Document:

Exhibit 10.19

 

DEED OF
TRUST, ASSIGNMENT OF RENTS,

SECURITY AGREEMENT AND FIXTURE FILING

 

RKB
WILLOWWOOD LLC

(Trustor, as
Grantor)

 

Trustor’s
Organizational Identification Number: 3641649

 

to

 

RICHARD W.
KLEIN, JR.

(Trustee, as
Grantee)

 

and

 

ARCHON
FINANCIAL, L.P.

(Beneficiary, as
Grantee)

 

Dated: As of June 13,
2003

 

Property
Location:

10302 - 10304
Eaton Place

Fairfax, Virginia

 

Loan No. 09-0001760

 

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

 

DOCUMENT PREPARED BY AND WHEN RECORDED, RETURN TO:

 

Kroll McNamara Evans & Delehanty, LLP

29 South Main Street

West Hartford, CT 06107

Attn: Edward J. McNamara, Esq.

 

Archon Financial, L.P.

Deed of Trust, Assignment of Rents,

Security Agreement and Fixture Filing

Willowwood III & IV, Fairfax VA

 

 

TABLE OF
CONTENTS

 

	
  Paragraph

  	
   

  	
  Heading

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  1.

  	
   

  	
  Certain Representations, Warranties and
  Covenants of Trustor

  	
   

  
	
  2.

  	
   

  	
  Insurance

  	
   

  
	
  3.

  	
   

  	
  Casualty and Condemnation

  	
   

  
	
  4.

  	
   

  	
  Use of the Proceeds of Insurance or Award

  	
   

  
	
  5.

  	
   

  	
  Tax and Insurance Impound

  	
   

  
	
  6.

  	
   

  	
  Escrow Funds

  	
   

  
	
  7.

  	
   

  	
  Leases and Rents

  	
   

  
	
  8.

  	
   

  	
  Transfer or Encumbrance of the Trust Property

  	
   

  
	
  9.

  	
   

  	
  Single Purpose Entity/Separateness

  	
   

  
	
  10.

  	
   

  	
  Maintenance of Trust Property

  	
   

  
	
  11.

  	
   

  	
  Defeasance

  	
   

  
	
  12.

  	
   

  	
  Estoppel Certificates and No Default Affidavits

  	
   

  
	
  13.

  	
   

  	
  Changes in Laws Regarding Taxation

  	
   

  
	
  14.

  	
   

  	
  No Credits on Account of the Debt

  	
   

  
	
  15.

  	
   

  	
  Documentary Stamps

  	
   

  
	
  16.

  	
   

  	
  Controlling Agreement

  	
   

  
	
  17.

  	
   

  	
  Financial Statements

  	
   

  
	
  18.

  	
   

  	
  Performance of Other Agreements

  	
   

  
	
  19.

  	
   

  	
  Further Acts, Etc.

  	
   

  
	
  20.

  	
   

  	
  Recording of Deed of Trust, Etc.

  	
   

  
	
  21.

  	
   

  	
  Notice of Certain Events

  	
   

  
	
  22.

  	
   

  	
  Events of Default

  	
   

  
	
  23.

  	
   

  	
  Late Payment Charge

  	
   

  
	
  24.

  	
   

  	
  Beneficiary’s Right To Cure Defaults

  	
   

  
	
  25.

  	
   

  	
  Remedies

  	
   

  
	
  26.

  	
   

  	
  Right of Entry and Inspection

  	
   

  
	
  27.

  	
   

  	
  Security Agreement

  	
   

  
	
  28.

  	
   

  	
  Actions and Proceedings

  	
   

  
	
  29.

  	
   

  	
  Contest of Certain Claims

  	
   

  
	
  30.

  	
   

  	
  Recovery of Sums Required to be Paid

  	
   

  
	
  31.

  	
   

  	
  Marshalling and Other Matters

  	
   

  
	
  32.

  	
   

  	
  Hazardous Substances

  	
   

  
	
  33.

  	
   

  	
  Environmental Operations

  	
   

  
	
  34.

  	
   

  	
  Environmental Monitoring

  	
   

  
	
  35.

  	
   

  	
  Compliance with Law; Alterations

  	
   

  
	
  36.

  	
   

  	
  Indemnification

  	
   

  
	
  37.

  	
   

  	
  Notices

  	
   

  
	
  38.

  	
   

  	
  Authority

  	
   

  
	
  39.

  	
   

  	
  Non-Waiver

  	
   

  
	
  40.

  	
   

  	
  No Oral Change

  	
   

  

 

i

 

	
  41.

  	
   

  	
  Liability

  	
   

  
	
  42.

  	
   

  	
  Inapplicable Provisions

  	
   

  
	
  43.

  	
   

  	
  Headings, Etc.

  	
   

  
	
  44.

  	
   

  	
  Duplicate Originals

  	
   

  
	
  45.

  	
   

  	
  Definitions

  	
   

  
	
  46.

  	
   

  	
  Homestead

  	
   

  
	
  47.

  	
   

  	
  Assignments

  	
   

  
	
  48.

  	
   

  	
  Waiver of Jury Trial

  	
   

  
	
  49.

  	
   

  	
  Trustee’s Fees; Substitute Trustee

  	
   

  
	
  50.

  	
   

  	
  Power of Sale

  	
   

  
	
  51.

  	
   

  	
  Recourse Provisions

  	
   

  
	
  52.

  	
   

  	
  Miscellaneous

  	
   

  
	
  53.

  	
   

  	
  Reconveyance of Trust Property

  	
   

  
	
  54.

  	
   

  	
  Indemnification Paragraphs

  	
   

  
	
  55.

  	
   

  	
  Special State Provisions

  	
   

  

 

ii

 

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

 

WITNESSETH:

 

To secure (i) the payment of an
indebtedness in the original principal sum of Forty Million and No/100 Dollars
($40,000,000), lawful money of the United States of America, to be paid with
interest according to a certain deed of trust note of even date herewith made
by Trustor to Beneficiary (the deed of trust note together with all extensions,
renewals, modifications, substitutions, consolidations and amendments thereof
being hereinafter collectively called the “Note”) and all
other sums due hereunder, under the other Loan Documents (hereinafter defined)
and under the Note, including, without limitation, interest, default interest, late
charges, prepayment premiums and any sums advanced by Beneficiary to protect or
preserve the hereinafter defined Trust Property (said indebtedness and interest
due under the Note and all other sums due hereunder under the Note and the
other Loan Documents being hereinafter collectively referred to as the “Debt”), and (ii) the full and prompt
performance of each and every other obligation of Trustor contained herein or
in the Loan Documents (collectively the “Obligations”), Trustor has deeded, mortgaged, given, granted, bargained, sold,
alienated, enfeoffed, conveyed, confirmed, warranted, pledged, assigned, and
hypothecated and by these presents does hereby irrevocably, unconditionally and
absolutely deed, mortgage, give, grant, bargain, sell, alien, enfeoff, convey,
confirm, warrant, pledge, assign and hypothecate unto Trustee (in trust, with
power of sale), the real property described in Exhibit A attached
hereto (the “Premises”) and the buildings, structures, fixtures,
additions, enlargements, extensions, modifications, repairs, replacements and
improvements now or hereafter located or erected thereon (the “Improvements”);

 

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

 

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

 

 

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

 

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

 

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

 

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

 

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

 

2

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

3

 

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

 

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

 

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

 

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

 

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

 

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

 

4

 

free and clear of all liens, encumbrances
and charges whatsoever except for those exceptions shown in the title insurance
policy insuring the lien of this Deed of Trust. Trustor represents and warrants
that this Deed of Trust is and will remain a valid and enforceable first lien
on and security interest in the Trust Property, subject only to said
exceptions. Trustor further represents and warrants that it is in compliance
with the terms of that certain Declaration of Access Utilities, and Signage
Easement dated January 13, 1986, recorded in Book 6337, Page 1936 of
the Fairfax County land records. Trustor shall forever warrant, defend and
preserve such title and the validity and priority of the lien of this Deed of
Trust and shall forever warrant and defend the same to Beneficiary against the
claims of all persons whomsoever.

 

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

 

(d)                                 Trustor
represents and warrants to Beneficiary that (i) Trustor is not an “investment
company,” or a company “controlled” by an “investment company,” as such terms are
defined in the Investment Company Act of 1940, as amended; (ii) no part of
the proceeds of the Loan will be used for the purpose of purchasing or
acquiring any “margin stock” within the meaning of Regulations T, U or X of the
Board of Governors of the Federal Reserve System or for any other purpose which
would be inconsistent with such Regulations T, U or X or any other Regulations
of such Board of Governors, or for any purpose prohibited by legal requirements
or by the terms and conditions of the Loan Documents; (iii) the Loan is
solely for the business purpose of Trustor, and is not for personal, family,
household, or agricultural purposes; and (iv) the Note, this Deed of Trust
and the other Loan Documents are not subject to any right of rescision,
set-off, counterclaim or defense, including the defense of usury, nor would the
operation of any of the terms of the Note, this Deed of Trust or the other Loan
Documents, or the exercise of any right thereunder, render this Deed of Trust
unenforceable, in whole or in part, or subject to any right of rescission,
set-off, counterclaim or defense, including the defense of usury.

 

5

 

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

 

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

 

(g)                                 Trustor
represents and warrants to Beneficiary that to its best knowledge and belief,
except as expressly disclosed in writing in the Leases or the rent roll for the
Improvements delivered to Beneficiary prior to the date hereof, (i) Trustor
is the sole owner of the entire lessor’s interest in the Leases, (ii) the
Leases are valid and enforceable and in full force and effect, (iii) all of
the Leases are arm’s-length agreements with bona fide, independent third
parties, (iv) no party under any Lease is in default in any material
respect, (v) all Rents due have been paid in full, (vi) the terms of
all alterations, modifications and amendments to the Leases are reflected in
the written documents delivered to Beneficiary prior to the date hereof, (vii) none
of the Rents

 

6

 

reserved in the Leases have been assigned
or otherwise pledged or hypothecated (except such pledge or hypothecation that
will be fully terminated and released in connection with the filing and
recordation of this Deed of Trust), (viii) none of the Rents have been
collected for more than one (1) month in advance (except a security
deposit that shall not be deemed rent collected in advance), (ix) the
premises demised under the Leases have been completed and the tenants under the
Leases have accepted the same and have taken possession of the same on a
rent-paying basis, (x) there exist no offsets or defenses to the payment of any
portion of the Rents and Trustor has no monetary obligation to any tenant under
any Lease, (xi) Trustor has received no notice from any tenant challenging the
validity or enforceability of any Lease, (xii) there are no agreements with the
tenants under the Leases other than expressly set forth in each Lease, (xiii)
no Lease contains an option to purchase, right of first refusal to purchase, or
any other similar provision respecting the Premises or Improvements, (xiv) no
person has any possessory interest in, or right to occupy, the Premises or
Improvements except under and pursuant to a Lease, (xv) all security deposits
relating to the Leases reflected on the rent roll delivered by Trustor to
Beneficiary have been collected in cash by Trustor or are evidenced by a letter
of credit received by Trustor, and (xvi) no brokerage commissions or finders
fees are due and payable regarding any Lease.

 

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

 

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

 

(j)                                     The Property
Management Agreement, dated as of May 22, 2003, (the “Management Agreement”) between Trustor and Republic Properties
Corporation, a District of Columbia corporation (the “Manager”) pursuant to which Manager operates the
Trust Property is in full force and effect and there is no default or violation
by any party thereunder. The fee due under the Management Agreement, and the
terms and provisions of the Management Agreement, are subordinate to this Deed
of Trust and the Manager shall attorn to Beneficiary. Trustor shall not
terminate, cancel, modify, renew or extend the Management Agreement, or enter
into any

 

7

 

agreement relating to the management or
operation of the Trust Property with Manager or any other party without the
express prior written consent of Beneficiary, which consent shall not be
unreasonably withheld. If at any time Beneficiary consents to the appointment
of a new manager, such new manager and Trustor shall, as a condition of
Beneficiary’s consent, execute a Manager’s Consent and Subordination of
Management Agreement in the form then used by Beneficiary. If Trustor proposes
to enter into an agreement relating to the management or operation of the Trust
Property with any person other than Manager or the Trustor’s Governing Entity,
Beneficiary may condition its consent to such new arrangement upon Beneficiary’s
receipt of written recommendations from the Rating Agencies (as hereinafter
defined) to the effect that the proposed change in property manager will not
result in a requalification, reduction or withdrawal of any rating initially
assigned or to be assigned in a Secondary Market Transaction (as hereinafter
defined), if Beneficiary reasonably determines it necessary or prudent to do
so. Trustor shall reimburse Beneficiary on demand for all of Beneficiary’s
actual out-of pocket costs incurred in processing Trustor request for consent
to new property management arrangements.

 

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

 

(1)                                  Trustor warrants,
represents and covenants that neither Trustor nor Guarantor is or will be an
entity or person (i) that is listed in the Annex to, or is otherwise
subject to the provisions of Executive Order 13224 issued on September 24,
2001 (“EO13224”), (ii) whose name appears on the
United States Treasury Department’s Office of Foreign Assets Control (“OFAC”) most current
list of “Specifically Designated National and Blocked Persons” (which list may
be published from time to time in various mediums including, but not limited
to, the OFAC website, http:www.treas.gov/ofac/tllsdn.pdf) (iii) who commits,
threatens to commit or supports “terrorism”, as that term is defined in EO
13224, or (iv) who is otherwise affiliated with any entity or person
listed above (any and all parties or persons described in clauses [i] – [iv]
above are herein referred to as a “Prohibited Person”). Trustor covenants and agrees that neither

 

8

 

Trustor nor Guarantor will (x) knowingly
conduct any business, nor engage in any transaction or dealing, with any
Prohibited Person, including, but not limited to, knowingly making or receiving
any contribution of funds, goods, or services, to or for the benefit of a
Prohibited Person in violation of applicable laws, or (y) knowingly engage in
or conspire to engage in any transaction that evades or avoids, or has the
purpose of evading or avoiding, or attempts to violate, any of the prohibitions
set forth in EO13224. Trustor further covenants and agrees to deliver (from
time to time) to Beneficiary any such certification or other evidence as may be
reasonably requested by Beneficiary, confirming that (i) neither Trustor
nor Guarantor is a Prohibited Person and (ii) neither Trustor nor
Guarantor has knowingly engaged in any business, transaction or dealings with a
Prohibited Person, including, but not limited to, knowingly making or receiving
any contribution of funds, goods, or services, to or for the benefit of a
Prohibited Person in violation of applicable laws.

 

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

 

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

 

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

 

(ii)                                  Business income
interruption insurance (A) with loss payable to Beneficiary, (B) covering
losses of income and Rents derived from the Premises and Improvements and any
non-insured property on or adjacent to the Premises resulting from any risk or
casualty required to be carried under subparagraph (a)(i) of this Paragraph
2, (C) containing an extended period of indemnity endorsement which
provides that after the physical loss to the Improvements and all other
insurable portions of the Trust Property have been repaired, the continued loss
of income will be insured until such income either returns to the same level it
was at prior to the loss, or the expiration of eighteen (18) months from the
date of the loss, whichever first occurs, and

 

9

 

notwithstanding that the policy may expire
prior to the end of such period, and (D) in an amount equal to one hundred
percent (100%) of the projected gross income from the Trust Property for a period
of eighteen (18) months. The amount of such business income insurance shall be
determined by Beneficiary prior to the date hereof and at least once each year
thereafter based on Trustor’s reasonable estimate of the gross income from the
Trust Property for the succeeding eighteen (18) month period. All insurance
proceeds payable to Beneficiary pursuant to this Subparagraph 2(a)(ii) shall
be held by Beneficiary and shall, subject to the provisions of Paragraph 3
and Paragraph 4, be applied to the Debt and/or disbursed to Trustor for
payment of the costs and expenses to maintain and operate the Premises and
Improvements in such amounts and at such times as Beneficiary may determine; provided,
however, that nothing herein contained shall be deemed to relieve Trustor
of its obligation to pay the Debt on the respective dates of payment provided
for in the Note except to the extent such amounts are actually paid out of the
proceeds of such business income insurance. The perils covered by this
insurance shall be the same as those accepted on the real property, including
flood and earthquake, as necessary. This coverage shall be written on the same
basis as the property policy stated in Subparagraph 2(a)(i) above.

 

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

 

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

 

(v)                                 At all times
during which structural construction, repairs or alterations are being made
with respect to the Improvements: (A) owner’s contingent or protective
liability insurance covering claims not covered by or under the terms or
provisions of the commercial general liability insurance policy described in Subparagraph
2(b), and (B) the
insurance provided for in Subparagraph 2(a)(i) written on a
so-called builder’s risk completed value form (1) on a non-reporting
basis, (2) against all risks insured against pursuant to Subparagraph
2(a)(i), (3) including permission to occupy the Improvements, and (4) with
an agreed amount endorsement waiving co-insurance provisions. The amount of
such coverage must be approved by Beneficiary.

