under or above the Premises;

     (G) All cash funds, deposit accounts and other rights and evidence of rights to cash, now or
hereafter created or held by Lender pursuant to this Security Deed or any other of the Loan
Documents (as hereinafter defined), including, without limitation, all funds now or hereafter on
deposit in the Reserves (as hereinafter defined);

     (H) All leases (including, without limitation, oil, gas and mineral leases), licenses,
concessions and occupancy agreements of all or any part of the Premises or the Improvements (each,
a “Lease” and collectively, “Leases”), whether written or oral, now or hereafter entered into and
all rents, royalties, issues, profits, bonus money, revenue, income, rights and other benefits
(collectively, the “Rents and Profits”) of the Premises or the Improvements, now or hereafter
arising from the use or enjoyment of all or any portion thereof or from any present or future
Lease or other agreement pertaining thereto or arising from any of the Leases or any of the
General Intangibles (as hereinafter defined) and all cash or securities deposited to secure
performance by the tenants, lessees or licensees (each, a “Tenant” and collectively, “Tenants”),
as applicable, of their obligations under any such Leases, whether said cash or securities are to
be held until the expiration of the terms of said Leases or applied to one or more of the
installments of rent coming due prior to the expiration of said terms, subject, however, to the
provisions contained in Section 2.7 hereinbelow;

     (I) All contracts and agreements now or hereafter entered into covering any part of the
Premises or the Improvements (collectively, the “Contracts”) and all revenue, income
and other benefits thereof, including, without limitation, management agreements, service
contracts, maintenance contracts, equipment leases, personal property leases and any contracts or
documents relating to construction on any part of the Premises or the Improvements (including
plans, drawings, surveys, tests, reports, bonds and governmental approvals) or to the management
or operation of any part of the Premises or the Improvements;

     (J) All present and future monetary deposits given to any public or private utility with
respect to utility services furnished to any part of the Premises or the Improvements;

2

 

     (K) All present and future funds, accounts, instruments, accounts receivable, documents,
causes of action, claims, general intangibles (including, without limitation, trademarks, trade
names, service marks and symbols now or hereafter used in connection with any part of the Premises
or the Improvements, all names by which the Premises or the Improvements may be operated or known,
all rights to carry on business under such names, and all rights, interest and privileges which
Borrower has or may have as developer or declarant under any covenants, restrictions or
declarations now or hereafter relating to the Premises or the Improvements) and all notes or
chattel paper now or hereafter arising from or by virtue of any transactions related to the
Premises or the Improvements (collectively, the “General Intangibles”);

     (L) All water taps, sewer taps, certificates of occupancy, permits, licenses, franchises,
certificates, consents, approvals and other rights and privileges now or hereafter obtained in
connection with the Premises or the Improvements and all present and future warranties and
guaranties relating to the Improvements or to any equipment, fixtures, furniture, furnishings,
personal property or components of any of the foregoing now or hereafter located or installed on
the Premises or the Improvements;

     (M) All building materials, supplies and equipment now or hereafter placed on the Premises or
in the Improvements and all architectural renderings, models, drawings, plans, specifications,
studies and data now or hereafter relating to the Premises or the Improvements;

     (N) All right, title and interest of Borrower in any insurance policies or binders now or
hereafter relating to the Property, including any unearned premiums thereon;

     (O) All proceeds, products, substitutions and accessions (including claims and demands
therefor) of the conversion, voluntary or involuntary, of any of the foregoing into cash or
liquidated claims, including, without limitation, proceeds of insurance and condemnation awards;
and

     (P) All other or greater rights and interests of every nature in the Premises or the
Improvements and in the possession or use thereof and income therefrom, whether now owned or
hereafter acquired by Borrower.

     THIS CONVEYANCE IS INTENDED TO (i) OPERATE AND BE CONSTRUED AS A DEED PASSING TITLE TO THE
PROPERTY TO LENDER AND IS MADE UNDER THOSE PROVISIONS OF THE EXISTING LAWS OF THE STATE OF GEORGIA
RELATING TO DEEDS TO SECURE DEBT, AND NOT AS A MORTGAGE AND (ii) TO CONSTITUTE A SECURITY
AGREEMENT PURSUANT TO THE GEORGIA UNIFORM COMMERCIAL CODE, AND IS GIVEN TO SECURE THE FOLLOWING:

     (1) The loan (the “Loan”) evidenced by that certain Promissory Note (such Promissory Note,
together with any and all renewals, amendments, modifications, consolidations and extensions
thereof, is hereinafter referred to as the “Note”) of even date with this Security Deed, made by
Borrower payable to the order of Lender in the principal face amount of Fourteen Million Six
Hundred Fifty Thousand and No/100 Dollars ($14,650,000.00), together with interest as therein
provided;

3

 

     (2) The full and prompt payment and performance of all of the provisions, agreements,
covenants and obligations herein contained and contained in any other agreements, documents or
instruments now or hereafter evidencing, securing or otherwise relating to the Debt (as hereinafter
defined) including, but not limited to, the Environmental Indemnity Agreement (as hereinafter
defined) and the Indemnity and Guaranty Agreements (as hereinafter defined) (the Note, this
Security Deed, and such other agreements, documents and instruments, together with any and all
renewals, amendments, extensions and modifications thereof, are hereinafter collectively referred
to as the “Loan Documents”) and the payment of all other sums herein or therein covenanted to be
paid;

     (3) Any and all additional advances made by Lender to protect or preserve the Property or the
lien or security interest created hereby on the Property, or for taxes, assessments or insurance
premiums as hereinafter provided or for performance of any of Borrower’s obligations hereunder or
under the other Loan Documents or for any other purpose provided herein or in the other Loan
Documents (whether or not the original Borrower remains the owner of the Property at the time of
such advances); and

     (4) Any and all other indebtedness now owing or which may hereafter be owing by Borrower to
Lender, including, without limitation, all prepayment fees, however and whenever incurred or
evidenced, whether express or implied, direct or indirect, absolute or contingent, or due or to
become due, and all renewals, modifications, consolidations, replacements and extensions thereof,
it being contemplated by Borrower and Lender that Borrower may hereafter become so indebted to
Lender.

(All of the sums referred to in Paragraphs (1) through (4) above are herein referred to as
the “Debt”).

     TO HAVE AND TO HOLD the Property unto Lender, its successors and assigns forever, and
Borrower does hereby bind itself, its successors and assigns, to WARRANT AND FOREVER DEFEND the
title to the Property, subject to the Permitted Encumbrances (as hereinafter defined), to Lender
against every person whomsoever lawfully claiming or to claim the same or any part thereof;

     PROVIDED, HOWEVER, that if the principal and interest and all other sums due or to become due
under the Note or under the other Loan Documents, including, without limitation, any prepayment
fees required pursuant to the terms of the Note, shall have been paid at the time and in the
manner stipulated therein and the Debt shall have been paid and all other covenants contained in
the Loan Documents shall have been performed, then, in such case, the liens, security interests,
estates and rights granted by this Security Deed shall be satisfied and the estate, right, title
and interest of Lender in the Property shall cease, and upon payment to Lender of all costs and
expenses incurred for the preparation of the release hereinafter referenced and all recording
costs if allowed by law, Lender shall promptly satisfy and release this Security Deed of record
and the lien hereof by proper instrument.

4

 

ARTICLE I.

REPRESENTATIONS AND WARRANTIES OF BORROWER

     Borrower, for itself and its successors and assigns, does hereby represent, warrant and
covenant to and with Lender, its successors and assigns, that:

     1.1 Organization; Special Purpose. Borrower has been duly organized and is validly
existing and in good standing under the laws of the state of its formation, with requisite power
and authority, and all rights, licenses, permits and authorizations, governmental or otherwise,
necessary to own its properties and to transact the business in which it is now engaged. Borrower
is duly qualified to do business and is in good standing in each jurisdiction where it is required
to be so qualified in connection with its properties, business and operations. Borrower possesses
all franchises, patents, copyrights, trademarks, trade names, licenses and permits necessary for
the conduct of its business substantially as now conducted. Borrower is a Single- Purpose Entity in
compliance with the provisions of Section 2.29 hereof.

     1.2 Title. Borrower has good, marketable and indefeasible fee simple title to the
Property, subject only to those matters expressly set forth as exceptions to or subordinate matters
in the title insurance policy insuring the lien of this Security Deed delivered as of the date
hereof which Lender has agreed to accept, excepting therefrom all preprinted and/or standard
exceptions (such items being the “Permitted Encumbrances”), and has full power and lawful authority
to grant, bargain, sell, convey, assign, transfer, encumber and mortgage its interest in the
Property in the manner and form hereby done or intended. Borrower will preserve its interest in and
title to the Property and will forever warrant and defend the same to Lender against any and all
claims whatsoever and will forever warrant and defend the validity and priority of the lien and
security interest created herein against the claims of all persons and parties whomsoever, subject
to the Permitted Encumbrances. This Security Deed creates (i) a valid, perfected lien on the
Premises, subject only to Permitted Encumbrances and the liens created by the Loan Documents and
(ii) perfected security interests in and to, and perfected collateral assignments of, all
personalty, all in accordance with the terms thereof, in each case subject only to any applicable
Permitted Encumbrances, such other liens as are permitted pursuant to the Loan Documents and the
liens created by the Loan Documents. There are no security agreements or financing statements
affecting all or any portion of the Property other than (i) as disclosed in writing by Borrower to
Lender prior to the date hereof and (ii) the security agreements and financing statements created
in favor of Lender. There are no claims for payment for work, labor or materials affecting the
Premises which are or may become a lien prior to, or of equal priority with, the liens created by
the Loan Documents. None of the Permitted Encumbrances, individually or in the aggregate,
materially interfere with the benefits of the security intended to be provided by this Security
Deed, materially and adversely affect the value of the Premises, impair the use or operations of
the Premises or impair Borrower’s ability to pay its obligations in a timely manner. The foregoing
warranty of title shall survive the foreclosure of this Security Deed and shall inure to the
benefit of and be enforceable by Lender in the event Lender acquires title to the Property pursuant
to any foreclosure.

     1.3 No Bankruptcy Filing. No bankruptcy, insolvency proceedings or liquidation of all
or a substantial portion of the Property is pending or contemplated by Borrower or, to the best

5

 

knowledge of Borrower, against Borrower or by or against any endorser or cosigner of the Note or
of any portion of the Debt, or any guarantor or indemnitor under any guaranty or indemnity
agreement, including, without limitation, those certain Indemnity and Guaranty Agreements, each
dated the date hereof, executed in favor of Lender (the “Indemnity and Guaranty Agreements”)
executed in connection with the Note or the loan evidenced thereby and secured hereby (an
“Indemnitor”). No petition in bankruptcy has been filed against Borrower or any general partner,
manager, sole member, managing member or majority shareholder of Borrower, as applicable
(collectively, the “Borrower Parties”, each a “Borrower Party”), and neither Borrower Party or any
principal of a Borrower Party has ever made an assignment for the benefit of creditors or taken
advantage of any insolvency act for the benefit of debtors.

     1.4 Full and Accurate Disclosure. No statement of fact made by Borrower in any Loan
Documents contains any untrue statement of a material fact or omits to state any material fact
necessary to make statements contained therein not misleading. There is no material fact presently
known to Borrower that has not been disclosed to Lender which adversely affects, or, as far as
Borrower can foresee, might adversely affect, the Property or the business, operations or condition
(financial or otherwise) of Borrower. All financial data, including the statements of cash flow and
income and operating expense, that have been delivered to Lender with respect to Borrower and the
Property (i) are true, complete and correct in all material respects, (ii) accurately represent the
financial condition of Borrower and the Property as of the date of such reports, and (iii) to the
extent prepared by an independent certified public accounting firm, have been prepared in
accordance with generally accepted accounting principles consistently applied throughout the
periods covered, except as disclosed therein. Borrower has no contingent liabilities, liabilities
for taxes, unusual forward or long-term commitments, unrealized or anticipated losses from any
unfavorable commitments or any liabilities or obligations not expressly permitted by this Security
Deed. Since the date of such financial statements, there has been no materially adverse change in
the financial condition, operations or business of Borrower or the Property from that set forth in
said financial statements.

     1.5 Proceedings; Enforceability. The execution, delivery and performance of this
Security Deed, the Note and all of the other Loan Documents have been duly authorized by all
necessary action to be, and are, binding and enforceable against Borrower in accordance with the
respective terms thereof and do not contravene, result in a breach of or constitute a default (nor
upon the giving of notice or the passage of time or both will constitute a default) under the
partnership agreement, articles of incorporation, operating agreement or other organizational
documents of Borrower or any contract or agreement of any nature to which Borrower is a party or by
which Borrower or any of its property may be bound and do not violate or contravene any law, order,
decree, rule or regulation to which Borrower is subject. The Loan Documents are not subject to, and
Borrower has not asserted, any right of rescission, set-off, counterclaim or defense, including the
defense of usury.

     1.6 No Conflicts. Borrower is not required to obtain any consent, approval or
authorization from or to file any declaration or statement with, any governmental authority or
agency in connection with or as a condition to the execution, delivery or performance of this
Security Deed, the Note or the other Loan Documents which has not been so obtained or filed.
Borrower has obtained or made all necessary (i) consents, approvals and authorizations and

6

 

registrations and filings of or with all governmental authorities or agencies and (ii) consents,
approvals, waivers and notifications of partners, stockholders, members, creditors, lessors and
other non-governmental persons and/or entities, in each case, which are required to be obtained or
made by Borrower in connection with the execution and delivery of, and the performance by Borrower
of its obligations under, the Loan Documents.

     1.7 Federal Reserve Regulations; Investment Company Act. No part of the proceeds of
the Loan will be used for the purpose of purchasing or acquiring any “margin stock” within the
meaning of Regulation T, U or X of the Board of Governors of the Federal Reserve System or for any
other purpose that would be inconsistent with such Regulation T, U or X or any other regulation of
such Board of Governors, or for any purpose prohibited by law or any Loan Document. Borrower is not
(i) an “investment company” or a company “controlled” by an “investment company,” within the
meaning of the Investment Company Act of 1940, as amended; (ii) a “holding company” or a
“subsidiary company” of a “holding company” or an “affiliate” of either a “holding company” or a
“subsidiary company” within the meaning of the Public Utility Holding Company Act of 1935, as
amended; or (iii) subject to any other federal or state law or regulation which purports to
restrict or regulate its ability to borrow money.

     1.8 Taxes. Borrower and any general partner or managing member of Borrower, if any,
has filed all federal, state and local tax returns required to be filed as of the date hereof and
has paid or made adequate provision for the payment of all federal, state and local taxes, charges
and assessments payable by Borrower and any general partner or managing member, if any, as of the
date hereof. Borrower and any general partner or managing member, if any, believe that their
respective tax returns properly reflect the income and taxes of Borrower and said general partner
or managing member, if any, for the periods covered thereby, subject only to reasonable adjustments
required by the Internal Revenue Service or other applicable tax authority upon audit. Borrower and
the Property are free from any past due obligations for sales and payroll taxes.

     1.9 ERISA. Borrower (i) has no knowledge of any material liability that has been
incurred or is expected to be incurred by Borrower that is or remains unsatisfied for any taxes or
penalties with respect to any “employee benefit plan”, as defined in section 3(3) of the Employee
Retirement Income Security Act of 1974, as amended (“ERISA”), or any “plan” within the meaning of
Section 4975(e)(l) of the Internal Revenue Code of 1986, as amended (the “Code”) or any other
benefit plan (other than a multi-employer plan) maintained, contributed to, or required to be
contributed to by Borrower or by any entity that is under the common control with Borrower within
the meaning of ERISA Section 4001(a)(14) (collectively, a “Plan”) or any plan that would be a Plan
but for the fact that it is a multi-employer plan within the meaning of ERISA Section 3(37) and
(ii) has made and shall continue to make when due all required contributions to all such Plans, if
any. Each such Plan, if any, has been and will be administered in compliance with its terms and the
applicable provisions of ERISA, the Code and any other applicable Federal or state law and no
action shall be taken or fail to be taken that would result in the disqualification or loss of the
tax-exempt status of any such Plan, if any, intended to be qualified or tax-exempt. The assets of
Borrower do not constitute “plan assets” of one or more such plans within the meaning of 29 C.F.R.
Section 2510.3-101.

7

 

     1.10 Property Compliance. The Premises and the Improvements and the current
intended use thereof by Borrower comply in all material respects with all applicable restrictive
covenants, zoning ordinances, subdivision and building codes, flood disaster laws, health and
environmental laws and regulations and all other ordinances, orders or requirements issued by any
state, federal or municipal authorities having or claiming jurisdiction over the Property. In the
event that all or any part of the Improvements are destroyed or damaged, said Improvements can be
legally reconstructed to their condition prior to such damage or destruction, and thereafter exist
for the same use without violating any zoning or other ordinances applicable thereto and without
the necessity of obtaining any variances or special permits. No legal proceedings are pending or,
to the knowledge of Borrower, threatened with respect to the zoning of the Premises. Neither the
zoning nor any other right to construct, use or operate the Premises is in any way dependent upon
or related to any property other than the Premises. All certifications, permits, licenses and
approvals, including certificates of completion and occupancy permits required for the legal use,
occupancy and operation of the Premises have been obtained and are in full force and effect. The
Premises and Improvements constitute one or more separate tax parcels for purposes of ad valorem
taxation. The Premises and Improvements do not require any rights over, or restrictions against,
other property in order to comply with any of the aforesaid governmental ordinances, orders or
requirements.

     1.11 Utilities. All utility services necessary and sufficient for the full use,
occupancy, operation and disposition of the Premises and the Improvements for their intended
purposes are available to the Property, including water, storm sewer, sanitary sewer, gas,
electric, cable and telephone facilities, through public rights-of-way or perpetual private
easements approved by Lender. The Property is free from delinquent water charges, sewer rents,
taxes and assessments.

     1.12 Public Access. All streets, roads, highways, bridges and waterways necessary for
access to and full use, occupancy, operation and disposition of the Premises and the Improvements
have been completed, have been dedicated to and accepted by the appropriate municipal authority and
are open and available to the Premises and the Improvements without further condition or cost to
Borrower. All curb cuts, driveways and traffic signals shown on the survey delivered to Lender
prior to the execution and delivery of this Security Deed are existing and have been fully approved
by the appropriate governmental authority.

     1.13 Litigation; Agreements. There are no judicial, administrative, mediation or
arbitration actions, suits or proceedings pending or threatened against or affecting Borrower (or,
if Borrower is a partnership or a limited liability company, any of its general partners or
members) or the Property which, if adversely determined, would materially impair either the
Property or Borrower’s ability to perform the covenants or obligations required to be performed
under the Loan Documents. Borrower is not a party to any agreement or instrument or subject to any
restriction which might adversely affect Borrower or the Property, or Borrower’s business,
properties, operations or condition, financial or otherwise. Borrower is not in default in any
material respect in the performance, observance or fulfillment of any of the obligations, covenants
or conditions contained in any Permitted Encumbrance or any other agreement or instrument to which
it is a party or by which it or the Property is bound.

8

 

     1.14 Physical Condition. As of the date of this Security Deed, (i) the Property
is free from unrepaired damage caused by fire, flood, accident or other casualty, (ii) no part of
the Premises or the Improvements has been taken in condemnation, eminent domain or like proceeding
nor is any such proceeding pending or, to Borrower’s knowledge and belief, threatened or
contemplated, (iii) except as may otherwise be disclosed in that certain property condition report
(the “Property Condition Report”) dated August 7, 2006 and prepared by IVI Due Diligence Services,
Inc., the Improvements are structurally sound, in good repair and free of defects in materials and
workmanship and have been constructed and installed in substantial compliance with the plans and
specifications relating thereto, and (iv) all major building systems located within the
Improvements, including, without limitation, the heating and air conditioning systems and the
electrical and plumbing systems, are in good working order and condition.

     1.15 Contracts. Borrower has delivered to Lender true, correct and complete copies of
all Contracts and all amendments thereto or modifications thereof. Each Contract constitutes the
legal, valid and binding obligation of Borrower and, to the best of Borrower’s knowledge and
belief, is enforceable against any other party thereto. No default exists, or with the passing of
time or the giving of notice or both would exist, under any Contract which would, in the aggregate,
have a material adverse effect on Borrower or the Property. No. Contract provides any party with
the right to obtain a lien or encumbrance upon the Property superior to the lien of this Security
Deed. All Contracts affecting the Property have been entered into at arms-length in the ordinary
course of Borrower’s business and provide for the payment of fees in amounts and upon terms
comparable to existing market rates.

     1.16 Leases. Borrower has delivered a true, correct and complete schedule
(the “Rent Roll”) of all Leases affecting the Property as of the date hereof, which accurately and completely
sets forth in all material respects for each such Lease, the following: the name of the Tenant, the
Lease expiration date, the base rent payable, the amount of any rent prepaid more than one (1)
month in advance, the security deposit held thereunder and any other material provisions of such
Lease. Upon Lender’s written request, Borrower shall provide true, correct and complete copies of
all Leases described in the Rent Roll. Each Lease constitutes the legal, valid and binding
obligation of Borrower and, to the best of Borrower’s knowledge and belief, is enforceable against
the Tenant thereof. No default exists, or with the passing of time or the giving of notice or both
would exist, under any Lease which would, in the aggregate, have a material adverse effect on
Borrower or the Property. Except as set forth in the Rent Roll, no Tenant under any Lease has, as
of the date hereof, paid rent more than thirty (30) days in advance, and the rents under such
Leases have not been waived, released, or otherwise discharged or compromised. All security
deposits required under such Leases have been fully funded and are held by Borrower in a separate
segregated account or as otherwise required by applicable law. No Lease provides any party with the
right to obtain a lien or encumbrance upon the Property superior to the lien of this Security Deed.
The Property forms no part of any property owned, used or claimed by Borrower as a residence or
business homestead and is not exempt from forced sale under the laws of the state in which the
Premises is located. Borrower hereby disclaims and renounces each and every claim to all or any
portion of the Property as a homestead.

9

 

     1.17 Foreign Person. Borrower is not a “foreign person” within the meaning of
§1445(f)(3) of the Code, and the related Treasury Department regulations, including temporary
regulations.

     1.18 Management Agreement. The property management agreement relating to the Premises
(the “Management Agreement”) is in full force and effect and to the best of Borrower’s knowledge,
there is no default, breach or violation existing thereunder by any party thereto beyond the
expiration of applicable notice and grace periods thereunder and no event has occurred (other than
payments due but not yet delinquent) that, with the passage of time or the giving of notice, or
both, would constitute a default, breach or violation by any party thereunder. The fee due under
the Management Agreement, and the terms and provisions of the Management Agreement, are subordinate
to this Security Deed; provided that payments under the Management Agreement may be paid and
retained so long as no Event of Default has occurred and is continuing.

     1.19 Fraudulent Transfer. Borrower has not entered into the Loan or any Loan Document
with the actual intent to hinder, delay, or defraud any creditor, and Borrower has received
reasonably equivalent value in exchange for its obligations under the Loan Documents. Giving effect
to the transactions contemplated by the Loan Documents, the fair saleable value of Borrower’s
assets exceeds and will, immediately following the execution and delivery of the Loan Documents,
exceed Borrower’s total liabilities, including subordinated, unliquidated, disputed or contingent
liabilities, including the maximum amount of its contingent liabilities or its debts as such debts
become absolute and matured. Borrower’s assets do not and, immediately following the execution and
delivery of the Loan Documents will not, constitute unreasonably small capital to carry out its
business as conducted or as proposed to be conducted. Borrower does not intend to, and does not
believe that it will, incur debts and liabilities (including contingent liabilities and other
commitments) beyond its ability to pay such debts as they mature (taking into account the timing
and amounts to be payable on or in respect of obligations of Borrower).

     1.20 Foreign Assets Control.

          (a) None of the Borrower, any subsidiary of the Borrower or any Affiliate of the Borrower or
any Indemnitor (i) is a Sanctioned Person (defined below), (ii) has more than 15% of its assets in
Sanctioned Countries (defined below), or (iii) derives more than 15% of its operating income from
investments in, or transactions with Sanctioned Persons or Sanctioned Countries. The loan proceeds
to be advanced by Lender will not be used and have not been used to fund any operations in,
finance any investments or activities in or make any payments to, a Sanctioned Person or a
Sanctioned Country. For purposes of the foregoing, a “Sanctioned Person” shall mean (i) a person
named on the list of “specially designated nationals” or “blocked persons” maintained by the U.S.
Office of Foreign Assets Control (“OFAC”) at http://www.treas.gov/offices/eotffc/ofac/sdn/index. html, or as otherwise published from time to time, or
(ii) (A) an agency of the government of a Sanctioned Country, (B) an organization controlled by a
Sanctioned Country, or (C) a person resident in a Sanctioned Country, to the extent subject to a
sanctions program administered by OFAC. A “Sanctioned Country” shall mean a country subject to a
sanctions program identified on the list maintained by OFAC and

10

 

available at http://www.treas.gov/offices/eotffc/ofac/sanctions/index.html. or as
otherwise published from time to time.

          (b) Lender may reject or refuse to accept any Collateral for credit toward payment of the
obligations hereunder or under any of the Loan Documents that is an account, instrument, chattel
paper, lease, or other obligation or property of any kind due from, owed by, or belonging to, a
Sanctioned Person.

          (c) Notwithstanding any grant of a security interest in the Collateral by virtue of other
provisions of this Security Deed or under any of the Loan Documents, (i) no account, instrument,
chattel paper or other obligation or property of any kind due from, owed by, or belonging to, a
Sanctioned Person or (ii) any lease in which the lessee is a Sanctioned Person shall be Collateral.

          (d) Borrower shall pay any civil penalty or fine assessed by the U. S. Department of the
Treasury’s Office of Foreign Assets Control against, and all reasonable costs and expenses
(including counsel fees and disbursements) incurred in connection with defense thereof by Lender as
a result of the funding of the loan proceeds by Lender hereunder or the acceptance of payments
hereunder or under the Note and other Loan Documents or of Collateral due under any of the Loan
Documents.

All of the representations and warranties in this Article I and elsewhere in the Loan
Documents (i) shall survive for so long as any portion of the Debt remains owing to Lender and
(ii) shall be deemed to have been relied upon by Lender notwithstanding any investigation
heretofore or hereafter made by Lender or on its behalf.

ARTICLE II.

COVENANTS OF BORROWER

     For the purposes of further securing the Debt and for the protection of the security of this
Security Deed, for so long as the Debt or any part thereof remains unpaid, Borrower covenants and
agrees as follows:

     2.1 Defense of Title. If, while this Security Deed is in force, the title to the
Property or the interest of Lender therein shall be the subject, directly or indirectly, of any
action at law or in equity, or be attached directly or indirectly, or endangered, clouded or
adversely affected in any manner, Borrower, at Borrower’s expense, shall take all necessary and
proper steps for the defense of said title or interest, including the employment of counsel
approved by Lender, the prosecution or defense of litigation, and the compromise or discharge of
claims made against said title or interest. Notwithstanding the foregoing, in the event that
Lender determines that Borrower is not adequately performing its obligations under this Section,
Lender may, without limiting or waiving any other rights or remedies of Lender hereunder, take
such steps with respect thereto as Lender shall deem necessary or proper and any and all costs and
expenses incurred by Lender in connection therewith, together with interest thereon at the Default
Interest Rate (as defined in the Note) from the date incurred by Lender until actually paid by
Borrower, shall be immediately paid by Borrower on demand and shall be secured by this Security
Deed

11

 

and by all of the other Loan Documents securing all or any part of the indebtedness evidenced by the Note.

     2.2 Performance of Obligations. Borrower shall pay when due the principal of and the
interest on the Debt in accordance with the terms of the Note. Borrower shall also pay all charges,
fees and other sums required to be paid by Borrower as provided in the Loan Documents, in
accordance with the terms of the Loan Documents, and shall observe, perform and discharge all
obligations, covenants and agreements to be observed, performed or discharged by Borrower set forth
in the Loan Documents in accordance with their terms. Further, Borrower shall promptly and strictly
perform and comply with all covenants, conditions, obligations and prohibitions required of
Borrower in connection with any other document or instrument affecting title to the Property, or
any part thereof, regardless of whether such document or instrument is superior or subordinate to
this Security Deed.

     2.3 Insurance. Borrower shall, at Borrower’s expense, maintain in force and effect on
the Property at all times while this Security Deed continues in effect the following insurance:

          (a) Insurance against loss or damage to the Property by fire, lightning, windstorm, tornado,
hail, terrorism, riot and civil commotion, vandalism, malicious mischief, burglary and theft and
against loss and damage by such other, further and additional risks as may be now or hereafter
embraced by a “special causes of loss” type of insurance policy. The amount of such insurance shall
be not less than one hundred percent (100%) of the full replacement cost (insurable value) of the
Improvements (as established by a Member of the Appraisal Institute appraisal), without reduction
for depreciation. The determination of the replacement cost amount shall be adjusted annually to
comply with the requirements of the insurer issuing such coverage or, at Lender’s election, by
reference to such indices, appraisals or information as Lender determines in its reasonable
discretion in order to reflect increased value due to inflation. “Full replacement cost,” as used
herein and elsewhere in this Section 2.3. means, with respect to the Improvements, the cost
of replacing the Improvements without regard to deduction for depreciation, exclusive of the cost
of excavations, foundations and footings below the lowest basement floor. Borrower shall also
maintain insurance against loss or damage to furniture, furnishings, fixtures, equipment and other
items (whether personalty or fixtures) included in the Property and owned by Borrower from time to
time to the extent applicable. Each policy shall contain a replacement cost endorsement and either
an agreed amount endorsement (to avoid the operation of any co-insurance provisions) or a waiver of
any co-insurance provisions, all subject to Lender’s approval. The maximum deductible shall be
$25,000.00.

          (b) If the “special causes of loss” policy required in subsection (a) above excludes coverage
for wind damage, Borrower shall maintain separate coverage for such risk. Furthermore, if the
Property is located in the State of Florida, or within twenty five (25) miles of the ocean coast of
the states of Texas, Louisiana, Mississippi, Alabama, Georgia, North Carolina, Hawaii or South
Carolina, windstorm insurance must be maintained in an amount equal to the lesser of (i) the full
replacement cost of the Property or (ii) the maximum limit of coverage available with respect to
the Improvements and Equipment. If available, a minimum of eighteen (18) months general business
income coverage specifically relating to wind damage shall be required. The maximum deductible
shall be $25,000.00.

12

 

          (c) Ordinance and law insurance is required if the Property is “non- conforming” with respect
to any zoning requirements. Borrower shall maintain “Coverage A” against loss on value to the
undamaged portion of the Improvements for the full replacement cost of the Improvements. Borrower
shall also maintain “Coverage B” against the cost of demolition in an amount equal to ten percent
(10%) of the total value of the Improvements and “Coverage C” against increased cost of
reconstruction in an amount equal to twenty percent (20%) of the total value of the Improvements.
The aggregate total amount of coverage required for Coverage A, Coverage B, and Coverage C above
shall be $10,000.00. The maximum deductible shall be $25,000.00.

          (d) Commercial General Liability Insurance against claims for personal injury, bodily injury,
death and property damage occurring on, in or about the Premises or the Improvements in amounts not
less than $1,000,000.00 per occurrence and $2,000,000.00 in the aggregate plus umbrella coverage in
an amount not less than $10,000,000. Lender hereby retains the right to periodically review the
amount of said liability insurance being maintained by Borrower and to require an increase in the
amount of said liability insurance should Lender deem an increase to be reasonably prudent under
then existing circumstances. The maximum deductible shall be $10,000.00.

          (e) Equipment breakdown (also known as boiler and machinery insurance) is required if steam
boilers or other pressure-fired vessels are in operation at the Premises. Minimum liability
coverage per accident must equal the greater of the replacement cost (insurable value) of the
Improvements housing such boiler or pressure-fired machinery or $2,000,000.00. If one or more large
HVAC units is in operation at the Premises, “Systems Breakdowns” coverage shall be required, as
determined by Lender. Minimum liability coverage per accident must equal the value of such unit(s).
If available, a minimum of eighteen (18) months general business income coverage specifically
relating to boiler and machinery damage shall be required. The maximum deductible shall be
$10,000.00. Co-insurance is prohibited.

          (f) If the Improvements or any part thereof is situated in an area designated by the Federal
Emergency Management Agency (“FEMA”) as a special flood hazard area (Zone A or Zone V), flood
insurance in an amount equal to the lesser of: (i) the minimum amount required, under the terms of
coverage, to compensate for any damage or loss on a replacement basis (or the unpaid balance of the
Debt if replacement cost coverage is not available for the type of building insured), or (ii) the
maximum insurance available under the appropriate National Flood Insurance Administration program.
If available, a minimum of eighteen (18) months general business income coverage specifically
relating to flood damage shall be required. The maximum deductible shall be $3,000.00 per building
or a higher minimum amount as required by FEMA or other applicable law.

          (g) If the Property is situated in an area designated by FEMA as a high probability earthquake
area (Zone 2b or greater), Lender may require a Probable Maximum Loss (“PML”) study to be conducted
at the Property. If the PML study reveals a PML equal to or exceeding twenty percent (20%) of the
full replacement cost of the Improvements, Borrower shall be required to maintain earthquake
insurance in an amount equal to the PML percentage of

13

 

full replacement cost of the Improvements. If available, a minimum of eighteen (18) months
general business Income coverage specifically relating to earthquake damage shall be required.
The maximum deductible shall be no more than five percent (5%) of the value at risk or the lowest
deductible available in the State in which the Property is located.

          (h) During the period of any construction, renovation or alteration of the existing
Improvements which exceeds the lesser of 10% of the principal amount of the Note or $500,000, at
Lender’s request, a completed value, “All Risk” Builder’s Risk form or “Course of Construction”
insurance policy in non-reporting form, in an amount approved by Lender, may be required. During
the period of any construction of any addition to the existing Improvements, a completed value,
“All Risk” Builder’s Risk form or “Course of Construction” insurance policy in non-reporting form,
in an amount approved by Lender, shall be required. The maximum deductible shall be $25,000.00.

          (i) When required by applicable law, ordinance or other regulation, Worker’s Compensation and
Employer’s Liability Insurance covering all persons subject to the worker’s compensation laws of
the state in which the Property is located. Additionally, if Borrower has direct employees, Hired
and Non-Owned Auto Insurance is required in an amount equal to $1,000,000 per occurrence. The
maximum deductible shall be $25,000.00.

          (j) In addition to the specific risk coverage required herein, general business income (loss
of rents) insurance in amounts sufficient to compensate Borrower for all Rents and Profits or
income during a period of not less than twelve (12) months. The “actual loss” amount of coverage
shall be adjusted annually to reflect the greater of (i) estimated Rents and Profits or income
payable during the succeeding twelve (12) month period or (ii) the projected operating expenses,
capital expenses and debt service for the Property as approved by Lender in its sole discretion.
Additionally, Lender, in its sole discretion, may require an “Extended Period of Indemnity”
endorsement for an additional six (6) months to allow for re-leasing of the Property. The maximum
deductible shall be $10,000.00.

          (k) Such other insurance on the Property or on any replacements or substitutions thereof or
additions thereto as may from time to time be required by Lender against other insurable hazards
or casualties which at the time are commonly insured against in the case of property similarly
situated including, without limitation, Sinkhole, Mine Subsidence and Environmental insurance, due
regard being given to the height and type of buildings, their construction, location, use and
occupancy.

     All such insurance shall (i) be with insurers fully licensed and authorized to do business
in the state within which the Premises is located and who have and maintain a rating of at least
(A) A- or higher from Standard & Poors and (B) AV or higher from A.M. Best, (ii) contain the
complete address of the Premises (or a complete legal description), (iii) be for terms of at
least one year, with premium prepaid, and (iv) be subject to the approval of Lender as to
insurance companies, amounts, content, forms of policies, method by which premiums are paid and
expiration dates, and (v) include a standard, non-contributory, mortgagee clause naming EXACTLY:

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Wachovia Bank, National Association,

its Successors and Assigns ATIMA

c/o Wachovia Bank, National Association, as Servicer

P.O. Box 563956

Charlotte, North Carolina 28256-3956

(A) as an additional insured under all liability insurance policies, (B) as the first
mortgagee on all property insurance policies and (C) as the loss payee on all loss of
rents or loss of business income insurance policies.

     Borrower shall, as of the date hereof, deliver to Lender evidence that said insurance policies
have been prepaid as required above and certified copies of such insurance policies and original
certificates of insurance signed by an authorized agent of the applicable insurance companies
evidencing such insurance satisfactory to Lender. Borrower shall renew all such insurance and
deliver to Lender an Accord 28 certificate for proof of commercial property insurance and an Accord
25 certificate for proof of liability insurance, together with such other certificates reasonably
requested by Lender and policies evidencing such renewals at least thirty (30) days before any such
insurance shall expire. Borrower further agrees that each such insurance policy: (i) shall provide
for at least thirty (30) days’ prior written notice to Lender prior to any policy reduction or
cancellation for any reason other than non-payment of premium and at least ten (10) days’ prior
written notice to Lender prior to any cancellation due to non-payment of premium; (ii) shall
contain an endorsement or agreement by the insurer that any loss shall be payable to Lender in
accordance with the terms of such policy notwithstanding any act or negligence of Borrower which
might otherwise result in forfeiture of such insurance; (iii) shall waive all rights of subrogation
against Lender; and (iv) may be in the form of a blanket policy provided that, in the event that
any such coverage is provided in the form of a blanket policy, Borrower hereby acknowledges and
agrees that failure to pay any portion of the premium therefor which is not allocable to the
Property or by any other action not relating to the Property which would otherwise permit the
issuer thereof to cancel the coverage thereof, would require the Property to be insured by a
separate, single-property policy. The blanket policy must properly identify and fully protect the
Property as if a separate policy were issued for 100% of Replacement Cost at the time of loss and
otherwise meet all of Lender’s applicable insurance requirements set forth in this Section
2.3. The delivery to Lender of the insurance policies or the certificates of insurance as
provided above shall constitute an assignment of all proceeds payable under such insurance policies
relating to the Property by Borrower to Lender as further security for the Debt. In the event of
foreclosure of this Security Deed, or other transfer of title to the Property in extinguishment in
whole or in part of the Debt, all right, title and interest of Borrower in and to all proceeds
payable under such policies then in force concerning the Property shall thereupon vest in the
purchaser at such foreclosure, or in Lender or other transferee in the event of such other transfer
of title. Approval of any insurance by Lender shall not be a representation of the solvency of any
insurer or the sufficiency of any amount of insurance. In the event Borrower fails to provide,
maintain, keep in force or deliver and furnish to Lender the policies of insurance required by this
Security Deed or evidence of their renewal as required herein, Lender may, but shall not be
obligated to, procure such insurance and Borrower shall pay all amounts advanced by Lender
therefor, together with interest thereon at the Default Interest Rate from and after the date
advanced by Lender until actually repaid by Borrower,

15

 

promptly upon demand by Lender. Any amounts so advanced by Lender, together with interest thereon,
shall be secured by this Security Deed and by all of the other Loan Documents securing all or any
part of the Debt. Lender shall not be responsible for nor incur any liability for the insolvency
of the insurer or other failure of the insurer to perform, even though Lender has caused the
insurance to be placed with the insurer after failure of Borrower to furnish such insurance.
Borrower shall not obtain insurance for the Property in addition to that required by Lender
without the prior written consent of Lender, which consent will not be unreasonably withheld
provided that (i) Lender is a named insured on such insurance, (ii) Lender receives complete
copies of all policies evidencing such insurance, and (iii) such insurance complies with all of
the applicable requirements set forth herein.

     2.4 Payment of Taxes. Borrower shall pay or cause to be paid, except to the extent
provision is actually made therefor pursuant to Section 3.3 of this Security Deed, all
taxes and assessments which are or may become a lien on the Property or which are assessed against
or imposed upon the Property. Borrower shall furnish Lender with receipts (or if receipts are not
immediately available, with copies of canceled checks evidencing payment with receipts to follow
promptly after they become available) showing payment of such taxes and assessments at least
fifteen (15) days prior to the applicable delinquency date therefor. Notwithstanding the
foregoing, Borrower may, in good faith, by appropriate proceedings and upon notice to Lender,
contest the validity, applicability or amount of any asserted tax or assessment so long as (a)
such contest is diligently pursued, (b) Lender determines, in its subjective opinion, that such
contest suspends the obligation to pay the tax and that nonpayment of such tax or assessment will
not result in the sale, loss, forfeiture or diminution of the Property or any part thereof or any
interest of Lender therein, and (c) prior to the earlier of the commencement of such contest or
the delinquency date of the asserted tax or assessment, Borrower deposits in the Impound Account
(as hereinafter defined) an amount determined by Lender to be adequate to cover the payment of
such tax or assessment and a reasonable additional sum to cover possible interest, costs and
penalties; provided, however, that Borrower shall promptly cause to be
paid any amount adjudged by a court of competent jurisdiction to be due, with all interest, costs
and penalties thereon, promptly after such judgment becomes final; and provided further
that in any event each such contest shall be concluded and the taxes, assessments,
interest, costs and penalties shall be paid prior to the date any writ or order is issued under
which the Property may be sold, lost or forfeited.

     2.5 Casualty and Condemnation. Borrower shall give Lender prompt written notice of
(i) the occurrence of any casualty affecting the Property or any portion thereof, (ii) the
institution of any proceedings for eminent domain or for the condemnation of the Property or any
portion thereof or (iii) any written notification threatening the institution of any proceedings
for eminent domain or for the condemnation of the Property or any portion thereof or any written
request to execute a deed in lieu of condemnation affecting the Property or any portion thereof.
All insurance proceeds on the Property, and all causes of action, claims, compensation, awards and
recoveries for any damage, condemnation or taking, or any deed in lieu of condemnation, affecting
all or any part of the Property or for any damage or injury to it for any loss or diminution in
value of the Property, are hereby assigned to and shall be paid to Lender. Lender may participate
in any suits or proceedings relating to any such proceeds, causes of action, claims, compensation,
awards or recoveries, and Lender is hereby authorized, in its own name or

16

 

in Borrower’s name, to adjust any loss covered by insurance or any condemnation claim or cause of
action, and to settle or compromise any claim or cause of action in connection therewith, and
Borrower shall from time to time deliver to Lender any instruments required to permit such
participation; provided, however, that, so long as no Event of Default has occurred, and no
event has occurred or failed to occur which with the passage of time, the giving of notice, or both
would constitute an Event of Default (a “Default”), Lender shall not have the right to participate
in the adjustment of any loss which is not in excess of the lesser of (i) five percent (5%) of the
then outstanding principal balance of the Note and (ii) $250,000. Lender shall apply any sums
received by it under this Section first to the payment of all of its costs and expenses (including,
but not limited to, reasonable legal fees and disbursements) incurred in obtaining those sums, and
then, as follows:

          (a) In the event that (x) less than fifteen percent (15%), in the case of condemnation, or
thirty percent (30%), in the case of casualty, of the fair market value or net rentable square
footage of the Improvements located on the Premises have been taken or destroyed and (y) Leases
covering in the aggregate at least sixty-five percent (65%) of the total rentable space in the
Property which has been demised under executed and delivered Leases in effect as of the date of the
occurrence of such casualty or condemnation, whichever the case may be, shall remain in full force
and effect during and after the completion of the restoration without abatement of rent beyond the
time required for restoration, the debt service coverage ratio of the Debt as determined by Lender
for the period during which such restoration will occur, and taking into account the proceeds of
business interruption or similar insurance, is not less than 1.10:1.0, then if and so long as:

          (1) no Default or Event of Default has occurred hereunder or under any of the other Loan
Documents, and

          (2) the Property can, in Lender’s reasonable judgment, with diligent restoration or
repair, be returned to a condition at least equal to the condition thereof that existed prior
to the casualty or partial taking causing the loss or damage within the earlier to occur of
(A) six (6) months after the initial receipt of any insurance proceeds or condemnation awards
by either Borrower or Lender but in any event prior to the expiration or lapse of rent loss
or general business income necessary to satisfy current obligations of the Loan, and (B) six
(6) months prior to the stated maturity date of the Note, and

          (3) all necessary governmental approvals can be obtained to allow the rebuilding and
reoccupancy of the Property as described in Section (a)(2) above, and

          (4) there are sufficient sums available (through insurance proceeds or condemnation
awards and contributions by Borrower, the full amount of which shall, at Lender’s option,
have been deposited with Lender) for such restoration or repair (including, without
limitation, for any costs and expenses of Lender to be incurred in administering said
restoration or repair) and for payment of principal and interest to become due and payable
under the Note during such restoration or repair, and

17

 

          (5) the economic feasibility of the Improvements after such restoration or repair will be such
that income from their operation is reasonably anticipated to be sufficient to pay operating
expenses of the Property and debt service on the Debt in full with the same coverage ratio
considered by Lender in its determination to make the loan secured hereby, and

          (6) in the event that the insurance proceeds or condemnation awards received as a result of
such casualty or partial taking exceed the lesser of (i) five percent (5%) of the then outstanding
principal balance of the Note and (ii) $250,000, Borrower shall have delivered to Lender, at
Borrower’s sole cost and expense, an appraisal report in form and substance satisfactory to Lender
appraising the value of the Property as proposed to be restored or repaired to be not less than the
appraised value of the Property considered by Lender in its determination to make the loan secured
hereby, and

          (7) Borrower so elects by written notice delivered to Lender within five (5) days after
settlement of the aforesaid insurance or condemnation claim.

Lender shall, solely for the purposes of such restoration or repair, advance so much of the
remainder of such sums as may be required for such restoration or repair, and any funds deposited
by Borrower therefor, to Borrower in the manner and upon such terms and conditions as would be
required by a prudent interim construction lender, including, but not limited to, the prior
approval by Lender of plans and specifications, contractors and form of construction contracts and
the furnishing to Lender of permits, bonds, lien waivers, invoices, receipts and affidavits from
contractors and subcontractors, in form and substance satisfactory to Lender in its discretion,
with any remainder being applied by Lender for payment of the Debt in whatever order Lender
directs in its absolute sole discretion, or at the discretion of Lender, the same may be paid,
either in whole or in part, to, or for the benefit of, Borrower for such purposes as Lender shall
designate in its discretion.

18

 

          (b) In all other cases, namely, in the event that (w) more than fifteen percent (15%), in the
case of condemnation, or thirty percent (30%), in the case of casualty, of the fair market value or
net rentable square footage of the Improvements located on the Premises have been taken or
destroyed, (x) Leases covering in the aggregate at least sixty-five percent (65%) of the total
rentable space in the Property which has been demised under executed and delivered Leases in effect
as of the date of the occurrence of such casualty or condemnation, whichever the case may be, will
not remain in full force and effect during and after the completion of the restoration without
abatement of rent beyond the time required for restoration, (y) the debt service coverage ratio of
the Debt as determined by Lender for the period during which such restoration will occur is less
than 1.10:1.0, or (z) Borrower does not elect to restore or repair the Property pursuant to
clause (a) above or otherwise fails to meet the requirements of clause (a)above,
then, in any of such events, Lender shall elect, in Lender’s absolute discretion and without regard
to the adequacy of Lender’s security to do either of the following: (1) accelerate the maturity
date of the Note and declare any and all of the Debt to be immediately due and payable and apply
the remainder of such sums received pursuant to this Section to the payment of the Debt in whatever
order Lender directs in its absolute discretion, with any remainder being paid to Borrower, or (2)
notwithstanding that Borrower may have elected not to restore or repair the Property pursuant to
the provisions of Section 2.5(a)(7) above, so long as the proceeds of any such award with
respect to any casualty or condemnation are made available to the Borrower for restoration, require
Borrower to restore or repair the Property in the manner and upon such terms and conditions as
would be required by a prudent interim construction lender, including, but not limited to, the
deposit by Borrower with Lender, within thirty (30) days after demand therefor, of any deficiency
reasonably determined by Lender to be necessary in order to assure the availability of sufficient
funds to pay for such restoration or repair, including Lender’s costs and expenses to be incurred
in connection therewith, the prior approval by Lender of plans and specifications, contractors and
form of construction contracts and the furnishing to Lender of permits, bonds, lien waivers,
invoices, receipts and affidavits from contractors and subcontractors, in form and substance
satisfactory to Lender in its discretion, and apply the remainder of such sums toward such
restoration and repair, with any balance thereafter remaining being applied by Lender for payment
of the Debt in whatever order Lender directs in its absolute sole discretion, or at the discretion
of Lender, the same may be paid, either in whole or in part, to, or for the benefit of, Borrower
for such purposes as Lender shall designate in its discretion.

Any reduction in the Debt resulting from Lender’s application of any sums received by it
hereunder shall take effect only when Lender actually receives such sums and elects to apply such
sums to the Debt and, in any event, the unpaid portion of the Debt shall remain in full force and
effect and Borrower shall not be excused in the payment thereof. Partial payments received by
Lender, as described in the preceding sentence, shall be applied first to the final payment due
under the Note and thereafter to installments due under the Note in the inverse order of their
due date. If Borrower elects or Lender directs Borrower to restore or repair the Property after
the occurrence of a casualty or partial taking of the Property as provided above, Borrower shall
promptly and diligently, at Borrower’s sole cost and expense and regardless of whether the
insurance proceeds or condemnation award, as appropriate, shall be sufficient for the purpose,
restore, repair, replace and rebuild the Property as nearly as possible to its value, condition
and

19

 

character immediately prior to such casualty or partial taking in accordance with the foregoing
provisions and Borrower shall pay to Lender all costs and expenses of Lender incurred in
administering said rebuilding, restoration or repair, provided that Lender makes such proceeds or
award available for such purpose. Borrower agrees to execute and deliver from time to time such
further instruments as may be requested by Lender to confirm the foregoing assignment to Lender of
any award, damage, insurance proceeds, payment or other compensation. Lender is hereby irrevocably
constituted and appointed the attorney-in-fact of Borrower (which power of attorney shall be
irrevocable so long as any portion of the Debt is outstanding, shall be deemed coupled with an
interest, shall survive the voluntary or involuntary dissolution of Borrower and shall not be
affected by any disability or incapacity suffered by Borrower subsequent to the date hereof), with
full power of substitution, subject to the terms of this Section, to settle for, collect and
receive any such awards, damages, insurance proceeds, payments or other compensation from the
parties or authorities making the same, to appear in and prosecute any proceedings therefor and to
give receipts and acquittances therefor.

