Document:

Exhibit
10.25

 

 

February 6, 2001

 

Pam Britton

28092 Paseo Rincon

Mission Viejo, CA  92692

 

Dear Pam:

 

We are pleased to offer
you the position of Executive Vice President of Operations for Gloria Jean’s
Gourmet Coffee.  This is a critical
position with responsibility for the successful operations of Gloria Jean’s
franchisees.  As you know, we are
currently the second largest specialty Coffee Company in the United States. We
view this as a unique opportunity to create something really special.

 

Our offer is as follows:

 

	
  •

  	
   

  	
  Base salary - $3,365.38
  per week (paid on a bi-weekly basis) which equates to $175,000 annually.

  
	
  •

  	
   

  	
  Incentive/Bonus plan -
  For the first year of employment only this award will pay out a guaranteed
  amount of $52,500 at the end of 12 months of employment.  You will then be eligible to participate
  in our Executive Vice President level incentive plan, up to 30% of your
  annual base salary, which is paid based upon achievement of specific
  financial goals agreed upon with the Chief Executive Officer.  This award will be prorated for stub
  portion remaining of fiscal 2001/2002 only.

  
	
  •

  	
   

  	
  Stock Options - The
  Company will issue you options to purchase at least 20,000 shares of Diedrich
  Coffee.  The strike price of the
  shares will be the trailing 5 day average of the price of the shares from the
  day you begin employment.  These
  options vest over 3 years at a rate of 33% per year.  The Board reviews issuance of additional
  stock options annually. This option grant will be subject to Board approval.

  
	
  •

  	
   

  	
  Vacation - You will be
  entitled to 3 weeks of vacation during your first year of employment.  Additional vacation time will be earned as
  plan eligibility requirements are met.

  
	
  •

  	
   

  	
  Benefits - You will
  participate in the company’s executive benefits plan. Your initial salary
  will be increased $99.06 per bi-week to provide employee +1 coverage and
  deducted pretax to pay your portion of the premium.  The benefit program may be modified from time to time.  Future changes to employee contribution
  levels will be your responsibility.

  
	
  •

  	
   

  	
  401(k) participation
  based on plan eligibility criteria.

  

 

 

	
  •

  	
   

  	
  Employment at will -
  you may resign at any time and Diedrich Coffee may terminate your employment
  at any time, with or without cause or notice.

  
	
  •

  	
   

  	
  Termination not for cause
  - Should your employment be terminated for reasons other than cause (cause
  meaning willful misconduct, repeated failure to perform duties, fraud or
  dishonesty, felonious, or criminal acts), and you execute a simple release of
  claims agreement you will be entitled to bi-weekly payments equal to six
  months of your then current salary. 
  In any event, these payments would cease if you accept other
  employment or accept work as an independent contractor.  Additionally, this benefit would not apply
  in the event of your death or inability to perform the job due to disability.

  
	
  •

  	
   

  	
  This position reports
  directly to the Mike Jenkins, Chief Executive Officer of Diedrich Coffee.

  
	
  •

  	
   

  	
  Start date will be on
  or before February 26, 2001.

  

 

We look forward to your
early response in becoming part of our team. 
Please confirm your acceptance of this offer by signing and returning an
executed copy to Matt Kimble.

 

	
  Very truly yours,

  
	
   

  
	
   

  	
   

  
	
  J. Michael Jenkins

  
	
  Chief Executive
  Officer, Diedrich Coffee Inc.

  

 

 

I accept the position of Executive
Vice President of Operations for Gloria Jean’s Gourmet Coffee, effective on or
before February 26, 2001 on the above terms and conditions.

 

 

	
   

  	
   

  	
   

  	
   

  
	
  Pamela Britton

  	
  Date

  

 

2Exhibit
10.26

 

 

February 3, 2000

 

Michael Zorehkey

17  Tanzanite

Rancho Santa Margarita,
CA  92688

 

Dear Mike:

 

We are pleased to offer you the position of Director
of Mall Development for Diedrich Coffee. 
This is a critical position with our Company that will take total
responsibility for the maintenance and expansion of the Company in malls. As
you know, we are currently the second largest specialty coffee company in the
United States with plans to expand significantly in the near future.  We view this as a growth position and a
unique opportunity to help create something really special.

 

Our offer is as follows:

 

	
  •

  	
   

  	
  Base salary - $2,211.54
  per week (paid on a bi-weekly basis) which equates to $115,000 annually at
  the completion of one full year of employment.  Wages are reviewed annually as anniversary dates are reached.

  
	
  •

  	
   

  	
  Incentive/Bonus plan -
  For traditional full line stores, a bonus of $1,000 will be paid for each new
  opening you complete and paid upon store opening. Non-traditional locations
  (e.g. kiosks, carts, airports, colleges, hospitals) are paid at .15% of first
  year sales and is paid on the 13th month anniversary of the
  location opening.  A bonus of $250
  will be paid for each lease renewal you complete and will be paid on the
  execution of the lease by both parties (excludes extensions of less than 3
  years or exercise of options).  For
  each sublease you complete during the fiscal year, a payment of $500 will be
  paid upon full execution of the sublease. For each occupancy cost reduction
  or early termination of a lease you negotiate, you will receive a payment
  equal to 5% of the net savings realized by the Company up to a maximum of
  $5,000.  This award will be paid upon
  full execution of the appropriate document. 
  This plan is for the time period of February 21, 2000 through the end
  of the Company fiscal year and is intended to reward personal
  performance.  It is not intended to
  pay for work completed by others (e.g. you do the deal - you receive the
  reward).  In order to be eligible for
  payment you must be employed when the payment is due.

  
	
  •

  	
   

  	
  Stock Options - The
  Company will issue you options to purchase 7,500 shares of Diedrich
  Coffee.  The strike price of the
  shares will be the trailing 5 day average of the price of the shares from the
  day you begin employment.  These
  options vest over 3 years at a rate of 33% per year.  The Board reviews issuance of additional
  stock options annually.

  

 

 

	
  •

  	
   

  	
  Signing bonus - a lump
  sum payment of $10,000, less applicable withholdings, will be made within
  your initial 30 days of employment. Should you voluntarily leave the Company
  within 12 months from the effective date of employment, for any reason, you
  will be responsible for repaying the Company this bonus on a prorated basis.

  
	
  •

  	
   

  	
  Car allowance - In this
  position you will receive a car allowance of $400 per month (paid on a
  bi-weekly basis).

  
	
  •

  	
   

  	
  Vacation - Based on
  your experience, you will be entitled to earn 2 weeks of vacation during your
  first year of employment.  You will
  retain this benefit until the vacation earning potential increases based on
  Company vacation policy.

  
	
  •

  	
   

  	
  Benefits - You will
  participate in the Company’s benefits plan. 
  A copy is attached.  The
  benefit program may be modified from time to time.

  
	
  •

  	
   

  	
  401(k) participation
  based on current eligibility criteria.

  
	
  •

  	
   

  	
  Employment at will -
  you may resign at any time and Diedrich Coffee may terminate your employment
  at any time, with or without cause or notice.

  
	
  •

  	
   

  	
  Termination not for
  cause - Should your employment be terminated for reasons other than cause
  (cause meaning willful misconduct, repeated failure to perform duties, fraud
  or dishonesty, felonious, or criminal acts), you will be entitled to a
  one-time payment equal to six month’s salary.

  
	
  •

  	
   

  	
  Position reports
  directly to Tony Bonwell - Vice President, Real Estate & Construction for
  Diedrich Coffee.

  
	
  •

  	
   

  	
  Start date on or before
  March 6, 2000.

  

 

 

We look forward to your
early response in becoming part of our team. 
Please confirm your acceptance of this offer by signing and returning an
executed copy to Matt Kimble.

 

	
  Very truly yours,

  
	
   

  
	
   

  	
   

  
	
  Tim Ryan

  
	
  Chief Executive Officer

  

 

 

I accept the position of
Director of Mall Development, Diedrich Coffee on the above terms and
conditions.

 

 

	
   

  	
   

  	
   

  	
   

  
	
  Michael Zorehkey

  	
  Date

  

 

2Exhibit
10.1

 

ALLSTATE
LIFE INSURANCE COMPANY

LOAN NO. 122360

 

DEED OF
TRUST, ASSIGNMENT OF LEASES,

 

RENTS AND
CONTRACTS, SECURITY AGREEMENT

 

AND

 

FIXTURE
FILING

 

BETWEEN

 

AMERIVEST
MESA INC., AN ARIZONA CORPORATION, AS TRUSTOR,

 

FIRST
AMERICAN TITLE INSURANCE COMPANY, A CALIFORNIA CORPORATION,

AS TRUSTEE

 

AND

 

ALLSTATE
LIFE INSURANCE COMPANY, AN ILLINOIS CORPORATION,

AS BENEFICIARY

 

DATED:  SEPTEMBER 8, 2003

 

LOAN
AMOUNT:  $24,750,000

 

PROPERTY
ADDRESS:

1201 SOUTH ALMA SCHOOL ROAD

MESA, ARIZONA

 

 

TABLE OF CONTENTS

 

	
  ARTICLE/SECTION

  	
   

  
	
   

  
	
  ARTICLE I
  COVENANTS OF TRUSTOR

  
	
   

  	
  1.1

  	
  Performance of Obligations Secured.

  
	
   

  	
  1.2

  	
  Insurance.

  
	
   

  	
  1.3

  	
  Condemnation.

  
	
   

  	
  1.4

  	
  Damage to Property.

  
	
   

  	
  1.5

  	
  Escrow Fund for Condemnation and
  Insurance Proceeds.

  
	
   

  	
  1.6

  	
  Taxes, Liens and Other Items.

  
	
   

  	
  1.7

  	
  Assignment of Leases, Contracts, Rents and
  Profits.

  
	
   

  	
  1.8

  	
  Due
  on Sale or Encumbrance.

  
	
   

  	
  1.9

  	
  Preservation and Maintenance of Property.

  
	
   

  	
  1.10

  	
  Use of Property.

  
	
   

  	
  1.11

  	
  Alterations and Additions.

  
	
   

  	
  1.12

  	
  Offset Certificates.

  
	
   

  	
  1.13

  	
  Trustee’s Costs and Expenses.

  
	
   

  	
  1.14

  	
  Protection of Security; Costs and
  Expenses.

  
	
   

  	
  1.15

  	
  Trustor’s Covenants Respecting Collateral.

  
	
   

  	
  1.16

  	
  Covenants Regarding Financial
  Statements.

  
	
   

  	
  1.17

  	
  Environmental Covenants and
  Indemnities.

  
	
   

  	
  1.18

  	
  Further Assurances.

  
	
   

  	
  1.19

  	
  Trustor’s Continued Existence.

  
	
  ARTICLE II
  EVENTS OF DEFAULT

  
	
   

  	
  2.1

  	
  Monetary and Performance Defaults.

  
	
   

  	
  2.2

  	
  Bankruptcy, Insolvency, Dissolution.

  
	
   

  	
  2.3

  	
  Misrepresentation.

  
	
   

  	
  2.4

  	
  Default under Subordinate Loans.

  
	
   

  	
  2.5

  	
  Breach of Due on Sale or Encumbrance
  Provision.

  
	
  ARTICLE III
  REMEDIES

  
	
   

  	
  3.1

  	
  Acceleration.

  
	
   

  	
  3.2

  	
  Entry.

  
	
   

  	
  3.3

  	
  Judicial Action.

  
	
   

  	
  3.4

  	
  Power of Sale.

  
	
   

  	
  3.5

  	
  Rescission of Notice of Default.

  
	
   

  	
  3.6

  	
  Beneficiary’s Remedies Respecting
  Collateral.

  
	
   

  	
  3.7

  	
  Proceeds of Sales.

  
	
   

  	
  3.8

  	
  Condemnation and Insurance Proceeds.

  
	
   

  	
  3.9

  	
  Waiver of Marshaling, Rights of Redemption,
  Homestead and Valuation.

  
	
   

  	
  3.10

  	
  Remedies Cumulative.

  
	
   

  	
  3.11

  	
  Nonrecourse.

  
	
  ARTICLE IV
  MISCELLANEOUS

  
	
   

  	
  4.1

  	
  Severability.

  
	
   

  	
  4.2

  	
  Certain Charges and Brokerage Fees.

  
				

 

i

 

	
   

  	
  4.3

  	
  Notices.

  
	
   

  	
  4.4

  	
  Trustor Not Released; Certain Trustee Acts.

  
	
   

  	
  4.5

  	
  Inspection.

  
	
   

  	
  4.6

  	
  Release or Reconveyance or Cancellation.

  
	
   

  	
  4.7

  	
  Statute of Limitations.

  
	
   

  	
  4.8

  	
  Interpretation.

  
	
   

  	
  4.9

  	
  Captions.

  
	
   

  	
  4.10

  	
  Consent.

  
	
   

  	
  4.11

  	
  Delegation to Subagents.

  
	
   

  	
  4.12

  	
  Successors and Assigns.

  
	
   

  	
  4.13

  	
  Governing Law.

  
	
   

  	
  4.14

  	
  Substitution of Trustee.

  
	
   

  	
  4.15

  	
  Changes in Taxation.

  
	
   

  	
  4.16

  	
  Maximum Interest Rate.

  
	
   

  	
  4.17

  	
  Time
  of Essence.

  
	
   

  	
  4.18

  	
  Reproduction of Documents.

  
	
   

  	
  4.19

  	
  No Oral Modifications.

  
	
   

  	
  4.20

  	
  Trustee Provisions.

  

 

ii

 

DEED OF
TRUST, ASSIGNMENT OF LEASES, RENTS AND CONTRACTS,

SECURITY AGREEMENT AND FIXTURE FILING

 

THIS
DEED OF TRUST, ASSIGNMENT OF LEASES, RENTS AND CONTRACTS, SECURITY AGREEMENT
AND FIXTURE FILING (“Deed of Trust”) is made as of September 8, 2003, from
AMERIVEST MESA INC., an Arizona corporation, whose mailing address is 1780
South Bellaire Street, Suite 100, Denver, Colorado 80222 (herein “Trustor”), to
FIRST AMERICAN TITLE INSURANCE COMPANY, a California corporation, whose mailing
address is P.O. Box 2922, Phoenix, Arizona 85062 (herein “Trustee”), in favor
of ALLSTATE LIFE INSURANCE COMPANY, an Illinois corporation, whose mailing
address is Allstate Plaza South, 3075 Sanders Road, Suite G5C, Northbrook,
Illinois,  60062 (herein “Beneficiary”).