 

(b)                                 Commercial General
Liability/Umbrella Liability.  Comprehensive general liability insurance against
claims for personal injury, bodily injury, death or property damage occurring
upon, in or about the Premises and Improvements, such insurance (A) to be
on the so-called “occurrence” form containing minimum limits per occurrence of
$1,000,000.00 and

 

10

 

$2.000,000.00 in the aggregate, together
with excess and/or umbrella liability in an amount of at least $20,000,000; (B) to
contain a liquor liability endorsement if any part of the Premises or
Improvements are covered by a liquor license; (C) to continue at not less
than the aforesaid limit until required to be changed by Beneficiary in writing
by reason of changed economic conditions making such protection inadequate; (D) to
cover at least the following hazards, (1) premises and operations, (2) products
and completed operations on an “if any” basis, (3) independent
contractors, (4) blanket contractual liability for all written and oral
contracts, (5) contractual liability covering the indemnities contained in
Paragraph 36 hereof to the extent the same is available, and (6) all
legal liability imposed upon Trustor and all court costs and attorneys’ fee
incurred in connection with the ownership, operation and maintenance of the
Trust Property; and (E) to be without any deductible. If Trustor has a
multi-location policy or loan, the coverage must be maintained on a “per-location
basis”.

 

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

 

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

 

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

 

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

 

11

 

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

 

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

 

12

 

reduction or cancellation of any of the
Policies or of any of the coverages afforded under any of the Policies. Within
thirty (30) days after request by Beneficiary, Trustor shall obtain such
increases in the amounts of coverage required hereunder as may be reasonably
requested by Beneficiary, taking into consideration changes in the value of
money over time, changes in liability laws, changes in prudent customs and
practices, and the like. The insurance coverages required by this Paragraph
2 may be effected under a so-called “blanket” insurance policy, which
covers other property in addition to the Trust Property, provided that such
blanket policy (or certificate issued thereunder) shall specify, except in the
case of commercial general liability insurance, the premises address of each
building comprising the Improvements that are covered under such policy and the
portion of the total coverage of such policy that is allocated to the Trust
Property. With respect to all blanket insurance policies, Trustor shall comply
with all other terms and conditions of this Paragraph 2 as if such
blanket policies were “Policies.”

 

3.                                      Casualty and Condemnation.

 

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

 

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

 

(c)                                  Subject to the
terms of Paragraph 4 below, all insurance proceeds payable under the
Policies and all awards or payments payable on account of a Taking (“Award”), and all causes of action, claims, compensation,
awards and recoveries for any other damage, injury, or loss or diminution in
value of the Trust Property, are hereby assigned to and shall be paid to Beneficiary.
Trustor agrees to execute and deliver from time to time such further
instruments as may be requested by Beneficiary to confirm the foregoing
assignment to Beneficiary. Trustor hereby irrevocably constitutes and appoints
Beneficiary as the attorney-in-fact of Trustor (which power of attorney shall
be irrevocable so long as any of the Debt is outstanding, shall be deemed coupled
with an interest, shall survive the voluntary or involuntary dissolution of
Trustor and shall not be affected by any disability or incapacity suffered by
Trustor subsequent to the date hereof), with full power of substitution,
subject to the terms of Paragraph 4, to settle for, collect and receive
all proceeds of insurance and any Award and any other awards, damages,
insurance proceeds, payments or other compensation from the parties or
authorities making the same, to appear in and prosecute any proceedings
therefor and to give receipts and acquittance therefor.

 

13

 

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

 

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

 

4.                                      Use of the Proceeds of
Insurance or Award.

 

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

 

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

 

(ii)                                  In the event of a
Casualty that does exceed $500,000.00 but does not exceed ten percent (10%) of
the original principal amount of the Note, Beneficiary may settle and adjust
any claim, provided, however, that any final agreement with the insurance
company or companies of the amount to be paid for the Casualty shall be subject
to the approval of Trustor as hereinafter provided, such approval not to be
unreasonably withheld, delayed or conditioned. In any such case, the proceeds
under the Policies shall be due and payable solely to Beneficiary and held in
escrow by Beneficiary in accordance with the terms of this Deed of Trust.
Trustor shall have the right to participate in the settlement discussions with
the applicable insurance company or companies and Beneficiary shall keep
Trustor apprised of all settlement offers and discussions and the results
thereof. Beneficiary shall provide ten (10) business days advance written
notice to Trustor of the terms and amount of any proposed final agreement on
any such claim (such proposed final amount, the “Beneficiary Approved
Settlement Amount”). If Trustor
disapproves of Beneficiary’s settlement of the claim on such terms and at such
amount, Trustor must furnish written notice of such disapproval (any such
notice, an “Arbitration
Notice”) to Beneficiary
within ten (10) business days after Trustor’s receipt of Beneficiary’s
notice, such notice of disapproval by Trustor to state Trustor’s election to
implement the arbitration procedure set forth in this Paragraph 4 below.
Trustor’s failure to furnish notice of disapproval prior to the expiration of
such ten (10) business day period shall constitute and be deemed Trustor’s

 

14

 

consent and approval to Beneficiary’s
settlement of the applicable claim for an amount not less than the Beneficiary
Approved Settlement Amount.

 

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

 

(iv)                              In the event of a
Taking where the Award is in an aggregate amount less than ten percent (10%) of
the original principal balance of the Note and the Taking does not affect any
portion of the Improvements or any portion of the Premises which in Beneficiary’s
reasonable determination is integral to the operation of the Premises and
Improvements, or in the event of a Casualty where the loss is in an aggregate
amount less than twenty-five percent (25%) of the original principal balance of
the Note, and (A) no Event of Default has occurred which is then
continuing, and (B) in the reasonable judgment of Beneficiary (1) the
Trust Property can be restored within twelve (12) months after insurance
proceeds or the proceeds of the Award are made available and not less than six (6) months
prior to the stated Maturity Date to a condition at least equal to the
condition thereof that existed prior to the Casualty or Taking, (2) such
restored Trust Property will be such that income from its operation is
reasonably anticipated to be sufficient to pay operating expenses of the Trust
Property and debt service on the Debt in full (such assessment by Beneficiary
to include consideration of the effect of the termination of any Leases due to
such Casualty or Taking), (3) all necessary government approvals will be
obtained to allow the rebuilding and reoccupancy of the Improvements, (4) there
are sufficient sums available (through insurance proceeds, the Award and
contributions by Trustor, the full amount of which shall at Beneficiary’s
option have been deposited with Beneficiary) for the Repair Work (defined
below) (including, without limitation, for any reasonable costs and expenses of
Beneficiary to be incurred in administering the Repair Work) and for payment of
the Debt as it becomes due and payable during the Repair Work, and (C) Trustor
shall have delivered to Beneficiary, at Trustor’s sole cost and expense, an
appraisal report in form and substance reasonably satisfactory to Beneficiary
from an appraiser reasonably approved by Beneficiary showing the value of the
Trust Property as proposed to be restored or repaired, then, and only then, the
proceeds of insurance or of the Award (after reimbursement of any expenses
incurred by Beneficiary) shall be applied in the manner set forth below to
reimburse Trustor for the cost of work of restoring, repairing, replacing or
rebuilding (collectively the “Repair Work”) the Trust
Property or the part thereof subject to the Casualty or Taking. Trustor hereby
covenants and agrees to commence and diligently to prosecute the Repair Work;
provided always, that Trustor shall pay all costs (and if required by
Beneficiary, Trustor shall deposit the total thereof with Beneficiary in
advance) of the Repair Work in excess of the net proceeds of insurance or Award
made available pursuant to the terms hereof.

 

15

 

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

 

(vi)                              In the event
Trustor is either entitled to disbursements from the insurance proceeds or
Award proceeds held by Beneficiary or Beneficiary elects to make such proceeds
available to Trustor for the Repair Work, such proceeds shall be disbursed to
Trustor for costs and expenses incurred by Trustor for the Repair Work
following (A) the receipt by Beneficiary of a written request from Trustor
for disbursement and a certification by Trustor to Beneficiary that the
applicable item of Repair Work has been completed, (B) the delivery to
Beneficiary of invoices, receipts or other evidence verifying the cost of
performing the Repair Work, and (C) for disbursement requests in excess of
$10,000.00 with respect to any single item of Repair Work, or for any single
item of Repair Work that is structural in nature, delivery to Beneficiary of (1) affidavits,
lien waivers or other evidence reasonably satisfactory to Beneficiary showing
that all materialmen, laborers, subcontractors and any other parties who might
or could claim statutory or common law liens and who are furnishing or have
furnished material or labor to the Trust Property have been paid all amounts
due for labor and materials furnished to the Trust Property, (2) a
certification from an inspecting architect or other third party acceptable to
Beneficiary describing the completed Repair Work and verifying its completion
and value, and (3) a new (or amended) certificate of occupancy for the
portion of the Improvements covered by such Repair Work, if said new
certificate of

 

16

 

occupancy is required by law, or a
certification by Trustor that no new certificate of occupancy is required by
law. Beneficiary shall not be required to make any such advances more
frequently than one time in any calendar month. Beneficiary may, in any event,
require that all plans and specifications for the Repair Work be submitted to
and approved by Beneficiary prior to commencement of the Repair Work, which
approval shall not be unreasonably withheld, delayed or conditioned. In no
event shall Beneficiary assume any duty or obligation for the adequacy, form or
content of any such plans and specifications, or for the performance, quality
or workmanship of any Repair Work. With respect to disbursements to be made by
Beneficiary, no payment made prior to the final completion of the Repair Work
shall exceed ninety percent (90%) of the value of the Repair Work performed
from time to time; funds other than proceeds of insurance or the Award shall be
disbursed prior to disbursement of such proceeds; and at all times, the
undisbursed balance of such proceeds remaining in the hands of Beneficiary,
together with funds deposited for that purpose or irrevocably committed to the
satisfaction of Beneficiary by or on behalf of Trustor for that purpose, shall
be at least sufficient in the reasonable judgment of Beneficiary to pay for the
cost of completion of the Repair Work, free and clear of all liens or claims
for lien. Any surplus which may remain out of the proceeds of insurance or
Award held by Beneficiary after payment of the costs of the Repair Work shall,
in the sole and absolute discretion of Beneficiary, be retained, by Beneficiary
and applied to payment of the Debt or paid to the party or parties legally
entitled to such surplus.

 

(vii)                           If Trustor
delivers an Arbitration Notice to Beneficiary, Trustor and Beneficiary shall,
within five (5) business days after Beneficiary’s receipt of any such
notice, jointly designate an independent and unaffiliated individual who has
not less than ten (10) years experience with respect to settlement of claims
resulting from casualties in respect of properties similar to the Premises and
Improvements. Not later than five (5) business days after such joint
designation of such individual, each of Trustor and Beneficiary shall submit to
such individual its separate determinations of the commercially reasonable
settlement amount for the applicable Casualty together with any documentation
and other backup therefor and shall simultaneously therewith provide a copy of
such submission to the other party. The individual so appointed shall review
the applicable submissions and within ten (10) days after such individual’s
designation select one of the submitted settlement amounts as more accurately
reflective of the commercially reasonable settlement amount. Notice of such
selection shall be furnished to Trustor and Beneficiary by the applicable
individual prior to the expiration of such ten-day period. Upon such selection,
Beneficiary shall be authorized to settle the applicable claim for an amount
not less than the settlement amount so selected without any further right of
consent of Trustor.

 

(viii)                        In the event that
Trustor and Beneficiary are unable to agree on one individual to act as
arbitrator within the five (5) business day period following Beneficiary’s
receipt of the Arbitration Notice as contemplated under subparagraph (vii) above,
then, in such case, the procedure set forth in this subparagraph (viii) shall
be observed in lieu thereof. Not later than five (5) business days after
Beneficiary’s receipt of the applicable notice to arbitrate, Trustor and
Beneficiary shall each designate an

 

17

 

independent and unaffiliated individual who
has not less than ten (10) years experience with respect to settlement of
claims resulting from casualties in respect of properties similar to the
Premises and Improvements and notify the other party of such appointment by
identifying the appointee. Not later than five (5) business days after
both arbitrators are appointed, the two selected arbitrators shall select a
third arbitrator who shall also be an independent and unaffiliated individual
who has not less than ten (10) years experience with respect to settlement
of claims resulting from casualties in respect of properties similar to the
Premises and Improvements, such selection to take place within five (5) business
days after such arbitrator’s appointment. Trustor and Beneficiary shall submit
to such third arbitrator their separate determinations of the commercially
reasonable settlement amount together with any documentation and other backup
therefor and shall simultaneously therewith provide a copy of such submission
to the other party. The third arbitrator so appointed shall review the
applicable submissions and within ten (10) days after such individual’s
designation select one of the submitted settlement amounts as more accurately
reflective of the commercially reasonable settlement amount. Notice of such
selection shall be furnished to Trustor and Beneficiary by the applicable
individual prior to the expiration of such ten-day period. Upon such selection,
Beneficiary shall be authorized to settle the applicable claim for an amount
not less than the settlement amount so selected without any further right of
consent of Trustor.

 

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

 

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

 

(b)                                 If Trustor
undertakes the Repair Work, Trustor shall promptly and diligently at Trustor’s
sole cost and expense and regardless of whether the insurance proceeds or
Award, as appropriate, shall be sufficient for the purpose, complete the Repair
Work to restore the Trust Property as nearly as possible to its value,
condition and character immediately prior to the Casualty or Taking in
accordance with the foregoing provisions.

 

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

 

18

 

against the Note consistent with the prepayment
provisions described therein for casualty or condemnation proceeds.

 

5.                                      Tax and Insurance Impound.  As of the date of
this Deed of Trust, Trustor shall pay to Beneficiary on demand for deposit into
the Tax and Insurance Impound (as defined below) an amount (i) equal to
one-twelfth of the Taxes estimated by Beneficiary to be due to the applicable
taxing authorities as of the date such Taxes are first due and payable without
penalty or interest after the date hereof multiplied by the number of months elapsed
from and including the first month for which such Taxes have been assessed to
and including the first month occurring after the month in which this Deed of
Trust becomes effective, and (ii) one-twelfth of the Insurance Premiums
that Beneficiary estimates will be payable for the renewal of the coverage
afforded by the Policies upon the expiration thereof multiplied by the number
of months elapsed from and including the first month in which the currently
effective Policies became effective to and including the first month occurring
after the month in which this Deed of Trust becomes effective. Thereafter,
Trustor shall pay to Beneficiary on the first day of each calendar month (a) one-twelfth
of the Taxes that Beneficiary estimates will be payable during the next ensuing
twelve (12) months in order to accumulate with Beneficiary sufficient funds to
pay all such Taxes at least thirty (30) days prior to their respective due
dates, and (b) one-twelfth of the Insurance Premiums that Beneficiary
estimates will be payable for the renewal of the coverage afforded by the
Policies upon the expiration thereof in order to accumulate with Beneficiary
sufficient funds to pay all such Insurance Premiums at least thirty (30) days
prior to the expiration of the Policies (the fund into which said amounts in (a) and
(b) above shall be deposited is hereinafter called the “Tax and Insurance Impound”). The monthly payment into the Tax and
Insurance Impound and the payments of interest payable pursuant to the Note
shall be added together and shall be paid as an aggregate sum by Trustor to
Beneficiary. Trustor agrees to notify Beneficiary immediately of any changes to
the amounts, schedules and instructions for payment of any Taxes and Insurance
Premiums of which it has or obtains knowledge and authorizes Beneficiary or its
agent to obtain the bills for Taxes and Other Charges directly from the
appropriate taxing authority. Trustor hereby pledges to Beneficiary and grants
to Beneficiary a security interest in any and all monies now or hereafter
deposited in the Tax and Insurance Impound as additional security for the
payment of the Debt. Provided that there are sufficient amounts on deposit in
the Tax and Insurance Impound and no Event of Default exists that is then
continuing. Beneficiary will apply the Tax and Insurance Impound to payments of
Taxes and Insurance Premiums required to be made by Trustor pursuant hereto. In
making any payment relating to the Tax and Insurance Impound, Beneficiary may
do so according to any bill, statement or estimate procured from the
appropriate public office (with respect to Taxes) or insurer or agent (with
respect to Insurance Premiums), without inquiry into the accuracy of such bill,
statement or estimate or into the validity of any tax, assessment, sale,
forfeiture, tax lien or title or claim thereof. If the amounts on deposit in
the Tax and Insurance Impound shall exceed the amounts due for Taxes and
Insurance Premiums, Beneficiary shall, in its sole discretion, return any
excess to Trustor or credit such excess against future payments to be made to
the Tax and Insurance Impound. In allocating such excess, Beneficiary may deal
with the person shown on the records of Beneficiary to be the owner of the
Trust Property. If at any time Beneficiary determines that the amounts on
deposit in the Tax and Insurance Impound are not or will not be sufficient to
pay the Taxes and Insurance Premiums, Beneficiary shall notify Trustor of such
determination and Trustor shall increase its monthly payments to Beneficiary by
the amount that Beneficiary estimates is sufficient to make up the deficiency
at least thirty (30) days prior to delinquency of the Taxes and/or expiration
of the Policies, as the case may be. Whenever an Event of Default exists that
is then continuing, Beneficiary may apply any sums then present in the Tax and
Insurance Impound to the payment of the Debt in any order in its sole
discretion. Until expended or

 

19

 

applied as above provided, any amounts in
the Tax and Insurance Impound shall constitute additional security for the
Debt. The Tax and Insurance Impound shall not constitute a trust fund and may
be commingled with other monies held by Beneficiary. Unless otherwise required
by applicable law, Trustor shall not receive interest or other earnings on the
Tax and Insurance Impound, which shall be held in Beneficiary’s name at a
financial institution selected by Beneficiary in its sole discretion. If
Beneficiary so elects at any time, Trustor shall provide, at Trustor’s expense,
a tax service contract for the Term issued by a tax reporting agency acceptable
to Beneficiary. If Beneficiary does not so elect, Trustor shall reimburse
Beneficiary for the cost of making annual tax searches throughout the Term.