     2.6 Construction Liens. Borrower shall pay when due all claims and demands of
mechanics, materialmen, laborers and others for any work performed or materials delivered for the
Premises or the Improvements; provided, however, that, Borrower shall have the
right to contest in good faith any such claim or demand, so long as it does so diligently, by
appropriate proceedings and without prejudice to Lender and provided that neither the Property nor
any interest therein would be in any danger of sale, loss or forfeiture as a result of such
proceeding or contest. In the event Borrower shall contest any such claim or demand, Borrower shall
promptly notify Lender of such contest and thereafter shall, upon Lender’s request, promptly
provide a bond, cash deposit or other security satisfactory to Lender to protect Lender’s interest
and security should the contest be unsuccessful. If Borrower shall fail to immediately discharge or
provide security against any such claim or demand as aforesaid, Lender may do so and any and all
expenses incurred by Lender, together with interest thereon at the Default Interest Rate from the
date incurred by Lender until actually paid by Borrower, shall be immediately paid by Borrower on
demand and shall be secured by this Security Deed and by all of the other Loan Documents securing
all or any part of the Debt.

     2.7 Rents and Profits. As additional and collateral security for the payment of the
Debt and cumulative of any and all rights and remedies herein provided for, Borrower hereby
absolutely and presently assigns to Lender all existing and future Rents and Profits. Borrower
hereby grants to Lender the sole, exclusive and immediate right, without taking possession of the
Property, to demand, collect (by suit or otherwise), receive and give valid and sufficient receipts
for any and all of said Rents and Profits, for which purpose Borrower does hereby irrevocably make,
constitute and appoint Lender its attorney-in-fact with full power to appoint substitutes or a
trustee to accomplish such purpose (which power of attorney shall be irrevocable so long as any
portion of the Debt is outstanding, shall be deemed to be coupled with an interest, shall survive
the voluntary or involuntary dissolution of Borrower and shall not be affected by any disability or
incapacity suffered by Borrower subsequent to the date hereof). Lender shall be without liability
for any loss which may arise from a failure or inability to collect Rents and Profits, proceeds or
other payments. However, until the occurrence of an Event of Default under this Security Deed or
under any other of the Loan Documents, Borrower shall have a license to collect, receive, use and
enjoy the Rents and Profits when due and prepayments thereof.

20

 

Prepayments of rent paid more than one (1) month in advance may be used and enjoyed by Borrower
subject to the terms hereof as and when such rents actually become due and payable under the associated Lease. Upon the occurrence of an Event of Default, Borrower’s
license shall automatically terminate without notice to Borrower and Lender may thereafter, without taking possession of the Property, collect the Rents and Profits itself or by an agent or receiver.
From and after the termination of such license, Borrower shall be the agent of Lender
in collection of the Rents and Profits, and all of the Rents and Profits so collected by Borrower shall
be held in trust by Borrower for the sole and exclusive benefit of Lender, and Borrower
shall, within one (1) business day after receipt of any Rents and Profits, pay the same to Lender to be
applied by Lender as hereinafter set forth. Neither the demand for or collection of Rents and
Profits by Lender shall constitute any assumption by Lender of any obligations under any
agreement relating thereto. Lender is obligated to account only for such Rents and Profits as are
actually collected or received by Lender. Borrower irrevocably agrees and consents that the
respective payors of the Rents and Profits shall, upon demand and notice from Lender of an
Event of Default, pay said Rents and Profits to Lender without liability to determine the actual
existence of any Event of Default claimed by Lender. Borrower hereby waives any right, claim
or demand which Borrower may now or hereafter have against any such payor by reason of such
payment of Rents and Profits to Lender, and any such payment shall discharge such payor’s
obligation to make such payment to Borrower. All Rents collected or received by Lender may
be applied against all expenses of collection, including, without limitation, reasonable attorneys’
fees, against costs of operation and management of the Property and against the Debt, in
whatever order or priority as to any of the items so mentioned as Lender directs in its sole
subjective discretion and without regard to the adequacy of its security. Neither the exercise by
Lender of any rights under this Section nor the application of any Rents to the Debt shall cure or
be deemed a waiver of any Event of Default. The assignment of Rents and Profits hereinabove
granted shall continue in full force and effect during any period of foreclosure or redemption
with respect to the Property. Borrower has executed an Assignment of Leases and Rents dated
of even date herewith (the “Lease Assignment”) in favor of Lender covering all of the right, title
and interest of Borrower, as landlord, lessor or licensor, in and to any Leases. All rights and
remedies granted to Lender under the Lease Assignment shall be in addition to and cumulative of
all rights and remedies granted to Lender hereunder.

     2.8 Leases.

          (a) Prior to execution of any Leases of space in the Improvements after the date hereof,
Borrower shall submit to Lender, for Lender’s prior approval, which approval shall not be
unreasonably withheld, a copy of the form Lease Borrower plans to use in leasing space in the
Improvements or at the Property. All such Leases of space in the Improvements or at the Property
shall be on terms consistent with the terms for similar leases in the market area of the Premises,
shall provide for free rent only if the same is consistent with prevailing market conditions,
shall provide for market rents then prevailing in the market area of the Premises and
substantially all of the Leases at the Property shall be for a term of not less than six (6)
months or greater than one (1) year. Such Leases may also provide for security deposits in
reasonable amounts consistent with prevailing market conditions. Borrower shall also submit to
Lender for Lender’s approval, which approval shall not be unreasonably withheld, prior to the
execution thereof, any proposed Lease of the Improvements or any portion thereof that differs
materially

21

 

and adversely from the aforementioned form Lease. Borrower shall not execute any Lease for all
or a substantial portion of the Property, except for an actual occupancy by the Tenant, lessee or
licensee thereunder, and shall at all times promptly and faithfully perform, or cause to be
performed, all of the covenants, conditions and agreements contained in all Leases with respect to
the Property, now or hereafter existing, on the part of the landlord, lessor or licensor thereunder
to be kept and performed. Borrower shall furnish to Lender, within ten (10) days after a request by
Lender to do so, but in any event by January 1 of each year, a current Rent Roll, certified by
Borrower as being true and correct, containing the names of all Tenants with respect to the
Property, the terms of their respective Leases, the spaces occupied and the rentals or fees payable
thereunder and the amount of each Tenant’s security deposit, if any. Upon the request of Lender,
Borrower shall deliver to Lender a copy of each such Lease. Borrower shall not do or suffer to be
done any act, or omit to take any action, that might result in a default by the landlord, lessor or
licensor under any such Lease or allow the Tenant thereunder to withhold payment of rent or cancel
or terminate same and shall not further assign any such Lease or any such Rents and Profits.
Borrower, at no cost or expense to Lender, shall enforce, short of termination, the performance and
observance of each and every condition and covenant of each of the parties under such Leases and
Borrower shall not anticipate, discount, release, waive, compromise or otherwise discharge any rent
payable under any of the Leases except to the extent consistent with prudent collection practices.
Notwithstanding the foregoing, at any time and from time to time, Lender shall be entitled to, and
Borrower hereby grants to Lender the right to, undertake any and all action as may be required (in
the sole discretion of Lender) to cure any default, or event which with the passage of time
following any notice and cure period shall constitute a default by Borrower, under such Leases.
Borrower shall not, without the prior written consent of Lender, modify any of the Leases,
terminate or accept the surrender of any Leases, waive or release any other party from the
performance or observance of any obligation or condition under such Leases except in the normal
course of business in a manner which is consistent with sound and customary leasing and management
practices for similar properties in the community in which the Property is located. Borrower
represents, warrants and covenants that no Rents have been anticipated, discounted, released,
waived, compromised or otherwise discharged, except for prepayment of rent of not more than one (1)
month prior to the accrual thereof, except for prepayments for up to thirty percent (30%) of the
Leases at the Property consistent with sound and customary leasing practices for similar properties
in the community in which the Property is located.

          (b) Upon the occurrence of an Event of Default under this Security Deed, whether before or
after the whole principal sum secured hereby is declared to be immediately due or whether before
or after the institution of legal proceedings to foreclose this Security Deed, forthwith, upon
demand of Lender, Borrower shall surrender to Lender, and Lender shall be entitled to take actual
possession of, the Property or any part thereof personally, or by its agent or attorneys. In such
event, Lender shall have, and Borrower hereby gives and grants to Lender, the right, power and
authority to make and enter into Leases with respect to the Property or portions thereof for such
rents and for such periods of occupancy and upon conditions and provisions as Lender may deem
desirable in its sole discretion, and Borrower expressly acknowledges and agrees that the term of
any such Lease may extend beyond the date of any foreclosure sale of the Property, it being the
intention of Borrower that in such event Lender shall be deemed to be and shall be the
attorney-in-fact of Borrower for the purpose of making and entering into Leases of

22

 

parts or portions of the Property for the rents and upon the terms, conditions and provisions
deemed desirable to Lender in its sole discretion and with like effect as if such Leases had been
made by Borrower as the owner in fee simple of the Property free and clear of any conditions or
limitations established by this Security Deed. The power and authority hereby given and granted
by Borrower to Lender shall be deemed to be coupled with an interest, shall not be revocable by
Borrower so long as any portion of the Debt is outstanding, shall survive the voluntary or
involuntary dissolution of Borrower and shall not be affected by any disability or incapacity
suffered by Borrower subsequent to the date hereof. In connection with any action taken by
Lender pursuant to this Section, Lender shall not be liable for any loss sustained by Borrower
resulting from any failure to let the Property, or any part thereof, or from any other act or
omission of Lender in managing the Property, nor shall Lender be obligated to perform or
discharge any obligation, duty or liability under any Lease covering the Property or any part
thereof or under or by reason of this instrument or the exercise of rights or remedies hereunder.
Borrower shall, and does hereby, indemnify Lender for, and hold Lender harmless from, any and
all claims, actions, demands, liabilities, loss or damage which may or might be incurred by
Lender under any such Lease or under this Security Deed or by the exercise of rights or remedies
hereunder and from any and all claims and demands whatsoever which may be asserted against
Lender by reason of any alleged obligations or undertakings on its part to perform or discharge
any of the terms, covenants or agreements contained in any such Lease other than those finally
determined by a court of competent jurisdiction to have resulted solely from the gross negligence
or willful misconduct of Lender. Should Lender incur any such liability, the amount thereof,
including, without limitation, costs, expenses and reasonable attorneys’ fees, together with
interest thereon at the Default Interest Rate from the date incurred by Lender until actually paid
by Borrower, shall be immediately due and payable to Lender by Borrower on demand and shall
be secured hereby and by all of the other Loan Documents securing all or any part of the Debt.
Nothing in this Section shall impose on Lender any duty, obligation or responsibility for the
control, care, management or repair of the Property, or for the carrying out of any of the terms
and conditions of any such Lease, nor shall it operate to make Lender responsible or liable for
any waste committed on the Property by the Tenants or by any other parties or for any dangerous
or defective condition of the Property, or for any negligence in the management, upkeep, repair
or control of the Property. Borrower hereby assents to, ratifies and confirms any and all actions
of Lender with respect to the Property taken under this Section.

     2.9 Alienation and Further Encumbrances.

          (a) Borrower acknowledges that Lender has relied upon the principals of Borrower and their
experience in owning and operating the Property and properties similar to the Property in
connection with the closing of the loan evidenced by the Note. Accordingly, except as specifically
allowed hereinbelow in this Section and notwithstanding anything to the contrary contained in
Section 6.6 hereof, in the event that the Property or any part thereof or direct or
indirect interest therein or direct or indirect interest in Borrower shall be sold, conveyed,
disposed of, alienated, hypothecated, leased (except to Tenants of space in the Improvements in
accordance with the provisions of Section 2.8 hereof), assigned, pledged, mortgaged,
further encumbered or otherwise transferred or Borrower shall be divested of its title to the
Property or any direct or indirect interest therein, in any manner or way, whether voluntarily or
involuntarily (each, a “Transfer”), without the prior written consent of Lender being first
obtained, which

23

 

consent may be withheld in Lender’s sole discretion, then the same shall constitute an Event
of Default and Lender shall have the right, at its option, to declare any or all of the Debt,
irrespective of the maturity date specified in the Note, immediately due and payable and to
otherwise exercise any of its other rights and remedies contained in Article V hereof.

          (b) A Transfer within the meaning of this Section 2.9 shall be deemed to include,
among other things: (i) an installment sales agreement wherein Borrower agrees to sell the
Property or any part thereof for a price to be paid in installments; and (ii) an agreement by
Borrower leasing all or a substantial part of the Property for other than actual occupancy by a
space tenant thereunder or a sale, assignment or other transfer of, or the grant of a security
interest in, Borrower’s right, title and interest in and to any Leases or any Rents and Profits.

          (c) Notwithstanding the foregoing, the following Transfers shall be permitted under this
Section 2.9 without the prior consent of Lender: (i) a Transfer of corporate stock,
partnership interests (other than the general partner’s direct interests in Borrower owned by any
SPE Equity Owner) and/or membership interests (other than the managing member’s direct interests in
Borrower owned by any SPE Equity Owner) in Borrower, or in any partner or member of Borrower, or
any direct or indirect legal or beneficial owner of Borrower, so long as following such Transfer
(whether in one or a series of transactions) or, with respect to any creation or issuance of new
limited partnership interests or membership interests, not more than 49% of the beneficial economic
interest in Borrower (whether directly or indirectly) has been transferred in the aggregate and
there is no Change of Control and the persons responsible for the day to day management of the
Property and Borrower remain unchanged following such Transfer, (ii) any involuntary Transfer
caused by the death of Borrower, or any partner, shareholder, joint venturer, member or beneficial
owner of a trust, or any direct or indirect legal or beneficial owner of Borrower, so long as
Borrower is promptly reconstituted, if required, following such death and so long as there is no
Change of Control and those persons responsible for the day to day management of the Property and
Borrower remain unchanged as a result of such death or any replacement management or controlling
parties are approved by Lender, (iii) a Transfer comprised of gifts for estate planning purposes of
any individual’s interests in Borrower, or in any of Borrower’s partners, members, shareholders,
beneficial owners of a trust or joint venturers, or any direct or indirect legal or beneficial
owner of Borrower, to the spouse or any lineal descendant of such individual, or to a trust for the
benefit of any one or more of such individual, spouse or lineal descendant, so long as Borrower is
reconstituted promptly, if required, following such gift and so long as there is no Change of
Control and those persons responsible for the day to day management of the Property and Borrower
remain unchanged following such gift and (iv) the contribution by Madiera Group, LLC, a North
Carolina limited liability company (“Madiera”) and TXG, LLC, a South Carolina limited liability
company (“TXG”) of their respective membership interests in Campus Crest Group, LLC, a North
Carolina limited liability company (“Campus Crest”), to MXT Capital, LLC, a North Carolina limited
liability company (“MXT”), in exchange for the issuance by MXT of all of its membership interests
to Madiera and TXG, and so long as there is no Change of Control and those persons responsible for
the day-to-day management of the Property and Borrower remain unchanged following such contribution
and issuance of the membership interests of MXT. Notwithstanding any provision of this Security
Deed to the contrary, no person or entity may become an owner of a direct or indirect interest in
Borrower, which interest exceeds forty-nine

24

 

percent (49%), without Lender’s prior written consent unless Borrower has complied with the
provisions set forth in Section 2.9(d) below. For purposes of this Section 2.9(c),
“Change of Control” shall mean a change in the identity of the individual or entities or group of
individuals or entities who have the right, by virtue of any partnership agreement, articles of
incorporation, by-laws, articles of organization, operating agreement or any other agreement, with
or without taking any formative action, to cause Borrower to take some action or to prevent,
restrict or impede Borrower from taking some action which, in either case, Borrower could take or
could refrain from taking were it not for the rights of such individuals.

          (d) Notwithstanding the foregoing provisions of this Section, Lender shall consent to (x) one
or more Transfers of the Property in its entirety, or (y) one or more Transfers of direct or
indirect interests in the Borrower for which consent is required under this Section 2.9
(any such hereinafter, a “Sale”) to any person or entity provided that, for each Sale,
each of the following terms and conditions are satisfied:

          (1) No Default and no Event of Default is then continuing hereunder or under any of the
other Loan Documents;

          (2) Borrower gives Lender written notice of the terms of such prospective Sale not less
than sixty (60) days before the date on which such Sale is scheduled to close and,
concurrently therewith, gives Lender all such information concerning the proposed transferee
of the Property or the proposed owner of the direct or indirect interest in the Borrower for
which consent is required under this Section 2.9. as applicable (hereinafter,
“Buyer”) as Lender would require in evaluating an initial extension of credit to a borrower
(it being acknowledged and agreed that (x) such information required to be delivered with
respect to the related Buyer shall not be materially more extensive than the corresponding
information provided by the initial Borrower and initial Indemnitor and (y) the initial
Borrower and initial Indemnitor shall not be required to deliver any additional information
with respect to such initial Borrower, Indemnitor or their respective members or partners
which are not then currently required to be delivered by the initial Borrower and initial
Indemnitor pursuant to the terms hereof or of any other Loan Document), including, without
limitation, information evidencing the Buyer’s compliance with the provisions of Section
2.30 and Section 2.31 hereof and pays to Lender a non-refundable application fee
in the amount of $5,000. Lender shall have the right to approve or disapprove the proposed
Buyer. In determining whether to give or withhold its approval of the proposed Buyer, Lender
shall consider the Buyer’s experience and track record in owning and operating facilities
similar to the Property, the Buyer’s financial strength, the Buyer’s general business
standing and the Buyer’s relationships and experience with contractors, vendors, tenants,
lenders and other business entities; provided, however, that, notwithstanding
Lender’s agreement to consider the foregoing factors in determining whether to give or
withhold such approval, such approval shall be given or withheld based on what Lender
determines to be commercially reasonable in Lender’s sole discretion and, if given, may be
given subject to such conditions as Lender may deem appropriate; provided, further, however,
notwithstanding the foregoing, Lender shall evaluate the proposed Buyer and any replacement
Indemnitor pursuant to this clause (d) as if it were evaluating an initial

25

 

extension of credit to a borrower pursuant to permanent market underwriting standards and without
regard to the financial or other condition of the Borrower or any current Indemnitor and without
regard to the impact on the trust which owns the Loan in connection with any Secondary Market
Transaction or any class of Securities issued thereunder;

          (3) Borrower pays Lender, concurrently with the closing of such Sale, a non-refundable
assumption fee in an amount equal to all out-of-pocket costs and expenses, including, without
limitation, reasonable attorneys’ fees and Rating Agency fees, incurred by Lender in connection
with the Sale, plus an amount equal to one percent (1.0%) of the then outstanding principal balance
of the Note;

          (4) In the event that such Sale is a Transfer of the Property in its entirety, the Buyer
assumes and agrees to pay the Debt subject to the provisions of Section 6.27 hereof and, in
all cases (whether such Sale is a Transfer of the Property in its entirety or a Transfer of direct
or indirect interests in the Borrower for which consent is required under this Section
2.9), prior to or concurrently with the closing of such Sale, the Buyer executes, without any
cost or expense to Lender, such documents and agreements as Lender shall reasonably require to
evidence and effectuate said assumption and delivers such legal opinions (including, without
limitation, a REMIC opinion) as Lender may require;

          (5) A party associated with the Buyer approved by Lender in its sole discretion assumes the
obligations of the current Indemnitor under its guaranty or indemnity agreement and environmental
indemnity agreement and such party associated with the Buyer executes, without any cost or expense
to Lender, a substitution agreement or a new guaranty or indemnity agreement or environmental
indemnity agreement in form and substance satisfactory to Lender and delivers such legal opinions
as Lender may require; provided, however, in connection with an assumption of the Loan, (x) the
Buyer shall not be required to post any additional collateral with Lender or deposit any additional
reserves with Lender beyond that in effect immediately prior to the related assumption and (y) the
party associated with the Buyer which enters into such substitution agreement or new guaranty or
indemnity agreement or environmental indemnity shall not be required to maintain evidence of credit
worthiness greater than that required by permanent market underwriting standards;

          (6) Borrower and the Buyer execute, without any cost or expense to Lender, new financing
statements or financing statement amendments (and new financing statements as may be necessary) and
any additional documents reasonably requested by Lender;

          (7) Borrower delivers to Lender, without any cost or expense to Lender, such replacement
policy or endorsements to Lender’s title insurance policy, hazard insurance policy endorsements or
certificates and other similar materials as Lender may deem necessary at the time of the Sale, all
in form and substance satisfactory to Lender, including, without limitation, a replacement policy
or an endorsement or

26

 

endorsements to Lender’s title insurance policy insuring the lien of this Security Deed, extending
the effective date of such policy to the date of execution and delivery (or, if later, of
recording) of the assumption agreement referenced above in subparagraph (4) of this Section, with
no additional exceptions added to such policy, and, in the event that such Sale is a Transfer of
the Property in its entirety, insuring that fee simple title to the Property is vested in the
Buyer;

          (8) Borrower and any current Indemnitor execute and deliver to Lender, without any cost or
expense to Lender, a release of Lender, its officers, directors, employees and agents, from all
claims and liability relating to the transactions evidenced by the Loan Documents, through and
including the date of the closing of the Sale, which agreement shall be in form and substance
satisfactory to Lender and shall be binding upon the Buyer and any new Indemnitor;

          (9) Subject to the provisions of Section 6.27 hereof, such Sale is not construed so as
to relieve Borrower of any personal liability under the Note or any of the other Loan Documents for
any acts or events occurring or obligations arising prior to or simultaneously with the closing of
such Sale, whether or not same is discovered prior or subsequent to the closing of such Sale, and
Borrower executes, without any cost or expense to Lender, such documents and agreements as Lender
shall reasonably require to evidence and effectuate the ratification of said personal liability. In
the event that such Transfer is a Sale of the Property in its entirety, Borrower shall be released
from and relieved of any personal liability under the Note or any of the other Loan Documents for
any acts or events occurring or obligations arising after the closing of such Sale which are not
caused by or arising out of any acts or events occurring or obligations arising prior to or
simultaneously with the closing of such Sale;

          (10) Such Sale is not construed so as to relieve any current Indemnitor of its obligations
under any guaranty or indemnity agreement for any acts or events occurring or obligations arising
prior to or simultaneously with the closing of such Sale, and each such current Indemnitor
executes, without any cost or expense to Lender, such documents and agreements as Lender shall
reasonably require to evidence and effectuate the ratification of each such guaranty and indemnity
agreement. In the event that such Transfer is a Sale of the Property in its entirety, each such
current Indemnitor shall be released from and relieved of any of its obligations under any guaranty
or indemnity agreement executed in connection with the loan secured hereby for any acts or events
occurring or obligations arising after the closing of such Sale which are not caused by or arising
out of any acts or events occurring or obligations arising prior to or simultaneously with the
closing of such Sale;

          (11) The Buyer shall furnish, if the Buyer is a corporation, partnership or other entity, all
appropriate papers evidencing the Buyer’s capacity and good standing, and the qualification of the
signers to execute the assumption of the Debt, which papers shall include certified copies of all
documents relating to the organization and formation of the Buyer and of the entities, if any,
which are partners of the Buyer. In the event that such Sale is a Transfer of the Property in its
entirety, the Buyer shall be a Single Purpose

27

 

Entity whose formation documents shall be approved by counsel to Lender, and who
shall comply with the requirements set forth in Section 2.29 hereof;

          (12) Borrower delivers to Lender confirmation in writing (a “No- Downgrade
Confirmation”) from each Rating Agency that such Sale will not result in a qualification,
downgrade or withdrawal of any ratings issued in connection with any Secondary Market
Transaction (as hereinafter defined) or, in the event the Secondary Market Transaction has
not yet occurred, Lender shall, in its sole discretion, have approved the Sale; and

          (13) The applicable transfer will not result in an increase in the real property taxes
for the Premises and Improvements that would cause the debt service coverage ratio of the
Debt with respect to the immediately succeeding twelve (12) month period to be less than
the debt service coverage ratio of the Debt for the twelve (12) month period immediately
preceding such transfer, in each case as determined by Lender.

     2.10 Payment of Utilities, Assessments, Charges, Etc. Borrower shall pay when due all
utility charges which are incurred by Borrower or which may become a charge or lien against any
portion of the Property for gas, electricity, water and sewer services furnished to the Premises
and/or the Improvements and all other assessments or charges of a similar nature, or assessments
payable pursuant to any restrictive covenants, whether public or private, affecting the Premises
and/or the Improvements or any portion thereof, whether or not such assessments or charges are or
may become liens thereon.

     2.11 Access Privileges and Inspections. Lender and the agents, representatives and
employees of Lender shall, subject to the rights of Tenants, have full and free access to the
Premises and the Improvements and any other location where books and records concerning the
Property are kept at all reasonable times and, except in the event of an emergency, upon not less
than 24 hours prior notice (which notice may be telephonic) for the purposes of inspecting the
Property and of examining, copying and making extracts from the books and records of Borrower
relating to the Property. Borrower shall lend assistance to all such agents, representatives and
employees of Lender.

     2.12 Waste; Alteration of Improvements. Borrower shall not commit, suffer or permit
any waste on the Property nor take any actions that might invalidate any insurance carried on the
Property. Borrower shall maintain the Property in good condition and repair. No part of the
Improvements may be removed, demolished or materially altered, without the prior written consent of
Lender other than in connection with non-structural day to day maintenance and except for tenant
improvements under Leases. Without the prior written consent of Lender, Borrower shall not commence
construction of any improvements on the Premises other than improvements required for the
maintenance or repair of the Property. Lender reserves the right to condition its consent to any
material alteration, removal, demolition or new construction on the following: (i) such conditions
as would be required by a prudent interim construction lender, including, but not limited to, the
prior approval by Lender of plans and specifications, construction budgets, contractors and form of
construction contracts and the furnishing to Lender of evidence regarding funds, permits,
approvals, bonds, insurance, lien waivers, title

28

 

endorsements, appraisals, surveys, certificates of occupancy, certificates regarding
completion, invoices, receipts and affidavits from contractors and subcontractors, in form and
substance satisfactory to Lender in its discretion, (ii) the delivery of an opinion from counsel
satisfactory to Lender in its discretion and in form and substance satisfactory to Lender in its
discretion opining as to such matters as Lender may reasonably require, including, without
limitation, an opinion that such alteration, removal, demolition or new construction will not have
an adverse effect on the status of any trust formed in connection with a Secondary Market
Transaction a “real estate mortgage investment conduit” within the meaning of Section 860D of the
Code (“REMIC”), and (iii) Borrower’s agreement to pay all fees, costs and expenses incurred by
Lender in granting such consent, including, without limitation, reasonable attorneys’ fees and
expenses.

     213 Zoning. Without the prior written consent of Lender, Borrower shall not seek,
make, suffer, consent to or acquiesce in any change in the zoning or conditions of use of the
Premises or the Improvements. Borrower shall comply with and make all payments required under the
provisions of any covenants, conditions or restrictions affecting the Premises or the
Improvements. Borrower shall comply with all existing and future requirements of all governmental
authorities having jurisdiction over the Property. Borrower shall keep all licenses, permits,
franchises and other approvals necessary for the operation of the Property in full force and
effect. Borrower shall operate the Property as a student housing complex for so long as the Debt
is outstanding. If, under applicable zoning provisions, the use of all or any part of the Premises
or the Improvements is or becomes a nonconforming use, Borrower shall not cause or permit such use
to be discontinued or abandoned without the prior written consent of Lender. Further, without
Lender’s prior written consent, Borrower shall not file or subject any part of the Premises or the
Improvements to any declaration of condominium or co-operative or convert any part of the Premises
or the Improvements to a condominium, co-operative or other form of multiple ownership and
governance.

     2.14 Financial Statements and Books and Records. Borrower shall keep accurate books
and records of account of the Property and its own financial affairs sufficient to permit the
preparation of financial statements therefrom in accordance with generally accepted accounting
principles. Lender and its duly authorized representatives shall have the right to examine, copy
and audit Borrower’s records and books of account at all reasonable times. So long as this
Security Deed continues in effect, Borrower shall provide to Lender, in addition to any other
financial statements required hereunder or under any of the other Loan Documents, the following
financial statements and information, all of which must be certified to Lender as being true and
correct by Borrower or the person or entity to which they pertain, as applicable, and be in form
and substance acceptable to Lender:

          (a) copies of all tax returns filed by Borrower, within thirty (30) days after the date of
filing;

          (b) monthly operating statements for the Property, within twenty (20) days after the end of
each of the first (1st) twelve (12) calendar months following the date hereof;

29

 

          (c) quarterly operating statements for the Property and a Rent Roll, within thirty (30)
days after the end of each March, June, September and December commencing with the first (1st) of
such months to occur following the first (1st) anniversary of the date hereof;

          (d) annual balance sheets for the Property and annual financial statements for Borrower, and
each Indemnitor, within ninety (90) days after the end of each calendar year;

          (e) such other information with respect to the Property, Borrower, the principals or general
partners in Borrower, and each Indemnitor, which may be reasonably requested from time to time by
Lender, within a reasonable time after the applicable request; and

          (f) If, at the time one or more Disclosure Documents (as defined below) are being prepared for
a securitization, Lender expects that Borrower alone or Borrower and one or more affiliates of
Borrower collectively, or the Property alone or the Property and any other parcel(s) of real
property, together with improvements thereon and personal property related thereto, that is
“related”, within the meaning of the definition of Significant Obligor, to the Property (a “Related Property”) collectively, will be a Significant Obligor, Borrower shall furnish to Lender upon
request (i) the selected financial data or, if applicable, net operating income, required under
Item 1112(b)(l) of Regulation AB and meeting the requirements thereof, if Lender expects that the
principal amount of the Loan, together with any loans made to an affiliate of Borrower or secured
by a Related Property that is included in a securitization with the Loan (a “Related Loan”), as of
the cut-off date for such securitization may, or if the principal amount of the Loan together with
any Related Loans as of the cut-off date for such securitization and at any time during which the
Loan and any Related Loans are included in a securitization does, equal or exceed ten percent (10%)
(but less than twenty percent (20%)) of the aggregate principal amount of all mortgage loans
included or expected to be included, as applicable, in the securitization or (ii) the financial
statements required under Item 1112(b)(2) of Regulation AB and meeting the requirements thereof, if
Lender expects that the principal amount of the Loan together with any Related Loans as of the
cut-off date for such securitization may, or if the principal amount of the Loan together with any
Related Loans as of the cut-off date for such securitization and at any time during which the Loan
and any Related Loans are included in a securitization does, equal or exceed twenty percent (20%)
of the aggregate principal amount of all mortgage loans included or expected to be included, as
applicable, in the securitization. Such financial data or financial statements shall be furnished
to Lender (A) within ten (10) Business Days after notice from Lender in connection with the
preparation of Disclosure Documents for the securitization, (B) not later than thirty (30) days
after the end of each fiscal quarter of Borrower and (C) not later than seventy-five (75) days
after the end of each fiscal year of Borrower; provided, however, that Borrower shall not be
obligated to furnish financial data or financial statements pursuant to clauses (B) or (C) of this
sentence with respect to any period for which a filing pursuant to the Securities Exchange Act of
1934 in connection with or relating to the securitization (an “Exchange Act Filing”) is not
required. As used herein, “Regulation AB” shall mean Regulation AB under the Securities Act of 1933
and the Securities Exchange Act of 1934 (as amended). As used herein, “Disclosure Document” shall
mean a prospectus, prospectus supplement, private placement memorandum, or similar offering
memorandum or offering circular, in each case in preliminary or final form, used to offer
securities in connection with a

30

 

securitization. As used herein, “Significant Obligor” shall have the meaning set forth in
Item 1101(k) of Regulation AB.

If any of the aforementioned materials are not furnished to Lender within the applicable time
periods, are not prepared in accordance with generally accepted accounting principles or Lender is
dissatisfied with the form of any of the foregoing and has notified Borrower of its
dissatisfaction, in addition to any other rights and remedies of Lender contained herein and
provided Lender has given Borrower at least ten (10) days notice of such failure and opportunity to
cure, (i) Borrower shall pay to Lender upon demand, at Lender’s option and in its sole discretion,
an amount equal to $2,500 per reporting period, and (ii) Lender shall have the right, but not the
obligation, to obtain the same by means of an audit by an independent certified public accountant
selected by Lender, in which event Borrower agrees to pay, or to reimburse Lender for, any expense
of such audit and further agrees to provide all necessary information to said accountant and to
otherwise cooperate in the making of such audit.

     2.15 Further Assurances. Borrower shall, on the request of Lender and at the expense
of Borrower: (a) promptly correct any defect, error or omission which may be discovered in the
contents of this Security Deed or in the contents of any of the other Loan Documents; (b) promptly
execute, acknowledge, deliver and record or file such further instruments (including, without
limitation, further mortgages, deeds of trust, security deeds, security agreements, financing
statements, continuation statements and assignments of rents or leases) and promptly do such
further acts as may be necessary, desirable or proper to carry out more effectively the purposes of
this Security Deed and the other Loan Documents and to subject to the liens and security interests
hereof and thereof any property intended by the terms hereof and thereof to be covered hereby and
thereby, including specifically, but without limitation, any renewals, additions, substitutions,
replacements or appurtenances to the Property; (c) promptly execute, acknowledge, deliver, procure
and record or file any document or instrument (including specifically, without limitation, any
financing statement) deemed advisable by Lender to protect, continue or perfect the liens or the
security interests hereunder against the rights or interests of third persons; and (d) promptly
furnish to Lender, upon Lender’s request, a duly acknowledged written statement and estoppel
certificate addressed to such party or parties as directed by Lender and in form and substance
supplied by Lender, setting forth all amounts due under the Note, stating whether any Default or
Event of Default has occurred hereunder, stating whether any offsets or defenses exist against the
Debt and containing such other matters as Lender may reasonably require.

     2.16 Payment of Costs; Reimbursement to Lender. Borrower shall pay all costs and
expenses of every character reasonably incurred in connection with the closing of the loan
evidenced by the Note and secured hereby, attributable or chargeable to Borrower as the owner of
the Property or otherwise attributable to any consent requested of Lender or any Rating Agency
under the terms hereof or any other Loan Document, including, without limitation, customary
servicing and consent fees, appraisal fees, recording fees, documentary, stamp, mortgage or
intangible taxes, brokerage fees and commissions, title policy premiums and title search fees,
uniform commercial code/tax lien/litigation search fees, escrow fees, consultants’ fees,
No-Downgrade Confirmations and reasonable attorneys’ fees. If Borrower defaults in any such
payment, which default is not cured within any applicable grace or cure period, Lender may

31

 

pay the same and Borrower shall reimburse Lender on demand for all such costs and expenses incurred
or paid by Lender, together with such interest thereon at the Default Interest Rate from and after
the date of Lender’s making such payment until reimbursement thereof by Borrower. Any such sums
disbursed by Lender, together with such interest thereon, shall be additional indebtedness of
Borrower secured by this Security Deed and by all of the other Loan Documents securing all or any
part of the Debt. Further, Borrower shall promptly notify Lender in writing of any litigation or
threatened litigation affecting the Property, or any other demand or claim which, if enforced,
could impair or threaten to impair Lender’s security hereunder. Without limiting or waiving any
other rights and remedies of Lender hereunder, if Borrower fails to perform any of its covenants or
agreements contained in this Security Deed or in any of the other Loan Documents and such failure
is not cured within any applicable grace or cure period, or if any action or proceeding of any kind
(including, but not limited to, any bankruptcy, insolvency, arrangement, reorganization or other
debtor relief proceeding) is commenced which might affect Lender’s interest in the Property or
Lender’s right to enforce its security, then Lender may, at its option, with or without notice to
Borrower, make any appearances, disburse any sums and take any actions as may be necessary or
desirable to protect or enforce the security of this Security Deed or to remedy the failure of
Borrower to perform its covenants and agreements (without, however, waiving any default of
Borrower). Borrower agrees to pay on demand all expenses of Lender incurred with respect to the
foregoing (including, but not limited to, reasonable fees and disbursements of counsel), together
with interest thereon at the Default Interest Rate from and after the date on which Lender incurs
such expenses until reimbursement thereof by Borrower. Any such expenses so incurred by Lender,
together with interest thereon as provided above, shall be additional indebtedness of Borrower
secured by this Security Deed and by all of the other Loan Documents securing all or any part of
the Debt. The necessity for any such actions and of the amounts to be paid shall be determined by
Lender in its discretion. Lender is hereby empowered to enter and to authorize others to enter upon
the Property or any part thereof for the purpose of performing or observing any such defaulted
term, covenant or condition without thereby becoming liable to Borrower or any person in possession
holding under Borrower. Borrower hereby acknowledges and agrees that the remedies set forth in this
Section 2.16 shall be exercisable by Lender, and any and all payments made or costs or
expenses incurred by Lender in connection therewith shall be secured hereby and shall be, without
demand, immediately repaid by Borrower with interest thereon at the Default Interest Rate,
notwithstanding the fact that such remedies were exercised and such payments made and costs
incurred by Lender after the filing by Borrower of a voluntary case or the filing against Borrower
of an involuntary case pursuant to or within the meaning of the Bankruptcy Reform Act of 1978, as
amended, Title 11 U.S.C, or after any similar action pursuant to any other debtor relief law
(whether statutory, common law, case law or otherwise) of any jurisdiction whatsoever, now or
hereafter in effect, which may be or become applicable to Borrower, Lender, any Indemnitor, the
Debt or any of the Loan Documents. Borrower hereby indemnifies and holds Lender harmless from and
against all loss, cost and expenses with respect to any Event of Default hereof, any liens (i.e.,
judgments, mechanics’ and materialmen’s liens, or otherwise), charges and encumbrances filed
against the Property, and from any claims and demands for damages or injury, including claims for
property damage, personal injury or wrongful death, arising out of or in connection with any
accident or fire or other casualty on the Premises or the Improvements or any nuisance made or
suffered thereon, except those that are due to Lender’s gross negligence or willful misconduct as
finally determined by a court of competent jurisdiction, including, without

32

 

limitation, in any case, reasonable attorneys’ fees, costs and expenses as aforesaid, whether
at pretrial, trial or appellate level, and such indemnity shall survive payment in full of the
Debt. This Section shall not be construed to require Lender to incur any expenses, make any
appearances or take any actions.

     2.17 Security Interest. This Security Deed is also intended to encumber and create a
security interest in, and Borrower hereby grants to Lender a security interest in, all sums on
deposit with Lender pursuant to the provisions of Article III hereof or any other Section
hereof or of any other Loan Document and all fixtures, chattels, accounts, equipment, inventory,
contract rights, general intangibles and other personal property included within the Property, all
renewals, replacements of any of the aforementioned items, or articles in substitution therefor or
in addition thereto or the proceeds thereof (said property is hereinafter referred to collectively
as the “Collateral”), whether or not the same shall be attached to the Premises or the
Improvements in any manner. It is hereby agreed that to the extent permitted by law, all of the
foregoing property is to be deemed and held to be a part of and affixed to the Premises and the
Improvements. The foregoing security interest shall also cover Borrower’s leasehold interest in
any of the foregoing property which is leased by Borrower. Notwithstanding the foregoing, but
except as permitted under Section 2.29(a)(9) of this Security Deed concerning permitted
purchase money financing for equipment, electronics, and other ancillary personal property, all of
the foregoing property shall be owned by Borrower and no leasing or installment sales or other
financing or title retention agreement in connection therewith shall be permitted without the
prior written approval of Lender. Borrower shall, from time to time upon the request of Lender,
supply Lender with a current inventory of all of the property in which Lender is granted a
security interest hereunder, in such detail as Lender may reasonably require. Borrower shall
promptly replace all of the Collateral subject to the lien or security interest of this Security
Deed when worn or obsolete with Collateral comparable to the worn out or obsolete Collateral when
new and will not, without the prior written consent of Lender, remove from the Premises or the
Improvements any of the Collateral subject to the lien or security interest of this Security Deed
except such as is replaced by an article of equal suitability and value as above provided, owned
by Borrower free and clear of any lien or security interest except that created by this Security
Deed and the other Loan Documents. All of the Collateral shall be kept at the location of the
Premises except as otherwise required by the terms of the Loan Documents. Borrower shall not use
any of the Collateral in violation of any applicable statute, ordinance or insurance policy.

     2.18 Security Agreement. This Security Deed constitutes a security agreement between
Borrower and Lender with respect to the Collateral in which Lender is granted a security interest
hereunder, and, cumulative of all other rights and remedies of Lender hereunder, Lender shall have
all of the rights and remedies of a secured party under any applicable Uniform Commercial Code.
Borrower hereby agrees to execute and deliver on demand and hereby irrevocably constitutes and
appoints Lender the attorney-in-fact of Borrower to execute and deliver and, if appropriate, to
file with the appropriate filing officer or office, such security agreements, financing
statements, continuation statements or other instruments as Lender may request or require in order
to impose, perfect or continue the perfection of the lien or security interest created hereby. To
the extent specifically provided herein, Lender shall have the right of possession of all cash,
securities, instruments, negotiable instruments, documents, certificates and any other evidences
of cash or other property or evidences of rights to cash rather than

33

 

property, which are now or hereafter a part of the Property, and Borrower shall promptly
deliver the same to Lender, endorsed to Lender, without further notice from Lender. Borrower agrees
to furnish Lender with notice of any change in the name, identity, organizational structure,
residence, or principal place of business or mailing address of Borrower within ten (10) days of
the effective date of any such change. Upon the occurrence of any Event of Default, Lender shall
have the rights and remedies as prescribed in this Security Deed, or as prescribed by general law,
or as prescribed by any applicable Uniform Commercial Code, all at Lender’s election. Any
disposition of the Collateral may be conducted by an employee or agent of Lender. Any person,
including both Borrower and Lender, shall be eligible to purchase any part or all of the Collateral
at any such disposition. Expenses of retaking, holding, preparing for sale, selling or the like
(including, without limitation, Lender’s reasonable attorneys’ fees and legal expenses), together
with interest thereon at the Default Interest Rate from the date incurred by Lender until actually
paid by Borrower, shall be paid by Borrower on demand and shall be secured by this Security Deed
and by all of the other Loan Documents securing all or any part of the Debt. Lender shall have the
right to enter upon the Premises and the Improvements or any real property where any of the
property which is the subject of the security interest granted herein is located to take possession
of, assemble and collect the same or to render it unusable, or Borrower, upon demand of Lender,
shall assemble such property and make it available to Lender at the Premises, or at a place which
is mutually agreed upon or, if no such place is agreed upon, at a place reasonably designated by
Lender to be reasonably convenient to Lender and Borrower. If notice is required by law, Lender
shall give Borrower at least ten (10) days’ prior written notice of the time and place of any
public sale of such property, or adjournments thereof, or of the time of or after which any private
sale or any other intended disposition thereof is to be made, and if such notice is sent to
Borrower, as the same is provided for the mailing of notices herein, it is hereby deemed that such
notice shall be and is reasonable notice to Borrower. No such notice is necessary for any such
property which is perishable, threatens to decline speedily in value or is of a type customarily
sold on a recognized market. Any sale made pursuant to the provisions of this Section shall be
deemed to have been a public sale conducted in a commercially reasonable manner if held
contemporaneously with a foreclosure sale as provided in Section 5.1(e) hereof upon giving
the same notice with respect to the sale of the Property hereunder as is required under said
Section 5.1(e). Furthermore, to the extent permitted by law, in conjunction with, in
addition to or in substitution for the rights and remedies available to Lender pursuant to any
applicable Uniform Commercial Code:

          (a) In the event of a foreclosure sale, the Property may, at the option of Lender, be sold as
a whole; and

          (b) It shall not be necessary that Lender take possession of the aforementioned Collateral, or
any part thereof, prior to the time that any sale pursuant to the provisions of this Section is
conducted and it shall not be necessary that said Collateral, or any part thereof, be present at
the location of such sale; and

          (c) Lender may appoint or delegate any one or more persons as agent to perform any act or acts
necessary or incident to any sale held by Lender, including the sending of notices and the conduct
of the sale, but in the name and on behalf of Lender. The name and address of Borrower (as Debtor
under any applicable Uniform Commercial Code) are as set forth

34

 

on the first page hereof. The name and address of Lender (as Secured Party under any
applicable Uniform Commercial Code) are as set forth on the first page hereof.

     2.19 Easements and Rights-of-Way. Borrower shall not grant any easement or right-
of-way with respect to all or any portion of the Premises or the Improvements without the prior
written consent of Lender. Borrower shall comply with all easements affecting the Property. The
purchaser at any foreclosure sale hereunder may, at its discretion, disaffirm any easement or
right-of-way granted in violation of any of the provisions of this Security Deed and may take
immediate possession of the Property free from, and despite the terms of, such grant of easement or
right-of-way. If Lender consents to the grant of an easement or right-of-way, Lender agrees to
grant such consent without charge to Borrower other than expenses, including, without limitation,
reasonable attorneys’ fees, incurred by Lender in the review of Borrower’s request and in the
preparation of documents effecting the subordination.

     2.20 Compliance with Laws. Borrower shall at all times comply with all statutes,
ordinances, regulations and other governmental or quasi-governmental requirements and private
covenants now or hereafter relating to the ownership, construction, use or operation of the
Property, including, but not limited to, those concerning employment and compensation of persons
engaged in operation and maintenance of the Property and any environmental or ecological
requirements, even if such compliance shall require structural changes to the Property;
provided, however, that, Borrower may, upon providing Lender with security
satisfactory to Lender, proceed diligently and in good faith to contest the validity or
applicability of any such statute, ordinance, regulation or requirement so long as during such
contest the Property shall not be subject to any lien, charge, fine or other liability and shall
not be in danger of being forfeited, lost or closed. Borrower shall not use or occupy, or allow the
use or occupancy of, the Property in any manner which violates any Lease of or any other agreement
applicable to the Property or any applicable law, rule, regulation or order or which constitutes a
public or private nuisance or which makes void, voidable or cancelable, or increases the premium
of, any insurance then in force with respect thereto.

     2.21 Additional Taxes. In the event of the enactment after the date hereof of any law
of the state in which the Property is located or of any other governmental entity deducting from
the value of the Property for the purpose of taxing any lien or security interest thereon, or
imposing upon Lender the payment of the whole or any part of the taxes or assessments or charges or
liens herein required to be paid by Borrower, or changing in any way the laws relating to the
taxation of deeds of trust, mortgages or security agreements or debts secured by deeds of trust,
mortgages or security agreements or the interest of the beneficiary, mortgagee or secured party in
the property covered thereby, or the manner of collection of such taxes, so as to adversely affect
this Security Deed or the Debt or Lender, then, and in any such event, Borrower, upon demand by
Lender, shall pay such taxes, assessments, charges or liens, or reimburse Lender therefor;
provided, however, that if in the opinion of counsel for Lender (a) it
might be unlawful to require Borrower to make such payment, or (b) the making of such payment might
result in the imposition of interest beyond the maximum amount permitted by law, then and in either
such event, Lender may elect, by notice in writing given to Borrower, to declare all of the Debt to
be and become due and payable in full thirty (30) days from the giving of such notice, and, in
connection with the payment of such Debt, no prepayment premium or fee shall be due unless, at

35

 

the time of such payment, an Event of Default or a Default shall have occurred, which Default or
Event of Default is unrelated to the provisions of this Section 2.21, in which event any
applicable prepayment premium or fee in accordance with the terms of the Note shall be due and
payable.

     2.22 Secured Indebtedness. It is understood and agreed that this Security Deed shall
secure payment of not only the indebtedness evidenced by the Note but also any and all
substitutions, replacements, renewals and extensions of the Note, any and all indebtedness and
obligations arising pursuant to the terms hereof and any and all indebtedness and obligations
arising pursuant to the terms of any of the other Loan Documents, all of which indebtedness is
equally secured with and has the same priority as any amounts advanced as of the date hereof. It is
agreed that any future advances made by Lender to or for the benefit of Borrower from time to time
under this Security Deed or the other Loan Documents and whether or not such advances are
obligatory or are made at the option of Lender, or otherwise, made for any purpose, and all
interest accruing thereon, shall be equally secured by this Security Deed and shall have the same
priority as all amounts, if any, advanced as of the date hereof and shall be subject to all of the
terms and provisions of this Security Deed.

