Document:

Exhibit 10.7

 

	
  APN:

  	
  177-35-201-001

  
	
   

  	
  177-35-201-002

  
	
   

  	
  177-35-201-003

  
	
   

  	
  177-35-201-006

  

 

The
mailing address to which this Mortgage

should be returned after recordation is:

 

WICK PHILLIPS, LLP

 

2100 Ross Avenue, Suite 950

Dallas, Texas  75201

Attention:  Walt
Miller, Esq.

 

SENIOR MEZZANINE DEED OF TRUST,
ASSIGNMENT OF RENTS AND LEASES,

SECURITY AGREEMENT, FIXTURE
FILING AND FINANCING STATEMENT

 

(This
Document Serves as a Fixture Filing under

Nevada
Revised Statutes Section 104.9502)

 

Dated to be effective as of December 31,
2008

 

made by

 

SW 132 ST. ROSE SENIOR BORROWER LLC,

 a
Delaware limited liability company (Grantor)

 

to

 

Chicago Title Agency of Nevada, Inc., as
Trustee

(Trustee)

 

for the benefit of

 

BEHRINGER HARVARD ST. ROSE REIT, LLC,

a Delaware limited liability company (Lender)

 

 

DEED
OF TRUST — Page 1

 

SENIOR MEZZANINE DEED OF TRUST,
ASSIGNMENT OF RENTS AND LEASES,

SECURITY AGREEMENT, FIXTURE
FILING AND FINANCING STATEMENT

 

Grantor’s Organizational Identification
Number: 26-3831531

 

THIS SENIOR
MEZZANINE DEED OF TRUST, ASSIGNMENT OF RENTS AND LEASES, SECURITY AGREEMENT,
FIXTURE FILING AND FINANCING STATEMENT (this “Mortgage”) is
made this 31st day of December, 2008, by Grantor, in favor of Trustee for the
benefit of Lender.

 

RECITALS

 

A.            This Mortgage is being executed by Grantor for the
purpose of securing a loan from Lender to SW 131 St. Rose Mezzanine Borrower
LLC, a Delaware limited liability company (the “Borrower”).  The Borrower is directly or indirectly the
legal and beneficial owner of all (100%) of the equity interests in Grantor.

 

B.            Grantor is the owner of the Land (as defined below) and
is currently pursuing a subdivision of the Land, and Grantor intends to convey
approximately 6.272 acres of the Land (the “Commercial Tract”) to its
affiliate, SW 122 St. Rose Senior Borrower LLC, a Delaware limited liability
company (the “Commercial Tract Borrower”).  The Land other than the Commercial Tract (the
“Multi-Family Tract”) will be used by Grantor to develop a 430-unit
apartment complex.

 

C.            When Commercial Tract Borrower acquires title to the
Commercial Tract (the date of such acquisition is referred to herein as the “Transfer
Date”), Lender will cause the lien of this Mortgage to be released as to
the Commercial Tract.

 

D.            Concurrently with the execution of this Mortgage, Grantor
also is executing (1) that certain Deed of Trust, Assignment of Rents and
Leases, Security Agreement, Fixture Filing and Financing Statement to and in
favor of PRLAP, Inc., as trustee, for the benefit of Bank of America,
N.A., as administrative agent for itself and certain other lenders (the “Multi-Family
DOT”), to secure, in part, the obligations of the Grantor in connection
with a $38,600,000 loan (the “Senior Loan”), (2) that certain Deed
of Trust, Assignment of Rents and Leases, Security Agreement, Fixture Filing
and Financing Statement to and in favor of PRLAP, Inc., as trustee, for
the benefit of Bank of America, N.A., for its own account as lender (the “Commercial
DOT”), to secure, in part, the obligations of the Commercial Tract Borrower
in connection with a $2,950,000 loan (the “Commercial Loan”), and (3) that
certain Junior Mezzanine Deed of Trust, Assignment of Rents and Leases,
Security Agreement, Fixture Filing and Financing Statement to and in favor of
Trustee, as trustee, for the benefit of Lender (the “Junior Mezzanine DOT”),
to secure, in part, the obligations of the Borrower under the Junior Mezzanine
Loan Documents.  The Multi-Family DOT and
the Commercial DOT are referred to herein as the “Senior DOTs”).