 

6.                                       Escrow Funds.

 

(a)                                  Replacement Escrow

 

Trustor shall pay
$3,490 to Beneficiary on the first day of each calendar month, as a reserve for
future replacements and repairs required to be made to the Trust Property (the “Replacement Escrow Fund”). Beginning January 1, 2005, and every January 1st
thereafter for the term of the Loan, Trustor shall pay Beneficiary an amount
equal to one-twelfth of 102.5% of the previously required annual Replacement
Escrow Fund amount on each monthly payment date for one year (or until the Loan
is defeased in full pursuant to this Deed of Trust). Trustor hereby pledges to
Beneficiary any and all monies now or hereafter deposited in the Replacement
Escrow Fund as additional security for the payment of the Debt. Provided that
no Event of Default has occurred which is then continuing, Beneficiary shall
make disbursements from the Replacement Escrow Fund as requested, in writing,
by Trustor, and approved by Beneficiary in its reasonable discretion, on a
quarterly basis in increments of no less than $5,000 upon delivery by Trustor
of copies of paid invoices (or with respect to requests in excess of $10,000,
unpaid invoices) for the amounts requested, a certification from the Trustor
stating: (a) the nature and type of the related replacement or repair, (b) that
the related replacement or repair (or the portion thereof for which
disbursements have been received or requested) has been completed in a good and
workmanlike manner and (c) that the related replacement or repair (or the
portion thereof for which disbursements have been received or requested) has
been paid for in full (or, with respect to requests in excess of $10,000, will
be paid for in full from the requested disbursement) and if required by
Beneficiary, lien waivers and releases from all parties furnishing materials
and/or services in connection with the requested payment. Any disbursement by
Beneficiary hereunder for a capital item in excess of $10,000 and not already
paid for by Trustor, shall be made by joint check, payable to Trustor and the
applicable contractor, supplier, materialman, mechanic, subcontractor or other
party to whom payment is due in connection with such capital item. Beneficiary
may require an inspection of the Trust Property at Trustor’s expense prior to
making a disbursement in order to verify completion of replacements and repairs
(or the portion thereof for which disbursements have been received or
requested) for which reimbursement is sought. The Replacement Escrow Fund shall
be held in an interest bearing account in Beneficiary’s name at a financial
institution selected by Beneficiary in its sole discretion. All earnings or
interest on the Replacement Escrow Fund shall be and become a part of such
Replacement Escrow Fund and shall be disbursed as provided in this Paragraph
6(a). All costs and expenses incurred by Beneficiary in establishing and
maintaining such interest bearing account shall be paid by Trustor, Beneficiary
may charge such costs and expenses directly against the Replacement Escrow Fund,
and Trustor shall thereafter promptly pay to Beneficiary for deposit into the

 

20

 

Replacement Escrow Fund the full amount of
such charges and expenses. Upon the occurrence and continuance of an Event of
Default, Beneficiary may apply any sums then present in the Replacement Escrow
Fund to the payment of the Debt in any order in its sole discretion. The
Replacement Escrow Fund shall not constitute a trust fund and may be commingled
with other monies held by Beneficiary. Following the delivery and recording of
a satisfaction, release, reconveyance or discharge of this Deed of Trust duly
executed by Beneficiary, any funds remaining on deposit in the Replacement
Escrow Fund will be disbursed to Trustor.

 

(b)                                 Cancellation
Funds Escrow

 

Trustor shall pay
to Beneficiary all funds received by Trustor from tenants in connection with
the cancellation of any Leases (hereinafter “Cancelled Lease”), including, but
not limited to, any cancellation fees, penalties, tenant improvements, leasing
commissions or other charges (together the “Cancellation Payments”), and such
funds shall be held and disbursed by Beneficiary pursuant to the terms of this
subparagraph (the “Cancelled Lease Escrow Fund”). Notwithstanding the foregoing,
at its sole election Beneficiary may cause all or any portion of the
Cancellation Payments to be deposited into the Rollover Escrow Fund and
disbursed, in accordance with the terms governing the Rollover Escrow Fund, for
expenses relating to the releasing of the space with respect to which they were
paid, provided that upon execution of a New Lease (hereafter defined)
Beneficiary shall cause all or a part of the balance in the Cancelled Lease
Escrow Fund to be deposited (to the extent funds are available therefor) into
the Rollover Escrow Fund and held pursuant to the terms thereof in an amount
equal to the leasing commissions, tenant improvement and other allowances and
other costs related to the New Lease required to be paid by the landlord thereunder.
Trustor hereby pledges to Beneficiary any and all monies now or hereafter
deposited in the Cancelled Lease Escrow Fund as additional security for the
payment of the Debt. Provided that no Event of Default has occurred that is
then continuing, Beneficiary shall make disbursements from the Cancelled Lease
Escrow Fund as follows: (i) the entire amount on deposit in the Cancelled
Lease Escrow Fund shall be disbursed to Trustor following receipt by
Beneficiary of a fully executed Lease covering the space that had been covered
by the Cancelled Lease and which otherwise complies with the requirements for
Leases entered into by Trustor in accordance with Paragraph 7 below and
the separate Assignment of Leases and Rents from Trustor to Beneficiary (a “New
Lease”), a signed tenant estoppel certificate in form and substance reasonably
satisfactory to Beneficiary from the tenant under the New Lease to the effect
that (1) Trustor has delivered possession of the space covered by such New
Lease to such tenant, (2) all tenant improvements obligations of landlord
under such New Lease have been satisfied, (3) tenant knows of no defaults
on such landlord’s part under such New Lease, and (4) tenant is paying
rent as required under such New Lease without setoff or deduction, and (ii) prior
to the time, if ever, that Trustor satisfies the conditions of clause (i) immediately
preceding, Beneficiary shall disburse to Trustor on the first day of each
calendar month commencing the first full calendar month after Beneficiary’s
receipt from Trustor of the Cancellation Payments an amount equal to the
monthly base rental payment that was last payable under the Cancelled Lease,
which disbursement shall continue each month until the earlier of either the
disbursement of all funds in the Cancelled Lease Escrow Fund or the occurrence
of an Event of Default and until such Event of Default is cured. The Cancelled
Lease Escrow Fund shall be held in an interest bearing account in Beneficiary’s
name at a financial institution selected by Beneficiary in its sole discretion.
All earnings or interest on the Cancelled Lease Escrow Fund

 

21

 

shall be and become a part of such
Cancelled Lease Escrow Fund and shall be disbursed as provided in this Paragraph
6(c). All costs and expenses charged by the financial institution where the
Cancelled Lease Escrow Fund account is held shall be paid by Trustor,
Beneficiary may charge such costs and expenses directly against the Cancelled
Lease Escrow Fund; and Trustor shall thereafter pay to Beneficiary on demand
for deposit into the Cancelled Lease Escrow Fund the full amount of such costs
and expenses. Upon the occurrence of an Event of Default that is then
continuing, Beneficiary may apply any sums then present in the Cancelled Lease
Escrow Fund to the payment of the Debt in any order in its sole discretion. The
Cancelled Lease Escrow Fund shall not constitute a trust fund and may be
commingled with other monies held by Beneficiary. Following the delivery and
recording of a satisfaction, release, reconveyance or discharge of this Deed of
Trust duly executed by Beneficiary, any funds remaining on deposit in the
Cancelled Lease Escrow Fund will be disbursed to Trustor.

 

(c)                                  If GSA fails to
exercise the GSA Renewal Option (hereinafter defined) on or before August 31
2003 (such date, the “Outside GSA Renewal Date”), then, in such event, commencing on September 1, 2003, and
continuing on the first day of each succeeding month through and including May 1,
2004, Trustor shall pay the sum of $111,111 to Beneficiary for deposit into an
escrow account held by Beneficiary for tenant improvement and leasing commission
obligations in connection with the re-leasing of the premises (the “GSA Space”) demised to GSA
as of the date of this Deed of Trust (the “GSA Rollover Escrow Fund”), the intent
hereof being that Beneficiary accumulate a reserve of $1,000,000 from such
monthly payments. In lieu of the aforesaid monthly deposits, Trustor shall have
the right to deliver a Letter of Credit (defined in subparagraph (e) below)
in the amount of $1,000,000, in which event the terms of subparagraph (e) below
shall govern and control (and provided no Event of Default has occurred that is
then continuing hereunder any funds held by Beneficiary in the GSA Rollover
Escrow Fund shall be promptly released by Beneficiary to Trustor). In the event
that subsequent to the Outside GSA Renewal Date and prior to the expiration of
the GSA Lease on May 3, 2004, Trustor and GSA execute and deliver a new or
renewal Lease in respect of the entirety of the GSA Space satisfying the terms,
provisions and conditions of this Deed of Trust (a “Delayed GSA Renewal”), then, in such case, Trustor’s obligation to
fund the GSA Rollover Escrow Fund shall cease as of the date of such execution
and delivery. For purposes hereof, (i) “GSA Renewal Option” shall mean and
refer to the right of GSA pursuant to Section 5 of the GSA Lease (defined
below) to renew the term thereof for the period May 4, 2004, through and
including May 3, 2009, on and subject to the terms, provisions and
conditions of the GSA Lease and (ii) “GSA Lease” shall mean and refer to that certain U.S.
Government Lease for Real Property dated February 6, 1998, by and between
Trustor, as landlord, and GSA, as tenant, as heretofore supplemented and
amended. 

 

Trustor hereby
pledges to Beneficiary any and all monies now or hereafter deposited in the GSA
Rollover Escrow Fund as additional security for the payment of the Debt.
Provided that no Event of Default has occurred that is then continuing,
Beneficiary shall make disbursements from cash deposits held in the GSA
Rollover Escrow Fund for expenses reasonably incurred by Trustor for new
Lease(s) entered into by Trustor in accordance with the provisions of Paragraph
7  below with respect to the GSA Space. All such expenses shall be
approved by Beneficiary in its

 

22

 

reasonable discretion.  Provided that no Event of Default that is
then continuing shall exist and remain uncured, Beneficiary shall make
disbursements as requested by Trustor on a monthly basis in increments of no
less than $1,000.00 upon delivery by Trustor of copies of paid invoices (or
with respect to requests in excess of $10,000.00, unpaid invoices) for the amounts
requested for tenant improvements and leasing commissions, the newly executed
Lease, extension, renewal, or modification, with a certification for tenant
improvement disbursements from the Trustor stating (i) the nature and type
of the related improvement, (ii) that the related improvement (or the
portion thereof for which disbursements have been received or requested) has
been completed in a good and workmanlike manner and (iii) that the related
improvement (or the portion thereof for which disbursements have been received
or requested) has been paid in full (or, with respect to requests in excess of
$10,000.00, will be paid for in full from the requested disbursement) or a
certification for leasing commission disbursements stating that such leasing commission
has been paid in full (or, with respect to requests in excess of $10,000.00,
will be paid for in full from the requested disbursement) and, if required by
Beneficiary, lien waivers and releases from all parties furnishing materials
and/or services in connection with the requested payment. Any disbursement by
Beneficiary hereunder in excess of $10,000.00 and not already paid for by
Trustor, shall be made by joint check, payable to Trustor and the applicable
contractor, supplier, materialman, mechanic, subcontractor, broker or other
party to whom payment is due in connection with such disbursement. Beneficiary
may require an inspection of the Trust Property at Trustor’s expense prior to
making a disbursement in order to verify completion of improvements (or the
portion thereof for which disbursements have been received or requested) for
which reimbursement is sought. The GSA Rollover Escrow Fund shall be held in an
interest bearing account in Beneficiary’s name at a financial institution
selected by Beneficiary in its sole discretion. All earnings or interest on the
GSA Rollover Escrow Fund shall be and become a part of such GSA Rollover Escrow
Fund and shall be disbursed as provided in this Paragraph 6(c). All
costs and expenses incurred by Beneficiary in establishing and maintaining such
interest bearing account shall be paid by Trustor, Beneficiary may charge such
costs and expenses directly against the GSA Rollover Escrow Fund, and Trustor
shall thereafter promptly pay to Beneficiary for deposit into the GSA Rollover
Escrow Fund the full amount of such charges and expenses. Upon the occurrence
of an Event of Default that is then continuing, Beneficiary may apply any sums
then present in the GSA Rollover Escrow Fund to the payment of the Debt in any
order in its sole discretion. The GSA Rollover Escrow Fund shall not
constitute a trust fund and may be commingled with other monies held by
Beneficiary.

 

Upon the
satisfaction of the GSA Rollover Escrow Release Condition, and provided that no
Event of Default that is then continuing shall exist, Beneficiary shall
disburse the remaining balance held in the GSA Rollover Escrow Fund to
Trustor on the first day of the calendar month following the month of such
satisfaction. For purposes hereof, “GSA Rollover Escrow Release Conditions” shall mean (i) Beneficiary’s receipt of an
estoppel certificate(s) from the new tenant(s) demising the GSA Space
certifying for the benefit of Beneficiary that Trustor has delivered possession
of the applicable space to such tenant, that such tenant has paid rent for a
period of not less than one month and is paying rent on a current basis, that
no default of Trustor as landlord under the Lease of such tenant(s) exists and
otherwise consistent with the form of estoppel certificate utilized by
Beneficiary in connection with the origination of the Loan, and (ii) Beneficiary’s
receipt of a written request from Trustor requesting the release of such
remaining balance, such request to be accompanied by the aforesaid estoppel
certificate(s), the intent hereof

 

23

 

being that once Trustor has released the
entirety of the GSA Space the undisbursed balance held in the GSA Space
Rollover Escrow Fund shall be released to Trustor. In the event of a Delayed GSA
Renewal, provided that no Event of Default that is then continuing shall exist,
Beneficiary shall disburse the remaining balance held in the GSA Rollover
Escrow Fund to Trustor on the first day of the calendar month following
Beneficiary’s receipt of (i) an estoppel certificate from GSA in a form
reasonably comparable to the form of estoppel certificate furnished to
Beneficiary in connection with the origination of the Loan and (ii), a
certification from an authorized officer of Trustor stating that all tenant
improvement allowances, lease extension incentive fees and other similar
allowances, fees or payments payable by Trustor to GSA as an inducement for
execution of the renewal Lease have been paid. Following the delivery and
recording of a satisfaction, release, reconveyance or discharge of this Deed of
Trust duly executed by Beneficiary, any funds remaining on deposit in the GSA
Rollover Escrow Fund will be disbursed to Trustor.

 

(d)                                 If Carfax fails
to exercise the Carfax Renewal Option (hereinafter defined) on or before April 30,
2006 (such date, the “Outside Carfax Renewal Date”), then, in such event, commencing on May 1,
2006, and continuing on the first day of each succeeding month through and
including October 1, 2006, Trustor shall pay the sum of $125,000 to
Beneficiary for deposit into an escrow account held by Beneficiary for tenant
improvement and leasing commission obligations in connection with the
re-leasing of the premises (the “Carfax Space”) demised to Carfax as of the date of this Deed of Trust (the “Carfax Rollover Escrow Fund”), the intent hereof being that Beneficiary
accumulate a reserve of $750,000 from such monthly payments. In lieu of the
aforesaid monthly deposits, Trustor shall have the right to deliver a Letter of
Credit (defined in subparagraph (e) below) in the amount of $1,000,000, in
which event the terms of subparagraph (e) below shall govern and control
(and provided no Event of Default has occurred that is then continuing
hereunder any funds held by Beneficiary in the Carfax Rollover Escrow Fund
shall be promptly released by Beneficiary to Trustor). For purposes hereof, (i) “Carfax Renewal Option” shall mean and refer to the right of Carfax
pursuant to Section 35 of the Carfax Lease (defined below) to renew the
term thereof through November 5, 2011, on and subject to the terms,
provisions and conditions of the Carfax Lease and (ii) “Carfax Lease” shall mean and refer to that certain Deed of Lease
dated May 20, 1998, by and between Trustor, as landlord, and Carfax, Inc.,
as tenant, as heretofore amended.

 

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

 

24

 

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

 

Upon the
satisfaction of the Carfax Rollover Escrow Release Condition, and provided that
no Event of Default that is then continuing shall exist, Beneficiary shall
disburse the remaining balance held in the Carfax Rollover Escrow Fund to
Trustor on the first day of the calendar month following the month of such
satisfaction. For purposes hereof, “Carfax Rollover Escrow Release Condition” shall mean (i) Beneficiary’s receipt of an
estoppel certificate(s) from the new tenant(s) demising the Carfax Space
certifying for the benefit of Beneficiary that Trustor has delivered possession
of the applicable space to such tenant, that such tenant has paid rent for a
period of not less than one month and is paying rent on a current basis, that
no default of Trustor as landlord under the Lease of such tenant(s) exists and
otherwise consistent with the form of estoppel certificate utilized by
Beneficiary in connection with the origination of the Loan, and (ii) Beneficiary’s
receipt of a written request from Trustor requesting the release of such
remaining balance, such request to be accompanied by the aforesaid estoppel
certificate(s), the intent hereof being that once Trustor has released the
entirety of the Carfax Space the undisbursed balance held in the Carfax
Rollover Escrow Fund shall be released to Trustor. Following the delivery and
recording of a satisfaction, release, reconveyance or discharge of this Deed of
Trust duly executed by Beneficiary, any funds remaining on deposit in the
Carfax Rollover Escrow Fund will be disbursed to Trustor.