 

TRUSTOR,
in consideration of the indebtedness herein recited and the trust herein
created, hereby irrevocably grants, bargains, sells, mortgages, conveys,
transfers and assigns to Trustee, its successors and assigns, in trust, with
power of sale and right of entry and possession, all of Trustor’s estate,
right, title and interest in, to and under that certain real property located in
Maricopa County, Arizona, more particularly described in Exhibit A
attached hereto and incorporated herein by this reference (the “Land”);

 

TOGETHER
with all of Trustor’s now or hereafter acquired estate, right, title and
interest in, to and under all buildings, structures, improvements and fixtures
now existing or hereafter erected on the Land and all right, title and
interest, if any, of Trustor in and to the streets and roads, opened or
proposed, abutting the Land to the center lines thereof, and strips within or
adjoining the Land, the air space and right to use said air space above the
Land, all rights of ingress and egress on or within the Land, all easements,
rights and appurtenances thereto or used in connection with the Land,
including, without limitation, all lateral support, alley and drainage rights,
all revenues, income, rents, cash or security deposits, advance rental
deposits, and other benefits thereof or arising from the use or enjoyment of
all or any portion thereof (subject however to the rights and authorities given
herein to Trustor to collect and apply such revenues, and other benefits), all
interests in and rights, royalties and profits in connection with all minerals,
oil and gas and other hydrocarbon substances thereon or therein, and water
stock, all options to purchase or lease, all development or other rights
relating to the Land or the operation thereof, or used in connection therewith,
including all Trustor’s right, title and interest in all fixtures, attachments,
partitions, machinery, equipment, building materials, appliances and goods of
every nature whatever now or hereafter located on, or attached to, the Land,
all of which, including replacements and additions thereto, shall, to the
fullest extent permitted by law and for the purposes of this Deed of Trust, be
deemed to be real property and, whether affixed or annexed thereto or not, be
deemed conclusively to be real property; and Trustor agrees to execute and
deliver, from time to time, such further instruments and documents as may be
required by Beneficiary to confirm the legal operation and effect of this Deed
of Trust on any of the foregoing.  All
of the foregoing property described in

 

 

this
section (the “Improvements”) together with the Land, shall be hereinafter
referred to as the “Property”.

 

TRUSTOR further hereby
grants to Beneficiary a security interest in, and assigns, all of Trustor’s now existing or hereafter acquired right,
title and interest in the following:

 

(A)          All equipment, fixtures, inventory, goods,
instruments, appliances, furnishings, machinery, tools, raw materials,
component parts, work in progress and materials, and all other tangible
personal property of whatsoever kind, used or consumed in the improvement, use
or enjoyment of the Property now or any time hereafter owned or acquired by
Trustor, wherever located and all products thereof whether in possession of
Trustor or whether located on the Property or elsewhere;

 

(B)           To the extent such general intangibles are
assignable, all general intangibles relating to design, development, operation,
management and use of the Property, including, but not limited to,  (i) 
all names under which or by which the Property may at any time be owned
and operated or any variant thereof, and all goodwill in any way relating to
the Property and all service marks and logotypes used in connection
therewith,  (ii)  all permits, licenses, authorizations,
variances, land use entitlements, approvals, consents, clearances, and rights
obtained from governmental agencies issued or obtained in connection with the
Property,  (iii)  all permits, licenses, approvals, consents,
authorizations, franchises and agreements issued or obtained in connection with
the construction, use, occupation or operation of the Property,  (iv) 
all materials prepared for filing or filed with any governmental agency,
and  (v)  the books and records of Trustor relating to construction or
operation of the Property;

 

(C)           All shares of stock or partnership interest
or other evidence of ownership of any part of the Property that is owned by
Trustor in common with others, including all water stock relating to the
Property, if any, and all documents or rights of membership in any owners’ or
members’ association or similar group having responsibility for managing or
operating any part of the Property provided, however, that the foregoing shall
not include any ownership interests in Trustor;

 

(D)          All accounts, deposit accounts, supporting
obligations, letter-of-credit rights, tax
and insurance escrows held pursuant to this Deed of Trust, accounts receivable,
instruments, documents, documents of title, general intangibles, payment
intangibles, rights to payment of every kind, all of Trustor’s rights, direct
or indirect, under or pursuant to any and all construction, development,
financing, guaranty, indemnity, maintenance, management, service, supply and
warranty agreements, commitments, contracts, subcontracts, insurance policies,
licenses and bonds now or anytime hereafter arising from construction on the
Land or the use or enjoyment of the Property to the extent such are assignable;

 

(E)           All condemnation proceeds (including
payments in lieu thereof) and
insurance proceeds related to the Property;

 

ii

 

TOGETHER
with all additions to, substitutions for and the products of all of the above,
and all proceeds therefrom, whether cash proceeds or noncash proceeds, received
when any such property (or the proceeds thereof) is sold, exchanged, leased,
licensed, or otherwise disposed of, whether voluntarily or involuntarily.  Such proceeds shall include any of the
foregoing specifically described property of Trustor acquired with cash
proceeds.  Together with, and without
limiting the above items, all Goods, Accounts, Documents, Instruments, Money,
Chattel Paper, Deposit Accounts, Letter-of-Credit Rights, Investment
Property, Equipment and General
Intangibles arising from or used in connection with the Property, as those
terms are defined in the Uniform Commercial Code from time to time in effect in
the state in which the Property is located. 
(All of the foregoing including such products and proceeds thereof, are
collectively referred to as “Collateral”.)

 

The
personal property in which Beneficiary has a security interest includes goods
which are or shall become fixtures on the Property.  This Deed of Trust is intended to serve as a fixture filing
pursuant to the terms of the applicable provisions of the Uniform Commercial
Code of the state in which the Property is located and the provisions of
Exhibit B are, for that purpose, incorporated herein.  This filing is to be recorded in the real estate records of the
appropriate city, town or county in which the Property is located.  In that regard, the following information is
provided:

 

	
  Name of Debtor:

  	
  AmeriVest Mesa Inc., an Arizona corporation

  
	
   

  	
   

  
	
  Address of Debtor:

  	
  See Section 4.3 hereof

  
	
   

  	
   

  
	
  Taxpayer Identification

  Number of Debtor:

  	
  84-1240264

  
	
   

  	
   

  
	
  Organizational

  Identification Number

  of Debtor:

  	
  10905828

  
	
   

  	
   

  
	
  Name of Secured Party:

  	
  Allstate Life Insurance Company,

  an Illinois corporation

  
	
   

  	
   

  
	
  Address of Secured Party

  	
  See Section 4.3 hereof.

  

 

Trustor
warrants and agrees that, to its knowledge, there is no financing statement
covering the foregoing Collateral, the Property, or any part thereof, on file
in any public office.

 

HOWEVER, THIS IS A DEED OF
TRUST, AND THIS CONVEYANCE IS MADE IN TRUST FOR THE FOLLOWING USES AND TRUST,
AND FOR NO OTHER

 

iii

 

PURPOSES, AND FOR THE PURPOSE OF SECURING, IN SUCH ORDER OF PRIORITY AS
BENEFICIARY MAY ELECT:

 

(A)          The
repayment of the indebtedness evidenced by that certain Mortgage Note (“Note”)
of even date herewith with a maturity date of October 5, 2010, executed by
Trustor and payable to the order of Beneficiary, in the principal sum of
TWENTY-FOUR MILLION SEVEN HUNDRED FIFTY THOUSAND DOLLARS ($24,750,000), with
interest thereon, as provided therein and all late charges, loan fees,
commitment fees, Prepayment Premiums (as described in the Note), and all extensions,
renewals, modifications, amendments and replacements thereof;

 

(B)           The payment of all other sums which may be
advanced by or otherwise be due to Trustee or Beneficiary under any provision
of this Deed of Trust or under any other instrument or document referred to in
Clause (C) below, with interest thereon at the rate provided herein or therein;

 

(C)           The performance of each and every covenant
and agreement of Trustor contained 
(i)  herein, in the Note, or in
any note evidencing a Future Advance (as hereinafter defined), and  (ii) 
in the obligations of Trustor upon any and all pledge or other security
agreements, loan agreements, disbursement agreements, supplemental agreements
(the foregoing shall not include the Commitment Letter between Trustor and Beneficiary
or that certain Environmental Indemnity Agreement of even date herewith, among
Trustor, AMERIVEST PROPERTIES INC., a Maryland corporation, and Beneficiary),
assignments (both present and collateral) and all instruments of indebtedness
or security now or hereafter executed by Trustor in connection with any
indebtedness referred to in clauses (A), (B) or (D) of this section or for
the purpose of supplementing or amending this Deed of Trust or any instrument
secured hereby (all of the foregoing in this Clause (C), as the same may be
amended, modified or supplemented from time to time, being referred to
hereinafter as “Related Agreements”) and all costs and expenses, including
reasonable attorneys’ fees with respect to all such documents, including, without
limitation, the negotiation and drafting of any loan settlement or workout
agreement; and,

 

(D)          The repayment of any other loans or
advances, with interest thereon, hereafter made to Trustor (or any successor in
interest to Trustor as the owner of the Property or any part thereof) by
Beneficiary when the promissory note evidencing the loan or advance
specifically states that said note is secured by this Deed of Trust, together
with all extensions, renewals, modifications, amendments and replacements
thereof (herein and in the Related Agreements “Future Advance”).

 

Trustor
makes the foregoing grant to Trustee to hold the Property and the Collateral in
trust for the benefit of Beneficiary and for the purposes and upon the terms
and conditions hereinafter set forth, subject to those exceptions (the
“Permitted Exceptions”) shown in the title policy (the “Title Policy”) issued
to Beneficiary and insuring the first lien position of this Deed of Trust.

 

iv

 

TO
HAVE AND TO HOLD THE SAME, together with the possession and right of possession
of the Property and the Collateral, unto Beneficiary, its successors and
assigns, forever.

 

ARTICLE I

COVENANTS OF TRUSTOR

 

To
protect the security of this Deed of Trust, Trustor covenants and agrees as
follows:

 

1.1           Performance of Obligations Secured.  Trustor shall promptly pay when due the
principal of and interest on the indebtedness evidenced by the Note, the
principal of and interest on any Future Advance, any Prepayment Premium and
late charges provided for in the Note or in any note evidencing a Future
Advance, and shall further perform fully and in a timely manner all other
obligations of Trustor contained herein or in the Note or in any note
evidencing a Future Advance or in any of the Related Agreements.

 

1.2           Insurance.  For all times during the period there
remains any indebtedness under the Note, or any and all other indebtedness
(including without limitation Future Advances) secured by this Deed of Trust,
Trustor shall keep the Property insured against all risks or hazards as
Beneficiary may require.  Such insurance
shall be in policy form, amount and coverage satisfactory to Beneficiary,
including, but not limited to:

 

(A)          Fire and extended coverage on an “all risk” replacement cost basis, in
an amount equal to the insurable value of the Improvements, without coinsurance
or deducting for depreciation, containing a waiver of subrogation clause and a
deductible amount acceptable to Beneficiary;

 

(B)           General public liability insurance, in such form, amount and deductible
reasonably satisfactory to Beneficiary, and naming Beneficiary c/o
Beneficiary’s servicing agent, if any, as additional insured covering
Beneficiary’s interest in the Property;

 

(C)           Business interruption or rent loss insurance endorsement in an amount at
least equal to 100% of the sum of: annual debt service on the Note, the annual
debt service on any other financing permitted by Beneficiary, ground rents, if
any, and operating expenses (without contribution from Trustor for a period of
twelve (12) months), including, without limitation, real estate taxes and
assessments and insurance, for the Property;

 

(D)          Flood insurance (whether or not available through the National Flood
Insurance Program) sufficient to cover any damage which may be anticipated in
the event of flood unless Trustor has provided Beneficiary evidence
satisfactory to

 

v

 

Beneficiary that no portion of the Property is located within the
boundaries of the 100 year flood plain (Flood Zone A);

 

(E)           “Dram shop” insurance if alcoholic beverages are sold on the Property;

 

(F)           Boiler and machinery insurance when risks covered thereby are present
and Beneficiary requires such insurance; and

 

(G)           Earthquake insurance if Beneficiary requires such insurance.

 

The insurance coverages described in subsections (A), (C), (D), (F) and
(G) above shall name Beneficiary c/o Beneficiary’s servicing agent, if any,
under a standard noncontributory mortgagee loss payable clause (and naming
Beneficiary as loss payee for rent loss coverage) or otherwise directly insure
Beneficiary’s interest in the Property. 
All losses under said insurance shall be payable to Beneficiary in the manner
provided in Sections 1.4 and 1.5 hereof. 
All policies of insurance required under this Section 1.2 shall be
with a company or companies with a policy rating of A- and financial rating of
at least Class X in the most current edition of Best’s Key Rating Guide and
authorized to do business in the state in which the Property is located.  All policies of insurance shall provide that
they will not be canceled or modified without thirty (30) days’ prior written
notice to Beneficiary.  True copies of
the above mentioned insurance policies or evidence of such insurance (in the
form of Acord Form 27) satisfactory to Beneficiary shall be delivered to and
held by Beneficiary.  True copies of all
renewal and replacement policies or evidences of such insurance forms (Acord
Form 27) thereof shall be delivered to Beneficiary at least thirty (30) days
before the expiration of the expiring policies.  If any renewal or replacement policy is not obtained as required
herein, Beneficiary is authorized to obtain the same in Trustor’s name and at
Trustor’s expense.  Beneficiary shall
not by the fact of failing to obtain any insurance, incur any liability for or
with respect to the amount of insurance carried, the form or legal sufficiency
of insurance contracts, solvency of insurance companies, or payment or defense
of lawsuits, and Trustor hereby expressly assumes full responsibility therefor
and all liability, if any, with respect thereto.

 

1.3           Condemnation.

 

(A)          Immediately upon obtaining knowledge of the commencement or threat of
any action in connection with (i) any condemnation, (ii) any other taking of
the Property or any part thereof by any public authority or private entity
having the power of eminent domain, or (iii) any conveyance in lieu of such
condemnation or taking of the Property or any part thereof (“Condemnation”),
Trustor shall notify Beneficiary in writing but in no event later than twenty
(20) days after Trustor obtains knowledge of the commencement of or threat of a
Condemnation.  Beneficiary shall have
the right, but not the obligation, to participate in any proceedings relating
to any Condemnation and may, in its sole discretion, consent or withhold its
consent to any settlement, adjustment, or compromise of any claims arising from
the Condemnation and no such

 

vi

 

settlement, adjustment or compromise shall be final or binding upon
Beneficiary without Beneficiary’s prior consent.