 

E.             This Mortgage is subject and subordinate to the Senior
DOTs, the obligations of the Grantor and/or Commercial Tract Borrower in
respect of the Senior Loan and the 

 

DEED
OF TRUST — Page 2

 

Commercial Loan,
respectively, and the rights of the administrative agent and/or lenders arising
in connection with the Senior Loan and the Commercial Loan, respectively.

 

ARTICLE 1

Definitions; Granting Clauses; Secured Indebtedness

 

Section 1.1.            Principal Secured.  This Mortgage secures the aggregate principal
amount of up to TWENTY ONE MILLION FORTY THREE THOUSAND ONE HUNDRED NINETY
SEVEN AND NO/100 DOLLARS ($21,043,197.00) together with interest thereon.  This instrument secures future advances as
defined in Nevada Revised Statutes (as amended, NRS) 106.320, and is goverened
by NRS 106.300 to 106.400, inclusive.

 

Section 1.2.            Definitions.

 

(a)           In addition to other terms defined herein, each of the
following terms shall have the meaning assigned to it, such definitions to be
applicable equally to the singular and the plural forms of such terms and to
all genders:

 

“Grantor”:  SW 132 ST. ROSE SENIOR BORROWER LLC, a
Delaware limited liability, whose mailing address is 2001 Bryan Street, Suite 3250,
Dallas, Texas 75201, Attention: Tim Hogan, and its permitted successors and
assigns.

 

“Lender”:  BEHRINGER HARVARD ST. ROSE REIT, LLC, a
Delaware limited liability company, or any subsequent holder(s) of the
Notes at the time in question.

 

“Mezzanine Loan Agreement”:  The Senior Mezzanine Loan Agreement dated of
even date herewith between Lender and Borrower, which is incorporated herein by
reference for all purposes.

 

“Promissory Note”:  The Senior Mezzanine Promissory Note made by
Borrower pursuant to the Mezzanine Loan Agreement, payable to the order of
Lender, in the principal face amount of up to $21,043,197.00, bearing interest
as therein provided.

 

“Trustee”:  Chicago Title Agency of Nevada, Inc., a
Nevada corporation.

 

“UCC”:   The Nevada Uniform Commercial Code,  NRS Section 104.1101 et seq., as amended
from time to time.

 

(b)           Any term used or defined in the UCC, as in effect from
time to time, and not defined in this Mortgage has the meaning given to the
term in the UCC, as in effect from time to time, when used in this Mortgage.
However, if a term is defined in NRS Section 104.9101 et seq. of the UCC
differently than in another title of the UCC, the term has the meaning
specified in said NRS Section 104.9101 et seq.

 

DEED
OF TRUST — Page 3

 

(c)           Unless otherwise defined herein, capitalized terms used
herein shall have the meanings ascribed to such terms in the Mezzanine Loan
Agreement.

 

