Document:

Exhibit
10.3

 

GUARANTY
OF RECOURSE OBLIGATIONS

made by

BEHRINGER HARVARD OPPORTUNITY
REIT I, INC.

as guarantor,

in favor of

CITIGROUP
GLOBAL MARKETS REALTY CORP.

Dated as of June
8, 2007

 

GUARANTY OF RECOURSE
OBLIGATIONS

This GUARANTY (this “Guaranty”), dated as of June 8,
2007, made by BEHRINGER HARVARD OPPORTUNITY REIT I, INC.
a Maryland corporation (“Behringer REIT”),
having an address at Behringer Harvard Holdings, LLC, 15601 Dallas Parkway,
Suite 600, Addison, Texas 75001, (“Guarantor”), in favor of CITIGROUP GLOBAL MARKETS REALTY CORP., a New York
corporation (together with its successors and assigns, hereinafter referred to
as “Lender”), having an address at 388
Greenwich Street, Floor 11, New York, New York 
10013.

R  E  C  I  T  A
L  S:

A.                                   Pursuant to that certain Loan Agreement
dated as of the date hereof (as the same may be amended, modified, supplemented
or replaced from time to time, the “Loan Agreement”)
between BEHRINGER HARVARD SANTA
CLARA LP, a Delaware limited partnership (“Borrower”)
and Lender, Lender has agreed to make a loan (the “Loan”)
to Borrower in the maximum principal amount of up to $59,500,000.00 or so much thereof as may be advanced
from time to time, subject to the terms and conditions of the
Loan Agreement;

B.                                     As a condition to Lender’s making the
Loan, Lender is requiring that Guarantor execute and deliver to Lender this
Guaranty; and

C.                                     Guarantor hereby acknowledges that it
will materially benefit from Lender’s agreeing to make the Loan;

NOW, THEREFORE, in consideration of the premises set forth herein
and as an inducement for and in consideration of the agreement of Lender to
make the Loan pursuant to the Loan Agreement, Guarantor hereby agrees,
covenants, represents and warrants to Lender as follows:

1.                                       Definitions.

(a)                                  All capitalized terms used and not defined
herein shall have the respective meanings given such terms in the Loan
Agreement.

(b)                                 The term “Guaranteed Obligations” means Borrower’s
Recourse Liabilities (the “Recourse
Liability Guaranteed Obligations”).

2.                                       Guaranty.

(a)                                  Guarantor hereby irrevocably, absolutely and
unconditionally guarantees to Lender the full, prompt and complete payment when
due of the Guaranteed Obligations.

(b)                                 All sums payable to Lender under this
Guaranty shall be payable on demand and without reduction for any offset,
claim, counterclaim or defense.

(c)                                  Guarantor
hereby agrees to indemnify, defend and save harmless Lender from and against
any and all costs, losses, liabilities, claims, causes of action, expenses and
damages, including reasonable attorneys’ fees and disbursements, which Lender
may suffer or which otherwise may arise by reason of Borrower’s failure to pay
any of the Guaranteed Obligations when due, irrespective of whether such costs,
losses, liabilities, claims, causes of action, expenses or damages are incurred
by Lender prior or subsequent to (i) Lender’s declaring the Principal, interest
and other sums evidenced or secured by the Loan Documents to be due and payable,
(ii) the commencement or completion of a judicial or non-judicial
foreclosure of the Mortgage or (iii) the conveyance of all or any portion of
the Property by deed-in-lieu of foreclosure.

(d)                                 Guarantor
agrees that no portion of any sums applied (other than sums received from
Guarantor in full or partial satisfaction of its obligations hereunder), from
time to time, in reduction of the Debt shall be deemed to have been applied in
reduction of the Guaranteed Obligations until such time as the Debt has been
paid in full, or Guarantor shall have made the full payment required hereunder,
it being the intention hereof that the Guaranteed Obligations shall be the last
portion of the Debt to be deemed satisfied.

3.                                       Representations and Warranties.  Guarantor hereby represents and warrants (as
to itself) to Lender as follows (which representations and warranties shall be
given as of the date hereof and shall survive the execution and delivery of
this Guaranty):

(a)                                  Organization, Authority and Execution.  Behringer REIT is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Maryland, and has all necessary power and authority to own its properties and
to conduct its business as presently conducted or proposed to be conducted and
to enter into and perform this Guaranty and all other agreements and
instruments to be executed by it in connection herewith.  This Guaranty has been duly executed and
delivered by Guarantor.

(b)                                 Enforceability.  This Guaranty constitutes a legal, valid and
binding obligation of Guarantor, enforceable against Guarantor in accordance
with its terms, except as enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or similar laws affecting
the enforcement of creditors’ rights generally.

(c)                                  No Violation.  The execution, delivery and performance
by  Guarantor of its obligations under
this Guaranty has been duly authorized by all necessary action, and do not and
will not violate any law, regulation, order, writ, injunction or decree of any
court or governmental body, agency or other instrumentality applicable to a
Guarantor, or result in a breach of any of the terms, conditions or provisions
of, or constitute a default under, or result in the creation or imposition of
any mortgage, lien, charge or encumbrance of any nature whatsoever upon any of
the assets of a Guarantor pursuant to the terms of a Guarantor’s articles of
organization, or any mortgage, indenture, agreement or instrument to which a
Guarantor is a party or by which it or any of its properties is bound.  No Guarantor is in default under any other
guaranty which it has provided to Lender.

(d)                                 No
Litigation.  There are no actions,
suits or proceedings at law or at equity, pending or, to Guarantor’s best knowledge,
threatened against or affecting a Guarantor

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or which
involve or might involve the validity or enforceability of this Guaranty or
which might materially adversely affect the financial condition of a Guarantor
or the ability of a Guarantor to perform any of its obligations under this
Guaranty.  No Guarantor is in default
beyond any applicable grace or cure period with respect to any order, writ,
injunction, decree or demand of any Governmental Authority which might
materially adversely affect the financial condition of Guarantor or the ability
of Guarantor to perform any of its obligations under this Guaranty.

(e)                                  Consents. 
All consents, approvals, orders or authorizations of, or registrations,
declarations or filings with, all Governmental Authorities (collectively, the
“Consents”) that are required in connection with the valid execution, delivery
and performance by Guarantor of this Guaranty have been obtained and Guarantor
agrees that all Consents required in connection with the carrying out or performance
of any of Guarantor’s obligations under this Guaranty will be obtained when
required.

(f)                                    Financial Statements and Other Information.  All financial statements of Guarantor
heretofore delivered to Lender are true and correct in all material respects
and fairly present the financial condition of Guarantor as of the respective
dates thereof, and no materially adverse change has occurred in the financial
conditions reflected therein since the respective dates thereof.  None of the aforesaid financial statements or
any certificate or statement furnished to Lender by or on behalf of Guarantor
in connection with the transactions contemplated hereby, and none of the
representations and warranties in this Guaranty contains any untrue statement
of a material fact or omits to state a material fact necessary in order to make
the statements contained therein or herein not misleading.  No Guarantor is insolvent within the meaning
of the United States Bankruptcy Code or any other applicable law, code or
regulation and the execution, delivery and performance of this Guaranty will
not render any Guarantor insolvent.

(g)                                 Consideration.  Guarantor is the owner, directly or
indirectly, of legal and beneficial equity interests in Borrower, and as such
will materially benefit from the making of the Loan.

4.                                       Financial Statements. 
BEHRINGER REIT shall deliver to Lender, (a) within 120 days after
the end of each fiscal year of BEHRINGER REIT, a complete copy of BEHRINGER
REIT’s annual financial statements, (b) if requested by Lender, within 60
days after the end of each fiscal quarter of BEHRINGER REIT, financial
statements (including a balance sheet as of the end of such fiscal quarter and
a statement of income and expense for such fiscal quarter) certified by
BEHRINGER REIT and in form, content, level of detail and scope reasonably
satisfactory to Lender, and (c) 20 days after request by Lender, such
other financial information with respect to BEHRINGER REIT as Lender may
reasonably request.

5.                                       Unconditional
Character of Obligations of Guarantor.

The
obligations of Guarantor hereunder shall be irrevocable, absolute and
unconditional, irrespective of the validity, regularity or enforceability, in
whole or in part, of the other Loan Documents or any provision thereof, or the
absence of any action to enforce the same, any waiver or consent with respect
to any provision thereof, the recovery of any judgment against Borrower, a
Guarantor or any other Person or any action to enforce the

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same, any
failure or delay in the enforcement of the obligations of Borrower under the
other Loan Documents or Guarantor under this Guaranty, or any setoff,
counterclaim, and irrespective of any other circumstances which might otherwise
limit recourse against a Guarantor by Lender or constitute a legal or equitable
discharge or defense of a guarantor or surety. 
Lender may enforce the obligations of Guarantor under this Guaranty by a
proceeding at law, in equity or otherwise, independent of any loan foreclosure
or similar proceeding or any deficiency action against Borrower or any other
Person at any time, either before or after an action against the Property or
any part thereof, Borrower or any other Person. 
This Guaranty is a guaranty of payment
and performance and not merely a guaranty of collection.  Guarantor waives diligence, notice of
acceptance of this Guaranty, filing of claims with any court, any proceeding to
enforce any provision of any other Loan Document, against Guarantor, Borrower
or any other Person, any right to require a proceeding first against Borrower
or any other Person, or to exhaust any security (including, without limitation,
the Property) for the performance of the Guaranteed Obligations or any other
obligations of Borrower or any other Person, or any protest, presentment, notice
of default or other notice or demand whatsoever (except to the extent expressly
provided to the contrary in this Guaranty).