 

(B)           If all or part of the Property is taken by Condemnation and Beneficiary
in its reasonable judgment determines that the remainder of the Property, if
any, cannot be operated as an economically viable entity at substantially the
same level of operations as immediately prior to such Condemnation, then all
proceeds of the Condemnation (“Condemnation Proceeds”) shall be paid over to
Beneficiary and shall be applied first toward reimbursement of the costs and
expenses (including reasonable attorneys’ fees) of Beneficiary, if any, in
connection with the recovery of such Condemnation Proceeds, and then, in the
sole and absolute discretion of Beneficiary and without regard to the adequacy
of its security under this Deed of Trust, shall be applied against all amounts
due herein or under the Note and any remaining Condemnation Proceeds shall be
released to Trustor.  Provided there is no
Event of Default (as defined below) hereunder, full or partial prepayment of
the Note under this Section 1.3(B) shall not be subject to the Prepayment
Premium; however, such partial prepayment shall not entitle Trustor to prepay
the portion of the Note remaining unpaid after application of the Condemnation
Proceeds.  Prepayment of the balance
shall continue to be subject to the terms and conditions of the Note, including
the No-Prepayment Period and the Prepayment Premium described therein.

 

(C)           If less than all of the Property is taken by Condemnation and
Beneficiary in its reasonable judgment determines that the remainder of the
Property can be operated as an economically viable entity at substantially the
same level of operations as immediately prior to such Condemnation, then
Trustor shall diligently restore the Property to a condition and use as close
as possible to its condition immediately prior to the Condemnation and all
Condemnation Proceeds shall be made available to Trustor for such restoration.  If the estimated cost of restoration, as
reasonably determined by Beneficiary, is equal to or less than $500,000.00, all
Condemnation Proceeds shall be released directly to Trustor for restoration of
the Property.  If the estimated cost of
restoration exceeds $500,000.00, all Condemnation Proceeds shall be deposited
into an escrow fund in accordance with Section 1.5 below. Beneficiary
shall have the right to obtain an opinion of an independent contractor or
engineer satisfactory to Beneficiary, at Trustor’s expense, to estimate the
cost to restore the remaining portion of the Property.  If the amount of the Condemnation Proceeds
is not sufficient to restore the Property based on the opinion of an
independent contractor or engineer, subject to revision as restorations are
made, Trustor shall be obligated to pay the difference toward the restoration
of the Property, prior to the disbursement of any Condemnation Proceeds to, or
for the account of Trustor.

 

(D)          If an Event of Default exists at any time from the time of a
Condemnation through the completion of restoration and payment of any
Condemnation Proceeds, the use of the Condemnation Proceeds shall be governed
by the remedies set forth in Article III below.  If an event has occurred which with notice, the passage of time,
or both, could become an Event of Default, then, the Condemnation Proceeds
shall be held by Beneficiary or in the Escrow Fund (as defined below), as
applicable,

 

vii

 

pending cure of such event prior to the expiration of any applicable
cure or grace period.  The application
of any Condemnation Proceeds to the indebtedness secured hereby shall not cure
or waive any Event of Default hereunder, or invalidate any act done pursuant to
any notice thereof.

 

1.4           Damage to Property.

 

(A)          Promptly upon obtaining knowledge of any damage to the Property or any
part thereof with an estimated cost of restoration in excess of $25,000.00, but
in no event later than five (5) days after Trustor obtains such knowledge,
Trustor shall notify Beneficiary of such damage in writing.  Trustor shall diligently restore the
Property to the same condition that existed immediately prior to the damage
whether or not insurance proceeds are sufficient for such restoration.  All proceeds of any insurance on the
Property (“Insurance Proceeds”) received by Trustor shall be applied to such
restoration.  Beneficiary shall have the
right to obtain an opinion of an independent contractor or engineer
satisfactory to Beneficiary, at Trustor’s expense, to estimate the cost to
restore the Property to its original condition, which opinion may be revised as
restorations are made.  If the amount of
the insurance proceeds is not sufficient to restore the Property based on an
independent contractor’s or engineer’s opinion, subject to revision as
restorations are made, Trustor shall be obligated to pay the difference toward
the restoration of the Property, prior to the application of any Insurance
Proceeds to such restoration as provided herein.

 

(B)           If the estimated cost of restoration is equal to or less than
$500,000.00, Trustor shall promptly settle and adjust any claims under the
insurance policies which insure against such risks and, upon receipt of the
Insurance Proceeds, Trustee and Beneficiary shall deliver such to Trustor for
use in restoration of the Property.

 

(C)           If the estimated cost of restoration is greater than $500,000.00,
Beneficiary shall have the right, but not the obligation, to participate in the
settlement of the insurance claims and may, in its commercially reasonable
discretion, consent or withhold its consent to any settlement, adjustment, or
compromise of such insurance claims and no such settlement, adjustment, or
compromise shall be final or binding upon Beneficiary without its prior
consent.  Upon settlement of insurance
claims, and if Trustor can demonstrate to the reasonable satisfaction of
Beneficiary that the projected ratio of Net Operating Income, as defined below,
to annual debt service due under the Note and any other notes secured by the
Property (“Debt Coverage Ratio”) will be at least 105% for the twelve months
immediately following reconstruction of the Property, the insurance proceeds
shall be deposited into an escrow fund in accordance with Section 1.5
below, prior to the disbursement of any Condemnation Proceeds to, or for the
account of Trustor.

 

As
used in this Deed of Trust, “Net Operating Income” shall mean:  (i) 
all gross operating revenues anticipated to be received during the
following twelve-month period based on leases in effect as of the date of
calculation and only for such time as those

 

viii

 

leases
are contracted to remain in effect without expiration by their terms or
optional termination by the tenant (unless the tenant has waived its
termination rights in writing or the term of the lease has been extended in
writing), including without limitation all amounts to be received from tenants
as payment of operating expenses but not including refundable deposits, lease
termination payments, excess tenant improvement and leasing commission payments
included as additional rent, principal or interest payments received by Trustor
on loans to tenants, and fees and reimbursements for work performed for tenants
by Trustor, less:  (ii)  all amounts, calculated on a pro forma
basis, for the operation or maintenance of the Property for the following
twelve-month period, including ground rents, the cost of property management
(which shall be no less than 4% of gross revenues), maintenance, cleaning,
security, landscaping, parking maintenance and utilities, and other costs and
expenses approved in writing by Beneficiary and amounts reasonably estimated by
Beneficiary for the payment of real estate taxes and assessments and other
taxes related to the operation of the Property, insurance premiums, necessary
repairs and future replacements of equipment; payments under the Note shall not
be included in Net Operating Income. 
Notwithstanding the foregoing, if any of the Related Agreements require
a historical calculation of Net Operating Income, it shall be calculated on a
cash basis for the previous twelve-month period as of the date of such
calculation.

 

(D)          If in the reasonable judgment of Beneficiary the conditions of Paragraph
1.4(C) cannot be satisfied, then at any time from and after the occurrence of
the damage, upon written notice to Trustor, Beneficiary may declare the entire
balance of the Note and/or any Future Advances then outstanding and accrued and
unpaid interest thereon, and all other sums or payments required thereunder or
under this Deed of Trust, without any Prepayment Premium (provided no Event of Default then exists
hereunder), to be immediately due and payable, and all insurance proceeds shall
be applied by Beneficiary first to the reimbursement of any costs or expenses
incurred by Beneficiary in connection with the damage or the determination to
be made hereunder, and then to the payment of the indebtedness secured by this
Deed of Trust in such order as Beneficiary may determine in its sole
discretion.

 

(E)           Notwithstanding any provision herein to the contrary, if an Event of
Default exists at any time from the time of damage through the completion of
restoration and the final release of any Insurance Proceeds to Trustor, the use
of the insurance proceeds shall be governed by the remedies set forth in
Article III below.  If an event has
occurred which with notice, the passage of time, or both, could become an Event
of Default, then the Insurance Proceeds shall be held by Beneficiary or in the
Escrow Fund, as applicable, pending cure of such event prior to the expiration
of any applicable cure or grace period. 
The application of any Insurance Proceeds to the indebtedness secured
hereby shall not cure or waive any Event of Default hereunder or invalidate any
act done pursuant to any notice thereof.

 

ix

 

1.5           Escrow Fund for Condemnation and Insurance Proceeds.

 

(A)          In the circumstances indicated above in Subsections 1.3(C) and 1.4(C),
all Condemnation Proceeds and Insurance Proceeds (“Proceeds”) shall be
deposited in an interest bearing escrow fund (“Escrow Fund”).  The escrow agent and the form of the escrow
agreement shall be satisfactory to Beneficiary and Trustor.  The costs and fees of such escrow agent
shall be paid by Trustor.  If the amount
of the Proceeds is not sufficient to restore the Property based on an
independent contractor’s or engineer’s opinion obtained by Beneficiary at
Trustor’s expense, subject to revision as restorations are made, Trustor shall
be obligated to deposit in the Escrow Fund the difference between the
contractor’s or engineer’s estimate and the amount of the Proceeds or deliver
to the escrow agent an irrevocable, unconditional letter of credit issued in
the amount of such difference in a form and by a financial institution
acceptable to Beneficiary or other cash equivalent acceptable to
Beneficiary.  Trustor’s funds, if
necessary, and the Proceeds shall be deposited into the Escrow Fund and shall
not be released by the escrow agent unless used to restore the Property to its
original condition and unless a disbursement agent satisfactory to Beneficiary
and Trustor approves such disbursements from time to time.  The escrow agreement shall provide that the
escrow agent shall only disburse funds to Trustor so long as the restoration
work is being diligently performed by Trustor and only after:  (i) 
Trustor has delivered to Beneficiary and Beneficiary has approved the
plans and specifications for the restoration of the Property;  (ii) 
Trustor has executed a contract acceptable to Beneficiary with a general
contractor reasonably acceptable to Beneficiary for the restoration of the
Property;  (iii)  the general contractor has submitted lien waivers
and/or releases, executed by the general contractor and all subcontractors
which may be partial to the extent of partial payments and which, in the case
of releases, may be contingent upon payment if the escrow agent makes payment
directly to such contractor or subcontractor; 
(iv)  Trustor has furnished
Beneficiary with an endorsement to the Title Policy showing no additional
exceptions; and  (v)  Trustor has deposited its funds in the
Escrow Fund as provided in this paragraph and has submitted such other
documents and information as may be requested by Beneficiary to determine that
the work to be paid for has been performed in accordance with the plans and
specifications approved by Beneficiary. 
If any requisition for payment of work performed is for an amount which
would result in the remaining balance of the Escrow Fund to be insufficient to
complete the remainder of the restoration, Trustor shall advance the requisite
amount in cash to the Escrow Fund immediately upon written request from the disbursement
agent or Beneficiary.  Any failure by
Trustor to satisfy any of the conditions to the disbursement of Proceeds set
forth in this Paragraph upon demand by Beneficiary shall constitute a
Performance Default, as hereinafter defined.

 

(B)           Any Proceeds and any interest thereon remaining in the Escrow Fund after
payment of the costs to complete the restoration of the Property pursuant to
the approved plans and specifications and the costs of the escrow agent shall
be paid first, to Trustor to the extent of any funds of Trustor’s contributed
to the restoration pursuant to Paragraph 1.5, provided there is no Event of
Default or an event which with notice, the passage of time, or both, could
become an Event of Default, and thereafter

 

x

 

at Beneficiary’s option, any remaining Proceeds may be applied to the
prepayment of the Note without payment of any Prepayment Premium.  Full or partial prepayment of the Note under
the preceding sentences of this Section 1.5B shall not be subject to the
Prepayment Premium; however, any such partial prepayment shall not entitle
Trustor to prepay the portion of the Note remaining unpaid after application of
the Proceeds.  Prepayment of the balance
shall continue to be subject to the terms and conditions of the Note, including
the No-Prepayment Period and the Prepayment Premium described therein.  If an Event of Default exists, the use of
the Proceeds shall be governed by Article III below.  If, however, an event exists which with notice,
the passage of time, or both, could become an Event of Default, the remaining
balance in the Escrow Fund shall be held by the escrow agent pending cure of
the event prior to the expiration of any applicable cure or grace period.

 

1.6           Taxes, Liens and
Other Items.

 

(A)          Trustor shall pay any and all taxes, bonds, assessments, fees, liens,
charges, fines, impositions and any accrued interest or penalty thereon, and
any and all other items which are attributable to or affect the Property
(collectively, “Impositions”) by making payment prior to delinquency directly
to the payee thereof and promptly furnish copies of paid receipts for these to
Beneficiary.  Trustor shall promptly
discharge or bond any lien or encumbrance on the Property whether or not said
lien or encumbrance has or may attain priority over this Deed of Trust.  This Deed of Trust shall be the sole
encumbrance on the Property (other than the Permitted Exceptions and the lien
for taxes not yet due and payable) and, if with the consent of Beneficiary it
is not the sole encumbrance, then it shall be prior to any and all other liens
or encumbrances on the Property. 
Trustor may in good faith and with due diligence protest the payment of
any Imposition which it believes unwarranted or excessive and may defer payment
of such Imposition pending conclusion of such contest if legally permitted to
do so, provided that the priority of this Deed of Trust and Beneficiary’s
security is not adversely affected and that Trustor shall have furnished
Beneficiary or the taxing authority such security as may be required.

 

(B)           As further security for the payment of the Note and the payment of real
estate taxes, regular or special assessments and insurance premiums, Trustor
shall deposit 1/12th of the annual amounts of such items as estimated by
Beneficiary, with each monthly payment on the Note, so that Beneficiary will
hold a sufficient amount to pay all such charges not less than thirty (30) days
prior to the date on which such items become due and payable.  Beneficiary shall be furnished evidence to
allow it to estimate such amounts, including paid receipts or annual insurance
premium statements, assessment notices and tax receipts.  All funds so deposited shall, until applied
to the payment of the aforesaid items, as hereinafter provided, be held by
Beneficiary without interest (except to the extent required under applicable
law) and may be commingled with other funds of Beneficiary.  All funds so deposited shall be applied to
the payment of the aforesaid items only upon the satisfaction of the following
conditions: (i) no Event of Default or event, which with notice or the passage
of time or both could become an Event of Default, shall have occurred; (ii)
Beneficiary shall have

 

xi

 

sufficient funds to pay the full amounts of such items (which funds may
include amounts paid solely for such purpose by Trustor in addition to the
escrowed funds); and (iii) Trustor shall have furnished Beneficiary with prior
written notification that such items are due and with the bills and invoices
therefor in sufficient time to pay the same before any penalty or interest
attaches and before policies of insurance lapse, as the case may be, and shall
have deposited any additional funds as Beneficiary may determine as necessary
to pay such items.