     2.23 Borrower’s Waivers. To the full extent permitted by law, Borrower agrees that
Borrower shall not at any time insist upon, plead, claim or take the benefit or advantage of any
law now or hereafter in force providing for any appraisement, valuation, stay, moratorium or
extension, or any law now or hereafter in force providing for the reinstatement of the Debt prior
to any sale of the Property to be made pursuant to any provisions contained herein or prior to the
entering of any decree, judgment or order of any court of competent jurisdiction, or any right
under any statute to redeem all or any part of the Property so sold. Borrower, for Borrower and
Borrower’s successors and assigns, and for any and all persons ever claiming any interest in the
Property, to the full extent permitted by law, hereby knowingly, intentionally and voluntarily,
with and upon the advice of competent counsel: (a) waives, releases, relinquishes and forever
forgoes all rights of valuation, appraisement, stay of execution, reinstatement and notice of
election or intention to mature or declare due the Debt (except such notices as are specifically
provided for herein); (b) waives, releases, relinquishes and forever forgoes all right to a
marshaling of the assets of Borrower, including the Property, to a sale in the inverse order of
alienation, or to direct the order in which any of the Property shall be sold in the event of
foreclosure of the liens and security interests hereby created and agrees that any court having
jurisdiction to foreclose such liens and security interests may order the Property sold as an
entirety; and (c) waives, releases, relinquishes and forever forgoes all rights and periods of
redemption provided under applicable law. To the full extent permitted by law, Borrower shall not
have or assert any right under any statute or rule of law pertaining to the exemption of homestead
or other exemption under any federal, state or local law now or hereafter in effect, the
administration of estates of decedents or other matters whatever to defeat, reduce or affect the
right of Lender under the terms of this Security Deed to a sale of the Property, for the collection
of the Debt without any prior or different resort for collection, or the right of Lender under the
terms of this Security Deed to the payment of the Debt out of the proceeds of sale of the Property
in preference to every other claimant whatever. Furthermore, Borrower hereby knowingly,
intentionally and voluntarily, with and upon the advice of competent counsel, waives, releases,
relinquishes and forever forgoes all present and future statutes of limitations as a defense to any
action to enforce the provisions of this Security Deed or to collect any of the Debt to the fullest

36

 

extent permitted by law. Borrower covenants and agrees that upon the commencement of a voluntary
or involuntary bankruptcy proceeding by or against Borrower, Borrower shall not seek a
supplemental stay or otherwise shall not seek pursuant to 11 U.S.C §105 or any other provision of
the Bankruptcy Reform Act of 1978, as amended, or any other debtor relief law (whether statutory,
common law, case law, or otherwise) of any jurisdiction whatsoever, now or hereafter in effect,
which may be or become applicable, to stay, interdict, condition, reduce or inhibit the ability of
Lender to enforce any rights of Lender against any guarantor or indemnitor of the secured
obligations or any other party liable with respect thereto by virtue of any indemnity, guaranty or
otherwise.

     2.24 SUBMISSION TO JURISDICTION; WAIVER OF JURY TRIAL.

          (a) BORROWER, TO THE FULL EXTENT PERMITTED BY LAW, HEREBY KNOWINGLY, INTENTIONALLY AND
VOLUNTARILY, WITH AND UPON THE ADVICE OF COMPETENT COUNSEL, (i) SUBMITS TO PERSONAL JURISDICTION IN
THE STATE IN WHICH THE PREMISES IS LOCATED OVER ANY SUIT, ACTION OR PROCEEDING BY ANY PERSON
ARISING FROM OR RELATING TO THE NOTE, THIS SECURITY DEED OR ANY OTHER OF THE LOAN DOCUMENTS, (ii)
AGREES THAT ANY SUCH ACTION, SUIT OR PROCEEDING MAY BE BROUGHT IN ANY STATE OR FEDERAL COURT OF
COMPETENT JURISDICTION SITTING IN THE COUNTY IN WHICH THE PREMISES IS LOCATED, (iii) SUBMITS TO THE
JURISDICTION OF SUCH COURTS, AND (iv) TO THE FULLEST EXTENT PERMITTED BY LAW, AGREES THAT IT WILL
NOT BRING ANY ACTION, SUIT OR PROCEEDING IN ANY OTHER FORUM (BUT NOTHING HEREIN SHALL AFFECT THE
RIGHT OF LENDER TO BRING ANY ACTION, SUIT OR PROCEEDING IN ANY OTHER FORUM).

          (b) BORROWER, TO THE FULL EXTENT PERMITTED BY LAW, HEREBY KNOWINGLY, INTENTIONALLY AND
VOLUNTARILY, WITH AND UPON THE ADVICE OF COMPETENT COUNSEL, WAIVES, RELINQUISHES AND FOREVER
FORGOES THE RIGHT TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING BASED UPON, ARISING OUT OF, OR IN
ANY WAY RELATING TO THE DEBT OR ANY CONDUCT, ACT OR OMISSION OF LENDER OR BORROWER, OR ANY OF THEIR
RESPECTIVE DIRECTORS, OFFICERS, PARTNERS, MEMBERS, EMPLOYEES, AGENTS OR ATTORNEYS, OR ANY OTHER
PERSONS AFFILIATED WITH LENDER OR BORROWER, IN EACH OF THE FOREGOING CASES, WHETHER SOUNDING IN
CONTRACT, TORT OR OTHERWISE.

     2.25 Attorney-in-Fact Provisions. With respect to any provision of this Security
Deed or any other Loan Document whereby Borrower grants to Lender a power-of-attorney, provided
no Default or Event of Default has occurred under this Security Deed, Lender shall first give
Borrower written notice at least three (3) days prior to acting under such power, which notice
shall demand that Borrower first take the proposed action within such period and advising
Borrower that if it fails to do so, Lender will so act under the power; provided, however, that,
in the event that a Default or an Event of Default has occurred, or if necessary to prevent
imminent death, serious injury, damage, loss, forfeiture or diminution in value to the Property
or any

37

 

surrounding property or to prevent any adverse affect on Lender’s interest in the Property,
Lender may act immediately and without first giving such notice. In such event, Lender will give
Borrower notice of such action as soon thereafter as reasonably practical.

     2.26 Management. The management of the Property shall be by either: (a) Borrower or an
entity affiliated with Borrower approved by Lender for so long as Borrower or said affiliated
entity is managing the Property in a first class manner; or (b) a professional property management
company approved by Lender. Such management by an affiliated entity or a professional property
management company shall be pursuant to a written agreement approved by Lender. In no event shall
any manager be removed or replaced or the terms of any management agreement modified or amended
without the prior written consent of Lender; provided, however, Borrower shall, so long as no Event
of Default shall have occurred and be continuing, be permitted to replace any manager with a
Qualified Manager without the prior written consent of Lender so long as Borrower delivers to
Lender notice of such replacement of any manager with a Qualified Manager. After an Event of
Default or a default under any management contract then in effect, which default is not cured
within any applicable grace or cure period or if at any time during the term of the Loan the debt
service coverage ratio of the Property is ever less than 1.10:1, as determined by Lender, Lender
shall have the right to terminate, or to direct Borrower to terminate, such management contract
upon thirty (30) days’ notice and to retain, or to direct Borrower to retain, a new management
agent approved by Lender. All Rents and Profits generated by or derived from the Property shall
first be utilized solely for current expenses directly attributable to the ownership and operation
of the Property, including, without limitation, current expenses relating to Borrower’s liabilities
and obligations with respect to this Security Deed and the other Loan Documents, and none of the
Rents and Profits generated by or derived from the Property shall be diverted by Borrower and
utilized for any other purposes unless all such current expenses attributable to the ownership and
operation of the Property have been fully paid and satisfied.

     For purposes herein, “Qualified Manager” shall mean a reputable and experienced professional
management organization which manages, together with its affiliates, first class multi-family
residential complexes of a type and size similar to the Property, totaling in the aggregate no
less than 1,000 residential units, exclusive of the Property; provided, however, if Lender with
respect to any Qualified Manager which is an affiliate of Borrower, Borrower shall be required to
deliver to Lender a revised Non-Consolidation Opinion if one was delivered in connection with the
closing of the Loan.

     2.27 Hazardous Waste and Other Substances.

          (a) Except as otherwise may be disclosed in that certain Phase I Environmental Site
Assessment, dated August 7, 2006 and prepared by IVI Due Diligence Services, Inc., Borrower hereby
represents and warrants to Lender that, as of the date hereof: (i) to the best of Borrower’s
knowledge, information and belief, none of Borrower nor the Property nor any Tenant at the
Premises nor the operations conducted thereon is in direct or indirect violation of or otherwise
exposed to any liability under any local, state or federal law, rule or regulation or common law
duty pertaining to human health, natural resources or the environment, including, without
limitation, the Comprehensive Environmental Response,

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Compensation and Liability Act of 1980 (42 U.S.C.- §9601 et seq.) (“CERCLA”), the Resource
Conservation and Recovery Act of 1976 (42 U.S.C. §6901 et seq.), the Federal Water Pollution
Control Act (33 U.S.C. §1251 et seq.), the Clean Air Act (42 U.S.C. §7401 et seq.), the Emergency
Planning and Community-Right-to-Know Act (42 U.S.C. §11001 et seq.), the Endangered Species Act (16
U.S.C. §1531 et seq.), the Toxic Substances Control Act (15 U.S.C. §2601 et seg.), the Occupational
Safety and Health Act (29 U.S.C. §651 et seq.) and the Hazardous Materials Transportation Act (49
U.S.C. §1801 et seq.), the Georgia Hazardous Waste Management Act, as amended, O.C.G.A. § 12-8-60
et seq., the Georgia Oil or Hazardous Materials Spills or Releases Act, as amended, O.C.G.A. §
12-14-1 et seq., the Georgia Comprehensive Solid Waste Management Act, as amended, O.C.G.A. §
12-8-20 et seq., the Georgia Asbestos Safety Act, as amended, O.C.G.A. § 12-12-1 et seq., the
Georgia Underground Storage Tank Act, as amended, O.C.G.A. § 12-13-1 et seq. and those relating to
Lead Based Paint (as hereinafter defined), and regulations promulgated pursuant thereto by the
Georgia Department of Natural Resources Environmental Protection Division, regulations promulgated
pursuant to said laws, all as amended from time to time (collectively, “Environmental Laws”) or
otherwise exposed to any liability under any Environmental Law relating to or affecting the
Property, whether or not used by or within the control of Borrower; (ii) no hazardous, toxic or
harmful substances, wastes, materials, pollutants or contaminants (including, without limitation,
asbestos or asbestos-containing materials, lead based paint, Toxic Mold (as hereinafter defined)
polychlorinated biphenyls, petroleum or petroleum products or byproducts, flammable explosives,
radioactive materials, infectious substances or raw materials which include hazardous constituents)
or any other substances or materials which are included under or regulated by Environmental Laws
(collectively, “Hazardous Substances”) are located on, in or under or have been handled, generated,
stored, processed or disposed of on or released or discharged from the Property (including
underground contamination), except for those substances used by Borrower or any Tenant in the
ordinary course of their respective businesses and in compliance with all Environmental Laws and
where such Hazardous Substances could not reasonably be expected to give rise to liability under
Environmental Laws; (iii) radon is not present at the Property in excess or in violation of any
applicable thresholds or standards or in amounts that require disclosure under applicable law to
any tenant or occupant of or invitee to the Property or to any governmental agency or the general
public; (iv) the Property is not subject to any private or governmental lien or judicial or
administrative notice or action arising under Environmental Laws; (v) there is no pending, nor, to
Borrower’s knowledge, information or belief, threatened litigation arising under Environmental Laws
affecting Borrower or the Property; (vi) there are no and have been no existing or closed
underground storage tanks or other underground storage receptacles for Hazardous Substances or
landfills or dumps on the Property; (vii) Borrower has received no notice of, and to the best of
Borrower’s knowledge and belief, there exists no investigation, action, proceeding or claim by any
agency, authority or unit of government or by any third party which could result in any liability,
penalty, sanction or judgment under any Environmental Laws with respect to any condition, use or
operation of the Property, nor does Borrower know of any basis for such an investigation, action,
proceeding or claim; and (viii) Borrower has received no notice of and, to the best of Borrower’s
knowledge and belief, there has been
 no claim by any party that any use, operation or condition of
the Property has caused any nuisance or any other liability or adverse condition on any other
property, nor does Borrower know of any basis for such an investigation, action, proceeding or
claim. For the purposes hereof, “Toxic Mold” shall mean any mold or fungus at the Property which is
of a type (i) that

39

 

might pose a significant risk to human health or the environment or (ii) that would negatively
impact the value of the Property.

          (b) Borrower has not received nor to the best of Borrower’s knowledge, information and belief
has there been issued, any notice, notification, demand, request for information, citation,
summons, or order in any way relating to any actual, alleged or potential violation or liability
arising under Environmental Laws.

          (c) Neither the Property, nor to the best of Borrower’s knowledge, information and belief, any
property to which Borrower has, in connection with the maintenance or operation of the Property,
directly or indirectly transported or arranged for the transportation of any Hazardous Substances
is listed or, to the best of Borrower’s knowledge, information and belief, proposed for listing on
the National Priorities List promulgated pursuant to CERCLA, or CERCLIS (as defined in CERCLA) or
on any similar federal or state list of sites requiring environmental investigation or clean-up.

          (d) Borrower shall comply with all applicable Environmental Laws. Borrower shall keep the
Property or cause the Property to be kept free from Hazardous Substances (except those substances
used by Borrower or any Tenant in the ordinary course of their respective businesses and except in
compliance with all Environmental Laws and where such Hazardous Substances could not reasonably be
expected to give rise to liability under Environmental Laws) and in compliance with all
Environmental Laws, Borrower shall not install or use any underground storage tanks, shall
expressly prohibit the use, generation, handling, storage, production, processing and disposal of
Hazardous Substances by all Tenants in quantities or conditions that would violate or give rise to
any obligation to take remedial or other action under any applicable Environmental Laws. Without
limiting the generality of the foregoing, during the term of this Security Deed, Borrower shall not
install in the Improvements or permit to be installed in the Improvements any asbestos or
asbestos-containing materials.

          (e) Borrower shall promptly notify Lender if Borrower shall become aware of (i) the actual or
potential existence of any Hazardous Substances on the Property other than those occurring in the
ordinary course of Borrower’s business and which do not violate, or would not otherwise give rise
to liability under Environmental Laws, (ii) any direct or indirect violation of, or other exposure
to liability under, any Environmental Laws, (iii) any lien, action or notice affecting the Property
or Borrower resulting from any violation or alleged violation of or liability or alleged liability
under any Environmental Laws, (iv) the institution of any investigation, inquiry or proceeding
concerning Borrower or the Property pursuant to any Environmental Laws or otherwise relating to
Hazardous Substances, or (v) the discovery of any occurrence, condition or state of facts which
would render any representation or warranty contained in this Security Deed incorrect in any
respect if made at the time of such discovery. Immediately upon receipt of same, Borrower, shall
deliver to Lender copies of any and all requests for information, complaints, citations, summonses,
orders, notices, reports or other communications, documents or instruments in any way relating to
any actual, alleged or potential violation or liability of any nature whatsoever arising under
Environmental Laws and relating to the Property or to Borrower. Borrower shall remedy or cause to
be remedied in a timely manner (and in any event within the time period permitted by applicable
Environmental Laws) any violation of

40

 

Environmental Laws or any condition that could give rise to liability under Environmental
Laws. Without, limiting the foregoing, Borrower shall, promptly and regardless of the source of the
contamination or threat to the environment or human health, at its own expense, take all actions as
shall be necessary or prudent, for the clean-up of any and all portions of the Property or other
affected property, including, without limitation, all investigative, monitoring, removal,
containment and remedial actions in accordance with all applicable Environmental Laws (and in all
events in a manner satisfactory to Lender) and shall further pay or cause to be paid, at no expense
to Lender, all clean-up, administrative and enforcement costs of applicable governmental agencies
which may be asserted against the Property. In the event Borrower fails to do so, Lender may, but
shall not be obligated to, cause the Property or other affected property to be freed from any
Hazardous Substances or otherwise brought into conformance with Environmental Laws and any and all
costs and expenses incurred by Lender in connection therewith, together with interest thereon at
the Default Interest Rate from the date incurred by Lender until actually paid by Borrower, shall
be immediately paid by Borrower on demand and shall be secured by this Security Deed and by all of
the other Loan Documents securing all or any part of the Debt. Borrower hereby grants to Lender and
its agents and employees access to the Property and a license to remove any items deemed by Lender
to be Hazardous Substances and to do all things Lender shall deem necessary to bring the Property
into conformance with Environmental Laws.

          (f) Borrower covenants and agrees, at Borrower’s sole cost and expense, to indemnify, defend
(at trial and appellate levels, and with attorneys, consultants and experts acceptable to Lender),
and hold Lender harmless from and against any and all liens, damages (including without
limitation, punitive or exemplary damages), losses, liabilities (including, without limitation,
strict liability), obligations, settlement payments, penalties, fines, assessments, citations,
directives, claims, litigation, demands, defenses, judgments, suits, proceedings, costs,
disbursements or expenses of any kind or of any nature whatsoever (including, without limitation,
reasonable attorneys’, consultants’ and experts’ fees and disbursements actually incurred in
investigating, defending, settling or prosecuting any claim, litigation or proceeding) which may
at any time be imposed upon, incurred by or asserted or awarded against Lender or the Property,
and arising directly or indirectly from or out of: (i) any violation or alleged violation of, or
liability or alleged liability under, any Environmental Law; (ii) the presence, release or threat
of release of or exposure to any Hazardous Substances or radon on, in, under or affecting all or
any portion of the Property or any surrounding areas, regardless of whether or not caused by or
within the control of Borrower; (iii) any transport, treatment, recycling, storage, disposal or
arrangement therefor of Hazardous Substances whether on the Property, originating from the
Property, or otherwise associated with Borrower or any operations conducted on the Property at any
time; (iv) the failure by Borrower to comply fully with the terms and conditions of this
Section 2.27; (v) the breach of any representation or warranty contained in this
Section 2.27; or (vi) the enforcement of this Section 2.27, including, without
limitation, the cost of assessment, investigation, containment, removal and/or remediation of any
and all Hazardous Substances from all or any portion of the Property or any surrounding areas, the
cost of any actions taken in response to the presence, release or threat of release of any
Hazardous Substances on, in, under or affecting any portion of the Property or any surrounding
areas to prevent or minimize such release or threat of release so that it does not migrate or
otherwise cause or threaten danger to present or future public health, safety, welfare

41

 

or the environment, and costs incurred to comply with Environmental Laws in connection with all
or any portion of the Property or any surrounding areas. The indemnity set forth in this
Section 2.27 shall also include any diminution in the value of the security afforded by
the Property or any future reduction in the sales price of the Property by reason of any matter
set forth in this Section 2.27. The foregoing indemnity shall specifically not include
any such costs relating to Hazardous Substances which are initially placed on, in or under the
Property after foreclosure or other taking of title to the Property by Lender or its successor or
assigns. Lender’s rights under this Section shall survive payment in full of the Debt and shall
be in addition to all other rights of Lender under this Security Deed, the Note and the other
Loan Documents.

          (g) Upon Lender’s request, at any time after the occurrence of an Event of Default or at such
other time as Lender has reasonable grounds to believe that Hazardous Substances are or have been
released, stored or disposed of on the Property, or on property contiguous with the Property, or
that the Property may be in violation of the Environmental Laws, Borrower shall perform or cause to
be performed, at Borrower’s sole cost and expense and in scope, form and substance satisfactory to
Lender, an inspection or audit of the Property prepared by a hydrogeologist or environmental
engineer or other appropriate consultant approved by Lender indicating the presence or absence of
Hazardous Substances on the Property, the compliance or non-compliance status of the Property and
the operations conducted thereon with applicable Environmental Laws, or an inspection or audit of
the Property prepared by an engineering or consulting firm approved by Lender indicating the
presence or absence of friable asbestos or substances containing asbestos or lead or substances
containing lead or lead based paint (“Lead Based Paint”) on the Property. If Borrower fails to
provide reports of such inspection or audit within thirty (30) days after such request, Lender may
order the same, and Borrower hereby grants to Lender and its employees and agents access to the
Property and an irrevocable license to undertake such inspection or audit. The cost of such
inspection or audit, together with interest thereon at the Default Interest Rate from the date
incurred by Lender until actually paid by Borrower, shall be immediately paid by Borrower on demand
and shall be secured by this Security Deed and by all of the other Loan Documents securing all or
any part of the Debt.

          (h) Reference is made to that certain Environmental Indemnity Agreement of even date herewith
by and among Borrower and any other principal signatory named therein in favor of Lender (the
“Environmental Indemnity Agreement”). The provisions of this Security Deed and the Environmental
Indemnity Agreement shall be read together to maximize the coverage with respect to the subject
matter thereof, as determined by Lender.

          (i) If prior to the date hereof, it was determined that the Property contains
asbestos-containing materials (“ACM’s”), Borrower covenants and agrees to institute, within
thirty (30) days after the date hereof, an operations and maintenance program (the “Maintenance
Program”) designed by an environmental consultant, satisfactory to Lender, with respect to ACM’s,
consistent with “Guidelines for Controlling Asbestos-Containing Materials in Buildings” (USEPA,
1985) and other relevant guidelines, and such Maintenance Program will hereafter continuously
remain in effect until the Debt secured hereby is repaid in full. In furtherance of the
foregoing, Borrower shall inspect and maintain all ACM’s on a regular basis and ensure that all
ACM’s shall be maintained in a condition that prevents exposure of residents

42

 

to ACM’s at all times. Without limiting the generality of the preceding sentence, Lender may
require (i) periodic notices or reports to Lender in form, substance and at such intervals as
Lender may specify, (ii) an amendment to such operations and maintenance program to address
changing circumstances, laws or other matters, (iii) at Borrower’s sole expense, supplemental
examination of the Property by consultants specified by Lender, and (iv) variation of the
operations and maintenance program in response to the reports provided by any such consultants.

          (j) If, prior to the date hereof, it was determined that the Property contains Lead Based
Paint, Borrower had prepared an assessment report describing the location and condition of the
Lead Based Paint (a “Lead Based Paint Report”). If, at any time hereafter, Lead Based Paint is
suspected of being present on the Property, Borrower agrees, at its sole cost and expense and
within twenty (20) days thereafter, to cause to be prepared a Lead Based Paint Report prepared by
an expert, and in form, scope and substance, acceptable to Lender. Borrower agrees that if it has
been, or if at any time hereafter it is, determined that the Property contains Lead Based Paint,
on or before thirty (30) days following (i) the date hereof, if such determination was made prior
to the date hereof or (ii) such determination, if such determination is hereafter made, as
applicable, Borrower shall, at its sole cost and expenses, develop and implement, and thereafter
diligently and continuously carry out (or cause to be developed and implemented and thereafter
diligently and continually to be carried out), an operations, abatement and maintenance plan for
the Lead Based Paint on the Property, which plan shall be prepared by an expert, and be in form,
scope and substance, acceptable to Lender (together with any Lead Based Paint Report, the “O&M
Plan”). (If an O&M Plan has been prepared prior to the date hereof, Borrower agrees to diligently
and continually carry out (or cause to be carried out) the provisions thereof.) Compliance with
the O&M Plan shall require or be deemed to require, without limitation, the proper preparation and
maintenance of all records, papers and forms required under the Environmental Laws.

     2.28 Indemnification; Subrogation.

          (a) Borrower shall indemnify, defend and hold Lender harmless against: (i) any and all claims
for brokerage, leasing, finders or similar fees which may be made relating to the Property or the
Debt, and (ii) any and all liability, obligations, losses, damages, penalties, claims, actions,
suits, costs and expenses (including Lender’s reasonable attorneys’ fees) of whatever kind or
nature which may be asserted against, imposed on or incurred by Lender in connection with the Debt,
this Security Deed, the Property, or any part thereof, the exercise by Lender of any rights or
remedies granted to it under this Security Deed or arise from the information provided in
accordance with the terms hereof; provided, however, that nothing herein shall be
construed to obligate Borrower to indemnify, defend and hold harmless Lender from and against any
and all liabilities, obligations, losses, damages, penalties, claims, actions, suits, costs and
expenses enacted against, imposed on or incurred by Lender by reason of Lender’s willful misconduct
or gross negligence.

          (b) If Lender is made a party defendant to any litigation or any claim is threatened or
brought against Lender concerning the Debt, this Security Deed, the Property, or any part thereof,
or any interest therein, or the construction, maintenance, operation or occupancy or use thereof,
then Borrower shall indemnify, defend and hold Lender harmless from

43

 

and against all liability by reason of said litigation or claims, including reasonable
attorneys’ fees and expenses incurred by Lender in any such litigation or claim, whether or not any
such litigation or claim is prosecuted to judgment. If Lender commences an action against Borrower
to enforce any of the terms hereof or to prosecute any breach by Borrower of any of the terms
hereof or to recover any sum secured hereby, Borrower shall pay to Lender its reasonable attorneys’
fees and expenses. The right to such attorneys’ fees and expenses shall be deemed to have accrued
on the commencement of such action, and shall be enforceable whether or not such action is
prosecuted to judgment. If Borrower breaches any term of this Security Deed, Lender may engage the
services of an attorney or attorneys to protect its rights hereunder, and in the event of such
engagement following any breach by Borrower, Borrower shall pay Lender reasonable attorneys’ fees
and expenses incurred by Lender, whether or not an action is actually commenced against Borrower by
reason of such breach. All references to “attorneys” in this Subsection and elsewhere in this
Security Deed shall include, without limitation, any attorney or law firm engaged by Lender and
Lender’s in-house counsel, and all references to “fees and expenses” in this Subsection and
elsewhere in this Security Deed shall include, without limitation, any fees of such attorney or law
firm, any appellate counsel fees, if applicable, and any allocation charges and allocation costs of
Lender’s in-house counsel.

          (c) A waiver of subrogation shall be obtained by Borrower from its insurance carrier and,
consequently, Borrower waives any and all right to claim or recover against Lender, its officers,
employees, agents and representatives, for loss of or damage to Borrower, the Property, Borrower’s
property or the property of others under Borrower’s control from any cause insured against or
required to be insured against by the provisions of this Security Deed.

     2.29 Covenants with Respect to Existence, Indebtedness, Operations, Fundamental Changes
of Borrower. (a) Borrower, and any general partner, manager, or managing member of Borrower,
as applicable, have each done since the date of their formation and shall do or cause to be done
all things necessary to (i) preserve, renew and keep in full force and effect its existence,
rights, and franchises, (ii) continue to engage in the business presently conducted by it, (iii)
obtain and maintain all licenses, and (iv) qualify to do business and remain in good standing
under the laws of each jurisdiction, in each case as and to the extent required for the ownership,
maintenance, management and operation of the Property. Borrower hereby represents, warrants and
covenants as of the date hereof and until such time as the Debt is paid in full, that Borrower has
been, since the date of its formation, is, and shall remain a Single-Purpose Entity (as
hereinafter defined). A “Single-Purpose Entity” or “SPE” means a corporation, limited partnership
or limited liability company that:

          (1) was and will be organized solely for the purpose of owning an interest in the Property;

          (2) will not, nor will any partner, limited or general, member or shareholder thereof, as
applicable, amend, modify or otherwise change its partnership certificate, partnership agreement,
articles of incorporation, by-laws, operating agreement, articles of organization, or other
formation agreement or document, as applicable, in any material term or manner, or in a manner
which adversely affects Borrower’s existence as a Single Purpose Entity;

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          (3) will not liquidate or dissolve (or suffer any liquidation or dissolution), or enter
into any transaction of merger or consolidation, or acquire by purchase or otherwise all or
substantially all the business or assets of, or any stock or other evidence of beneficial
ownership of any entity;

          
(4) will not, nor will any partner, limited or general, member or shareholder thereof, as
applicable, violate the terms of its partnership certificate, partnership agreement, articles of
incorporation, by-laws, operating agreement, articles of organization, or other formation agreement
or document, as applicable;

          (5) has not and will not guarantee, pledge its assets for the benefit of, or otherwise become
liable on or in connection with, any obligation of any other person or entity;

          (6) does not own and will not own any asset other than (i) the Property, and (ii) incidental
personal property necessary for the operation of the Property;

          (7) is not engaged and will not engage, either directly or indirectly, in any business other
than the ownership, management and operation of the Property;

          (8) will not enter into any contract or agreement with any general partner, principal,
affiliate or member of Borrower, as applicable, or any affiliate of any general partner, principal
or member of Borrower, except upon terms and conditions that are intrinsically fair and
substantially similar to those that would be available on an arms-length basis with third parties
other than an affiliate;

          (9) has not incurred and will not incur any debt, secured or unsecured, direct or contingent
(including guaranteeing any obligation), other than (i) the Debt, (ii) normal trade payables or
accrued expenses incurred in the ordinary course of business of operating the Property customarily
satisfied within thirty (30) days and in an aggregate amount not to exceed two percent (2.0%) of
the existing principal balance of the Note, and (iii) purchase money indebtedness incurred to
acquire equipment, electronics and other ancillary personal property used at the Property
(excluding any furniture, fixtures or room furnishings) and lease obligations in the normal course
of business, and no other debt will be secured (senior, subordinate or pari passu) by the Property;

          (10) has not made and will not make any loans or advances to any third party (including any
affiliate);

          (11) is and will be solvent and pay its debts from its assets as the same shall become due;

          (12) has done or caused to be done and will do all things necessary to preserve its existence,
and will observe all formalities applicable to it;

          (13) will conduct and operate its business in its own name and as presently conducted and
operated; provided, that, Borrower may contract with any property manager for

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the Property for (i) the rights under a nonexclusive license authorizing Borrower to use
various service marks, trademarks, and tradenames (e.g. “The Grove,” “Go Grove,” and “Campus
Crest”) for purposes of marketing the Property to prospective tenants, (ii) the use by such
property manager of such licensed service marks, trademarks and trade names on behalf of the
Borrower for purposes of marketing the Property to potential tenants, and (iii) space on a
nonexclusive website which advertises the Property to potential tenants along with other properties
managed by such property manager that are also licensed to use such service marks, trademarks and
tradenames;

          (14) will maintain financial statements, books and records and bank accounts separate from
those of its affiliates, including, without limitation, its general partners or members, as
applicable;

          (15) will be, and at all times will hold itself out to the public as, a legal entity separate
and distinct from any other entity (including, without limitation, any affiliate, general partner,
or member, as applicable, or any affiliate of any general partner or member of Borrower, as
applicable) and will correct any known misunderstanding concerning its separate identity;

          (16) will file its own tax returns;

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

          (18) will establish and maintain an office through which its business will be conducted
separate and apart from those of its affiliates or shall allocate fairly and reasonably any
overhead and expense for shared office space;

          (19) will not commingle the funds and other assets of Borrower with those of any general
partner, member, affiliate, principal or any other person;

          (20) has and will maintain its assets in such a manner that it is not costly or difficult to
segregate, ascertain or identify its individual assets from those of any affiliate or any other
person;

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

          (22) will pay the salaries of its own employees (if any) from its own funds and maintain a
sufficient number of employees (if any) in light of its contemplated business operations;

          (23) will pay any liabilities out of its own funds, including salaries of its employees, not
funds of any affiliate; and

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          (24) will use stationery, invoices, and checks separate from its affiliates; provided, that,
the foregoing shall not limit the ability of any property manager under a management agreement
acting on behalf of the Borrower to use such manager’s own stationery and invoices provided that,
in matters affecting legal rights and obligations of the Borrower or the Property, such manager
shall identify its representative capacity of the Borrower and/or the Property so as to avoid any
misunderstanding of the Borrower’s separate identity.

          (b) In the event Borrower is a single-member Delaware limited liability company, the limited
liability company agreement of Borrower (the “LLC Agreement”) shall provide that (i) upon the
occurrence of any event that causes the sole member of Borrower (“Member”) to cease to be the
member of Borrower (other than (A) upon an assignment by Member of all of its limited liability
company interest in Borrower and the admission of the transferee, or (B) the resignation of Member
and the admission of an additional member in either case in accordance with the terms of the Loan
Documents and the LLC Agreement), any person acting as a “springing” or “special” member of
Borrower shall without any action of any other Person and simultaneously with the Member ceasing
to be the member of Borrower, automatically be admitted to Borrower (“Special Member”) and shall
continue Borrower without dissolution and (ii) Special Member may not resign from Borrower or
transfer its rights as Special Member unless a successor Special Member has been admitted to
Borrower as Special Member in accordance with requirements of Delaware law. The LLC Agreement
shall further provide that (i) Special Member shall automatically cease to be a member of Borrower
upon the admission to Borrower of a substitute Member, (ii) Special Member shall be a member of
Borrower that has no interest in the profits, losses and capital of Borrower and has no right to
receive any distributions of Borrower assets, (iii) pursuant to Section 18-301 of the Delaware
Limited Liability Company Act (the “Act”), Special Member shall not be required to make any
capital contributions to Borrower and shall not receive a limited liability company interest in
Borrower, (iv) Special Member, in its capacity as Special Member, may not bind Borrower, and (v)
except as required by any mandatory provision of the Act, Special Member, in its capacity as
Special Member, shall have no right to vote on, approve or otherwise consent to any action by, or
matter relating to, Borrower, including, without limitation, the merger, consolidation or
conversion of Borrower; provided, however, such prohibition shall not limit the
obligations of Special Member to vote on such matters required by the Loan Documents or the LLC
Agreement. In order to implement the admission to Borrower of Special Member, Special Member shall
execute a counterpart to the LLC Agreement. Prior to its admission to Borrower as Special Member,
Special Member shall not be a member of Borrower.

          (c) Upon the occurrence of any event that causes the Member to cease to be a member of
Borrower, to the fullest extent permitted by law, the personal representative of Member shall,
within ninety (90) days after the occurrence of the event that terminated the continued membership
of Member in Borrower, agree in writing (i) to continue Borrower and (ii) to the admission of the
personal representative or its nominee or designee, as the case may be, as a substitute member of
Borrower, effective as of the occurrence of the event that terminated the continued membership of
Member of Borrower in Borrower. Any action initiated by or brought against Member or Special
Member under any creditors rights laws shall not cause Member or Special Member to cease to be a
member of Borrower and upon the occurrence of such an event, the business of Borrower shall
continue without dissolution. The LLC Agreement shall provide

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that each of Member and Special Member waives any right it might have to agree in writing to
dissolve Borrower upon the occurrence of any action initiated by or brought against Member or
Special Member under any creditors rights laws, or the occurrence of an event that causes Member
or Special Member to cease to be a member of Borrower.

     2-30 Embargoed Person. At all times throughout the term
of the Loan, including after
giving effect to any Sale hereunder, (a) none of the funds or assets of Indemnitor that are used
to repay the Loan or of Borrower shall constitute property of, or shall be beneficially owned
directly or, to Borrower’s best knowledge, indirectly, by any person subject to sanctions or trade
restrictions under United States law (“Embargoed Person” or “Embargoed Persons”) that are
identified on (1) the “List of Specially Designated Nationals and Blocked Persons” maintained by
the Office of Foreign Assets Control (OFAC), U.S. Department of the Treasury, and/or to Borrower’s
best knowledge, information and belief, as of the date thereof, on any other similar list
maintained by OFAC pursuant to any authorizing statute including, but not limited to, the
International Emergency Economic Powers Act, 50 U.S.C. §§ 1701 et seq., The Trading with the Enemy
Act, 50 U.S.C. App. 1 et seq., and any Executive Order or regulation promulgated thereunder, with
the result that the investment in Borrower or any Indemnitor, as applicable (whether directly or
indirectly), is prohibited by law, or the Loan made by Lender would be in violation of law, or (2)
Executive Order 13224 (September 23, 2001) issued by the President of the United States
(“Executive Order Blocking Property and Prohibiting Transactions with Persons Who Commit, Threaten
to Commit, or Support Terrorism”), any related enabling legislation or any other similar Executive
Orders, and (b) no Embargoed Person shall have any direct interest, and to Borrower’s best
knowledge, as of the date hereof, based upon reasonable inquiry by Borrower, indirect interest, of
any nature whatsoever in Borrower or any Indemnitor, as applicable, with the result that the
investment in Borrower or any Indemnitor, as applicable (whether directly or indirectly), is
prohibited by law or the Loan is in violation of law.

     2.31 Anti-Money Laundering. At all times throughout the term of the Loan, including
after giving effect to any Transfers permitted pursuant to the Loan Documents, none of the funds of
Borrower or any Indemnitor, as applicable, that are used to repay the Loan shall be derived from
any unlawful activity, with the result that the investment in Borrower or any Indemnitor, as
applicable (whether directly or indirectly), is prohibited by law or the Loan is in violation of
law.

     2.32 ERISA.

          (a) Borrower shall not engage in any transaction which would cause any obligation, or action
taken or to be taken, hereunder (or the exercise by Lender of any of its rights under the Note,
this Security Deed or any of the other Loan Documents) to be a non-exempt (under a statutory or
administrative class exemption) prohibited transaction under ERISA.

          (b) Borrower further covenants and agrees to deliver to Lender such certifications or other
evidence from time to time throughout the term of this Security Deed, as requested by Lender in its
sole discretion, that (i) Borrower is not an “employee benefit plan” as defined in Section 3(3) of
ERISA, which is subject to Title I of ERISA, or a “governmental plan” within the meaning of Section
3(32) of ERISA; (ii) Borrower is not subject to Federal or state

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statutes regulating investments and fiduciary obligations with respect to governmental plans;
and (iii) one or more of the following circumstances is true:

     (1) Equity interests in Borrower are publicly offered securities within the meaning of
29 C.F.R. Section 2510.3-101(b)(2);

     (2) Less than 25 percent of each outstanding class of equity interests in Borrower are
held by “benefit plan investors” within the meaning of 29 C.F.R. Section 2510.3-101 (f)(2);
or

     (3) Borrower qualifies as an “operating company” within the meaning of 29 C.F.R.
Section 2510.3-101 or an investment company registered under the Investment Company Act of
1940.

          (c) Borrower shall indemnify Lender and defend and hold Lender harmless from and against all
civil penalties, excise taxes, or other loss, cost damage and expense (including, without
limitation, reasonable attorneys’ fees and disbursements and costs incurred in the investigation,
defense and settlement of claims and losses incurred in correcting any prohibited transaction or
in the sale of a prohibited loan, and in obtaining any individual prohibited transaction exemption
under ERISA that may be required, in Lender’s sole discretion) that Lender may incur, directly or
indirectly, as a result of a default under this Section. This indemnity shall survive any
termination, satisfaction or foreclosure of this Security Deed.

ARTICLE III.

RESERVES AND CASH MANAGEMENT

     3.1 Reserves Generally.

          (a) As additional security for the payment and performance by Borrower of all duties,
responsibilities and obligations under the Note and the other Loan Documents, Borrower hereby
unconditionally and irrevocably assigns, conveys, pledges, mortgages, transfers, delivers,
deposits, sets over and confirms unto Lender, and hereby grants to Lender a security interest in,
(i) the Payment Reserve, the Impound Account, the Replacement Reserve, as applicable (each as
hereinafter defined) and any other reserve or escrow account established pursuant to the terms
hereof or of any other Loan Document (collectively, the “Reserves”), (ii) the accounts into which
the Reserves have been deposited, (iii) all insurance on said accounts, (iv) all accounts,
contract rights and general intangibles or other rights and interests pertaining thereto, (v) all
sums now or hereafter held therein or represented thereby, (vi) all replacements, substitutions or
proceeds thereof, (vii) all instruments and documents now or hereafter evidencing the Reserves or
such accounts, (viii) all powers, options, rights, privileges and immunities pertaining to the
Reserves (including the right to make withdrawals therefrom), and (ix) all proceeds of the
foregoing. Borrower hereby authorizes and consents to the account into which the Reserves have
been deposited being held in Lender’s name or the name of any entity servicing the Note for Lender
and hereby acknowledges and agrees that Lender, or at Lender’s election, such servicing agent,
shall have exclusive control over said account. Notice of the assignment and security interest
granted to Lender herein may be delivered by Lender at any

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time to the financial institution wherein the Reserves have been established, and Lender, or
such servicing entity, shall have possession of all passbooks or other evidences of such accounts.
Borrower hereby assumes all risk of loss with respect to amounts on deposit in the Reserves. Funds
on deposit in the Replacement Reserve shall bear interest at a rate equal to the then prevailing
commercial money market rate. All amounts deemed earned on funds contributed to the Replacement
Reserve at the rate referenced in the immediately preceding sentence shall be retained by Lender
and accumulated for the benefit of Borrower and added to the balance in the Replacement Reserve and
shall be disbursed for payment of the items for which other funds in the Replacement Reserve are to
be disbursed. Borrower shall not be entitled to earn any interest with respect to funds on deposit
in the Payment Reserve and the Impound Account. Borrower hereby knowingly, voluntarily and
intentionally stipulates, acknowledges and agrees that the advancement of the funds from the
Reserves as set forth herein is at Borrower’s direction and is not the exercise by Lender of any
right of set-off or other remedy upon a Default or an Event of Default. Borrower hereby waives all
right to withdraw funds from the Reserves except as provided for in this Security Deed. If an Event
of Default shall occur hereunder or under any other of the Loan Documents Lender may, without
notice or demand on Borrower, at its option: (A) withdraw any or all of the funds (including,
without limitation, interest) then remaining in the Reserves and apply the same, after deducting
all costs and expenses of safekeeping, collection and delivery (including, but not limited to,
reasonable attorneys’ fees, costs and expenses) to the Debt or any other obligations of Borrower
under the other Loan Documents in such manner as Lender shall deem appropriate in its sole
discretion, and the excess, if any, shall be paid to Borrower, (B) exercise any and all rights and
remedies of a secured party under any applicable Uniform Commercial Code, or (C) exercise any other
remedies available at law or in equity. No such use or application of the funds contained in the
Reserves shall be deemed to cure any Default or Event of Default.

          (b) The Reserves shall not, unless otherwise explicitly required by applicable law, be or be
deemed to be escrow or trust funds, but, at Lender’s option and in Lender’s discretion, may either
be held in a separate account or be commingled by Lender with the general funds of Lender. The
Reserves are solely for the protection of Lender and entail no responsibility on Lender’s part
beyond the payment of the respective items for which they are held following receipt of bills,
invoices or statements therefor in accordance with the terms hereof and beyond the allowing of due
credit for the sums actually received. Upon assignment of this Security Deed by Lender, any funds
in the Reserves shall be turned over to the assignee and any responsibility of Lender, as
assignor, with respect thereto shall terminate. If the funds in the applicable Reserve shall
exceed the amount of payments actually applied by Lender for the purposes and items for which the
applicable Reserve is held, such excess may be credited by Lender on subsequent payments to be
made hereunder or, at the option of Lender, refunded to Borrower. If, however, the applicable
Reserve shall not contain sufficient funds to pay the sums required by the dates on which such
sums are required to be on deposit in such account, Borrower shall, within ten (10) days after
receipt of written notice thereof, deposit with Lender the full amount of any such deficiency. If
Borrower shall fail to deposit with Lender the full amount of such deficiency as provided above,
Lender shall have the option, but not the obligation, to make such deposit, and all amounts so
deposited by Lender, together with interest thereon at the Default Interest Rate from the date so
deposited by Lender until actually paid by Borrower, shall be immediately paid by Borrower on
demand and shall be secured by this

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Security Deed and by all of the other Loan Documents securing all or any part of the Debt. If
there is an Event of Default under this Security Deed, Lender may, but shall not be obligated to,
apply at any time the balance then remaining in any or all of the Reserves against the Debt in
whatever order Lender shall subjectively determine. No such application of any or all of the
Reserves shall be deemed to cure any Event of Default. Upon full payment of the Debt in accordance
with its terms or at such earlier time as Lender may elect, the balance of any or all of the
Reserves then in Lender’s possession shall be paid over to Borrower and no other party shall have
any right or claim thereto.

     3.2 Payment Reserve.

          (a) Contemporaneously with the execution hereof, Borrower has established with Lender a
reserve in the amount of the first (1st) payment of principal, interest and deposits for any
applicable reserves or escrow accounts required under the terms of this Security Deed or the other
Loan Documents as calculated by Lender (the “Payment Reserve”). Borrower understands and agrees
that, notwithstanding the establishment of the Payment Reserve as herein required, all of the
proceeds of the Note have been, and shall be considered, fully disbursed and shall bear interest
and be payable on the terms provided therein.

          (b) For so long as no Event of Default has occurred hereunder or under any of the other Loan
Documents, Lender shall, on the First Payment Date (as defined in the Note) under the Note, advance
from the Payment Reserve to itself the amount of the monthly installment due and payable by
Borrower under the Note on the First Payment Date and shall also advance from the Payment Reserve
into the Impound Account the amount of any deposit for taxes and insurance premiums and into the
Replacement Reserve (as hereinafter defined) the amount of any deposit for Repairs (as hereinafter
defined) and into any other reserve account the amount of any deposit in accordance with the terms
of any other Loan Document required to be paid by Borrower concurrently with such monthly
installment pursuant to the terms hereof and thereof. Provided no Default or Event of Default has
occurred, after the scheduled disbursement from the Payment Reserve, any amounts then remaining in
the Payment Reserve shall be paid to Borrower. Nothing contained herein, including, without
limitation, the existence of the Payment Reserve, shall release Borrower of any obligation to make
payments under the Note, this Security Deed or the other Loan Documents strictly in accordance with
the terms hereof or thereof and, in this regard, without limiting the generality of the foregoing,
should the amounts contained in the Payment Reserve not be sufficient to pay in full the monthly
installments and the Impound Account, Replacement Reserve and any other applicable reserve account
deposits referenced above in this subparagraph, Borrower shall be responsible for paying such
deficiency on the First Payment Date.

     3.3 Impound Account. Borrower shall establish and maintain at all times while this
Security Deed continues in effect an impound account (the “Impound Account”) with Lender for
payment of real estate taxes and assessments and insurance on the Property and as additional
security for the Debt. Simultaneously with the execution hereof, Borrower shall deposit in the
Impound Account an amount determined by Lender to be necessary to ensure that there will be on
deposit with Lender an amount which, when added to the monthly payments subsequently required to
be deposited with Lender hereunder on account of real estate taxes, assessments and

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insurance premiums, will result in there being on deposit with Lender in the Impound Account an
amount sufficient to pay the next due installment of real estate taxes and assessments on the
Property at least one (1) month prior to the earlier of (a) the due date thereof or (b) any such
date by which Borrower or Lender is required by law to pay same and the next due annual insurance
premiums with respect to the Property at least one (1) month prior to the due date thereof.
Commencing on the first monthly payment date under the Note and continuing thereafter on each
monthly payment date under the Note, Borrower shall pay to Lender, concurrently with and in
addition to the monthly payment due under the Note and until the Debt is fully paid and performed,
deposits in an amount equal to one-twelfth (1/12) of the amount of the annual real estate taxes and
assessments that will next become due and payable on the Property, plus one-twelfth (1/12) of the
amount of the annual premiums that will next become due and payable on insurance policies which
Borrower is required to maintain hereunder, each as estimated and determined by Lender. So long as
no Default or Event of Default has occurred, and no event has occurred or failed to occur which
with the passage of time, the giving of notice, or both would constitute an Event of Default (a
“Default”), all sums in the Impound Account shall be held by Lender in the Impound Account to pay
said taxes, assessments and insurance premiums before the same become delinquent. Borrower shall be
responsible for ensuring the receipt by Lender, at least twenty (20) days prior to the respective
due date for payment thereof, of all bills, invoices and statements for all taxes, assessments and
insurance premiums to be paid from the Impound Account, and so long as no Event of Default has
occurred, Lender shall pay the governmental authority or other party entitled thereto directly to
the extent funds are available for such purpose in the Impound Account. In making any payment from
the Impound Account, Lender shall be entitled to rely on any bill, statement or estimate procured
from the appropriate public office or insurance company or agent without any inquiry into the
accuracy of such bill, statement or estimate and without any inquiry into the accuracy, validity,
enforceability or contestability of any tax, assessment, valuation, sale, forfeiture, tax lien or
title or claim thereof.

     3.4 Intentionally Deleted.

     3.5 Replacement Reserve. As additional security for the Debt, Borrower shall establish
and maintain at all times while this Security Deed continues in effect a repair reserve (the
“Replacement Reserve”) with Lender for payment of costs and expenses incurred by Borrower in
connection with the performance of work to the roofs, chimneys, gutters, downspouts, paving, curbs,
ramps, driveways, balconies, porches, patios, exterior walls, exterior doors and doorways, windows,
elevators and mechanical and HVAC equipment (collectively, the “Repairs”). Commencing on the first
monthly Payment Date under the Note and continuing thereafter on each monthly Payment Date under
the Note, Borrower shall pay to Lender, concurrently with and in addition to the monthly payment
due under the Note and until the Debt is fully paid and performed, a deposit to the Replacement
Reserve in an amount equal to $5,125.00 per month. So long as no Event of Default has occurred, all
sums in the Replacement Reserve shall be held by Lender in the Replacement Reserve to pay the costs
and expenses of Repairs. So long as no Default or Event of Default has occurred, Lender shall, to
the extent funds are available for such purpose in the Replacement Reserve, disburse to Borrower
the amount paid or incurred by Borrower in performing such Repairs within ten (10) days following:
(a) the receipt by Lender of a written request from Borrower for disbursement from the Replacement
Reserve and a certification by Borrower in a form approved in writing by Lender

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that the applicable item of Repair has been completed; (b) the delivery to Lender of invoices,
receipts or other evidence satisfactory to Lender, verifying the cost of performing the Repairs;
(c) for disbursement requests in excess of $25,000.00, the delivery to Lender of affidavits, lien
waivers or other evidence reasonably satisfactory to Lender showing that all materialmen, laborers,
subcontractors and any other parties who might or could claim statutory or common law liens and are
furnishing or have furnished material or labor to the Property have been paid all amounts due for
labor and materials furnished to the Property; (d) for disbursement requests in excess of
$25,000.00, delivery to Lender of a certification from an inspecting architect or other third party
acceptable to Lender describing the completed Repairs and verifying the completion of the Repairs
and the value of the completed Repairs; and (e) for disbursement requests in excess of $25,000.00,
delivery to Lender of a new certificate of occupancy for the portion of the Improvements covered by
such Repairs, if said new certificate of occupancy is required by law, or a certification by
Borrower that no new certificate of occupancy is required. Lender shall not be required to make
advances from the Replacement Reserve more frequently than once in any thirty (30) day period. In
making any payment from the Replacement Reserve, Lender shall be entitled to rely on such request
from Borrower without any inquiry into the accuracy, validity or contestability of any such amount.
Lender may, at Borrower’s expense, make or cause to be made during the term of this Security Deed
an annual inspection of the Property to determine the need, as determined by Lender in its
reasonable judgment, for further Repairs of the Property. In the event that such inspection reveals
that further Repairs of the Property are required, Lender shall provide Borrower with a written
description of the required Repairs and Borrower shall complete such Repairs to the reasonable
satisfaction of Lender within ninety (90) days after the receipt of such description from Lender,
or such later date as may be approved by Lender in its sole discretion.