(b)                                 The
obligations of Guarantor under this Guaranty, and the rights of Lender to
enforce the same by proceedings, whether by action at law, suit in equity or
otherwise, shall not be in any way affected by any of the following:

(i)                                     any insolvency,
bankruptcy, liquidation, reorganization, readjustment, composition,
dissolution, receivership, conservatorship, winding up or other similar
proceeding involving or affecting Borrower, the Property or any part thereof, a
Guarantor or any other Person;

(ii)                                  any failure by Lender
or any other Person, whether or not without fault on its part, to perform or
comply with any of the terms of the Loan Agreement, or any other Loan
Documents, or any document or instrument relating thereto;

(iii)                               the sale, transfer or
conveyance of the Property or any interest therein to any Person, whether now
or hereafter having or acquiring an interest in the Property or any interest
therein and whether or not pursuant to any foreclosure, trustee sale or similar
proceeding against Borrower or the Property or any interest therein;

(iv)                              the conveyance to Lender,
any Affiliate of Lender or Lender’s nominee of the Property or any interest
therein by a deed-in-lieu of foreclosure;

(v)                                 the release of
Borrower or any other Person from the performance or observance of any of the
agreements, covenants, terms or conditions contained in any of the Loan
Documents by operation of law or otherwise; or

(vi)                              the release in whole or
in part of any collateral for any or all Guaranteed Obligations or for the Loan
or any portion thereof.

(c)                                  Except
as otherwise specifically provided in this Guaranty, Guarantor hereby expressly
and irrevocably waives all defenses in an action brought by Lender

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to enforce
this Guaranty based on claims of waiver, release, surrender, alteration or
compromise and all setoffs, reductions, or impairments, whether arising
hereunder or otherwise.

(d)                                 Lender
may deal with Borrower and Affiliates of Borrower in the same manner and as
freely as if this Guaranty did not exist and shall be entitled, among other
things, to grant Borrower or any other Person such extension or extensions of
time to perform any act or acts as may be deemed advisable by Lender, at any
time and from time to time, without terminating, affecting or impairing the
validity of this Guaranty or the obligations of Guarantor hereunder.

(e)                                  No
compromise, alteration, amendment, modification, extension, renewal, release or
other change of, or waiver, consent, delay, omission, failure to act or other
action with respect to, any liability or obligation under or with respect to,
or of any of the terms, covenants or conditions of, the Loan Documents shall in
any way alter, impair or affect any of the obligations of Guarantor hereunder,
and Guarantor agrees that if any Loan Document are modified with Lender’s
consent, the Guaranteed Obligations shall automatically be deemed modified to
include such modifications.

(f)                                    Lender
may proceed to protect and enforce any or all of its rights under this Guaranty
by suit in equity or action at law, whether for the specific performance of any
covenants or agreements contained in this Guaranty or otherwise, or to take any
action authorized or permitted under applicable law, and shall be entitled to
require and enforce the performance of all acts and things required to be
performed hereunder by Guarantor.  Each
and every remedy of Lender shall, to the extent permitted by law, be cumulative
and shall be in addition to any other remedy given hereunder or now or
hereafter existing at law or in equity.

(g)                                 No
waiver shall be deemed to have been made by Lender of any rights hereunder
unless the same shall be in writing and signed by Lender, and any such waiver
shall be a waiver only with respect to the specific matter involved and shall
in no way impair the rights of Lender or the obligations of Guarantor to Lender
in any other respect or at any other time.

(h)                                 At
the option of Lender, Guarantor may be joined in any action or proceeding
commenced by Lender against Borrower in connection with or based upon any other
Loan Documents and recovery may be had against any Guarantor in such action or
proceeding or in any independent action or proceeding against Guarantor to the
extent of Guarantor’s liability hereunder, without any requirement that Lender
first assert, prosecute or exhaust any remedy or claim against Borrower or any
other Person, or any security for the obligations of Borrower or any other
Person.

(i)                                     Guarantor
agrees that this Guaranty shall continue to be effective or shall be
reinstated, as the case may be, if at any time any payment is made by Borrower
or a Guarantor to Lender and such payment is rescinded or must otherwise be
returned by Lender (as determined by Lender in its sole and absolute
discretion) upon insolvency, bankruptcy, liquidation, reorganization,
readjustment, composition, dissolution, receivership, conservatorship, winding
up or other similar proceeding involving or affecting Borrower or a Guarantor,
all as though such payment had not been made.

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(j)                                     In
the event that Guarantor shall advance or become obligated to pay any sums
under this Guaranty or in connection with the Guaranteed Obligations or in the
event that for any reason whatsoever Borrower or any subsequent owner of the
Property or any part thereof is now, or shall hereafter become, indebted to a
Guarantor, Guarantor agrees that (i) the amount of such sums and of such
indebtedness and all interest thereon shall at all times be subordinate as to
lien, the time of payment and in all other respects to all sums, including
principal and interest and other amounts, at any time owed to Lender under the
Loan Documents, and (ii) Guarantor shall not be entitled to enforce or
receive payment thereof until all principal, interest and other sums due
pursuant to the Loan Documents have been paid in full.  Nothing herein contained is intended or shall
be construed to give Guarantor any right of subrogation in or under the Loan
Documents or any right to participate in any way therein, or in the right,
title or interest of Lender in or to any collateral for the Loan,
notwithstanding any payments made by a Guarantor under this Guaranty, until the
actual and irrevocable receipt by Lender of payment in full of all principal,
interest and other sums due with respect to the Loan or otherwise payable under
the Loan Documents.  If any amount shall
be paid to a Guarantor on account of such subrogation rights at any time when
any such sums due and owing to Lender shall not have been fully paid, such
amount shall be paid by Guarantor to Lender for credit and application against
such sums due and owing to Lender.

(k)                                  Guarantor’s
obligations hereunder shall survive a foreclosure, deed-in-lieu of foreclosure
or similar proceeding involving the Property and the exercise by Lender of any
of all of its remedies pursuant to the Loan Documents and Guarantor expressly
agrees that to the extent necessary to satisfy its obligations under Section 2
hereof, it shall be and remain liable for any deficiency remaining after
foreclosure of any Mortgage or security interest securing the Note,
notwithstanding provisions of law that may prevent the Lender from enforcing
such deficiency against the Borrower..

6.                                       Covenants.

(a)                                  As
used in this Section 6, the following terms shall have the respective meanings
set forth below:

(i)                                     “GAAP” shall mean generally
accepted accounting principles, consistently applied.

(ii)                                  “Liquid Assets” shall mean
assets in the form of cash, cash equivalents, obligations of (or fully
guaranteed as to principal and interest by) the United States or any agency or
instrumentality thereof (provided the full faith and credit of the United
States supports such obligation or guarantee), certificates of deposit issued
by a commercial bank having net assets of not less than $[500 million],
securities listed and traded on a recognized stock exchange or traded over the
counter and listed in the National Association of Securities Dealers Automatic
Quotations, or liquid debt instruments that have a readily ascertainable value
and are regularly traded in a recognized financial market.

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(iii)                               “Net Worth” shall mean, as of a given date,  (x) the total assets of a Guarantor as of
such date less (y) Guarantor’s total liabilities as of such date, determined in
accordance with GAAP.

(b)                                 Guarantor
shall not, at any time while a default in the payment of the Guaranteed
Obligations has occurred and is continuing, either (i) enter into or effectuate
any transaction with any Affiliate which would reduce the Net Worth of
Guarantor, including the payment of any dividend or distribution to a
shareholder, or the redemption, retirement, purchase or other acquisition for
consideration of any stock in Guarantor or (ii) sell, pledge, mortgage or
otherwise transfer to any Person any of Guarantor’s assets, or any interest
therein, except for fair value.

7.                                       Entire
Agreement/Amendments.  This
instrument represents the entire agreement between the parties with respect to the
subject matter hereof.  The terms of this
Guaranty shall not be waived, altered, modified, amended, supplemented or
terminated in any manner whatsoever except by written instrument signed by
Lender and Guarantor.

8.                                       Successors and Assigns. 
This Guaranty shall be binding upon Guarantor, and Guarantor’s estate,
heirs, personal representatives, successors and assigns, may not be assigned or
delegated by any Guarantor and shall inure to the benefit of Lender and its
successors and assigns.

9.                                       Applicable
Law and Consent to Jurisdiction. 
This Guaranty shall be governed by, and construed in accordance with,
the substantive laws of the State of New York. 
Guarantor irrevocably (a) agrees that any suit, action or other
legal proceeding arising out of or relating to this Guaranty may be brought in
a court of record in the City and County of New York or in the Courts of the
United States of America located in the Southern District of New York,
(b) consents to the jurisdiction of each such court in any such suit, action
or proceeding and (c) waives any objection which it may have to the laying
of venue of any such suit, action or proceeding in any of such courts and any
claim that any such suit, action or proceeding has been brought in an
inconvenient forum.  Guarantor
irrevocably consents to the service of any and all process in any such suit,
action or proceeding by service of copies of such process to Guarantor at its
address provided in Section 14 hereof. 
Nothing in this Section 9, however, shall affect the right of
Lender to serve legal process in any other manner permitted by law or affect
the right of Lender to bring any suit, action or proceeding against Guarantor
or its property in the courts of any other jurisdictions.

10.                                 Section
Headings.  The headings of the
sections and paragraphs of this Guaranty have been inserted for convenience of
reference only and shall in no way define, modify, limit or amplify any of the
terms or provisions hereof.

11.                                 Severability.  Any provision of this Guaranty which may be
determined by any competent authority to be prohibited or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such prohibition or unenforceability without invalidating the remaining
provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.

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To the extent
permitted by applicable law, Guarantor hereby waives any provision of law which
renders any provision hereof prohibited or unenforceable in any respect.