 

25

 

(e)                                  Letter of Credit Provisions

 

For purposes
hereof, “Letter of Credit” shall mean an
unconditional irrevocable letter of credit naming Beneficiary as the party
entitled to demand payment thereunder, issued by a national bank or other
financial institution with a rating of “A” or better from Standard &
Poors and otherwise in form and substance satisfactory in all respects to
Beneficiary in its sole discretion. Any Letter of Credit furnished by Trustor
hereunder shall be held by Beneficiary as additional security for the Loan,
subject to release in accordance with the terms, provisions and conditions of
this subparagraph (e). By and upon delivery of a Letter of Credit, Trustor
shall thereby be deemed to have pledged to Beneficiary such Letter of Credit as
additional security for the payment of the Debt without the requirement for the
execution and delivery of any other document or instrument. Trustor shall
execute and deliver to Beneficiary such documents and instruments as
Beneficiary may require to create and perfect such security interest.

 

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

 

26

 

7.                                       Leases and Rents.

 

(a)                                  For Ten Dollars
($10.00) and other good and valuable consideration, including the indebtedness
evidenced by the Note, the receipt and sufficiency of which are hereby acknowledged
and confessed, Trustor has absolutely GRANTED, BARGAINED, SOLD, and CONVEYED,
and by these presents does absolutely and unconditionally GRANT, BARGAIN, SELL,
and CONVEY the Rents unto Beneficiary, in order to provide a source of future
payment of the Debt subject only to the permitted exceptions applicable thereto
and the License (herein defined), it being the intention of Trustor and
Beneficiary that this conveyance be presently and immediately effective; TO
HAVE AND TO HOLD the Rents unto Beneficiary, forever, and Trustor does hereby
bind itself, its successors, and assigns to warrant and forever defend the
title to the Rents unto Beneficiary against every person whomsoever lawfully
claiming or to claim the same or any part thereof; provided, however, that if
Trustor shall pay or cause to be paid the Debt as and when the same shall
become due and payable and shall perform and discharge or cause to be performed
and discharged the Obligations on or before the date the same are to be
perforrned and discharged, then this assignment shall terminate and be of no
further force and effect, and all rights, titles, and interests conveyed
pursuant to this assignment of rents shall become vested in Trustor without the
necessity of any further act or requirement by Trustor, Trustee, or Beneficiary.

 

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

 

(c)                              Upon receipt from
Beneficiary of a Lease Rent Notice (as defined in Paragraph 25 hereof),
each lessee under the Leases is hereby authorized and directed to pay directly
to Beneficiary all Rents thereafter accruing, and the receipt of Rents by
Beneficiary shall be a release of such lessee to the extent of all amounts so
paid. The receipt by a lessee under the Leases of a Lease Rent Notice shall be
sufficient authorization for such lessee to make all future payments of Rents directly
to Beneficiary and each such lessee shall be entitled to rely on such Lease
Rent Notice and shall have no liability to Trustor for any Rents paid to
Beneficiary after

 

27

 

receipt of such Lease Rent Notice. Rents so
received by Beneficiary for any period prior to foreclosure under this Deed of
Trust or acceptance of a deed in lieu of such foreclosure shall be applied by
Beneficiary to the payment of the following in such order and priority as
Beneficiary shall determine: (i) the Debt and all expenses incident to
taking and retaining possession of the Trust Property and/or collecting Rent as
it becomes due and payable and (ii) all expenses associated with the
ownership and operation of the Premises and Improvements. In no event will this
Paragraph 7 reduce the Debt except to the extent, if any, that Rents are
actually received by Beneficiary and applied upon or after said receipt to the
Debt in accordance with the preceding sentence. Without impairing its rights
hereunder, Beneficiary may, at its option, at any time and from time to time,
release to Trustor Rents so received by Beneficiary or any part thereof. As
between Trustor and Beneficiary, and any person claiming through or under
Trustor, other than any lessee under the Leases who has not received a Lease
Rent Notice, this Assignment of Rents is intended to be absolute, unconditional
and presently effective (and not an assignment for additional security), and
the Lease Rent Notice hereof is intended solely for the benefit of each such
lessee and shall never inure to the benefit of Trustor or any person claiming
through or under Trustor, other than a lessee who has not received such notice.
It shall never be necessary for Beneficiary to institute legal proceedings of
any kind whatsoever to enforce the provisions of this Deed of Trust with
respect to Rents. TRUSTOR SHALL HAVE NO RIGHT OR CLAIM AGAINST ANY LESSEE FOR
THE PAYMENT OF ANY RENTS TO BENEFICIARY HEREUNDER, AND TRUSTOR HEREBY
INDEMNIFIES AND AGREES TO HOLD FREE AND HARMLESS EACH LESSEE FROM AND AGAINST ALL
LIABILITY, LOSS, COST, DAMAGE OR EXPENSE SUFFERED OR INCURRED BY SUCH LESSEE BY
REASON OF SUCH LESSEE’S COMPLIANCE
WITH ANY DEMAND F0R PAYMENT OF RENTS MADE BY BENEFICIARY CONTEMPLATED BY THIS DEED
OF TRUST.

 

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

 

(e)                                  All security
deposits of tenants, whether held in cash or any other form, shall not be
commingled with any other funds of Trustor and, if cash, shall be deposited by
Trustor at such commercial or savings bank or banks as may be reasonably
satisfactory to Beneficiary. Any bond or other instrument which Trustor is
permitted to hold in lieu of cash security deposits under any applicable legal
requirements shall be maintained in full force and effect in the full amount of
such deposits unless replaced by cash deposits as hereinabove described, shall
be issued by an institution reasonably satisfactory to Beneficiary, and shall,
in all respects, comply with any applicable legal requirements and otherwise be
reasonably satisfactory to Beneficiary. Trustor shall, upon request, provide
Beneficiary with evidence reasonably satisfactory to Beneficiary of Trustor’s
compliance with the foregoing. Whenever an Event of Default exists that is then

 

28

 

continuing, Trustor shall, upon Beneficiary’s
request, if permitted by any applicable legal requirements, turn over to
Beneficiary the security deposits (and any interest theretofore earned thereon)
with respect to all or any portion of the Trust Property, to be held by Beneficiary
subject to the terms of the Leases.

 

(f)                                    Trustor covenants
and agrees (i) to the extent reasonably necessary to avoid a Material
Adverse Effect, to perform punctually all obligations and agreements to be
performed by it as lessor or party thereto under any Lease, and under any
operating agreement, reciprocal easement agreement or similar such agreement; (ii) to
the extent reasonably necessary to avoid a Material Adverse Effect, to do all
things necessary or appropriate in the ordinary course of its business to
compel performance by each other party to each of such instruments of such
other party’s obligations and agreements thereunder; (iii) not to collect
any of the Rents more than one (1) month in advance; (iv) not to
execute any other assignment of lessor’s interest in the Leases or the Rents
and (v) not to permit any subletting of any space covered by a Lease or an
assignment of the tenant’s rights under a Lease except in strict accordance
with the terms of such Lease. Except as otherwise permitted hereunder, Trustor
shall not give any notice, approval or consent or exercise any rights under or
in respect of any Lease or any of such other instruments, which action,
omission, notice, approval, consent or exercise of rights would release any
tenant or other party from, or reduce any tenant’s or any other party’s
obligations or liabilities under, or would result in the termination, surrender
or assignment of, or the amendment or modification of in any material adverse
respect, or would impair the validity of, any Lease or any of such other instruments,
if any of the foregoing would result in a Material Adverse Effect, without the
prior written consent of Beneficiary, and any attempt to do any of the
foregoing without such consent shall be of no force and effect. For purposes
hereof, “Material
Adverse Effect” means a material
adverse effect upon (i) the business operations, assets or condition
(financial or otherwise) of Trustor, (ii) the ability of Trustor to
perform, or of Beneficiary to enforce, any material provision of any Loan
Document, or (iii) the value, use or enjoyment of the Trust Properly or
the operation thereof.

 

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

 

(h)                                 Trustor shall not
enter into any Lease after the date hereof that would, evaluated alone or in
conjunction with any then existing Leases, result in any Material Adverse
Effect of the fair market value, as of the date such Lease is executed by
Trustor, of the Premises or Improvements. Trustor may enter into any Lease
which is not inconsistent with the provisions of this Paragraph 7 and
the other applicable provisions of this Deed of Trust and the Loan Documents,
if any. Each Lease entered into after the date hereof and each renewal or
extension

 

29

 

on or after the date hereof of any Lease (a
“Renewal
Lease”) shall (i) be
with a tenant whom Trustor has reasonably determined is creditworthy in light
of the financial obligations to be assumed by such tenant under the Lease or
Renewal Lease, (ii) have an initial term of not less than three (3) or
more than ten (10) years, except Leases covering residential dwelling
units, (iii) provide for rent and other items to be payable in amounts at
least equal to the fair market rental value (taking into account the type and
quality of the tenant and the space covered by such Lease), as of the date such
Lease or Renewal Lease is executed by Trustor (unless, in the case of a Renewal
Lease, the rent payable during such renewal, or a formula or other method to
compute such rent, is provided for in the original Lease), (iv) not have a
Material Adverse Effect on the value of the Premises and Improvements as a
whole or the ability of Trustor to pay the Debt, (v) constitute an arm’s-length
transaction with a bona fide, independent third-party tenant, (vi) be
expressly subject and subordinate to this Deed of Trust and contain provisions
for the agreement by the tenant thereunder to attorn to Beneficiary and any
purchaser at a foreclosure sale, such attornment to be self-executing and
effective upon acquisition of title to the Premises and Improvements by any
purchaser at a foreclosure sale, provided that, if Beneficiary has approved
such Lease, the aforesaid subordination may be conditioned upon Beneficiary
executing a non-disturbance agreement in Beneficiary’s customary form (vii) require
the tenant thereunder to execute and deliver to Trustor an estoppel certificate
addressing the issues set forth in Paragraph 12(b) of this Deed of
Trust, and (viii) be written on the standard form of lease (without any
material changes) approved in writing by Beneficiary (or in the case of any
renewal or extension, on the form of the lease previously executed by such
tenant prior to such renewal or extension) or otherwise approved in writing by
Beneficiary. Subject to the provisions below covering Material Leases, Trustor
may, without the consent of Beneficiary, amend, modify or waive the provisions
of any Lease, provided that such action is in the normal course of Trustor’s
business in a manner which is consistent with sound and customary leasing and
management practices for similar properties in the community in which the Improvements
are located, does not have a Material Adverse Effect upon the value of any of
the Premises and Improvements, and provided further that such Lease, as
amended, modified or waived, is otherwise in compliance with the requirements
of this Deed of Trust and the other Loan Documents, as applicable. Following
Beneficiary’s written request, Trustor shall deliver to Beneficiary a duplicate
original or certified copy of the amendment, modification or waiver. Subject to
the provisions below covering Material Leases, Trustor may terminate or permit
the termination of any Lease or accept surrender of all or any portion of the
space demised under any Lease or acquire any Lease or reduce the rentals
reserved under or shorten the term of any Lease so long as such action is in
the normal course of Trustor’s business in a manner which is consistent with
sound and customary leasing and management practices for similar properties in
the community in which the Improvements are located, and does not materially
adversely affect the value of the Premises and Improvements (taking into
account the planned alternative uses of the space) or the ability of Trustor to
pay the Debt. All Leases and Renewal Leases, and amendments, modifications,
terminations or waivers thereof not meeting the foregoing requirements may not
be entered into by Trustor without the prior written approval of Beneficiary.

 

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

 

30

 

(j)                                     Notwithstanding
anything contained herein to the contrary, Trustor shall not, without the prior
written consent of Beneficiary, enter into, renew, extend, amend, modify, waive
any provisions of, terminate, permit the termination of, or accept surrender of
all or any portion of the space demised under, any Material Lease. The term “Material Lease” shall mean any existing Lease that covers or
proposed lease agreement that would cover more than 28,000 rentable square feet
of the Premises or Improvements. Nothing in this subparagraph shall prohibit
Trustor from accepting a tenant’s election of a right to extend the term of any
Material Lease existing as of the date hereof or which Material Lease is
subsequently approved by Beneficiary pursuant to the terms hereof if such right
to extend is expressly provided for in such Material Lease, the exercise of
such right is at the sole option of the tenant thereunder and the length of the
extended term and the rental to be paid during the extended term are fixed
amounts or formula amounts set forth in such Material Lease.

 

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

 

8.                                      Transfer or Encumbrance of
the Trust Property.

 

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

 

31

 

a lease that is not a lease described in
the preceding clause (B) and shall not include any easement, covenant,
condition or restriction executed in the ordinary course of the Trustor’s
business.

 

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

 

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

 

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

 

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

 

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

 

(g)                                 Notwithstanding
anything to the contrary in this Paragraph 8. Trustor shall have the
right to transfer the Trust Property in its entirety (a “Property Transfer”) without complying

 

32

 

with the other provisions of this Paragraph
8 if, and only if, all of the following conditions are first satisfied:

 

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

 

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

 

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

 

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

 

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

 

(vi)                              Without any cost
or expense to Beneficiary, Transferee and, if applicable, Transferee Guarantor
execute and deliver to Beneficiary an assumption agreement in form and
substance acceptable to Beneficiary evidencing such Transferee’s

 

33

 

agreement to abide and be bound by the
terms of the Note, this Deed of Trust and the other Loan Documents (subject to
the provisions of Paragraph 51) and, if applicable, such Transferee
Guarantor’s agreement to abide and be bound by the terms of the Guaranty, and
Transferee executes and delivers new financing statements or financing
statement amendments, and Transferee and Transferee Guarantor deliver such
additional documents and legal opinions as reasonably requested by Beneficiary
to evidence and effectuate said assumption.

 

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

 

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

 

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

 

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

 

34

 

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

 

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

 

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

 

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

 

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

 

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

 

(d)                                 Trustor has not
incurred and will not incur any indebtedness, secured or unsecured, direct or
indirect, absolute or contingent (including guaranteeing any obligation), other
than (i) the Debt, (ii) Trade Payables (defined hereinbelow) not
represented by a note customarily paid by Trustor within 60 days of incurrence
and in fact not more than 60 days outstanding (unless being contested in good
faith by Trustor), which are incurred in the ordinary course of Trustor’s
ownership and operation of the Trust Property, in amounts reasonable and
customary for similar properties and not exceeding four percent (4%) of the
Loan at any one time, and (iii) debt incurred in the financing of
equipment and other personal property used on the Premises; provided that the
aggregate capitalized amount thereof shall not exceed $250,000 at any time or require
aggregate payments exceeding $25,000 in any calendar year. No indebtedness
other than the Debt may be secured (subordinate or pari  passu) by
the Trust Property. For purposes hereof, “Trade Payables” shall mean unsecured amounts payable by or on behalf of Trustor for or
in respect of the ownership and operation of the Trust Property in the ordinary
course, including

 

35

 

amounts payable to suppliers, vendors,
contractors, mechanics, materialmen or other persons providing property or
services to the Trust Property or Trustor.

 

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

 

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

 

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

 

(h)                                 Trustor will
maintain all of its books, records, financial statements and bank accounts
separate from those of its affiliates and any constituent party and, unless
treated as a division for tax purposes of another taxpayer, Trustor will file
its own tax returns, provided, however, that Trustor’s assets may
be included in a consolidated financial statement with its affiliates provided
that the appropriate notations shall be made on such consolidated financial
statement to indicate the separateness of Trustor and such affiliates and to
indicate that none of such affiliates assets and credit are available to
satisfy the debts and other obligations of Trusor.

 

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

 

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

 

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

 

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

 

36

 

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

 

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

 

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

 

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

 

(q)                                 Trustor and its
Governing Entity, have caused, and at all times shall cause, there to be at
least two duly appointed managers of the Governing Entity, who each constitute
an “Independent
Director” and who are each reasonably
satisfactory to Beneficiary. As used herein, the term “Independent Director” means an individual who, except in his or her
capacity as an Independent Director of the Governing Entity is not, and has not
been during the five years immediately before such individual’s appointment as
an Independent Director, (i) a member, managing member, partner, Member,
officer or employee of the Trustor, its Governing Entity, or their Affiliates; (ii) affiliated
with a customer or supplier of the Trustor, its Governing Entity or their
Affiliates; (iii) a spouse, parent, sibling or child of any person
described by (i) or (ii) above. As used herein, the term “Affiliate” shall mean any person or entity other than the
Governing Entity (i) which owns beneficially, directly or indirectly, any
outstanding shares of the Governing Entity stock or any membership interest in
the Trustor, or (ii) which controls or is under common control with the
Governing Entity or the Trustor. As used herein, the term “control” means the possession, directly or indirectly, of
the power to direct or cause the direction of the management and policies of a
person or entity, whether through ownership of voting securities, by contract
or otherwise.

 

(r)                                    Neither Trustor
nor its Governing Entity shall cause or permit the board of directors or
members, as the case may be, of Trustor or of Governing Entity, to take any
action which, under the terms of any certificate of incorporation or
organization, any by-laws or operating agreement, or any voting trust agreement
with respect to any common stock, or membership or partnership interests,
requires the vote of the board of directors, partners, managers or members of
Trustor or of its Governing Entity unless at the time of such action there
shall be at least one director, manager or member who is an Independent
Director.

 

(s)                                  Trustor shall
conduct its business so that the assumptions made with respect to Trustor in
that certain opinion letter dated June 13, 2003 (the “Insolvency Opinion”) delivered

 

37

 

by Arent Fox Kintner Plotkin &
Kahn, PLLC in connection with the Loan shall be true and correct in all
material respects.