ARTICLE IV.

EVENTS OF DEFAULT

     4.1 Events of Default. The occurrence of any of the following events shall be an Event
of Default hereunder:

          (a) Borrower (x) fails to pay any payments due under the Note or to the Reserves on the date
when the same is due and payable, or (y) fails to pay any money to Lender required hereunder at the
time or within any applicable grace period set forth herein, or if no grace period is set forth
herein, then within seven (7) days of the date such payment is due (except those regarding payments
to be made under the Note or to the Reserves, which failure is not subject to any grace or cure
period).

          (b) Borrower fails to provide insurance as required by Section 2.3 hereof or fails to
perform any covenant, agreement, obligation, term or condition set forth in Section 2.27or
Section 2.29 hereof.

          (c) Borrower fails to perform any other covenant, agreement, obligation, term or condition set
forth herein, other than those otherwise described in this Section 4.1, and, to the extent
such failure or default is susceptible of being cured, the continuance of such failure or default
for thirty (30) days after written notice thereof from Lender to Borrower; provided,

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however, that if such default is susceptible of cure but such cure cannot be accomplished
with reasonable diligence within said period of time, and if Borrower commences to cure such
default promptly after receipt of notice thereof from Lender, and thereafter prosecutes the curing
of such default with reasonable diligence, such period of time shall be extended for such period
of time as may be necessary to cure such default with reasonable diligence, but not to exceed an
additional sixty (60) days.

          (d) Any representation or warranty made herein, in or in connection with any application or
commitment relating to the Loan evidenced by the Note, or in any of the other Loan Documents to
Lender by Borrower, by any principal, general partner, manager or member in Borrower, or by any
Indemnitor is determined by Lender to have been false or misleading in any material respect at the
time made.

          (e) There shall be a sale, conveyance, disposition, alienation, hypothecation, leasing,
assignment, pledge, mortgage, granting of a security interest in or other transfer or further
encumbrancing of the Property, Borrower or its general partners or managing members, or any portion
thereof or any interest therein, in violation of Section 2.9 hereof.

          (f) A default occurs under any of the other Loan Documents which has not been cured within any
applicable grace or cure period therein provided.

          (g) Borrower, general partner or managing member in Borrower or any Indemnitor becomes
insolvent, or makes a transfer in fraud of creditors, or makes an assignment for the benefit of
creditors, or files a petition in bankruptcy, or is voluntarily adjudicated insolvent or bankrupt
or admits in writing the inability to pay its debts as they mature, or petitions or applies to any
tribunal for or consents to or fails to contest the appointment of a receiver, trustee, custodian
or similar officer for Borrower, for any such general partner or managing member of Borrower or for
any Indemnitor or for a substantial part of the assets of Borrower, of any such general partner or
managing member of Borrower or of any Indemnitor, or commences any case, proceeding or other action
under any bankruptcy, reorganization, arrangement, readjustment or debt, dissolution or liquidation
law or statute of any jurisdiction, whether now or hereafter in effect.

          (h) A petition is filed or any case, proceeding or other action is commenced against
Borrower, against any general partner or managing member of Borrower or against any Indemnitor
seeking to have an order for relief entered against it as debtor or seeking reorganization,
arrangement, adjustment, liquidation, dissolution or composition of it or its debts or other
relief under any law relating to bankruptcy, insolvency, arrangement, reorganization, receivership
or other debtor relief under any law or statute of any jurisdiction, whether now or hereafter in
effect, or a court of competent jurisdiction enters an order for relief against Borrower, against
any general partner or managing member of Borrower or against any Indemnitor, as debtor, or an
order, judgment or decree is entered appointing, with or without the consent of Borrower, of any
such general partner or managing member of Borrower or of any Indemnitor, a receiver, trustee,
custodian or similar officer for Borrower, for any such general partner or managing member of
Borrower or for any Indemnitor, or for any substantial part of any of the properties of Borrower,
of any such general partner or managing member of Borrower

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or of any Indemnitor, and if any such event shall occur, such petition, case, proceeding, action,
order, judgment or decree is not dismissed within sixty (60) days after being commenced.

          (i) The Property or any part thereof is taken on execution or other process of law in any
action against Borrower.

          (j) Borrower abandons all or a portion of the Property.

          (k) The holder of any lien or security interest on the Property (without implying the consent
of Lender to the existence or creation of any such lien or security interest), whether superior or
subordinate to this Security Deed or any of the other Loan Documents, declares a default and such
default is not cured within any applicable grace or cure period set forth in the applicable
document or such holder institutes foreclosure or other proceedings for the enforcement of its
remedies thereunder.

          (l) The Property, or any part thereof, is subjected to waste or to removal, demolition or
material alteration so that the value of the Property is materially diminished thereby and Lender
determines that it is not adequately protected from any loss, damage or risk associated therewith.

          (m) Any dissolution, termination, partial or complete liquidation, merger or consolidation of
Borrower, any general partner or any managing member, or any Indemnitor.

ARTICLE V.

REMEDIES

     5.1 Remedies Available. If there shall occur an Event of Default under this Security
Deed, then this Security Deed is subject to foreclosure as provided by law and Lender may, at its
option and by or through a trustee, nominee, assignee or otherwise, to the fullest extent
permitted by law, exercise any or all of the following rights, remedies and recourses, either
successively or concurrently:

          (a) Acceleration. Accelerate the maturity date of the Note and declare any or all of
the Debt to be immediately due and payable without any presentment, demand, protest, notice or
action of any kind whatever (each of which is hereby expressly waived by Borrower), whereupon the
same shall become immediately due and payable. Upon any such acceleration, payment of such
accelerated amount shall constitute a prepayment of the principal balance of the Note and any
applicable prepayment fee provided for in the Note shall then be immediately due and payable.

          (b) Entry on the Property. Either in person or by agent, with or without bringing any
action or proceeding, or by a receiver appointed by a court and without regard to the adequacy of
its security, enter upon and take possession of the Property, or any part thereof, without force or
with such force as is permitted by law and without notice or process or with such notice or process
as is required by law, unless such notice and process is waivable, in which

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case Borrower hereby waives such notice and process, and do any and all acts and perform any and
all work which may be desirable or necessary in Lender’s judgment to complete any unfinished
construction on the Premises, to preserve the value, marketability or rentability of the Property,
to increase the income therefrom, to manage and operate the Property or to protect the security
hereof, and all sums expended by Lender therefor, together with interest thereon at the Default
Interest Rate, shall be immediately due and payable to Lender by Borrower on demand and shall be
secured hereby and by all of the other Loan Documents securing all or any part of the Debt.

          (c) Collect Rents and Profits. With or without taking possession of the Property, sue
or otherwise collect the Rents and Profits, including those past due and unpaid.

          (d) Appointment of Receiver. Upon, or at any time prior or after, initiating the
exercise of any power of sale, instituting any judicial foreclosure or instituting any other
foreclosure of the liens and security interests provided for herein or any other legal proceedings
hereunder, make application to a court of competent jurisdiction for appointment of a receiver for
all or any part of the Property, as a matter of strict right and without notice to Borrower and
without regard to the adequacy of the Property for the repayment of the Debt or the solvency of
Borrower or any person or persons liable for the payment of the Debt, and Borrower does hereby
irrevocably consent to such appointment, waive any and all notices of and defenses to such
appointment and agree not to oppose any application therefor by Lender, but nothing herein is to be
construed to deprive Lender of any other right, remedy or privilege Lender may now have under the
law to have a receiver appointed, provided, however, that the appointment of such receiver,
trustee or other appointee by virtue of any court order, statute or regulation shall not impair or
in any manner prejudice the rights of Lender to receive payment of the Rents and Profits pursuant
to other terms and provisions hereof. Any such receiver shall have all of the usual powers and
duties of receivers in similar cases, including, without limitation, the full power to hold,
develop, rent, lease, manage, maintain, operate and otherwise use or permit the use of the Property
upon such terms and conditions as said receiver may deem to be prudent and reasonable under the
circumstances as more fully set forth in Section 5.3 below. Such receivership shall, at the
option of Lender, continue until full payment of all of the Debt or until title to the Property
shall have passed by foreclosure sale under this Security Deed or deed in lieu of foreclosure.

          (e) Foreclosure. Immediately commence an action to foreclose this Security Deed or to
specifically enforce its provisions with respect to any of the Debt, pursuant to the statutes in
such case made and provided, and sell the Property or cause the Property to be sold in accordance
with the requirements and procedures provided by said statutes in a single parcel or in several
parcels at the option of Lender. In the event foreclosure proceedings are instituted by Lender, all
expenses incident to such proceedings, including, but not limited to, reasonable attorneys’ fees
and costs, shall be paid by Borrower and secured by this Security Deed and by all of the other Loan
Documents securing all or any part of the Debt. The Debt and all other obligations secured by this
Security Deed, including, without limitation, interest at the Default Interest Rate any prepayment
charge, fee or premium required to be paid under the Note in order to prepay principal (to the
extent permitted by applicable law), reasonable attorneys’ fees and any other amounts due and
unpaid to Lender under the Loan Documents, may be bid by Lender

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in the event of a foreclosure sale hereunder. In the event of a judicial sale pursuant to a
foreclosure decree, it is understood and agreed that Lender or its assigns may become the
purchaser of the Property or any part thereof.

          (f) Judicial Remedies. Proceed by suit or suits, at law or in equity, instituted by
or on behalf of Lender, to enforce the payment of the Debt or the other obligations of Borrower
hereunder or pursuant to the Loan Documents, to foreclose the liens and security interests of this
Security Deed as against all or any part of the Property, and to have all or any part of the
Property sold under the judgment or decree of a court of competent jurisdiction. This remedy shall
be cumulative of any other non-judicial remedies available to Lender with respect to the Loan
Documents. Proceeding with the request or receiving a judgment for legal relief shall not be or be
deemed to be an election of remedies or bar any available non-judicial remedy of Lender.

          (g) Other. Exercise any other right or remedy available hereunder, under any of the
other Loan Documents or at law or in equity.

     5.2 Application of Proceeds. To the fullest extent permitted by law, the proceeds of
any sale under this Security Deed shall be applied, to the extent funds are so available, to the
following items in such order as Lender in its discretion may determine:

          (a) To payment of the reasonable costs, expenses and fees of taking possession of the
Property, and of holding, operating, maintaining, using, leasing, repairing, improving, marketing
and selling the same and of otherwise enforcing Lender’s rights and remedies hereunder and under
the other Loan Documents, including, but not limited to, receivers’ fees, court costs, attorneys’,
accountants’, appraisers’, managers’ and other professional fees, title charges and transfer taxes.

          (b) To payment of all sums expended by Lender under the terms of any of the Loan Documents and
not yet repaid, together with interest on such sums at the Default Interest Rate.

          (c) To payment of the Debt and all other obligations secured by this Security Deed, including,
without limitation, interest at the Default Interest Rate and, to the extent permitted by
applicable law, any prepayment fee, charge or premium required to be paid under the Note in order
to prepay principal, in any order that Lender chooses in its sole discretion.

          (d) The remainder, if any, of such funds shall be disbursed to Borrower or to the person or
persons legally entitled thereto.

     5.3 Right and Authority of Receiver or Lender in the Event of Default; Power of
Attorney. Upon the occurrence of an Event of Default, and entry upon the Property pursuant to
Section 5.1(b) hereof or appointment of a receiver pursuant to Section 5.1(d)
hereof, and under such terms and conditions as may be prudent and reasonable under the
circumstances in Lender’s or the receiver’s sole discretion, all at Borrower’s expense, Lender or
said receiver, or such other persons or entities as they shall hire, direct or engage, as the
case may be, may do or permit one

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or more of the following, successively or concurrently: (a) enter upon and take possession and
control of any and all of the Property; (b) take and maintain possession of all documents, books,
records, papers and accounts relating to the Property; (c) exclude Borrower and its agents,
servants and employees wholly from the Property; (d) manage and operate the Property; (e) preserve
and maintain the Property; (f) make repairs and alterations to the Property; (g) complete any
construction or repair of the Improvements, with such changes, additions or modifications of the
plans and specifications or intended disposition and use of the Improvements as Lender may in its
sole discretion deem appropriate or desirable to place the Property in such condition as will, in
Lender’s sole discretion, make it or any part thereof readily marketable or rentable; (h) conduct a
marketing or leasing program with respect to the Property, or employ a marketing or leasing agent
or agents to do so, directed to the leasing or sale of the Property under such terms and conditions
as Lender may in its sole discretion deem appropriate or desirable; (i) employ such contractors,
subcontractors, materialmen, architects, engineers, consultants, managers, brokers, marketing
agents, or other employees, agents, independent contractors or professionals, as Lender may in its
sole discretion deem appropriate or desirable to implement and effectuate the rights and powers
herein granted; (j) execute and deliver, in the name of Lender as attorney-in-fact and agent of
Borrower or in its own name as Lender, such documents and instruments as are necessary or
appropriate to consummate authorized transactions; (k) enter such leases, whether of real or
personal property, or tenancy agreements, under such terms and conditions as Lender may in its sole
discretion deem appropriate or desirable; (1) collect and receive the Rents and Profits from the
Property; (m) eject tenants or repossess personal property, as provided by law, for breaches of the
conditions of their leases or other agreements; (n) initiate a cause of action for unpaid Rents and
Profits, payments, income or proceeds in the name of Borrower or Lender; (o) maintain actions in
forcible entry and detainer, ejectment for possession and actions in distress for rent; (p)
compromise or give acquittance for Rents and Profits, payments, income or proceeds that may become
due; (q) delegate or assign any and all rights and powers given to Lender by this Security Deed;
and (r) do any acts which Lender in its sole discretion deems appropriate or desirable to protect
the security hereof and use such measures, legal or equitable, as Lender may in its sole discretion
deem appropriate or desirable to implement and effectuate the provisions of this Security Deed.
This Security Deed shall constitute a direction to and full authority to any lessee, or other third
party who has heretofore dealt or contracted or may hereafter deal or contract with Borrower or
Lender, at the request of Lender, to pay all amounts owing under any Lease, contract, concession,
license or other agreement to Lender without proof of the Event of Default relied upon. Any such
lessee or third party is hereby irrevocably authorized to rely upon and comply with (and shall be
fully protected by Borrower in so doing) any request, notice or demand by Lender for the payment to
Lender of any Rents and Profits or other sums which may be or thereafter become due under its
Lease, contract, concession, license or other agreement, or for the performance of any undertakings
under any such Lease, contract, concession, license or other agreement, and shall have no right or
duty to inquire whether any Event of Default under this Security Deed or under any of the other
Loan Documents has actually occurred or is then existing. Borrower hereby constitutes and appoints
Lender, its assignees, successors, transferees and nominees, as Borrower’s true and lawful
attorney-in-fact and agent, with full power of substitution in the Property, in Borrower’s name,
place and stead, to do or permit any one or more of the foregoing described rights, remedies,
powers and authorities, successively or concurrently, and said power of attorney shall be deemed a
power coupled with an interest and irrevocable so long as any portion of the Debt is outstanding.
Any

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money advanced by Lender in connection with any action taken under this Section 5.3, together with interest thereon at the Default Interest Rate from the date of making such
advancement by Lender until actually paid by Borrower, shall be a demand obligation owing by
Borrower to Lender and shall be secured by this Security Deed and by every other instrument
securing all or any portion of the Debt.

     5.4 Occupancy After Foreclosure. In the event there is a foreclosure sale hereunder
and at the time of such sale, Borrower or Borrower’s representatives, successors or assigns, or any
other persons claiming any interest in the Property by, through or under Borrower (except tenants
of space in the Improvements subject to leases entered into prior to the date hereof), are
occupying or using the Property, or any part thereof, then, to the extent not prohibited by
applicable law, each and all shall, at the option of Lender or the purchaser at such sale, as the
case may be, immediately become the tenant of the purchaser at such sale, which tenancy shall be a
tenancy from day-to-day, terminable at the will of either landlord or tenant, at a reasonable
rental per day based upon the value of the Property occupied or used, such rental to be due daily
to the purchaser. Further, to the extent permitted by applicable law, in the event the tenant fails
to surrender possession of the Property upon the termination of such tenancy, the purchaser shall
be entitled to institute and maintain an action for unlawful detainer of the Property in the
appropriate court of the county in which the Premises is located.

     5.5 Notice to Account Debtors. Lender may, at any time after an Event of Default,
notify the account debtors and obligors of any accounts, chattel paper, negotiable instruments or
other evidences of indebtedness to Borrower included in the Property to pay Lender directly.
Borrower shall at any time or from time to time upon the request of Lender provide to Lender a
current list of all such account debtors and obligors and their addresses.

     5.6 Cumulative Remedies. All remedies contained in this Security Deed are cumulative
and Lender shall also have all other remedies provided at law and in equity or in any other Loan
Documents. Such remedies may be pursued separately, successively or concurrently at the sole
subjective direction of Lender and may be exercised in any order and as often as occasion therefor
shall arise. No act of Lender shall be construed as an election to proceed under any particular
provisions of this Security Deed to the exclusion of any other provision of this Security Deed or
as an election of remedies to the exclusion of any other remedy which may then or thereafter be
available to Lender. No delay or failure by Lender to exercise any right or remedy under this
Security Deed shall be construed to be a waiver of that right or remedy or of any Event of Default.
Lender may exercise any one or more of its rights and remedies at its option without regard to the
adequacy of its security.

     5.7 Payment of Expenses. Borrower shall pay on demand all of Lender’s expenses
incurred in any efforts to enforce any terms of this Security Deed, whether or not any lawsuit is
filed and whether or not foreclosure is commenced but not completed, including, but not limited to,
reasonable legal fees and disbursements, fees of any Rating Agency, fees related to any No-Downgrade Confirmation, foreclosure costs and title charges, together with interest thereon from
and after the date incurred by Lender until actually paid by Borrower at the Default Interest Rate,
and the same shall be secured by this Security Deed and by all of the other Loan Documents securing
all or any part of the Debt.

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ARTICLE VI.

MISCELLANEOUS TERMS AND CONDITIONS

     6.1 Time of Essence. Time is of the essence with respect to all provisions of this
Security Deed.

     6.2 Release of Security Deed. If all of the Debt shall be paid, then and in that event
only, all rights under this Security Deed, except for those provisions hereof which by their terms
survive, shall terminate and the Property shall become wholly clear of the liens, security
interests, conveyances and assignments evidenced hereby, which shall be promptly released of record
by Lender in due form at Borrower’s cost. No release of this Security Deed or the lien hereof shall
be valid unless executed by Lender.

     6.3 Certain Rights of Lender. Without affecting Borrower’s liability for the payment
of any of the Debt, Lender may from time to time and without notice to Borrower: (a) release any
person liable for the payment of the Debt; (b) extend or modify the terms of payment of the Debt;
(c) accept additional real or personal property of any kind as security or alter, substitute or
release any property securing the Debt; (d) recover any part of the Property; (e) consent in
writing to the making of any subdivision map or plat thereof; (f) join in granting any easement
therein; or (g) join in any extension agreement of this Security Deed or any agreement
subordinating the lien hereof.

     6.4 Waiver of Certain Defenses. No action for the enforcement of the lien hereof or of
any provision hereof shall be subject to any defense which would not be good and available to the
party interposing the same in an action at law upon the Note or any of the other Loan Documents.

     6.5 Notices. All notices, demands, requests or other communications to be sent by one
party to the other hereunder or required by law shall be in writing and shall be deemed to have
been validly given or served by delivery of the same in person to the intended addressee, or by
depositing the same with Federal Express or another reputable private courier service for next
business day delivery, or by depositing the same in the United States mail, postage prepaid,
registered or certified mail, return receipt requested, in any event addressed to the intended
addressee at its address set forth on the first page of this Security Deed or at such other address
as may be designated by such party as herein provided, together with, in the case of notices to
Borrower, a copy to: Bradley Arant Rose & White LLP, One Federal Place, 1819 Fifth Avenue North,
Birmingham, Alabama 35203-2104, Attention: Dawn H. Sharff. All notices, demands and requests shall
be effective upon such personal delivery, or one (1) business day after being deposited with the
private courier service, or two (2) business days after being deposited in the United States mail
as required above. Rejection or other refusal to accept or the inability to deliver because of
changed address of which no notice was given as herein required shall be deemed to be receipt of
the notice, demand or request sent. By giving to the other party hereto at least fifteen (15) days’
prior written notice thereof in accordance with the provisions hereof, the parties hereto shall
have the right from time to time to change their respective addresses and each

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shall have the right to specify as its address any other address within the United States of
America.

     6.6 Successors and Assigns: Joint and Several Liability. The terms, provisions,
indemnities, covenants and conditions hereof shall be binding upon Borrower and the successors and
assigns of Borrower, including all successors in interest of Borrower in and to all or any part of
the Property, and shall inure to the benefit of Lender, its directors, officers, shareholders,
employees and agents and their respective successors and assigns and shall constitute covenants
running with the land. All references in this Security Deed to Borrower or Lender shall be deemed
to include all such parties’ successors and assigns, and the term “Lender” as used herein
shall also mean and refer to any lawful holder or owner, including pledgees and participants, of
any of the Debt. If Borrower consists of more than one person or entity, each is jointly and
severally liable to perform the obligations of Borrower hereunder and all representations,
warranties, covenants and agreements made by Borrower hereunder are joint and several.

     6.7 Severability. A determination that any provision of this Security Deed is
unenforceable or invalid shall not affect the enforceability or validity of any other provision,
and any determination that the application of any provision of this Security Deed to any person or
circumstance is illegal or unenforceable shall not affect the enforceability or validity of such
provision as it may apply to any other persons or circumstances.

     6.8 Gender. Within this Security Deed, words of any gender shall be held and construed
to include any other gender, and words in the singular shall be held and construed to include the
plural, and vice versa, unless the context otherwise requires.

     6.9
Waiver; Discontinuance of Proceedings. Lender may waive any single Event of
Default by Borrower hereunder without waiving any other prior or subsequent Event of Default.
Lender may remedy any Event of Default by Borrower hereunder without waiving the Event of Default
remedied. Neither the failure by Lender to exercise, nor the delay by Lender in exercising, any
right, power or remedy upon any Event of Default by Borrower hereunder shall be construed as a
waiver of such Event of Default or as a waiver of the right to exercise any such right, power or
remedy at a later date. No single or partial exercise by Lender of any right, power or remedy
hereunder shall exhaust the same or shall preclude any other or further exercise thereof, and every
such right, power or remedy hereunder may be exercised at any time and from time to time. No
modification or waiver of any provision hereof nor consent to any departure by Borrower therefrom
shall in any event be effective unless the same shall be in writing and signed by Lender, and then
such waiver or consent shall be effective only in the specific instance and for the specific
purpose given. No notice to nor demand on Borrower in any case shall of itself entitle Borrower to
any other or further notice or demand in similar or other circumstances. Acceptance by Lender of
any payment in an amount less than the amount then due on any of the Debt shall be deemed an
acceptance on account only and shall not in any way affect the existence of an Event of Default. In
case Lender shall have proceeded to invoke any right, remedy or recourse permitted hereunder or
under the other Loan Documents and shall thereafter elect to discontinue or abandon the same for
any reason, Lender shall have the unqualified right to do so and, in such an event, Borrower and
Lender shall be restored to their former positions

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with respect to the Debt, the Loan Documents, the Property and otherwise, and the rights,
remedies, recourses and powers of Lender shall continue as if the same had never been invoked.

     6.10 Section Headings. The headings of the sections and paragraphs of this Security
Deed are for convenience of reference only, are not to be considered a part hereof and shall not
limit or otherwise affect any of the terms hereof.

     6.11 GOVERNING LAW. THIS SECURITY DEED WILL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE
WITH THE LAWS OF THE STATE IN WHICH THE PREMISES IS LOCATED, PROVIDED THAT TO THE EXTENT THAT ANY
OF SUCH LAWS MAY NOW OR HEREAFTER BE PREEMPTED BY FEDERAL LAW, SUCH FEDERAL LAW SHALL SO GOVERN AND
BE CONTROLLING, AND PROVIDED FURTHER THAT THE LAWS OF THE STATE IN WHICH THE PREMISES IS LOCATED
SHALL GOVERN AS TO THE CREATION, PRIORITY AND ENFORCEMENT OF LIENS AND SECURITY INTERESTS IN THE
PROPERTY LOCATED IN SUCH STATE.

     6.12 Counting of Days. The term “days” when used herein shall mean calendar days. If
any time period ends on a Saturday, Sunday or holiday officially recognized by the state within
which the Premises is located, the period shall be deemed to end on the next succeeding business
day. The term “business day” when used herein shall mean a weekday, Monday through Friday, except a
legal holiday or a day on which banking institutions in New York, New York are authorized by law to
be closed.

     6.13 Relationship of the Parties. The relationship between Borrower and Lender is that
of a borrower and a lender only and neither of those parties is, nor shall it hold itself out to
be, the agent, employee, joint venturer or partner of the other party.

     6.14 Application of the Proceeds of the Note. To the extent that proceeds of the Note
are used to pay indebtedness secured by any outstanding lien, security interest, charge or prior
encumbrance against the Property, such proceeds have been advanced by Lender at Borrower’s request
and Lender shall be subrogated to any and all rights, security interests and liens owned by any
owner or holder of such outstanding liens, security interests, charges or encumbrances,
irrespective of whether said liens, security interests, charges or encumbrances are released.

     6.15 Unsecured Portion of Indebtedness. If any part of the Debt cannot be lawfully
secured by this Security Deed or if any part of the Property cannot be lawfully subject to the lien
and security interest hereof to the full extent of such indebtedness, then all payments made shall
be applied on said indebtedness first in discharge of that portion thereof which is unsecured by
this Security Deed.

     6.16 Cross Default. An Event of Default hereunder which has not been cured within any
applicable grace or cure period shall be a default under each of the other Loan Documents.

     6.17 Interest After Sale. In the event the Property or any part thereof shall be sold
upon foreclosure as provided hereunder, to the extent permitted by law, the sum for which the

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same shall have been sold shall, for purposes of redemption (pursuant to the laws of the state in
which the Premises is located), bear interest at the Default Interest Rate.

     6.18 Inconsistency with Other Loan Documents. In the event of any inconsistency
between the provisions hereof and the provisions in any of the other Loan Documents, it is
intended that the provisions of the Note shall control over the provisions of this Security Deed,
and that the provisions of this Security Deed shall control over the provisions of the Lease
Assignment, the Indemnity and Guaranty Agreements, the Environmental Indemnity Agreement, and the
other Loan Documents.

     6.19 Construction of this Document. This document may be construed as a mortgage,
security deed, deed of trust, chattel mortgage, conveyance, assignment, security agreement,
pledge, financing statement, hypothecation or contract, or any one or more of the foregoing, in
order to fully effectuate the liens and security interests created hereby and the purposes and
agreements herein set forth.

     6.20 No Merger. It is the desire and intention of the parties hereto that this
Security Deed and the lien hereof do not merge in fee simple title to the Property. It is hereby
understood and agreed that should Lender acquire any additional or other interests in or to the
Property or the ownership thereof, then, unless a contrary intent is manifested by Lender as
evidenced by an appropriate document duly recorded, this Security Deed and the lien hereof shall
not merge in such other or additional interests in or to the Property, toward the end that this
Security Deed may be foreclosed as if owned by a stranger to said other or additional interests.

     6.21 Rights With Respect to Junior Encumbrances. Any person or entity purporting to
have or to take a junior mortgage or other lien upon the Property or any interest therein shall be
subject to the rights of Lender to amend, modify, increase, vary, alter or supplement this Security
Deed, the Note or any of the other Loan Documents, and to extend the maturity date of the Debt, and
to increase the amount of the Debt, and to waive or forebear the exercise of any of its rights and
remedies hereunder or under any of the other Loan Documents and to release any collateral or
security for the Debt, in each and every case without obtaining the consent of the holder of such
junior lien and without the lien or security interest of this Security Deed losing its priority
over the rights of any such junior lien.

     6.22 Lender May File Proofs of Claim. In the case of any receivership, insolvency,
bankruptcy, reorganization, arrangement, adjustment, composition or other proceedings affecting
Borrower or the principals, general partners or managing members in Borrower, or their respective
creditors or property, Lender, to the extent permitted by law, shall be entitled to file such
proofs of claim and other documents as may be necessary or advisable in order to have the claims of
Lender allowed in such proceedings for the entire Debt at the date of the institution of such
proceedings and for any additional amount which may become due and payable by Borrower hereunder
after such date.

     6.23 Fixture Filing. This Security Deed shall be effective from the date of its
recording as a financing statement filed as a fixture filing with respect to all goods
constituting part of the Property which are or are to become fixtures. This Security Deed shall
also be

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effective as a financing statement covering minerals or the like (including oil and gas) and is to
be filed for record in the real estate records of the county where the Premises is situated. The
mailing address of Borrower and the address of Lender from which information concerning the
security interests may be obtained are set forth in Section 2.18 above.

     6.24 After-Acquired Property. All property acquired by Borrower after the date of this
Security Deed which by the terms of this Security Deed shall be subject to the lien and the
security interest created hereby, shall immediately upon the acquisition thereof by Borrower and
without further mortgage, conveyance or assignment become subject to the lien and security interest
created by this Security Deed. Nevertheless, Borrower shall execute, acknowledge, deliver and
record or file, as appropriate, all and every such further mortgages, security agreements,
financing statements, assignments and assurances as Lender shall require for accomplishing the
purposes of this Security Deed.

     6.25 No Representation. By accepting delivery of any item required to be observed,
performed or fulfilled or to be given to Lender pursuant to the Loan Documents, including, but not
limited to, any officer’s certificate, balance sheet, statement of profit and loss or other
financial statement, survey, appraisal or insurance policy, Lender shall not be deemed to have
warranted, consented to, or affirmed the sufficiency, legality, effectiveness or legal effect of
the same, or of any term, provision or condition thereof, and such acceptance of delivery thereof
shall not be or constitute any warranty, consent or affirmation with respect thereto by Lender.

     6.26 Counterparts. This Security Deed may be executed in any number of counterparts,
each of which shall be effective only upon delivery and thereafter shall be deemed an original, and
all of which shall be taken to be one and the same instrument, for the same effect as if all
parties hereto had signed the same signature page. Any signature page of this Security Deed may be
detached from any counterpart of this Security Deed without impairing the legal effect of any
signatures thereon and may be attached to another counterpart of this Security Deed identical in
form hereto but having attached to it one or more additional signature pages.

     6.27 Personal Liability. Notwithstanding anything to the contrary contained in this
Security Deed, the liability of Borrower and its officers, directors, general partners, managers,
members and principals for the Debt and for the performance of the other agreements, covenants and
obligations contained herein and in the Loan Documents shall be limited as set forth in the
Note.

     6.28 Recording and Filing. Borrower will cause the Loan Documents and all amendments
and supplements thereto and substitutions therefor to be recorded, filed, re-recorded and re-filed
in such manner and in such places as Lender shall reasonably request, and will pay on demand all
such recording, filing, re-recording and re-filing taxes, fees and other charges. Borrower shall
reimburse Lender, or its servicing agent, for the costs incurred in obtaining a tax service company
to verify the status of payment of taxes and assessments on the Property.

     6.29 Entire Agreement and Modifications. This Security Deed and the other Loan
Documents contain the entire agreements between the parties relating to the subject matter hereof
and thereof and all prior agreements relative hereto and thereto which are not contained

64

 

herein or therein are terminated. This Security Deed and the other Loan Documents may not be
amended, revised, waived, discharged, released or terminated orally but only by a written
instrument or instruments executed by the party against which enforcement of the amendment,
revision, waiver, discharge, release or termination is asserted. Any alleged amendment, revision,
waiver, discharge, release or termination which is not so documented shall not be effective as to
any party.

     6.30 Intentionally Reserved.

     6.31 Secondary Market. Lender may sell, transfer and deliver the Note and the Loan
Documents to one or more investors in the secondary mortgage market
(a “Secondary Market
Transaction”). In connection with such sale, Lender may retain or assign responsibility for
servicing the loan evidenced by the Note or may delegate some or all of such responsibility and/or
obligations to a servicer, including, but not limited to, any subservicer or master servicer, on
behalf of the Investors (as hereinafter defined). All references to Lender herein shall refer to
and include, without limitation, any such servicer, to the extent applicable.

     6.32 Dissemination of Information. If Lender determines at any time to sell, transfer
or assign the Note, this Security Deed and the other Loan Documents, and any or all servicing
rights with respect thereto, or to grant participations therein (the “Participations”) or issue
mortgage pass-through certificates or other securities evidencing a beneficial interest in a rated
or unrated public offering or private placement (the “Securities”), Lender may forward to each
purchaser, transferee, assignee, servicer, participant, investor, or their respective successors in
such Participations and/or Securities (collectively, the “Investors”) or any rating agency rating
such Securities (each a “Rating Agency”), each prospective Investor and each of the foregoing’s
respective counsel, all documents and information which Lender now has or may hereafter acquire
relating to the Debt, to Borrower, any guarantor, any indemnitor, and the Property, which shall
have been furnished by Borrower and any Indemnitor, as Lender determines necessary or desirable.

     6.33 Certain Matters Relating to Property Located in the State of Georgia. With
respect to the Property which is located in the State of Georgia, notwithstanding anything
contained herein to the contrary:

          (a) THIS
SECURITY DEED is made in compliance with the provisions of
Section 44-14-60, et seq.
of the Official Code of Georgia Annotated, as amended, for the purpose of securing an indebtedness
or guaranty of Borrower to Lender together with interest thereon from maturity as prescribed in
the Note, any additional advances made by Lender to protect the Property or to pay taxes or other
assessments, and also for the purpose of securing such other and further indebtedness as may now
be, or from time to time hereafter shall become owing to Lender by Borrower which indebtedness
shall include reasonable attorney’s fees without statutory presumption as provided for in the Note
and in any and all renewals thereof and in any other note evidencing any indebtedness secured
hereby, and also any contingent indebtedness owing to Lender by Borrower as surety, guarantor or
endorser, it being the purpose and intention of this conveyance that in the event, in addition to
the indebtedness above specifically described, Borrower may now be otherwise indebted or may from
time to time hereafter become otherwise

65

 

indebted to Lender through overdrafts or other loans from Lender or contingently as surety,
guarantor or endorser, then any and all such indebtedness shall be secured by this conveyance, as
well as the specific debt first above described.

          (b) This instrument covers goods which are or are to be fixtures related to the real estate
described herein and should be indexed in the index of financing statements and in the real
property records.

          (c) Borrower authorizes and empowers Lender to take possession of the Property, or any part
thereof, and collect rents and revenues and Borrower hereby grants to Lender, the following
irrevocable power of attorney: To sell all or any part of the Property at auction, at the usual
place for conducting sales at the Courthouse in the County where the Property or any part thereof
lies, in said State, to the highest bidder for cash, after advertising the time, terms and place of
such sale once a week for four (4) weeks immediately preceding such sale (but without regard to the
number of days) in a newspaper published in the County where the Property or any part thereof lies,
or in the paper in which the Sheriffs advertisements for such County are published, all other
notice being hereby waived by Borrower; and Lender (or any person on behalf of Lender) may bid and
purchase at such sale and thereupon execute and deliver to the purchaser or purchasers at such sale
a sufficient conveyance of the Property in fee simple, which conveyance may contain recitals as to
the happenings of the default upon which the execution of the power of sale herein granted depends,
and Borrower hereby constitutes and appoints Lender the agent and attomey-in-fact of Borrower to
make such recitals, and hereby covenants and agrees that the recitals so made by Lender shall be
binding and conclusive upon Borrower, and Lender shall collect the proceeds of such sale, and after
reserving therefrom the entire amount of principal and interest due, together with the amount of
taxes, assessments and premiums of insurance or other payments theretofore paid by Lender, together
with all costs and expenses of sale including, without limitation, reasonable attorneys’ fees
actually incurred at standard hourly rates, shall pay any overage to Borrower as provided by law.
All remedies provided in this Security Deed are cumulative to any other right or remedy under this
Security Peed or afforded by law or equity, and may be exercised concurrently, independently or
successively and any costs, expenses or monetary rights (including rights of Lender to attorneys’
fees actually incurred at standard hourly rates) associated with the exercise of such remedy or
remedies shall be secured by this Security Deed in addition to all other obligations herein
provided for. The power and agency hereby granted are coupled with an interest and are irrevocable
by death or otherwise and are granted as cumulative to the remedies for collection of the
indebtedness secured hereby as provided by law.

     6.34 REMIC Opinions. In the event Borrower requests Lender’s consent with respect to
any proposed action or Borrower proposes to take any action not otherwise requiring Lender’s
specific consent under the Loan Documents, which Lender determines, in its discretion, may affect
(i) the “REMIC” status of Lender, its successors or assigns, or (ii) the status of this Security
Deed as a “qualified mortgage” as defined in Section 860G of the Internal Revenue Code of 1986
(or any succeeding provision of such law), Lender reserves the right to require Borrower, at
Borrower’s sole expense, to obtain, from counsel satisfactory to Lender in its discretion, an
opinion, in form and substance satisfactory to Lender in its discretion, that no adverse tax
consequences will arise as a result of the proposed course of action.

66

 

[THE BALANCE OF THIS PAGE WAS LEFT BLANK INTENTIONALLY]

67

 

	 	 	IN WITNESS WHEREOF, Borrower has executed this Security Deed on the day and year first
written above.

	 	 	 	 	 
	 	BORROWER:

CAMPUS CREST AT CARROLLTON, LLC,
a Delaware limited
liability company

 	 
	 	By:  	Campus Crest Carrollton Manager, LLC,
 	 
	 	 	a Delaware limited liability company,  	 
	 	 	its Manager 	 
	 	 	 
	 	By:  	/s/ Michael S. Hartnett
 	 
	 	 	Name:  	Michael S. Hartnett 	 
	 	 	Title:  	Director 	 
	 

Signed, sealed and delivered in

the presence of

 

Witness

 

Notary Public

My Commission Expires: April 4, 2011

[AFFIX NOTARIAL SEAL]

	 	 	 

	LENDER’S ADDRESS:

	 	BORROWER’S ADDRESS:
	 
	 	 
	Commercial Real Estate Services

	 	3 Centerview Drive, Suite 200
	8739 Research Drive URP — 4, NC 1075

	 	Greensboro, North Carolina 27407
	Charlotte, North Carolina 28262exv10w45

Exhibit
10.45

THIS INSTRUMENT PREPARED BY

AND WHEN RECORDED RETURN TO:

Kilpatrick Stockton LLP

Hearst Tower, Suite 2500

214 North Tryon Street

Charlotte, North Carolina 28202

Attn: John Nicholas Suhr, Jr., Esq.

(SPACE ABOVE THIS LINE FOR RECORDER’S USE)

			
	 	 	 
	Loan No.: 50-2857350
	 	Las Cruces Building

CAMPUS CREST AT LAS CRUCES, LLC,

as Borrower

to

TRSTE, INC.,

as Trustee

For the benefit of

WACHOVIA BANK, NATIONAL ASSOCIATION,

as Lender

 

DEED OF TRUST, SECURITY AGREEMENT

AND FIXTURE FILING

 

Date: September 22, 2006

SIMPLE DESCRIPTION: As required by Section 14-11-10.1 NMSA 1978, a simple description
of the Property is: 320 Union Avenue, Las Cruces, New Mexico 88001

 

 

TABLE OF CONTENTS

	 	 	 	 	 	 	 
	 	 	 	 	Page	 
	 
	 	 	 	 	 	 
	ARTICLE I. REPRESENTATIONS AND WARRANTIES OF BORROWER	 	 	5	 
	1.1
	 	Organization; Special Purpose	 	 	5	 
	1.2
	 	Title	 	 	5	 
	1.3
	 	No Bankruptcy Filing	 	 	6	 
	1.4
	 	Full and Accurate Disclosure	 	 	6	 
	1.5
	 	Proceedings; Enforceability	 	 	6	 
	1.6
	 	No Conflicts	 	 	7	 
	1.7
	 	Federal Reserve Regulations; Investment Company Act	 	 	7	 
	1.8
	 	Taxes	 	 	7	 
	1.9
	 	ERISA	 	 	7	 
	1.10
	 	Property Compliance	 	 	8	 
	1.11
	 	Utilities	 	 	8	 
	1.12
	 	Public Access	 	 	8	 
	1.13
	 	Litigation; Agreements	 	 	8	 
	1.14
	 	Physical Condition	 	 	9	 
	1.15
	 	Contracts	 	 	9	 
	1.16
	 	Leases	 	 	9	 
	1.17
	 	Foreign Person	 	 	10	 
	1.18
	 	Management Agreement	 	 	10	 
	1.19
	 	Fraudulent Transfer	 	 	10	 
	1.20
	 	Foreign Assets Control	 	 	10	 
	1.21
	 	New Mexico Deed of Trust Act	 	 	11	 
	 
	 	 	 	 	 	 
	ARTICLE II. COVENANTS OF BORROWER	 	 	11	 
	2.1
	 	Defense of Title	 	 	11	 
	2.2
	 	Performance of Obligations	 	 	12	 
	2.3
	 	Insurance	 	 	12	 
	2.4
	 	Payment of Taxes	 	 	16	 
	2.5
	 	Casualty and Condemnation	 	 	16	 
	2.6
	 	Construction Liens	 	 	20	 
	2.7
	 	Rents and Profits	 	 	20	 
	2.8
	 	Leases	 	 	21	 
	2.9
	 	Alienation and Further Encumbrances	 	 	23	 
	2.10
	 	Payment of Utilities, Assessments, Charges, Etc.	 	 	28	 
	2.11
	 	Access Privileges and Inspections	 	 	28	 
	2.12
	 	Waste; Alteration of Improvements	 	 	28	 
	2.13
	 	Zoning	 	 	29	 
	2.14
	 	Financial Statements and Books and Records	 	 	29	 
	2.15
	 	Further Assurances	 	 	31	 
	2.16
	 	Payment of Costs; Reimbursement to Lender	 	 	31	 
	2.17
	 	Security Interest	 	 	32	 
	2.18
	 	Security Agreement	 	 	33	 
	2.19
	 	Easements and Rights-of-Way	 	 	34	 

i

 

	 	 	 	 	 	 	 
	 	 	 	 	Page	 
	 
	 	 	 	 	 	 
	2.20
	 	Compliance with Laws	 	 	35	 
	2.21
	 	Additional Taxes	 	 	35	 
	2.22
	 	Secured Indebtedness	 	 	35	 
	2.23
	 	Borrower's Waivers	 	 	36	 
	2.24
	 	SUBMISSION TO JURISDICTION; WAIVER OF JURY TRIAL	 	 	37	 
	2.25
	 	Attorney-in-Fact Provisions	 	 	37	 
	2.26
	 	Management	 	 	37	 
	2.27
	 	Hazardous Waste and Other Substances	 	 	38	 
	2.28
	 	Indemnification; Subrogation	 	 	43	 
	2.29
	 	Covenants with Respect to Existence, Indebtedness, Operations, Fundamental Changes of Borrower	 	 	44	 
	2.30
	 	Embargoed Person	 	 	47	 
	2.31
	 	Anti-Money Laundering	 	 	48	 
	2.32
	 	ERISA	 	 	48	 
	 
	 	 	 	 	 	 
	ARTICLE III. RESERVES AND CASH MANAGEMENT	 	 	49	 
	3.1
	 	Reserves Generally	 	 	49	 
	3.2
	 	Payment Reserve	 	 	50	 
	3.3
	 	Impound Account	 	 	51	 
	3.4
	 	Intentionally Deleted	 	 	52	 
	3.5
	 	Replacement Reserve	 	 	52	 
	 
	 	 	 	 	 	 
	ARTICLE IV. EVENTS OF DEFAULT	 	 	53	 
	4.1
	 	Events of Default	 	 	53	 
	 
	 	 	 	 	 	 
	ARTICLE V. REMEDIES	 	 	55	 
	5.1
	 	Remedies Available	 	 	55	 
	5.2
	 	Application of Proceeds	 	 	58	 
	5.3
	 	Right and Authority of Receiver or Lender in the Event of Default; Power of Attorney	 	 	59	 
	5.4
	 	Occupancy After Foreclosure	 	 	60	 
	5.5
	 	Notice to Account Debtors	 	 	60	 
	5.6
	 	Cumulative Remedies	 	 	60	 
	5.7
	 	Payment of Expenses	 	 	61	 
	 
	 	 	 	 	 	 
	ARTICLE VI. MISCELLANEOUS TERMS AND CONDITIONS	 	 	61	 
	6.1
	 	Time of Essence	 	 	61	 
	6.2
	 	Release of Deed of Trust	 	 	61	 
	6.3
	 	Certain Rights of Lender	 	 	61	 
	6.4
	 	Waiver of Certain Defenses	 	 	61	 
	6.5
	 	Notices	 	 	61	 
	6.6
	 	Successors and Assigns; Joint and Several Liability	 	 	62	 
	6.7
	 	Severability	 	 	62	 
	6.8
	 	Gender	 	 	62	 
	6.9
	 	Waiver; Discontinuance of Proceedings	 	 	62	 
	6.10
	 	Section Headings	 	 	63	 
	6.11
	 	GOVERNING LAW	 	 	63	 
	6.12
	 	Counting of Days	 	 	63	 
	6.13
	 	Relationship of the Parties	 	 	63	 

ii

 

	 	 	 	 	 	 	 
	 	 	 	 	Page	 
	 
	 	 	 	 	 	 
	6.14
	 	Application of the Proceeds of the Note	 	 	63	 
	6.15
	 	Unsecured Portion of Indebtedness	 	 	64	 
	6.16
	 	Cross Default	 	 	64	 
	6.17
	 	Interest After Sale	 	 	64	 
	6.18
	 	Inconsistency with Other Loan Documents	 	 	64	 
	6.19
	 	Construction of this Document	 	 	64	 
	6.20
	 	No Merger	 	 	64	 
	6.21
	 	Rights With Respect to Junior Encumbrances	 	 	64	 
	6.22
	 	Lender May File Proofs of Claim	 	 	65	 
	6.23
	 	Fixture Filing	 	 	65	 
	6.24
	 	After-Acquired Property	 	 	65	 
	6.25
	 	No Representation	 	 	65	 
	6.26
	 	Counterparts	 	 	65	 
	6.27
	 	Personal Liability	 	 	65	 
	6.28
	 	Recording and Filing	 	 	66	 
	6.29
	 	Entire Agreement and Modifications	 	 	66	 
	6.30
	 	Intentionally Reserved	 	 	66	 
	6.31
	 	Secondary Market	 	 	66	 
	6.32
	 	Dissemination of Information	 	 	66	 
	6.33
	 	Certain Matters Relating to Property Located in the State of New Mexico	 	 	66	 
	6.34
	 	REMIC Opinions	 	 	67	 
	 
	 	 	 	 	 	 
	ARTICLE VII. CONCERNING THE TRUSTEE	 	 	67	 
	7.1
	 	Certain Rights	 	 	67	 
	7.2
	 	Retention of Money	 	 	68	 
	7.3
	 	Successor Trustees	 	 	68	 
	7.4
	 	Perfection of Appointment	 	 	69	 
	7.5
	 	Succession Instruments	 	 	69	 
	7.6
	 	No Representation by Trustee or Lender	 	 	69	 

iii

 

DEED OF TRUST, SECURITY AGREEMENT AND FIXTURE FILING

CERTAIN OF THE PROPERTY DESCRIBED HEREIN IS GOODS THAT ARE OR ARE TO BECOME FIXTURES RELATED TO
THE REAL PROPERTY DESCRIBED HEREIN, AND IT IS INTENDED THAT, AS TO THOSE GOODS THIS DEED OF TRUST
SHALL BECOME EFFECTIVE AS A FINANCING STATEMENT FILED AS A FIXTURE FILING FROM THE DATE OF ITS
FILING IN THE REAL ESTATE RECORDS OF DONA ANA COUNTY, NEW MEXICO. THE NAME OF THE RECORD OWNER OF
THE ENCUMBERED PROPERTY IS CAMPUS CREST AT LAS CRUCES, LLC INFORMATION CONCERNING THE SECURITY
INTEREST CREATED BY THIS INSTRUMENT MAY BE OBTAINED FROM THE LENDER AS SECURED PARTY.

     THIS DEED OF TRUST, SECURITY AGREEMENT AND FIXTURE FILING (as
the same may from time to time be amended, consolidated, renewed or replaced, this “Deed of Trust”)
is made as of September 22, 2006 by CAMPUS CREST AT LAS CRUCES, LLC, a Delaware limited liability
company, as grantor (“Borrower”), whose address is 3 Centerview Drive, Suite 200, Greensboro, North
Carolina 27407, to TRSTE, INC., a Virginia corporation, as Trustee (“Trustee”) whose address is 301
South College Street, Charlotte, North Carolina 28288, for the benefit of WACHOVIA BANK, NATIONAL
ASSOCIATION, a national banking association, as beneficiary (together with its successors and
assigns, “Lender”), whose address is Commercial Real Estate Services, 8739 Research Drive URP-4, NC
1075, Charlotte, North Carolina 28262.