12.                                 WAIVER OF TRIAL BY JURY. 
GUARANTOR HEREBY WAIVES THE RIGHT OF TRIAL BY JURY IN ANY LITIGATION,
ACTION OR PROCEEDING ARISING HEREUNDER OR IN CONNECTION THEREWITH.

13.                                 Judgment.  If Lender
recovers a judgment on this Guaranty, Guarantor agrees to pay to Lender
immediately upon demand all reasonable attorneys’ fees and costs incurred by
Lender in collecting and satisfying such judgment; it being expressly
understood that such agreement by the Guarantor is absolute and unconditional
and (i) shall survive (and not merge into) the entry of any judgment and (ii)
shall not be limited regardless of the security for the Loan, and regardless of
whether the Lender exercises any available rights or remedies against any
collateral pledged as security for the Loan.

14.                                 Notices.  All notices,
consents, approvals and requests required or permitted hereunder (a “Notice”) shall
be given in writing and shall be effective for all purposes if either hand
delivered with receipt acknowledged, or by a nationally recognized overnight
delivery service (such as Federal Express), or by certified or registered
United States mail, return receipt requested, postage prepaid, or by facsimile
and confirmed by facsimile answer back, in each case addressed as follows (or
to such other address or Person as a party shall designate from time to time by
notice to the other party):  If to
Lender: Citigroup Global Markets Realty Corp., 388 Greenwich Street, Floor 11,
New York, New York 10013, Attention: Commercial Mortgage Finance, Telecopier
(212) 816-1299, with a copy to: Thacher Proffitt & Wood, LLP, Two World
Financial Center, New York, New York 10281, Attention: Donald F. Simone, Esq.,
Telecopier: (212) 912-7751; if to Guarantor: 
15601 Dallas Parkway, Suite 600, Addison, Texas  75001, Attention: Chief Legal Counsel,
Telecopier: (214) 655-1610,
and 15601 Dallas Parkway, Suite 600, Addison, Texas  75001, Telecopier: (214) 655-1610.  A notice shall be deemed to have been
given:  in the case of hand delivery, at
the time of delivery; in the case of registered or certified mail, when
delivered or the first attempted delivery on a Business Day; or in the case of
overnight delivery, upon the first attempted delivery on a Business Day.

15.                                 Guarantor’s Receipt of Loan Documents.  Guarantor by its execution hereof
acknowledges receipt of true copies of all of the Loan Documents, the terms and
conditions of which are hereby incorporated herein by reference.

16.                                 Interest; Expenses. 
If Guarantor fails to pay all or any sums due hereunder upon demand by
Lender, the amount of such sums payable by Guarantor to Lender shall bear
interest from the date of demand until paid at the Default Rate in effect from
time to time.

(a)                                  Guarantor
hereby agrees to pay all costs, charges and expenses, including  reasonable attorneys’ fees and disbursements,
that may be incurred by Lender in enforcing the covenants, agreements,
obligations and liabilities of Guarantor under this Guaranty.

 8

IN WITNESS WHEREOF, Guarantor has executed this Guaranty as of the date
first above written.

	
  

  	
  BEHRINGER HARVARD OPPORTUNITY

  REIT I, INC., a Maryland corporation

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:Exhibit
10.4

	
   

  	
  PREPARED BY AND UPON

  
	
   

  	
  RECORDATION RETURN TO:

  
	
   

  	
  Thacher Proffitt & Wood LLP

  
	
   

  	
  Two World Financial Center

  
	
   

  	
  New York, New York 10281

  
	
   

  	
  Attn: Donald F. Simone, Esq.

  

 

INSTRUCTIONS TO RECORDER:  INDEX THIS DOCUMENT AS A DEED OF TRUST, AN
ASSIGNMENT OF LEASES AND RENTS, A SECURITY AGREEMENT AND A FIXTURE FILING

	
  BEHRINGER HARVARD SANTA CLARA LP, as grantor

  
	
   

  	
  (Borrower)

  
	
   

  
	
  To

  
	
   

  
	
  FIRST
  AMERICAN TITLE INSURANCE COMPANY,

  
	
  as trustee

  
	
   

  	
  (Trustee)

  
	
   

  
	
  for the benefit
  of

  
	
   

  
	
  CITIGROUP
  GLOBAL MARKETS REALTY CORP., as beneficiary

  
	
   

  	
  (Lender)

  
				

 

DEED OF TRUST, ASSIGNMENT OF LEASES
AND

RENTS, SECURITY AGREEMENT AND FIXTURE

FILING

	
  

  	
  Dated:

  	
  As of June 8, 2007

  
	
   

  	
   

  	
   

  
	
   

  	
  Location:

  	
  700 and 750-800 Central Expressway

  
	
   

  	
   

  	
  Santa Clara, California 95050

  
	
   

  	
  File No.:

  	
  20655-00026

  

 

THIS DEED OF TRUST, ASSIGNMENT OF
LEASES AND RENTS, SECURITY AGREEMENT AND FIXTURE FILING (this
“Security Instrument”), is made as of
June 8, 2007, by BEHRINGER HARVARD SANTA CLARA LP, a Delaware limited partnership,
having its principal place of business at 15601 Dallas Parkway, Suite 600,
Addison, Texas 75001, as grantor (“Borrower”)
to FIRST AMERICAN TITLE INSURANCE COMPANY,
having an address at 1737 North First Street, Suite 500 San Jose, Calif. 95112,
as trustee (“Trustee”), for the benefit of
CITIGROUP GLOBAL MARKETS REALTY CORP.,
a New York corporation, having an address at 388 Greenwich Street, Floor 11,
New York, New York 10013, as beneficiary (together with its successors and
assigns, hereinafter referred to as “Lender”).

Borrower and Lender have entered into a Loan Agreement, dated as of the
date hereof (as amended, modified, restated, consolidated or supplemented from
time to time, the “Loan Agreement”) pursuant to
which Lender is making a secured loan to Borrower in the maximum principal
amount of up to FIFTY
NINE MILLION FIVE HUNDRED THOUSAND  AND
00/100 DOLLARS ($59,500,000.00)
or so much thereof as may be advanced from time to time (the “Loan”).  Capitalized terms used herein without
definition are used as defined in the Loan Agreement.  The Loan is evidenced by a Promissory Note,
dated the date hereof, made by Borrower to Lender in such principal amount
(as the same may be amended, modified, restated, severed, consolidated,
renewed, replaced, or supplemented from time to time, the “Note”).

Borrower is the owner of the fee simple title to certain parcels of
real property (the “Premises”) described in Exhibit
A attached hereto, and the buildings, structures, fixtures, additions,
enlargements, extensions, modifications, repairs, replacements and other
improvements now or hereafter located thereon (the “Improvements”).

To secure the payment of the Note and all sums which may or shall
become due thereunder or under any of the other documents evidencing, securing
or executed in connection with the Loan (the Note, this Security Instrument,
the Loan Agreement and such other documents, as any of the same may, from time
to time, be modified, amended or supplemented, being hereinafter collectively
referred to as the “Loan Documents” which Loan
Documents are incorporated herein by reference for all purposes), including (i)
the payment of interest and other amounts which would accrue and become due but
for the filing of a petition in bankruptcy (whether or not a claim is allowed
against Borrower for such interest or other amounts in any such bankruptcy
proceeding) or the operation of the automatic stay under Section 362(a) of
Title 11 of the United States Code (the “Bankruptcy Code”),
and (ii) the costs and expenses of enforcing any provision of any Loan Document
(all such sums being hereinafter collectively referred to as the “Debt”), Borrower has given, granted,
bargained, sold, alienated, enfeoffed, conveyed, confirmed, warranted, pledged,
assigned and hypothecated and by these presents does hereby give, grant,
bargain, sell, alien, enfeoff, convey, confirm, warrant, pledge, assign and
hypothecate unto Trustee in trust for the benefit of Lender, WITH POWER OF
SALE, the Premises and the Improvements and the following:

 (i)                                  all
of Borrower’s interest as owner in fee simple of the Premises; and

(ii)                                  any
and all after-acquired right, title and interest of Borrower, its successors
and assigns in and to any other portion of the Premises or the Improvements.

TOGETHER WITH:  all right, title, interest and estate of Borrower
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 “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, rights to 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, curtesy and rights of curtesy, property, possession,
claim and demand whatsoever, both at law and in equity, of Borrower 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 all heating, air conditioning, plumbing, lighting,
communications and elevator fixtures), inventory, materials, supplies and other
articles of personal property and accessions thereof, renewals and replacements
thereof and substitutions therefor, and other property of every kind and
nature, tangible or intangible, owned by Borrower, or in which Borrower has or
shall have an interest, now or hereafter located upon the Premises or the
Improvements, or appurtenant thereto, and usable in connection with the present
or future operation and occupancy of the Premises and the Improvements
(hereinafter collectively referred to as the “Equipment”),
including any leases of, deposits in connection with, and proceeds of any sale
or transfer of any of the foregoing, and the right, title and interest of
Borrower in and to any of the Equipment that may be subject to any “security
interest” as defined in the Uniform Commercial Code, as in effect in the State
where the Property is located (the “UCC”),
superior in lien to the lien of this Security Instrument;

(c)                                  all
awards or payments, including interest thereon, that may heretofore or
hereafter be made with respect to the Premises or the Improvements, whether
from the exercise of the right of eminent domain or condemnation (including any
transfer made in lieu of or in anticipation of the exercise of such right), or
for a change of grade, or for any other injury to or decrease in the value of
the Premises or Improvements;