 

(C)           Beneficiary expressly disclaims any obligation to pay the aforesaid
items unless and until Trustor complies with all of the provisions set forth in
Subsections 1.6(A) and (B).  Trustor
hereby pledges and grants a security interest in any and all monies now or
hereafter deposited pursuant to Subsection 1.6(B) as additional security
for the Note and Related Agreements.  If
any Event of Default shall have occurred, or if the Note shall be accelerated
as herein provided, all funds so deposited may, at Beneficiary’s option, be
applied as determined solely by Beneficiary or to cure said Event of Default or
as provided in this Section 1.6. 
In no event shall Trustor claim any credit against the principal and
interest due hereunder for any payment or deposit for any of the aforesaid
items.

 

1.7           Assignment of Leases, Contracts, Rents and Profits.

 

(A)          Trustor hereby absolutely, presently and unconditionally grants,
assigns, transfers, conveys and sets over to Beneficiary, subject to all of the
terms, covenants and conditions set forth herein, all of Trustor’s right, title
and interest in and to the following whether arising under the “Leases” (as
hereinafter defined), by statute, at law, in equity, or in any other way:

 

(1)           All of the leases of the Property which are
in effect on the date hereof and all leases entered into or in effect from time
to time after the date hereof, including, without limitation, all amendments,
extensions, replacements, modifications and renewals thereof and all subleases,
concession agreements, and all other agreements affecting the same (the
“Leases”) and all guaranties thereunder;

 

(2)           All of the rents, income, profits, revenue,
security deposits, judgments, Condemnation Proceeds, Insurance Proceeds,
unearned insurance premiums, all termination and/or cancellation payments
received by Trustor in connection with any Lease, proceeds from the surrender,
sale or other disposition of any Lease, any other fees or sums payable to Trustor
or any other person as landlord and any award or payment in connection with any
enforcement action of any Lease, including, without limitation, any award to
Trustor made hereafter in any court involving any of the tenants under the
Leases in any bankruptcy, insolvency, or reorganization proceeding in any state
or federal court, and Trustor’s right to appear in any action and/or to collect
any such award or payment, and all payments by any tenant in lieu of rent
(collectively, “Rents and Profits”); and

 

xii

 

(3)           All contracts, agreements, management,
operating and maintenance agreements, warranties, licenses, permits, guaranties
and sales contracts relating to the Property and the Collateral entered into
by, or inuring to the benefit of, Trustor (the “Contracts”).

 

(B)           Notwithstanding the provisions of Subsection 1.7(A), so long as no
Event of Default is continuing, and, subject to Subsection 1.7(F) and
Article III, Trustor shall have a license to manage the Property; to
collect, receive and use all Rents and Profits in accordance with the terms of
the Leases; to let the Property subject to the terms hereof and to take all
actions which a reasonable and prudent landlord would take in enforcing the
provisions of the Leases and Contracts; provided, however, that all amounts so
collected shall be applied toward operating expenses, real estate taxes and
insurance relating to the Property, capital repair items necessary to the
operation of the Property, and the payment of sums due and owing under the Note
and this Deed of Trust prior to any other expenditure or distribution by
Trustor.  During the continuation of an
Event of Default (whether or not Beneficiary shall have exercised Beneficiary’s
option to declare the Note immediately due and payable), such license shall be
automatically revoked without any action required by Beneficiary.  Any amounts received by Trustor or its
agents in the performance of any acts prohibited by the terms of this Deed of
Trust, including but not limited to any amounts received in connection with any
cancellation, modification or amendment of any of the Leases prohibited by the
terms of this Deed of Trust and any amounts received by Trustor as rents,
income, issues or profits from the Property from and after the occurrence of an
Event of Default under this Deed of Trust, the Note, or any of the other
Related Agreements, shall be held by Trustor as trustee for Beneficiary and all
such amounts shall be accounted for to Beneficiary and shall not be commingled
with other funds of Trustor.  Any person
acquiring or receiving all or any portion of such trust funds shall acquire or
receive the same in trust for Beneficiary as if such person had actual or
constructive notice that such funds were impressed with a trust in accordance
herewith.

 

(C)           During the continuation of an Event of Default, Beneficiary shall have
the right but not the obligation to perform as landlord under the Leases and as
a party under the Contracts.  The
assignment of Rents and Profits set forth herein constitutes an irrevocable
direction and authorization to all tenants under the Leases to pay all Rents
and Profits to Beneficiary upon demand and without further consent or other
action by Trustor.  Trustor irrevocably
appoints Beneficiary its true and lawful attorney, at the option of Beneficiary
at any time, to demand, receive and enforce payment, to give receipts, releases
and satisfactions, and to sue, either in the name of Trustor or in the name of
Beneficiary, for all such Rents and Profits and apply the same to the
indebtedness secured by this Deed of Trust.

 

(D)          Neither the foregoing assignment of Rents and Profits, Leases and
Contracts to Beneficiary nor the exercise by Beneficiary of any of its rights
or remedies under Article III shall be deemed to make Beneficiary a
“mortgagee-in-possession” or otherwise liable in any manner with respect to the
Property, unless Beneficiary, in person or by agent, assumes actual possession
thereof.  Nor shall appointment of a

 

xiii

 

receiver for the Property by any court at the request of Beneficiary or
by agreement with Trustor, or the entering into possession of the Property by
such receiver, be deemed to make Beneficiary a “mortgagee-in-possession” or
otherwise liable in any manner with respect to the Property.

 

(E)           In the event Beneficiary collects and receives any Rents and Profits
under this Section 1.7 pursuant to any Monetary or Performance Default as
defined in Section 2.1 hereof, such collection or receipt shall in no way
constitute a curing of the Monetary or Performance Default.

 

(F)           Trustor shall not, without the prior written consent of Beneficiary, (i)
enter into any lease, extend or renew any Lease (other than extensions or
renewals in accordance with the terms of a lease approved by Beneficiary), or
consent to or permit the assignment or subletting of any Leases (other than
assignments or subleases in accordance with the terms of a lease approved by
Beneficiary), or amend or terminate any Lease; (ii) alter, modify, change or
terminate the terms of any guaranties of any Leases; (iii) create or permit any
lien or encumbrance which, upon foreclosure, would be superior to any such
Leases or in any other manner impair Beneficiary’s rights and interest with
respect to the Rents and Profits; (iv) pledge, transfer, mortgage or otherwise
encumber or assign the Leases, the Contracts or the Rents and Profits; or (v)
collect rents more than 30 days prior to their due date.  Notwithstanding the foregoing, so long as no
Event of Default has occurred hereunder, Trustor may enter into Leases, extend
or renew Leases, and permit the assignment or sublease of Leases which demise
20,000 rentable square feet or less for a term of five (5) years or less (“Non-material
Leases”), provided they are on rental rates, including rental concessions, at
least equal to that charged for comparable properties within the Property’s
submarket area, have been negotiated at arm’s length, and do not contain
material modifications to the form of lease previously approved by
Beneficiary.  Trustor may also amend
Non-material Leases without Beneficiary’s prior written consent if, in
Trustor’s prudent business judgment, such amendments are necessary and do not
impair the value of the Property. 
Beneficiary will not unreasonably withhold or delay its consent to any
lease submitted to it for approval.  Any
lease submitted for Beneficiary’s consent shall, at Beneficiary’s option, be
accompanied by a Subordination, Non-Disturbance and Attornment Agreement in
Beneficiary’s then current form. 
Trustor may also terminate leases of less than 6,500 rentable square
feet without Beneficiary’s prior written consent if, in Trustor’s prudent
business judgment, such termination is necessary and will not impair the value
of the Property.

 

(G)           Trustor shall promptly give notice to Beneficiary of any and all
monetary defaults or material non-monetary defaults of any of the tenants under
any of the Leases meeting the criteria of a lease for which Beneficiary’s
consent would have been required pursuant to Paragraph 1.7(F) regardless of
whether such leases were executed before or after the date of this Deed of
Trust, together with a complete copy of any notices delivered to or by the
tenant as a result of such default. 
Beneficiary shall have the right, but not the obligation, to cure any
default of Trustor under any of the

 

xiv

 

Leases and all amounts disbursed in connection with said cure shall be
deemed to be indebtedness secured hereby.

 

(H)          Beneficiary shall have the right to approve any lease forms used by
Trustor for lease of space in the Property, which approval shall not be
unreasonably withheld, conditioned or delayed.

 

(I)            Trustor hereby represents, warrants and
agrees that:

 

(1)           Trustor has the right, power and capacity to
make this assignment and that no person, firm or corporation or other entity
other than Trustor has or will have any right, title or interest in or to the
Leases or the Rents and Profits.

 

(2)           Trustor shall, at its sole cost and expense,
perform and discharge all of the obligations and undertakings of the landlord
under the Leases.  Trustor shall enforce
the performance of each obligation of the tenants under the Leases and will appear
in and prosecute or defend any action connected with the Leases or the
obligations of the tenants thereunder.

 

(J)            Beneficiary shall not be obligated to
perform or discharge, nor does it hereby undertake to perform or discharge, any
obligation, duty or liability under the Leases or under or by reason of this
assignment.  Trustor shall and does
hereby agree to indemnify Beneficiary for and to defend and hold Beneficiary
harmless from any and all liability, loss or damage which Beneficiary may or
might incur under the Leases or under or by reason of this assignment, and from
any and all claims whatsoever which may be asserted against Beneficiary by
reason of any alleged obligations or undertakings on Beneficiary’s part to
perform or discharge any of the terms, covenants or agreements contained in the
Leases.  Should Beneficiary incur any
liability, loss or damage under the Leases or under or by reason of this
assignment, or in the defense of any of such claims or demands, the amount
thereof, including costs, expenses and reasonable attorneys’ fees, shall be
secured by this Deed of Trust; and Trustor shall reimburse Beneficiary therefor
immediately upon demand, and upon failure of Trustor to do so, Beneficiary may
declare all sums so secured to be immediately due and payable.

 

(K)          Beneficiary may take or release other security, may release any party
primarily or secondarily liable for any indebtedness secured hereby, may grant
extensions, renewals or indulgences with respect to such indebtedness, and may
apply any other security therefor held by it to the satisfaction of such
indebtedness, without prejudice to any of its rights hereunder.

 

(L)           Nothing herein contained and no act done or omitted by Beneficiary
pursuant to the powers and rights granted it herein shall be deemed to be a
waiver by Beneficiary of its other rights and remedies under the Note and this
Deed of Trust, and this assignment is made and accepted without prejudice to
any of the other rights and remedies possessed by Beneficiary under the terms
thereof.  The right of Beneficiary to
collect said indebtedness and to enforce any other security therefor held by it
may be

 

xv

 

exercised by Beneficiary either prior to, simultaneously with, or
subsequent to any action taken by it hereunder.  It is the intent of both Trustor and Beneficiary that this
assignment be supplementary to, and not in substitution or derogation of, any
other provision contained in this Deed of Trust giving Beneficiary any interest
in or rights with respect to the Leases or Rents and Profits.

 

(M)         Neither this assignment nor pursuit of any remedy hereunder by
Beneficiary shall cause or constitute a merger of the interests of the tenant
and Trustor under any of the Leases such that any of the Leases hereby assigned
are no longer valid and binding legal obligations of the parties executing the
same.

 

(N)          Trustor agrees, from time to time, to execute and deliver, upon demand,
all assignments and any and all other writings as Beneficiary may reasonably
deem necessary or desirable to carry out the purpose and intent hereof, or to
enable Beneficiary to enforce any right or rights hereunder.

 

1.8           Due on Sale or Encumbrance.  Neither Trustor nor any principal of Trustor
shall, without the prior written consent of Beneficiary: (i) create, effect,
consent to, suffer to exist, assume, incur, permit (voluntarily or
involuntarily, by operation of law or otherwise) any direct or indirect
conveyance, sale, assignment, transfer, grant, lien, pledge, mortgage, security
interest or other encumbrance or disposition (each of the foregoing defined as
“Transfer”) of the Property or an interest therein; (ii) be divested of its
title to the Property or any interest therein; (iii) enter into a contract to
sell or grant an option to purchase all or any portion of the Property or any
interest therein that results in a transfer of possession or of equitable title
to the Property or any portion thereof prior to the payment of the Loan in
accordance with its terms; (iv) enter into any lease giving the tenant any
option to purchase the Property or any part thereof; (v) permit or suffer any
Transfer of any direct or indirect ownership interest in Trustor or any
indemnitor or guarantor under this Deed of Trust or any Related Agreement; (vi)
permit or suffer any Transfer of any ownership interest in any direct or
indirect owner of a legal or beneficial interest in Trustor (including, without
limitation its general partners, members, trustees, beneficiaries or
shareholders); (vii) permit or suffer the merger, dissolution, liquidation or
consolidation of Trustor or any of the direct or indirect owners of Trustor or
the conversion of one type of legal entity into another type of legal
entity.  Except as expressly consented
to in writing by Beneficiary, Trustor shall not incur any additional
indebtedness (secured or unsecured, direct or contingent) other than unsecured
debt or trade payables incurred in the ordinary course of business in
connection with the operation of the Property. 
Upon the occurrence of any of the prohibited actions specified herein,
then Beneficiary shall have the right, at its option, to declare the
indebtedness secured by this Deed of Trust immediately due and payable,
irrespective of the maturity date specified in the Note.

 

1.9           Preservation and Maintenance of Property.  Trustor shall hire competent and responsible
property managers who shall be reasonably acceptable to Beneficiary.  Trustor, at its sole cost and expense, shall
keep the Property and every part thereof in good condition and repair (subject
to ordinary wear and tear), in such a

 

xvi

 

fashion that the value and utility of the Property will not be
diminished and shall promptly and faithfully comply with and obey all laws,
ordinances, rules, regulations, requirements and orders of every duly
constituted governmental authority or agent having jurisdiction with respect to
the Property.  All repairs, replacements
and renewals shall be at least equal in quality to the original
Improvements.  Trustor shall not permit
or commit any waste, impairment, or deterioration of the Property, nor commit,
suffer or permit any act upon or use of the Property in violation of law or
applicable order of any governmental authority, whether now existing or
hereafter enacted, or in violation of any covenants, conditions or restrictions
affecting the Property or bring or keep any article in the Property or
cause or permit any condition to exist thereon which would be prohibited by or
invalidate the insurance coverage required to be maintained hereunder.  Trustor shall promptly bond or discharge any
mechanics’ liens against the Property.