 

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

 

11.                               Defeasance.

 

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

 

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

 

38

 

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

 

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

 

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

 

(v)                                 the delivery to
Beneficiary of:

 

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

 

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

 

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

 

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

 

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

 

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

 

In connection
with the conditions set forth in Subparagraph11(a)(v) above,
Trustor hereby appoints Beneficiary as its agent and attorney-in-fact for the
purpose of using the Defeasance Deposit to purchase U.S. Obligations which
provide payments on or prior to, but as close as possible to, all successive
scheduled payment dates after the Release Date upon which interest and
principal payments are required under the Note and in amounts equal to the

 

39

 

 

scheduled payments due on such dates under
the Note (the “Scheduled Defeasance Payments”). Trustor, pursuant to the Security Agreement
or other appropriate document, shall authorize and direct that the payments
received from the U.S. Obligations may be made directly to Beneficiary and
applied to satisfy the obligations of the Trustor under the Note.

 

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

 

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

 

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

 

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

 

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

 

40

 

12.                               Estoppel Certificates and No
Default Affidavits.

 

(a)                                  After written
request by Beneficiary, Trustor, within ten (10) days, shall furnish Beneficiary
or any proposed assignee with a statement, duly acknowledged and certified,
setting forth (i) the original principal amount of the Note, (ii) the
unpaid principal amount of the Note, (iii) the rate of interest of the
Note, (iv) the terms of payment and maturity date of the Note, (v) the
date installments of interest and/or principal were last paid, (vi) that,
except as provided in such statement, no Events of Default or events which,
with the passage of time or the giving of notice or both, would constitute an
Event of Default exist under any of the Loan Documents that is then continuing,
(vii) that, except as expressly set forth in such statement, all
representations and warranties of Trustor set forth herein and in the other
Loan Documents are true and correct in all material respects as of the date of
such statement, (viii) that the Loan Documents are valid, legal and
binding obligations and have not been modified or if modified, giving
particulars of such modification, (ix) whether any offsets or defenses
exist against the Debt or Obligations and, if any are alleged to exist, a
detailed description thereof, (x) that all Leases are in full force and effect
and (provided the Improvements are not a residential multifamily property) have
not been modified (or if modified, setting forth all modifications), (xi) the
date to which the Rents thereunder have been paid pursuant to the Leases, (xii)
whether or not, to the best knowledge of Trustor, any of the lessees under the
Leases are in default under the Leases, and, if any of the lessees are in
material default, setting forth the specific nature of all such material
defaults, (xiii) the amount of security deposits held by Trustor under each
Lease and that such amounts are consistent with the amounts required under each
Lease, and (xiv) as to any other matters reasonably requested by Beneficiary
and reasonably related to the Leases, the Debt and Obligations, the Trust
Property or this Deed of Trust.

 

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

 

13.                               Changes in Laws Regarding
Taxation.  If any law is enacted or adopted or amended after
the date of this Deed of Trust which deducts the Debt from the value of the
Trust Property for the purpose of taxation or which imposes a tax, either
directly or indirectly, on the Debt or Beneficiary’s interest in the Trust
Property, Trustor will pay such tax, with interest and penalties thereon, if
any. In the event Beneficiary is advised by counsel chosen by it that the
payment of such tax or interest and penalties by Trustor would be unlawful or
taxable to Beneficiary or unenforceable or provide the basis for a defense of

 

41

 

usury, then in any such event, Beneficiary
shall have the option, by written notice of not less than ninety (90) days, to
declare the Debt immediately due and payable, in which event the payment of the
Debt shall be without any prepayment or yield maintenance premium or penalty.

 

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

 

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

 

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

 

17.                               Financial Statements.

 

(a)                                  Trustor
represents and warrants to Beneficiary that the financial statements heretofore
furnished to Beneficiary are, as of the dates specified therein, complete and
correct in all material respects and fairly present the financial condition of
the Trustor and any other persons

 

42

 

or entities that are the subject of such
financial statements, and are prepared in accordance with sound accounting
principles consistently applied. Trustor does not have any contingent
liabilities, liabilities for taxes, unusual forward or long-term commitments or
unrealized or anticipated losses from any unfavorable commitments that are
known to Trustor and reasonably likely to have a materially adverse effect on
the Trust Property or the operation of the Improvements, except as referred to
or reflected in said financial statements. Since the date of such financial
statements, there has been no materially adverse change in the financial
condition, operation or business of Trustor from that set forth in said
financial statements.

 

(b)                                 Trustor will
maintain full and accurate books and records of accounts in accordance with
sound accounting principles consistently applied in which full, true and
correct entries shall be promptly made with respect to Trustor, the Trust
Property and the operation thereof, and will permit all such books and records
(including without limitation all contracts, statements, invoices, bills and
claims for labor, materials and services supplied for the construction, repair
or operation of the Improvements) to be inspected or audited and copies made by
Beneficiary and its representatives during normal business hours and at any
other reasonable times. Trustor will furnish, or cause to be furnished, to
Beneficiary on or before forty-five (45) calendar days after the end of each
calendar quarter the following items, each certified by Trustor as being true
and correct, in such format and in such detail as Beneficiary may request: (i) a
written statement (rent roll) dated as of the last day of each such calendar
quarter identifying each of the Leases by the term, space occupied, rental
required to be paid, security deposit paid, any rental concessions,
commencement date, expiration date, options to renew or expand, expense
recovery provisions, and identifying any defaults or payment delinquencies
thereunder; (ii) monthly and year-to-date operating statements prepared
for each calendar month during each such calendar quarter reporting period
detailing the total revenues received, total expenses incurred, total cost of
all capital improvements, total debt service and total cash flow. From the date
hereof through the earlier of the date twelve (12) months after the date hereof
or the date of disposition of the Loan by Beneficiary in a Secondary Market
Transaction (defined in Paragraph 19(b)), the Trustor shall furnish on a
monthly basis each of the items listed in the immediately preceding sentence
(collectively, the “Pre-Securitization Financials”) within twenty (20) days after the end of
each calendar month. Trustor’s annual financial statements shall include,
except with respect to tenants occupying and Leases covering residential
dwelling units, (i) a list of the tenants, if any, occupying more than
twenty (20%) percent of the total floor area of the Improvements, and (ii) a
breakdown showing the year in which each Lease then in effect expires and the
percentage of total floor area of the Improvements and the percentage of base
rent with respect to which Leases shall expire in each such year, each such
percentage to be expressed on both a per year and a cumulative basis. Within
ninety (90) days following the end of each calendar year, Trustor shall furnish
statements of its financial affairs and condition including a balance sheet and
a statement of profit and loss for the Trustor in such detail and format as
Beneficiary may request, and setting forth the financial condition and the
income and expenses for the Trust Property for the immediately preceding
calendar year. Trustor’s annual financial statements shall be accompanied by a
certificate executed by its chief financial officer, or by an authorized
representative of its Governing Entity, as applicable, stating that each such
annual financial statement presents fairly the financial condition of the Trust
Property being reported upon in accordance with sound accounting principles consistently
applied. Upon the request of Beneficiary, Trustor’s annual financial statement
shall be audited by, or prepared and certified by,

 

43

 

an independent certified
public accountant. At any time and from time to time Trustor shall deliver to
Beneficiary or its agents such other financial data as Beneficiary or its
agents shall reasonably request with respect to the ownership, maintenance, use
and operation of the Trust Property.

 

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

 

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

 

19.                               Further Acts, Etc.

 

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

 

44

 

effect the assignment or transfer of any
license, permit, agreement or any other right necessary or useful to the
operation of the Trust Property. Trustor grants to Beneficiary and Trustee an
irrevocable power of attorney coupled with an interest for the purpose of
exercising and perfecting any and all rights and remedies available to
Beneficiary and Trustee at law and in equity, including, without limitation,
such rights and remedies available to Beneficiary and Trustee pursuant to this
paragraph.

 

(b)                                 Trustor
acknowledges that Beneficiary and its successors and assigns may (i) sell,
assign or transfer this Deed of Trust, the Note and other Loan Documents to one
or more investors as a whole loan, (ii) grant participation interests in
the Loan to investors or issue to investors mortgage pass-through certificates
or other securities evidencing a beneficial interest in a rated or unrated
public offering or private placement to one or more investors, (iii) deposit
this Deed of Trust, the Note and other Loan Documents with a trust, which trust
may sell certificates to investors evidencing an ownership interest in the
trust assets, (vi) transfer any and all of the servicing rights with
respect to the Loan, or delegate any or all of its responsibilities as
Beneficiary under the Loan Documents, or (v) otherwise sell the Loan or
interest therein to investors (the transactions referred to in clauses (i) through
(v) are hereinafter each referred to as “Secondary Market Transaction”); provided, however, notwithstanding anything to the
contrary contained herein or in any of the other Loan Documents, Trustor shall
not be obligated to take any action nor shall any such requirements be imposed
in connection with a Secondary Market Transaction that would: (i) change
the outstanding principal balance of the Loan; (ii) increase the interest
rate or payments on the Loan; (iii) increase the rate of amortization of
the Loan; (iv) shorten the maturity date of the Loan; (v) alter in
any material way the transfer restrictions relating to direct or indirect
interests in the Trust Property (including any equity interests in the direct
or indirect owners of Trustor); (vi) affect the limitations on recourse
against Trustor; (vii) increase the amounts of reserves or escrows; (viii) violate
any existing agreement to which Trustor, Guarantor or any of their affiliates
is a party or any applicable law; or (ix) materially change any obligation
of Trustor under the other Loan Documents. Trustor shall cooperate with
Beneficiary in effecting any such Secondary Market Transaction and shall
cooperate to implement all requirements imposed by any Rating Agency involved
in any Secondary Market Transaction, provided, however, that Trustor
shall not be required to (A) incur any additional liability under the Loan
Documents, (B) suffer any increased obligation under the Loan Documents or
(C) suffer any diminishment of its rights under the Loan Documents.
Trustor shall provide such information, legal opinions and documents relating
to Trustor, Guarantor, if any, the Trust Property and any tenants of the
Improvements (to the extent in Trustor’s possession or control) as Beneficiary
may reasonably request in connection with such Secondary Market Transaction.
Beneficiary shall bear the reasonable out of pocket expense incurred by Trustor
to third parties (but not Trustor’s general and administrative overhead) in
providing any such information, opinions and documents so long as Trustor
notifies Beneficiary in writing promptly after receipt of Beneficiary’s request
for the aforesaid information, opinions and documents of the nature and
specific amount of the third party expenditure that will be incurred in
complying with Beneficiary’s request. In addition, Trustor shall make available
to Beneficiary all information concerning its business and operations that
Beneficiary may reasonably request. Beneficiary shall be permitted to share all
such information with the investment banking firms, Rating Agencies, accounting
firms, law firms and other third-party advisory firms involved with the Loan
and the Loan Documents or the applicable Secondary Market Transaction. It is
understood

 

45

 

that the information provided by Trustor to
Beneficiary may ultimately be incorporated into the offering documents for the
Secondary Market Transaction and thus various investors may also see some or
all of the information. Beneficiary and all of the aforesaid third-party
advisors and professional firms shall be entitled to rely on the information
supplied by, or on behalf of, Trustor and Trustor indemnifies Beneficiary as to
any losses, claims, damages or liabilities that arise out of or are based upon
any untrue statement or alleged untrue statement of any material fact contained
in any Sanctioned Information or arise out of or are based upon the omission or
alleged omission to state therein a material fact required to be stated in such
information or necessary in order to make the statements in such information,
or in light of the circumstances under which they were made, not misleading.
Beneficiary may publicize the existence of the Loan in connection with its
marketing for a Secondary Market Transaction or otherwise as part of its
business development. For purposes hereof, the term “Sanctioned Information
means written disclosure materials prepared by Beneficiary for use in
connection with a Secondary Market Transaction, but only that portion of such
disclosure materials that contain information about Trustor’s financial
condition, business or operations or about the Trust Property, and which
disclosure materials Trustor has expressly approved in writing for such use
after having had not less than five (5) business days, to review the final
forms of such disclosure materials.

 

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

 

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

 

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

 

46

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

47

 

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

 

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

 

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

 

(k)                                  if Trustor fails
to cure properly any violations of laws or ordinances affecting or which may be
interpreted to affect the Trust Property within thirty (30) days after Trustor
first receives notice of any such violations; provided, however, if such
default is reasonably susceptible of cure, but not within such thirty (30) day
period, then Trustor may be permitted up to an additional one hundred twenty
(120) days to cure such default provided that Trustor commences a cure within
such initial thirty (30) day period and thereafter diligently and continuously
pursues such cure;

 

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

 

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

 

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

 

(o)                                 if Trustor ceases
to continuously operate the Improvements or any material portion thereof for
any reason whatsoever (other than temporary cessation in connection with any

 

48

 

repair or renovation thereof undertaken
pursuant to the terms of this Deed of Trust or with the prior written consent
of Beneficiary).

 

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

 

24.                               Beneficiary’s Right To Cure
Defaults.  Upon the occurrence of any Event of Default or if Trustor
fails to make any payment or to do any act as herein provided, Beneficiary may,
so long as such Event of Default or failure is then continuing, but without any
obligation to do so and without notice to or demand on Trustor and without
releasing Trustor from any obligation hereunder, make or do the same in such
manner and to such extent as Beneficiary may deem necessary to protect the
security hereof. Beneficiary is authorized to enter upon the Trust Property for
such purposes or appear in, defend, or bring any action or proceeding to protect
its interest in the Trust Property or to foreclose this Deed of Trust or collect
the Debt, and the cost and expense thereof (including reasonable attorneys’
fees and disbursements to the extent permitted by law), with interest at the
Default Rate (as defined in the Note) for the period after notice from
Beneficiary that such cost or expense was incurred to the date of payment to Beneficiary,
shall constitute a portion of the Debt, shall be secured by this Deed of Trust
and the other Loan Documents and shall be due and payable to Beneficiary upon
demand.

 

25.                               Remedies.

 

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

 

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

 

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

 

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

 

(iv)                              Sell for cash or
upon credit the Trust Property or any part thereof and all estate, claim,
demand, right, title and interest of Trustor therein and rights of redemption

 

49

 

thereof, pursuant to the power of sale
contained herein or otherwise, at one or more sales, as an entirety or in
parcels, at such time and place, upon such terms and after such notice thereof
as may be required or permitted by law.

 

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

 

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

 

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

 

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

 

50

 

recording an instrument of subordination,
and upon such election the lien of this Deed of Trust shall be subordinate to
the Lease identified in such instrument of subordination; provided, however, in
each instance such subordination will not affect or be applicable to, and
expressly excludes any lien, charge, encumbrance, security interest, claim,
easement, restriction, option, covenant and other rights, titles, interests or estates
of any nature whatsoever with respect to all or any portion of the Trust
Property to the extent that the same may have arisen or intervened during the
period between the recordation of this Deed of Trust and the execution of the
Lease identified in such instrument of subordination.

 

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

 

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

 

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

 

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

 

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

 

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

 

51

 

shall be a perpetual bar both at law and in
equity against Trustor and against any and all persons claiming or who may
claim the same, or any part thereof from, through or under Trustor.

 

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

 

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

 

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

 

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

 

52

 

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

 

26.                             Right of Entry and
Inspection.  In addition to any other rights or remedies
granted under this Deed of Trust, Beneficiary, Trustee and their agents shall
have the right to enter and inspect the Premises, Improvements and Equipment at
any reasonable time during the Term, and inspect, examine, audit and copy
Trustor’s books and records, including all recorded data of any kind or nature,
regardless of the medium of recording. The cost of such inspections,
examinations, copying or audits shall be borne by Trustor should Beneficiary
determine that an Event of Default exists that is then continuing, including the
cost of all follow up or additional investigations, audits or inquiries deemed
reasonably necessary by Beneficiary. The cost of such inspections,
examinations, audits and copying, if not paid for by Trustor following demand,
may be added to the Debt and shall bear interest thereafter until paid at the
Default Rate. If Trustor prohibits, bars or fails to permit Beneficiary,
Trustee or their agents from entering and inspecting the Premises, Improvements
and Equipment at any reasonable time during the Term, or from inspecting,
examining, auditing and copying Trustor’s books and records, including all
recorded data of any kind or nature, regardless of the medium of recording, for
more than five (5) days after a request is made by Beneficiary to do so,
Trustor agrees to pay Beneficiary on demand the sum of $1,000.00 for each day
after such five (5) day period that Trustor so prohibits, bars or fails,
and such sum or sums shall be part of the Debt.