WITNESSETH:

     THAT FOR AND IN CONSIDERATION OF THE SUM OF TEN AND NO/100 DOLLARS ($10.00), AND OTHER
VALUABLE CONSIDERATION, THE RECEIPT AND SUFFICIENCY OF WHICH ARE HEREBY ACKNOWLEDGED, BORROWER
HEREBY IRREVOCABLY MORTGAGES, GRANTS, BARGAINS, SELLS, CONVEYS, TRANSFERS, PLEDGES, SETS OVER AND
ASSIGNS, WITH POWER OF SALE AND MORTGAGE COVENANTS AND UPON THE STATUTORY MORTGAGE CONDITION, all
of Borrower’s estate, right, title and interest in, to and under any and all of the following
described property, whether now owned or hereafter acquired by Borrower (collectively, the
“Property”) and expressly agrees that this Deed of Trust is subject to the New Mexico Deed of
Trust Act (N.M. Stat. Ann. Section 48-10-1 to Section 48-10-21) (hereinafter, the “Deed of Trust
Act”):

     (A) All that certain real property situated in the County of Dona Ana, State of New Mexico,
more particularly described on Exhibit A attached hereto and incorporated herein by this
reference (the “Premises”), together with all of the easements, rights, privileges, franchises,
tenements, hereditaments and appurtenances now or hereafter thereunto belonging or in any way
appertaining thereto, and all of the estate, right, title, interest, claim and demand whatsoever
of Borrower therein or thereto, either at law or in equity, in possession or in expectancy, now or
hereafter acquired;

     (B) All structures, buildings and improvements of every kind and description now or at any
time hereafter located or placed on the Premises (the “Improvements”);

 

 

     (C) All furniture, furnishings, fixtures, goods, equipment, inventory or personal property
owned by Borrower and now or hereafter located on, attached to or used in and about the
Improvements, including, but not limited to, all machines, engines, boilers, dynamos, elevators,
stokers, tanks, cabinets, awnings, screens, shades, blinds, carpets, draperies, lawn mowers, and
all appliances, plumbing, heating, air conditioning, lighting, ventilating, refrigerating, disposal
and incinerating equipment, and all fixtures and appurtenances thereto, and such other goods and
chattels and personal property owned by Borrower as are now or hereafter used or furnished in
operating the Improvements, or the activities conducted therein, and all building materials and
equipment hereafter situated on or about the Premises or Improvements, and all warranties and
guaranties relating thereto, and all additions thereto and substitutions and replacements therefor
(exclusive of any of the foregoing owned or leased by tenants of space in the Improvements);

     (D) All easements, rights-of-way, strips and gores of land, vaults, streets, ways, alleys,
passages, sewer rights, and other emblements now or hereafter located on the Premises or under or
above the same or any part or parcel thereof, and all estates, rights, titles, interests,
tenements, hereditaments and appurtenances, reversions and remainders whatsoever, in any way
belonging, relating or appertaining to the Property or any part thereof, or which hereafter shall
in any way belong, relate or be appurtenant thereto, whether now owned or hereafter acquired by
Borrower;

     (E) All water, ditches, wells, reservoirs and drains and all water, ditch, well, reservoir
and drainage rights which are appurtenant to, located on, under or above or used in connection
with the Premises or the Improvements, or any part thereof, whether now existing or hereafter
created or acquired;

     (F) All minerals, crops, timber, trees, shrubs, flowers and landscaping features now or
hereafter located on, under or above the Premises;

     (G) All cash funds, deposit accounts and other rights and evidence of rights to cash, now or
hereafter created or held by Lender pursuant to this Deed of Trust or any other of the Loan
Documents (as hereinafter defined), including, without limitation, all funds now or hereafter on
deposit in the Reserves (as hereinafter defined);

     (H) All leases (including, without limitation, oil, gas and mineral leases), licenses,
concessions and occupancy agreements of all or any part of the Premises or the Improvements (each,
a “Lease” and collectively, “Leases”), whether written or oral, now or hereafter entered into and
all rents, royalties, issues, profits, bonus money, revenue, income, rights and other benefits
(collectively, the “Rents and Profits”) of the Premises or the Improvements, now or hereafter
arising from the use or enjoyment of all or any portion thereof or from any present or future
Lease or other agreement pertaining thereto or arising from any of the Leases or any of the
General Intangibles (as hereinafter defined) and all cash or securities deposited to secure
performance by the tenants, lessees or licensees (each, a “Tenant” and collectively, “Tenants”),
as applicable, of their obligations under any such Leases, whether said cash or securities are to
be held until the expiration of the terms of said Leases or applied to one or more of the
installments of rent coming due prior to the expiration of said terms, subject, however, to the
provisions contained in Section 2.7 hereinbelow;

2

 

     (I) All contracts and agreements now or hereafter entered into covering any part of the
Premises or the Improvements (collectively, the “Contracts”) and all revenue, income and other
benefits thereof, including, without limitation, management agreements, service contracts,
maintenance contracts, equipment leases, personal property leases and any contracts or documents
relating to construction on any part of the Premises or the Improvements (including plans,
drawings, surveys, tests, reports, bonds and governmental approvals) or to the management or
operation of any part of the Premises or the Improvements;

     (J) All present and future monetary deposits given to any public or private utility with
respect to utility services furnished to any part of the Premises or the Improvements;

     (K) All present and future funds, accounts, instruments, accounts receivable, documents,
causes of action, claims, general intangibles (including, without limitation, trademarks, trade
names, service marks and symbols now or hereafter used in connection with any part of the Premises
or the Improvements, all names by which the Premises or the Improvements may be operated or known,
all rights to carry on business under such names, and all rights, interest and privileges which
Borrower has or may have as developer or declarant under any covenants, restrictions or
declarations now or hereafter relating to the Premises or the Improvements) and all notes or
chattel paper now or hereafter arising from or by virtue of any transactions related to the
Premises or the Improvements (collectively, the “General Intangibles”);

     (L) All water taps, sewer taps, certificates of occupancy, permits, licenses, franchises,
certificates, consents, approvals and other rights and privileges now or hereafter obtained in
connection with the Premises or the Improvements and all present and future warranties and
guaranties relating to the Improvements or to any equipment, fixtures, furniture, furnishings,
personal property or components of any of the foregoing now or hereafter located or installed on
the Premises or the Improvements;

     (M) All building materials, supplies and equipment now or hereafter placed on the Premises or
in the Improvements and all architectural renderings, models, drawings, plans, specifications,
studies and data now or hereafter relating to the Premises or the Improvements;

     (N) All right, title and interest of Borrower in any insurance policies or binders now or
hereafter relating to the Property, including any unearned premiums thereon;

     (O) All proceeds, products, substitutions and accessions (including claims and demands
therefor) of the conversion, voluntary or involuntary, of any of the foregoing into cash or
liquidated claims, including, without limitation, proceeds of insurance and condemnation awards;
and

     (P) All other or greater rights and interests of every nature in the Premises or the
Improvements and in the possession or use thereof and income therefrom, whether now owned or
hereafter acquired by Borrower.

     FOR THE PURPOSE OF SECURING:

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     (1) The loan (the “Loan”) evidenced by that certain Promissory Note (such Promissory
Note, together with any and all renewals, amendments, modifications, consolidations and extensions
thereof, is hereinafter referred to as the “Note”) of even date with this Deed of Trust, made by
Borrower payable to the order of Lender in the principal face amount of Fifteen Million One Hundred
Forty Thousand and No/100 Dollars ($15,140,000.00), together with interest as therein provided;

     (2) The full and prompt payment and performance of all of the provisions, agreements,
covenants and obligations herein contained and contained in any other agreements, documents or
instruments now or hereafter evidencing, securing or otherwise relating to the Debt (as
hereinafter defined) including, but not limited to, the Environmental Indemnity Agreement (as
hereinafter defined) and the Indemnity and Guaranty Agreements (as hereinafter defined) (the Note,
this Deed of Trust, and such other agreements, documents and instruments, together with any and
all renewals, amendments, extensions and modifications thereof, are hereinafter collectively
referred to as the “Loan Documents”) and the payment of all other sums herein or therein
covenanted to be paid;

     (3) Any and all additional advances made by Lender to protect or preserve the Property or the
lien or security interest created hereby on the Property, or for taxes, assessments or insurance
premiums as hereinafter provided or for performance of any of Borrower’s obligations hereunder or
under the other Loan Documents or for any other purpose provided herein or in the other Loan
Documents (whether or not the original Borrower remains the owner of the Property at the time of
such advances); and

     (4) Any and all other indebtedness now owing or which may hereafter be owing by Borrower to
Lender, including, without limitation, all prepayment fees, however and whenever incurred or
evidenced, whether express or implied, direct or indirect, absolute or contingent, or due or to
become due, and all renewals, modifications, consolidations, replacements and extensions thereof,
it being contemplated by Borrower and Lender that Borrower may hereafter become so indebted to
Lender.

(All of the sums referred to in Paragraphs (1) through (4) above are herein referred to as
the “Debt”).

     TO HAVE AND TO HOLD the Property unto Trustee, its successors and assigns forever, for the
benefit of Lender, its successors and assigns, and Borrower does hereby bind itself, its
successors and assigns, to WARRANT AND FOREVER DEFEND the title to the Property, subject to the
Permitted Encumbrances (as hereinafter defined), to Lender and Trustee against every person
whomsoever lawfully claiming or to claim the same or any part thereof;

     PROVIDED, HOWEVER, that if the principal and interest and all other sums due or to become
due under the Note or under the other Loan Documents, including, without limitation, any
prepayment fees required pursuant to the terms of the Note, shall have been paid at the time and
in the manner stipulated therein and the Debt shall have been paid and all other covenants
contained in the Loan Documents shall have been performed, then, in such case, the liens,
security interests, estates and rights granted by this Deed of Trust shall be satisfied and the
estate, right, title and interest of Lender in the Property shall cease, and upon payment to
Lender of all

4

 

costs and expenses incurred for the preparation of the release hereinafter referenced and all
recording costs if allowed by law, Lender shall promptly satisfy and release this Deed of Trust of
record and the lien hereof by proper instrument.

     THE MAXIMUM AMOUNT SECURED AT ANY ONE TIME BY THIS DEED OF TRUST IS $30,280,000.00.

ARTICLE I.

REPRESENTATIONS AND WARRANTIES OF BORROWER

     Borrower, for itself and its successors and assigns, does hereby represent, warrant and
covenant to and with Lender, its successors and assigns, that:

     1.1 Organization; Special Purpose. Borrower has been duly organized and is validly
existing and in good standing under the laws of the state of its formation, with requisite power
and authority, and all rights, licenses, permits and authorizations, governmental or otherwise,
necessary to own its properties and to transact the business in which it is now engaged. Borrower
is duly qualified to do business and is in good standing in each jurisdiction where it is required
to be so qualified in connection with its properties, business and operations. Borrower possesses
all franchises, patents, copyrights, trademarks, trade names, licenses and permits necessary for
the conduct of its business substantially as now conducted. Borrower is a Single-Purpose Entity in
compliance with the provisions of Section 2.29 hereof.

     1.2 Title. Borrower has good, marketable and indefeasible fee simple title to the
Property, subject only to those matters expressly set forth as exceptions to or subordinate
matters in the title insurance policy insuring the lien of this Deed of Trust delivered as of the
date hereof which Lender has agreed to accept, excepting therefrom all preprinted and/or standard
exceptions (such items being the “Permitted Encumbrances”), and has full power and lawful
authority to grant, bargain, sell, convey, assign, transfer, encumber and mortgage its interest in
the Property in the manner and form hereby done or intended. Borrower will preserve its interest
in and title to the Property and will forever warrant and defend the same to Lender against any
and all claims whatsoever and will forever warrant and defend the validity and priority of the
lien and security interest created herein against the claims of all persons and parties
whomsoever, subject to the Permitted Encumbrances. This Deed of Trust creates (i) a valid,
perfected lien on the Premises, subject only to Permitted Encumbrances and the liens created by
the Loan Documents and (ii) perfected security interests in and to, and perfected collateral
assignments of, all personality, all in accordance with the terms thereof, in each case subject
only to any applicable Permitted Encumbrances, such other liens as are permitted pursuant to the
Loan Documents and the liens created by the Loan Documents. There are no security agreements or
financing statements affecting all or any portion of the Property other than (i) as disclosed in
writing by Borrower to Lender prior to the date hereof and (ii) the security agreements and
financing statements created in favor of Lender. There are no claims for payment for work, labor
or materials affecting the Premises which are or may become a lien prior to, or of equal priority
with, the liens created by the Loan Documents. None of the Permitted Encumbrances, individually or
in the aggregate, materially interfere with the benefits of the security intended to be provided
by this Deed of Trust, materially and adversely affect the value of the Premises,

5

 

impair the use or operations of the Premises or impair Borrower’s ability to pay its obligations
in a timely manner. The foregoing warranty of title shall survive the foreclosure of this Deed of
Trust and shall inure to the benefit of and be enforceable by Lender in the event Lender acquires
title to the Property pursuant to any foreclosure.

     1.3 No Bankruptcy Filing. No bankruptcy, insolvency proceedings or liquidation of all
or a substantial portion of the Property is pending or contemplated by Borrower or, to the best
knowledge of Borrower, against Borrower or by or against any endorser or cosigner of the Note or
of any portion of the Debt, or any guarantor or indemnitor under any guaranty or indemnity
agreement, including, without limitation, those certain Indemnity and Guaranty Agreements, each
dated the date hereof, executed in favor of Lender (the “Indemnity and Guaranty Agreements”)
executed in connection with the Note or the loan evidenced thereby and secured hereby (an
“Indemnitor”). No petition in bankruptcy has been filed against Borrower or any general partner,
manager, sole member, managing member or majority shareholder of Borrower, as applicable
(collectively, the “Borrower Parties”, each a “Borrower Party”), and neither Borrower Party or any
principal of a Borrower Party has ever made an assignment for the benefit of creditors or taken
advantage of any insolvency act for the benefit of debtors.

     1.4 Full and Accurate Disclosure. No statement of fact made by Borrower in any Loan
Documents contains any untrue statement of a material fact or omits to state any material fact
necessary to make statements contained therein not misleading. There is no material fact presently
known to Borrower that has not been disclosed to Lender which adversely affects, or, as far as
Borrower can foresee, might adversely affect, the Property or the business, operations or
condition (financial or otherwise) of Borrower. All financial data, including the statements of
cash flow and income and operating expense, that have been delivered to Lender with respect to
Borrower and the Property (i) are true, complete and correct in all material respects, (ii)
accurately represent the financial condition of Borrower and the Property as of the date of such
reports, and (iii) to the extent prepared by an independent certified public accounting firm, have
been prepared in accordance with generally accepted accounting principles consistently applied
throughout the periods covered, except as disclosed therein. Borrower has no contingent
liabilities, liabilities for taxes, unusual forward or long-term commitments, unrealized or
anticipated losses from any unfavorable commitments or any liabilities or obligations not
expressly permitted by this Deed of Trust. Since the date of such financial statements, there has
been no materially adverse change in the financial condition, operations or business of Borrower
or the Property from that set forth in said financial statements.

     1.5 Proceedings; Enforceability. The execution, delivery and performance of this
Deed of Trust, the Note and all of the other Loan Documents have been duly authorized by all
necessary action to be, and are, binding and enforceable against Borrower in accordance with the
respective terms thereof and do not contravene, result in a breach of or constitute a default
(nor upon the giving of notice or the passage of time or both will constitute a default) under
the partnership agreement, articles of incorporation, operating agreement or other organizational
documents of Borrower or any contract or agreement of any nature to which Borrower is a party or
by which Borrower or any of its property may be bound and do not violate or contravene any law,
order, decree, rule or regulation to which Borrower is subject. The Loan Documents are not

6

 

subject to, and Borrower has not asserted, any right of rescission, set-off, counterclaim or
defense, including the defense of usury.

     1.6 No Conflicts. Borrower is not required to obtain any consent, approval or
authorization from or to file any declaration or statement with, any governmental authority or
agency in connection with or as a condition to the execution, delivery or performance of this Deed
of Trust, the Note or the other Loan Documents which has not been so obtained or filed. Borrower
has obtained or made all necessary (i) consents, approvals and authorizations and registrations
and filings of or with all governmental authorities or agencies and (ii) consents, approvals,
waivers and notifications of partners, stockholders, members, creditors, lessors and other
non-governmental persons and/or entities, in each case, which are required to be obtained or made
by Borrower in connection with the execution and delivery of, and the performance by Borrower of
its obligations under, the Loan Documents.

     1.7 Federal Reserve Regulations; Investment Company Act. No part of the proceeds of
the Loan will be used for the purpose of purchasing or acquiring any “margin stock” within the
meaning of Regulation T, U or X of the Board of Governors of the Federal Reserve System or for any
other purpose that would be inconsistent with such Regulation T, U or X or any other regulation of
such Board of Governors, or for any purpose prohibited by law or any Loan Document. Borrower is
not (i) an “investment company” or a company “controlled” by an “investment company,” within the
meaning of the Investment Company Act of 1940, as amended; (ii) a “holding company” or a
“subsidiary company” of a “holding company” or an “affiliate” of either a “holding company” or a
“subsidiary company” within the meaning of the Public Utility Holding Company Act of 1935, as
amended; or (iii) subject to any other federal or state law or regulation which purports to
restrict or regulate its ability to borrow money.

     1.8 Taxes. Borrower and any general partner or managing member of Borrower, if any,
has filed all federal, state and local tax returns required to be filed as of the date hereof and
has paid or made adequate provision for the payment of all federal, state and local taxes, charges
and assessments payable by Borrower and any general partner or managing member, if any, as of the
date hereof. Borrower and any general partner or managing member, if any, believe that their
respective tax returns properly reflect the income and taxes of Borrower and said general partner
or managing member, if any, for the periods covered thereby, subject only to reasonable
adjustments required by the Internal Revenue Service or other applicable tax authority upon audit.
Borrower and the Property are free from any past due obligations for sales and payroll taxes.

     1.9 ERISA. Borrower (i) has no knowledge of any material liability that has been
incurred or is expected to be incurred by Borrower that is or remains unsatisfied for any taxes
or penalties with respect to any “employee benefit plan”, as defined in section 3(3) of the
Employee Retirement Income Security Act of 1974, as amended (“ERISA”), or any “plan” within the
meaning of Section 4975(e)(1) of the Internal Revenue Code of 1986, as amended (the “Code”) or
any other benefit plan (other than a multi-employer plan) maintained, contributed to, or required
to be contributed to by Borrower or by any entity that is under the common control with Borrower
within the meaning of ERISA Section 4001(a)(14) (collectively, a “Plan”) or any plan that would
be a Plan but for the fact that it is a multi-employer plan within the meaning of

7

 

ERISA Section 3(37) and (ii) has made and shall continue to make when due all required
contributions to all such Plans, if any. Each such Plan, if any, has been and will be administered
in compliance with its terms and the applicable provisions of ERISA, the Code and any other
applicable Federal or state law and no action shall be taken or fail to be taken that would result
in the disqualification or loss of the tax-exempt status of any such Plan, if any, intended to be
qualified or tax-exempt. The assets of Borrower do not constitute “plan assets” of one or more
such plans within the meaning of 29 C.F.R. Section 2510.3-101.

     1.10 Property Compliance. The Premises and the Improvements and the current intended
use thereof by Borrower comply in all material respects with all applicable restrictive covenants,
zoning ordinances, subdivision and building codes, flood disaster laws, health and environmental
laws and regulations and all other ordinances, orders or requirements issued by any state, federal
or municipal authorities having or claiming jurisdiction over the Property. In the event that all
or any part of the Improvements are destroyed or damaged, said Improvements can be legally
reconstructed to their condition prior to such damage or destruction, and thereafter exist for the
same use without violating any zoning or other ordinances applicable thereto and without the
necessity of obtaining any variances or special permits. No legal proceedings are pending or, to
the knowledge of Borrower, threatened with respect to the zoning of the Premises. Neither the
zoning nor any other right to construct, use or operate the Premises is in any way dependent upon
or related to any property other than the Premises. All certifications, permits, licenses and
approvals, including certificates of completion and occupancy permits required for the legal use,
occupancy and operation of the Premises have been obtained and are in full force and effect. The
Premises and Improvements constitute one or more separate tax parcels for purposes of ad valorem
taxation. The Premises and Improvements do not require any rights over, or restrictions against,
other property in order to comply with any of the aforesaid governmental ordinances, orders or
requirements.

     1.11 Utilities. All utility services necessary and sufficient for the full use,
occupancy, operation and disposition of the Premises and the Improvements for their intended
purposes are available to the Property, including water, storm sewer, sanitary sewer, gas,
electric, cable and telephone facilities, through public rights-of-way or perpetual private
easements approved by Lender. The Property is free from delinquent water charges, sewer rents,
taxes and assessments.

     1.12 Public Access. All streets, roads, highways, bridges and waterways necessary for
access to and full use, occupancy, operation and disposition of the Premises and the Improvements
have been completed, have been dedicated to and accepted by the appropriate municipal authority
and are open and available to the Premises and the Improvements without further condition or cost
to Borrower. All curb cuts, driveways and traffic signals shown on the survey delivered to Lender
prior to the execution and delivery of this Deed of Trust are existing and have been fully
approved by the appropriate governmental authority.

     1.13 Litigation; Agreements. There are no judicial, administrative, mediation or
arbitration actions, suits or proceedings pending or threatened against or affecting Borrower
(or, if Borrower is a partnership or a limited liability company, any of its general partners or
members) or the Property which, if adversely determined, would materially impair either the
Property or Borrower’s ability to perform the covenants or obligations required to be performed

8

 

under the Loan Documents. Borrower is not a party to any agreement or instrument or subject to any
restriction which might adversely affect Borrower or the Property, or Borrower’s business,
properties, operations or condition, financial or otherwise. Borrower is not in default in any
material respect in the performance, observance or fulfillment of any of the obligations,
covenants or conditions contained in any Permitted Encumbrance or any other agreement or
instrument to which it is a party or by which it or the Property is bound.

     1.14 Physical Condition. As of the date of this Deed of Trust, (i) the Property is
free from unrepaired damage caused by fire, flood, accident or other casualty, (ii) no part of the
Premises or the Improvements has been taken in condemnation, eminent domain or like proceeding nor
is any such proceeding pending or, to Borrower’s knowledge and belief, threatened or contemplated,
(iii) except as may otherwise be disclosed in that certain property condition report (the “Property
Condition Report”) dated August 7, 2006 and prepared by IVI Due Diligence Services, Inc., the
Improvements are structurally sound, in good repair and free of defects in materials and
workmanship and have been constructed and installed in substantial compliance with the plans and
specifications relating thereto, and (iv) all major building systems located within the
Improvements, including, without limitation, the heating and air conditioning systems and the
electrical and plumbing systems, are in good working order and condition.

     1.15 Contracts. Borrower has delivered to Lender true, correct and complete copies of
all Contracts and all amendments thereto or modifications thereof. Each Contract constitutes the
legal, valid and binding obligation of Borrower and, to the best of Borrower’s knowledge and
belief, is enforceable against any other party thereto. No default exists, or with the passing of
time or the giving of notice or both would exist, under any Contract which would, in the
aggregate, have a material adverse effect on Borrower or the Property. No Contract provides any
party with the right to obtain a lien or encumbrance upon the Property superior to the lien of
this Deed of Trust. All Contracts affecting the Property have been entered into at arms-length in
the ordinary course of Borrower’s business and provide for the payment of fees in amounts and upon
terms comparable to existing market rates.

     1.16 Leases. Borrower has delivered a true, correct and complete schedule (the “Rent
Roll”) of all Leases affecting the Property as of the date hereof, which accurately and completely
sets forth in all material respects for each such Lease, the following: the name of the Tenant,
the Lease expiration date, the base rent payable, the amount of any rent prepaid more than one (1)
month in advance, the security deposit held thereunder and any other material provisions of such
Lease. Upon Lender’s written request, Borrower shall provide true, correct and complete copies of
all Leases described in the Rent Roll. Each Lease constitutes the legal, valid and binding
obligation of Borrower and, to the best of Borrower’s knowledge and belief, is enforceable against
the Tenant thereof. No default exists, or with the passing of time or the giving of notice or both
would exist, under any Lease which would, in the aggregate, have a material adverse effect on
Borrower or the Property. Except as set forth in the Rent Roll, no Tenant under any Lease has, as
of the date hereof, paid rent more than thirty (30) days in advance, and the rents under such
Leases have not been waived, released, or otherwise discharged or compromised. All security
deposits required under such Leases have been fully funded and are held by Borrower in a separate
segregated account or as otherwise required by applicable law. No Lease provides any party with
the right to obtain a lien or encumbrance upon the Property superior to the lien of this

9

 

Deed of Trust. The Property forms no part of any property owned, used or claimed by Borrower as a
residence or business homestead and is not exempt from forced sale under the laws of the state in
which the Premises is located. Borrower hereby disclaims and renounces each and every claim to
all or any portion of the Property as a homestead.

     1.17 Foreign Person. Borrower is not a “foreign person” within the meaning of §
1445(f)(3) of the Code, and the related Treasury Department regulations, including temporary
regulations.

     1.18 Management Agreement. The property management agreement relating to the Premises
(the “Management Agreement”) is in full force and effect and to the best of Borrower’s knowledge,
there is no default, breach or violation existing thereunder by any party thereto beyond the
expiration of applicable notice and grace periods thereunder and no event has occurred (other than
payments due but not yet delinquent) that, with the passage of time or the giving of notice, or
both, would constitute a default, breach or violation by any party thereunder. The fee due under
the Management Agreement, and the terms and provisions of the Management Agreement, are
subordinate to this Deed of Trust; provided that payments under the Management Agreement may be
paid and retained so long as no Event of Default has occurred and is continuing.

     1.19 Fraudulent Transfer. Borrower has not entered into the Loan or any Loan Document
with the actual intent to hinder, delay, or defraud any creditor, and Borrower has received
reasonably equivalent value in exchange for its obligations under the Loan Documents. Giving
effect to the transactions contemplated by the Loan Documents, the fair saleable value of
Borrower’s assets exceeds and will, immediately following the execution and delivery of the Loan
Documents, exceed Borrower’s total liabilities, including subordinated, unliquidated, disputed or
contingent liabilities, including the maximum amount of its contingent liabilities or its debts as
such debts become absolute and matured. Borrower’s assets do not and, immediately following the
execution and delivery of the Loan Documents will not, constitute unreasonably small capital to
carry out its business as conducted or as proposed to be conducted. Borrower does not intend to,
and does not believe that it will, incur debts and liabilities (including contingent liabilities
and other commitments) beyond its ability to pay such debts as they mature (taking into account
the timing and amounts to be payable on or in respect of obligations of Borrower).

     1.20 Foreign Assets Control.

          (a) None of the Borrower, any subsidiary of the Borrower or any Affiliate of the Borrower or
any Indemnitor (i) is a Sanctioned Person (defined below), (ii) has more than 15% of its assets in
Sanctioned Countries (defined below), or (iii) derives more than 15% of its operating income from
investments in, or transactions with Sanctioned Persons or Sanctioned Countries. The loan proceeds
to be advanced by Lender will not be used and have not been used to fund any operations in,
finance any investments or activities in or make any payments to, a Sanctioned Person or a
Sanctioned Country. For purposes of the foregoing, a “Sanctioned Person” shall mean (i) a person
named on the list of “specially designated nationals” or “blocked persons” maintained by the U.S.
Office of Foreign Assets Control (“OFAC”) at

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http://www.treas.gov/offices/eotffc/ofac/sdn/index.html, or as otherwise published from
time to time, or (ii) (A) an agency of the government of a Sanctioned Country, (B) an organization
controlled by a Sanctioned Country, or (C) a person resident in a Sanctioned Country, to the
extent subject to a sanctions program administered by OFAC. A “Sanctioned Country” shall mean a
country subject to a sanctions program identified on the list maintained by OFAC and available at
http://www.treas.gov/offices/eotffc/ofac/sanctions/index.html, or as otherwise published
from time to time.

          (b) Lender may reject or refuse to accept any Collateral for credit toward payment of the
obligations hereunder or under any of the Loan Documents that is an account, instrument, chattel
paper, lease, or other obligation or property of any kind due from, owed by, or belonging to, a
Sanctioned Person.

          (c) Notwithstanding any grant of a security interest in the Collateral by virtue of other
provisions of this Deed of Trust or under any of the Loan Documents, (i) no account, instrument,
chattel paper or other obligation or property of any kind due from, owed by, or belonging to, a
Sanctioned Person or (ii) any lease in which the lessee is a Sanctioned Person shall be
Collateral.

          (d) Borrower shall pay any civil penalty or fine assessed by the U. S. Department of the
Treasury’s Office of Foreign Assets Control against, and all reasonable costs and expenses
(including counsel fees and disbursements) incurred in connection with defense thereof by Lender
as a result of the funding of the loan proceeds by Lender hereunder or the acceptance of payments
hereunder or under the Note and other Loan Documents or of Collateral due under any of the Loan
Documents.

All of the representations and warranties in this Article I and elsewhere in the Loan
Documents (i) shall survive for so long as any portion of the Debt remains owing to Lender and
(ii) shall be deemed to have been relied upon by Lender notwithstanding any investigation
heretofore or hereafter made by Lender or on its behalf.

     1.21 New Mexico Deed of Trust Act. The Premises constitutes and qualifies as “trust
real estate” within the meaning of N.M. Stat. Ann. Section 48-10-3(M) of the Deed of Trust Act.
The Loan is a business or commercial loan in the amount of Five Hundred Thousand Dollars
($500,000.00) or more.

ARTICLE II.

COVENANTS OF BORROWER

     For the purposes of further securing the Debt and for the protection of the security of this
Deed of Trust, for so long as the Debt or any part thereof remains unpaid, Borrower covenants and
agrees as follows:

     2.1 Defense of Title. If, while this Deed of Trust is in force, the title to the
Property or the interest of Lender therein shall be the subject, directly or indirectly, of any
action at law or in equity, or be attached directly or indirectly, or endangered, clouded or
adversely affected in

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any manner, Borrower, at Borrower’s expense, shall take all necessary and proper steps for the
defense of said title or interest, including the employment of counsel approved by Lender, the
prosecution or defense of litigation, and the compromise or discharge of claims made against said
title or interest. Notwithstanding the foregoing, in the event that Lender determines that
Borrower is not adequately performing its obligations under this Section, Lender may, without
limiting or waiving any other rights or remedies of Lender hereunder, take such steps with respect
thereto as Lender shall deem necessary or proper and any and all costs and expenses incurred by
Lender in connection therewith, together with interest thereon at the Default Interest Rate (as
defined in the Note) from the date incurred by Lender until actually paid by Borrower, shall be
immediately paid by Borrower on demand and shall be secured by this Deed of Trust and by all of
the other Loan Documents securing all or any part of the indebtedness evidenced by the Note.

     2.2 Performance of Obligations. Borrower shall pay when due the principal of and the
interest on the Debt in accordance with the terms of the Note. Borrower shall also pay all
charges, fees and other sums required to be paid by Borrower as provided in the Loan Documents, in
accordance with the terms of the Loan Documents, and shall observe, perform and discharge all
obligations, covenants and agreements to be observed, performed or discharged by Borrower set
forth in the Loan Documents in accordance with their terms. Further, Borrower shall promptly and
strictly perform and comply with all covenants, conditions, obligations and prohibitions required
of Borrower in connection with any other document or instrument affecting title to the Property,
or any part thereof, regardless of whether such document or instrument is superior or subordinate
to this Deed of Trust.

     2.3 Insurance. Borrower shall, at Borrower’s expense, maintain in force and effect on
the Property at all times while this Deed of Trust continues in effect the following insurance:

          (a) Insurance against loss or damage to the Property by fire, lightning, windstorm, tornado,
hail, terrorism, riot and civil commotion, vandalism, malicious mischief, burglary and theft and
against loss and damage by such other, further and additional risks as may be now or hereafter
embraced by a “special causes of loss” type of insurance policy. The amount of such insurance
shall be not less than one hundred percent (100%) of the full replacement cost (insurable value)
of the Improvements (as established by a Member of the Appraisal Institute appraisal), without
reduction for depreciation. The determination of the replacement cost amount shall be adjusted
annually to comply with the requirements of the insurer issuing such coverage or, at Lender’s
election, by reference to such indices, appraisals or information as Lender determines in its
reasonable discretion in order to reflect increased value due to inflation. “Full replacement
cost,” as used herein and elsewhere in this Section 2.3, means, with respect to the
Improvements, the cost of replacing the Improvements without regard to deduction for depreciation,
exclusive of the cost of excavations, foundations and footings below the lowest basement floor.
Borrower shall also maintain insurance against loss or damage to furniture, furnishings, fixtures,
equipment and other items (whether personalty or fixtures) included in the Property and owned by
Borrower from time to time to the extent applicable. Each policy shall contain a replacement cost
endorsement and either an agreed amount endorsement (to avoid the operation of any co-insurance
provisions) or a waiver of any co-insurance provisions, all subject to Lender’s approval. The
maximum deductible shall be $25,000.00.

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          (b) If the “special causes of loss” policy required in subsection (a) above excludes coverage
for wind damage, Borrower shall maintain separate coverage for such risk. Furthermore, if the
Property is located in the State of Florida, or within twenty five (25) miles of the ocean coast of
the states of Texas, Louisiana, Mississippi, Alabama, Georgia, North Carolina, Hawaii or South
Carolina, windstorm insurance must be maintained in an amount equal to the lesser of (i) the full
replacement cost of the Property or (ii) the maximum limit of coverage available with respect to
the Improvements and Equipment. If available, a minimum of eighteen (18) months general business
income coverage specifically relating to wind damage shall be required. The maximum deductible
shall be $25,000.00.

          (c) Ordinance and law insurance is required if the Property is “non-conforming” with respect
to any zoning requirements. Borrower shall maintain “Coverage A” against loss on value to the
undamaged portion of the Improvements for the full replacement cost of the Improvements. Borrower
shall also maintain “Coverage B” against the cost of demolition in an amount equal to ten percent
(10%) of the total value of the Improvements and “Coverage C” against increased cost of
reconstruction in an amount equal to twenty percent (20%) of the total value of the Improvements.
The aggregate total amount of coverage required for Coverage A, Coverage B and Coverage C above
shall be $10,000.00. The maximum deductible shall be $25,000.00.

          (d) Commercial General Liability Insurance against claims for personal injury, bodily injury,
death and property damage occurring on, in or about the Premises or the Improvements in amounts
not less than $1,000,000.00 per occurrence and $2,000,000.00 in the aggregate plus umbrella
coverage in an amount not less than $10,000,000. Lender hereby retains the right to periodically
review the amount of said liability insurance being maintained by Borrower and to require an
increase in the amount of said liability insurance should Lender deem an increase to be reasonably
prudent under then existing circumstances. The maximum deductible shall be $10,000.00.

          (e) Equipment breakdown (also known as boiler and machinery insurance) is required if steam
boilers or other pressure-fired vessels are in operation at the Premises. Minimum liability
coverage per accident must equal the greater of the replacement cost (insurable value) of the
Improvements housing such boiler or pressure-fired machinery or $2,000,000.00. If one or more
large HVAC units is in operation at the Premises, “Systems Breakdowns” coverage shall be required,
as determined by Lender. Minimum liability coverage per accident must equal the value of such
unit(s). If available, a minimum of eighteen (18) months general business income coverage
specifically relating to boiler and machinery damage shall be required. The maximum deductible
shall be $10,000.00. Co-insurance is prohibited.

          (f) If the Improvements or any part thereof is situated in an area designated by the Federal
Emergency Management Agency (“FEMA”) as a special flood hazard area (Zone A or Zone V), flood
insurance in an amount equal to the lesser of: (i) the minimum amount required, under the terms
of coverage, to compensate for any damage or loss on a replacement basis (or the unpaid balance
of the Debt if replacement cost coverage is not available for the type of building insured), or
(ii) the maximum insurance available under the appropriate National

13

 

Flood Insurance Administration program. If available, a minimum of eighteen (18) months general
business income coverage specifically relating to flood damage shall be required. The maximum
deductible shall be $3,000.00 per building or a higher minimum amount as required by FEMA or
other applicable law.

          (g) If the Property is situated in an area designated by FEMA as a high probability earthquake
area (Zone 2b or greater), Lender may require a Probable Maximum Loss (“PML”) study to be conducted
at the Property. If the PML study reveals a PML equal to or exceeding twenty percent (20%) of the
full replacement cost of the Improvements, Borrower shall be required to maintain earthquake
insurance in an amount equal to the PML percentage of full replacement cost of the Improvements. If
available, a minimum of eighteen (18) months general business Income coverage specifically relating
to earthquake damage shall be required. The maximum deductible shall be no more than five percent
(5%) of the value at risk or the lowest deductible available in the State in which the Property is
located.

          (h) During the period of any construction, renovation or alteration of the existing
Improvements which exceeds the lesser of 10% of the principal amount of the Note or $500,000, at
Lender’s request, a completed value, “All Risk” Builder’s Risk form or “Course of Construction”
insurance policy in non-reporting form, in an amount approved by Lender, may be required. During
the period of any construction of any addition to the existing Improvements, a completed value,
“All Risk” Builder’s Risk form or “Course of Construction” insurance policy in non-reporting form,
in an amount approved by Lender, shall be required. The maximum deductible shall be $25,000.00.

          (i) When required by applicable law, ordinance or other regulation, Worker’s Compensation and
Employer’s Liability Insurance covering all persons subject to the worker’s compensation laws of
the state in which the Property is located. Additionally, if Borrower has direct employees, Hired
and Non-Owned Auto Insurance is required in an amount equal to $1,000,000 per occurrence. The
maximum deductible shall be $25,000.00.

          (j) In addition to the specific risk coverage required herein, general business income (loss
of rents) insurance in amounts sufficient to compensate Borrower for all Rents and Profits or
income during a period of not less than twelve (12) months. The “actual loss” amount of coverage
shall be adjusted annually to reflect the greater of (i) estimated Rents and Profits or income
payable during the succeeding twelve (12) month period or (ii) the projected operating expenses,
capital expenses and debt service for the Property as approved by Lender in its sole discretion.
Additionally, Lender, in its sole discretion, may require an “Extended Period of Indemnity”
endorsement for an additional six (6) months to allow for re-leasing of the Property. The maximum
deductible shall be $10,000.00.

          (k) Such other insurance on the Property or on any replacements or substitutions thereof or
additions thereto as may from time to time be required by Lender against other insurable hazards
or casualties which at the time are commonly insured against in the case of property similarly
situated including, without limitation, Sinkhole, Mine Subsidence and Environmental insurance, due
regard being given to the height and type of buildings, their construction, location, use and
occupancy.

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     All such insurance shall (i) be with insurers fully licensed and authorized to do business in
the state within which the Premises is located and who have and maintain a rating of at least (A)
A- or higher from Standard & Poors and (B) AV or higher from A.M. Best, (ii) contain the complete
address of the Premises (or a complete legal description), (iii) be for terms of at least one
year, with premium prepaid, and (iv) be subject to the approval of Lender as to insurance
companies, amounts, content, forms of policies, method by which premiums are paid and expiration
dates, and (v) include a standard, non-contributory, mortgagee clause naming EXACTLY:

Wachovia Bank, National Association,

its Successors and Assigns ATIMA

c/o Wachovia Bank, National Association, as Servicer

P.O. Box 563956

Charlotte, North Carolina 28256-3956

(A) as an additional insured under all liability insurance policies, (B) as the first
mortgagee on all property insurance policies and (C) as the loss payee on all loss of
rents or loss of business income insurance policies.

     Borrower shall, as of the date hereof, deliver to Lender evidence that said insurance
policies have been prepaid as required above and certified copies of such insurance policies and
original certificates of insurance signed by an authorized agent of the applicable insurance
companies evidencing such insurance satisfactory to Lender. Borrower shall renew all such
insurance and deliver to Lender an Accord 28 certificate for proof of commercial property
insurance and an Accord 25 certificate for proof of liability insurance, together with such other
certificates reasonably requested by Lender and policies evidencing such renewals at least thirty
(30) days before any such insurance shall expire. Borrower further agrees that each such insurance
policy: (i) shall provide for at least thirty (30) days’ prior written notice to Lender prior to
any policy reduction or cancellation for any reason other than non-payment of premium and at least
ten (10) days’ prior written notice to Lender prior to any cancellation due to non-payment of
premium; (ii) shall contain an endorsement or agreement by the insurer that any loss shall be
payable to Lender in accordance with the terms of such policy notwithstanding any act or
negligence of Borrower which might otherwise result in forfeiture of such insurance; (iii) shall
waive all rights of subrogation against Lender; and (iv) may be in the form of a blanket policy
provided that, in the event that any such coverage is provided in the form of a blanket policy,
Borrower hereby acknowledges and agrees that failure to pay any portion of the premium therefor
which is not allocable to the Property or by any other action not relating to the Property which
would otherwise permit the issuer thereof to cancel the coverage thereof, would require the
Property to be insured by a separate, single-property policy. The blanket policy must properly
identify and fully protect the Property as if a separate policy were issued for 100% of
Replacement Cost at the time of loss and otherwise meet all of Lender’s applicable insurance
requirements set forth in this Section 2.3. The delivery to Lender of the insurance
policies or the certificates of insurance as provided above shall constitute an assignment of all
proceeds payable under such insurance policies relating to the Property by Borrower to Lender as
further security for the Debt. In the event of foreclosure of this Deed of Trust, or other
transfer of title to the

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Property in extinguishment in whole or in part of the Debt, all right, title and interest of
Borrower in and to all proceeds payable under such policies then in force concerning the Property
shall thereupon vest in the purchaser at such foreclosure, or in Lender or other transferee in the
event of such other transfer of title. Approval of any insurance by Lender shall not be a
representation of the solvency of any insurer or the sufficiency of any amount of insurance. In the
event Borrower fails to provide, maintain, keep in force or deliver and furnish to Lender the
policies of insurance required by this Deed of Trust or evidence of their renewal as required
herein, Lender may, but shall not be obligated to, procure such insurance and Borrower shall pay
all amounts advanced by Lender therefor, together with interest thereon at the Default Interest
Rate from and after the date advanced by Lender until actually repaid by Borrower, promptly upon
demand by Lender. Any amounts so advanced by Lender, together with interest thereon, shall be
secured by this Deed of Trust and by all of the other Loan Documents securing all or any part of
the Debt. Lender shall not be responsible for nor incur any liability for the insolvency of the
insurer or other failure of the insurer to perform, even though Lender has caused the insurance to
be placed with the insurer after failure of Borrower to furnish such insurance. Borrower shall not
obtain insurance for the Property in addition to that required by Lender without the prior written
consent of Lender, which consent will not be unreasonably withheld provided that (i) Lender is a
named insured on such insurance, (ii) Lender receives complete copies of all policies evidencing
such insurance, and (iii) such insurance complies with all of the applicable requirements set forth
herein.

     2.4 Payment of Taxes. Borrower shall pay or cause to be paid, except to the extent
provision is actually made therefor pursuant to Section 3.3 of this Deed of Trust, all
taxes and assessments which are or may become a lien on the Property or which are assessed against
or imposed upon the Property. Borrower shall furnish Lender with receipts (or if receipts are not
immediately available, with copies of canceled checks evidencing payment with receipts to follow
promptly after they become available) showing payment of such taxes and assessments at least
fifteen (15) days prior to the applicable delinquency date therefor. Notwithstanding the
foregoing, Borrower may, in good faith, by appropriate proceedings and upon notice to Lender,
contest the validity, applicability or amount of any asserted tax or assessment so long as (a)
such contest is diligently pursued, (b) Lender determines, in its subjective opinion, that such
contest suspends the obligation to pay the tax and that nonpayment of such tax or assessment will
not result in the sale, loss, forfeiture or diminution of the Property or any part thereof or any
interest of Lender therein, and (c) prior to the earlier of the commencement of such contest or
the delinquency date of the asserted tax or assessment, Borrower deposits in the Impound Account
(as hereinafter defined) an amount determined by Lender to be adequate to cover the payment of
such tax or assessment and a reasonable additional sum to cover possible interest, costs and
penalties; provided, however, that Borrower shall promptly cause to be
paid any amount adjudged by a court of competent jurisdiction to be due, with all interest, costs
and penalties thereon, promptly after such judgment becomes final; and provided further
that in any event each such contest shall be concluded and the taxes, assessments, interest,
costs and penalties shall be paid prior to the date any writ or order is issued under which the
Property may be sold, lost or forfeited.

     2.5 Casualty and Condemnation. Borrower shall give Lender prompt written notice of
(i) the occurrence of any casualty affecting the Property or any portion thereof, (ii) the

16

 

institution of any proceedings for eminent domain or for the condemnation of the Property or any
portion thereof or (iii) any written notification threatening the institution of any proceedings
for eminent domain or for the condemnation of the Property or any portion thereof or any written
request to execute a deed in lieu of condemnation affecting the Property or any portion thereof.
All insurance proceeds on the Property, and all causes of action, claims, compensation, awards and
recoveries for any damage, condemnation or taking, or any deed in lieu of condemnation, affecting
all or any part of the Property or for any damage or injury to it for any loss or diminution in
value of the Property, are hereby assigned to and shall be paid to Lender. Lender may participate
in any suits or proceedings relating to any such proceeds, causes of action, claims, compensation,
awards or recoveries, and Lender is hereby authorized, in its own name or in Borrower’s name, to
adjust any loss covered by insurance or any condemnation claim or cause of action, and to settle or
compromise any claim or cause of action in connection therewith, and Borrower shall from time to
time deliver to Lender any instruments required to permit such participation; provided,
however, that, so long as no Event of Default has occurred, and no event has occurred or failed
to occur which with the passage of time, the giving of notice, or both would constitute an Event of
Default (a “Default”), Lender shall not have the right to participate in the adjustment of any loss
which is not in excess of the lesser of (i) five percent (5%) of the then outstanding principal
balance of the Note and (ii) $250,000. Lender shall apply any sums received by it under this
Section first to the payment of all of its costs and expenses (including, but not limited to,
reasonable legal fees and disbursements) incurred in obtaining those sums, and then, as follows:

          (a) In the event that (x) less than fifteen percent (15%), in the case of condemnation, or
thirty percent (30%), in the case of casualty, of the fair market value or net rentable square
footage of the Improvements located on the Premises have been taken or destroyed and (y) Leases
covering in the aggregate at least sixty-five percent (65%) of the total rentable space in the
Property which has been demised under executed and delivered Leases in effect as of the date of
the occurrence of such casualty or condemnation, whichever the case may be, shall remain in full
force and effect during and after the completion of the restoration without abatement of rent
beyond the time required for restoration, the debt service coverage ratio of the Debt as
determined by Lender for the period during which such restoration will occur, and taking into
account the proceeds of business interruption or similar insurance, is not less than 1.10:1.0,
then if and so long as:

          (1) no Default or Event of Default has occurred hereunder or under any of the other
Loan Documents, and

          (2) the Property can, in Lender’s reasonable judgment, with diligent restoration or
repair, be returned to a condition at least equal to the condition thereof that existed
prior to the casualty or partial taking causing the loss or damage within the earlier to
occur of (A) six (6) months after the initial receipt of any insurance proceeds or
condemnation awards by either Borrower or Lender but in any event prior to the expiration
or lapse of rent loss or general business income necessary to satisfy current obligations
of the Loan, and (B) six (6) months prior to the stated maturity date of the Note, and

17

 

          (3) all necessary governmental approvals can be obtained to allow the rebuilding and
reoccupancy of the Property as described in Section (a)(2) above, and

          (4) there are sufficient sums available (through insurance proceeds or condemnation
awards and contributions by Borrower, the full amount of which shall, at Lender’s option,
have been deposited with Lender) for such restoration or repair (including, without
limitation, for any costs and expenses of Lender to be incurred in administering said
restoration or repair) and for payment of principal and interest to become due and payable
under the Note during such restoration or repair, and

          (5) the economic feasibility of the Improvements after such restoration or repair
will be such that income from their operation is reasonably anticipated to be sufficient
to pay operating expenses of the Property and debt service on the Debt in full with the
same coverage ratio considered by Lender in its determination to make the loan secured
hereby, and

          (6) in the event that the insurance proceeds or condemnation awards received as a
result of such casualty or partial taking exceed the lesser of (i) five percent (5%) of
the then outstanding principal balance of the Note and (ii) $250,000, Borrower shall have
delivered to Lender, at Borrower’s sole cost and expense, an appraisal report in form and
substance satisfactory to Lender appraising the value of the Property as proposed to be
restored or repaired to be not less than the appraised value of the Property considered by
Lender in its determination to make the loan secured hereby, and

          (7) Borrower so elects by written notice delivered to Lender within five (5) days
after settlement of the aforesaid insurance or condemnation claim.

Lender shall, solely for the purposes of such restoration or repair, advance so much of the
remainder of such sums as may be required for such restoration or repair, and any funds
deposited by Borrower therefor, to Borrower in the manner and upon such terms and
conditions as would be required by a prudent interim construction lender, including, but
not limited to, the prior approval by Lender of plans and specifications, contractors and
form of construction contracts and the furnishing to Lender of permits, bonds, lien
waivers, invoices, receipts and affidavits from contractors and subcontractors, in form and
substance satisfactory to Lender in its discretion, with any remainder being applied by
Lender for payment of the Debt in whatever order Lender directs in its absolute sole
discretion, or at the discretion of Lender, the same may be paid, either in whole or in
part, to, or for the benefit of, Borrower for such purposes as Lender shall designate in
its discretion.