 

1.10         Use of Property.  Except as may have been previously agreed in writing by
Beneficiary, Trustor shall continue to operate the Property for the purposes
for which it was used on the date hereof and for no other purpose.  Trustor shall not make or suffer any
improper or offensive use of the Property or any part thereof and will not use
or permit to be used any part of the Property for any dangerous, noxious,
offensive or unlawful trade or business or for any purpose which will reduce
the value of the Property in any respect or will cause the Property or any part
thereof or interest therein to be subject to forfeiture.  Trustor at its expense will promptly comply
with all rights of way or use, privileges, franchises, servitudes, licenses,
easements, tenements, hereditaments and appurtenances forming a part of the
Property and all instruments relating or evidencing the same, in each case, to
the extent compliance therewith is required of Trustor under the terms
thereof.  Trustor will not take any
action which results in a forfeiture or termination of the rights afforded to
Trustor under any such instruments and will not, without the prior written
consent of Beneficiary, amend in any material respect any of such
instruments.  Trustor shall at all times
comply with all laws affecting the Property and comply with any instruments of
record at the time in force affecting the Property or any part thereof and
shall procure, maintain and comply with all permits, licenses, and other
authorizations required for any use of the Property or any part thereof then
being made, and for the proper erection, installation, operation and
maintenance of the Improvements or any part thereof.  Trustor shall not initiate, join in, acquiesce in, or consent to
any change in any private restrictive covenant, zoning law or other public or private
restriction, limiting or defining the uses which may be made of the Property or
any part thereof.  In furtherance of the
foregoing sentence, Trustor will not, by act or omission: (i) impair the
integrity of the Property as a single zoning lot separate and apart from all
other premises; or (ii) permit or suffer to permit the Property to be used by
the public or any party in such manner as might make possible a claim of
adverse usage or possession or any implied dedication or easement.  If under applicable zoning provisions the
use of all or any portion of the Property is or shall become a nonconforming
use, Trustor will not cause or permit such nonconforming use to be discontinued
or abandoned without the express written consent of Beneficiary.

 

xvii

 

1.11         Alterations and Additions.  Trustor shall not cause, suffer or permit:

 

(A)          Any material alterations of the Property except (i) as required by any
law, statute, ordinance, order, rule, regulation, decree or other requirement
of the United States, the applicable state or county in which the Property is
located or any political subdivision of any of the foregoing, or any agency,
department, commission, board, court, bureau or instrumentality of any of them
(“Governmental Authority”) or by any condition of any approval, consent,
registration, franchise, permit, license, variance, certificate of occupancy or
other authorization with regard to zoning, landmark, ecological, environmental,
air quality, subdivision, planning, building or land use required by any
Governmental Authority for the construction, lawful occupancy and operation of
the Property and the actual and contemplated uses thereof, or (ii) as permitted
or required to be made by the terms of any Leases approved by Beneficiary (with
respect to work in any space demised thereunder);

 

(B)           Any demolition or removal of any portion of the Property;

 

(C)           Any change which would increase the risk of fire or other hazard;

 

(D)          Any zoning, reclassification with respect to the Property; or

 

(E)           Any unlawful use of, or nuisance to exist upon, the Property.

 

As
used herein, the term “material alteration” shall mean any alteration,
improvement or replacement (i) the cost of which (including any related
alteration, improvement or replacement) shall exceed $495,000 (excluding tenant
improvement work pursuant to Leases), or (ii) which materially and adversely
affects the mechanical, electrical, heating, ventilating, air-conditioning or
other building or operating systems of any of the Improvements, or materially
and adversely affects the cost of operation or maintenance of any such building
or operating systems, affects the structure or structural soundness of any of
the improvements of the Property, or the exterior or appearance of the
Property, or otherwise has a material adverse effect on the Property including
the use and/or value thereof.

 

1.12         Offset Certificates.  Trustor, within three (3) days upon request in person or within
ten (10) days upon request by mail, shall furnish a written statement duly
acknowledged and notarized, of all amounts due on any indebtedness secured
hereby or secured by any of the Related Agreements, whether for principal or
interest on the Note or otherwise, and stating whether any offsets or defenses
exist against the indebtedness secured hereby and covering such other matters
with respect to any such indebtedness as Beneficiary may reasonably require.

 

1.13         Trustee’s Costs and Expenses.   Trustor shall pay all costs, fees and
expenses of Trustee, its agents and counsel, in connection with the performance
of its duties hereunder.

 

xviii

 

1.14         Protection of Security; Costs and Expenses.

 

(A)          In addition to any other rights or remedies of Beneficiary hereunder,
under any of the Related Agreements, or in law or in equity, upon the
occurrence and during the continuation of an Event of Default (or prior thereto
after notice to Trustor, when possible, if Trustor is not paying or performing
the act itself and Beneficiary determines in its sole good faith judgment that
the same is necessary to preserve the Property or the lien of this Deed of
Trust or any other collateral securing the indebtedness evidenced by the Note,
either before or after acceleration of the indebtedness) Beneficiary may, but shall
not be required to, make any payment or perform any act required to be
performed by Trustor hereunder or under any of the Related Agreements in any
form and manner deemed expedient to Beneficiary, including, without limitation,
if applicable: (i) paying any Impositions which remain unpaid; (ii) procuring
the release, discharge, compromise or settlement of any lien filed or otherwise
asserted against the Property which has not been discharged by Trustor in
accordance with the provisions of this Deed of Trust or any of the other
Related Agreements, and (iii) obtaining insurance policies where insurance
coverage was required to be obtained hereunder and the required evidence that
Trustor had obtained the same has not been delivered to Beneficiary as required
hereunder.  Nothing herein shall be
construed to require Beneficiary to advance or expend monies for any purpose
mentioned herein, or for any other purpose.

 

(B)           Trustor and its property manager, if applicable, shall appear in and
defend any action or proceeding purporting to affect the security of this Deed
of Trust or any additional or other security for the obligations secured
hereby, or the rights or powers of Beneficiary or Trustee, and shall pay all
costs and expenses actually incurred, including, without limitation, cost of
evidence of title and actual attorneys’ fees, in any such action or proceeding
in which Beneficiary or Trustee may appear, and in any suit brought by
Beneficiary to foreclose this Deed of Trust or to enforce or establish any other
rights or remedies of Beneficiary hereunder or under any other security for the
obligations secured hereby.  If Trustor
fails to perform any of the covenants or agreements contained in this Deed of
Trust, or if any action or proceeding is commenced which affects Beneficiary’s
interest in the Property or any part thereof, including, eminent domain, code
enforcement, or proceedings of any nature whatsoever under any federal or state
law, whether now existing or hereafter enacted or amended, relating to bankruptcy,
insolvency, arrangement, reorganization or other form of debtor relief, or to a
decedent, then Beneficiary may, but without obligation to do so and without
notice to or demand upon Trustor, perform such covenant or agreement and
compromise any encumbrance, charge or lien which in the judgment of Beneficiary
appears to be prior or superior hereto. 
Trustor shall further pay all expenses of Beneficiary actually incurred
(including reasonable and actual fees and disbursements of counsel) incident to
the protection or enforcement of the rights of Beneficiary hereunder, and
enforcement or collection of payment of the Note or any Future Advance whether
by judicial or nonjudicial proceedings, or in connection with any bankruptcy,
insolvency, arrangement, reorganization or other debtor relief proceeding of
Trustor, or otherwise.

 

xix

 

(C)           Trustor shall pay to Beneficiary, immediately upon written notice from
Beneficiary:  (i)  all recordation, transfer, stamp, documentary
or other fees or taxes levied on Beneficiary (exclusive of Beneficiary’s income
taxes) by reason of the making or recording of the Note, this Deed of Trust or
any Related Agreement, and (ii) all intangible property taxes levied upon any
holder of the Note or Beneficiary under this Deed of Trust or secured party
under the Related Agreements.

 

Any
amounts disbursed by Beneficiary pursuant to this section or
Section 1.13, including, without limitation, reasonable attorneys’ fees,
whether or not the indebtedness as a result thereof shall exceed the face
amount of the Note, shall be additional indebtedness of Trustor secured by this
Deed of Trust and each of the Related Agreements as of the date of disbursement
shall become immediately due and payable on demand and shall bear interest at
the Default Rate set forth in the Note, from demand until paid.  All such amounts shall be payable by Trustor
immediately upon demand.  Nothing
contained in this section shall be construed to require Beneficiary to incur
any expense, make any appearance, or take any other action.

 

1.15         Trustor’s Covenants
Respecting Collateral.

 

(A)          Trustor authorizes Beneficiary to file financing and continuation
statements covering the Collateral from time to time and in such form as Beneficiary
may require to perfect and continue the perfection of Beneficiary’s security
interest with respect to such property, and Trustor shall pay all reasonable
costs and expenses of any record searches for financing statements Beneficiary
may require.  For purpose of such
filings, Trustor agrees to furnish any information requested by Beneficiary
promptly upon request by Beneficiary describing the Collateral.  Trustor hereby ratifies and approves all
filings of financing statements, amendments, and continuations applicable to
the Collateral made or filed by Beneficiary prior to the date of this Deed of
Trust.

 

(B)           Without the prior written consent of Beneficiary, Trustor shall not
create or suffer to be created any other security interest in the Collateral,
including replacements and additions thereto.

 

(C)           Without the prior written consent of Beneficiary or except in the
ordinary course of business, Trustor shall not sell, transfer or encumber any
of the Collateral, or remove any of the Collateral from the Property unless
Trustor shall promptly substitute and replace the property removed with similar
property of at least equivalent value on which Beneficiary shall have a
continuing security interest ranking at least equal in priority to
Beneficiary’s security interest in the property removed.

 

(D)          Trustor shall (i) upon reasonable notice (unless an emergency or Event
of Default exists) permit Beneficiary and its representatives to enter upon the
Property to inspect the Collateral and Trustor’s books and records relating to
the Collateral and make extracts therefrom and to arrange for verification of
the amount of Collateral, under procedures acceptable to Beneficiary, directly
with Trustor’s debtors or

 

xx

 

otherwise at Trustor’s expense; (ii) promptly notify Beneficiary of any
attachment or other legal process levied against any of the Collateral and any
information received by Trustor relative to the Collateral, Trustor’s debtors
or other persons obligated in connection therewith, which may in any way affect
the value of the Collateral or the rights and remedies of Beneficiary in
respect thereto; (iii) reimburse Beneficiary upon demand for any and all costs
actually incurred, including, without limitation, reasonable and actual
attorneys’ and accountants’ fees, and other expenses incurred in collecting any
sums payable by Trustor under any obligation secured hereby, or in the
checking, handling and collection of the Collateral and the preparation and
enforcement of any agreement relating thereto; (iv) notify Beneficiary of each
location at which the Collateral is or will be kept, other than for temporary
processing, storage or similar purposes, and of any removal thereof to a new
location, including, without limitation, each office of Trustor at which
records relating to the Collateral are kept; (v) provide, maintain and deliver
to Beneficiary originals or certified copies of the policies of insurance and
certificates of insurance insuring the Collateral against loss or damage by
such risks and in such amounts, form and by such companies as Beneficiary may
require and with loss payable to Beneficiary, and in the event Beneficiary
takes possession of the Collateral, the insurance policy or policies and any
unearned or returned premium thereon shall at the option of Beneficiary become
the sole property of Beneficiary; and 
(vi)  do all acts necessary to
maintain, preserve and protect all Collateral, keep all Collateral in good
condition and repair and prevent any waste or unusual or unreasonable
depreciation thereof.

 

(E)           Until Beneficiary exercises its right to collect proceeds of the
Collateral pursuant hereto, Trustor will collect with diligence any and all
proceeds of the Collateral.  If an Event
of Default exists, any proceeds received by Trustor shall be held in trust for
Beneficiary, and Trustor shall keep all such collections separate and apart
from all other funds and property so as to be capable of identification as the
property of Beneficiary and shall deliver to Beneficiary such collections at
such time as Beneficiary may request in the identical form received, properly
endorsed or assigned when required to enable Beneficiary to complete collection
thereof.

 

(F)           Beneficiary shall have all of the rights and remedies granted to a
secured party under the Uniform Commercial Code of the state in which the
Collateral is located, as well as all other rights and remedies available at
law or in equity.  During the
continuation of any Event of Default hereunder or under the Note, Beneficiary
shall have the right to take possession of all or any part of the Collateral,
to receive directly or through its agent(s) collections of proceeds of the
Collateral (including notification of the persons obligated to make payments to
Trustor in respect of the Collateral), to release persons liable on the
Collateral and compromise disputes in connection therewith, to exercise all
rights, powers and remedies which Trustor would have, but for the security
agreement contained herein, to all of the Collateral and proceeds thereof, and
to do all other acts and things and execute all documents in the name of
Trustor or otherwise, deemed by Beneficiary as necessary, proper and convenient
in connection with the preservation, perfection or enforcement of its rights
hereunder; and

 

xxi

 

(G)           During the continuation of any Event of Default hereunder or under the
Note, Trustor shall, at the request of Beneficiary, assemble and deliver the
Collateral and books and records pertaining to the Property at a place
designated by Beneficiary, and Beneficiary may, with reasonable notice to
Trustor (unless an emergency or Event of Default exists, in which case no
notice shall be required), enter onto the Property and take possession of the
Collateral.  It is agreed that public or
private sales, for cash or on credit to a wholesaler or retailer or investor,
or user of collateral of the types subject to the security agreement, or public
auction, are all commercially reasonable since differences in the sales prices
generally realized in the different kinds of sales are ordinarily offset by the
differences in the costs and credit risks of such sales.  The proceeds of any sale of the Collateral
shall be applied first to the expenses of Beneficiary actually incurred in
retaking, holding, preparing for sale, or selling the Collateral or similar
matters, including reasonable and actual attorneys’ fees, and then, as
Beneficiary shall solely determine.

 

(H)          Trustor represents and warrants to Beneficiary that (i) Trustor’s exact
legal name is as set forth in the heading to the Deed of Trust; (ii) if Trustor
is an organization, Trustor’s type of organization and jurisdiction of
organization are as set forth in the heading to this Deed of Trust, and
Trustor’s chief executive office is located at the address set forth for
notices to Trustor in this Deed of Trust; (iii) if Trustor is an individual,
Trustor’s principal residence is at Trustor’s address for notices set forth in
the Deed of Trust; (iv) except as specifically disclosed by Trustor to
Beneficiary prior to the execution of this Deed of Trust, during the five (5)
years and six months prior to the date of this Deed of Trust, Trustor has not
been known by any legal name different from the one set forth in the heading of
the Deed of Trust nor has Trustor been the subject of any merger,
consolidation, or other corporate or organizational reorganization.