(d)                                 all
leases and other agreements or arrangements heretofore or hereafter entered
into providing for the use, enjoyment or occupancy of, or the conduct of any
activity upon or in, the Premises or the Improvements, including any
extensions, renewals, modifications or amendments thereof (hereinafter
collectively referred to as the “Leases”)
and all rents, rent equivalents, moneys payable as damages (including payments
by reason of the rejection of a Lease in a Bankruptcy Proceeding or in lieu of
rent or rent equivalents), royalties (including all oil and gas or other
mineral royalties and bonuses), income, fees, receivables, receipts, revenues,
deposits (including security, utility and other deposits), accounts, cash,
issues, profits, charges for services rendered, and other consideration of
whatever form or nature received by or paid to or for the account of or benefit
of Borrower or its agents or employees (other than fees paid under the Management
Agreement and salaries paid to employees) from any and all sources arising from
or attributable to the Premises and the Improvements, including all
receivables,

customer obligations, installment payment obligations
and other obligations now existing or hereafter arising or created out of the
sale, lease, sublease, license, concession or other grant of the right of the
use and occupancy of the Premises or the Improvements, or rendering of services
by Borrower or any of its agents or employees, and proceeds, if any, from
business interruption or other loss of income insurance (hereinafter
collectively referred to as 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 the
Property (in the case of a blanket policy of insurance, to the extent allocable
to the Property), including the right to receive and apply the proceeds of any
insurance, judgments, or settlements made in lieu thereof, for damage to the
Property;

(f)                                    the
right, in the name and on behalf of Borrower, to appear in and defend any
action or proceeding brought with respect to the Property and to commence any
action or proceeding to protect the interest of Lender in the Property;

(g)                                 all
accounts (including reserve accounts), escrows, documents, instruments, chattel
paper, claims, deposits and general intangibles, as the foregoing terms are
defined in the UCC, and all franchises, trade names, trademarks, symbols,
service marks, books, records, plans, specifications, designs, drawings,
surveys, title insurance policies, permits, consents, licenses, management
agreements, contract rights (including 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 Property), approvals,
actions, refunds of real estate taxes and assessments (and any other governmental
impositions related to the Property) and causes of action that now or hereafter
relate to, are derived from or are used in connection with the Property, or the
use, operation, maintenance, occupancy or enjoyment thereof or the conduct of
any business or activities thereon (hereinafter collectively referred to as the
“Intangibles”); and

(h)                                 all
proceeds, products, offspring, rents and profits from any of the foregoing,
including those from sale, exchange, transfer, collection, loss, damage,
disposition, substitution or replacement of any of the foregoing.

Without limiting the generality of any of the
foregoing, in the event that a case under the Bankruptcy Code is commenced by
or against Borrower, pursuant to Section 552(b)(2) of the Bankruptcy Code,
the security interest granted by this Security Instrument shall automatically
extend to all Rents acquired by the Borrower after the commencement of the case
and shall constitute cash collateral under Section 363(a) of the
Bankruptcy Code.

TO HAVE AND TO HOLD the Property
unto and to the use and benefit of Lender and its successors and assigns,
forever;

PROVIDED, HOWEVER, these
presents are upon the express condition that, if Borrower shall well and truly
pay to Lender the Debt at the time and in the manner provided in the Loan
Documents and shall well and truly abide by and comply with each and every
covenant and condition set forth in the Loan Documents in a timely manner,
these presents and the estate hereby granted shall cease, terminate and be
void;

AND Borrower represents and
warrants to and covenants and agrees with Lender as follows:

PART I - GENERAL
PROVISIONS

1.                                       Payment of Debt and Incorporation of Covenants
Conditions and Agreements. 
Borrower shall pay the Debt at the time and in the manner provided in
the Loan Documents.  All the covenants,
conditions and agreements contained in the Loan Documents are hereby made a
part of this Security Instrument to the same extent and with the same force as
if fully set forth herein.  Without
limiting the generality of the foregoing, Borrower (i) agrees to insure,
repair, maintain and restore damage to the Property, escrow and pay Taxes and
Other Charges, and comply with Legal Requirements, in accordance with the Loan
Agreement, and (ii) agrees that the Proceeds of Insurance and Awards for
Condemnation shall be settled, held and applied in accordance with the Loan
Agreement.

2.                                       Leases and Rents.

(a)                                  Borrower does hereby
absolutely and unconditionally assign to Lender all of Borrower’s right, title
and interest in all current and future Leases and Rents, it being intended by
Borrower that this assignment constitutes a present, absolute assignment and
not an assignment for additional security only. 
Such assignment shall not be construed to bind Lender to the performance
of any of the covenants or provisions contained in any Lease or otherwise
impose any obligation upon Lender. 
Nevertheless, subject to the terms of this paragraph, Lender grants to
Borrower a revocable license to operate and manage the Property and to collect
the Rents subject to the requirements of the Loan Agreement (including the
deposit of Rents into the Clearing Account). 
Upon an Event of Default, without the need for notice or demand, the
license granted to Borrower herein shall automatically be revoked, and Lender
shall immediately be entitled to possession of all Rents in the Clearing
Account, the Deposit Account (including all Subaccounts thereof) and all Rents
collected thereafter (including Rents past due and unpaid), whether or not
Lender enters upon or takes control of the Property.  Borrower hereby grants and assigns to Lender
the right, at its option, upon revocation of the license granted herein, to
enter upon the Property in person, by agent or by court-appointed
receiver to collect the Rents.  Unless
prohibited by applicable law, any Rents collected after the revocation of such
license may be applied toward payment of the Debt in such priority and
proportions as Lender in its sole discretion shall deem proper.

(b)                                 Borrower shall not
enter into, modify, amend, cancel, terminate or renew any Lease except as
provided in Section 5.10 of the Loan Agreement.

3.                                       Use of Property.  Except as provided in the Loan Agreement, (a)
Borrower 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 Property;
(b) if under applicable zoning provisions the use of the Property is or shall
become a nonconforming use, Borrower shall not cause or permit such
nonconforming use to be discontinued or abandoned without the consent of
Lender; and (c) Borrower shall not (i) change the use of the Property, or
(ii) permit or suffer to occur any waste on or to the Property.

4.                                       Transfer or Encumbrance of the Property.

(a)                                  Borrower acknowledges
that (i) Lender has examined and relied on the creditworthiness and
experience of the principals of Borrower in owning and operating properties
such as the Property in agreeing to make the Loan, (ii) Lender will
continue to rely on Borrower’s ownership of the Property as a means of
maintaining the value of the Property as security for the Debt, and
(iii) Lender has a valid interest in maintaining the value of the Property
so as to ensure that, should Borrower default in the repayment of the Debt,
Lender can recover the Debt by a sale of the Property.  Borrower shall not sell, convey, alienate,
mortgage, encumber, pledge or otherwise transfer the Property or any part
thereof, or suffer or permit any Transfer to occur, other than a Permitted
Transfer or as otherwise expressly permitted under the Loan Documents.

(b)                                 Lender 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 Transfer in violation of this Paragraph 4.  This provision shall apply to every sale,
conveyance, alienation, mortgage, encumbrance, pledge or transfer of the
Property (and every other Transfer) regardless of whether voluntary or
not.  Any Transfer made in contravention
of this Paragraph 4 shall be null and void and of no force and effect, to
the fullest extent permitted by law. 
Borrower agrees to bear and shall pay or reimburse Lender on demand for
all reasonable expenses (including reasonable attorneys’ fees and
disbursements, title search costs and title insurance endorsement premiums)
incurred by Lender in connection with the review, approval and documentation of
any Permitted Transfer.

5.                                       Changes in Laws Regarding Taxation.  If any law is enacted or adopted or amended
after the date of this Security Instrument which deducts the Debt from the
value of the Property for the purpose of taxation or which imposes a tax,
either directly or indirectly, on the Debt or Lender’s interest in the
Property, Borrower will pay such tax, with interest and penalties thereon, if
any.  If Lender is advised by its counsel
that the payment of such tax or interest and penalties by Borrower would be unlawful,
taxable to Lender or unenforceable, or would provide the basis for a defense of
usury, then Lender shall have the option, by notice of not less than 90 days,
to declare the Debt immediately due and payable.

6.                                       No Credits on Account of the Debt.  Borrower shall not claim or demand or be
entitled to any credit on account of the Debt for any part of the Taxes or
Other Charges assessed against the Property, and no deduction shall otherwise
be made or claimed from the assessed value of the Property for real estate tax
purposes by reason of this Security Instrument or the Debt.  If such claim, credit or deduction shall be
required by law, Lender shall have the option, by notice of not less than 90
days, to declare the Debt immediately due and payable.

7.                                       Further Acts, Etc.  Borrower shall, at its sole cost, do, execute,
acknowledge and deliver all and every such further acts, deeds, conveyances,
mortgages, assignments, notices of assignment, transfers and assurances as
Lender shall, from time to time, require, for the better assuring, conveying,
assigning, transferring, and confirming unto Lender the property and rights
hereby mortgaged, given, granted, bargained, sold, alienated, enfeoffed,
conveyed, confirmed, pledged, assigned and hypothecated or intended now or
hereafter so to be, or which Borrower may be or may hereafter become bound to
convey or assign to Lender, or for carrying out the intention or facilitating
the performance of the terms of this Security Instrument, or for filing,
registering or recording this Security Instrument or for facilitating the sale
and transfer of the Loan and the Loan Documents in connection with a Secondary
Market Transaction as described in Section 9.1 of the Loan Agreement.  Upon foreclosure, the

appointment of a receiver or any other relevant action, Borrower shall,
at its sole cost, cooperate fully and completely to effect the assignment or
transfer of any license, permit, agreement or any other right necessary or
useful to the operation of the Property. 
Borrower grants to Lender an irrevocable power of attorney coupled with
an interest for the purpose of exercising and perfecting any and all rights and
remedies available to Lender at law and in equity, including such rights and
remedies available to Lender pursuant to this paragraph.  Notwithstanding anything to the contrary in
the immediately preceding sentence, Lender shall not execute any document as
attorney-in-fact of Borrower unless (x)  Borrower shall have failed or
refused to execute the same within five (5) Business Days after Lender’s
request therefor, or (y) in Lender’s good faith determination it would be
materially prejudiced by the delay involved in making such a request.  Lender shall give prompt notice to Borrower
of any exercise of the power of attorney as provided for in this Paragraph 7,
along with copies of all documents executed in connection therewith.