 

27.                               Security Agreement.  This Deed of
Trust is both a real property deed of trust and a “security agreement” within
the meaning of the Uniform Commercial Code. The Trust Property includes both
real and personal property and all other assets, rights and interests, whether
tangible or intangible in nature, including all proceeds and products thereof,
and all supporting obligations ancillary to or arising in any way in connection
therewith, of Trustor in the Trust Property. It is the intent of Trustor,
Beneficiary, and Trustee that the lien and security interest granted in this
Deed of Trust encumber all Leases and that all items contained in the
definition of “Leases” which are included within the Uniform Commercial Code be
covered by the security interest granted in this Paragraph 27; and all
items contained in the definition of “Leases” which are excluded from the
Uniform Commercial Code be covered by the grant of a deed of trust lien against
the Trust Property contained in this Deed of Trust. Trustor by executing and
delivering this Deed of Trust has granted and hereby grants to Beneficiary and
Trustee, as security for the Debt, a security interest in the Trust Property to
the full extent that the Trust Property may be subject to the Uniform
Commercial Code (said portion of the Trust Property so subject to the Uniform
Commercial Code being called in this paragraph the “Collateral”). Trustor hereby agrees with Beneficiary to
execute and deliver to Beneficiary, in form and substance satisfactory to
Beneficiary, such financing statements, financing statement amendments and such
further assurances as Beneficiary may from time to time, reasonably consider
necessary to create, perfect, and preserve Beneficiary’s security interest
herein granted. This Deed of Trust shall also constitute a “fixture filing” for
the purposes of the Uniform Commercial Code. As such, this Deed of Trust covers
all items of the Collateral that are or are to become fixtures. Information
concerning the security interest herein granted may be obtained from the
parties at the addresses of the parties set forth in the first paragraph of
this Deed of Trust. If an Event of Default shall occur that is then continuing,
Beneficiary and Trustee, in addition to any other rights and remedies

 

53

 

which it may have, shall have and may
exercise immediately and without demand, any and all rights and remedies
granted to a secured party upon default under the Uniform Commercial Code,
including, without limiting the generality of the foregoing, the right to take
possession of the Collateral or any part thereof, and to take such other
measures as Beneficiary or Trustee may deem necessary for the care, protection
and preservation of the Collateral. Upon request or demand of Beneficiary or
Trustee, Trustor shall at its expense assemble the Collateral and make it
available to Beneficiary and Trustee at a convenient place acceptable to
Beneficiary. Trustor shall pay to Beneficiary and Trustee on demand any and all
expenses, including fees and disbursements, incurred or paid by Beneficiary and
Trustee in protecting the interest in the Collateral and in enforcing the
rights hereunder with respect to the Collateral. Any notice of sale,
disposition or other intended action by Beneficiary and Trustee with respect to
the Collateral sent to Trustor in accordance with the provisions hereof at
least five (5) days prior to such action, shall constitute commercially
reasonable notice to Trustor; provided that if Beneficiary fails to comply with
this sentence in any respect, its liability for such failure shall be limited
to the liability (if any) imposed on it as a matter of law under the Uniform
Commercial Code. The proceeds of any disposition of the Collateral, or any part
thereof, may be applied by Beneficiary to the payment of the Debt in such
priority and proportions as Beneficiary in its sole discretion shall deem
proper. Beneficiary may comply with any applicable state or federal law or
regulatory requirements in connection with a disposition of the Collateral, and
such compliance will not be considered or deemed to affect adversely the
commercial reasonableness of any sale of the Collateral. Beneficiary may sell
the Collateral without giving any warranties as to the Collateral, and
specifically disclaim any warranties of title, merchantability, fitness for a
specific purpose or the like, and this procedure will not be considered or
deemed to affect adversely the commercial reasonableness of any sale of the
Collateral. Trustor acknowledges that a private sale of the Collateral may
result in less proceeds than a public sale, and Trustor acknowledges that the
Collateral may be sold at a loss to Trustor, and that, in such event,
Beneficiary shall have no liability or responsibility to Trustor or any other
party for such loss. If Beneficiary shall require the filing or recording of
additional Uniform Commercial Code financing statements, amendments thereto or
continuation statements, Trustor shall, promptly after request, execute, file
and record such Uniform Commercial Code financing statements, amendments
thereto or continuation statements as Beneficiary shall deem necessary, and
shall pay all expenses and fees in connection with the filing and recording
thereof, it being understood and agreed, however, that no such additional
documents shall increase Trustor’s obligations under the Note, this Deed of
Trust or any of the other Loan Documents. Trustor hereby authorizes Beneficiary
at any time and from time to time to file any initial financing statements,
amendments thereto and continuation statements with or without the signature of
Trustor as authorized by applicable law, including any statements describing
the collateral as being all assets of Trustor, it being acknowledged that all
such assets subject to the Uniform Commercial Code are intended to be included
in the Collateral. For purposes of such filings, Trustor agrees to furnish
promptly any information reasonably requested by Beneficiary. Trustor also
hereby ratifies its authorization for Beneficiary to have filed any like
initial financing statements, amendments thereto or continuation statements if
filed prior to the date of this Deed of Trust. Trustor hereby irrevocably
appoints Beneficiary and any officer or agent of Beneficiary, with full power
of substitution, as its true and lawful attorney-in-fact, coupled with an
interest, with full irrevocable power and authority in the place and stead of
Trustor or in Trustor’s name to execute in Trustor’s name any such documents
and to otherwise carry out the purposes of this Paragraph, to the extent
that Trustor’s authorization above is deemed not to be sufficient as a matter
of law. To the extent permitted by law, Trustor hereby ratifies all acts said
attorneys-in-fact shall lawfully do, have done in the past or cause to be done
in the future by virtue hereof.

 

54

 

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

 

29.                               Contest of Certain Claims.  At its own
expense, Trustor may contest by appropriate legal proceeding, promptly
initiated and conducted in good faith and with due diligence, the amount or
validity or application in whole or in part of any Taxes, Other Charges or
mechanic’s or materialman’s lien asserted against the Trust Property if, and so
long as, (a) such Lien is not being foreclosed or such legal proceedings
shall operate to prevent the enforcement or collection of the same and the sale
of the Trust Property or any part thereof, to satisfy the same and either (i) within
sixty (60) days of the inception of such Lien such Lien is released or
discharged of record or is fully insured over by the title issuer that issued
the title insurance policy that insures the lien of this Deed of Trust such
that the Lien is not an exception to Beneficiary’s title to the Trust Property
pursuant to this Deed of Trust, or (ii) Trustor deposits with Beneficiary,
by the expiration of such sixty (60)-day period, a cash deposit, or an
indemnity bond satisfactory to Beneficiary with a surety satisfactory to
Beneficiary, in the amount of the Taxes, Other Charges or mechanic’s or
materialman’s lien claim, plus a reasonable additional sum to pay all costs,
interest and penalties that may be imposed or incurred in connection therewith,
to assure payment of the matters under contest and to prevent any sale or
forfeiture of the Trust Property or any part thereof; (d) Trustor shall
promptly upon final determination thereof pay the amount of any such Taxes,
Other Charges or claim so determined, together with all costs, interest and
penalties which may be payable in connection therewith. Notwithstanding the foregoing,
Trustor shall immediately upon request of Beneficiary pay (and if Trustor shall
fail so to do, Beneficiary may, but shall not be required to, pay or cause to
be discharged or bonded against) any such Taxes, Other Charges or claim
notwithstanding such contest, if in the reasonable opinion of Beneficiary, the
Trust Property or any part thereof or interest therein may be in danger of
being sold, forfeited, foreclosed, terminated, canceled or lost. Beneficiary may
pay over any such cash deposit or part thereof to the claimant entitled thereto
at any time when, in the reasonable judgment of Beneficiary, the entitlement of
such claimant is established.

 

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

 

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

 

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

 

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

 

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

 

35.                               Compliance with Law;
Alterations.

 

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

 

(b)                                 Notwithstanding
any provisions set forth herein or in any other document regarding Beneficiary’s
approval of alterations of the Premises or Improvements, Trustor shall not alter
the Premises or Improvements in any manner which would increase Trustor’s
responsibilities for compliance with the applicable Access Laws without the
prior written approval of Beneficiary except to the extent that such increased
responsibilities cannot reasonably be expected to have a Material Adverse
Effect. Beneficiary’s approval of the plans, specifications, or working
drawings for alterations of the Premises or Improvements shall create no
responsibility or liability on behalf of Beneficiary for their completeness,
design, sufficiency or their compliance with the Access Laws. The foregoing
shall apply to tenant improvements constructed by Trustor or by any of its tenants.
Beneficiary may condition any such approval upon receipt of a certificate of
Access Law compliance from an independent architect, engineer, or other person
acceptable to Beneficiary.

 

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

 

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

 

36.                               Indemnification.

 

(a)                              TRUSTOR, AT ITS SOLE COST
AND EXPENSE, SHALL
PROTECT, DEFEND, INDEMNIFY AND SAVE HARMLESS
THE INDEMNIFIED PARTIES (DEFINED BELOW) FROM AND AGAINST ALL LOSSES (AS DEFINED
BELOW) IMPOSED UPON OR INCURRED BY OR ASSERTED AGAINST ANY OF THE INDEMNIFIED PARTIES
BY REASON OF (A) OWNERSHIP OF THIS DEED OF TRUST, THE TRUST PROPERTY OR
ANY INTEREST THEREIN OR RECEIPT OF ANY RENTS; (B) ANY ACCIDENT, INJURY TO
OR DEATH OF PERSONS OR LOSS OF OR DAMAGE TO PROPERTY OCCURRING IN, ON OR ABOUT
THE PREMISES OR IMPROVEMENTS OR ANY PART THEREOF OR ON THE ADJOINING

 

56

 

SIDEWALKS, CURBS, ADJACENT PROPERTY OR ADJACENT
PARKING AREAS, STREETS OR WAYS; (C) ANY USE, NONUSE OR CONDITION IN, ON OR ABOUT
THE PREMISES OR IMPROVEMENTS OR ANY PART THEREOF OR ON ADJOINING
SIDEWALKS, CURBS, ADJACENT PROPERTY OR ADJACENT PARKING AREAS, STREETS OR WAYS;
(D) ANY FAILURE ON THE PART OF TRUSTOR OR TRUSTEE TO PERFORM OR
COMPLY WITH ANY OF THE TERMS OF THIS DEED OF TRUST; (E) PERFORMANCE OF ANY
LABOR OR SERVICES OR THE FURNISHING OF ANY MATERIALS OR OTHER PROPERTY IN
RESPECT OF THE TRUST PROPERTY OR ANY PART THEREOF; (F) ANY FAILURE OF THE TRUST
PROPERTY TO COMPLY WITH ANY APPLICABLE LAW, INCLUDING ACCESS LAWS; (G) ANY REPRESENTATION OR WARRANTY
MADE IN THE NOTE, THIS DEED OF TRUST OR ANY OF THE OTHER LOAN DOCUMENTS BEING
FALSE OR MISLEADING IN ANY MATERIAL RESPECT AS OF THE DATE SUCH REPRESENTATION
OR WARRANTY WAS MADE; (H) ANY CLAIM BY BROKERS, FINDERS OR SIMILAR PERSONS
CLAIMING TO BE ENTITLED TO A COMMISSION IN CONNECTION WITH ANY LEASE OR OTHER
TRANSACTION INVOLVING THE TRUST PROPERTY OR ANY PART THEREOF UNDER ANY
LEGAL REQUIREMENT OR ANY LIABILITY ASSERTED AGAINST ANY INDEMNIFIED PARTY WITH
RESPECT THERETO; AND (I) ANY AND ALL CLAIMS AND DEMANDS WHATSOEVER WHICH MAY BE
ASSERTED AGAINST ANY INDEMNIFIED PARTY BY REASON OF ANY ALLEGED OBLIGATIONS OR
UNDERTAKINGS ON SUCH PARTY’S PART TO PERFORM OR DISCHARGE ANY OF THE
TERMS, COVENANTS, OR
AGREEMENTS CONTAINED IN ANY LEASE. HOWEVER, NOTHING HEREIN SHALL BE CONSTRUED TO
OBLIGATE TRUSTOR TO INDEMNIFY, DEFEND AND HOLD HARMLESS ANY INDEMNIFIED PARTY
FROM AND AGAINST ANY AND ALL LIABILITIES, OBLIGATIONS, LOSSES, DAMAGES,
PENALTIES, CLAIMS, ACTIONS, SUITS, COSTS AND EXPENSES ENACTED AGAINST, IMPOSED
ON OR INCURRED BY ANY INDEMNIFIED PARTY BY REASON OF SUCH PARTY’S WILLFUL
MISCONDUCT OR GROSS NEGLIGENCE. THIS INDEMNITY SHALL SURVIVE PAYMENT IN FULL OF
THE DEBT, THE TERMINATION, SATISFACTION, RELEASE OR ASSIGNMENT OF THIS DEED OF TRUST AND
THE EXERCISE BY BENEFICIARY OF ANY OF ITS RIGHTS OR REMEDIES HEREUNDER,
INCLUDING, BUT NOT LIMITED TO, THE ACQUISITION OF THE TRUST PROPERTY BY
FORECLOSURE OR A CONVEYANCE IN LIEU OF FORECLOSURE.

 

(b)                                 As used in this
herein, the term (i) “Indemnified Parties” means (A) Beneficiary, (B) Trustee, (C) any officers,
directors, shareholders, partners, members, employees, agents, attorneys,
servants, representatives, contractors, subcontractors, affiliates or
subsidiaries of any and all of the foregoing, and (D) the heirs, legal
representatives, successors and assigns of any and all of the foregoing
(including, without limitation, any successors by merger, consolidation or
acquisition of all or a substantial portion of an Indemnified Party’s assets
and business), in all cases whether during the term of the Loan or as part of
or following a foreclosure of the Loan; and (ii) the term “Losses” means
any and all claims, suits, liabilities (including, without limitation, strict
liabilities), actions, proceedings, obligations, debts, demands, causes of
action, damages, losses, costs, expenses, fines, penalties, charges, fees,
judgments,

 

57

 

awards, amounts paid in settlement of
whatever kind or nature (including but not limited to reasonable attorneys’
fees and other costs of defense).

 

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

 

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

 

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

 

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

 

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

 

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

 

58

 

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

 

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

 

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

 

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

 

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

 

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

 

45.                               Definitions.  Unless the
context clearly indicates a contrary intent or unless otherwise specifically
provided herein, words used in this Deed of Trust may be used interchangeably
in singular or plural form. The word “Trustor” shall mean “each Trustor and any subsequent owner or owners of the Trust
Property or any part thereof or any interest therein;” the word “Beneficiary” shall mean

 

59

 

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

 

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

 

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

 

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

 

60

 

49.                               Trustee’s Fees: Substitute
Trustee.

 

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

 

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

 

50.                               Power of Sale.

 

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

 

61

 

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

 

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

 

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

 

51.                               Recourse Provisions.  Subject to the
qualifications below, Beneficiary shall not enforce the liability and
obligation of Trustor to perform and observe the obligations contained in the
Note, this Deed of Trust or in any of the other Loan Documents by any action or
proceeding wherein a money judgment shall be sought against Trustor, except
that Beneficiary may bring a foreclosure action, an action for specific performance
or any other appropriate action or proceeding to enable Beneficiary to enforce
and realize upon its interests under the Note, this Deed of Trust and the other
Loan Documents, or in the Trust Property, the Rents (as defined in this Deed of
Trust), or any other collateral given to Beneficiary pursuant to the Loan
Documents; provided, however, that, except as specifically
provided herein, any judgment in any such action or proceeding shall be
enforceable against Trustor only to the extent of Trustor’s interest in the
Trust Property, in the Rents and in any other collateral given to Beneficiary.
By accepting the Note, this Deed of Trust and the other Loan Documents,
Beneficiary agrees that it shall not except as otherwise herein provided, sue
for, seek or demand any deficiency judgment or other monetary judgment against
Trustor in any such action or proceeding under or by reason of or under or in
connection with the Note, this Deed of Trust or the other Loan Documents. The
provisions of this paragraph shall not, however, (a) constitute a waiver,
release or impairment of any obligation evidenced or secured by any of the Loan
Documents; (b) impair the right of Beneficiary to name Trustor as a party
defendant in any action or suit for foreclosure and sale under this Deed of
Trust; (c) affect the validity or enforceability

 

62

 

of any guaranty or indemnity made in connection
with the Loan or any of the rights and remedies of the Beneficiary thereunder; (d) impair
the right of Beneficiary to obtain the appointment of a receiver; (e) impair
the enforcement of the Assignment of Leases; or (f) constitute a waiver of
the right of Beneficiary to enforce the liability and obligation of Trustor, by
money judgment or otherwise, to the extent of, but
only to the extent of, any loss, damage, cost, expense, liability,
claim or other obligation incurred by Beneficiary (including attorneys’ fees
and costs reasonably incurred) arising out of or in connection with the
following:

 

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

 

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

 

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

 

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

 

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

 

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

 

(vii)                           any security
deposits or other refundable deposits collected with respect to the Trust
Property which are not delivered to Beneficiary upon a sale or foreclosure of
the Trust Property or other action in lieu thereof, except to the extent any
such security deposits were

 

63

 

applied in accordance with the terms and
conditions of any of the Leases (as defined in this Deed of Trust) prior to the
occurrence of the Event of Default that gave rise to such sale or foreclosure
or action in lieu thereof; and

 

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

 

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

 

Notwithstanding anything to the contrary in
the Note or any of the Loan Documents, (A) Beneficiary shall not be deemed
to have waived any right which Beneficiary may have under Section 506(a),
506(b), 1111(b) or any other provisions of the U.S. Bankruptcy Code to
file a claim for the full amount of the Debt secured by this Deed of Trust or
to require that all collateral shall continue to secure all of the Debt owing
to Beneficiary in accordance with the Loan Documents, and (B) the Debt
shall be fully recourse to Trustor in the event that: (i) the Trust
Property or any part thereof becomes an asset in a voluntary bankruptcy or
voluntary insolvency proceeding under the U.S. Bankruptcy Code; (ii) Trustor
engages in any business activities other than those related to the Trust
Property or violates the restrictions on indebtedness set forth in this Deed of
Trust; (iii) Trustor fails to obtain Beneficiary’s prior written consent
to any subordinate financing or other voluntary lien encumbering the Trust
Property or any interests in Trustor; (iv) Trustor fails to obtain
Beneficiary’s prior written consent to any assignment, transfer, or conveyance of
the Trust Property or any interest therein as required by this Deed of Trust;
or (v) there is an intentional breach of, or deliberate failure to
perform, any of the representations, covenants and agreements of Section 1(1) of
this Deed of Trust occurs.