 

(I)            Trustor agrees that so long as this Deed of
Trust remains in effect, it will notify Beneficiary in writing at least sixty
(60) days in advance of:  (i) any change
whatsoever in the name of Trustor; (ii) any change whatsoever in the state or
jurisdiction in which Trustor is formed or, if Trustor is an individual, in
which Trustor’s principal residence is located, or (iii) any change whatsoever
in the name(s) under which Trustor conducts business, any new names under which
Trustor intends to do business; or, (iv) any new addresses at or from which
Trustor intends to do business or to keep collateral of any kind.  Trustor shall in any event keep all
collateral within one or more of the United States of America.

 

1.16         Covenants Regarding Financial Statements.

 

(A)          Trustor shall keep true books of record and account in which full, true
and correct entries in accordance with sound accounting practice and principles
applied on a consistent basis from year to year shall be made of all dealings
or transactions with respect to the Property.

 

xxii

 

(B)           (1)           Trustor shall deliver to Beneficiary:

 

(a)           Within sixty (60) days after the last day of
each fiscal year of Trustor during the term of the Note, unaudited annual
financial reports prepared on an accrual basis, including balance sheets,
income statements and cash flow statements covering the operation of the
Property, the financial condition of Trustor, Trustor’s general partners(s),
shareholder(s), member(s) and such principals of Trustor as Beneficiary may
from time to time designate, for the previous fiscal year, all certified to
Beneficiary to be complete, correct and accurate by the individual, managing
general partner, manager or chief financial officer of the party whom the
report concerns; and

 

(b)           if available, within thirty (30) days after
receipt by Trustor, original annual audit reports of an independent certified
public accountant prepared in accordance with generally accepted accounting
principles containing an unqualified opinion, including balance sheets, income
statements and cash flow statements covering the operation of the Property and
the financial condition of Trustor, Trustor’s general partner(s),
shareholder(s), member(s) and such principals of Trustor as Beneficiary may
from time to time designate, for the previous fiscal year;

 

(2)           If, in Beneficiary’s reasonable opinion, the
loan to value ratio is then seventy-five percent (75%) or greater, Trustor
shall also deliver, at Beneficiary’s request from time to time (but no more
often than once in each fiscal quarter of Trustor during the term of the Note),
unaudited financial reports prepared on an accrual basis, including balance
sheets, income statements and cash flow statements covering the operation of
the Property and the financial condition of Trustor, Trustor’s general partner(s),
shareholder(s), member(s) and such principals of Trustor as Beneficiary may
from time to time request, for the previous fiscal quarter, a portfolio
analysis report covering the operation of all properties of which Trustor or
any of Trustor’s general partners, shareholder(s), member(s) or principals
designated by Beneficiary is the owner or a general partner of the owner,
setting out a cash flow statement (including debt service payments) for each
such property, and a current rent roll of the Property, all certified to
Beneficiary to be complete, correct and accurate by the individual, managing
general partner or chief financial officer of the party whom the report
concerns.

 

(3)           All reports shall include, without
limitation, balance sheets and statements of income and of partner’s equity, if
applicable, setting forth in each case in comparative form the figures for the
previous fiscal quarter or year, as the case may be.  The interim quarterly reports shall also include a breakdown of
all categories of revenues and expenses, and any supporting schedules and data
requested by Beneficiary.  Each set of
annual or quarterly financial reports or quarterly rent rolls delivered to
Beneficiary pursuant to this Section 1.16 shall also be accompanied by a
certificate of the chief financial officer or the managing general partner of
Trustor, stating whether any condition or event exists or has existed during
the period covered by the annual or quarterly reports which then constituted or
now constitutes an Event of Default under the Note or this Deed of Trust, and
if any such condition or event then

 

xxiii

 

existed or now exists, specifying its nature and period of existence
and what Trustor did or proposes to do with respect to such condition or event.

 

(C)           In the event such statements are not in a form reasonably acceptable to
Beneficiary or Trustor fails to furnish such statements and reports, then
Beneficiary shall have the immediate and absolute right to audit the respective
books and records of the Property and Trustor at the expense of Trustor.

 

1.17         Environmental
Covenants and
Indemnities.  Trustor
covenants:

 

(A)          That no Hazardous Materials (as defined below) shall be installed, used,
generated, manufactured, treated, handled, refined, produced, processed, stored
or disposed of, in, on or under the Property other than Hazardous Materials in
quantities and of types reasonably and customarily associated with general
office use which have been and are stored, used and disposed of in compliance
with Hazardous Material Laws (as defined below) and the presence of which do
not require compliance with any reporting requirements under any Hazardous
Material Laws;

 

(B)           That no activity shall be undertaken on the Property which would cause:

 

(1)           the Property to become a hazardous waste
treatment, storage or disposal facility under any Hazardous Material Law,

 

(2)           a release or threatened release of Hazardous
Material from the Property in violation of any Hazardous Material Law, or

 

(3)           the discharge of Hazardous Material into any
watercourse, body of surface or subsurface water or wetland, or the discharge
into the atmosphere of any Hazardous Material which would require a permit
under any Hazardous Material Law and for which no such permit has been issued;

 

(C)           That no activity shall be undertaken or permitted to be undertaken, by
Trustor on the Property which would result in a violation under any Hazardous
Material Law;

 

(D)          To obtain and deliver to Beneficiary, within a reasonable time following
completion of actions required by an appropriate governmental agency,
certifications of engineers or other professionals reasonably acceptable to
Beneficiary, in form and substance satisfactory to Beneficiary, certifying that
all necessary and required actions to clean up, remove, contain, prevent and
eliminate all releases or threats of release of Hazardous Materials on or about
the Property to the levels required by the appropriate governmental agencies
have been taken and, to the knowledge of such professional, the Property is
then in compliance with applicable Hazardous Material Laws as then in effect
and applicable to such actions.  For
purposes of this Deed of Trust, “Hazardous Materials” means and includes
asbestos or any substance

 

xxiv

 

containing asbestos, polychlorinated biphenyls, any explosives,
radioactive materials, chemicals known or suspected to cause cancer or
reproductive toxicity, pollutants, effluents, contaminants, emissions,
infectious wastes, any petroleum or petroleum-derived waste or product or
related materials and any items defined as hazardous, special or toxic
materials, substances or waste under any Hazardous Material Law, or any
material which shall be removed from the Property pursuant to any
administrative order or enforcement proceeding or in order to place the
Property in a condition that is suitable for ordinary use.  “Hazardous Material Laws” means all federal,
state and local laws (whether under common law, statute or otherwise),
ordinances, rules, regulations and guidance documents now in force, as amended
from time to time, in any way relating to or regulating human health or safety,
industrial hygiene or environmental conditions, protection of the environment,
pollution or contamination of the air, soil, surface water or groundwater, and
includes, without limitation, the Comprehensive Environmental Response,
Compensation, and Liability Act of 1980, 42 U.S.C. §9601, et seq., the Resource
Conservation and Recovery Act, 42 U.S.C. §6901, et seq., the Clean Water Act,
33 U.S.C. §1251, et seq., the Clean Air Act, 42 U.S.C. §7401, et seq., the
Occupational Safety and Health Act, 29 U.S.C. §651, et seq., the Hazardous
Materials Transportation Act, 49 U.S.C. §1801, et seq., the Federal Water
Pollution Control Act, 33 U.S.C. §1321, et seq., and the Toxic Substances
Control Act, 15 U.S.C. §2601, et seq.

 

(E)           Trustor hereby agrees, at its sole cost and expense, to unconditionally
indemnify, defend, and hold Beneficiary, its directors, officers, employees and
agents harmless against any loss, liability, damage (whether direct or
consequential), expenses, claims, penalties, fines, injunctions, suits,
proceedings, disbursements or expenses (including, without limitation, attorneys’
and experts’ fees and disbursements and court costs) (collectively, the
“Liabilities”) arising under any Hazardous Material Law, or any other
Liabilities which may be incurred by or asserted against Beneficiary directly
or indirectly resulting from the presence of Hazardous Material on the
Property.  Trustor shall assume the
burden and expense of defending all suits, administrative proceedings and
disputes of any description with all persons, entities, political subdivisions
or government agencies arising out of the matters to be indemnified under this
Deed of Trust.  Trustor shall pay,
promptly upon entry, any nonappealable order, judgment or other final
resolution of any claim or dispute arising out of the matters to be indemnified
under this Deed of Trust and shall pay promptly when due any fines, penalties
or agreed settlements arising out of the matters to be indemnified under this
Deed of Trust.  In the event that such
payment is not made, Beneficiary, at its sole discretion, may proceed to file
suit against Trustor to compel such payment. 
Promptly following completion of any actions imposed upon Trustor under
any Hazardous Material Law, Trustor shall obtain and deliver to Beneficiary, an
environmental report in form and substance reasonably acceptable to Beneficiary
from an environmental consultant acceptable to Beneficiary, stating that all
required action has been taken, and that upon completion of such action, the
Property is, to the knowledge of such professional, then in compliance with the
applicable Hazardous Material Laws. 
Such indemnification shall survive payment of the Note, but shall become
null and void and of no further force or effect in the event Beneficiary or any
other party obtains title to the

 

xxv

 

Property through foreclosure or exercise of power of sale under this
Deed of Trust or deed in lieu of foreclosure or exercise of power of sale.

 

1.18         Further Assurances.  Trustor, from time to time, will execute,
acknowledge, subscribe and deliver to or at the direction of Beneficiary such
documents and further assurances as Beneficiary may reasonably require for the
purpose of evidencing, perfecting or confirming the lien and security interest
created by this Deed of Trust or the security to be afforded by the Related
Agreements, or both.  Without limiting
the foregoing and notwithstanding anything in this Deed of Trust or the Related
Agreements to the contrary, Trustor will defend, indemnify and hold Beneficiary
harmless with respect to any suit or proceeding in which the validity,
enforceability or priority of any such lien or security interest, or both, is
endangered or contested, directly or indirectly.  If Trustor fails to undertake the defense of any such claim in a
timely manner, or, in Beneficiary’s sole determination, fails to prosecute such
defense with due diligence, then Beneficiary is authorized to take, at the sole
expense of Trustor, all necessary and proper action in defense of any such
claim, including, without limitation, the retention of legal counsel, the
prosecution or defense of litigation and the compromise or discharge of claims,
including payment of all costs and attorneys’ and paralegals’ fees.  All cost, expenses and losses, if any, so
incurred by Beneficiary, including all attorneys’ and paralegals’ fees,
regardless of whether suit is brought, for all administrative, trial and
appellate proceedings, if any, will constitute advances by Beneficiary as
provided in Section 1.14 hereinabove.

 

1.19         Trustor’s Continued Existence.  Trustor shall at all times during the term
of the Loan maintain its legal existence and qualification to do or transact
business in the state in which the Property or any of the Collateral is located
and shall maintain its legal existence and good standing in the state in which
Trustor was created.

 

ARTICLE II

EVENTS OF DEFAULT

 

Each
of the following shall constitute an event of default (“Event of Default”)
hereunder:

 

2.1           Monetary and Performance Defaults.

 

(A)          Failure to make any payment due under the Note or any note evidencing a
Future Advance, other than the final payment and Prepayment Premium, or to make
any payment due under this Deed of Trust to Beneficiary or any other party,
including without limitation, payment of escrow deposits, real estate taxes,
insurance premiums and ground rents, if any, on or before the fourth day after
such payment is due; or,

 

(B)           Failure to make the final payment or the Prepayment Premium due under
the Note or any note evidencing a Future Advance when such payment is due

 

xxvi

 

whether at maturity, by reason of acceleration, as part of a prepayment
or otherwise (the defaults in (A) and (B) hereinafter “Monetary Default”); or

 

(C)           Breach or default in the performance of any of the covenants or
agreements of Trustor contained herein or in any Related Agreement
(“Performance Default”), if such Performance Default shall continue for fifteen
(15) days or more after written notice to Trustor from Beneficiary specifying
the nature of the Performance Default; provided, however, that if such
Performance Default is of a nature that it cannot be cured within the 15 day
period, then Trustor shall not be in default if it commences good faith efforts
to cure the Performance Default within the 15 day period, demonstrates
continuous diligent efforts to cure the Performance Default in a manner
satisfactory to Beneficiary and, within a reasonable period, not to exceed 180
days after the date of the original written notice of the Performance Default,
completes the cure of such Performance Default.  Notwithstanding the foregoing, if the breach or default is one
which is defined as an Event of Default elsewhere in this Article II or in
the default definition of any Related Agreement, then Trustor shall not be
entitled to any notice or cure period upon the occurrence of such breach or
default except for such notice and cure periods, if any, as may be expressly
granted in such other defined Event of Default.

 

2.2           Bankruptcy, Insolvency, Dissolution.

 

(A)          Any court of competent jurisdiction shall sign an order (i) adjudicating
Trustor, or any person, partnership or corporation holding an ownership
interest in Trustor or in any partnership comprising Trustor, or any guarantor
(which term when used in this Deed of Trust shall mean guarantor of payment of
the indebtedness) bankrupt or insolvent, (ii) appointing a receiver, trustee or
liquidator of the Property or of a substantial part of the property of Trustor,
or any person, partnership or corporation holding an ownership interest in
Trustor, or in any partnership comprising Trustor, or any guarantor, or (iii)
approving a petition for, or effecting an arrangement in bankruptcy, or any
other judicial modification or alteration of the rights of Beneficiary or of
other creditors of Trustor, or any person, partnership or corporation holding
an ownership interest in Trustor, or in any partnership comprising Trustor or
any guarantor; or

 

(B)           Trustor, any person, partnership or corporation holding an ownership
interest in Trustor or in any partnership comprising Trustor, shall (i) apply
for or consent to the appointment of a receiver, trustee or liquidator for it
or for any of its property, (ii) as debtor, file a voluntary petition in
bankruptcy, or petition or answer seeking reorganization or an arrangement with
creditors or to take advantage of any bankruptcy, reorganization, insolvency,
readjustment of debt, dissolution or liquidation law or statute, or an answer
admitting the material allegations of a petition filed against it and any
proceeding under such law, (iii) admit in writing an inability to pay its debts
as they mature, or (iv) make a general assignment for the benefit of creditors;
or

 

xxvii

 

(C)           An involuntary petition in bankruptcy is filed against Trustor, or any
person, partnership or corporation holding an ownership interest in Trustor or
in any partnership comprising Trustor and the same is not vacated or stayed
within 30 days of the filing date.