8.                                       Recording of Security Instrument, Etc.  Borrower forthwith upon the execution and
delivery of this Security Instrument and thereafter, from time to time, shall
cause this Security Instrument, and any security instrument creating a lien or
security interest or evidencing the lien hereof upon the 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 Lender in, the Property.  Borrower shall pay all filing, registration
or recording fees, all expenses incident to the preparation, execution and
acknowledgment of and all federal, state, county and municipal, taxes, duties,
imposts, documentary stamps, assessments and charges arising out of or in
connection with the execution and delivery of, this Security Instrument, any
Security Instrument supplemental hereto, any security instrument with respect
to the Property or any instrument of further assurance, except where prohibited
by law so to do.  Borrower shall hold
harmless and indemnify Lender, its successors and assigns, against any
liability incurred by reason of the imposition of any tax on the making or
recording of this Security Instrument.

9.                                       Right to Cure Defaults.  Upon the occurrence of any Event of Default,
Lender may, but without any obligation to do so and without notice to or demand
on Borrower and without releasing Borrower from any obligation hereunder,
perform the obligations in Default in such manner and to such extent as Lender
may deem necessary to protect the security hereof.  Lender is authorized to enter upon the
Property for such purposes or appear in, defend or bring any action or
proceeding to protect its interest in the Property or to foreclose this
Security Instrument or collect the Debt, and the cost and expense thereof
(including reasonable attorneys’ fees and disbursements to the extent permitted
by law), with interest thereon at the Default Rate for the period after notice
from Lender that such cost or expense was incurred to the date of payment to
Lender, shall constitute a portion of the Debt, shall be secured by this
Security Instrument and the other Loan Documents and shall be due and payable
to Lender upon demand.

10.                                 Remedies.

(a)                                  Upon the occurrence
of any Event of Default, Lender may take such action, without notice or demand,
as it deems advisable to protect and enforce its rights against Borrower and in
and to the Property, by Lender itself or otherwise, including the following
actions, each of which may be pursued concurrently or otherwise, at such time
and in such order

as Lender may determine, in its sole discretion, without impairing or
otherwise affecting the other rights and remedies of Lender:

(i)                                     declare
the entire Debt to be immediately due and payable;

(ii)                                  give
such notice of default and of election to cause the Trust Property to be sold
as may be required by law or as may be necessary to cause Beneficiary to
exercise the power of sale granted herein; Beneficiary shall then record and
give such notice of Beneficiary’s sale as then required by law and, after the
expiration of such time as may be required by law, may sell the Trust Property
at the time and place specified in the notice of sale, as a whole or in
separate parcels as directed by Beneficiary, or by Trustor to the extent
required by law, at public auction to the highest bidder for cash in lawful
money of the United States, payable at time of sale, all in accordance with
applicable law.  Beneficiary, from time
to time, may postpone or continue the sale of all or any portion of the Trust
Property by public declaration at the time and place last appointed for the
sale and no other notice of the postponed sale shall be required unless
provided by applicable law.  Upon any
sale, Beneficiary shall deliver its deed conveying the property sold, without
any covenant or warranty, expressed or implied, to the purchaser or purchasers
at the sale.  The recitals in such deed
of any matters or facts shall be conclusive as to the accuracy thereof;

(iii)                               institute
a proceeding or proceedings, judicial or nonjudicial, to the extent permitted
by law, by advertisement, by action or otherwise, for the complete foreclosure
of this Security Instrument, in which case the Property 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;

(iv)                              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 Security Instrument for the portion of the Debt then due and payable,
subject to the continuing lien of this Security Instrument for the balance of
the Debt not then due;

(v)                                 sell
for cash or upon credit the Property and all estate, claim, demand, right,
title and interest of Borrower therein and rights of redemption thereof,
pursuant to the power of sale, to the extent permitted by law, 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;

(vi)                              institute
an action, suit or proceeding in equity for the specific performance of any
covenant, condition or agreement contained herein or in any other Loan
Document;

(vii)                           recover
judgment on the Note either before, during or after any proceeding for the enforcement
of this Security Instrument;

(viii)                        apply
for the ex-parte appointment of a trustee, receiver, liquidator or conservator
of the Property, without notice and without regard for the adequacy of the
security for the Debt and without regard for the solvency of the Borrower or of
any person, firm or other entity liable for the payment of the Debt;

(ix)                                enforce
Lender’s interest in the Leases and Rents and enter into or upon the Property,
either personally or by its agents, nominees or attorneys and dispossess
Borrower and its agents and employees therefrom, and thereupon Lender may (A)
use, operate, manage, control, insure, maintain, repair, restore and otherwise
deal with the Property and conduct the business thereat; (B) complete any
construction on the Property in such manner and form as Lender deems advisable;
(C) make alterations, additions, renewals, replacements and improvements to or
on the Property; (D) exercise all rights and powers of Borrower with
respect to the Property, whether in the name of Borrower or otherwise,
including the right to make, cancel, enforce or modify Leases, obtain and evict
tenants, and demand, sue for, collect and receive Rents; and (E) unless
prohibited by applicable law, apply the receipts from the Property to the payment
of the Debt, after deducting therefrom all expenses (including reasonable
attorneys’ fees and disbursements) incurred in connection with the aforesaid
operations and all amounts necessary to pay the Taxes, insurance and other
charges in connection with the Property, as well as just and reasonable
compensation for the services of Lender, and its counsel, agents and employees;

(x)                                   require
Borrower to pay monthly in advance to Lender, or any receiver appointed to
collect the Rents, the fair and reasonable rental value for the use and
occupation of any portion of the Property occupied by Borrower, and require
Borrower to vacate and surrender possession of the Property to Lender or to
such receiver, and, in default thereof, evict Borrower by summary proceedings
or otherwise; or

(xi)                                pursue
such other rights and remedies as may be available at law or in equity or under
the UCC, including the right to receive and/or establish a lock box for all
Rents and proceeds from the Intangibles and any other receivables or rights to
payments of Borrower relating to the Property.

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

(b)                                 The proceeds of any
sale made under or by virtue of this Paragraph 10, together with any other
sums which then may be held by Lender under this Security Instrument, whether
under the provisions of this paragraph or otherwise, shall be applied by Lender
to the payment of the Debt in such priority and proportion as Lender in its
sole discretion shall deem proper.

(c)                                  To the extent
permitted by law, Lender may adjourn from time to time any sale by it to be
made under or by virtue of this Security Instrument by announcement at the time
and place appointed for such sale or for such adjourned sale or sales; and,
except as otherwise provided by any applicable law, Lender, 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, Lender, 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.  Beneficiary is
hereby irrevocably appointed the true and lawful attorney of Trustor, in its
name and stead, to make all necessary conveyances, assignments, transfers and
deliveries of the Trust Property and rights so sold and for that purpose
Beneficiary may execute all necessary instruments of conveyance, assignment and
transfer, and may substitute one or more persons with like power, Trustor
hereby ratifying and confirming all that its said attorney or such substitute
or substitutes shall lawfully do by virtue hereof.  Any sale or sales made under or by virtue of
this Paragraph 10, 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 Borrower in and to the
properties and rights so sold, and shall be a perpetual bar both at law and in
equity against Borrower and against any and all persons claiming or who may
claim the same, or any part thereof, from, through or under Borrower, subject
only to such redemption rights as are required by law.

(e)                                  To the extent
permitted by law, upon any sale made under or by virtue of this
Paragraph 10, whether made under a power of sale or under or by virtue of
judicial proceedings or of a judgment or decree of foreclosure and sale, Lender
may bid for and acquire the Property or any part thereof and in lieu of paying
cash therefor may make settlement for the purchase price by crediting 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 Lender is authorized to deduct
under this Security Instrument or any other Loan Document.

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

(g)                                 To the extent
permitted by law, Lender may terminate or rescind any proceeding or other
action brought in connection with its exercise of the remedies provided in this
Paragraph 10 at any time before the conclusion thereof, as determined in
Lender’s sole discretion and without prejudice to Lender.

(h)                                 Lender may resort to
any remedies and the security given by this Security Instrument or in any other
Loan Document in whole or in part, and in such portions and in such order as
determined by Lender’s sole discretion. 
No such action shall in any way be considered a waiver of any rights,
benefits or remedies evidenced or provided by any Loan Document.  The failure of Lender to exercise any right,
remedy or option provided in any Loan Document shall not be deemed a waiver of
such right, remedy or option or of any covenant or obligation secured by any
Loan Document.  No acceptance by Lender
of any payment after the occurrence of any Event of Default and no payment by
Lender of any obligation for which Borrower is liable hereunder shall be deemed
to waive or cure any Event of Default, or Borrower’s liability to pay such
obligation.  No sale of all or any
portion of the Property, no forbearance on the part of Lender, and no extension
of time for the payment of the whole or any portion of the Debt or any other
indulgence given by Lender to Borrower, shall operate to release or in any
manner affect

the interest of Lender in the remaining Property or the liability of
Borrower to pay the Debt.  No waiver by
Lender shall be effective unless it is in writing and then only to the extent
specifically stated.  All costs and
expenses of Lender in exercising its rights and remedies under this
Paragraph 10 (including reasonable attorneys’ fees and disbursements to
the extent permitted by law), shall be paid by Borrower immediately upon notice
from Lender, with interest at the Default Rate for the period after notice from
Lender, and such costs and expenses shall constitute a portion of the Debt and shall
be secured by this Security Instrument.