 

52.                               Miscellaneous.

 

(a)                                  Trustor covenants
and agrees not to engage in any transaction which would cause any obligation,
or action taken or to be taken, hereunder (or the exercise by Beneficiary of
any of its rights under the Loan Documents) to be a non-exempt (under a
statutory or administrative class exemption) prohibited transaction under the
Employee Retirement Income Security Act of 1974, as amended (“ERISA”). Trustor
further covenants and agrees to deliver to Beneficiary such certifications or
other evidence from tune to time throughout the Term, as REASONABLY requested
by Beneficiary, that (i) Trustor is not an “employee benefit plan” as
defined in Section 3(3) of ERISA, which is subject to Title I of
ERISA, or a “governmental plan” within the meaning of Section 3(32) of
ERISA; (ii) Trustor is not subject to state statutes regulating
investments and fiduciary obligations with respect to governmental plans; and (iii) one
or more of the following circumstances is true: (A) Equity interests in
Trustor are publicly offered securities, within the meaning of 29 C.F.R. § 2510.3-10l(b)(2);
(B) Less than twenty-five percent (25%) of

 

64

 

each outstanding class of equity interests
in Trustor are held by “benefit plan investors” within the meaning of 29 C.F.R.
§ 2510.3-101(f)(2); or (C) Trustor qualifies as an “operating company”
or a “real estate operating company” within the meaning of 29 C.F.R. § 2510.3-101(c) or
(e) or an investment company registered under the Investment Company Act
of 1940. TRUSTOR FURTHER
COVENANTS AND AGREES TO PROTECT, DEFEND, INDEMNIFY AND HOLD THE INDEMNIFIED PARTIES
HARMLESS FROM AND AGAINST ALL LOSSES THAT ANY INDEMNIFIED PARTY MAY INCUR
AS A RESULT OF TRUSTOR’S BREACH OF THE COVENANTS IN THIS PARAGRAPH. The covenants and indemnity contained in this
Paragraph shall survive the extinguishment of the lien of this Deed of Trust by
foreclosure or action in lieu thereof; furthermore, the foregoing indemnity
shall supersede any limitations on Trustor’s liability under any of the Loan
Documents.

 

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

 

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

 

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

 

(e)                                  Trustor covenants
and agrees to pay Beneficiary upon receipt of written notice from Beneficiary,
all reasonable costs and expenses (including, without limitation, reasonable

 

65

 

attorneys’ fees and disbursements and the
costs and expenses of any title insurance company, appraisers, engineers or
surveyors) incurred by Beneficiary in connection with (i) the preparation,
negotiation, execution and delivery of this Deed of Trust and the other Loan
Documents; (ii) Trustor’s performance of and compliance with Trustor’s
respective agreements and covenants contained in this Deed of Trust and the
other Loan Documents on its part to be performed or complied with after the
date hereof; (iii) Beneficiary’s performance and compliance with all
agreements and conditions contained in this Deed of Trust and the other Loan
Documents on its part to be performed or complied with after the date hereof; (iv) the
negotiation, preparation, execution, delivery and administration of any
consents, amendments, waivers or other modifications to this Deed of Trust and
the other Loan Documents; and (v) the filing and recording fees and
expenses, title insurance fees and expenses, and other similar expenses
incurred in creating and perfecting the lien in favor of Beneficiary pursuant
to this Deed of Trust and the other Loan Documents.

 

(f)                                    THIS DEED OF TRUST, AND ITS
VALIDITY, ENFORCEMENT AND INTERPRETATION, SHALL BE GOVERNED BY AND CONSTRUED,
INTERPRETED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE IN WHICH THE
PREMISES ARE LOCATED (WITHOUT REGARD TO ANY CONFLICT OF LAWS PRINCIPLES) AND
APPLICABLE UNITED STATES FEDERAL LAW.

 

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

 

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

 

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

 

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

 

(b)                                 Upon the
occurrence and during the continuance of any Event of Default, in addition to any
other rights or remedies provided in the Loan Documents, at law, in equity or
otherwise, Beneficiary shall have the right to cause the Trust Property or any
part thereof to be sold in order to accomplish the object of these trusts and
upon demand by Beneficiary, Trustee, without demand on Trustor, shall sell the
Trust Property or such part thereof as Trustee in its sole discretion may deem
necessary to accomplish the objects of these trusts having first given notice

 

66

 

of the time and place of such sale as
required by law for the sale of real property under Sections 55-59.1 et  seq.
of the Virginia Code (1950).

 

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

 

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

 

Exemptions Waived;

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

Renewal or extension permitted;

Substitution of trustee permitted; and

Any trustee may act.

 

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

 

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

 

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

 

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

 

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

 

67

 

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

 

Remainder
of page intentionally blank

Signature page(s) follow

 

68

 

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

 

	
   

  	
  TRUSTOR:

  
	
   

  	
   

  
	
   

  	
  RKB WILLOWWOOD LLC

  
	
   

  	
   

  
	
   

  	
  By: 

  	
  RKB Willowwood Manager LLC

  Its Managing Member

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ Steven A. Grigg

  
	
   

  	
   

  	
   

  	
  Name:

  	
  Steven A. Grigg

  
	
   

  	
   

  	
   

  	
  Title:

  	
  President

  
	
   

  	
   

  	
   

  
						

 

Signature page to
Deed of Trust, Assignment of Rents,

Security Agreement and Fixture Filing

 

 

 

	
  District of Columbia

  	
  )

  	
   

  
	
   

  	
  )

  	
  TO WIT:

  
	
   

  	
  )

  	
   

  

 

 

The foregoing instrument was acknowledged
before me this 27th day of May, 2003 by Steven A. Grigg as President
of RKB Willowwood Manager LLC, a Delaware limited liability company, the
Managing Member of RKB Willowwood LLC, a Delaware limited liability company, on
behalf of said limited liability companies.

 

 

	
   

  	
  /s/ Carmen D.
  Zollman

  	
   

  
	
   

  	
  Notary Public

  
	
   

  	
   

  
	
  [Notarial Seal]

  	
   

  
	
   

  	
   

  
	
  My term of office expires

  	
   

  	
   

  	
   

  	
  Carmen D. Zollman

  
	
   

  	
   

  	
  Notary Public, District of Columbia

  My Commission Expires 12-14-2006

  
						

 

Acknowledgment
page to Deed of Trust, Assignment of Rents,

Security Agreement and Fixture Filing

 

 

Exhibit A

Legal
Description

 

All that certain lot or parcel of land situate and lying in the City of
Fairfax, Virginia, and more particularly described as follows:

 

Lots 3, 4 and Parcel B, COMMONWEALTH
CORPORATE CENTER, as the same appears duly dedicated, platted and recorded in
Deed Book 6301 at page 704 and amended in Deed Book 6965 at page 272,
among the land records of Fairfax County, Virginia.

 

TOGETHER WITH the right to use in
conjunction with others a sixty foot easement for the purposes of Ingress and
egress over Parcel A, as shown on the plat attached to a Deed of Dedication
dated December 9, 1969 and recorded in Deed Book
3260 at page 382, of the land records of Fairfax County, Virginia; and
TOGETHER WITH an easement sixty feet in width, for the purposes of ingress and
egress for Parcel I-A-I-a along the southerly side of a four acre tract,
reserved in a conveyance to Roland Bruce Adkins, Trustee, and Steven F. Adkins,
Trustee, by Samuel W. Eaton, divorced and not remarried, dated October 4,
1972 and recorded in Deed Book 3710 at page 585, of the land records of
said County, said last mentioned sixty foot easement being a continuation of
the street or easement road now serving as access to the aforesaid 4 acre
tract, also designated Parcel I-A-I-b.

 

AND TOGETHER WITH AND SUBJECT TO the
easements created in that certain Declaration of Access, Utilities and Signage
Easement dated January 13, 1986, recorded in Deed Book 6337 at page 1936,
among the aforesaid land records.

 

Tax Parcel Numbers: 

47-4-02-02-003

47-4-02-02-004

47-4-02-02-000B

 

NOTE: Lots 3,4 and
Parcel B, Commonwealth Corporate Center, are also more particularly described
by metes and bounds on Exhibits A-1, A-2 and A-3 attached hereto and made a
part hereof.

 

 

EXHIBIT A-l

 

5/28/03

DESCRIPTION OF
LOT 3

COMMONWEALTH
CORPORATE CENTER

 

BEGINNING at a drill hole found in the north side
of Eaton Place (60’ R/W), a public street, said point being 601.03 feet from
the north side of Lee Highway (public R/W width varies), U.S. Routes 50,29,211;

 

THENCE with said north side of Eaton Place,
N 86 degrees 12’ 59” W, 35.00 feet to a drill hole found;

 

THENCE departing said Eaton Place and
running with the east line of Lot 2, Commonwealth Corporate Center the
following courses and distances:

 

N 03 degrees 47’ 01” E, 81.12 feet to a
nail found,

N 41 degrees 12’ 59” W, 51.10 feet to a
drill hole found in walk;

 

THENCE continuing with an arc of a curve to
the right whose radius is 61.00 feet, whose chord is 46.69 feet, whose chord
bearing is N 18 degrees 42’ 59” W for a distance of 47.91 feet to an iron pipe
found and;

 

N 03 degrees 47’ 01” E,
115.79 feet to an iron pipe found, 

N 86 degrees 12’ 59” W,
139.06 feet to a PK nail found;

 

THENCE continuing with
an arc of a curve to the left whose radius is 60.00 feet, whose chord is 15.76
feet, whose chord bearing is N 11 degrees 19’ 56” E, for a distance of 15.81
feet to a PK nail found and;

 

N 03 degrees 47’01” E, 157.20 feet to a PK
nail found,

N 86 degrees 12’ 59” W, 105.00 feet to a nail found,

N 03 degrees 47’ 01” E, 44.26 feet to an
iron pipe found,

N 86 degrees 12’ 59” W, 76.44 feet to a
drill bole found and,

N 68 degrees 14’ 24” W,
52.51 feet to an iron pipe found in the east line of Parcel I-A-I-B, Eaton
Property;

 

THENCE with said Parcel I-A-I-B, N 21
degrees 45’ 36” E, 185.54 feet to an iron pipe found in the south line of
Parcel IV, Fairfax Motel Corporation;

 

THENCE with said Parcel IV S 85 degrees 51’
51” E, 442.13 feet to a point, said point being the northwest corner to Lot 4,
Commonwealth Corporate Center;

 

1

 

THENCE departing Parcel IV and running with
aforementioned Lot 4 the following courses and distances;

 

S 03 degrees 47’ 01” W, 39.30 feet to a
point,

N 86 degrees 12’ 59” W, 154.01 feet to a
point,

S 03 degrees 47’ 01” W, 120,00 feet to a
point,

S 86 degrees 12’ 59” E,
112.00 feet to a point and,

S 03 degrees 47’ 01” W, 523.93 feet to the
point of beginning and containing 3.2777 Acres, more or less;

 

BEING the same property duly dedicated,
platted and recorded in Deed Book 6301 at page 704 and amended in Deed
Book 6965 at page 272, among the land records of Fairfax county.

 

2

 

EXHIBIT A-2

 

6/03/03

DESCRIPTION OF
LOT 4

COMMONWEALTH
CORPORATE CENTER

 

BEGINNING at a drill hole found in the north side
of Eaton Place (60’ R/W), a
public street, said point being 566.03 feet from the north side of Lee Highway
(public R/W width varies), U.S. Routes 50, 29, 211;

 

THENCE with said north side of Eaton Place,
N 86 degrees 12’ 59” W, 35.00 feet to a drill hole found;

 

THENCE departing said
Eaton Place and running with the east line of Lot 3, Commonwealth Corporate Center
the following courses and distances:

 

N 03 degrees 47’ 01” E, 523.93 feet to a
point,

N 86 degrees 12’ 59” W, 112.00 feet to a
point,

N 03 degrees 47’ 01” E, 120.00 feet to a
point,

N 86 degrees 12’ 59” W, 154.01 feet to a
point, and

N 03 degrees 47’01” E, 39.30 feet to a
point in the south line of Parcel IV, Fairfax Motel Corporation;

 

THENCE with said Parcel IV, S 85
degrees 51’ 51” E, 124.21 feet to an iron pipe found, said pipe being the
northwest corner to Parcel “B” Commonwealth Corporate Center;

 

THENCE with said Parcel “B”,
S 28 degrees 51’ 51” E, 354.95 feet to an iron pipe found, and continuing S 40
degrees 45’ 32” E, 3.53 feet to
an iron pipe found being the northern most corner to Lot 1, Commonwealth
Corporate Center;

 

THENCE departing Parcel “B”
and running with the line of aforementioned Lot 1 the following courses and
distances:

 

S 54 degrees 08’ 58” W, 33.80 feet to a PK nail found,

S 40 degrees 45’ 32” E, 61.29 feet to a PK
nail found,

S 03 degrees 47’ 01” W, 32.85 feet to a
nail found,

N 86 degrees 12’ 59” W, 61.96 feet to a PK nail found,

S 03 degrees 47’ 01” W, 6.82 feet to a nail
found,

N 86 degrees 12” 59” W, 226.17 feet to an
iron pipe found,

S 03 degrees 47’ 01” W, 115.79
feet to an iron pipe found;

 

1

 

THENCE continuing with a arc of a curve to
the right whose radius is 61.00 feet, whose chord is 46.69 feet, whose chord
bearing is S 26 degrees 17’ 01” W, for a distance of 47.91 feet to a drill hole
found in walk;

 

S 48 degrees 47’ 01” W, 51.10 feet to a
nail found, and

S 03 degrees 47’ 01” W, 81.12 feet to the
point of beginning and containing 3.3811 Acres, more or less;

 

BEING the same property duly dedicated,
platted and recorded in Deed Book 6301 at page 704 and amended in Deed Book
6965 at page 272, among the land records of Fairfax County.

 

2

 

EXHIBIT A-3

 

5/28/03

DESCRIPTION OF
PARCEL “B”

COMMONWEALTH
CORPORATE CENTER

 

BEGINNING at an iron pipe found in the east
line of Lot 1, Commonwealth Corporate Center, said pipe is in the west line of
City of Fairfax being N 11degrees 14’ 13” E, 23.07 feet from the north line of
Lee Highway (public R/W width varies) U.S. Routes 50,29, 211;

 

THENCE with said east line of Lot 1, N 59
degrees 10’ 17” W, 402.68 feet to an iron pipe found, and N 40 degrees 45’ 32”
W, 195.30 feet to an iron pipe found in the east line of Lot 4, Commonwealth
Corporate Center;

 

THENCE with said Lot 4, N 40 degrees 45’ 32”
W, 3.53 feet to an iron pipe found, and N 28 degrees 51’ 51” W, 354.95 feet to
an iron pipe found in the south line of Parcel IV, Fairfax Motel Corporation;

 

THENCE with said Parcel IV and continuing
with Lots 23 thru 17, Section One, First Addition to Mosby Woods S 85
degrees 51’ 51” E, 770.58 feet to an iron pipe found being the south west corner
to Lot 16, Block “A”, Mosby Woods, and the northwest
corner of aforementioned City of Fairfax, Virginia;

 

THENCE with the line of
City of Fairfax, S 11 degrees 14’ 13” W, 624.21 feet to the point of beginning
and containing 6.7640 Acres, more or less;

 

BEING the same property duly dedicated,
platted and recorded in Deed Book 6301 at page 704 and amended in Deed
Book 6965 at page 272, among the land records of Fairfax county.

 

3

 

Fairfax
County Land Records

Cover Sheet - V04-4934

 

Instrument(s)

Grantor(s)

RKB LAKESIDE LLC _I_N

Grantee(s)

RICHARD W KLEIN JR _I_N

 

	
  Consideration

  	
  19500000.00

  	
  Consideration%

  	
  100

  
	
  Tax Exemption

  	
  None

  	
  Amount Not Taxed

  	
   

  
	
  DEM Number

  	
   

  	
  Tax Map Number

  	
  044-4-0/50/01/8

  
	
  Original Book

  	
   

  	
  Original Page

  	
   

  
	
  Title Company

  	
  TRI-STATE
  COMMERCIAL CLOSINGS, INC.

  	
   

  	
  Title Case

  	
  V04-4934

  
	
  Property Descr.