 

2.3           Misrepresentation.   Trustor makes or furnishes a
representation, warranty, statement, certificate, schedule and/or report
to Beneficiary in or pursuant to this Deed of Trust or any of the Related
Agreements which is false or misleading in any material respect as of the date
made or furnished.

 

2.4           Default under Subordinate Loans.   An occurrence of a default under any loan
subordinate to this Deed of Trust which is not an independent default under
this Deed of Trust which results in the commencement of foreclosure proceedings
or the taking of any other remedial action under such subordinate loan.

 

2.5           Breach of Due on Sale or Encumbrance Provision.   Any occurrence of a prohibited Transfer
under Section 1.8 hereof.

 

ARTICLE III

REMEDIES

 

Notwithstanding any provision to the contrary in the
Note, this Deed of Trust, or any of the Related Agreements, upon the occurrence
of an Event of Default, such Event of Default shall be deemed to exist and be
continuing unless and until (a) applicable law requires Beneficiary to accept a
cure by Trustor of such Event of Default or (b) Beneficiary elects, in its sole
and absolute discretion, to accept a cure by Trustor of such Event of
Default.  During the continuation of any
Event of Default, Trustee and Beneficiary shall have the following rights and
remedies set forth in Sections 3.1 through 3.8:

 

3.1           Acceleration.   Notwithstanding the stated maturity date in
the Note, or any note evidencing any Future Advance, Beneficiary may without
notice or demand, declare the entire principal amount of the Note and/or any
Future Advances then outstanding and accrued and unpaid interest thereon, and
all other sums or payments required thereunder including, but not limited to
the Prepayment Premium described in the Note, to be due and payable
immediately.

 

3.2           Entry.  
Irrespective of whether Beneficiary exercises the option provided in
Section 3.1 above, Beneficiary in person or by agent or by court-appointed
receiver may, at its option, without any action on its part being required,
without in any way waiving such Event of Default, with or without the
appointment of a receiver, or an application therefor:

 

(A)          Take possession of the Property and conduct tests of, manage or hire a
manager to manage, lease and operate the Property or any part thereof, on such
terms and for such period of time as Beneficiary may deem proper, with full
power to

 

xxviii

 

make, from time to time, all alterations, renovations, repairs or
replacements thereto as may seem proper to Beneficiary;

 

(B)           With or without taking possession of the Property, collect and receive
all Rents and Profits, notify tenants under the Leases or any other parties in
possession of the Property to pay Rents and Profits directly to Beneficiary,
its agent or a court-appointed receiver and apply such Rents and Profits to the
payment of:

 

(1)           all costs and expenses incident to taking
and retaining possession of the Property (including the cost of any
receivership), management and operation of the Property, keeping the Property
properly insured and all alterations, renovations, repairs and replacements to
the Property;

 

(2)           all taxes, charges, claims, assessments, and
any other liens which may be prior in lien or payment to this Deed of Trust or
the Note, and premiums for insurance, with interest on all such items; and

 

(3)           the indebtedness secured hereby together
with all costs and attorneys’ fees, in such order or priority as to any of such
items as Beneficiary in its sole discretion may determine, any statute, law,
custom or use to the contrary notwithstanding;

 

(C)           Exclude Trustor, its agents and servants, wholly from the Property;

 

(D)          Have joint access with Trustor to the books, papers and accounts of
Trustor relating to the Property, at the expense of Trustor;

 

(E)           Commence, appear in and/or defend any action or proceedings purporting
to affect the interests, rights, powers and/or duties of Beneficiary hereunder,
whether brought by or against Trustor or Beneficiary; and

 

(F)           Pay, purchase, contest or compromise any claim, debt, lien, charge or
encumbrance which in the judgment of Beneficiary may affect or appear to affect
the interest of Beneficiary or the rights, powers and/or duties of Beneficiary
hereunder.

 

Trustee or Beneficiary,
as a matter of right without notice to Trustor or anyone claiming under it and
without regard to the then value of the Property or the interest of Trustor
therein, shall have the right to apply to any court having jurisdiction to
appoint a receiver or receivers to take charge of the Property or any portion
thereof.  Any such receiver or receivers
shall have all of the usual and customary powers and duties of receivers in
like or similar cases and all of the powers and duties of Beneficiary in case
of entry as provided hereinabove, including without limitation, the right to
collect and receive Rents and Profits. 
All such Rents and Profits paid to Trustee or Beneficiary or collected
by such receiver shall be applied as provided for in subparagraph 3.2(B) above.  Trustor for itself and any subsequent owner
of the Property hereby waives any

 

xxix

 

and all defenses to the
application for such receiver and hereby irrevocably consents to such
appointment without notice of any application therefor.

 

The receipt by Beneficiary of any Rents and Profits pursuant to this
Deed of Trust after the institution of foreclosure or other proceedings under
the Deed of Trust shall not cure any such Event of Default or affect such proceedings
or any sale pursuant thereto.  After
deducting the expenses and amounts set forth above in this Section 3.2, as
well as just and reasonable compensation for all Beneficiary’s employees and
other agents (including, without limitation, reasonable and actual attorneys’
fees and management and rental commissions) engaged and employed, the moneys
remaining, at the option of Beneficiary, may be applied to the indebtedness
secured hereby.  Whenever all amounts due
on the Note and under this Deed of Trust shall have been paid and all Events of
Default have been cured and any such cure has been accepted by Beneficiary,
Beneficiary shall surrender possession to Trustor.  The same right of entry, however, shall exist if any subsequent
Event of Default shall occur; provided, however, neither Trustee nor
Beneficiary shall be under any obligation to make any of the payments or do any
of the acts referred to in this Section 3.2.

 

3.3           Judicial Action.   Beneficiary may bring an action in any court of competent jurisdiction
to foreclose this instrument or to enforce any of the covenants and agreements
hereof.  The Property may be foreclosed
in parts or as an entirety.

 

3.4           Power of Sale.   Beneficiary may elect to cause the Property or any part thereof
to be sold under the power of sale herein granted in any manner permitted by
applicable law.  Should Beneficiary
elect to sell the Property, or any part thereof, which is real property as
provided above, Beneficiary 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, and without the necessity
of any demand on Trustor, Trustee, at the time and place specified in the
notice of sale, shall sell the Property or any part thereof at public auction
to the highest bidder for cash in lawful money of the United States payable at
time of sale.  Trustee may, and upon
request of Beneficiary shall, from time to time, postpone any sale hereunder in
the manner required by law.  If the
Property consists of several lots, parcels or items of property, Beneficiary
may designate the order in which such lots, parcels or items shall be offered for
sale or sold.  Any person, including Trustor,
Trustee or Beneficiary, may purchase at any sale hereunder, and Beneficiary
shall have the right to purchase at any sale hereunder by crediting upon the
bid price the amount of all or any part of the indebtedness hereby secured plus
interest, late charges, prepayment fees, and reasonable attorneys’ fees and
trustees’ fees, as herein provided. 
Should Beneficiary desire that more than one sale or other disposition
of the Property be conducted, Beneficiary may, at its option, cause the same to
be conducted simultaneously, or successively, on the same day, or at such
different times and in such order as Beneficiary may deem to be in its best
interests, and no such sale shall terminate or otherwise affect the lien of
this Deed of Trust on any part of the Property not sold until all indebtedness
secured hereby has been fully paid.  In
the event of default of any purchaser, Trustee shall have the right to resell
the Property as set forth

 

xxx

 

above.  Upon any sale hereunder,
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
whatever, express or implied, whereupon such purchaser or purchasers shall be
let into immediate possession; and the recitals of facts in any such deed or
deeds such as default, the giving of notice of default and notice of sale, and
other facts affecting the regularity or validity of such sale or disposition,
shall be conclusive proof of the truth of such facts and any such deed or deeds
shall be conclusive against all persons as to such facts recited therein.

 

3.5           Rescission of Notice of Default.   Beneficiary, from time to time before
Trustee’s sale, public sale or deed in lieu of foreclosure, may rescind any
such notice of breach or default and of election to cause the Property to be
sold by executing and delivering to Trustee a written notice of such
rescission, which notice, when recorded, shall also constitute a cancellation
of any prior declaration of default and demand for sale or such documents as
may be required by the laws of the state in which the Property is located to
effect such rescission.  The exercise by
Beneficiary of such right of rescission shall not constitute a waiver of any
breach or Event of Default then existing or subsequently occurring, or impair
the right of Beneficiary to execute and deliver to Trustee, as above provided,
other declarations of default and demand for sale, and notices of breach or
default, and of election to cause the Property to be sold to satisfy the
obligations hereof, nor otherwise affect any provision, agreement, covenant or
condition of the Note and/or of this Deed of Trust or any of the rights,
obligations or remedies of the parties hereunder.

 

3.6           Beneficiary’s Remedies Respecting Collateral.   Beneficiary may realize upon the
Collateral, enforce and exercise all of Trustor’s rights, powers, privileges
and remedies in respect of the Collateral, dispose of or otherwise deal with
the Collateral in such order as Beneficiary may in its discretion determine,
and exercise any and all other rights, powers, privileges and remedies afforded
to a secured party under the laws of the state in which the Property is located
as well as all other rights and remedies available at law or in equity.

 

3.7           Proceeds of Sales.   The proceeds of any sale made under or by virtue of this
Article III, together with all other sums which then may be held by
Trustee or Beneficiary under this Deed of Trust, whether under the provisions
of this Article III or otherwise, shall be applied as follows:

 

(A)          To the payment of the costs, fees and expenses of sale and of any
judicial proceedings wherein the same may be made, including the cost of
evidence of title in connection with the sale, compensation to Trustee and
Beneficiary, and to the payment of all expenses, liabilities and advances made
or incurred by Trustee under this Deed of Trust, together with interest on all
advances made by Trustee at the interest rate applicable under the Note, but
limited to any maximum rate permitted by law to be charged by Trustee;

 

xxxi

 

(B)           To the payment of any and all sums expended by Beneficiary under the
terms hereof, not then repaid, with accrued interest at the Default Rate set
forth in the Note, and all other sums (except advances of principal and
interest thereon) required to be paid by Trustor pursuant to any provisions of
this Deed of Trust, or the Note, or any note evidencing any Future Advance, or
any of the Related Agreements, including, without limitation, all expenses,
liabilities and advances made or incurred by Beneficiary under this Deed of
Trust or in connection with the enforcement thereof, together with interest
thereon as herein provided; and

 

(C)           To the payment of the entire amount then due, owing or unpaid for
principal and interest upon the Note, any notes evidencing any Future Advance,
and any other obligation secured hereby, with interest on the unpaid principal
at the rate set forth therein from the date of advancement thereof until the
same is paid in full; and then

 

(D)          The remainder, if any, to the person or persons, including Trustor,
legally entitled thereto.

 

3.8           Condemnation and Insurance
Proceeds.   All Proceeds
and any interest earned thereon shall be paid over either by the condemning
authority, insurance company or escrow agent to Beneficiary and shall be
applied first toward reimbursement of the costs and expenses of Beneficiary
(including reasonable attorneys’ fees), if any, in connection with the recovery
of such Proceeds, and then shall be applied in the sole and absolute discretion
of Beneficiary and without regard to the adequacy of its security under this
Deed of Trust:

 

(A)          to the payment or prepayment of all or any portion of the Note including
the Prepayment Premium described in the Note;

 

(B)           to the reimbursement of expenses incurred by Beneficiary in connection
with the restoration of the Property; or

 

(C)           to the performance of any of the covenants contained in this Deed of
Trust as Beneficiary may determine.  Any
prepayment of the Note or portion thereof pursuant to Beneficiary’s election
under this section shall be subject to the Prepayment Premium described in
the Note.

 

3.9           Waiver of Marshaling,
Rights of Redemption, Homestead and Valuation.

 

(A)          Trustor, for itself and for all persons hereafter claiming through or
under it or who may at any time hereafter become holders of liens junior to the
lien of this Deed of Trust, hereby expressly waives and releases all rights to
direct the order in which any of the Property shall be sold in the event of any
sale or sales pursuant hereto and to have any of the Property and/or any other
property now or hereafter constituting

 

xxxii

 

security for any of the indebtedness secured hereby marshalled upon any
foreclosure of this Deed of Trust or of any other security for any of said
indebtedness.

 

(B)           To the fullest extent permitted by law, Trustor, for itself and all who
may at any time claim through or under it, hereby expressly waives, releases
and renounces all rights of redemption from any foreclosure sale, all rights of
homestead, exception, monitoring reinstatements, forbearance, appraisement,
valuation, stay and all rights under any other laws which may be enacted
extending the time for or otherwise affecting enforcement or collection of the
Note, the debt evidenced thereby, or this Deed of Trust.

 

3.10         Remedies Cumulative.   No remedy herein conferred upon or reserved to Trustee or
Beneficiary 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.  No delay or omission of
Trustee or Beneficiary to exercise any right or power accruing upon any Event
of Default shall impair any right or power or shall be construed to be a waiver
of any Event of Default or any acquiescence therein.  Every power and remedy given by this Deed of Trust to Trustee or
Beneficiary may be exercised separately, successively or concurrently from time
to time as often as may be deemed expedient by Trustee or Beneficiary.  If there exists additional security for the
performance of the obligations secured hereby, Beneficiary, at its sole option,
and without limiting or affecting any of its rights or remedies hereunder, may
exercise any of the rights and remedies to which it may be entitled hereunder
either concurrently with whatever rights and remedies it may have in connection
with such other security or in such order as it may determine.  Any application of any amounts or any
portion thereof held by Beneficiary at any time as additional security or
otherwise, to any indebtedness secured hereby shall not extend or postpone the
due dates of any payments due from Trustor to Beneficiary hereunder or under
the Note, any Future Advance, or under any of the Related Agreements, or change
the amounts of any such payments or otherwise be construed to cure or waive any
default or notice of default hereunder or invalidate any act done pursuant to
any such default or notice.

 

3.11         Nonrecourse.   Beneficiary acknowledges and agrees that
the liability of Trustor under the Note, this Deed of Trust and the Related
Agreements is limited as provided in the Note, the provisions of which are
hereby incorporated by this reference.

 

ARTICLE IV

MISCELLANEOUS

 

4.1           Severability.   In the event any one or more of the
provisions contained in this Deed of Trust shall for any reason be held to be
invalid, illegal or unenforceable in any respect, such invalidity, illegality
or unenforceability shall not affect any other provision of this Deed of Trust,
but this Deed of Trust shall be construed as if such invalid, illegal or
unenforceable provision had never been contained herein, but only to the extent
that it is invalid, illegal or unenforceable.