Section 1.3.            Granting Clause.  In consideration of the provisions of this
Mortgage and the sum of TEN AND NO/100 DOLLARS ($10.00) cash in hand paid and
other good and valuable consideration the receipt and sufficiency of which are
acknowledged by Grantor, Grantor does hereby GRANT, BARGAIN, SELL, CONVEY,
TRANSFER, ASSIGN and SET OVER to Trustee, IN TRUST with the power of sale for
the benefit and security of Lender, with GENERAL WARRANTY, the following:  (a)  the real property described in Exhibit A
which is attached hereto and incorporated herein by reference (the “Land”)
together with: (i) any and all buildings, structures, improvements,
alterations or appurtenances now or hereafter situated or to be situated on the
Land (collectively the “Improvements”); and (ii) all right, title
and interest of Grantor, now owned or hereafter acquired, in and to (1) streets,
roads, alleys, easements, rights-of-way, licenses, rights of ingress and
egress, vehicle parking rights and public places, existing or proposed,
abutting, adjacent, used in connection with or pertaining to the Land or the
Improvements; (2) any strips or gores between the Land and abutting or
adjacent properties; (3) all options to purchase the Land or the
Improvements or any portion thereof or interest therein, and any greater estate
in the Land or the Improvements; (4) all water and water rights, ditches
and ditch rights, reservoirs, reservoir rights and storage rights, wells and
well rights, well permits, springs and spring rights, groundwater rights
(whether tributary, nontributary or not-nontributary), water contracts, water
allotments, water taps, stock certificates, shares in ditch or reservoir or
water companies, and all other rights of any kind or nature in or to the use of
water, whether or not adjudicated, which are appurtenant to, historically used
on or in connection with, or located on or under the Land (collectively, “Water
Rights”), together with any and all associated structures and facilities
for the diversion, carriage, transmission, conveyance, measurement, storage or
use of said Water Rights, and any and all easements, rights of way, fixtures,
personal property, contract rights, licenses, permits or decrees associated
with or used in connection with any such Water Rights or which may be necessary
for the development, operation or maintenance of such Water Rights; and (5) timber,
crops and mineral interests on or pertaining to the Land (the Land,
Improvements and other rights, titles and interests referred to in this clause (a) being
herein sometimes collectively called the “Premises”); (b) all
fixtures, equipment, systems, machinery, furniture, furnishings, appliances,
inventory, goods, building and construction materials, supplies, and articles
of personal property, of every kind and character, tangible and intangible
(including software embedded therein), now owned or hereafter acquired by
Grantor, which are now or hereafter attached to or situated in, on or about the
Land or the Improvements, or used in or necessary to the complete and proper
planning, development, use, occupancy or operation thereof, or acquired
(whether delivered to the Land or stored elsewhere) for use or installation in
or on the Land or the Improvements, and all renewals and replacements of,
substitutions for and additions to the foregoing (the properties referred to in
this clause (b) being herein sometimes collectively called the “Accessories,”
all of which are hereby declared to be permanent accessions to the Land); (c) Grantor’s
rights, but not liability for any breach by Grantor, under all (i) plans
and specifications for the Improvements; (ii) insurance policies to the
extent transferable, or proceeds thereof (to the extent not transferable) (or
additional or supplemental coverage related thereto, including  from an insurance provider meeting the requirements
of the Loan Documents or from or through any state or federal 

 

DEED
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government sponsored program or entity), contracts and agreements for
the design, construction, operation or inspection of the Improvements; (iii) Grantor’s
rights in tenants’ security deposits, deposits with respect to utility services
to the Premises, rebates or refunds of impact fees or other taxes, assessments
or charges; (iv) permits, licenses, franchises, certificates, development
rights, commitments and rights for utilities, and other rights and privileges
obtained in connection with the Premises or the Accessories; (v) leases,
rents, royalties, bonuses, issues, profits, revenues and other benefits of the
Premises and the Accessories (without derogation of Article 3
hereof); (vi) as-extracted collateral produced from or allocated to the
Land including, without limitation, oil, gas and other hydrocarbons and other
minerals and all products processed or obtained therefrom, and the proceeds
thereof; and (vii) engineering, accounting, title, legal, and other
technical or business data concerning the Property which are in the possession
of Grantor or in which Grantor can otherwise grant a security interest; and (d) all
(i) accounts and proceeds (cash or non-cash and including payment
intangibles) of or arising from the properties, rights, titles and interests
referred to above in this Section 1.3, including but not limited to
proceeds of any sale, lease or other disposition thereof, proceeds of each
policy of insurance (or additional or supplemental coverage related thereto,
including  from an insurance provider
meeting the requirements of the Loan Documents or from or through any state or
federal government sponsored program or entity) relating thereto (including
premium refunds), proceeds of the taking thereof or of any rights appurtenant
thereto, including change of grade of streets, curb cuts or other rights of
access, by condemnation, eminent domain or transfer in lieu thereof for public
or quasi-public use under any Law, and proceeds arising out of any damage
thereto; (ii) all letter-of-credit rights (whether or not the letter of
credit is evidenced by a writing) Grantor now has or hereafter acquires
relating to the properties, rights, titles and interests referred to in this Section 1.3;
(iii) all commercial tort claims Grantor now has or hereafter acquires
relating to the properties, rights, titles and interests referred to in this Section 1.3;
and (iv) other interests of every kind and character which Grantor now has
or hereafter acquires in, to or for the benefit of the properties, rights,
titles and interests referred to above in this Section 1.3 and all
property used or useful in connection therewith, including but not limited to
rights of ingress and egress and remainders, reversions and reversionary rights
or interests; and if the estate of Grantor in any of the property referred to
above in this Section 1.3 is a leasehold estate, this conveyance
shall include, and the lien and security interest created hereby shall encumber
and extend to, all other or additional title, estates, interests or rights
which are now owned or may hereafter be acquired by Grantor in or to the
property demised under the lease creating the leasehold estate;