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

11.                                 Right of Entry.  In addition to any other rights or remedies
granted under this Security Instrument, Lender and its agents shall have the
right to enter and inspect the Property at any reasonable time during the term
of this Security Instrument.  The cost of
such inspections or audits shall be borne by Borrower should Lender determine
that an Event of Default exists, including the cost of all follow up or
additional investigations or inquiries deemed reasonably necessary by
Lender.  The cost of such inspections, if
not paid for by Borrower following demand, may be added to the principal
balance of the sums due under the Note and this Security Instrument and shall
bear interest thereafter until paid at the Default Rate.

12.                                 Security Agreement.

(a)                                  This Security
Instrument is both a real property deed of trust and a “security agreement”
within the meaning of the UCC.  The
Property includes both real and personal property and all other rights and
interests, whether tangible or intangible in nature, of Borrower in the
Property.  Borrower by executing and
delivering this Security Instrument has granted and hereby grants to Lender, as
security for the Debt, a security interest in the Property to the full extent
that the Property may be subject to the UCC (such portion of the Property so
subject to the UCC being called in this paragraph the “Collateral”). 
This Security Instrument shall also constitute a “fixture filing” for
the purposes of the UCC and is to be filed for record in the real estate records
where any part of the Property (including said fixtures) is situated.  As such, this Security Instrument 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 Security Instrument.  If an Event of Default shall occur, Lender,
in addition to any other rights and remedies which it may have, shall have and
may exercise immediately and without demand, any and all rights and remedies
granted to a secured party upon default under the UCC, 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 Lender may
deem necessary for the care, protection and preservation of the
Collateral.  Upon request or demand of
Lender, Borrower shall at its expense assemble the Collateral and make it available
to Lender at a convenient place acceptable to Lender.  Borrower shall pay to Lender on demand any
and all expenses, including reasonable attorneys’ fees and disbursements,
incurred or paid by Lender 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 Lender with respect to the Collateral, sent to

Borrower in accordance with the provisions hereof at least ten days
prior to such action, shall constitute commercially reasonable notice to
Borrower.  The proceeds of any
disposition of the Collateral, or any part thereof, may be applied by Lender to
the payment of the Debt in such priority and proportions as Lender in its sole
discretion shall deem proper.  In the
event of any change in name, identity or structure of Borrower, Borrower shall
notify Lender thereof and promptly after request shall execute, file and record
such UCC forms as are necessary to maintain the priority of Lender’s lien upon
and security interest in the Collateral, and shall pay all expenses and fees in
connection with the filing and recording thereof.  If Lender shall require the filing or
recording of additional UCC forms or continuation statements, Borrower shall,
promptly after request, execute, file and record such UCC forms or continuation
statements as Lender 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 Borrower’s
obligations under the Loan Documents. 
Borrower hereby irrevocably appoints Lender as its attorney-in-fact,
coupled with an interest, to file with the appropriate public office on its
behalf any financing or other statements signed only by Lender, as secured
party, in connection with the Collateral covered by this Security Instrument.

13.                                 Actions and Proceedings.  Lender has the right to appear in and defend
any action or proceeding brought with respect to the Property and to bring any
action or proceeding, in the name and on behalf of Borrower, which Lender, in
its sole discretion, decides should be brought to protect its or their interest
in the Property.  Lender shall, at its
option, be subrogated to the lien of any mortgage, 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.

14.                                 Marshalling and Other Matters.  Borrower hereby waives, to the extent permitted
by law, the benefit of all homestead, 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 Property or any part
thereof or any interest therein. 
Further, Borrower hereby expressly waives any and all rights of
redemption from sale under any order or decree of foreclosure of this Security
Instrument on behalf of Borrower, and on behalf of each and every person
acquiring any interest in or title to the Property subsequent to the date of
this Security Instrument and on behalf of all persons to the extent permitted
by applicable law.  The lien of this
Security Instrument shall be absolute and unconditional and shall not in any
manner be affected or impaired by any acts or omissions whatsoever of Lender
and, without limiting the generality of the foregoing, the lien hereof shall
not be impaired by (i) any acceptance by Lender of any other security for any
portion of the Debt, (ii) any failure, neglect or omission on the part of
Lender to realize upon or protect any portion of the Debt or any collateral
security therefor or (iii) any release (except as to the property released),
sale, pledge, surrender, compromise, settlement, renewal, extension,
indulgence, alteration, changing, modification or disposition of any portion of
the Debt or of any of the collateral security therefor; and Lender may
foreclose, or exercise any other remedy available to Lender under other Loan
Documents without first exercising or enforcing any of its remedies under this
Security Instrument, and any exercise of the rights and remedies of Lender
hereunder shall not in any manner impair the Debt or the liens of any other
Loan Document or any of Lender’s rights and remedies thereunder.

15.                                 Notices.  All notices, consents, approvals and requests
required or permitted hereunder shall be in writing, and shall be sent, and
shall be deemed effective, as provided in the Loan Agreement.

16.                                 Inapplicable Provisions.  If any term, covenant or condition of this
Security Instrument is held to be invalid, illegal or unenforceable in any
respect, this Security Instrument shall be construed without such provision.

17.                                 Headings.  The paragraph headings in this Security
Instrument 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.

18.                                 Duplicate Originals.  This Security Instrument may be executed in
any number of duplicate originals and each such duplicate original shall be
deemed to be an original.

19.                                 Definitions.  Unless the context clearly indicates a
contrary intent or unless otherwise specifically provided herein, words used in
this Security Instrument may be used interchangeably in singular or plural
form; and the word “Borrower”
shall mean “each Borrower and any subsequent owner or owners of a fee interest
in the Property or any part thereof, or any subsequent owner or owners of a
leasehold interest under each Ground Lease, the word “Lender” shall mean “Lender
and any subsequent holder of the Note,” the words “Property” shall
include any portion of the Property and any interest therein, the word “including” means “including
but not limited to” and the words “attorneys’ fees” shall include any and all
attorneys’ fees, paralegal and law clerk fees, including fees at the pre-trial,
trial and appellate levels incurred or paid by Lender in protecting its
interest in the Property and Collateral and enforcing its rights hereunder.

20.                                 Homestead.  Borrower 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 Property as against the
collection of the Debt, or any part thereof.

21.                                 Assignments.  Lender shall have the right to assign or
transfer its rights under this Security Instrument in connection with any
transfer of its interest in the Loan, or any portion thereof, in accordance
with the Loan Agreement.  Any assignee or
transferee shall be entitled to all the benefits afforded Lender under this
Security Instrument.

22.                                 Waiver of Jury Trial.  BORROWER AND BY ITS FUNDING OF THE LOAN,
LENDER, HEREBY AGREE NOT TO ELECT A TRIAL BY JURY OF ANY ISSUE TRIABLE OF RIGHT
BY JURY, AND WAIVE ANY RIGHT TO TRIAL BY JURY FULLY TO THE EXTENT THAT ANY SUCH
RIGHT SHALL NOW OR HEREAFTER EXIST WITH REGARD TO THIS SECURITY INSTRUMENT OR
ANY OTHER LOAN DOCUMENT, 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 IS
INTENDED TO ENCOMPASS INDIVIDUALLY EACH INSTANCE AND EACH ISSUE AS TO WHICH THE
RIGHT TO A TRIAL BY JURY WOULD OTHERWISE ACCRUE.  EITHER PARTY HERETO IS HEREBY AUTHORIZED TO
FILE A COPY OF THIS PARAGRAPH IN ANY PROCEEDING AS CONCLUSIVE EVIDENCE OF THIS
WAIVER BY BORROWER.

23.                                 Consents.  Any consent or approval by Lender in any
single instance shall not be deemed or construed to be Lender’s consent or
approval in any like matter arising at a subsequent date, and the failure of
Lender to promptly exercise any right, power, remedy,

consent or approval provided herein or at law or in equity shall not
constitute or be construed as a waiver of the same nor shall Lender be estopped
from exercising such right, power, remedy, consent or approval at a later
date.  Any consent or approval requested
of and granted by Lender pursuant hereto shall be narrowly construed to be
applicable only to Borrower and the matter identified in such consent or
approval and no third party shall claim any benefit by reason thereof, and any
such consent or approval shall not be deemed to constitute Lender a venturer or
partner with Borrower nor shall privity of contract be presumed to have been
established with any such third party. 
If Lender deems it to be in its best interest to retain assistance of
persons, firms or corporations (including attorneys, title insurance companies,
appraisers, engineers and surveyors) with respect to a request for consent or
approval, Borrower shall reimburse Lender for all costs reasonably incurred in
connection with the employment of such persons, firms or corporations.

24.                                 Employee Benefit Plan.  During the term of this Security Instrument,
unless Lender shall have previously consented in writing, (i) Borrower shall
take no action that would cause it to become an “employee benefit plan” as
defined in 29 C.F.R. Section 2510.3-101, or “assets of a governmental plan”
subject to regulation under the state statutes, and (ii) Borrower shall
not sell, assign or transfer the Property, or any portion thereof or interest
therein, to any transferee that does not execute and deliver to Lender its
written assumption of the obligations of this covenant.  Borrower shall protect, defend, indemnify and
hold Lender harmless from and against all loss, cost, damage and expense
(including all attorneys’ fees, excise taxes and costs of correcting any
prohibited transaction or obtaining an appropriate exemption) that Lender may
incur as a result of Borrower’s breach of this covenant.  This covenant and indemnity shall survive the
extinguishment of the lien of this Security Instrument by foreclosure or action
in lieu thereof; furthermore, the foregoing indemnity shall supersede any limitations
on Borrower’s liability under any of the Loan Documents.