 

xxxiii

 

4.2           Certain Charges and Brokerage Fees.

 

(A)          Trustor agrees to pay Beneficiary a commercially reasonable charge for
each written statement requested of Beneficiary as to the obligations secured
hereby, furnished at Trustor’s request. 
Trustor further agrees to pay the charges of Beneficiary for any other
service rendered Trustor, or on its behalf, connected with this Deed of Trust
or the indebtedness secured hereby, including, without limitation, the delivery
to an escrow holder of a request for full or partial release or reconveyance of
this Deed of Trust, transmittal to an escrow holder of moneys secured hereby,
changing its records pertaining to this Deed of Trust and indebtedness secured
hereby to show a new owner of the Property, and replacing an existing policy of
insurance held hereunder with another such policy.

 

(B)           Trustor agrees to indemnify and hold Beneficiary harmless from any
responsibility and/or liability for the payment of any commission charge or
brokerage fees to anyone which may be payable in connection with the funding of
the loan evidenced by the Note and this Deed of Trust or refinancing of any
prior indebtedness, if applicable, based upon any action taken by Trustor.  It is understood that any such commission
charge or brokerage fees shall be paid directly by Trustor to the entitled
parties.

 

4.3           Notices.

 

(A)          All notices expressly provided hereunder to be given by Beneficiary to
Trustor and all notices, demands and other communications of any kind or nature
whatever which Trustor may be required or may desire to give to or serve on
Beneficiary shall be in writing and shall be (i) hand-delivered, effective upon
receipt, (ii) sent by United States Express Mail or by private overnight
courier, effective upon receipt, or (iii) served by certified mail, to the
appropriate address set forth below, or at such other place as Trustor,
Beneficiary or Trustee, as the case may be, may from time to time designate in
writing by ten (10) days prior written notice thereof.  Any such notice or demand served by
certified mail, return receipt requested, shall be deposited in the United
States mail, with postage thereon fully prepaid and addressed to the party so
to be served at its address above stated or at such other address of which said
party shall have theretofore notified in writing, as provided above, the party
giving such notice.  Service of any such
notice or demand so made shall be deemed effective on the day of actual
delivery as shown by the addressee’s return receipt or the expiration of three
(3) business days after the date of mailing, whichever is the earlier in
time.  Any notice required to be given
by Beneficiary shall be equally effective if given by Beneficiary’s agent, if
any.

 

(B)           Trustor hereby requests that any notice, demand, request or other
communication (including any notice of an Event of Default and notice of sale
as may be required by law) desired to be given or required pursuant to the
terms hereof be addressed to Trustor as follows:

 

xxxiv

 

AmeriVest
Mesa Inc.

1780 South Bellaire Street

Suite 100

Denver, Colorado 80222

With a copy to:

Stephen R. Voelker, Esq.

Jenkens & Gilchrist

1445 Ross Avenue

Suite 3200

Dallas, Texas 75202

 

All notices and other
communications to Beneficiary shall be addressed as follows:

 

Allstate
Life Insurance Company

Allstate
Plaza South, Suite G5C

3075
Sanders Road

Northbrook,
Illinois  60062

Attention:  Commercial Mortgage Loan Servicing Manager

 

With
a copy to:

 

Allstate
Insurance Company

Investment
Law Division

Allstate
Plaza South, Suite G5A

3075
Sanders Road

Northbrook,
Illinois   60062

 

All
notices to Trustee shall be addressed as follows:

 

First
American Title Insurance Company

P.O.
Box 2922

Phoenix,
Arizona 85062

 

4.4           Trustor Not Released; Certain Trustee Acts.

 

(A)          Extension of the time for payment or modification of the terms of
payment of any sums secured by this Deed of Trust granted by Beneficiary to any
successor in interest of Trustor shall not operate to release, in any manner,
the liability of Trustor.  Beneficiary
shall not be required to: commence proceedings against such successor or refuse
to extend time for payment or otherwise modify the terms of payment of the sums
secured by this Deed of Trust, by reason of any demand made by Trustor.  Without affecting the liability of any
person, including Trustor, but subject to the

 

xxxv

 

terms and provisions of Section 3.11, for the payment of any
indebtedness secured hereby, or the legal operation and effect of this Deed of
Trust on the remainder of the Property for the full amount of any such
indebtedness and liability unpaid, Beneficiary and Trustee are respectively
empowered as follows:  Beneficiary may
from time to time and without notice (i) release any person liable for the
payment of any of the indebtedness; (ii) extend the time or otherwise alter the
terms of payment of any of the indebtedness; (iii) accept additional real or
personal property of any kind as security therefor, whether evidenced by deeds
of trust, mortgages, security agreements or any other instruments of security;
or (iv) alter, substitute or release any property securing the indebtedness.

 

(B)           Beneficiary may, at any time, and from time to time, (i) consent to the
making of any map or plan of the Property or any part thereof; (ii) join in
granting any easement or creating any restriction thereon; (iii) join in any
subordination or other agreement affecting this Deed of Trust or the legal
operation and effect or charge hereof; or (iv) release or reconvey, without any
warranty, all or part of the Property from the lien of this Deed of Trust.

 

4.5           Inspection.   Upon reasonable prior notice and subject to
the rights of tenants under the Leases, Beneficiary may at any reasonable time
make or cause to be made entry upon and make inspections, reappraisals,
surveys, construction and environmental testing of the Property or any part
thereof in person or by agent, and if Beneficiary has a reasonable basis to
believe that Trustor is in breach of any covenant of this Deed of Trust in
regard to the Property, the cost of any such inspection shall be borne by
Trustor.

 

4.6           Release or Reconveyance or Cancellation.   Upon the payment in full of all sums
secured by this Deed of Trust, Beneficiary shall cancel this Deed of Trust or
request Trustee to release this Deed of Trust or reconvey the Property and
shall surrender this Deed of Trust and all notes evidencing indebtedness
secured by this Deed of Trust to Trustee. 
Upon payment of its fees and any other sums owing to it under this Deed
of Trust, Trustee shall release this Deed of Trust or reconvey the Property
without warranty to the person or persons legally entitled thereto.  The duly recorded release or reconveyance of
the Property shall constitute a reassignment of the Leases by Beneficiary to
Trustor.  Such person or persons shall
pay all fees of Trustee and costs of recordation, if any.  The recitals in such release or reconveyance
of any matters or facts shall be conclusive proof of the truthfulness thereof.

 

4.7           Statute of Limitations.   Trustor hereby expressly waives and
releases to the fullest extent permitted by law, the pleading of any statute of
limitations as a defense to any and all obligations secured by this Deed of
Trust.

 

4.8           Interpretation.   Wherever used in this Deed of Trust, unless
the context otherwise indicates a contrary intent, or unless otherwise
specifically provided herein, the word “Trustor” shall mean and include both
Trustor and any subsequent owner or owners of the Property, and the word
“Beneficiary” shall mean and include not only the

 

xxxvi

 

original Beneficiary hereunder but also any future owner and holder,
including pledgees, of the Note or other obligations secured hereby.  In this Deed of Trust, the Note and the
Related Agreements, whenever the context so requires, the masculine gender
includes the feminine and/or neuter, and the neuter includes the feminine
and/or masculine, and the singular number includes the plural.  In this Deed of Trust, the Note and the
Related Agreements, the use of the word “including” shall not be deemed to
limit the generality of the term or clause to which it has reference, whether
or not non-limiting language (such as “without limitation,” or “but not limited
to,” or words of similar import) is used with reference thereto.

 

4.9           Captions.   The
captions and headings of the Articles and sections of this Deed of Trust, the
Note and the Related Agreements,  are
for convenience only and are not to be used to interpret, define or limit the
provisions hereof.

 

4.10         Consent.   The
granting or withholding of consent by Beneficiary to any transaction as
required by the terms hereof shall not be deemed a waiver of the right to
require consent to future or successive transactions.  Trustor covenants and agrees to reimburse Beneficiary promptly on
demand for all legal and other expenses incurred by Beneficiary or its
servicing agent in connection with all requests by Trustor for consent or
approval under this Deed of Trust.

 

4.11         Delegation to Subagents.   Wherever a power of attorney is conferred
upon Beneficiary hereunder, it is understood and agreed that such power is
conferred with full power of substitution, and Beneficiary may elect in its
sole discretion to exercise such power itself or to delegate such power, or any
part thereof, to one or more subagents.

 

4.12         Successors and Assigns.   All of the grants, obligations, covenants,
agreements, terms, provisions and conditions herein shall run with the land and
shall apply to, bind and inure to the benefit of, the heirs, administrators,
executors, legal representatives, successors and assigns of Trustor (but this
shall not permit any assignment prohibited hereby) and the successors in trust
of Trustee and the endorsees, transferees, successors and assigns of Beneficiary.  In the event Trustor is composed of more
than one party, the obligations, covenants, agreements, and warranties
contained herein and in the Related Agreements as well as the obligations
arising therefrom are and shall be joint and several as to each such party.

 

4.13         Governing Law.   THIS DEED OF TRUST AND THE RELATED
AGREEMENTS ARE INTENDED TO BE GOVERNED BY AND CONSTRUED UNDER THE LAWS OF THE
STATE IN WHICH THE PROPERTY IS LOCATED. 
TRUSTOR HEREBY WAIVES ITS RIGHT TO A TRIAL BY JURY.

 

4.14         Substitution of Trustee.   Beneficiary may remove Trustee at any time
or from time to time and appoint a successor trustee, and upon such
appointment, all powers, rights, duties and authority of Trustee, as aforesaid,
shall thereupon become vested in such successor.  Such substitute trustee shall be appointed by written

 

xxxvii

 

instrument duly recorded in the county or counties where the real
property covered hereby is located, which appointment may be executed by any authorized
agent of Beneficiary or in any other manner permitted by applicable law.

 

4.15         Changes in Taxation.   If, after the date of this Deed of Trust, any law is passed by
the state in which the Property is located or by any other governing entity,
imposing upon Beneficiary any tax against the Property, or changing in any way
the laws for the taxation of mortgages or deeds of trust or debts secured by
mortgages or deeds of trust so that an additional or substitute tax is imposed
on Beneficiary or the holder of the Note, Trustor shall reimburse Beneficiary
for the amount of such taxes immediately upon receipt of written notice from
Beneficiary.  Provided, however, that
such requirement of payment shall be ineffective if Trustor is permitted by law
to pay the whole of such tax in addition to all other payments required
hereunder, without any penalty or charge thereby accruing to Beneficiary and if
Trustor in fact pays such tax prior to the date upon which payment is required
by such notice.

 

4.16         Maximum Interest Rate.   Trustor agrees to pay an effective rate of
interest which is the stated rate provided for in the Note, plus any additional
rate of interest resulting from any charges of interest or in the nature of
interest paid or to be paid in connection with the loan evidenced by the Note,
including without limitation, any amounts paid pursuant to the provisions of
the Note, this Deed of Trust and that certain Application dated July 28,
2003, from Trustor to Beneficiary, as accepted by Beneficiary on August 26,
2003.  No provision of this Deed of
Trust or of the Note or of any note evidencing a Future Advance shall require
the payment or permit the collection of interest in excess of the maximum
non-usurious rate permitted by applicable law. 
In the event such interest does exceed the maximum legal rate, it shall
be canceled automatically to the extent that such interest exceeds the maximum
legal rate and if theretofore paid, credited on the principal amount of the
Note or, if the Note has been prepaid, then such excess shall be rebated to
Trustor and Trustor hereby agrees to accept such rebate.

 

4.17         Time of Essence.   Time is of the essence of the obligations of Trustor in this
Deed of Trust and each and every term, covenant and condition made herein by or
applicable to Trustor.

 

4.18         Reproduction of Documents.   This
Deed of Trust and all documents relating thereto, specifically excluding the
Note but including, without limitation, consents, waivers and modifications
which may hereafter be executed, financial and operating statements,
certificates and other information previously or hereafter furnished to
Beneficiary, may be reproduced by Beneficiary by any photographic, photostatic,
microfilm, micro-card, miniature photographic or other similar process and
Beneficiary may destroy any original document (“Master”) so reproduced.  Trustor agrees and stipulates that any such
reproduction is an original and shall be admissible in evidence as the Master
in any judicial or administrative proceeding (whether or not the Master is in
existence and whether or not such reproduction was made or preserved

 

xxxviii

 

by Beneficiary in the regular course of business) and any enlargement,
facsimile or further reproduction of such a reproduction shall be no less
admissible.

 

4.19         No Oral Modifications.   This Deed of Trust may not be amended or
modified orally, but only by an agreement in writing signed by the party
against whom enforcement of any amendment or modification is sought.

 

4.20         Trustee Provisions.   Trustee accepts this Trust when this Deed of Trust, duly
executed and acknowledged is made a public record as provided by law.  The Trust created hereby is irrevocable by Trustor.  Trustee, upon presentation to it of an affidavit
signed by or on behalf of Beneficiary, setting forth any facts showing a
default by Trustor under any of the terms or conditions of this Deed of Trust,
is authorized to accept as true and conclusive all facts and statements in such
affidavit and to act hereunder in complete reliance thereon.  Trustee shall be under no obligation to
notify any party hereof of any action or proceeding of any kind in which
Trustor, Beneficiary and/or Trustee shall be a party, unless brought by
Trustee, or of any pending sale under any other deed of trust.  The necessity of Trustee’s making oath,
filing inventory or giving bond as security for the execution of this Deed of
Trust, as may now be or hereafter required by the laws of the state in which
the Property is located, is hereby expressly waived.

 

IN WITNESS WHEREOF, the undersigned has executed this
Deed of Trust as of the day and year first hereinabove written.

 

	
   

  	
  AMERIVEST MESA INC., an Arizona corporation

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
   

  	
  John B. Greenman

  
	
   

  	
   

  	
   

  	
  John B. Greenman

  
	
   

  	
   

  	
  Its

  	
  Vice President

  

 

xxxix

 

	
  STATE OF COLORADO

  	
  )

  
	
   

  	
  ) ss.

  
	
  County of Denver

  	
  )

  

 

The
foregoing instrument was acknowledged before me this 8th day of September,
2003, by John B. Greenman, the Vice President of AMERIVEST MESA INC., an
Arizona corporation, on behalf of the corporation.

 

Witness
my hand and official seal.

 

 

	
   

  	
  Jean M. Gonzales

  
	
   

  	
  Notary Public

  
	
   

  	
   

  
	
  My Commission Expires:

  	
   

  
	
   

  	
   

  
	
  April 9, 2005

  	
   

  	
   

  
			

 

xl

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