 

TO HAVE AND TO HOLD the
foregoing rights, interests and properties, and all rights, estates, powers and
privileges appurtenant thereto (herein collectively called the “Property”),
unto Trustee, and its successors or substitutes in this trust, in trust, in fee
simple forever, subject to the terms, provisions and conditions herein set
forth, to secure the obligations of Borrower under the Notes and Loan Documents
(as hereinafter defined) and all other indebtedness and matters defined as “Secured
Indebtedness” in Section 1.5 of this Mortgage.

 

Notwithstanding any of the
above, the lien of this Mortgage does not extend to the names “Trammell Crow
Residential”, “Alexan” and “TCR” or any variant thereof or the “TCR” logo or to
any written or printed material that contains any of such names or such logo,
and if Lender forecloses against the Premises, or Lender acquires the Premises
(whether through foreclosure, 

 

DEED
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deed
in lieu of foreclosure or other means), or if Lender takes possession of the
Premises, or if a receiver is appointed for the Premises, then Lender will not
use, and any person acquiring the Premises through foreclosure, deed in lieu of
foreclosure or other means shall not use, in connection with the Premises any
of the names “Trammell Crow Residential”, “Alexan” or “TCR” or any variant
thereof or the “TCR” logo.  The
limitation of names listed in this Section 1.3 does not imply a license or
right to use any other name, service mark, trademark or logo that is
proprietary to Grantor or any of its affiliates.

 

Section 1.4.            Security Interest.  Grantor hereby grants to Lender a security
interest in all of the Property which constitutes personal property or
fixtures, all proceeds and products thereof, and all supporting obligations
ancillary to or arising in any way in connection therewith (herein sometimes
collectively called the “Collateral”) to secure the obligations of
Grantor under the Notes and Loan Documents and all other indebtedness and
matters defined as Secured Indebtedness in Section 1.5 of this
Mortgage.  In addition to its rights
hereunder or otherwise, Lender shall have all of the rights of a secured party
under the UCC, as in effect from time to time, or under the Uniform Commercial
Code in force, from time to time, in any other state to the extent the same is
applicable Law.

 

Section 1.5.            Secured Indebtedness, Notes, Loan
Documents, Other Obligations.  This
Mortgage is made to secure and enforce the payment and performance of the
following promissory notes, obligations, indebtedness, duties and liabilities
and all renewals, extensions, supplements, increases, and modifications thereof
in whole or in part from time to time (collectively the “Secured Indebtedness”):  (a) the Promissory Note and all other
promissory notes given in substitution therefor or in modification, supplement,
increase, renewal or extension thereof, in whole or in part (such promissory
note or promissory notes, whether one or more, as from time to time renewed,
extended, supplemented, increased or modified and all other notes given in
substitution therefor, or in modification, renewal or extension thereof, in
whole or in part, being hereinafter called the “Notes”); (b)  all
indebtedness, liabilities, duties, covenants, promises and other obligations
whether joint or several, direct or indirect, fixed or contingent, liquidated
or unliquidated, and the cost of collection of all such amounts, owed by
Borrower to Lender now or hereafter incurred or arising pursuant to or
permitted by the provisions of the Notes, this Mortgage, or any other document
now or hereafter evidencing, governing, guaranteeing or securing the loan
evidenced by the Notes executed by Borrower or any Guarantor (as defined in the
Mezzanine Loan Agreement), including but not limited to any loan or credit
agreement, letter of credit or reimbursement agreement, tri-party financing
agreement or other agreement between Borrower and Lender, or among Borrower,
Lender and any other party or parties, pertaining to the repayment or use of
the proceeds of the loan evidenced by the Notes (the Notes, this Mortgage and
such other documents, as they or any of them may have been or may be from time
to time renewed, extended, supplemented, increased or modified, being herein
sometimes collectively called the “Loan Documents”; provided, however,
the Environmental Indemnity is not a Loan Document); (c) all future
advances made by Lender to Grantor or Borrower; provided, however, this clause (c) shall
not operate or be effective to constitute or require any assumption or payment
by any person, in any way, of any debt of any other person to the extent that
the same would violate or exceed the limit provided in any applicable usury or
other Law; and (d) the obligations of Grantor under this Mortgage.  Should the Secured 