25.                                 Loan Repayment and Defeasance.  The lien of this Security Instrument shall be
terminated, released and reconveyed of record by Lender prior to the Maturity
Date only in accordance with the terms and provisions set forth in the Loan
Agreement.

26.                                 Governing Law.  This Security Instrument shall be governed
by, and be construed in accordance with, the laws of the state in which the
Property is located without regard to conflict of law provisions thereof.

27.                                 Exculpation.  The liability of Borrower hereunder is
limited pursuant to Section 10.1 of the Loan Agreement.

28.                                 Counterparts.  This Security Instrument may be executed in
any number of counterparts, each of which when so executed and delivered shall
be an original, but all of which shall together constitute one and the same
instrument.

29.                                 Joint and Several.  Each Person constituting Borrower hereunder
shall have joint and several liability for the obligations of Borrower
hereunder except as otherwise provided in the Loan Documents.

30.                                 Trustee; Successor Trustee.  Trustee shall not be liable for any error of
judgment or act done by Trustee, or be otherwise responsible or accountable
under any circumstances whatsoever, except if the result of Trustee’s gross
negligence or willful

misconduct.  Trustee shall not be
personally liable in case of entry by him or anyone acting by virtue of the
powers herein granted him upon the Trust Property for debts contracted or
liability or damages or damages incurred in the management or operation of the
Trust Property.  Trustee shall have the
right to rely on any instrument, document or signature authorizing or
supporting any action taken or proposed to be taken by him hereunder or
believed by him to be genuine.  Trustee
shall be entitled to reimbursement for actual expenses incurred by him in the
performance of his duties hereunder and to reasonable compensation for such of
his services hereunder as shall be rendered. 
Trustor will, from time to time, reimburse Trustee for and save and hold
him harmless from and against any and all loss, cost, liability, damage and
reasonable expense whatsoever incurred by him in the performance of his
duties.  All monies received by Trustee
shall, until used or applied as herein provided, be held in trust for the
purposes for which they were received, but need not be segregated in any manner
from any other monies (except to the extent required by law) and Trustee shall
be under no liability for interest on any monies received by him hereunder.  Trustee may resign by giving of notice of
such resignation in writing to Beneficiary. 
If Trustee shall die, resign or become disqualified from acting in the
execution of this trust or shall fail or refuse to exercise the same when requested
by Beneficiary or if for any or no reason and without cause Beneficiary shall
prefer to appoint a substitute trustee to act instead of the original Trustee
named herein, or any prior successor or substitute trustee, Beneficiary shall,
without any formality or notice to Trustor or any other person, have full power
to appoint a substitute trustee and, if Beneficiary so elects, several
substitute trustees in succession who shall succeed to all the estate, rights,
powers and duties of the aforenamed Trustee. 
Each appointment and substitution shall be evidenced by an instrument in
writing which shall recite the parties to, and the book and page of record of,
this Security Instrument, and the description of the real property herein
described, which instrument, executed and acknowledged by Beneficiary, shall
(i) be conclusive proof of the proper substitution and appointment of such
successor Trustee or Trustees, (ii) duly assign and transfer all the estates,
properties, rights, powers and trusts of Trustee so ceasing to act and (iii) be
notice of such proper substitution and appointment to all parties in
interest.  In addition, such Trustee
ceasing to act shall duly assign, transfer, and deliver any of the property and
monies held by Trustee to the successor Trustee so appointed in its or his place.  The Trustee may act in the execution of this
trust and may authorize one or more parties to act on his behalf to perform the
ministerial functions required of him hereunder, including without limitation,
the transmittal and posting of any notices and it shall not be necessary for
any Trustee to be present in person at any foreclosure sale.

PART II -
CALIFORNIA PROVISIONS

31.                                 Principles of Construction.  In the event of any inconsistencies between
the terms and conditions of this Part II and the terms and conditions of this
Security Instrument, the terms and conditions of this Part II shall control and
be binding.

32.                                 Grant In Trust.  The words “and right of entry and possession,”
are added following the words “Lender, WITH POWER OF SALE” in the fourth (4th) recital paragraph.

33.                                 Security Agreement.  Section 12 of this Security Instrument
entitled “Security Agreement” is hereby deleted and the following is
substituted therefor:

“This Security Instrument is both a real property deed
of trust and a “security agreement” within the meaning of the Uniform
Commercial Code and is being recorded as a fixture filing.  With respect to said fixture filing, (i) the
debtor is Borrower, and Borrower’s name and address appear in the first
paragraph of this Security Instrument, and (ii) the secured party is Lender,
and Lender’s name and address appear in the first paragraph of the Security
Instrument. The Property includes both real and personal property and all other
rights and interests, whether tangible or intangible in nature, of Borrower in
the Property.  By executing and
delivering this Security Instrument, Borrower hereby grants to Lender and
Trustee, as security for the Obligations (hereinafter defined), a security
interest in the Personal Property, the Accounts and the Account Collateral;
including the right, title and interest of Borrower in and to all “accounts”, “deposit
accounts”, “chattel paper”, “equipment”, “fixtures”, “inventory”, “general
intangibles” and “goods” (as such terms are defined in the Uniform Commercial
Code) to the full extent that the Personal Property, the Accounts and the
Account Collateral may be subject to the Uniform Commercial Code.

34.                                 Conditions To Grant.  The portion of the paragraph beginning “PROVIDED,
HOWEVER” appearing in the paragraph immediately preceding the paragraph “AND
Borrower represents and warrants to and covenants and agrees with Lender as
follows:” in this Security Instrument is hereby deleted in its entirety and the
following language is substituted therefor:

PROVIDED, HOWEVER, upon written request of Lender
stating that all sums secured hereby have been paid, that Borrower has complied
with each and every covenant and condition set forth herein and in the Note,
and upon the surrendering of this Security Instrument and the Note to Trustee
for cancellation and retention and upon payment by Borrower of Trustee’s fees,
Trustee shall reconvey to Borrower, or to the person or persons legally
entitled thereto, without warranty, any portion of the estate hereby granted
and then held hereunder.  The recitals in
such reconveyance of any matters or facts shall be conclusive proof of the
truthfulness thereof.  The grantee in any
reconveyance may be described as “the person or persons legally entitled
thereto”.

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35             [Section
7 of this Security Instrument entitled “Further Acts, Etc.” is hereby modified to add the
following words to the end of the second sentence after the words “. . .of the
security interest in the Property.”

“, including, without limitation, an indication or
description of the collateral as “all personal property” or “all assets” of
Borrower, in each case, whether now owned or hereafter acquired.”]

36.           Power Of Sale.  Upon the occurrence and during the
continuance of an Event of Default, Lender, its successors and assigns, in
addition to all other rights and remedies under this Security Instrument and
the other Loan Documents, may elect to cause the Property or any part thereof
to be sold as follows:

(a)           Lender may proceed as
if all of the Property were real property, in accordance with subparagraph (c)
below, or Lender may elect to treat any of the Property which consists of a
right in action or which is property that can be severed from the Land without
causing structural damage thereto as if the same were personal property, and
dispose of the same in accordance with 12(a), separate and apart from the sale
of real property, the remainder of the Property being treated as real property.

(b)           Lender may cause any
such sale or other disposition to be conducted immediately following the
expiration of any grace period, if any, herein provided (or immediately upon
the expiration of any redemption period required by law) or Lender may delay
any such sale or other disposition for such period of time as Lender deems to
be in its best interest. Should Lender desire that more than one such sale or
other disposition be conducted, Lender may at its option, cause the same to be
conducted simultaneously, or successively on the same day, or at such different
days or times and in such order as Lender may deem to be in its best interest.

(c)           Lender may elect to
sell the Property which is real property or which Lender has elected to treat
as real property, upon such election Lender or Trustee shall give such Notice
of Default and Election to Sell as may then be required by law.  Thereafter, upon the expiration of such time
and the giving of such Notice of Sale as 
may then be required by law, Trustee, at the time and place specified in
the Notice of Sale, shall sell such Property, or any portion thereof specified
by Lender, at public auction to the highest bidder for cash in lawful money of
the United States, subject, however, to the provisions of subparagraph (h)
hereof.  Trustee for good cause may, and
upon request of Lender shall, from time to time, postpone the sale by public
announcement thereof at the time and place noticed therefor.  If the Property consists of several lots or
parcels, Lender may designate the order in which such lots or parcels shall be
offered for sale or sold.  Any person,
including Borrower, Trustee or Lender, may purchase at the sale.  Upon any sale Trustee shall execute and
deliver to the purchaser or purchasers a deed or deeds conveying the property
so sold, but without any covenant or warranty whatsoever, express or implied,
whereupon such purchaser or purchasers shall be let into immediate possession.

(d)           In the event of a sale
or other disposition of any such property, or any part thereof, and the
execution of a deed or other conveyance, pursuant thereto, the recitals therein
of

facts, such as a default, the giving of
notice of default and notice of sale, demand that such sale should be made,
postponement of sale, terms of sale, sale, purchaser, payment of purchase
money, and any other fact affecting the regularity or validity of such sale or
disposition, shall be conclusive proof of the truth of such facts; and any such
deed of conveyance shall be conclusive against all persons as to such facts
recited therein.

(c)           Lender and/or Trustee
shall apply the proceeds of any sale or disposition hereunder to payment of the
following:  (1)  the expenses of such sale or disposition
together with Trustee's fees and reasonable attorneys' fees, and the actual
cost of publishing, recording, mailing and posting notice; (2) the cost of any
search and/or other evidence of title procured in connection therewith and
transfer tax on any deed or conveyance; (3) all sums expended under the terms
hereof, not then repaid, with accrued interest in the amount provided herein;
(4) all other sums secured hereby in accordance with Section 10(b); and (5) the
remainder if any to the person or persons legally entitled thereto.