          (b) In all other cases, namely, in the event that (w) more than fifteen percent (15%), in the
case of condemnation, or thirty percent (30%), in the case of casualty, of the fair market value
or net rentable square footage of the Improvements located on the Premises have been taken or
destroyed, (x) Leases covering in the aggregate at least sixty-five percent (65%) of the total
rentable space in the Property which has been demised under executed and delivered Leases in
effect as of the date of the occurrence of such casualty or condemnation, whichever the

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case may be, will not remain in full force and effect during and after the completion of the
restoration without abatement of rent beyond the time required for restoration, (y) the debt
service coverage ratio of the Debt as determined by Lender for the period during which such
restoration will occur is less than 1.10:1.0, or (z) Borrower does not elect to restore or repair
the Property pursuant to clause (a) above or otherwise fails to meet the requirements of
clause (a) above, then, in any of such events, Lender shall elect, in Lender’s absolute
discretion and without regard to the adequacy of Lender’s security to do either of the following:
(1) accelerate the maturity date of the Note and declare any and all of the Debt to be immediately
due and payable and apply the remainder of such sums received pursuant to this Section to the
payment of the Debt in whatever order Lender directs in its absolute discretion, with any remainder
being paid to Borrower, or (2) notwithstanding that Borrower may have elected not to restore or
repair the Property pursuant to the provisions of Section 2.5(a)(7) above, so long as the
proceeds of any such award with respect to any casualty or condemnation are made available to the
Borrower for restoration, require Borrower to restore or repair the Property in the manner and upon
such terms and conditions as would be required by a prudent interim construction lender, including,
but not limited to, the deposit by Borrower with Lender, within thirty (30) days after demand
therefor, of any deficiency reasonably determined by Lender to be necessary in order to assure the
availability of sufficient funds to pay for such restoration or repair, including Lender’s costs
and expenses to be incurred in connection therewith, the prior approval by Lender of plans and
specifications, contractors and form of construction contracts and the furnishing to Lender of
permits, bonds, lien waivers, invoices, receipts and affidavits from contractors and
subcontractors, in form and substance satisfactory to Lender in its discretion, and apply the
remainder of such sums toward such restoration and repair, with any balance thereafter remaining
being applied by Lender for payment of the Debt in whatever order Lender directs in its absolute
sole discretion, or at the discretion of Lender, the same may be paid, either in whole or in part,
to, or for the benefit of, Borrower for such purposes as Lender shall designate in its discretion.

Any reduction in the Debt resulting from Lender’s application of any sums received by it hereunder
shall take effect only when Lender actually receives such sums and elects to apply such sums to the
Debt and, in any event, the unpaid portion of the Debt shall remain in full force and effect and
Borrower shall not be excused in the payment thereof. Partial payments received by Lender, as
described in the preceding sentence, shall be applied first to the final payment due under the Note
and thereafter to installments due under the Note in the inverse order of their due date. If
Borrower elects or Lender directs Borrower to restore or repair the Property after the occurrence
of a casualty or partial taking of the Property as provided above, Borrower shall promptly and
diligently, at Borrower’s sole cost and expense and regardless of whether the insurance proceeds or
condemnation award, as appropriate, shall be sufficient for the purpose, restore, repair, replace
and rebuild the Property as nearly as possible to its value, condition and character immediately
prior to such casualty or partial taking in accordance with the foregoing provisions and Borrower
shall pay to Lender all costs and expenses of Lender incurred in administering said rebuilding,
restoration or repair, provided that Lender makes such proceeds or award available for such
purpose. Borrower agrees to execute and deliver from time to time such further instruments as may
be requested by Lender to confirm the foregoing assignment to Lender of any award, damage,
insurance proceeds, payment or other compensation. Lender is hereby irrevocably constituted and
appointed the attorney-in-fact of Borrower (which power of

19

 

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

     2.6 Construction Liens. Borrower shall pay when due all claims and demands of
mechanics, materialmen, laborers and others for any work performed or materials delivered for the
Premises or the Improvements; provided, however, that, Borrower shall have the
right to contest in good faith any such claim or demand, so long as it does so diligently, by
appropriate proceedings and without prejudice to Lender and provided that neither the Property nor
any interest therein would be in any danger of sale, loss or forfeiture as a result of such
proceeding or contest. In the event Borrower shall contest any such claim or demand, Borrower shall
promptly notify Lender of such contest and thereafter shall, upon Lender’s request, promptly
provide a bond, cash deposit or other security satisfactory to Lender to protect Lender’s interest
and security should the contest be unsuccessful. If Borrower shall fail to immediately discharge or
provide security against any such claim or demand as aforesaid, Lender may do so and any and all
expenses incurred by Lender, together with interest thereon at the Default Interest Rate from the
date incurred by Lender until actually paid by Borrower, shall be immediately paid by Borrower on
demand and shall be secured by this Deed of Trust and by all of the other Loan Documents securing
all or any part of the Debt.

     2.7 Rents and Profits, As additional and collateral security for the payment of the
Debt and cumulative of any and all rights and remedies herein provided for, Borrower hereby
absolutely and presently assigns to Lender all existing and future Rents and Profits. Borrower
hereby grants to Lender the sole, exclusive and immediate right, without taking possession of the
Property, to demand, collect (by suit or otherwise), receive and give valid and sufficient
receipts for any and all of said Rents and Profits, for which purpose Borrower does hereby
irrevocably make, constitute and appoint Lender its attorney-in-fact with full power to appoint
substitutes or a trustee to accomplish such purpose (which power of attorney shall be irrevocable
so long as any portion of the Debt is outstanding, shall be deemed to be coupled with an interest,
shall survive the voluntary or involuntary dissolution of Borrower and shall not be affected by
any disability or incapacity suffered by Borrower subsequent to the date hereof). Lender shall be
without liability for any loss which may arise from a failure or inability to collect Rents and
Profits, proceeds or other payments. However, until the occurrence of an Event of Default under
this Deed of Trust or under any other of the Loan Documents, Borrower shall have a license to
collect, receive, use and enjoy the Rents and Profits when due and prepayments thereof.
Prepayments of rent paid more than one (1) month in advance may be used and enjoyed by Borrower
subject to the terms hereof as and when such rents actually become due and payable under the
associated Lease. Upon the occurrence of an Event of Default, Borrower’s license shall
automatically terminate without notice to Borrower and Lender may thereafter, without taking
possession of the Property, collect the Rents and Profits itself or by an agent or receiver. From
and after the termination of such license, Borrower shall be the agent of Lender in collection of
the Rents and Profits, and all of the Rents and Profits so collected by Borrower shall

20

 

be held in trust by Borrower for the sole and exclusive benefit of Lender, and Borrower shall,
within one (1) business day after receipt of any Rents and Profits, pay the same to Lender to be
applied by Lender as hereinafter set forth. Neither the demand for or collection of Rents and
Profits by Lender shall constitute any assumption by Lender of any obligations under any agreement
relating thereto. Lender is obligated to account only for such Rents and Profits as are actually
collected or received by Lender. Borrower irrevocably agrees and consents that the respective
payors of the Rents and Profits shall, upon demand and notice from Lender of an Event of Default,
pay said Rents and Profits to Lender without liability to determine the actual existence of any
Event of Default claimed by Lender. Borrower hereby waives any right, claim or demand which
Borrower may now or hereafter have against any such payor by reason of such payment of Rents and
Profits to Lender, and any such payment shall discharge such payor’s obligation to make such
payment to Borrower. All Rents collected or received by Lender may be applied against all expenses
of collection, including, without limitation, reasonable attorneys’ fees, against costs of
operation and management of the Property and against the Debt, in whatever order or priority as to
any of the items so mentioned as Lender directs in its sole subjective discretion and without
regard to the adequacy of its security. Neither the exercise by Lender of any rights under this
Section nor the application of any Rents to the Debt shall cure or be deemed a waiver of any Event
of Default. The assignment of Rents and Profits hereinabove granted shall continue in full force
and effect during any period of foreclosure or redemption with respect to the Property. Borrower
has executed an Assignment of Leases and Rents dated of even date herewith (the “Lease
Assignment”) in favor of Lender covering all of the right, title and interest of Borrower, as
landlord, lessor or licensor, in and to any Leases. All rights and remedies granted to Lender
under the Lease Assignment shall be in addition to and cumulative of all rights and remedies
granted to Lender hereunder.

     2.8 Leases.

          (a) Prior to execution of any Leases of space in the Improvements after the date hereof,
Borrower shall submit to Lender, for Lender’s prior approval, which approval shall not be
unreasonably withheld, a copy of the form Lease Borrower plans to use in leasing space in the
Improvements or at the Property. All such Leases of space in the Improvements or at the Property
shall be on terms consistent with the terms for similar leases in the market area of the Premises,
shall provide for free rent only if the same is consistent with prevailing market conditions,
shall provide for market rents then prevailing in the market area of the Premises and
substantially all of the Leases at the Property shall be for a term of not less than six (6)
months or greater than one (1) year. Such Leases may also provide for security deposits in
reasonable amounts consistent with prevailing market conditions. Borrower shall also submit to
Lender for Lender’s approval, which approval shall not be unreasonably withheld, prior to the
execution thereof, any proposed Lease of the Improvements or any portion thereof that differs
materially and adversely from the aforementioned form Lease. Borrower shall not execute any Lease
for all or a substantial portion of the Property, except for an actual occupancy by the Tenant,
lessee or licensee thereunder, and shall at all times promptly and faithfully perform, or cause to
be performed, all of the covenants, conditions and agreements contained in all Leases with respect
to the Property, now or hereafter existing, on the part of the landlord, lessor or licensor
thereunder to be kept and performed. Borrower shall furnish to Lender, within ten (10) days after
a request by Lender to do so, but in any event by January 1 of each year, a current Rent

21

 

Roll, certified by Borrower as being
true and correct, containing the names of all Tenants with
respect to the Property, the terms of their respective Leases, the spaces occupied and the
rentals or fees payable thereunder and the amount of each Tenant’s security deposit, if any. Upon
the request of Lender, Borrower shall deliver to Lender a copy of each such Lease. Borrower shall
not do or suffer to be done any act, or omit to take any action, that might result in a default by
the landlord, lessor or licensor under any such Lease or allow the Tenant thereunder to withhold
payment of rent or cancel or terminate same and shall not further assign any such Lease or any
such Rents and Profits. Borrower, at no cost or expense to Lender, shall enforce, short of
termination, the performance and observance of each and every condition and covenant of each of
the parties under such Leases and Borrower shall not anticipate, discount, release, waive,
compromise or otherwise discharge any rent payable under any of the Leases except to the extent
consistent with prudent collection practices. Notwithstanding the foregoing, at any time and from
time to time, Lender shall be entitled to, and Borrower hereby grants to Lender the right to,
undertake any and all action as may be required (in the sole discretion of Lender) to cure any
default, or event which with the passage of time following any notice and cure period shall
constitute a default by Borrower, under such Leases. Borrower shall not, without the prior written
consent of Lender, modify any of the Leases, terminate or accept the surrender of any Leases,
waive or release any other party from the performance or observance of any obligation or condition
under such Leases except in the normal course of business in a manner which is consistent with
sound and customary leasing and management practices for similar properties in the community in
which the Property is located. Borrower represents, warrants and covenants that no Rents have been
anticipated, discounted, released, waived, compromised or otherwise discharged, except for
prepayment of rent of not more than one (1) month prior to the accrual thereof, except for
prepayments for up to thirty percent (30%) of the Leases at the Property consistent with sound and
customary leasing practices for similar properties in the community in which the Property is
located.

          (b) Upon the occurrence of an Event of Default under this Deed of Trust, whether before or
after the whole principal sum secured hereby is declared to be immediately due or whether before
or after the institution of legal proceedings to foreclose this Deed of Trust, forthwith, upon
demand of Lender, Borrower shall surrender to Lender, and Lender shall be entitled to take actual
possession of, the Property or any part thereof personally, or by its agent or attorneys. In such
event, Lender shall have, and Borrower hereby gives and grants to Lender, the right, power and
authority to make and enter into Leases with respect to the Property or portions thereof for such
rents and for such periods of occupancy and upon conditions and provisions as Lender may deem
desirable in its sole discretion, and Borrower expressly acknowledges and agrees that the term of
any such Lease may extend beyond the date of any foreclosure sale of the Property, it being the
intention of Borrower that in such event Lender shall be deemed to be and shall be the
attorney-in-fact of Borrower for the purpose of making and entering into Leases of parts or
portions of the Property for the rents and upon the terms, conditions and provisions deemed
desirable to Lender in its sole discretion and with like effect as if such Leases had been made by
Borrower as the owner in fee simple of the Property free and clear of any conditions or
limitations established by this Deed of Trust. The power and authority hereby given and granted by
Borrower to Lender shall be deemed to be coupled with an interest, shall not be revocable by
Borrower so long as any portion of the Debt is outstanding, shall survive the voluntary or
involuntary dissolution of Borrower and shall not be affected by any disability or incapacity

22

 

suffered by Borrower subsequent to the date hereof. In connection with any action taken by Lender
pursuant to this Section, Lender shall not be liable for any loss sustained by Borrower resulting
from any failure to let the Property, or any part thereof, or from any other act or omission of
Lender in managing the Property, nor shall Lender be obligated to perform or discharge any
obligation, duty or liability under any Lease covering the Property or any part thereof or under or
by reason of this instrument or the exercise of rights or remedies hereunder. Borrower shall, and
does hereby, indemnify Lender for, and hold Lender harmless from, any and all claims, actions,
demands, liabilities, loss or damage which may or might be incurred by Lender under any such Lease
or under this Deed of Trust or by the exercise of rights or remedies hereunder and from any and all
claims and demands whatsoever which may be asserted against Lender by reason of any alleged
obligations or undertakings on its part to perform or discharge any of the terms, covenants or
agreements contained in any such Lease other than those finally determined by a court of competent
jurisdiction to have resulted solely from the gross negligence or willful misconduct of Lender.
Should Lender incur any such liability, the amount thereof, including, without limitation, costs,
expenses and reasonable attorneys’ fees, together with interest thereon at the Default Interest
Rate from the date incurred by Lender until actually paid by Borrower, shall be immediately due and
payable to Lender by Borrower on demand and shall be secured hereby and by all of the other Loan
Documents securing all or any part of the Debt. Nothing in this Section shall impose on Lender any
duty, obligation or responsibility for the control, care, management or repair of the Property, or
for the carrying out of any of the terms and conditions of any such Lease, nor shall it operate to
make Lender responsible or liable for any waste committed on the Property by the Tenants or by any
other parties or for any dangerous or defective condition of the Property, or for any negligence in
the management, upkeep, repair or control of the Property. Borrower hereby assents to, ratifies and
confirms any and all actions of Lender with respect to the Property taken under this Section.

     2.9 Alienation and Further Encumbrances.

          (a) Borrower acknowledges that Lender has relied upon the principals of Borrower and their
experience in owning and operating the Property and properties similar to the Property in
connection with the closing of the loan evidenced by the Note. Accordingly, except as specifically
allowed hereinbelow in this Section and notwithstanding anything to the contrary contained in
Section 6.6 hereof, in the event that the Property or any part thereof or direct or
indirect interest therein or direct or indirect interest in Borrower shall be sold, conveyed,
disposed of, alienated, hypothecated, leased (except to Tenants of space in the Improvements in
accordance with the provisions of Section 2.8 hereof), assigned, pledged, mortgaged,
further encumbered or otherwise transferred or Borrower shall be divested of its title to the
Property or any direct or indirect interest therein, in any manner or way, whether voluntarily or
involuntarily (each, a “Transfer”), without the prior written consent of Lender being first
obtained, which consent may be withheld in Lender’s sole discretion, then the same shall
constitute an Event of Default and Lender shall have the right, at its option, to declare any or
all of the Debt, irrespective of the maturity date specified in the Note, immediately due and
payable and to otherwise exercise any of its other rights and remedies contained in Article
V hereof.

          (b) A Transfer within the meaning of this Section 2.9 shall be deemed to include,
among other things: (i) an installment sales agreement wherein Borrower agrees to sell

23

 

the Property or any part thereof for a price to be paid in installments; and (ii) an agreement by
Borrower leasing all or a substantial part of the Property for other than actual occupancy by a
space tenant thereunder or a sale, assignment or other transfer of, or the grant of a security
interest in, Borrower’s right, title and interest in and to any Leases or any Rents and Profits.

          (c) Notwithstanding the foregoing, the following Transfers shall be permitted under this
Section 2.9 without the prior consent of Lender: (i) a Transfer of corporate stock,
partnership interests (other than the general partner’s direct interests in Borrower owned by any
SPE Equity Owner) and/or membership interests (other than the managing member’s direct interests in
Borrower owned by any SPE Equity Owner) in Borrower, or in any partner or member of Borrower, or
any direct or indirect legal or beneficial owner of Borrower, so long as following such Transfer
(whether in one or a series of transactions) or, with respect to any creation or issuance of new
limited partnership interests or membership interests, not more than 49% of the beneficial economic
interest in Borrower (whether directly or indirectly) has been transferred in the aggregate and
there is no Change of Control and the persons responsible for the day to day management of the
Property and Borrower remain unchanged following such Transfer, (ii) any involuntary Transfer
caused by the death of Borrower, or any partner, shareholder, joint venturer, member or beneficial
owner of a trust, or any direct or indirect legal or beneficial owner of Borrower, so long as
Borrower is promptly reconstituted, if required, following such death and so long as there is no
Change of Control and those persons responsible for the day to day management of the Property and
Borrower remain unchanged as a result of such death or any replacement management or controlling
parties are approved by Lender, (iii) a Transfer comprised of gifts for estate planning purposes of
any individual’s interests in Borrower, or in any of Borrower’s partners, members, shareholders,
beneficial owners of a trust or joint venturers, or any direct or indirect legal or beneficial
owner of Borrower, to the spouse or any lineal descendant of such individual, or to a trust for the
benefit of any one or more of such individual, spouse or lineal descendant, so long as Borrower is
reconstituted promptly, if required, following such gift and so long as there is no Change of
Control and those persons responsible for the day to day management of the Property and Borrower
remain unchanged following such gift and (iv) the contribution by Madiera Group, LLC, a North
Carolina limited liability company (“Madiera”) and TXG, LLC, a South Carolina limited liability
company (“TXG”) of their respective membership interests in Campus Crest Group, LLC, a North
Carolina limited liability company (“Campus Crest”), to MXT Capital, LLC, a North Carolina limited
liability company (“MXT”), in exchange for the issuance by MXT of all of its membership interests
to Madiera and TXG, and so long as there is no Change of Control and those persons responsible for
the day-to-day management of the Property and Borrower remain unchanged following such contribution
and issuance of the membership interests of MXT. Notwithstanding any provision of this Deed of
Trust to the contrary, no person or entity may become an owner of a direct or indirect interest in
Borrower, which interest exceeds forty-nine percent (49%), without Lender’s prior written consent
unless Borrower has complied with the provisions set forth in Section 2.9(d) below. For
purposes of this Section 2.9(c), “Change of Control” shall mean a change in the identity of
the individual or entities or group of individuals or entities who have the right, by virtue of any
partnership agreement, articles of incorporation, by-laws, articles of organization, operating
agreement or any other agreement, with or without taking any formative action, to cause Borrower to
take some action or to prevent, restrict or

24

 

impede Borrower from taking some action which, in either case, Borrower could take or could refrain
from taking were it not for the rights of such individuals.

          (d) Notwithstanding the foregoing provisions of this Section, Lender shall consent to (x) one
or more Transfers of the Property in its entirety, or (y) one or more Transfers of direct or
indirect interests in the Borrower for which consent is required under this Section 2.9
(any such hereinafter, a “Sale”) to any person or entity provided that, for each Sale,
each of the following terms and conditions are satisfied:

          (1) No Default and no Event of Default is then continuing hereunder or under any of the
other Loan Documents;

          (2) Borrower gives Lender written notice of the terms of such prospective Sale not less
than sixty (60) days before the date on which such Sale is scheduled to close and,
concurrently therewith, gives Lender all such information concerning the proposed transferee
of the Property or the proposed owner of the direct or indirect interest in the Borrower for
which consent is required under this Section 2.9, as applicable (hereinafter,
“Buyer”) as Lender would require in evaluating an initial extension of credit to a borrower
(it being acknowledged and agreed that (x) such information required to be delivered with
respect to the related Buyer shall not be materially more extensive than the corresponding
information provided by the initial Borrower and initial Indemnitor and (y) the initial
Borrower and initial Indemnitor shall not be required to deliver any additional information
with respect to such initial Borrower, Indemnitor or their respective members or partners
which are not then currently required to be delivered by the initial Borrower and initial
Indemnitor pursuant to the terms hereof or of any other Loan Document), including, without
limitation, information evidencing the Buyer’s compliance with the provisions of Section
2.30 and Section 2.31 hereof and pays to Lender a non-refundable application fee
in the amount of $5,000. Lender shall have the right to approve or disapprove the proposed
Buyer. In determining whether to give or withhold its approval of the proposed Buyer, Lender
shall consider the Buyer’s experience and track record in owning and operating facilities
similar to the Property, the Buyer’s financial strength, the Buyer’s general business
standing and the Buyer’s relationships and experience with contractors, vendors, tenants,
lenders and other business entities; provided, however, that, notwithstanding
Lender’s agreement to consider the foregoing factors in determining whether to give or
withhold such approval, such approval shall be given or withheld based on what Lender
determines to be commercially reasonable in Lender’s sole discretion and, if given, may be
given subject to such conditions as Lender may deem appropriate; provided, further, however,
notwithstanding the foregoing, Lender shall evaluate the proposed Buyer and any replacement
Indemnitor pursuant to this clause (d) as if it were evaluating an initial extension of
credit to a borrower pursuant to permanent market underwriting standards and without regard
to the financial or other condition of the Borrower or any current Indemnitor and without
regard to the impact on the trust which owns the Loan in connection with any Secondary Market
Transaction or any class of Securities issued thereunder;

25

 

          (3) Borrower pays Lender, concurrently with the closing of such Sale, a non-refundable
assumption fee in an amount equal to all out-of-pocket costs and expenses, including, without
limitation, reasonable attorneys’ fees and Rating Agency fees, incurred by Lender in connection
with the Sale, plus an amount equal to one percent (1.0%) of the then outstanding principal
balance of the Note;

          (4) In the event that such Sale is a Transfer of the Property in its entirety, the Buyer
assumes and agrees to pay the Debt subject to the provisions of Section 6.27 hereof and, in
all cases (whether such Sale is a Transfer of the Property in its entirety or a Transfer of direct
or indirect interests in the Borrower for which consent is required under this Section
2.9), prior to or concurrently with the closing of such Sale, the Buyer executes, without any
cost or expense to Lender, such documents and agreements as Lender shall reasonably require to
evidence and effectuate said assumption and delivers such legal opinions (including, without
limitation, a REMIC opinion) as Lender may require;

          (5) A party associated with the Buyer approved by Lender in its sole discretion assumes the
obligations of the current Indemnitor under its guaranty or indemnity agreement and environmental
indemnity agreement and such party associated with the Buyer executes, without any cost or expense
to Lender, a substitution agreement or a new guaranty or indemnity agreement or environmental
indemnity agreement in form and substance satisfactory to Lender and delivers such legal opinions
as Lender may require; provided, however, in connection with an assumption of the Loan, (x) the
Buyer shall not be required to post any additional collateral with Lender or deposit any
additional reserves with Lender beyond that in effect immediately prior to the related assumption
and (y) the party associated with the Buyer which enters into such substitution agreement or new
guaranty or indemnity agreement or environmental indemnity shall not be required to maintain
evidence of credit worthiness greater than that required by permanent market underwriting
standards;

          (6) Borrower and the Buyer execute, without any cost or expense to Lender, new financing
statements or financing statement amendments (and new financing statements as may be necessary)
and any additional documents reasonably requested by Lender;

          (7) Borrower delivers to Lender, without any cost or expense to Lender, such replacement
policy or endorsements to Lender’s title insurance policy, hazard insurance policy endorsements
or certificates and other similar materials as Lender may deem necessary at the time of the Sale,
all in form and substance satisfactory to Lender, including, without limitation, a replacement
policy or an endorsement or endorsements to Lender’s title insurance policy insuring the lien of
this Deed of Trust, extending the effective date of such policy to the date of execution and
delivery (or, if later, of recording) of the assumption agreement referenced above in
subparagraph (4) of this Section, with no additional exceptions added to such policy, and, in the
event that such Sale is a Transfer of the Property in its entirety, insuring that fee simple
title to the Property is vested in the Buyer;

26

 

          (8) Borrower and any current Indemnitor execute and deliver to Lender, without any cost or
expense to Lender, a release of Lender, its officers, directors, employees and agents, from all
claims and liability relating to the transactions evidenced by the Loan Documents, through and
including the date of the closing of the Sale, which agreement shall be in form and substance
satisfactory to Lender and shall be binding upon the Buyer and any new Indemnitor;

          (9) Subject to the provisions of Section 6.27 hereof, such Sale is not construed so
as to relieve Borrower of any personal liability under the Note or any of the other Loan Documents
for any acts or events occurring or obligations arising prior to or simultaneously with the
closing of such Sale, whether or not same is discovered prior or subsequent to the closing of such
Sale, and Borrower executes, without any cost or expense to Lender, such documents and agreements
as Lender shall reasonably require to evidence and effectuate the ratification of said personal
liability. In the event that such Transfer is a Sale of the Property in its entirety, Borrower
shall be released from and relieved of any personal liability under the Note or any of the other
Loan Documents for any acts or events occurring or obligations arising after the closing of such
Sale which are not caused by or arising out of any acts or events occurring or obligations arising
prior to or simultaneously with the closing of such Sale;

          (10) Such Sale is not construed so as to relieve any current Indemnitor of its obligations
under any guaranty or indemnity agreement for any acts or events occurring or obligations arising
prior to or simultaneously with the closing of such Sale, and each such current Indemnitor
executes, without any cost or expense to Lender, such documents and agreements as Lender shall
reasonably require to evidence and effectuate the ratification of each such guaranty and indemnity
agreement. In the event that such Transfer is a Sale of the Property in its entirety, each such
current Indemnitor shall be released from and relieved of any of its obligations under any
guaranty or indemnity agreement executed in connection with the loan secured hereby for any acts
or events occurring or obligations arising after the closing of such Sale which are not caused by
or arising out of any acts or events occurring or obligations arising prior to or simultaneously
with the closing of such Sale;

          (11) The Buyer shall furnish, if the Buyer is a corporation, partnership or other entity, all
appropriate papers evidencing the Buyer’s capacity and good standing, and the qualification of the
signers to execute the assumption of the Debt, which papers shall include certified copies of all
documents relating to the organization and formation of the Buyer and of the entities, if any,
which are partners of the Buyer. In the event that such Sale is a Transfer of the Property in its
entirety, the Buyer shall be a Single Purpose Entity whose formation documents shall be approved
by counsel to Lender, and who shall comply with the requirements set forth in Section 2.29
hereof;

          (12) Borrower delivers to Lender confirmation in
writing (a “No-Downgrade Confirmation”)
from each Rating Agency that such Sale will not result in a qualification, downgrade or
withdrawal of any ratings issued in connection with any

27

 

Secondary Market Transaction (as hereinafter defined) or, in the event the Secondary Market
Transaction has not yet occurred, Lender shall, in its sole discretion, have approved the
Sale; and

          (13) The applicable transfer will not result in an increase in the real property
taxes for the Premises and Improvements that would cause the debt service coverage ratio
of the Debt with respect to the immediately succeeding twelve (12) month period to be less
than the debt service coverage ratio of the Debt for the twelve (12) month period
immediately preceding such transfer, in each case as determined by Lender.

     2.10 Payment of Utilities, Assessments, Charges, Etc. Borrower shall pay when due all
utility charges which are incurred by Borrower or which may become a charge or lien against any
portion of the Property for gas, electricity, water and sewer services furnished to the Premises
and/or the Improvements and all other assessments or charges of a similar nature, or assessments
payable pursuant to any restrictive covenants, whether public or private, affecting the Premises
and/or the Improvements or any portion thereof, whether or not such assessments or charges are or
may become liens thereon.

     2.11 Access Privileges and Inspections. Lender and the agents, representatives and
employees of Lender shall, subject to the rights of Tenants, have full and free access to the
Premises and the Improvements and any other location where books and records concerning the
Property are kept at all reasonable times and, except in the event of an emergency, upon not less
than 24 hours prior notice (which notice may be telephonic) for the purposes of inspecting the
Property and of examining, copying and making extracts from the books and records of Borrower
relating to the Property. Borrower shall lend assistance to all such agents, representatives and
employees of Lender.

     2.12 Waste; Alteration of Improvements. Borrower shall not commit, suffer or permit
any waste on the Property nor take any actions that might invalidate any insurance carried on the
Property. Borrower shall maintain the Property in good condition and repair. No part of the
Improvements may be removed, demolished or materially altered, without the prior written consent
of Lender other than in connection with non-structural day to day maintenance and except for
tenant improvements under Leases. Without the prior written consent of Lender, Borrower shall not
commence construction of any improvements on the Premises other than improvements required for the
maintenance or repair of the Property. Lender reserves the right to condition its consent to any
material alteration, removal, demolition or new construction on the following: (i) such conditions
as would be required by a prudent interim construction lender, including, but not limited to, the
prior approval by Lender of plans and specifications, construction budgets, contractors and form
of construction contracts and the furnishing to Lender of evidence regarding funds, permits,
approvals, bonds, insurance, lien waivers, title endorsements, appraisals, surveys, certificates
of occupancy, certificates regarding completion, invoices, receipts and affidavits from
contractors and subcontractors, in form and substance satisfactory to Lender in its discretion,
(ii) the delivery of an opinion from counsel satisfactory to Lender in its discretion and in form
and substance satisfactory to Lender in its discretion opining as to such matters as Lender may
reasonably require, including, without limitation, an opinion that such alteration, removal,
demolition or new construction will not have an adverse effect on

28

 

the status of any trust formed in connection with a Secondary Market Transaction a “real estate
mortgage investment conduit” within the meaning of Section 860D of the Code (“REMIC”), and (iii)
Borrower’s agreement to pay all fees, costs and expenses incurred by Lender in granting such
consent, including, without limitation, reasonable attorneys’ fees and expenses.

     2.13 Zoning. Without the prior written consent of Lender, Borrower shall not seek,
make, suffer, consent to or acquiesce in any change in the zoning or conditions of use of the
Premises or the Improvements. Borrower shall comply with and make all payments required under the
provisions of any covenants, conditions or restrictions affecting the Premises or the
Improvements. Borrower shall comply with all existing and future requirements of all governmental
authorities having jurisdiction over the Property. Borrower shall keep all licenses, permits,
franchises and other approvals necessary for the operation of the Property in full force and
effect. Borrower shall operate the Property as a student housing complex for so long as the Debt
is outstanding. If, under applicable zoning provisions, the use of all or any part of the Premises
or the Improvements is or becomes a nonconforming use, Borrower shall not cause or permit such use
to be discontinued or abandoned without the prior written consent of Lender. Further, without
Lender’s prior written consent, Borrower shall not file or subject any part of the Premises or the
Improvements to any declaration of condominium or co-operative or convert any part of the Premises
or the Improvements to a condominium, co-operative or other form of multiple ownership and
governance.

     2.14 Financial Statements and Books and Records. Borrower shall keep accurate books
and records of account of the Property and its own financial affairs sufficient to permit the
preparation of financial statements therefrom in accordance with generally accepted accounting
principles. Lender and its duly authorized representatives shall have the right to examine, copy
and audit Borrower’s records and books of account at all reasonable times. So long as this Deed of
Trust continues in effect, Borrower shall provide to Lender, in addition to any other financial
statements required hereunder or under any of the other Loan Documents, the following financial
statements and information, all of which must be certified to Lender as being true and correct by
Borrower or the person or entity to which they pertain, as applicable, and be in form and
substance acceptable to Lender:

          (a) copies of all tax returns filed by Borrower, within thirty (30) days after the date of
filing;

          (b) monthly operating statements for the Property, within twenty (20) days after the end of
each of the first (1st) twelve (12) calendar months following the date hereof;

          (c) quarterly operating statements for the Property and a Rent Roll, within thirty (30) days
after the end of each March, June, September and December commencing with the first (1st) of such
months to occur following the first (1st) anniversary of the date hereof;

          (d) annual balance sheets for the Property and annual financial statements for Borrower, and
each Indemnitor, within ninety (90) days after the end of each calendar year;

29

 

          (e) such other information with respect to the Property, Borrower, the principals or general
partners in Borrower, and each Indemnitor, which may be reasonably requested from time to time by
Lender, within a reasonable time after the applicable request; and

          (f) If, at the time one or more Disclosure Documents (as defined below) are being prepared for a
securitization, Lender expects that Borrower alone or Borrower and one or more affiliates of
Borrower collectively, or the Property alone or the Property and any other parcel(s) of real
property, together with improvements thereon and personal property related thereto, that is
“related”, within the meaning of the definition of Significant Obligor, to the Property (a “Related
Property”) collectively, will be a Significant Obligor, Borrower shall furnish to Lender upon
request (i) the selected financial data or, if applicable, net operating income, required under
Item 1112(b)(1) of Regulation AB and meeting the requirements thereof, if Lender expects that the
principal amount of the Loan, together with any loans made to an affiliate of Borrower or secured
by a Related Property that is included in a securitization with the Loan (a “Related Loan”), as of
the cut-off date for such securitization may, or if the principal amount of the Loan together with
any Related Loans as of the cut-off date for such securitization and at any time during which the
Loan and any Related Loans are included in a securitization does, equal or exceed ten percent (10%)
(but less than twenty percent (20%)) of the aggregate principal amount of all mortgage loans
included or expected to be included, as applicable, in the securitization or (ii) the financial
statements required under Item 1112(b)(2) of Regulation AB and meeting the requirements thereof, if
Lender expects that the principal amount of the Loan together with any Related Loans as of the
cut-off date for such securitization may, or if the principal amount of the Loan together with any
Related Loans as of the cut-off date for such securitization and at any time during which the Loan
and any Related Loans are included in a securitization does, equal or exceed twenty percent (20%)
of the aggregate principal amount of all mortgage loans included or expected to be included, as
applicable, in the securitization. Such financial data or financial statements shall be furnished
to Lender (A) within ten (10) Business Days after notice from Lender in connection with the
preparation of Disclosure Documents for the securitization, (B) not later than thirty (30) days
after the end of each fiscal quarter of Borrower and (C) not later than seventy-five (75) days
after the end of each fiscal year of Borrower; provided, however, that Borrower shall not be
obligated to furnish financial data or financial statements pursuant to clauses (B) or (C) of this
sentence with respect to any period for which a filing pursuant to the Securities Exchange Act of
1934 in connection with or relating to the securitization (an “Exchange Act Filing”) is not
required. As used herein, “Regulation AB” shall mean Regulation AB under the Securities Act of 1933
and the Securities Exchange Act of 1934 (as amended). As used herein, “Disclosure Document” shall
mean a prospectus, prospectus supplement, private placement memorandum, or similar offering
memorandum or offering circular, in each case in preliminary or final form, used to offer
securities in connection with a securitization. As used herein, “Significant Obligor” shall have
the meaning set forth in Item 1101 (k) of Regulation AB.

If any of the aforementioned materials are not furnished to Lender within the applicable time
periods, are not prepared in accordance with generally accepted accounting principles or Lender is
dissatisfied with the form of any of the foregoing and has notified Borrower of its
dissatisfaction, in addition to any other rights and remedies of Lender contained herein and
provided Lender has given Borrower at least ten (10) days notice of such failure and opportunity

30

 

 to cure, (i) Borrower shall pay to Lender upon demand, at Lender’s option and in its sole
discretion, an amount equal to $2,500 per reporting period, and (ii) Lender shall have the right,
but not the obligation, to obtain the same by means of an audit by an independent certified public
accountant selected by Lender, in which event Borrower agrees to pay, or to reimburse Lender for,
any expense of such audit and further agrees to provide all necessary information to said
accountant and to otherwise cooperate in the making of such audit.

     2.15 Further Assurances. Borrower shall, on the request of Lender and at the expense
of Borrower: (a) promptly correct any defect, error or omission which may be discovered in the
contents of this Peed of Trust or in the contents of any of the other Loan Documents; (b) promptly
execute, acknowledge, deliver and record or file such further instruments (including, without
limitation, further mortgages, deeds of trust, security deeds, security agreements, financing
statements, continuation statements and assignments of rents or leases) and promptly do such
further acts as may be necessary, desirable or proper to carry out more effectively the purposes
of this Deed of Trust and the other Loan Documents and to subject to the liens and security
interests hereof and thereof any property intended by the terms hereof and thereof to be covered
hereby and thereby, including specifically, but without limitation, any renewals, additions,
substitutions, replacements or appurtenances to the Property; (c) promptly execute, acknowledge,
deliver, procure and record or file any document or instrument (including specifically, without
limitation, any financing statement) deemed advisable by Lender to protect, continue or perfect
the liens or the security interests hereunder against the rights or interests of third persons;
and (d) promptly furnish to Lender, upon Lender’s request, a duly acknowledged written statement
and estoppel certificate addressed to such party or parties as directed by Lender and in form and
substance supplied by Lender, setting forth all amounts due under the Note, stating whether any
Default or Event of Default has occurred hereunder, stating whether any offsets or defenses exist
against the Debt and containing such other matters as Lender may reasonably require.

     2.16 Payment of Costs; Reimbursement to Lender. Borrower shall pay all costs and
expenses of every character reasonably incurred in connection with the closing of the loan
evidenced by the Note and secured hereby, attributable or chargeable to Borrower as the owner of
the Property or otherwise attributable to any consent requested of Lender or any Rating Agency
under the terms hereof or any other Loan Document, including, without limitation, customary
servicing and consent fees, appraisal fees, recording fees, documentary, stamp, mortgage or
intangible taxes, brokerage fees and commissions, title policy premiums and title search fees,
uniform commercial code/tax lien/litigation search fees, escrow fees, consultants’ fees,
No-Downgrade Confirmations and reasonable attorneys’ fees. If Borrower defaults in any such
payment, which default is not cured within any applicable grace or cure period, Lender may pay the
same and Borrower shall reimburse Lender on demand for all such costs and expenses incurred or
paid by Lender, together with such interest thereon at the Default Interest Rate from and after
the date of Lender’s making such payment until reimbursement thereof by Borrower. Any such sums
disbursed by Lender, together with such interest thereon, shall be additional indebtedness of
Borrower secured by this Deed of Trust and by all of the other Loan Documents securing all or any
part of the Debt. Further, Borrower shall promptly notify Lender in writing of any litigation or
threatened litigation affecting the Property, or any other demand or claim which, if enforced,
could impair or threaten to impair Lender’s security hereunder. Without

31

 

limiting or waiving any other rights and remedies of Lender hereunder, if Borrower fails to perform
any of its covenants or agreements contained in this Deed of Trust or in any of the other Loan
Documents and such failure is not cured within any applicable grace or cure period, or if any
action or proceeding of any kind (including, but not limited to, any bankruptcy, insolvency,
arrangement, reorganization or other debtor relief proceeding) is commenced which might affect
Lender’s interest in the Property or Lender’s right to enforce its security, then Lender may, at
its option, with or without notice to Borrower, make any appearances, disburse any sums and take
any actions as may be necessary or desirable to protect or enforce the security of this Deed of
Trust or to remedy the failure of Borrower to perform its covenants and agreements (without,
however, waiving any default of Borrower). Borrower agrees to pay on demand all expenses of Lender
or Trustee incurred with respect to the foregoing (including, but not limited to, reasonable fees
and disbursements of counsel), together with interest thereon at the Default Interest Rate from and
after the date on which Lender or Trustee incurs such expenses until reimbursement thereof by
Borrower. Any such expenses so incurred by Lender, together with interest thereon as provided
above, shall be additional indebtedness of Borrower secured by this Deed of Trust and by all of the
other Loan Documents securing all or any part of the Debt. The necessity for any such actions and
of the amounts to be paid shall be determined by Lender in its discretion. Lender is hereby
empowered to enter and to authorize others to enter upon the Property or any part thereof for the
purpose of performing or observing any such defaulted term, covenant or condition without thereby
becoming liable to Borrower or any person in possession holding under Borrower. Borrower hereby
acknowledges and agrees that the remedies set forth in this Section 2.16 shall be
exercisable by Lender, and any and all payments made or costs or expenses incurred by Lender in
connection therewith shall be secured hereby and shall be, without demand, immediately repaid by
Borrower with interest thereon at the Default Interest Rate, notwithstanding the fact that such
remedies were exercised and such payments made and costs incurred by Lender after the filing by
Borrower of a voluntary case or the filing against Borrower of an involuntary case pursuant to or
within the meaning of the Bankruptcy Reform Act of 1978, as amended, Title 11 U.S.C., or after any
similar action pursuant to any other debtor relief law (whether statutory, common law, case law or
otherwise) of any jurisdiction whatsoever, now or hereafter in effect, which may be or become
applicable to Borrower, Lender, any Indemnitor, the Debt or any of the Loan Documents. Borrower
hereby indemnifies and holds Lender harmless from and against all loss, cost and expenses with
respect to any Event of Default hereof, any liens (i.e., judgments, mechanics’ and materialmen’s
liens, or otherwise), charges and encumbrances filed against the Property, and from any claims and
demands for damages or injury, including claims for property damage, personal injury or wrongful
death, arising out of or in connection with any accident or fire or other casualty on the Premises
or the Improvements or any nuisance made or suffered thereon, except those that are due to Lender’s
gross negligence or willful misconduct as finally determined by a court of competent jurisdiction,
including, without limitation, in any case, reasonable attorneys’ fees, costs and expenses as
aforesaid, whether at pretrial, trial or appellate level, and such indemnity shall survive payment
in full of the Debt. This Section shall not be construed to require Lender to incur any expenses,
make any appearances or take any actions.

     2.17 Security Interest. This Deed of Trust is also intended to encumber and create a
security interest in, and Borrower hereby grants to Lender a security interest in, all sums on
deposit with Lender pursuant to the provisions of Article III hereof or any other Section
hereof or

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of any other Loan Document and all fixtures, chattels, accounts, equipment, inventory, contract
rights, general intangibles and other personal property included within the Property, all renewals,
replacements of any of the aforementioned items, or articles in substitution therefor or in
addition thereto or the proceeds thereof (said property is hereinafter referred to collectively as
the “Collateral”), whether or not the same shall be attached to the Premises or the Improvements in
any manner. It is hereby agreed that to the extent permitted by law, all of the foregoing property
is to be deemed and held to be a part of and affixed to the Premises and the Improvements. The
foregoing security interest shall also cover Borrower’s leasehold interest in any of the foregoing
property which is leased by Borrower. Notwithstanding the foregoing, but except as permitted under
Section 2.29(a)(9) of this Security Deed concerning permitted purchase money financing for
equipment, electronics, and other ancillary personal property, all of the foregoing property shall
be owned by Borrower and no leasing or installment sales or other financing or title retention
agreement in connection therewith shall be permitted without the prior written approval of Lender.
Borrower shall, from time to time upon the request of Lender, supply Lender with a current
inventory of all of the property in which Lender is granted a security interest hereunder, in such
detail as Lender may reasonably require. Borrower shall promptly replace all of the Collateral
subject to the lien or security interest of this Deed of Trust when worn or obsolete with
Collateral comparable to the worn out or obsolete Collateral when new and will not, without the
prior written consent of Lender, remove from the Premises or the Improvements any of the Collateral
subject to the lien or security interest of this Deed of Trust except such as is replaced by an
article of equal suitability and value as above provided, owned by Borrower free and clear of any
lien or security interest except that created by this Deed of Trust and the other Loan Documents.
All of the Collateral shall be kept at the location of the Premises except as otherwise required by
the terms of the Loan Documents. Borrower shall not use any of the Collateral in violation of any
applicable statute, ordinance or insurance policy.

     2.18 Security Agreement. This Deed of Trust constitutes a security agreement between
Borrower and Lender with respect to the Collateral in which Lender is granted a security interest
hereunder, and, cumulative of all other rights and remedies of Lender hereunder, Lender shall have
all of the rights and remedies of a secured party under any applicable Uniform Commercial Code.
Borrower hereby agrees to execute and deliver on demand and hereby irrevocably constitutes and
appoints Lender the attorney-in-fact of Borrower to execute and deliver and, if appropriate, to
file with the appropriate filing officer or office, such security agreements, financing
statements, continuation statements or other instruments as Lender may request or require in order
to impose, perfect or continue the perfection of the lien or security interest created hereby. To
the extent specifically provided herein, Lender shall have the right of possession of all cash,
securities, instruments, negotiable instruments, documents, certificates and any other evidences
of cash or other property or evidences of rights to cash rather than property, which are now or
hereafter a part of the Property, and Borrower shall promptly deliver the same to Lender, endorsed
to Lender, without further notice from Lender. Borrower agrees to furnish Lender with notice of
any change in the name, identity, organizational structure, residence, or principal place of
business or mailing address of Borrower within ten (10) days of the effective date of any such
change. Upon the occurrence of any Event of Default, Lender shall have the rights and remedies as
prescribed in this Deed of Trust, or as prescribed by general law, or as prescribed by any
applicable Uniform Commercial Code, all at Lender’s election. Any disposition of the Collateral
may be conducted by an employee or agent of Lender. Any person,

33

 

including both Borrower and Lender, shall be eligible to purchase any part or all of the Collateral
at any such disposition. Expenses of retaking, holding, preparing for sale, selling or the like
(including, without limitation, Lender’s reasonable attorneys’ fees and legal expenses), together
with interest thereon at the Default Interest Rate from the date incurred by Lender until actually
paid by Borrower, shall be paid by Borrower on demand and shall be secured by this Deed of Trust
and by all of the other Loan Documents securing all or any part of the Debt. Lender shall have the
right to enter upon the Premises and the Improvements or any real property where any of the
property which is the subject of the security interest granted herein is located to take possession
of, assemble and collect the same or to render it unusable, or Borrower, upon demand of Lender,
shall assemble such property and make it available to Lender at the Premises, or at a place which
is mutually agreed upon or, if no such place is agreed upon, at a place reasonably designated by
Lender to be reasonably convenient to Lender and Borrower. If notice is required by law, Lender
shall give Borrower at least ten (10) days’ prior written notice of the time and place of any
public sale of such property, or adjournments thereof, or of the time of or after which any private
sale or any other intended disposition thereof is to be made, and if such notice is sent to
Borrower, as the same is provided for the mailing of notices herein, it is hereby deemed that such
notice shall be and is reasonable notice to Borrower. No such notice is necessary for any such
property which is perishable, threatens to decline speedily in value or is of a type customarily
sold on a recognized market. Any sale made pursuant to the provisions of this Section shall be
deemed to have been a public sale conducted in a commercially reasonable manner if held
contemporaneously with a foreclosure sale as provided in Section 5.1(e) hereof upon giving
the same notice with respect to the sale of the Property hereunder as is required under said
Section 5.1(e). Furthermore, to the extent permitted by law, in conjunction with, in
addition to or in substitution for the rights and remedies available to Lender pursuant to any
applicable Uniform Commercial Code:

          (a) In the event of a foreclosure sale, the Property may, at the option of Lender, be sold as
a whole; and

          (b) It shall not be necessary that Lender take possession of the aforementioned Collateral,
or any part thereof, prior to the time that any sale pursuant to the provisions of this Section is
conducted and it shall not be necessary that said Collateral, or any part thereof, be present at
the location of such sale; and

          (c) Lender may appoint or delegate any one or more persons as agent to perform any act or
acts necessary or incident to any sale held by Lender, including the sending of notices and the
conduct of the sale, but in the name and on behalf of Lender. The name and address of Borrower (as
Debtor under any applicable Uniform Commercial Code) are as set forth on the first page hereof.
The name and address of Lender (as Secured Party under any applicable Uniform Commercial Code) are
as set forth on the first page hereof.

     2.19 Easements and Rights-of-Way. Borrower shall not grant any easement or
right-of-way with respect to all or any portion of the Premises or the Improvements without the
prior written consent of Lender. Borrower shall comply with all easements affecting the Property.
The purchaser at any foreclosure sale hereunder may, at its discretion, disaffirm any easement or
right-of-way granted in violation of any of the provisions of this Deed of Trust and may take

34

 

immediate possession of the Property free from, and despite the terms of, such grant of easement
or right-of-way. If Lender consents to the grant of an easement or right-of-way, Lender agrees to
grant such consent without charge to Borrower other than expenses, including, without limitation,
reasonable attorneys’ fees, incurred by Lender in the review of Borrower’s request and in the
preparation of documents effecting the subordination.

     2.20 Compliance with Laws. Borrower shall at all times comply with all statutes,
ordinances, regulations and other governmental or quasi-governmental requirements and private
covenants now or hereafter relating to the ownership, construction, use or operation of the
Property, including, but not limited to, those concerning employment and compensation of persons
engaged in operation and maintenance of the Property and any environmental or ecological
requirements, even if such compliance shall require structural changes to the Property;
provided, however, that. Borrower may, upon providing Lender with security
satisfactory to Lender, proceed diligently and in good faith to contest the validity or
applicability of any such statute, ordinance, regulation or requirement so long as during such
contest the Property shall not be subject to any lien, charge, fine or other liability and shall
not be in danger of being forfeited, lost or closed. Borrower shall not use or occupy, or allow the
use or occupancy of, the Property in any manner which violates any Lease of or any other agreement
applicable to the Property or any applicable law, rule, regulation or order or which constitutes a
public or private nuisance or which makes void, voidable or cancelable, or increases the premium
of, any insurance then in force with respect thereto.