 

DEED
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Indebtedness decrease or increase pursuant to the terms of the Notes or
otherwise, at any time or from time to time, this Mortgage shall retain its
priority position of record until (a) the termination of Lender’s
obligations to make advances under the Loan Documents and the full, final and
complete payment of all the Secured Indebtedness then outstanding, or (b) the
full release and termination of the liens and security interests created by
this Mortgage.

 

Section 1.6.            Subordinate Deed of Trust.  This Mortgage, the Promissory Note, the
Mezzanine Loan Agreement and the other Loan Documents, and all rights of Lender
under this Mortgage, are subject and subordinate to the Senior DOTs, the other
Senior Loan Documents and the rights of the Senior Lender arising
thereunder.  In the event of a conflict
between the provisions of the Senior Loan Documents and the provisions of the
Loan Documents, the provisions of the Senior Loan Documents shall control.  To the extent that Grantor is required to
perform any obligation under both the Senior Loan Documents and this Mortgage,
Grantor shall be deemed to have complied with the applicable provision of this
Mortgage as long as Grantor has performed the corresponding obligation for the
benefit of the Senior Lender pursuant to the Senior Loan Documents.  Reference is hereby made to that certain
Intercreditor and Subordination Agreement executed by Lender and the Senior
Lender, acting in its own capacity or as administrative agent on behalf of
itself and/or other lenders (the “Intercreditor Agreement”).  This Mortgage is subject to termination and
release upon the occurrence of certain events or circumstances as more
particularly described in Section 7 of the Intercreditor Agreement.

 

ARTICLE 2

 

Representations, Warranties
and Covenants

 

Section 2.1.            Grantor represents, warrants, and
covenants as follows:

 

(a)           Payment and Performance.  Grantor will timely and properly perform and
comply with all of the covenants, agreements, and conditions imposed upon it by
this Mortgage and will not permit an Event of Default to occur hereunder.  Time shall be of the essence in this
Mortgage.

 

(b)           Title and Permitted Encumbrances.  Grantor has, in Grantor’s own right, and
Grantor covenants to maintain, lawful, good and marketable title to the
Property, is lawfully seized and possessed of the Property and every part
thereof, and has the right to convey the same, free and clear of all liens,
charges, claims, security interests, and encumbrances except for (i) the
matters, if any, set forth under on Exhibit B attached hereto, but
only to the extent that the same are valid and subsisting and affect the Property,
(ii) the liens and security interests evidenced by this Mortgage, (iii) statutory
liens for real estate taxes, assessments and other governmental charges on the
Property which are not yet delinquent or are being contested in accordance with
Section 2.1(c) or comparable provisions of the documents
evidencing or securing the Senior Loan or the Commercial Loan, (iv) rights
of tenants under leases, (v)  the liens and security interests evidenced
by the Senior DOTs, (vi) other liens and security interests (if any) in
favor of Lender or otherwise approved by Lender, (vii) mechanics’ liens
being 

 