(f)            The acknowledgment of
the receipt of the purchase money, contained in any deed or conveyance executed
as aforesaid, shall be sufficient discharge from all obligations to see to the
proper application of the consideration therefor.

(g)           Borrower hereby
expressly waives any right which it may have to direct the order in which any
of the Property shall be sold in the event of any sale or sales pursuant
hereto.

(h)           Upon any sale of the
Property, whether made under a power of sale herein granted or pursuant to
judicial proceedings, if the holder of the Note is a purchaser at such sale, it
shall be entitled to use and apply all or any portion of the indebtedness then
secured hereby for or in settlement or payment of all or any portion of the
purchase price of the property purchased, and, in such case, this Security
Instrument, the Note and documents evidencing expenditures secured hereby shall
be presented to the person conducting the sale in order that the amount of said
indebtedness so used or applied may be credited thereon as having been paid.

(i)            No remedy herein
conferred upon or reserved to Trustee or Lender is intended to be exclusive of
any other remedy herein or by law provided, but each shall be cumulative and
shall be in addition to every other remedy given hereunder or now or hereafter
existing at law or in equity or by statute. 
Every power or remedy given by this instrument to Trustee or Lender, or
to which either of them may be otherwise entitled, may be exercised from time
to time and as often as may be deemed expedient by Trustee or Lender, and
either of them may pursue inconsistent remedies.  If there exists additional security for the
performance of the obligations secured hereby, the holder of the Note, at its
sole option and without limiting or affecting any rights or remedies hereunder,
may exercise any of the rights and remedies to which it may be entitled
hereunder either concurrently with whatever other rights it may have in
connection with such other security or in such order as it may determine.

(j)            Borrower hereby
requests that every notice of default and every notice of sale be delivered to
Borrower at 15601 Dallas Parkway,
Suite 600, Addison, Texas 75001, except as otherwise required by
statute. Borrower may, from time to time, change the address to which notice of
default and sale hereunder shall be sent by both filing a request therefore, in
the manner provided by the California Civil Code, Section 2924b, and sending a
copy of such

request to Lender, its successors or assigns
in accordance with the provisions of Section 15 hereof.

37            Other Remedies.  Upon the occurrence and during the
continuance of an Event of Default, Lender, in addition to all other rights and
remedies under this Security Instrument and the other Loan Documents, may do
any or all of the following:

(a)           Have a receiver
appointed to enter into possession of the Property, lease the Property, collect
the Rents and apply them as the appropriate court may direct.  Lender shall be entitled to the appointment
of a receiver without the necessity of proving either the inadequacy of the security
or the insolvency of Borrower.  Borrower
shall be deemed to have consented to the appointment of the receiver.  The collection or receipt of any of the Rents
by Lender or any receiver shall not affect or cure any Event of Default.  Lender’s rights hereunder include its rights
under California Code of Civil Procedure Section 564, as such Section may be
amended from time to time; and/or

(b)           In accordance with
California Code of Civil Procedure Section 736, as such Section may be amended
from time to time, Lender may bring an action for breach of contact against
Borrower for breach of any “environmental provision” (as such term is defined
in such Section) made by Borrower herein or in any other Loan Document, for the
recovery of damages and/or for the enforcement of the environmental provisions;
and/or

(c)           In accordance with
California Code of Civil Procedure Section 726.5, as such Section may be
amended from time to time, Lender may waive the security of this Security
Instrument as to any parcel of Real Property that is “environmentally impaired”
or is an “affected parcel” (as such terms are defined in such Section), and as
to any Personal Property attached to such parcel, and thereafter exercise
against Borrower, to the extent permitted by such Section 726.5, the rights and
remedies of an unsecured creditor, including reduction of Lender’s claim
against Borrower to judgment, and any other rights and remedies permitted by
law.  Borrower and Lender acknowledge
that pursuant to California Code of Civil Procedure Section 726.5, Lender’s
rights under this paragraph are limited to instances in which Borrower or any
affiliate, agent, co-tenant, partner or joint venturer of Borrower either (i)
caused, contributed to, permitted or acquiesced in the release (as defined in
such Section 726.5) or threatened release prior to the execution and delivery
of this Security Instrument and failed to disclose such release or threatened
release to Lender in writing after Lender’s written request for information
concerning the environmental condition of the Property, unless Lender otherwise
obtained actual knowledge of such release or threatened release prior to the
execution and delivery of this Security Instrument.

38.           No Merger.  In the event that Lender should become the
owner of the Property, there shall be no merger of the estate created by this
Security Instrument within the fee estate in the Property.

39.           Concerning
The Trustee:

(a)           Trustee accepts the
trust created by this Security Instrument when this Security Instrument, duly
executed and acknowledged, is made a public record as provided by law.

(b)           Trustee
is not obligated to notify any party hereto of pending sale under any other
deed of trust or of any action or proceeding in which Borrower, Lender or
Trustee shall be a party, unless brought by Trustee.  

(c)           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 Security
Instrument, covenants to perform and fulfill the trusts herein created, being
liable, however, only for gross negligence or willful 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 Borrower and to Lender.  Lender 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 Lender 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 Security Instrument is
recorded and all powers, rights, duties and authority of Trustee, as aforesaid,
shall thereupon become vested in such successor without conveyance from the
predecessor Trustee.  Such instrument
must contain the name of the original Borrower, Trustee and Lender hereunder,
the book and page where this Security Instrument is recorded, and the name and
address of the new Trustee.  Such
substitute trustee shall not be required to give bond for the faithful
performance of the duties of Trustee hereunder unless required by Lender.  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.

(d)           Trustee shall be
entitled to reasonable compensation for all services rendered or expenses
incurred in the administration or execution of the trusts hereby created and
Borrower hereby agrees to pay same. 
Trustee and Lender shall be indemnified, held harmless and reimbursed by
Borrower for any liability, damage or expense, including attorneys' fees and
amounts paid in settlement, which they or either of them may incur or sustain
in the execution of this trust or in the doing of any act which they, or either
of them, are required or permitted to do by the terms hereof or by law except
to the extent arising from any gross negligence or willful misconduct on the
part of either of them.

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40.           Due On Sale/Encumbrance.  Borrower expressly agrees that upon a
violation of Article 4 of this Security Instrument by Borrower and acceleration
of the principal balance of the Note because of such violation, Borrower will
pay all sums required to be paid in connection with a prepayment, herein
imposed on prepayment after an Event of Default and acceleration of the
principal balance.  BORROWER EXPRESSLY
(A) WAIVES ANY RIGHTS IT MAY HAVE UNDER CALIFORNIA CIVIL CODE SECTION 2954.10
TO PREPAY THE NOTE, IN WHOLE OR IN PART, WITHOUT FEE OR PENALTY, UPON
ACCELERATION OF THE MATURITY DATE OF THE NOTE, AND (B) AGREES THAT IF, FOR ANY
REASON, A PREPAYMENT OF THE NOTE IS MADE, UPON OR FOLLOWING ANY ACCELERATION OF
THE MATURITY DATE OF THE NOTE BY LENDER OR ACCOUNT OF ANY DEFAULT BY BORROWER
UNDER ANY LOAN DOCUMENT, INCLUDING BUT NOT LIMITED TO ANY TRANSFER, FURTHER
ENCUMBRANCE OR DISPOSITION WHICH IS PROHIBITED OR RESTRICTED BY THE LOAN
AGREEMENT OR THIS SECURITY INSTRUMENT, THEN BORROWER SHALL BE OBLIGATED TO PAY
CONCURRENTLY ALL AMOUNTS REQUIRED TO BE PAID IN CONNECTION WITH A PREPAYMENT IF
ANY, AS DESCRIBED IN THE NOTE.  BY
EXECUTING THIS PROVISION IN THE SPACE PROVIDED BELOW, BORROWER AGREES THAT
LENDER’S AGREEMENT TO MAKE THE LOAN AT THE INTEREST RATE AND FOR THE TERM SET
FORTH IN THE NOTE AND THE LOAN AGREEMENT CONSTITUTES ADEQUATE CONSIDERATION FOR
THIS WAIVER AND AGREEMENT.

 

	
  

  	
  BEHRINGER HARVARD
  SANTA CLARA LP,

  a Delaware limited partnership

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  BEHRINGER HARVARD SANTA

  CLARA GP, LLC, a Delaware limited

  liability company

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
   

  	
  Title:

  	
   

  

 

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PAGE]

IN WITNESS
WHEREOF, THIS SECURITY INSTRUMENT has been executed by Borrower the day and
year first above written.

	
  

  	
  BEHRINGER HARVARD SANTA CLARA LP,

  a Delaware limited partnership

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  BEHRINGER
  HARVARD SANTA

  CLARA GP, LLC, a Delaware limited

  liability company

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
   

  	
  Title:

  	
   

  

 

ACKNOWLEDGEMENT

	
  STATE OF

  	
  )

  
	
   

  	
  ) 

  	
  ss.

  
	
  COUNTY OF

  	
  )

  

 

On                            ,
2007, before me, the undersigned, a Notary Public, personally known to me (or
proved to me on the basis of satisfactory evidence) to be the person(s) whose
name(s) is/are subscribed to the within instrument and acknowledged to me that
s/he/they executed the same in her/his/their authorized capacity(ies), and that
by her/his/their signature(s) on the instrument the person(s), or the entity
upon behalf of which the person(s) acted, executed the instrument.

 

	
  

  	
  WITNESS my hand and official seal.

  

 

 

	
  

  	
  Signature

  	
   

  	
  (Seal)

  

 

EXHIBIT A

(Legal Description)

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