     2.21 Additional Taxes. In the event of the enactment after the date hereof of any law
of the state in which the Property is located or of any other governmental entity deducting from
the value of the Property for the purpose of taxing any lien or security interest thereon, or
imposing upon Lender the payment of the whole or any part of the taxes or assessments or charges
or liens herein required to be paid by Borrower, or changing in any way the laws relating to the
taxation of deeds of trust, mortgages or security agreements or debts secured by deeds of trust,
mortgages or security agreements or the interest of the beneficiary, mortgagee or secured party in
the property covered thereby, or the manner of collection of such taxes, so as to adversely affect
this Deed of Trust or the Debt or Lender, then, and in any such event, Borrower, upon demand by
Lender, shall pay such taxes, assessments, charges or liens, or reimburse Lender therefor;
provided, however, that if in the opinion of counsel for Lender (a) it
might be unlawful to require Borrower to make such payment, or (b) the making of such payment
might result in the imposition of interest beyond the maximum amount permitted by law, then and in
either such event, Lender may elect, by notice in writing given to Borrower, to declare all of the
Debt to be and become due and payable in full thirty (30) days from the giving of such notice,
and, in connection with the payment of such Debt, no prepayment premium or fee shall be due
unless, at the time of such payment, an Event of Default or a Default shall have occurred, which
Default or Event of Default is unrelated to the provisions of this Section 2.21, in which
event any applicable prepayment premium or fee in accordance with the terms of the Note shall be
due and payable.

     2.22 Secured Indebtedness. It is understood and agreed that this Deed of Trust shall
secure payment of not only the indebtedness evidenced by the Note but also any and all
substitutions, replacements, renewals and extensions of the Note, any and all indebtedness and
obligations arising pursuant to the terms hereof and any and all indebtedness and obligations

35

 

arising pursuant to the terms of any of the other Loan Documents, all of which indebtedness is
equally secured with and has the same priority as any amounts advanced as of the date hereof. It
is agreed that any future advances made by Lender to or for the benefit of Borrower from time to
time under this Deed of Trust or the other Loan Documents and whether or not such advances are
obligatory or are made at the option of Lender, or otherwise, made for any purpose, and all
interest accruing thereon, shall be equally secured by this Deed of Trust and shall have the same
priority as all amounts, if any, advanced as of the date hereof and shall be subject to all of the
terms and provisions of this Deed of Trust.

     2.23 Borrower’s Waivers. To the full extent permitted by law, Borrower agrees that
Borrower shall not at any time insist upon, plead, claim or take the benefit or advantage of any
law now or hereafter in force providing for any appraisement, valuation, stay, moratorium or
extension, or any law now or hereafter in force providing for the reinstatement of the Debt prior
to any sale of the Property to be made pursuant to any provisions contained herein or prior to the
entering of any decree, judgment or order of any court of competent jurisdiction, or any right
under any statute to redeem all or any part of the Property so sold. Borrower, for Borrower and
Borrower’s successors and assigns, and for any and all persons ever claiming any interest in the
Property, to the full extent permitted by law, hereby knowingly, intentionally and voluntarily,
with and upon the advice of competent counsel: (a) waives, releases, relinquishes and forever
forgoes all rights of valuation, appraisement, stay of execution, reinstatement and notice of
election or intention to mature or declare due the Debt (except such notices as are specifically
provided for herein); (b) waives, releases, relinquishes and forever forgoes all right to a
marshaling of the assets of Borrower, including the Property, to a sale in the inverse order of
alienation, or to direct the order in which any of the Property shall be sold in the event of
foreclosure of the liens and security interests hereby created and agrees that any court having
jurisdiction to foreclose such liens and security interests may order the Property sold as an
entirety; and (c) waives, releases, relinquishes and forever forgoes all rights and periods of
redemption provided under applicable law. To the full extent permitted by law, Borrower shall not
have or assert any right under any statute or rule of law pertaining to the exemption of homestead
or other exemption under any federal, state or local law now or hereafter in effect, the
administration of estates of decedents or other matters whatever to defeat, reduce or affect the
right of Lender under the terms of this Deed of Trust to a sale of the Property, for the collection
of the Debt without any prior or different resort for collection, or the right of Lender under the
terms of this Deed of Trust to the payment of the Debt out of the proceeds of sale of the Property
in preference to every other claimant whatever. Furthermore, Borrower hereby knowingly,
intentionally and voluntarily, with and upon the advice of competent counsel, waives, releases,
relinquishes and forever forgoes all present and future statutes of limitations as a defense to any
action to enforce the provisions of this Deed of Trust or to collect any of the Debt to the fullest
extent permitted by law. Borrower covenants and agrees that upon the commencement of a voluntary or
involuntary bankruptcy proceeding by or against Borrower, Borrower shall not seek a supplemental
stay or otherwise shall not seek pursuant to 11 U.S.C. §105 or any other provision of the
Bankruptcy Reform Act of 1978, as amended, or any other debtor relief law (whether statutory,
common law, case law, or otherwise) of any jurisdiction whatsoever, now or hereafter in effect,
which may be or become applicable, to stay, interdict, condition, reduce or inhibit the ability of
Lender to enforce any rights of Lender against any guarantor or indemnitor

36

 

of the secured obligations or any other party liable with respect thereto by virtue of any
indemnity, guaranty or otherwise.

     2.24 SUBMISSION TO JURISDICTION; WAIVER OF JURY TRIAL.

          (a) BORROWER, TO THE FULL EXTENT PERMITTED BY LAW, HEREBY KNOWINGLY, INTENTIONALLY AND
VOLUNTARILY, WITH AND UPON THE ADVICE OF COMPETENT COUNSEL, (i) SUBMITS TO PERSONAL JURISDICTION
IN THE STATE IN WHICH THE PREMISES IS LOCATED OVER ANY SUIT, ACTION OR PROCEEDING BY ANY PERSON
ARISING FROM OR RELATING TO THE NOTE, THIS DEED OF TRUST OR ANY OTHER OF THE LOAN DOCUMENTS, (ii)
AGREES THAT ANY SUCH ACTION, SUIT OR PROCEEDING MAY BE BROUGHT IN ANY STATE OR FEDERAL COURT OF
COMPETENT JURISDICTION SITTING IN THE COUNTY IN WHICH THE PREMISES IS LOCATED, (iii) SUBMITS TO
THE JURISDICTION OF SUCH COURTS, AND (iv) TO THE FULLEST EXTENT PERMITTED BY LAW, AGREES THAT IT
WILL NOT BRING ANY ACTION, SUIT OR PROCEEDING IN ANY OTHER FORUM (BUT NOTHING HEREIN SHALL AFFECT
THE RIGHT OF LENDER TO BRING ANY ACTION, SUIT OR PROCEEDING IN ANY OTHER FORUM).

          (b) BORROWER, TO THE FULL EXTENT PERMITTED BY LAW, HEREBY KNOWINGLY, INTENTIONALLY AND
VOLUNTARILY, WITH AND UPON THE ADVICE OF COMPETENT COUNSEL, WAIVES, RELINQUISHES AND FOREVER
FORGOES THE RIGHT TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING BASED UPON, ARISING OUT OF, OR IN
ANY WAY RELATING TO THE DEBT OR ANY CONDUCT, ACT OR OMISSION OF LENDER OR BORROWER, OR ANY OF
THEIR RESPECTIVE DIRECTORS, OFFICERS, PARTNERS, MEMBERS, EMPLOYEES, AGENTS OR ATTORNEYS, OR ANY
OTHER PERSONS AFFILIATED WITH LENDER OR BORROWER, IN EACH OF THE FOREGOING CASES, WHETHER SOUNDING
IN CONTRACT, TORT OR OTHERWISE.

     2.25 Attorney-in-Fact Provisions. With respect to any provision of this Deed of Trust
or any other Loan Document whereby Borrower grants to Lender a power-of-attorney, provided no
Default or Event of Default has occurred under this Deed of Trust, Lender shall first give
Borrower written notice at least three (3) days prior to acting under such power, which notice
shall demand that Borrower first take the proposed action within such period and advising Borrower
that if it fails to do so, Lender will so act under the power; provided, however, that, in the
event that a Default or an Event of Default has occurred, or if necessary to prevent imminent
death, serious injury, damage, loss, forfeiture or diminution in value to the Property or any
surrounding property or to prevent any adverse affect on Lender’s interest in the Property, Lender
may act immediately and without first giving such notice. In such event, Lender will give Borrower
notice of such action as soon thereafter as reasonably practical.

     2.26 Management. The management of the Property shall be by either: (a) Borrower or
an entity affiliated with Borrower approved by Lender for so long as Borrower or said affiliated
entity is managing the Property in a first class manner; or (b) a professional property

37

 

management company approved by Lender. Such management by an affiliated entity or a professional
property management company shall be pursuant to a written agreement approved by Lender. In no
event shall any manager be removed or replaced or the terms of any management agreement modified or
amended without the prior written consent of Lender; provided, however, Borrower shall, so long as
no Event of Default shall have occurred and be continuing, be permitted to replace any manager with
a Qualified Manager without the prior written consent of Lender so long as Borrower delivers to
Lender notice of such replacement of any manager with a Qualified Manager. After an Event of
Default or a default under any management contract then in effect, which default is not cured
within any applicable grace or cure period or if at any time during the term of the Loan the debt
service coverage ratio of the Property is ever less than 1.10:1, as determined by Lender, Lender
shall have the right to terminate, or to direct Borrower to terminate, such management contract
upon thirty (30) days’ notice and to retain, or to direct Borrower to retain, a new management
agent approved by Lender. All Rents and Profits generated by or derived from the Property shall
first be utilized solely for current expenses directly attributable to the ownership and operation
of the Property, including, without limitation, current expenses relating to Borrower’s liabilities
and obligations with respect to this Deed of Trust and the other Loan Documents, and none of the
Rents and Profits generated by or derived from the Property shall be diverted by Borrower and
utilized for any other purposes unless all such current expenses attributable to the ownership and
operation of the Property have been fully paid and satisfied.

	For purposes herein, “Qualified Manager” shall mean a reputable and experienced professional
management organization which manages, together with its affiliates, first class multi-family
residential complexes of a type and size similar to the Property, totaling in the aggregate no
less than 1,000 residential units, exclusive of the Property; provided, however, if Lender with
respect to any Qualified Manager which is an affiliate of Borrower, Borrower shall be required to
deliver to Lender a revised Non-Consolidation Opinion if one was delivered in connection with the
closing of the Loan.

     2.27 Hazardous Waste and Other Substances.

          (a) Except as otherwise may be disclosed in that certain Phase I Environmental Site
Assessment, dated August 7, 2006 and prepared by IVI Due Diligence Services, Inc., Borrower hereby
represents and warrants to Lender that, as of the date hereof: (i) to the best of Borrower’s
knowledge, information and belief, none of Borrower nor the Property nor any Tenant at the
Premises nor the operations conducted thereon is in direct or indirect violation of or otherwise
exposed to any liability under any local, state or federal law, rule or regulation or common law
duty pertaining to human health, natural resources or the environment, including, without
limitation, the Comprehensive Environmental Response, Compensation and Liability Act of 1980 (42
U.S.C. §9601 et seq.) (“CERCLA”), the Resource Conservation and Recovery Act of 1976 (42 U.S.C.
§6901 et seq.), the Federal Water Pollution Control Act (33 U.S.C. §1251 et seq.), the Clean Air
Act (42 U.S.C §7401 et seq.), the Emergency Planning and Community-Right-to-Know Act (42 U.S.C.
§11001 et seq.), the Endangered Species Act (16 U.S.C. §1531 et seq.), the Toxic Substances
Control Act (15 U.S.C §2601 et seq.), the Occupational Safety and Health Act (29 U.S.C §651 et
seq,) and the Hazardous Materials Transportation Act (49 U.S.C. §1801 et seq.), regulations
promulgated

38

 

pursuant to said laws, all as amended from time to time (collectively, “Environmental Laws”) or
otherwise exposed to any liability under any Environmental Law relating to or affecting the
Property, whether or not used by or within the control of Borrower; (ii) no hazardous, toxic or
harmful substances, wastes, materials, pollutants or contaminants (including, without limitation,
asbestos or asbestos-containing materials, lead based paint, Toxic Mold (as hereinafter defined)
polychlorinated biphenyls, petroleum or petroleum products or by products, flammable explosives,
radioactive materials, infectious substances or raw materials which include hazardous constituents)
or any other substances or materials which are included under or regulated by Environmental Laws
(collectively, “Hazardous Substances”) are located on, in or under or have been handled, generated,
stored, processed or disposed of on or released or discharged from the Property (including
underground contamination), except for those substances used by Borrower or any Tenant in the
ordinary course of their respective businesses and in compliance with all Environmental Laws and
where such Hazardous Substances could not reasonably be expected to give rise to liability under
Environmental Laws; (iii) radon is not present at the Property in excess or in violation of any
applicable thresholds or standards or in amounts that require disclosure under applicable law to
any tenant or occupant of or invitee to the Property or to any governmental agency or the general
public; (iv) the Property is not subject to any private or governmental lien or judicial or
administrative notice or action arising under Environmental Laws; (v) there is no pending, nor, to
Borrower’s knowledge, information or belief, threatened litigation arising under Environmental Laws
affecting Borrower or the Property; (vi) there are no and have been no existing or closed
underground storage tanks or other underground storage receptacles for Hazardous Substances or
landfills or dumps on the Property; (vii) Borrower has received no notice of, and to the best of
Borrower’s knowledge and belief, there exists no investigation, action, proceeding or claim by any
agency, authority or unit of government or by any third party which could result in any liability,
penalty, sanction or judgment under any Environmental Laws with respect to any condition, use or
operation of the Property, nor does Borrower know of any basis for such an investigation, action,
proceeding or claim; and (viii) Borrower has received no notice of and, to the best of Borrower’s
knowledge and belief, there has been no claim by any party that any use, operation or condition of
the Property has caused any nuisance or any other liability or adverse condition on any other
property, nor does Borrower know of any basis for such an investigation, action, proceeding or
claim. For the purposes hereof, “Toxic Mold” shall mean any mold or fungus at the Property which is
of a type (i) that might pose a significant risk to human health or the environment or (ii) that
would negatively impact the value of the Property.

          (b) Borrower has not received nor to the best of Borrower’s knowledge, information and belief
has there been issued, any notice, notification, demand, request for information, citation,
summons, or order in any way relating to any actual, alleged or potential violation or liability
arising under Environmental Laws.

          (c) Neither the Property, nor to the best of Borrower’s knowledge, information and belief,
any property to which Borrower has, in connection with the maintenance or operation of the
Property, directly or indirectly transported or arranged for the transportation of any Hazardous
Substances is listed or, to the best of Borrower’s knowledge, information and belief, proposed
for listing on the National Priorities List promulgated pursuant to CERCLA, or

39

 

CERCLIS (as defined in CERCLA) or on any similar federal or state list of sites requiring
environmental investigation or clean-up.

          (d) Borrower shall comply with all applicable Environmental Laws. Borrower shall keep the
Property or cause the Property to be kept free from Hazardous Substances (except those substances
used by Borrower or any Tenant in the ordinary course of their respective businesses and except in
compliance with all Environmental Laws and where such Hazardous Substances could not reasonably be
expected to give rise to liability under Environmental Laws) and in compliance with all
Environmental Laws, Borrower shall not install or use any underground storage tanks, shall
expressly prohibit the use, generation, handling, storage, production, processing and disposal of
Hazardous Substances by all Tenants in quantities or conditions that would violate or give rise to
any obligation to take remedial or other action under any applicable Environmental Laws. Without
limiting the generality of the foregoing, during the term of this Deed of Trust, Borrower shall not
install in the Improvements or permit to be installed in the Improvements any asbestos or
asbestos-containing materials.

          (e) Borrower shall promptly notify Lender if Borrower shall become aware of (i) the actual or
potential existence of any Hazardous Substances on the Property other than those occurring in the
ordinary course of Borrower’s business and which do not violate, or would not otherwise give rise
to liability under Environmental Laws, (ii) any direct or indirect violation of, or other exposure
to liability under, any Environmental Laws, (iii) any lien, action or notice affecting the Property
or Borrower resulting from any violation or alleged violation of or liability or alleged liability
under any Environmental Laws, (iv) the institution of any investigation, inquiry or proceeding
concerning Borrower or the Property pursuant to any Environmental Laws or otherwise relating to
Hazardous Substances, or (v) the discovery of any occurrence, condition or state of facts which
would render any representation or warranty contained in this Deed of Trust incorrect in any
respect if made at the time of such discovery. Immediately upon receipt of same, Borrower, shall
deliver to Lender copies of any and all requests for information, complaints, citations, summonses,
orders, notices, reports or other communications, documents or instruments in any way relating to
any actual, alleged or potential violation or liability of any nature whatsoever arising under
Environmental Laws and relating to the Property or to Borrower. Borrower shall remedy or cause to
be remedied in a timely manner (and in any event within the time period permitted by applicable
Environmental Laws) any violation of Environmental Laws or any condition that could give rise to
liability under Environmental Laws. Without limiting the foregoing, Borrower shall, promptly and
regardless of the source of the contamination or threat to the environment or human health, at its
own expense, take all actions as shall be necessary or prudent, for the clean-up of any and all
portions of the Property or other affected property, including, without limitation, all
investigative, monitoring, removal, containment and remedial actions in accordance with all
applicable Environmental Laws (and in all events in a manner satisfactory to Lender) and shall
further pay or cause to be paid, at no expense to Lender, all clean-up, administrative and
enforcement costs of applicable governmental agencies which may be asserted against the Property.
In the event Borrower fails to do so, Lender may, but shall not be obligated to, cause the Property
or other affected property to be freed from any Hazardous Substances or otherwise brought into
conformance with Environmental Laws and any and all costs and expenses incurred by Lender in
connection therewith, together with interest thereon at the Default Interest Rate from the date
incurred by

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Lender until actually paid by Borrower, shall be immediately paid by Borrower on demand and shall
be secured by this Deed of Trust and by all of the other Loan Documents securing all or any part
of the Debt. Borrower hereby grants to Lender and its agents and employees access to the Property
and a license to remove any items deemed by Lender to be Hazardous Substances and to do all things
Lender shall deem necessary to bring the Property into conformance with Environmental Laws.

          (f) Borrower covenants and agrees, at Borrower’s sole cost and expense, to indemnify, defend (at
trial and appellate levels, and with attorneys, consultants and experts acceptable to Lender), and
hold Lender harmless from and against any and all liens, damages (including without limitation,
punitive or exemplary damages), losses, liabilities (including, without limitation, strict
liability), obligations, settlement payments, penalties, fines, assessments, citations,
directives, claims, litigation, demands, defenses, judgments, suits, proceedings, costs,
disbursements or expenses of any kind or of any nature whatsoever (including, without limitation,
reasonable attorneys’, consultants’ and experts’ fees and disbursements actually incurred in
investigating, defending, settling or prosecuting any claim, litigation or proceeding) which may
at any time be imposed upon, incurred by or asserted or awarded against Lender or the Property,
and arising directly or indirectly from or out of: (i) any violation or alleged violation of, or
liability or alleged liability under, any Environmental Law; (ii) the presence, release or threat
of release of or exposure to any Hazardous Substances or radon on, in, under or affecting all or
any portion of the Property or any surrounding areas, regardless of whether or not caused by or
within the control of Borrower; (iii) any transport, treatment, recycling, storage, disposal or
arrangement therefor of Hazardous Substances whether on the Property, originating from the
Property, or otherwise associated with Borrower or any operations conducted on the Property at any
time; (iv) the failure by Borrower to comply fully with the terms and conditions of this
Section 2.27; (v) the breach of any representation or warranty contained in this
Section 2.27; or (vi) the enforcement of this
Section 2.27, including, without
limitation, the cost of assessment, investigation, containment, removal and/or remediation of any
and all Hazardous Substances from all or any portion of the Property or any surrounding areas, the
cost of any actions taken in response to the presence, release or threat of release of any
Hazardous Substances on, in, under or affecting any portion of the Property or any surrounding
areas to prevent or minimize such release or threat of release so that it does not migrate or
otherwise cause or threaten danger to present or future public health, safety, welfare or the
environment, and costs incurred to comply with Environmental Laws in connection with all or any
portion of the Property or any surrounding areas. The indemnity set forth in this Section
2.27 shall also include any diminution in the value of the security afforded by the Property
or any future reduction in the sales price of the Property by reason of any matter set forth in
this Section 2.27. The foregoing indemnity shall specifically not include any such costs
relating to Hazardous Substances which are initially placed on, in or under the Property after
foreclosure or other taking of title to the Property by Lender or its successor or assigns.
Lender’s rights under this Section shall survive payment in full of the Debt and shall be in
addition to all other rights of Lender under this Deed of Trust, the Note and the other Loan
Documents.

          (g) Upon Lender’s request, at any time after the occurrence of an Event of Default or at such
other time as Lender has reasonable grounds to believe that Hazardous Substances are or have been
released, stored or disposed of on the Property, or on property

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contiguous with the Property, or that the Property may be in violation of the Environmental Laws,
Borrower shall perform or cause to be performed, at Borrower’s sole cost and expense and in scope,
form and substance satisfactory to Lender, an inspection or audit of the Property prepared by a
hydrogeologist or environmental engineer or other appropriate consultant approved by Lender
indicating the presence or absence of Hazardous Substances on the Property, the compliance or
non-compliance status of the Property and the operations conducted thereon with applicable
Environmental Laws, or an inspection or audit of the Property prepared by an engineering or
consulting firm approved by Lender indicating the presence or absence of friable asbestos or
substances containing asbestos or lead or substances containing lead or lead based paint (“Lead
Based Paint”) on the Property. If Borrower fails to provide reports of such inspection or audit
within thirty (30) days after such request, Lender may order the same, and Borrower hereby grants
to Lender and its employees and agents access to the Property and an irrevocable license to
undertake such inspection or audit. The cost of such inspection or audit, together with interest
thereon at the Default Interest Rate from the date incurred by Lender until actually paid by
Borrower, shall be immediately paid by Borrower on demand and shall be secured by this Deed of
Trust and by all of the other Loan Documents securing all or any part of the Debt.

          (h) Reference is made to that certain Environmental Indemnity Agreement of even date herewith
by and among Borrower and any other principal signatory named therein in favor of Lender (the
“Environmental Indemnity Agreement”). The provisions of this Deed of Trust and the Environmental
Indemnity Agreement shall be read together to maximize the coverage with respect to the subject
matter thereof, as determined by Lender.

          (i) If prior to the date hereof, it was determined that the Property contains
asbestos-containing materials (“ACM’s”), Borrower covenants and agrees to institute, within thirty
(30) days after the date hereof, an operations and maintenance program (the “Maintenance Program”)
designed by an environmental consultant, satisfactory to Lender, with respect to ACM’s, consistent
with “Guidelines for Controlling Asbestos-Containing Materials in Buildings” (USEPA, 1985) and
other relevant guidelines, and such Maintenance Program will hereafter continuously remain in
effect until the Debt secured hereby is repaid in full. In furtherance of the foregoing, Borrower
shall inspect and maintain all ACM’s on a regular basis and ensure that all ACM’s shall be
maintained in a condition that prevents exposure of residents to ACM’s at all times. Without
limiting the generality of the preceding sentence, Lender may require (i) periodic notices or
reports to Lender in form, substance and at such intervals as Lender may specify, (ii) an
amendment to such operations and maintenance program to address changing circumstances, laws or
other matters, (iii) at Borrower’s sole expense, supplemental examination of the Property by
consultants specified by Lender, and (iv) variation of the operations and maintenance program in
response to the reports provided by any such consultants.

          (j) If, prior to the date hereof, it was determined that the Property contains Lead Based
Paint, Borrower had prepared an assessment report describing the location and condition of the
Lead Based Paint (a “Lead Based Paint Report”), If, at any time hereafter, Lead Based Paint is
suspected of being present on the Property, Borrower agrees, at its sole cost and expense and
within twenty (20) days thereafter, to cause to be prepared a Lead Based Paint Report prepared by
an expert, and in form, scope and substance, acceptable to Lender. Borrower

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agrees that if it has been, or if at any time hereafter it is, determined that the Property
contains Lead Based Paint, on or before thirty (30) days following (i) the date hereof, if such
determination was made prior to the date hereof or (ii) such determination, if such determination
is hereafter made, as applicable, Borrower shall, at its sole cost and expenses, develop and
implement, and thereafter diligently and continuously carry out (or cause to be developed and
implemented and thereafter diligently and continually to be carried out), an operations, abatement
and maintenance plan for the Lead Based Paint on the Property, which plan shall be prepared by an
expert, and be in form, scope and substance, acceptable to Lender (together with any Lead Based
Paint Report, the “O&M Plan”). (If an O&M Plan has been prepared prior to the date hereof,
Borrower agrees to diligently and continually carry out (or cause to be carried out) the
provisions thereof.) Compliance with the O&M Plan shall require or be deemed to require, without
limitation, the proper preparation and maintenance of all records, papers and forms required under
the Environmental Laws.

     2.28 Indemnification; Subrogation.

          (a) Borrower shall indemnify, defend and hold Lender harmless against: (i) any and all claims
for brokerage, leasing, finders or similar fees which may be made relating to the Property or the
Debt, and (ii) any and all liability, obligations, losses, damages, penalties, claims, actions,
suits, costs and expenses (including Lender’s reasonable attorneys’ fees) of whatever kind or
nature which may be asserted against, imposed on or incurred by Lender in connection with the
Debt, this Deed of Trust, the Property, or any part thereof, the exercise by Lender of any rights
or remedies granted to it under this Deed of Trust or arise from the information provided in
accordance with the terms hereof; provided, however, that nothing herein shall be
construed to obligate Borrower to indemnify, defend and hold harmless Lender from and against any
and all liabilities, obligations, losses, damages, penalties, claims, actions, suits, costs and
expenses enacted against, imposed on or incurred by Lender by reason of Lender’s willful
misconduct or gross negligence.

          (b) If Lender is made a party defendant to any litigation or any claim is threatened or
brought against Lender concerning the Debt, this Deed of Trust, the Property, or any part thereof,
or any interest therein, or the construction, maintenance, operation or occupancy or use thereof,
then Borrower shall indemnify, defend and hold Lender harmless from and against all liability by
reason of said litigation or claims, including reasonable attorneys’ fees and expenses incurred by
Lender in any such litigation or claim, whether or not any such litigation or claim is prosecuted
to judgment. If Lender commences an action against Borrower to enforce any of the terms hereof or
to prosecute any breach by Borrower of any of the terms hereof or to recover any sum secured
hereby, Borrower shall pay to Lender its reasonable attorneys’ fees and expenses. The right to
such attorneys’ fees and expenses shall be deemed to have accrued on the commencement of such
action, and shall be enforceable whether or not such action is prosecuted to judgment. If Borrower
breaches any term of this Deed of Trust, Lender may engage the services of an attorney or
attorneys to protect its rights hereunder, and in the event of such engagement following any
breach by Borrower, Borrower shall pay Lender reasonable attorneys’ fees and expenses incurred by
Lender, whether or not an action is actually commenced against Borrower by reason of such breach.
All references to “attorneys” in this Subsection and elsewhere in this Deed of Trust shall
include, without limitation, any attorney or

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law firm engaged by Lender and Lender’s in-house counsel, and all references to “fees and
expenses” in this Subsection and elsewhere in this Deed of Trust shall include, without
limitation, any fees of such attorney or law firm, any appellate counsel fees, if applicable, and
any allocation charges and allocation costs of Lender’s in-house counsel.

          (c) A waiver of subrogation shall be obtained by Borrower from its insurance carrier and,
consequently, Borrower waives any and all right to claim or recover against Lender, its officers,
employees, agents and representatives, for loss of or damage to Borrower, the Property, Borrower’s
property or the property of others under Borrower’s control from any cause insured against or
required to be insured against by the provisions of this Deed of Trust.

     2.29
Covenants with Respect to Existence, Indebtedness. Operations, Fundamental Changes of
Borrower. (a) Borrower, and any general partner, manager or managing member of Borrower, as
applicable, have each done since the date of their formation and shall do or cause to be done all
things necessary to (i) preserve, renew and keep in full force and effect its existence, rights,
and franchises, (ii) continue to engage in the business presently conducted by it, (iii) obtain and
maintain all licenses, and (iv) qualify to do business and remain in good standing under the laws
of each jurisdiction, in each case as and to the extent required for the ownership, maintenance,
management and operation of the Property. Borrower hereby represents, warrants and covenants as of
the date hereof and until such time as the Debt is paid in full, that Borrower has been, since the
date of its formation, is, and shall remain a Single-Purpose Entity (as hereinafter defined). A
“Single-Purpose Entity” or “SPE” means a corporation, limited partnership or limited liability
company that:

          (1) was and will be organized solely for the purpose of owning an interest in the Property;

          (2) will not, nor will any partner, limited or general, member or shareholder thereof, as
applicable, amend, modify or otherwise change its partnership certificate, partnership agreement,
articles of incorporation, by-laws, operating agreement, articles of organization, or other
formation agreement or document, as applicable, in any material term or manner, or in a manner
which adversely affects Borrower’s existence as a Single Purpose Entity;

          (3) will not liquidate or dissolve (or suffer any liquidation or dissolution), or enter into
any transaction of merger or consolidation, or acquire by purchase or otherwise all or
substantially all the business or assets of, or any stock or other evidence of beneficial
ownership of any entity;

          (4) will not, nor will any partner, limited or general, member or shareholder thereof, as
applicable, violate the terms of its partnership certificate, partnership agreement, articles of
incorporation, by-laws, operating agreement, articles of organization, or other formation
agreement or document, as applicable;

          (5) has not and will not guarantee, pledge its assets for the benefit of, or otherwise become
liable on or in connection with, any obligation of any other person or entity;

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          (6) does not own and will not own any asset other than (i) the Property, and (ii) incidental
personal property necessary for the operation of the Property;

          (7) is not engaged and will not engage, either directly or indirectly, in any business other
than the ownership, management and operation of the Property;

          (8) will not enter into any contract or agreement with any general partner, principal,
affiliate or member of Borrower, as applicable, or any affiliate of any general partner, principal
or member of Borrower, except upon terms and conditions that are intrinsically fair and
substantially similar to those that would be available on an arms-length basis with third parties
other than an affiliate;

          (9) has not incurred and will not incur any debt, secured or unsecured, direct or contingent
(including guaranteeing any obligation), other than (i) the Debt, (ii) normal trade payables or
accrued expenses incurred in the ordinary course of business of operating the Property customarily
satisfied within thirty (30) days and in an aggregate amount not to exceed two percent (2.0%) of
the existing principal balance of the Note, and (iii) purchase money indebtedness incurred to
acquire equipment, electronics and other ancillary personal property used at the Property
(excluding any furniture, fixtures or room furnishings) and lease obligations in the normal course
of business, and no other debt will be secured (senior, subordinate or pari passu) by the
Property;

          (10) has not made and will not make any loans or advances to any third party (including any
affiliate);

          (11) is and will be solvent and pay its debts from its assets as the same shall become due;

          (12) has done or caused to be done and will do all things necessary to preserve its
existence, and will observe all formalities applicable to it;

          (13) will conduct and operate its business in its own name and as presently conducted and
operated; provided, that, Borrower may contract with any property manager for the Property for (i)
the rights under a nonexclusive license authorizing Borrower to use various service marks,
trademarks, and tradenames (e.g. “The Grove,” “Go Grove,” and “Campus Crest”) for purposes of
marketing the Property to prospective tenants, (ii) the use by such property manager of such
licensed service marks, trademarks and trade names on behalf of the Borrower for purposes of
marketing the Property to potential tenants, and (iii) space on a nonexclusive website which
advertises the Property to potential tenants along with other properties managed by such property
manager that are also licensed to use such service marks, trademarks and tradenames;

          (14) will maintain financial statements, books and records and bank accounts separate from
those of its affiliates, including, without limitation, its general partners or members, as
applicable;

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          (15) will be, and at all times will hold itself out to the public as, a legal entity separate
and distinct from any other entity (including, without limitation, any affiliate, general partner,
or member, as applicable, or any affiliate of any general partner or member of Borrower, as
applicable) and will correct any known misunderstanding concerning its separate identity;

          (16) will file its own tax returns;

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

          (18) will establish and maintain an office through which its business will be conducted
separate and apart from those of its affiliates or shall allocate fairly and reasonably any
overhead and expense for shared office space;

          (19) will not commingle the funds and other assets of Borrower with those of any general
partner, member, affiliate, principal or any other person;

          (20) has and will maintain its assets in such a manner that it is not costly or difficult to
segregate, ascertain or identify its individual assets from those of any affiliate or any other
person;

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

          (22) will pay the salaries of its own employees (if any) from its own funds and maintain a
sufficient number of employees (if any) in light of its contemplated business operations;

          (23) will pay any liabilities out of its own funds, including salaries of its employees, not
funds of any affiliate; and

          (24) will use stationery, invoices, and checks separate from its affiliates; provided, that,
the foregoing shall not limit the ability of any property manager under a management agreement
acting on behalf of the Borrower to use such manager’s own stationery and invoices provided that,
in matters affecting legal rights and obligations of the Borrower or the Property, such manager
shall identify its representative capacity of the Borrower and/or the Property so as to avoid any
misunderstanding of the Borrower’s separate identity.

          (b) In the event Borrower is a single-member Delaware limited liability company, the limited
liability company agreement of Borrower (the “LLC Agreement”) shall provide that (i) upon the
occurrence of any event that causes the sole member of Borrower (“Member”) to cease to be the
member of Borrower (other than (A) upon an assignment by Member of all of its limited liability
company interest in Borrower and the admission of the transferee, or (B) the resignation of
Member and the admission of an additional member in either case in accordance with the terms of
the Loan Documents and the LLC Agreement), any person

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acting as a “springing” or “special” member of Borrower shall without any action of any other
Person and simultaneously with the Member ceasing to be the member of Borrower, automatically be
admitted to Borrower (“Special Member”) and shall continue Borrower without dissolution and (ii)
Special Member may not resign from Borrower or transfer its rights as Special Member unless a
successor Special Member has been admitted to Borrower as Special Member in accordance with
requirements of Delaware law. The LLC Agreement shall further provide that (i) Special Member shall
automatically cease to be a member of Borrower upon the admission to Borrower of a substitute
Member, (ii) Special Member shall be a member of Borrower that has no interest in the profits,
losses and capital of Borrower and has no right to receive any distributions of Borrower assets,
(iii) pursuant to Section 18-301 of the Delaware Limited Liability Company Act (the “Act”), Special
Member shall not be required to make any capital contributions to Borrower and shall not receive a
limited liability company interest in Borrower, (iv) Special Member, in its capacity as Special
Member, may not bind Borrower, and (v) except as required by any mandatory provision of the Act,
Special Member, in its capacity as Special Member, shall have no right to vote on, approve or
otherwise consent to any action by, or matter relating to, Borrower, including, without limitation,
the merger, consolidation or conversion of Borrower; provided, however, such
prohibition shall not limit the obligations of Special Member to vote on such matters required by
the Loan Documents or the LLC Agreement. In order to implement the admission to Borrower of Special
Member, Special Member shall execute a counterpart to the LLC Agreement. Prior to its admission to
Borrower as Special Member, Special Member shall not be a member of Borrower.

          (c) Upon the occurrence of any event that causes the Member to cease to be a member of
Borrower, to the fullest extent permitted by law, the personal representative of Member shall,
within ninety (90) days after the occurrence of the event that terminated the continued membership
of Member in Borrower, agree in writing (i) to continue Borrower and (ii) to the admission of the
personal representative or its nominee or designee, as the case may be, as a substitute member of
Borrower, effective as of the occurrence of the event that terminated the continued membership of
Member of Borrower in Borrower. Any action initiated by or brought against Member or Special
Member under any creditors rights laws shall not cause Member or Special Member to cease to be a
member of Borrower and upon the occurrence of such an event, the business of Borrower shall
continue without dissolution. The LLC Agreement shall provide that each of Member and Special
Member waives any right it might have to agree in writing to dissolve Borrower upon the occurrence
of any action initiated by or brought against Member or Special Member under any creditors rights
laws, or the occurrence of an event that causes Member or Special Member to cease to be a member
of Borrower.

     2.30 Embargoed Person. At all times throughout the term of the Loan, including after
giving effect to any Sale hereunder, (a) none of the funds or assets of Indemnitor that are used
to repay the Loan or of Borrower shall constitute property of, or shall be beneficially owned
directly or, to Borrower’s best knowledge, indirectly, by any person subject to sanctions or trade
restrictions under United States law (“Embargoed Person” or “Embargoed Persons”) that are
identified on (1) the “List of Specially Designated Nationals and Blocked Persons” maintained by
the Office of Foreign Assets Control (OFAC), U.S. Department of the Treasury, and/or to Borrower’s
best knowledge, information and belief, as of the date thereof, on any other similar list
maintained by OFAC pursuant to any authorizing statute including, but not limited to, the

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International Emergency Economic Powers
Act, 50 U.S.C. §§ 1701 et seq., The Trading with the Enemy
Act, 50 U.S-C App. 1 et seq., and any Executive Order or regulation promulgated thereunder, with
the result that the investment in Borrower or any Indemnitor, as applicable (whether directly or
indirectly), is prohibited by law, or the Loan made by Lender would be in violation of law, or (2)
Executive Order 13224 (September 23, 2001) issued by the President of the United States (“Executive
Order Blocking Property and Prohibiting Transactions with Persons Who Commit, Threaten to Commit,
or Support Terrorism”), any related enabling legislation or any other similar Executive Orders, and
(b) no Embargoed Person shall have any direct interest, and to Borrower’s best knowledge, as of the
date hereof, based upon reasonable inquiry by Borrower, indirect interest, of any nature whatsoever
in Borrower or any Indemnitor, as applicable, with the result that the investment in Borrower or
any Indemnitor, as applicable (whether directly or indirectly), is prohibited by law or the Loan is
in violation of law.

     2.31 Anti-Money Laundering. At all times throughout the term of the Loan, including
after giving effect to any Transfers permitted pursuant to the Loan Documents, none of the funds
of Borrower or any Indemnitor, as applicable, that are used to repay the Loan shall be derived
from any unlawful activity, with the result that the investment in Borrower or any Indemnitor, as
applicable (whether directly or indirectly), is prohibited by law or the Loan is in violation of
law.

     2.32 ERISA.

          (a) Borrower shall not engage in any transaction which would cause any obligation, or action
taken or to be taken, hereunder (or the exercise by Lender of any of its rights under the Note,
this Deed of Trust or any of the other Loan Documents) to be a non-exempt (under a statutory or
administrative class exemption) prohibited transaction under ERISA.

          (b) Borrower further covenants and agrees to deliver to Lender such certifications or other
evidence from time to time throughout the term of this Deed of Trust, as requested by Lender in
its sole discretion, that (i) Borrower is not an “employee benefit plan” as defined in Section
3(3) of ERISA, which is subject to Title I of ERISA, or a “governmental plan” within the meaning
of Section 3(32) of ERISA; (ii) Borrower is not subject to Federal or state statutes regulating
investments and fiduciary obligations with respect to governmental plans; and (iii) one or more of
the following circumstances is true:

     (1) Equity interests in Borrower are publicly offered securities within the meaning of
29 C.F.R. Section 2510.3-101(b)(2);

     (2) Less than 25 percent of each outstanding class of equity interests in Borrower
are held by “benefit plan investors” within the meaning of 29 C.F.R. Section 2510.3-101
(f)(2); or

     (3) Borrower qualifies as an “operating company” within the meaning of 29 C.F.R.
Section 2510.3-101 or an investment company registered under the Investment Company Act of
1940.

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          (c) Borrower shall indemnify Lender and defend and hold Lender harmless from and against all
civil penalties, excise taxes, or other loss, cost damage and expense (including, without
limitation, reasonable attorneys’ fees and disbursements and costs incurred in the investigation,
defense and settlement of claims and losses incurred in correcting any prohibited transaction or
in the sale of a prohibited loan, and in obtaining any individual prohibited transaction exemption
under ERISA that may be required, in Lender’s sole discretion) that Lender may incur, directly or
indirectly, as a result of a default under this Section. This indemnity shall survive any
termination, satisfaction or foreclosure of this Deed of Trust.

ARTICLE III.

RESERVES AND CASH MANAGEMENT

     3.1 Reserves Generally.

          (a) As additional security for the payment and performance by Borrower of all duties,
responsibilities and obligations under the Note and the other Loan Documents, Borrower hereby
unconditionally and irrevocably assigns, conveys, pledges, mortgages, transfers, delivers,
deposits, sets over and confirms unto Lender, and hereby grants to Lender a security interest in,
(i) the Payment Reserve, the Impound Account, the Replacement Reserve, as applicable (each as
hereinafter defined) and any other reserve or escrow account established pursuant to the terms
hereof or of any other Loan Document (collectively, the “Reserves”), (ii) the accounts into which
the Reserves have been deposited, (iii) all insurance on said accounts, (iv) all accounts,
contract rights and general intangibles or other rights and interests pertaining thereto, (v) all
sums now or hereafter held therein or represented thereby, (vi) all replacements, substitutions or
proceeds thereof, (vii) all instruments and documents now or hereafter evidencing the Reserves or
such accounts, (viii) all powers, options, rights, privileges and immunities pertaining to the
Reserves (including the right to make withdrawals therefrom), and (ix) all proceeds of the
foregoing. Borrower hereby authorizes and consents to the account into which the Reserves have
been deposited being held in Lender’s name or the name of any entity servicing the Note for Lender
and hereby acknowledges and agrees that Lender, or at Lender’s election, such servicing agent,
shall have exclusive control over said account. Notice of the assignment and security interest
granted to Lender herein may be delivered by Lender at any time to the financial institution
wherein the Reserves have been established, and Lender, or such servicing entity, shall have
possession of all passbooks or other evidences of such accounts. Borrower hereby assumes all risk
of loss with respect to amounts on deposit in the Reserves. Funds on deposit in the Replacement
Reserve shall bear interest at a rate equal to the then prevailing commercial money market rate.
All amounts deemed earned on funds contributed to the Replacement Reserve at the rate referenced
in the immediately preceding sentence shall be retained by Lender and accumulated for the benefit
of Borrower and added to the balance in the Replacement Reserve and shall be disbursed for payment
of the items for which other funds in the Replacement Reserve are to be disbursed. Borrower shall
not be entitled to earn any interest with respect to funds on deposit in the Payment Reserve and
the Impound Account. Borrower hereby knowingly, voluntarily and intentionally stipulates,
acknowledges and agrees that the advancement of the funds from the Reserves as set forth herein is
at Borrower’s direction and is not the exercise by Lender of any right of set-off or other remedy
upon a Default or an Event of Default. Borrower hereby waives all right to withdraw funds from the
Reserves except as

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provided for in this Deed of Trust. If an Event of Default shall occur hereunder or under any
other of the Loan Documents Lender may, without notice or demand on Borrower, at its option: (A)
withdraw any or all of the funds (including, without limitation, interest) then remaining in the
Reserves and apply the same, after deducting all costs and expenses of safekeeping, collection and
delivery (including, but not limited to, reasonable attorneys’ fees, costs and expenses) to the
Debt or any other obligations of Borrower under the other Loan Documents in such manner as Lender
shall deem appropriate in its sole discretion, and the excess, if any, shall be paid to Borrower,
(B) exercise any and all rights and remedies of a secured party under any applicable Uniform
Commercial Code, or (C) exercise any other remedies available at law or in equity. No such use or
application of the funds contained in the Reserves shall be deemed to cure any Default or Event of
Default.

          (b) The Reserves shall not, unless otherwise explicitly required by applicable law, be or be
deemed to be escrow or trust funds, but, at Lender’s option and in Lender’s discretion, may either
be held in a separate account or be commingled by Lender with the general funds of Lender. The
Reserves are solely for the protection of Lender and entail no responsibility on Lender’s part
beyond the payment of the respective items for which they are held following receipt of bills,
invoices or statements therefor in accordance with the terms hereof and beyond the allowing of due
credit for the sums actually received. Upon assignment of this Deed of Trust by Lender, any funds
in the Reserves shall be turned over to the assignee and any responsibility of Lender, as
assignor, with respect thereto shall terminate. If the funds in the applicable Reserve shall
exceed the amount of payments actually applied by Lender for the purposes and items for which the
applicable Reserve is held, such excess may be credited by Lender on subsequent payments to be
made hereunder or, at the option of Lender, refunded to Borrower. If, however, the applicable
Reserve shall not contain sufficient funds to pay the sums required by the dates on which such
sums are required to be on deposit in such account, Borrower shall, within ten (10) days after
receipt of written notice thereof, deposit with Lender the full amount of any such deficiency. If
Borrower shall fail to deposit with Lender the full amount of such deficiency as provided above,
Lender shall have the option, but not the obligation, to make such deposit, and all amounts so
deposited by Lender, together with interest thereon at the Default Interest Rate from the date so
deposited by Lender until actually paid by Borrower, shall be immediately paid by Borrower on
demand and shall be secured by this Deed of Trust and by all of the other Loan Documents securing
all or any part of the Debt. If there is an Event of Default under this Deed of Trust, Lender may,
but shall not be obligated to, apply at any time the balance then remaining in any or all of the
Reserves against the Debt in whatever order Lender shall subjectively determine. No such
application of any or all of the Reserves shall be deemed to cure any Event of Default. Upon full
payment of the Debt in accordance with its terms or at such earlier time as Lender may elect, the
balance of any or all of the Reserves then in Lender’s possession shall be paid over to Borrower
and no other party shall have any right or claim thereto.

     3.2 Payment Reserve.

          (a) Contemporaneously with the execution hereof, Borrower has established with Lender a
reserve in the amount of the first (1st) payment of principal, interest and deposits for any
applicable reserves or escrow accounts required under the terms of this Deed of Trust or

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the other Loan Documents as calculated by Lender (the “Payment Reserve”). Borrower understands
and agrees that, notwithstanding the establishment of the Payment Reserve as herein required, all
of the proceeds of the Note have been, and shall be considered, fully disbursed and shall bear
interest and be payable on the terms provided therein.

          (b) For so long as no Event of Default has occurred hereunder or under any of the other Loan
Documents, Lender shall, on the First Payment Date (as defined in the Note) under the Note, advance
from the Payment Reserve to itself the amount of the monthly installment due and payable by
Borrower under the Note on the First Payment Date and shall also advance from the Payment Reserve
into the Impound Account the amount of any deposit for taxes and insurance premiums and into the
Replacement Reserve (as hereinafter defined) the amount of any deposit for Repairs (as hereinafter
defined) and into any other reserve account the amount of any deposit in accordance with the terms
of any other Loan Document required to be paid by Borrower concurrently with such monthly
installment pursuant to the terms hereof and thereof. Provided no Default or Event of Default has
occurred, after the scheduled disbursement from the Payment Reserve, any amounts then remaining in
the Payment Reserve shall be paid to Borrower. Nothing contained herein, including, without
limitation, the existence of the Payment Reserve, shall release Borrower of any obligation to make
payments under the Note, this Deed of Trust or the other Loan Documents strictly in accordance with
the terms hereof or thereof and, in this regard, without limiting the generality of the foregoing,
should the amounts contained in the Payment Reserve not be sufficient to pay in full the monthly
installments and the Impound Account, Replacement Reserve and any other applicable reserve account
deposits referenced above in this subparagraph, Borrower shall be responsible for paying such
deficiency on the First Payment Date.

     3.3 Impound Account. Borrower shall establish and maintain at all times while this
Deed of Trust continues in effect an impound account (the “Impound Account”) with Lender for
payment of real estate taxes and assessments and insurance on the Property and as additional
security for the Debt. Simultaneously with the execution hereof, Borrower shall deposit in the
Impound Account an amount determined by Lender to be necessary to ensure that there will be on
deposit with Lender an amount which, when added to the monthly payments subsequently required to
be deposited with Lender hereunder on account of real estate taxes, assessments and insurance
premiums, will result in there being on deposit with Lender in the Impound Account an amount
sufficient to pay the next due installment of real estate taxes and assessments on the Property at
least one (1) month prior to the earlier of (a) the due date thereof or (b) any such date by which
Borrower or Lender is required by law to pay same and the next due annual insurance premiums with
respect to the Property at least one (1) month prior to the due date thereof. Commencing on the
first monthly payment date under the Note and continuing thereafter on each monthly payment date
under the Note, Borrower shall pay to Lender, concurrently with and in addition to the monthly
payment due under the Note and until the Debt is fully paid and performed, deposits in an amount
equal to one-twelfth (1/12) of the amount of the annual real estate taxes and assessments that
will next become due and payable on the Property, plus one-twelfth (1/12) of the amount of the
annual premiums that will next become due and payable on insurance policies which Borrower is
required to maintain hereunder, each as estimated and determined by Lender. So long as no Default
or Event of Default has occurred, and no event has occurred or failed to occur which with the
passage of time, the giving of notice, or both would

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constitute an Event of Default (a “Default”), all sums in the Impound Account shall be held by
Lender in the Impound Account to pay said taxes, assessments and insurance premiums before the
same become delinquent. Borrower shall be responsible for ensuring the receipt by Lender, at least
twenty (20) days prior to the respective due date for payment thereof, of all bills, invoices and
statements for all taxes, assessments and insurance premiums to be paid from the Impound Account,
and so long as no Event of Default has occurred, Lender shall pay the governmental authority or
other party entitled thereto directly to the extent funds are available for such purpose in the
Impound Account. In making any payment from the Impound Account, Lender shall be entitled to rely
on any bill, statement or estimate procured from the appropriate public office or insurance
company or agent without any inquiry into the accuracy of such bill, statement or estimate and
without any inquiry into the accuracy, validity, enforceability or contestability of any tax,
assessment, valuation, sale, forfeiture, tax lien or title or claim thereof.