  	
  PARCELS
  18A AND 18B, WESTFIELDS

  	
   

  	
   

  
	
  Certified

  	
  No

  	
  Copies

  	
  0

  	
  Page RangeExhibit
10.20

 

DEED OF
TRUST NOTE

 

	
  $19,500,000

  	
   

  	
  May
  13, 2003

  

 

                FOR
VALUE RECEIVED, RKB LAKESIDE LLC, a Delaware limited liability
company having its principal place of business at 1280 Maryland Avenue, SW,
Suite 280, Washington D.C. 20024 (hereinafter referred to as “Borrower”), promises to pay to the order of ARCHON FINANCIAL, L.P., a Delaware limited partnership, at
its principal place of business at 600 East Las Colinas Boulevard, Suite 450, Irving,
Texas 75039 (hereinafter referred to as “Lender”), or at
such place as the holder hereof may from time to time designate in writing, the
principal sum of Nineteen Million Five Hundred Thousand and
No/100 Dollars ($19,500,000), in lawful money of the United States
of America, with interest thereon to be computed on the unpaid principal
balance from time to time outstanding at the Contract Rate (as hereinafter
defined), and to be paid in installments as provided herein:

 

1.     Payment Terms.          Borrower shall pay to Lender a payment
of interest only for the period from and including the first date on which
principal is advanced to Borrower on this Note to and including the last day of
that same month, which amount will be reserved and paid to Lender on the first
date on which principal is advanced to Borrower on this Note. Interest shall
thereafter be due and payable monthly, in arrears, commencing on July 1, 2003,
and continuing on the first day of each calendar month thereafter up to and
including May 1, 2008. The outstanding principal balance of this Note, together
with all accrued but unpaid interest thereon, shall be due and payable on June
1, 2008, or upon earlier maturity hereof whether by acceleration or otherwise
(the “Maturity Date”). Interest on the
principal sum of this Note shall be calculated on the basis of the actual
number of days elapsed in the related interest accrual period over a
three-hundred-sixty (360) day year. The first interest accrual period hereunder
shall commence on and include the date that principal is advanced hereunder and
shall end on and include the last day of such calendar month; unless principal
is advanced on the last day of a month, in which case the first interest
accrual period shall consist of only such last day. Each interest accrual
period thereafter shall commence on the first day of each calendar month during
the term of this Note and shall end on and include the last day of the calendar
month. All amounts due under this Note shall be payable without setoff,
counterclaim or any other deduction whatsoever. THIS IS A
BALLOON NOTE REQUIRING NO SCHEDULED INSTALLMENT PAYMENTS OF PRINCIPAL.

 

2.     Interest.         The term “Contract
Rate” as used in this Note means a rate of four and sixty
one-hundredths percent (4.60%) per annum.

 

3.     Security.        This Note is evidence of that certain loan
made by Lender to Borrower contemporaneously herewith (the “Loan”). This Note is secured by (a) a Deed of Trust,
Assignment of Rents, Security Agreement and Fixture Filing of even date
herewith in the amount of this Note given by Borrower for the use and benefit
of Lender covering the fee estate of Borrower in certain premises as more
particularly described therein (the “Deed of Trust”),
(b) an Assignment of Leases and Rents of even date herewith executed by
Borrower in favor of Lender (the “Assignment of Leases”),
and (c) the other Loan Documents (as hereinafter defined). The term “Loan Documents” as used in this Note means collectively this
Note, the Deed of Trust, the Assignment of Leases and any and all other
documents securing, evidencing, or guaranteeing all or any portion of the Loan
or otherwise executed and/or delivered in connection with this Note and the
Loan.

 

 

4.     Late Charge.                If any sum payable under this
Note is not paid within five (5) days of (and including) the date on which it
is due, Borrower shall pay to Lender upon demand an amount equal to the leaser
of five percent (5%) of such unpaid sum or the maximum amount permitted by
applicable law in order to defray a portion of the expenses incurred by Lender
in handling and processing such delinquent payment and to compensate Lender for
the loss of the use of such delinquent payment, and such amount shall be
secured by the Loan Documents. If the day when any payment required under this
Note is due is not a Business Day (as hereinafter defined), then payment shall
be due on the first Business Day thereafter. The term “Business Day”
shall mean a day other than (i) a Saturday or Sunday, or (ii) any day on which
banking and savings and loan institutions in New York are authorized or
obligated by law or executive order to be closed.

 

5.     Default and
Acceleration.          The
whole of the principal sum of this Note, together with all interest accrued and
unpaid thereon and all other sums due under the Loan Documents (all such sums
hereinafter collectively referred to as the “Debt”),
or any portion thereof, shall without notice become immediately due and payable
at the option of Lender if any payment required in this Note is not paid within
five (5) days after the date on which it is due or upon the happening of any other
“Event of Default” (as defined in the
Deed of Trust). In the event that it should become necessary to employ counsel
to collect or enforce the Debt or to protect or foreclose the security therefor
or to defend against any claims asserted by Borrower arising from or related to
the Loan Documents, Borrower also shall pay on demand all such costs incurred
by Lender, including reasonable attorneys’ fees and costs incurred for the
services of counsel whether or not suit be brought.

 

6.     Default Interest.          Borrower does hereby agree that upon
the occurrence and during the continuance of an Event of Default (including
upon the failure of Borrower to pay the Debt in full on the Maturity Date),
Lender shall be entitled to receive and Borrower shall pay interest on the
entire unpaid principal sum and any other amounts due at a rate (the “Default Rate”) equal to the lesser of (a) the maximum rate
permitted by applicable law, or (b) five percent (5%) above the Contract Rate.
The Default Rate shall be computed from the occurrence of the Event of Default
until the date Borrower cures the Event of Default and such cure is accepted by
Lender. This charge shall be added to the Debt and shall be secured by the Deed
of Trust. This paragraph, however, shall not be construed as an agreement or
privilege to extend the date of the payment of the Debt, nor as a waiver of any
other right or remedy accruing to Lender by reason of the occurrence of any
Event of Default.

 

7.     Defeasance.  The principal balance of this Note may not be
prepaid in whole or in part (except with respect to the application of Involuntary
Payments (as defined below)) prior to the Maturity Date; provided, however,
Borrower shall have the right and option to release the “Trust
Property” (as defined in the Deed of Trust) from the lien of the
Deed of Trust in accordance with the terms and provisions set forth in the Deed
of Trust (“Defeasance”). Notwithstanding the
foregoing sentence, Borrower shall have the privilege to prepay the entire
amount of the outstanding Debt on the first (1st) day of any of the three (3)
calendar months preceding the month in which the scheduled Maturity Date occurs
without Defeasance or the payment of the Yield Maintenance Premium (as defined
in the Deed of Trust) or any other premium or penalty. Notwithstanding the
foregoing, if prior to the scheduled Maturity Date (excluding, however, during
the three (3) months preceding the scheduled Maturity Date) and during the
existence of any Event of Default, Borrower shall tender payment of an amount
sufficient to satisfy the Debt at any time prior to a sale of the Trust
Property either through foreclosure or the exercise of the other remedies
available to Lender under the Deed of Trust, such tender by Borrower shall be
deemed to be voluntary and Borrower shall pay, in addition to the Debt, the
greater of (a) the Yield Maintenance

 

 

2

 

Premium, if any, that would be payable in
connection with a Defeasance, or (b) three percent (3%) of the unpaid principal
balance of this Note. In addition to the foregoing, Borrower shall not be required
to pay any fee or consideration if, in accordance with the terms and conditions
of the Deed of Trust, Lender receives (i) insurance proceeds or other payments
as a result of fire or other casualties, or (ii) awards or other payments made
in any condemnation or eminent domain proceedings (collectively, “Involuntary Prepayments”), and such Involuntary Prepayments
are applied by Lender toward reduction of the Debt; provided, however, if an
Event of Default, or an event with notice and/or the passage of time would
constitute an Event of Default, exists, then the Borrower shall pay to the
Lender an additional amount equal to the greater of (A) the Yield Maintenance
Premium, if any, that would be required if such Involuntary Prepayment had been
Defeased, or (B) three percent (3%) of the Involuntary Prepayment.

 

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

 

9.     No Oral Change;
Successors and Assigns; Liability.         This Note may not be modified, amended, waived, extended,
changed, discharged or terminated orally or by any act or failure to act on the
part of Borrower or Lender, but only by an agreement in writing signed by the
party against whom enforcement of any modification, amendment, waiver,
extension, change, discharge or termination is sought. Whenever used, the
singular number shall include the plural, the plural the singular, and the
words “Lender” and “Borrower”
shall include their respective successors, assigns, heirs, executors and
administrators. If Borrower consists of more than one person or party, the
obligations and liabilities of each such person or party shall be joint and
several.

 

10.  Waivers.        Except as specifically provided in the
Loan Documents, Borrower and any endorsers, sureties or guarantors hereof
jointly and severally waive presentment and demand for payment, notice of
intent to accelerate maturity, notice of acceleration of maturity, protest and
notice of protest and non-payment, all applicable exemption rights, valuation
and appraisement, notice of demand, and all

 

 

3

 

other notices in connection with the
delivery, acceptance, performance, default or enforcement of the payment of
this Note and the bringing of suit and diligence in taking any action to
collect any sums owing hereunder or in proceeding against any of the rights and
collateral securing payment hereof. Borrower and any surety, endorser or
guarantor hereof agree (i) that the time for any payments hereunder may be
extended from time to time without notice and consent, (ii) to the acceptance
by Lender of further collateral, (iii) the release by Lender of any existing
collateral for the payment of this Note, (iv) to any and all renewals, waivers
or modifications that may be granted by Lender with respect to the payment or
other provisions of this Note, and/or (v) that additional Borrowers, endorsers,
guarantors or sureties may become parties hereto all without notice to them and
without in any manner affecting their liability under or with respect to this
Note. No extension of time for the payment of this Note or any installment
hereof shall affect the liability of Borrower under this Note or any endorser
or guarantor hereof even though the Borrower or such endorser or guarantor is
not a party to such agreement. Failure of Lender to exercise any of the options
granted herein to Lender upon the happening of one or more of the events giving
rise to such options shall not constitute a waiver of the right to exercise the
same or any other option at any subsequent time in respect to the same or any
other event. The acceptance by Lender of any payment hereunder that is less
than payment in full of all amounts due and payable at the time of such payment
shall not constitute a waiver of the right to exercise any of the options
granted herein to Lender at that time or at any subsequent time or nullify any
prior exercise of any such option without the express written acknowledgment of
the Lender.

 

11.  Authority.      Borrower (and the undersigned representative
of Borrower, if any) represents that Borrower has full power, authority and
legal right to execute, deliver and perform its obligations pursuant to this
Note, the Deed of Trust and the other Loan Documents and that this Note, the
Deed of Trust and the other Loan Documents constitute valid and binding
obligations of Borrower.

 

12.  Notices.         All notices or other
communications required or permitted to be given pursuant hereto shall be given
in the manner specified in the Deed of Trust directed to the parties at their
respective addresses as provided therein.

 

13.  Exculpation.  Subject to the qualifications below, Lender
shall not enforce the liability and obligation of Borrower to perform and
observe the obligations contained in this Note, the Deed of Trust or in any of
the other Loan Documents by any action or proceeding wherein a money judgment
shall be sought against Borrower, except that Lender may bring a foreclosure
action, an action for specific performance or any other appropriate action or
proceeding to enable Lender to enforce and realize upon its interests under
this Note, the Deed of Trust and the other Loan Documents, or in the Trust
Property, the Rents (as defined in the Deed of Trust), or any other collateral
given to Lender pursuant to the Loan Documents; provided,  however, that, except as specifically
provided herein, any judgment in any such action or proceeding shall be
enforceable against Borrower only to the extent of Borrower’s interest in the
Trust Property, in the Rents and in any other collateral given to Lender. By
accepting this Note, the Deed of Trust and the other Loan Documents, Lender
agrees that it shall not except as otherwise herein provided, sue for, seek or
demand any deficiency judgment or other monetary judgment against Borrower in
any such action or proceeding under or by reason of or under or in connection
with this Note, the Deed of Trust or the other Loan Documents. The provisions
of this paragraph shall not, however, (a) constitute a waiver, release or
impairment of any obligation evidenced or secured by any of the Loan Documents;
(b) impair the right of Lender to name Borrower as a party defendant in any
action or suit for foreclosure and sale under the Deed of Trust; (c) affect the
validity or enforceability of any guaranty or indemnity made in connection with
the Loan or any of the rights and remedies of the Lender thereunder; (d) impair

 

 

4

 

the right of Lender to obtain the appointment
of a receiver; (e) impair the enforcement of the Assignment of Leases; or (f)
constitute a waiver of the right of Lender to enforce the liability and
obligation of Borrower, by money judgment or otherwise, to the extent of, but only to the extent of, any loss, damage, cost, expense,
liability, claim or other obligation incurred by Lender (including attorneys’ fees
and costs reasonably incurred) arising out of or in connection with the
following:

 

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

 

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

 

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

 

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

 

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

 

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

 

(vii)         any security deposits or other
refundable deposits collected with respect to the Trust Property which are not
delivered to Lender upon a sale or foreclosure of the Trust Property or other
action in lieu thereof, except to the extent any such security

 

 

5

 

deposits were applied in
accordance with the terms and conditions of any of the Leases (as defined in
the Deed of Trust) prior to the occurrence of the Event of Default that gave
rise to such sale or foreclosure or action in lieu thereof; and

 

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

 

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

 

Notwithstanding anything to
the contrary in this Note or any of the Loan Documents, (A) Lender shall not be
deemed to have waived any right which Lender may have under Section 506(a),
506(b), 1111(b) or any other provisions of the U.S. Bankruptcy Code to file a
claim for the full amount of the Debt secured by the Deed of Trust or to
require that all collateral shall continue to secure all of the Debt owing to
Lender in accordance with the Loan Documents, and (B) the Debt shall be fully
recourse to Borrower in the event that: (i) Borrower fails to pay the first
full monthly payment of interest under this Note when due; (ii) the Trust
Property or any part thereof becomes an asset in a voluntary bankruptcy or
voluntary insolvency proceeding under the U.S. Bankruptcy Code; (iii) Borrower
engages in any business activities other than those related to the Trust
Property or violates the restrictions on indebtedness set forth in the Deed of
Trust; (iv) Borrower fails to obtain Lender’s prior written consent to any
subordinate financing or other voluntary lien encumbering the Trust Property or
any interests in Borrower; (v) Borrower fails to obtain Lender’s prior written
consent to any assignment, transfer, or conveyance of the Trust Property or any
interest therein as required by the Deed of Trust; or (vi) there is an
intentional breach of, or deliberate failure to perform, any of the
representations, covenants and agreements of Section 1(l) of the Deed of Trust
occurs.

 

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

 

 

6

 

15.  Transfer.       Lender shall have the unrestricted right
at any time or from time to time to sell this Note and the loan evidenced by
this Note and the Loan Documents or participation interests therein. Borrower
shall execute, acknowledge and deliver any and all instruments requested by
Lender to satisfy such purchasers or participants that the unpaid indebtedness
evidenced by this Note is outstanding upon the terms and provisions set out in
this Note and the other Loan Documents. To the extent, if any, specified in
such assignment or participation, such assignee(s) or participant(s) shall have
the rights and benefits with respect to this Note and the other Loan Documents
as such assignee(s) or participant(s) would have if they were the Lender
hereunder.

 

16.  APPLICABLE LAW;
JURISDICTION AND VENUE.         THIS
NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
STATE IN WHICH THE LAND (AS DEFINED IN THE DEED OF TRUST) IS LOCATED AND THE
APPLICABLE LAWS OF THE UNITED STATES OF AMERICA. BORROWER AND LENDER, TO THE
FULL EXTENT PERMITTED BY LAW, EACH HEREBY KNOWINGLY, INTENTIONALLY AND VOLUNTARILY,
WITH AND UPON THE ADVICE OF COMPETENT COUNSEL, (A) SUBMITS TO PERSONAL
JURISDICTION IN THE STATE WHERE THE LAND IS LOCATED OVER ANY SUIT, ACTION OR
PROCEEDING BY ANY PERSON ARISING FROM OR RELATING TO THIS NOTE, (B) AGREES THAT
ANY SUCH ACTION, SUIT OR PROCEEDING MAY BE BROUGHT IN ANY STATE OR FEDERAL
COURT OF COMPETENT JURISDICTION SITTING IN EITHER THE CITY OR THE COUNTY WHERE
THE LAND IS LOCATED, (C) SUBMITS TO THE JURISDICTION OF SUCH COURTS, AND (D) TO
THE FULLEST EXTENT PERMITTED BY LAW, AGREES THAT BORROWER AND LENDER WILL NOT
BRING ANY ACTION, SUIT OR PROCEEDING IN ANY OTHER FORUM AND BORROWER AND LENDER
EACH FURTHER CONSENTS AND AGREES TO SERVICE OF ANY SUMMONS, COMPLAINT OR OTHER
LEGAL PROCESS IN ANY SUCH SUIT, ACTION OR PROCEEDING BY REGISTERED OR CERTIFIED
U.S. MAIL, POSTAGE PREPAID, TO BORROWER OR LENDER, AS THE CASE MAY BE, AT THE
ADDRESS FOR NOTICES DESCRIBED ON THE FIRST PAGE HEREOF, AND CONSENTS AND AGREES
THAT SUCH SERVICE SHALL CONSTITUTE IN EVERY RESPECT VALID AND EFFECTIVE SERVICE
(BUT NOTHING HEREIN SHALL AFFECT THE VALIDITY OR EFFECTIVENESS OF PROCESS
SERVED IN ANY OTHER MANNER PERMITTD BY LAW).

 

17.  Special State Provisions.

 

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

 

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

 

 

7

 

18.  Notices.         All notices required or permitted to be
given under this Note shall be delivered in the manner set forth in Section 37
of the Deed of Trust.

 

 

Remainder
of page intentionally blank

Signature
page(s) follow

 

 

8

 

Borrower has duly executed
this Note to be effective as of the date first above written.

 

	
   

  	
  BORROWER:

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  RKB LAKESIDE LLC

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  RKB Lakeside Manager LLC

  
	
   

  	
   

  	
  Its Managing Member

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ Steven A. Grigg

  
	
   

  	
   

  	
   

  	
  Name:

  	
  Steven A. Grigg

  
	
   

  	
   

  	
   

  	
  Title:

  	
  President

  

 

 

 

Signature
Page to Deed of Trust Note

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