DEED
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contested in accordance with Section 2.1(l) or
comparable provisions of the documents evidencing or securing the Senior Loan
or the Commercial Loan, and (viii) the Junior Mezzanine DOT (the matters
described in the foregoing clauses (i), (ii), (iii), (iv), (v), (vi), (vii) and
(viii) being herein called the “Permitted Encumbrances”).  Grantor, and Grantor’s successors and
assigns, will warrant generally and forever defend title to the Property,
subject as aforesaid, to Trustee, and its successors or substitutes, against
the claims and demands of all persons claiming or to claim the same or any part
thereof.  Except as permitted in the
Mezzanine Loan Agreement, Grantor will punctually pay, perform, observe and
keep all covenants, obligations and conditions in or pursuant to any Permitted
Encumbrance and will not modify or permit modification of any Permitted
Encumbrance without the prior written consent of Lender.  Inclusion of any matter as a Permitted
Encumbrance does not constitute approval or waiver by Lender of any existing or
future violation or other breach thereof by Grantor, by the Property or
otherwise.  No part of the Property
constitutes all or any part of the homestead of Grantor.  If any right or interest of Lender in the
Property or any part thereof shall be endangered or questioned or shall be
attacked directly or indirectly, Trustee and Lender, or either of them (whether
or not named as parties to legal proceedings with respect thereto), are hereby
authorized and empowered to take such steps as in their discretion may be
proper for the defense of any such legal proceedings or the protection of such
right or interest of Lender, including the employment of independent counsel,
the prosecution or defense of litigation, and the compromise or discharge of
adverse claims.  All reasonable
expenditures so made of every kind and character shall be a demand obligation
(which obligation Grantor hereby promises to pay) owing by Grantor to Lender or
Trustee (as the case may be) with interest as provided in the Notes, and the
party (Lender or Trustee, as the case may be) making such expenditures shall be
subrogated to all rights of the person receiving such payment.

 

(c)           Taxes and Other Impositions.  Grantor will pay, or cause to be paid, all
taxes, assessments and other charges or levies imposed upon or against or with
respect to the Property or the ownership, use, occupancy or enjoyment of any
portion thereof, or any utility service thereto, as the same become due and
payable, including but not limited to all ad valorem taxes assessed against the
Property or any part thereof, and shall deliver promptly to Lender such
evidence of the payment thereof as Lender may require; provided, however, that
Grantor may contest the payment of any such tax or other imposition to the
extent and in the manner permitted by Law if and so long as the following
conditions are satisfied: (i) Grantor shall have notified Lender of
Grantor’s contest; (ii) Grantor shall diligently and in good faith contest
the same by appropriate legal proceedings which shall operate to prevent the
enforcement or collection of the same and the sale of the Property, or any part
thereof, to satisfy the same; (iii) Grantor shall have furnished to Lender
a cash deposit reasonably satisfactory to Lender, or an indemnity bond
reasonably satisfactory to Lender with a surety reasonably satisfactory to Lender,
in the amount of the tax or other imposition plus a reasonable additional sum
to pay all costs, interest and penalties that may be imposed or incurred in
connection therewith (or in the statutory amount, in the case of a bond
authorized by statute), to assure payment of the matters under contest and to
prevent any sale or forfeiture of the Property or any part thereof, but in each
case, only to the extent Grantor has not furnished a cash deposit or indemnity
bond to the Senior Lender pursuant to the Senior Loan Documents; (iv) Grantor
shall promptly upon final determination thereof pay the amount of any such tax
or other imposition so determined, together with all costs, interest 

 

DEED
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and penalties which may be payable in connection therewith; and (v) the
failure to pay the tax or other imposition does not constitute an event of
default under any other deed of trust, mortgage or security interest covering
or affecting any part of the Property and does not subject Lender to any civil
or criminal liability or to any damages or expense not reimbursed by
Grantor.  Notwithstanding the foregoing,
Grantor shall immediately upon request of Lender pay (and if Grantor shall fail
so to do, Lender may, but shall not be required to, pay or cause to be
discharged or bonded against) any such tax or other imposition notwithstanding
such contest if in the reasonable opinion of Lender, the Property shall be in
jeopardy or in danger of being forfeited or foreclosed.  Lender may pay over any such cash deposit or
part thereof to the claimant entitled thereto at any time when, in the judgment
of Lender, the entitlement of such claimant is established.