     3.4 Intentionally Deleted.

     3.5 Replacement Reserve. As additional security for the Debt, Borrower shall establish
and maintain at all times while this Deed of Trust continues in effect a repair reserve (the
“Replacement Reserve”) with Lender for payment of costs and expenses incurred by Borrower in
connection with the performance of work to the roofs, chimneys, gutters, downspouts, paving, curbs,
ramps, driveways, balconies, porches, patios, exterior walls, exterior doors and doorways, windows,
elevators and mechanical and HVAC equipment (collectively, the “Repairs”). Commencing on the first
monthly Payment Date under the Note and continuing thereafter on each monthly Payment Date under
the Note, Borrower shall pay to Lender, concurrently with and in addition to the monthly payment
due under the Note and until the Debt is fully paid and performed, a deposit to the Replacement
Reserve in an amount equal to $5,125.00 per month. So long as no Event of Default has occurred, all
sums in the Replacement Reserve shall be held by Lender in the Replacement Reserve to pay the costs
and expenses of Repairs. So long as no Default or Event of Default has occurred, Lender shall, to
the extent funds are available for such purpose in the Replacement Reserve, disburse to Borrower
the amount paid or incurred by Borrower in performing such Repairs within ten (10) days following:
(a) the receipt by Lender of a written request from Borrower for disbursement from the Replacement
Reserve and a certification by Borrower in a form approved in writing by Lender that the applicable
item of Repair has been completed; (b) the delivery to Lender of invoices, receipts or other
evidence satisfactory to Lender, verifying the cost of performing the Repairs; (c) for disbursement
requests in excess of $25,000.00, the delivery to Lender of affidavits, lien waivers or other
evidence reasonably satisfactory to Lender showing that all materialmen, laborers, subcontractors
and any other parties who might or could claim statutory or common law liens and are furnishing or
have furnished material or labor to the Property have been paid all amounts due for labor and
materials furnished to the Property; (d) for disbursement requests in excess of $25,000.00,
delivery to Lender of a certification from an inspecting architect or other third party acceptable
to Lender describing the completed Repairs and verifying the completion of the Repairs and the
value of the completed Repairs; and (e) for disbursement requests in excess of $25,000.00, delivery
to Lender of a new certificate of occupancy for the portion of the Improvements covered by such
Repairs, if said new certificate of occupancy is required by law, or a certification by Borrower
that no new certificate of occupancy is required. Lender shall not be required to make advances
from the Replacement Reserve more frequently than once in any

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thirty (30) day period. In making any payment from the Replacement Reserve, Lender shall be
entitled to rely on such request from Borrower without any inquiry into the accuracy, validity or
contestability of any such amount. Lender may, at Borrower’s expense, make or cause to be made
during the term of this Deed of Trust an annual inspection of the Property to determine the need,
as determined by Lender in its reasonable judgment, for further Repairs of the Property. In the
event that such inspection reveals that further Repairs of the Property are required, Lender shall
provide Borrower with a written description of the required Repairs and Borrower shall complete
such Repairs to the reasonable satisfaction of Lender within ninety (90) days after the receipt of
such description from Lender, or such later date as may be approved by Lender in its sole
discretion.

ARTICLE IV.

EVENTS OF DEFAULT

     4.1 Events of Default. The occurrence of any of the following events shall be an Event
of Default hereunder:

          (a) Borrower (x) fails to pay any payments due under the Note or to the Reserves on the date
when the same is due and payable, or (y) fails to pay any money to Lender required hereunder at
the time or within any applicable grace period set forth herein, or if no grace period is set
forth herein, then within seven (7) days of the date such payment is due (except those regarding
payments to be made under the Note or to the Reserves, which failure is not subject to any grace
or cure period).

          (b) Borrower fails to provide insurance as required by Section 2.3 hereof or fails to
perform any covenant, agreement, obligation, term or condition set forth in Section 2.27
or Section 2.29 hereof.

          (c) Borrower fails to perform any other covenant, agreement, obligation, term or condition
set forth herein, other than those otherwise described in this Section 4.1, and, to the
extent such failure or default is susceptible of being cured, the continuance of such failure or
default for thirty (30) days after written notice thereof from Lender to Borrower; provided,
however, that if such default is susceptible of cure but such cure cannot be accomplished with
reasonable diligence within said period of time, and if Borrower commences to cure such default
promptly after receipt of notice thereof from Lender, and thereafter prosecutes the curing of such
default with reasonable diligence, such period of time shall be extended for such period of time
as may be necessary to cure such default with reasonable diligence, but not to exceed an
additional sixty (60) days.

          (d) Any representation or warranty made herein, in or in connection with any application or
commitment relating to the Loan evidenced by the Note, or in any of the other Loan Documents to
Lender by Borrower, by any principal, general partner, manager or member in Borrower, or by any
Indemnitor is determined by Lender to have been false or misleading in any material respect at the
time made.

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          (e) There shall be a sale, conveyance, disposition, alienation, hypothecation, leasing,
assignment, pledge, mortgage, granting of a security interest in or other transfer or further
encumbrancing of the Property, Borrower or its general partners or managing members, or any portion
thereof or any interest therein, in violation of Section 2.9 hereof.

          (f) A default occurs under any of the other Loan Documents which has not been cured within
any applicable grace or cure period therein provided.

          (g) Borrower, general partner or managing member in Borrower or any Indemnitor becomes
insolvent, or makes a transfer in fraud of creditors, or makes an assignment for the benefit of
creditors, or files a petition in bankruptcy, or is voluntarily adjudicated insolvent or bankrupt
or admits in writing the inability to pay its debts as they mature, or petitions or applies to any
tribunal for or consents to or fails to contest the appointment of a receiver, trustee, custodian
or similar officer for Borrower, for any such general partner or managing member of Borrower or for
any Indemnitor or for a substantial part of the assets of Borrower, of any such general partner or
managing member of Borrower or of any Indemnitor, or commences any case, proceeding or other action
under any bankruptcy, reorganization, arrangement, readjustment or debt, dissolution or liquidation
law or statute of any jurisdiction, whether now or hereafter in effect.

          (h) A petition is filed or any case, proceeding or other action is commenced against
Borrower, against any general partner or managing member of Borrower or against any Indemnitor
seeking to have an order for relief entered against it as debtor or seeking reorganization,
arrangement, adjustment, liquidation, dissolution or composition of it or its debts or other
relief under any law relating to bankruptcy, insolvency, arrangement, reorganization, receivership
or other debtor relief under any law or statute of any jurisdiction, whether now or hereafter in
effect, or a court of competent jurisdiction enters an order for relief against Borrower, against
any general partner or managing member of Borrower or against any Indemnitor, as debtor, or an
order, judgment or decree is entered appointing, with or without the consent of Borrower, of any
such general partner or managing member of Borrower or of any Indemnitor, a receiver, trustee,
custodian or similar officer for Borrower, for any such general partner or managing member of
Borrower or for any Indemnitor, or for any substantial part of any of the properties of Borrower,
of any such general partner or managing member of Borrower or of any Indemnitor, and if any such
event shall occur, such petition, case, proceeding, action, order, judgment or decree is not
dismissed within sixty (60) days after being commenced.

          (i) The Property or any part thereof is taken on execution or other process of law in any
action against Borrower.

          (j) Borrower abandons all or a portion of the Property.

          (k) The holder of any lien or security interest on the Property (without implying the
consent of Lender to the existence or creation of any such lien or security interest), whether
superior or subordinate to this Deed of Trust or any of the other Loan Documents, declares a
default and such default is not cured within any applicable grace or cure period set

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forth in the applicable document or such holder institutes foreclosure or other proceedings for
the enforcement of its remedies thereunder.

          (l) The Property, or any part thereof, is subjected to waste or to removal, demolition or
material alteration so that the value of the Property is materially diminished thereby and Lender
determines that it is not adequately protected from any loss, damage or risk associated
therewith.

          (m) Any dissolution, termination, partial or complete liquidation, merger or consolidation
of Borrower, any general partner or any managing member, or any Indemnitor.

ARTICLE V.

REMEDIES

     
5.1 Remedies Available. If there shall occur an Event of Default under this Deed of
Trust, then this Deed of Trust is subject to foreclosure as provided by law and Lender may, at its
option and by or through a trustee, nominee, assignee or otherwise (including, without limitation,
the Trustee), to the fullest extent permitted by law, exercise any or all of the following rights,
remedies and recourses, either successively or concurrently:

          (a) Acceleration. Accelerate the maturity date of the Note and declare any or all of
the Debt to be immediately due and payable without any presentment, demand, protest, notice or
action of any kind whatever (each of which is hereby expressly waived by Borrower), whereupon the
same shall become immediately due and payable. Upon any such acceleration, payment of such
accelerated amount shall constitute a prepayment of the principal balance of the Note and any
applicable prepayment fee provided for in the Note shall then be immediately due and payable.

          (b) Entry on the Property. Either in person or by agent, with or without bringing any
action or proceeding, or by a receiver appointed by a court and without regard to the adequacy of
its security, enter upon and take possession of the Property, or any part thereof, without force
or with such force as is permitted by law and without notice or process or with such notice or
process as is required by law, unless such notice and process is waivable, in which case Borrower
hereby waives such notice and process, and do any and all acts and perform any and all work which
may be desirable or necessary in Lender’s judgment to complete any unfinished construction on the
Premises, to preserve the value, marketability or rentability of the Property, to increase the
income therefrom, to manage and operate the Property or to protect the security hereof, and all
sums expended by Lender therefor, together with interest thereon at the Default Interest Rate,
shall be immediately due and payable to Lender by Borrower on demand and shall be secured hereby
and by all of the other Loan Documents securing all or any part of the Debt.

          (c) Collect Rents and Profits. With or without taking possession of the Property,
sue or otherwise collect the Rents and Profits, including those past due and unpaid.

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          (d) Appointment of Receiver. Upon, or at any time prior or after, initiating the
exercise of any power of sale, instituting any judicial foreclosure or instituting any other
foreclosure of the liens and security interests provided for herein or any other legal proceedings
hereunder, make application to a court of competent jurisdiction for appointment of a receiver for
all or any part of the Property, as a matter of strict right and without notice to Borrower and
without regard to the adequacy of the Property for the repayment of the Debt or the solvency of
Borrower or any person or persons liable for the payment of the Debt, and Borrower does hereby
irrevocably consent to such appointment, waive any and all notices of and defenses to such
appointment and agree not to oppose any application therefor by Lender, but nothing herein is to be
construed to deprive Lender of any other right, remedy or privilege Lender may now have under the
law to have a receiver appointed, provided, however, that the appointment of such
receiver, trustee or other appointee by virtue of any court order, statute or regulation shall not
impair or in any manner prejudice the rights of Lender to receive payment of the Rents and Profits
pursuant to other terms and provisions hereof. Any such receiver shall have all of the usual powers
and duties of receivers in similar cases, including, without limitation, the full power to hold,
develop, rent, lease, manage, maintain, operate and otherwise use or permit the use of the Property
upon such terms and conditions as said receiver may deem to be prudent and reasonable under the
circumstances as more fully set forth in Section 5.3 below. Such receivership shall, at the
option of Lender, continue until full payment of all of the Debt or until title to the Property
shall have passed by foreclosure sale under this Deed of Trust or deed in lieu of foreclosure.

          (e) Foreclosure. Immediately commence an action to foreclose this Deed of Trust or to
specifically enforce its provisions with respect to any of the Debt, pursuant to the statutes in
such case made and provided, and sell the Property or cause the Property to be sold in accordance
with the requirements and procedures provided by said statutes in a single parcel or in several
parcels at the option of Lender. In the event foreclosure proceedings are instituted by Lender,
all expenses incident to such proceedings, including, but not limited to, reasonable attorneys’
fees and costs, shall be paid by Borrower and secured by this Deed of Trust and by all of the
other Loan Documents securing all or any part of the Debt. The Debt and all other obligations
secured by this Deed of Trust, including, without limitation, interest at the Default Interest
Rate any prepayment charge, fee or premium required to be paid under the Note in order to prepay
principal (to the extent permitted by applicable law), reasonable attorneys’ fees and any other
amounts due and unpaid to Lender under the Loan Documents, may be bid by Lender in the event of a
foreclosure sale hereunder. In the event of a judicial sale pursuant to a foreclosure decree, it
is understood and agreed that Lender or its assigns may become the purchaser of the Property or
any part thereof.

          (f) Judicial Remedies. Proceed by suit or suits, at law or in equity, instituted by
or on behalf of Lender, to enforce the payment of the Debt or the other obligations of Borrower
hereunder or pursuant to the Loan Documents, to foreclose the liens and security interests of this
Deed of Trust as against all or any part of the Property, and to have all or any part of the
Property sold under the judgment or decree of a court of competent jurisdiction. This remedy shall
be cumulative of any other non-judicial remedies available to Lender with respect to the Loan
Documents. Proceeding with the request or receiving a judgment for legal relief

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shall not be or be deemed to be an election of remedies or bar any available non-judicial remedy
of Lender.

          (g) Sale of Property, (i) Trustee, at the request of Lender, shall have the power to
sell the Property or any part thereof at public auction, in such manner, at such time, and place,
upon such terms and conditions, and upon notice to Borrower as required by the Deed of Trust Act
and such public notice as Lender may deem best for the interest of Lender or as may be required or
permitted by applicable law, consisting of advertisement in a newspaper of general circulation in
the jurisdiction and for such period as applicable law may require and at such other times and by
such other methods, if any, as may be required by law to convey the Property in fee simple by
trustee’s deed with special warranty of title to and at the cost of the purchaser, who shall not be
liable to see to the application of the purchase money. The proceeds or avails of any sale made
under or by virtue of this paragraph, together with any other sums which then may be held by Lender
under this Deed of Trust, whether under the provisions of this paragraph or otherwise, shall be
applied as provided in Section 5.2 hereof. Lender, Trustee and any receiver or custodian of
the Property or any part thereof shall be liable to account for only those rents, issues, proceeds
and profits actually received by it.

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

          (iii) Upon the completion of any sale or sales ordered by Lender and made by Trustee
under or by virtue of this paragraph, Lender or Trustee, or any officer of any court
empowered to do so, shall execute and deliver to the accepted purchaser or purchasers a good
and sufficient instrument, or good and sufficient instruments, granting, conveying,
assigning and transferring all estate, right, title and interest in and to the property and
rights sold. Trustee is hereby irrevocably appointed the true and lawful attorney-in-fact
for Borrower (coupled with an interest), in its name and stead, to make all necessary
conveyances, assignments, transfers and deliveries of the property and rights so sold and
for that purpose Trustee may execute all necessary instruments of conveyance, assignment,
transfer and delivery, and may substitute one or more persons with like power, Borrower
hereby ratifying and confirming all that its said attorney-in-fact or such substitute or
substitutes shall lawfully do by virtue hereof. Nevertheless, Borrower, if so requested by
Trustee or Lender, shall ratify and confirm any such sale or sales by executing and
delivering to Lender, or to such purchaser or purchasers all such instruments as may be
advisable, in the sole judgment of Lender, for such purpose, and as may be designated in
such request. Any such sale or sales made under or by virtue of this paragraph, whether made
under the power of sale herein granted or under or by virtue of judicial proceedings or a
judgment or decree of foreclosure and sale, shall operate to divest all the estate, right,
title, interest, claim and demand whatsoever, whether at law or in equity, of Borrower in
and to the property and rights so sold, and shall, to the fullest extent permitted under
law, be a perpetual bar both at law and in equity against Borrower

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and against any and all persons claiming or who may claim the same, or any part thereof,
from, through or under Borrower.

          (iv) In the event of any sale made under or by virtue of this Deed of Trust (whether
made under the power of sale herein granted or under or by virtue of judicial proceedings
or a judgment or decree of foreclosure and sale), the entire Debt relative to the Property,
immediately thereupon shall, anything in the Note, this Deed of Trust or any other of the
Loan Documents to the contrary notwithstanding, become due and payable.

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

          (vi) No recovery of any judgment by Lender and no levy of an execution under any
judgment upon the Property or any part thereof or upon any other property of Borrower
shall release the lien of this Deed of Trust upon the Property or any part thereof, or any
liens, rights, powers or remedies of Lender hereunder, but such liens, rights, powers and
remedies of Lender shall continue unimpaired until the entire Debt is paid in full.

          (vii) After any judicial foreclosure sale, the redemption period shall be one (1)
month in lieu of nine (9) months pursuant to N.M. Stat. Ann. 39-5-19.

          (h) Other. Exercise any other right or remedy available hereunder, under any of the
other Loan Documents or at law or in equity.

     5.2
Application of Proceeds. To the fullest extent permitted by law, the proceeds of
any sale under this Deed of Trust shall be applied, to the extent funds are so available, to the
following items in such order as Lender in its discretion may determine:

          (a) To payment of the reasonable costs, expenses and fees of taking possession of the
Property, and of holding, operating, maintaining, using, leasing, repairing, improving, marketing
and selling the same and of otherwise enforcing Lender’s rights and remedies hereunder and under
the other Loan Documents, including, but not limited to, receivers’ fees, court costs,
attorneys’, accountants’, appraisers’, managers’ and other professional fees, title charges and
transfer taxes.

          (b) To payment of all sums expended by Lender under the terms of any of the Loan Documents
and not yet repaid, together with interest on such sums at the Default Interest Rate.

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          (c) To payment of the Debt and all other obligations secured by this Deed of Trust,
including, without limitation, interest at the Default Interest Rate and, to the extent permitted
by applicable law, any prepayment fee, charge or premium required to be paid under the Note in
order to prepay principal, in any order that Lender chooses in its sole discretion.

          (d) The remainder, if any, of such funds shall be disbursed to Borrower or to the person or
persons legally entitled thereto.

     5.3
Right and Authority of Receiver or Lender in the Event of Default; Power of
Attorney. Upon the occurrence of an Event of Default, and entry upon the Property pursuant to
Section 5.1(b) hereof or appointment of a receiver pursuant to Section 5.1(d)
hereof, and under such terms and conditions as may be prudent and reasonable under the
circumstances in Lender’s or the receiver’s sole discretion, all at Borrower’s expense, Lender or
said receiver, or such other persons or entities as they shall hire, direct or engage, as the case
may be, may do or permit one or more of the following, successively or concurrently: (a) enter upon
and take possession and control of any and all of the Property; (b) take and maintain possession of
all documents, books, records, papers and accounts relating to the Property; (c) exclude Borrower
and its agents, servants and employees wholly from the Property; (d) manage and operate the
Property; (e) preserve and maintain the Property; (f) make repairs and alterations to the Property;
(g) complete any construction or repair of the Improvements, with such changes, additions or
modifications of the plans and specifications or intended disposition and use of the Improvements
as Lender may in its sole discretion deem appropriate or desirable to place the Property in such
condition as will, in Lender’s sole discretion, make it or any part thereof readily marketable or
rentable; (h) conduct a marketing or leasing program with respect to the Property, or employ a
marketing or leasing agent or agents to do so, directed to the leasing or sale of the Property
under such terms and conditions as Lender may in its sole discretion deem appropriate or desirable;
(i) employ such contractors, subcontractors, materialmen, architects, engineers, consultants,
managers, brokers, marketing agents, or other employees, agents, independent contractors or
professionals, as Lender may in its sole discretion deem appropriate or desirable to implement and
effectuate the rights and powers herein granted; (j) execute and deliver, in the name of Lender as
attorney-in-fact and agent of Borrower or in its own name as Lender, such documents and instruments
as are necessary or appropriate to consummate authorized transactions; (k) enter such leases,
whether of real or personal property, or tenancy agreements, under such terms and conditions as
Lender may in its sole discretion deem appropriate or desirable; (1) collect and receive the Rents
and Profits from the Property; (m) eject tenants or repossess personal property, as provided by
law, for breaches of the conditions of their leases or other agreements; (n) initiate a cause of
action for unpaid Rents and Profits, payments, income or proceeds in the name of Borrower or
Lender; (o) maintain actions in forcible entry and detainer, ejectment for possession and actions
in distress for rent; (p) compromise or give acquittance for Rents and Profits, payments, income or
proceeds that may become due; (q) delegate or assign any and all rights and powers given to Lender
by this Deed of Trust; and (r) do any acts which Lender in its sole discretion deems appropriate or
desirable to protect the security hereof and use such measures, legal or equitable, as Lender may
in its sole discretion deem appropriate or desirable to implement and effectuate the provisions of
this Deed of Trust. This Deed of Trust shall constitute a direction to and full authority to any
lessee, or other third party who has heretofore dealt or contracted or may hereafter deal or
contract with Borrower or Lender, at the request of Lender, to pay all amounts

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owing under any Lease, contract, concession, license or other agreement to Lender without proof of
the Event of Default relied upon. Any such lessee or third party is hereby irrevocably authorized
to rely upon and comply with (and shall be fully protected by Borrower in so doing) any request,
notice or demand by Lender for the payment to Lender of any Rents and Profits or other sums which
may be or thereafter become due under its Lease, contract, concession, license or other agreement,
or for the performance of any undertakings under any such Lease, contract, concession, license or
other agreement, and shall have no right or duty to inquire whether any Event of Default under this
Deed of Trust or under any of the other Loan Documents has actually occurred or is then existing.
Borrower hereby constitutes and appoints Lender, its assignees, successors, transferees and
nominees, as Borrower’s true and lawful attorney-in-fact and agent, with full power of substitution
in the Property, in Borrower’s name, place and stead, to do or permit any one or more of the
foregoing described rights, remedies, powers and authorities, successively or concurrently, and
said power of attorney shall be deemed a power coupled with an interest and irrevocable so long as
any portion of the Debt is outstanding. Any money advanced by Lender in connection with any action
taken under this Section 5.3. together with interest thereon at the Default Interest Rate
from the date of making such advancement by Lender until actually paid by Borrower, shall be a
demand obligation owing by Borrower to Lender and shall be secured by this Deed of Trust and by
every other instrument securing all or any portion of the Debt.

     5.4 Occupancy After Foreclosure. In the event there is a foreclosure sale hereunder
and at the time of such sale, Borrower or Borrower’s representatives, successors or assigns, or
any other persons claiming any interest in the Property by, through or under Borrower (except
tenants of space in the Improvements subject to leases entered into prior to the date hereof), are
occupying or using the Property, or any part thereof, then, to the extent not prohibited by
applicable law, each and all shall, at the option of Lender or the purchaser at such sale, as the
case may be, immediately become the tenant of the purchaser at such sale, which tenancy shall be a
tenancy from day-to-day, terminable at the will of either landlord or tenant, at a reasonable
rental per day based upon the value of the Property occupied or used, such rental to be due daily
to the purchaser. Further, to the extent permitted by applicable law, in the event the tenant
fails to surrender possession of the Property upon the termination of such tenancy, the purchaser
shall be entitled to institute and maintain an action for unlawful detainer of the Property in the
appropriate court of the county in which the Premises is located.

     5.5 Notice to Account Debtors. Lender may, at any time after an Event of Default,
notify the account debtors and obligors of any accounts, chattel paper, negotiable instruments or
other evidences of indebtedness to Borrower included in the Property to pay Lender directly.
Borrower shall at any time or from time to time upon the request of Lender provide to Lender a
current list of all such account debtors and obligors and their addresses.

     5.6 Cumulative Remedies. All remedies contained in this Deed of Trust are cumulative
and Lender shall also have all other remedies provided at law and in equity or in any other Loan
Documents. Such remedies may be pursued separately, successively or concurrently at the sole
subjective direction of Lender and may be exercised in any order and as often as occasion
therefor shall arise. No act of Lender shall be construed as an election to proceed under any
particular provisions of this Deed of Trust to the exclusion of any other provision of this

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Deed of Trust or as an election of remedies to the exclusion of any other remedy which may then or
thereafter be available to Lender. No delay or failure by Lender to exercise any right or remedy
under this Deed of Trust shall be construed to be a waiver of that right or remedy or of any Event
of Default. Lender may exercise any one or more of its rights and remedies at its option without
regard to the adequacy of its security.

     5.7 Payment of Expenses. Borrower shall pay on demand all of Lender’s expenses
incurred in any efforts to enforce any terms of this Deed of Trust, whether or not any lawsuit is
filed and whether or not foreclosure is commenced but not completed, including, but not limited
to, reasonable legal fees and disbursements, fees of any Rating Agency, fees related to any
No-Downgrade Confirmation, foreclosure costs and title charges, together with interest thereon
from and after the date incurred by Lender until actually paid by Borrower at the Default Interest
Rate, and the same shall be secured by this Deed of Trust and by all of the other Loan Documents
securing all or any part of the Debt.

ARTICLE VI.

MISCELLANEOUS TERMS AND CONDITIONS

     6.1 Time of Essence. Time is of the essence with respect to all provisions of this
Deed of Trust.

     6.2 Release of Deed of Trust. If all of the Debt shall be paid, then and in that
event only, all rights under this Deed of Trust, except for those provisions hereof which by their
terms survive, shall terminate and the Property shall become wholly clear of the liens, security
interests, conveyances and assignments evidenced hereby, which shall be promptly released of
record by Lender in due form at Borrower’s cost. No release of this Deed of Trust or the lien
hereof shall be valid unless executed by Lender.

     6.3 Certain Rights of Lender. Without affecting Borrower’s liability for the payment
of any of the Debt, Lender may from time to time and without notice to Borrower: (a) release any
person liable for the payment of the Debt; (b) extend or modify the terms of payment of the Debt;
(c) accept additional real or personal property of any kind as security or alter, substitute or
release any property securing the Debt; (d) recover any part of the Property; (e) consent in
writing to the making of any subdivision map or plat thereof; (f) join in granting any easement
therein; or (g) join in any extension agreement of this Deed of Trust or any agreement
subordinating the lien hereof.

     6.4 Waiver of Certain Defenses. No action for the enforcement of the lien hereof or
of any provision hereof shall be subject to any defense which would not be good and available to
the party interposing the same in an action at law upon the Note or any of the other Loan
Documents.

     6.5 Notices. All notices, demands, requests or other communications to be sent by
one party to the other hereunder or required by law shall be in writing and shall be deemed to
have been validly given or served by delivery of the same in person to the intended addressee, or
by depositing the same with Federal Express or another reputable private courier service for next

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business day delivery, or by depositing the same in the United States mail, postage prepaid,
registered or certified mail, return receipt requested, in any event addressed to the intended
addressee at its address set forth on the first page of this Deed of Trust or at such other address
as may be designated by such party as herein provided, together with, in the case of notices to
Borrower, a copy to: Bradley Arant Rose & White LLP, One Federal Place, 1819 Fifth Avenue North,
Birmingham, Alabama 35203-2104, Attention: Dawn H. Sharff. All notices, demands and requests shall
be effective upon such personal delivery, or one (1) business day after being deposited with the
private courier service, or two (2) business days after being deposited in the United States mail
as required above. Rejection or other refusal to accept or the inability to deliver because of
changed address of which no notice was given as herein required shall be deemed to be receipt of
the notice, demand or request sent. By giving to the other party hereto at least fifteen (15) days’
prior written notice thereof in accordance with the provisions hereof, the parties hereto shall
have the right from time to time to change their respective addresses and each shall have the right
to specify as its address any other address within the United States of America.

     6.6 Successors and Assigns; Joint and Several Liability. The terms, provisions,
indemnities, covenants and conditions hereof shall be binding upon Borrower and the successors and
assigns of Borrower, including all successors in interest of Borrower in and to all or any part of
the Property, and shall inure to the benefit of Lender, its directors, officers, shareholders,
employees and agents and their respective successors and assigns and shall constitute covenants
running with the land. All references in this Deed of Trust to Borrower or Lender shall be deemed
to include all such parties’ successors and assigns, and the term “Lender” as used herein
shall also mean and refer to any lawful holder or owner, including pledgees and participants, of
any of the Debt. If Borrower consists of more than one person or entity, each is jointly and
severally liable to perform the obligations of Borrower hereunder and all representations,
warranties, covenants and agreements made by Borrower hereunder are joint and several.

     6.7 Severability. A determination that any provision of this Deed of Trust is
unenforceable or invalid shall not affect the enforceability or validity of any other provision,
and any determination that the application of any provision of this Deed of Trust to any person or
circumstance is illegal or unenforceable shall not affect the enforceability or validity of such
provision as it may apply to any other persons or circumstances.

     6.8 Gender. Within this Deed of Trust, words of any gender shall be held and
construed to include any other gender, and words in the singular shall be held and construed to
include the plural, and vice versa, unless the context otherwise requires.

     6.9 Waiver; Discontinuance of Proceedings. Lender may waive any single Event of
Default by Borrower hereunder without waiving any other prior or subsequent Event of Default.
Lender may remedy any Event of Default by Borrower hereunder without waiving the Event of Default
remedied. Neither the failure by Lender to exercise, nor the delay by Lender in exercising, any
right, power or remedy upon any Event of Default by Borrower hereunder shall be construed as a
waiver of such Event of Default or as a waiver of the right to exercise any such right, power or
remedy at a later date. No single or partial exercise by Lender of any right, power or remedy
hereunder shall exhaust the same or shall preclude any other or further exercise

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thereof, and every such right, power or remedy hereunder may be exercised at any time and from
time to time. No modification or waiver of any provision hereof nor consent to any departure by
Borrower therefrom shall in any event be effective unless the same shall be in writing and signed
by Lender, and then such waiver or consent shall be effective only in the specific instance and
for the specific purpose given. No notice to nor demand on Borrower in any case shall of itself
entitle Borrower to any other or further notice or demand in similar or other circumstances.
Acceptance by Lender of any payment in an amount less than the amount then due on any of the Debt
shall be deemed an acceptance on account only and shall not in any way affect the existence of an
Event of Default. In case Lender shall have proceeded to invoke any right, remedy or recourse
permitted hereunder or under the other Loan Documents and shall thereafter elect to discontinue or
abandon the same for any reason, Lender shall have the unqualified right to do so and, in such an
event, Borrower and Lender shall be restored to their former positions with respect to the Debt,
the Loan Documents, the Property and otherwise, and the rights, remedies, recourses and powers of
Lender shall continue as if the same had never been invoked.

     6.10 Section Headings. The headings of the sections and paragraphs of this Deed of
Trust are for convenience of reference only, are not to be considered a part hereof and shall not
limit or otherwise affect any of the terms hereof.

     6.11 GOVERNING LAW. THIS DEED OF TRUST WILL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE IN WHICH THE PREMISES IS LOCATED, PROVIDED THAT TO THE
EXTENT THAT ANY OF SUCH LAWS MAY NOW OR HEREAFTER BE PREEMPTED BY FEDERAL LAW, SUCH FEDERAL LAW
SHALL SO GOVERN AND BE CONTROLLING, AND PROVIDED FURTHER THAT THE LAWS OF THE STATE IN WHICH THE
PREMISES IS LOCATED SHALL GOVERN AS TO THE CREATION, PRIORITY AND ENFORCEMENT OF LIENS AND
SECURITY INTERESTS IN THE PROPERTY LOCATED IN SUCH STATE.

     6.12 Counting of Days. The term “days” when used herein shall mean calendar days. If
any time period ends on a Saturday, Sunday or holiday officially recognized by the state within
which the Premises is located, the period shall be deemed to end on the next succeeding business
day. The term “business day” when used herein shall mean a weekday, Monday through Friday, except
a legal holiday or a day on which banking institutions in New York, New York are authorized by
law to be closed.

     6.13 Relationship of the Parties. The relationship between Borrower and Lender is
that of a borrower and a lender only and neither of those parties is, nor shall it hold itself
out to be, the agent, employee, joint venturer or partner of the other party.

     6.14 Application of the Proceeds of the Note. To the extent that proceeds of the
Note are used to pay indebtedness secured by any outstanding lien, security interest, charge or
prior encumbrance against the Property, such proceeds have been advanced by Lender at Borrower’s
request and Lender shall be subrogated to any and all rights, security interests and liens owned
by any owner or holder of such outstanding liens, security interests, charges or encumbrances,
irrespective of whether said liens, security interests, charges or encumbrances are released.

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     6.15 Unsecured Portion of Indebtedness. If any part of the Debt cannot be lawfully
secured by this Deed of Trust or if any part of the Property cannot be lawfully subject to the lien
and security interest hereof to the full extent of such indebtedness, then all payments made shall
be applied on said indebtedness first in discharge of that portion thereof which is unsecured by
this Deed of Trust.

     6.16 Cross Default. An Event of Default hereunder which has not been cured within any
applicable grace or cure period shall be a default under each of the other Loan Documents.

     6.17 Interest After Sale. In the event the Property or any part thereof shall be sold
upon foreclosure as provided hereunder, to the extent permitted by law, the sum for which the same
shall have been sold shall, for purposes of redemption (pursuant to the laws of the state in which
the Premises is located), bear interest at the Default Interest Rate.

     6.18 Inconsistency with Other Loan Documents. In the event of any inconsistency
between the provisions hereof and the provisions in any of the other Loan Documents, it is
intended that the provisions of the Note shall control over the provisions of this Deed of Trust,
and that the provisions of this Deed of Trust shall control over the provisions of the Lease
Assignment, the Indemnity and Guaranty Agreements, the Environmental Indemnity Agreement, and the
other Loan Documents.

     6.19 Construction of this Document. This document may be construed as a mortgage,
security deed, deed of trust, chattel mortgage, conveyance, assignment, security agreement,
pledge, financing statement, hypothecation or contract, or any one or more of the foregoing, in
order to fully effectuate the liens and security interests created hereby and the purposes and
agreements herein set forth.

     6.20 No Merger. It is the desire and intention of the parties hereto that this Deed
of Trust and the lien hereof do not merge in fee simple title to the Property. It is hereby
understood and agreed that should Lender acquire any additional or other interests in or to the
Property or the ownership thereof, then, unless a contrary intent is manifested by Lender as
evidenced by an appropriate document duly recorded, this Deed of Trust and the lien hereof shall
not merge in such other or additional interests in or to the Property, toward the end that this
Deed of Trust may be foreclosed as if owned by a stranger to said other or additional interests.

     6.21 Rights With Respect to Junior Encumbrances. Any person or entity purporting to
have or to take a junior mortgage or other lien upon the Property or any interest therein shall be
subject to the rights of Lender to amend, modify, increase, vary, alter or supplement this Deed of
Trust, the Note or any of the other Loan Documents, and to extend the maturity date of the Debt,
and to increase the amount of the Debt, and to waive or forebear the exercise of any of its rights
and remedies hereunder or under any of the other Loan Documents and to release any collateral or
security for the Debt, in each and every case without obtaining the consent of the holder of such
junior lien and without the lien or security interest of this Deed of Trust losing its priority
over the rights of any such junior lien.

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     6.22 Lender May File Proofs of Claim. In the case of any receivership, insolvency,
bankruptcy, reorganization, arrangement, adjustment, composition or other proceedings affecting
Borrower or the principals, general partners or managing members in Borrower, or their respective
creditors or property, Lender, to the extent permitted by law, shall be entitled to file such
proofs of claim and other documents as may be necessary or advisable in order to have the claims of
Lender allowed in such proceedings for the entire Debt at the date of the institution of such
proceedings and for any additional amount which may become due and payable by Borrower hereunder
after such date.

     6.23 Fixture Filing. This Deed of Trust shall be effective from the date of its
recording as a financing statement filed as a fixture filing with respect to all goods
constituting part of the Property which are or are to become fixtures. This Deed of Trust shall
also be effective as a financing statement covering minerals or the like (including oil and gas)
and is to be filed for record in the real estate records of the county where the Premises is
situated. The mailing address of Borrower and the address of Lender from which information
concerning the security interests may be obtained are set forth in Section 2.18 above.

     6.24 After-Acquired Property. All property acquired by Borrower after the date of
this Deed of Trust which by the terms of this Deed of Trust shall be subject to the lien and the
security interest created hereby, shall immediately upon the acquisition thereof by Borrower and
without further mortgage, conveyance or assignment become subject to the lien and security
interest created by this Deed of Trust. Nevertheless, Borrower shall execute, acknowledge, deliver
and record or file, as appropriate, all and every such further mortgages, security agreements,
financing statements, assignments and assurances as Lender shall require for accomplishing the
purposes of this Deed of Trust.

     6.25 No Representation. By accepting delivery of any item required to be observed,
performed or fulfilled or to be given to Lender pursuant to the Loan Documents, including, but not
limited to, any officer’s certificate, balance sheet, statement of profit and loss or other
financial statement, survey, appraisal or insurance policy, Lender shall not be deemed to have
warranted, consented to, or affirmed the sufficiency, legality, effectiveness or legal effect of
the same, or of any term, provision or condition thereof, and such acceptance of delivery thereof
shall not be or constitute any warranty, consent or affirmation with respect thereto by Lender.

     6.26 Counterparts. This Deed of Trust may be executed in any number of counterparts,
each of which shall be effective only upon delivery and thereafter shall be deemed an original,
and all of which shall be taken to be one and the same instrument, for the same effect as if all
parties hereto had signed the same signature page. Any signature page of this Deed of Trust may be
detached from any counterpart of this Deed of Trust without impairing the legal effect of any
signatures thereon and may be attached to another counterpart of this Deed of Trust identical in
form hereto but having attached to it one or more additional signature pages.

     6.27 Personal Liability. Notwithstanding anything to the contrary contained in this
Deed of Trust, the liability of Borrower and its officers, directors, general partners, managers,
members and principals for the Debt and for the performance of the other agreements, covenants

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and obligations contained herein and in the Loan Documents shall be limited as set forth in the Note.

     6.28 Recording and Filing. Borrower will cause the Loan Documents and all amendments
and supplements thereto and substitutions therefor to be recorded, filed, re-recorded and re-filed
in such manner and in such places as Lender shall reasonably request, and will pay on demand all
such recording, filing, re-recording and re-filing taxes, fees and other charges. Borrower shall
reimburse Lender, or its servicing agent, for the costs incurred in obtaining a tax service
company to verify the status of payment of taxes and assessments on the Property.

     6.29 Entire Agreement and Modifications. This Deed of Trust and the other Loan
Documents contain the entire agreements between the parties relating to the subject matter hereof
and thereof and all prior agreements relative hereto and thereto which are not contained herein or
therein are terminated. This Deed of Trust and the other Loan Documents may not be amended,
revised, waived, discharged, released or terminated orally but only by a written instrument or
instruments executed by the party against which enforcement of the amendment, revision, waiver,
discharge, release or termination is asserted. Any alleged amendment, revision, waiver, discharge,
release or termination which is not so documented shall not be effective as to any party.

     6.30 Intentionally Reserved.

     6.31 Secondary Market. Lender may sell, transfer and deliver the Note and the Loan
Documents to one or more investors in the secondary mortgage market (a “Secondary Market
Transaction”). In connection with such sale, Lender may retain or assign responsibility for
servicing the loan evidenced by the Note or may delegate some or all of such responsibility and/or
obligations to a servicer, including, but not limited to, any subservicer or master servicer, on
behalf of the Investors (as hereinafter defined). All references to Lender herein shall refer to
and include, without limitation, any such servicer, to the extent applicable.

     6.32 Dissemination of Information. If Lender determines at any time to sell, transfer
or assign the Note, this Deed of Trust and the other Loan Documents, and any or all servicing
rights with respect thereto, or to grant participations therein (the “Participations”) or issue
mortgage pass-through certificates or other securities evidencing a beneficial interest in a rated
or unrated public offering or private placement (the “Securities”), Lender may forward to each
purchaser, transferee, assignee, servicer, participant, investor, or their respective successors
in such Participations and/or Securities (collectively, the “Investors”) or any rating agency
rating such Securities (each a “Rating Agency”), each prospective Investor and each of the
foregoing’s respective counsel, all documents and information which Lender now has or may
hereafter acquire relating to the Debt, to Borrower, any guarantor, any indemnitor, and the
Property, which shall have been furnished by Borrower and any Indemnitor, as Lender determines
necessary or desirable.

     6.33 Certain Matters Relating to Property Located in the State of New Mexico. With
respect to the Property which is located in the State of New Mexico, notwithstanding anything
contained herein to the contrary:

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          A. If any of the terms, conditions, or obligations applied to Borrower by virtue of the
phrase “statutory mortgage condition” pertain to any matter that is expressly addressed by an
agreement of Borrower as provided in this Deed of Trust, the latter will control, but only to the
extent of any conflict.

          B. BORROWER EXPRESSLY SUBJECTS THE PROPERTY TO THE TERMS OF THE DEED OF TRUST ACT. BORROWER
INTENDS THAT TRUSTEE AND LENDER RECEIVE THROUGH THIS DEED OF TRUST ALL THE RIGHTS, POWERS AND
REMEDIES ACCORDED A TRUSTEE AND A LENDER AS PROVIDED IN THE DEED OF TRUST ACT WHETHER OR NOT SUCH
RIGHTS, POWERS AND REMEDIES ARE EXPRESSLY GRANTED OR RESERVED IN THIS DEED OF TRUST.

          C. Redemption Period. If the Property is sold at foreclosure sale following a court
ordered judicial foreclosure, the redemption period after foreclosure sale will be one month
instead of nine months as provided in Section 39-5-19 NMSA 1978.

          D. Limitation of Indemnification. To the extent, if at all, a court of competent
jurisdiction determines that N.M. Stat. Ann. Section 56-7-1 applies to any indemnification
provisions in this Deed of Trust, including certain types of insurance coverage as set forth in
N.M. Stat. Ann. Section 56-7-1, such provisions shall not extend to liability, claims, damages,
losses or expenses, including attorney fees, arising out of bodily injury to persons or damage to
property caused by or resulting from, in whole or in part, the negligence, act or omission of the
indemnitee or additional insured, as the case may be, its officers, employees or agents and shall
further be modified, if required, by the provisions of N.M. Stat. Ann. Section 56-7-1 (B).

     6.34 REMIC Opinions. In the event Borrower requests Lender’s consent with respect to
any proposed action or Borrower proposes to take any action not otherwise requiring Lender’s
specific consent under the Loan Documents, which Lender determines, in its discretion, may affect
(i) the “REMIC” status of Lender, its successors or assigns, or (ii) the status of this Deed of
Trust as a “qualified mortgage” as defined in Section 860G of the Internal Revenue Code of 1986
(or any succeeding provision of such law), Lender reserves the right to require Borrower, at
Borrower’s sole expense, to obtain, from counsel satisfactory to Lender in its discretion, an
opinion, in form and substance satisfactory to Lender in its discretion, that no adverse tax
consequences will arise as a result of the proposed course of action.

ARTICLE VII.

CONCERNING THE TRUSTEE

     7.1 Certain Rights. With the approval of Lender, Trustee shall have the right to
take any and all of the following actions: (i) to select, employ and consult with counsel (who
may be, but need not be, counsel for Lender) upon any matters arising hereunder, including the
preparation, execution and interpretation of the Loan Documents, and shall be fully protected in
relying as to legal matters on the advice of counsel, (ii) to execute any of the trusts and
powers hereof and to perform any duty hereunder either directly or through his or her agents or

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attorneys, (iii) to select and employ, in and about the execution of his or her duties hereunder,
suitable accountants, engineers and other experts, agents and attorneys-in-fact, either corporate
or individual, not regularly in the employ of Trustee (and Trustee shall not be answerable for any
act, default, negligence, or misconduct of any such accountant, engineer or other expert, agent or
attorney-in-fact, if selected with reasonable care, or for any error of judgment or act done by
Trustee in good faith, or be otherwise responsible or accountable under any circumstances
whatsoever, except for Trustee’s gross negligence or bad faith), and (iv) any and all other lawful
action that Lender may instruct Trustee to take to protect or enforce Lender’s rights hereunder.
Trustee shall not be personally liable in case of entry by Trustee, or anyone entering by virtue of
the powers herein granted to Trustee, upon the Property for debts contracted for or liability or
damages incurred in the management or operation of the Property. Trustee shall have the right to
rely on any instrument, document, or signature authorizing or supporting any action taken or
proposed to be taken by Trustee hereunder, believed by Trustee in good faith to be genuine. Trustee
shall be entitled to reimbursement for expenses incurred by Trustee in the performance of Trustee’s
duties hereunder and to reasonable compensation for such of Trustee’s services hereunder as shall
be rendered. Borrower will, from time to time, pay the compensation due to Trustee hereunder and
reimburse Trustee for, and save and hold Trustee harmless against, any and all liability and
expenses which may be incurred by Trustee in the performance of Trustee’s duties.

     7.2 Retention of Money. All moneys received by Trustee shall, until used or applied
as herein provided, be held in trust for the purposes for which they were received, and shall be
segregated from any other moneys of Trustee.

     7.3 Successor Trustees. Trustee may resign by the giving of notice of such
resignation in writing to Lender. If Trustee shall die, resign or become disqualified from acting
in the execution of this trust, or if, for any reason, Lender, in Lender’s sole discretion and
with or without cause, shall prefer to appoint a substitute trustee or multiple substitute
trustees, or successive substitute trustees or successive multiple substitute trustees, to act
instead of the aforenamed Trustee, Lender shall have full power to appoint a substitute trustee
(or, if preferred, multiple substitute trustees) in succession who shall succeed (and if multiple
substitute trustees are appointed, each of such multiple substitute trustees shall succeed) to all
the estates, rights, powers and duties of the aforenamed Trustee. Such appointment may be executed
by any authorized agent of Lender, and if such Lender be a corporation and such appointment be
executed on its behalf by any officer of such corporation, such appointment shall be conclusively
presumed to be executed with authority and shall be valid and sufficient without proof of any
action by the board of directors or any superior officer of the corporation. Borrower hereby
ratifies and confirms any and all acts which the aforenamed Trustee, or his or her successor or
successors in this trust, shall do lawfully by virtue hereof. If multiple substitute trustees are
appointed, each of such multiple substitute trustees shall be empowered and authorized to act
alone without the necessity of the joinder of the other multiple substitute trustees, whenever any
action or undertaking of such substitute trustees is requested or required under or pursuant to
this Deed of Trust or applicable law. Any prior election to act jointly or severally shall not
prevent either or both of such multiple substitute Trustees from subsequently executing, jointly
or severally, any or all of the provisions hereof.

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     7.4 Perfection of Appointment. Should any deed, conveyance, or instrument of any
nature be required from Borrower by any Trustee or substitute Trustee to more fully and certainly
vest in and confirm to Trustee or substitute Trustee such estates, rights, powers, and duties,
then, upon request by Trustee or substitute trustee, any and all such deeds, conveyances and
instruments shall be made, executed, acknowledged, and delivered and shall be caused to be recorded
and/or filed by Borrower.

     7.5 Succession Instruments. Any substitute trustee appointed pursuant to any of the
provisions hereof shall, without any further act, deed or conveyance, become vested with all the
estates, properties, rights, powers, and trusts of its, his or her predecessor in the rights
hereunder with like effect as if originally named as Trustee herein; but nevertheless, upon the
written request of Lender or of the substitute trustee, the Trustee ceasing to act shall execute
and deliver any instrument transferring to such substitute trustee, upon the trusts herein
expressed, all the estates, properties, rights, powers, and trusts of the Trustee so ceasing to
act, and shall duly assign, transfer and deliver any of the property and moneys held by such
Trustee to the substitute trustee so appointed in such Trustee’s place.

     7.6 No Representation by Trustee or Lender. By accepting or approving anything
required to be observed, performed, or fulfilled or to be given to Trustee or Lender pursuant to
the Loan Documents, including, without limitation, any officer’s certificate, balance sheet,
statement of profit and loss or other financial statement, survey, appraisal or insurance policy,
neither Trustee nor Lender shall be deemed to have warranted, consented to, or affirmed the
sufficiency, legality, effectiveness or legal effect of the same, or of any term, provision, or
condition thereof, and such acceptance or approval thereof shall not be or constitute any warranty
or affirmation with respect thereto by Trustee or Lender.

[THE BALANCE OF THIS PAGE WAS LEFT BLANK INTENTIONALLY]

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     IN WITNESS WHEREOF, Borrower has executed this Deed of Trust on the day and year first
written above.

	 	 	 	 	 
	 	BORROWER:

CAMPUS CREST AT LAS CRUCES, LLC, a Delaware

limited liability company
 	 
	 	By:  	Campus Crest Las Cruces Manager, LLC, a Delaware

limited liability company, its Manager 

	 
	 	By:  	/s/ Michael S. Hartnett
 	 
	 	 	Name:  	Michael S. Hartnett 	 
	 	 	Title:  	Director 	 

 

 

	 	 	 	 	 

	 	 	 	 	 	 	 

	STATE OF North Carolina

	 	 	)

)	 	 	ss:
	COUNTY OF Guilford

	 	 	)	 	 	 

     This instrument was acknowledged before me on the 14 day of September, 2006, by MICHAEL S.
HARTNETT, as the Director of Campus Crest Las Cruces Manager, LLC, a Delaware limited liability
company, the Manager of CAMPUS CREST AT LAS CRUCES, LLC, a Delaware limited liability company.

 

Notary Public

(NOTARIAL SEAL)

My Commission Expires: April 4, 2011

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