 

(d)           Insurance. 
Grantor shall obtain and maintain at no expense to Lender or Trustee
insurance in respect of the Property by the Mezzanine Loan Agreement.  Grantor shall cause all premiums on policies
required hereunder to be paid as they become due and payable and promptly
deliver to Lender evidence reasonably satisfactory to Lender of the timely
payment thereof.  If any loss occurs at
any time when Grantor has failed to perform Grantor’s covenants and agreements
in this paragraph with respect to any insurance payable because of loss
sustained to any part of the Property, whether or not such insurance is
required by Lender, then subject to the rights of the Senior Lender, Lender
shall nevertheless be entitled to the benefit of all insurance covering the
loss and held by or for Grantor, to the same extent as if it had been made
payable to Lender.  Upon any foreclosure
hereof or transfer of title to the Property in extinguishment of the whole or
any part of the Secured Indebtedness, all of Grantor’s right, title and
interest in and to the insurance policies (to the extent transferable) referred
to in this Section (including unearned premiums) and all proceeds payable
thereunder shall thereupon vest in the purchaser at foreclosure or other such
transferee, to the extent permissible under such policies, subject to the
rights of the Senior Lender, Lender shall have the right (but not the
obligation) to receive the proceeds of, all insurance for loss of or damage to
the Property, and if an Event of Default exists (after taking into
consideration applicable notice, grace and cure periods) to make proof of loss
for, settle and adjust any claim under such insurance, regardless of whether or
not such insurance policies are required by Lender, and the reasonable expenses
incurred by Lender in the adjustment and collection of insurance proceeds shall
be a part of the Secured Indebtedness and shall be due and payable to Lender on
demand.  Lender shall not be, under any
circumstances, liable or responsible for failure to collect or exercise diligence
in the collection of any of such proceeds or for the obtaining, maintaining or
adequacy of any insurance or for failure to see to the proper application of
any amount paid over to Grantor or to any third party.  Any such proceeds received by Lender shall be
applied as provided in the applicable provisions of the Mezzanine Loan
Agreement.

 

(e)           Reserve for Insurance, Taxes and
Assessments.  Upon the occurrence of
an Event of Default (after taking into consideration applicable notice, grace
and cure periods), in order to secure the performance and discharge of Grantor’s
obligations referred to below, but not in lieu of such payment and performance,
Grantor will deposit with Lender a sum equal to real estate taxes, assessments
and charges (which charges for the purposes of this paragraph shall include
without limitation any recurring charge which could result in a lien against
the Property) against 

 

DEED
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the Property for the current year and the premiums for such policies of
insurance for the current year (to the extent such premiums have not been
paid), all as estimated by Lender and prorated to the end of the calendar month
following the month during which Lender’s request is made, and thereafter will
deposit with Lender, on each date when an installment of principal and/or
interest is due on the Notes, sufficient funds (as estimated from time to time
by Lender) to permit Lender to pay at least fifteen (15) days prior to the due
date thereof, the next maturing real estate taxes, assessments and charges and
premiums for such policies of insurance; provided, however, Grantor shall not
be obligated to make any such deposits to the extent it makes deposits of a
similar character with the Senior Lender under the Senior Loan Documents.  All such funds shall be deposited into an
interest bearing account and, provided that no Event of Default or event which,
with notice or passage of time or both, would constitute an Event of Default
has occurred and is then continuing, Grantor shall, upon written request to
Lender, be entitled to receive the interest accrued on such account.  Lender shall have the right to rely upon tax
information furnished by applicable taxing authorities in the payment of such
taxes or assessments and shall have no obligation to make any protest of any
such taxes or assessments.  To the extent
permitted by Law, any excess over the amounts required for such purposes shall
be held by Lender for future credit against amounts due under this paragraph or
refunded to Grantor, at Lender’s option, and any deficiency in such funds so
deposited shall be made up by Grantor upon demand of Lender.  All such funds so deposited (including any
interest to which Grantor is not entitled under the provisions above) shall be
applied by Lender toward the payment of such taxes, assessments, charges and
premiums when statements therefor are presented to Lender by Grantor (which
statements shall be presented by Grantor to Lender a reasonable time before the
applicable amount is due); provided, however, that, if an Event of Default
shall then exist hereunder (after taking into consideration applicable notice,
grace and cure periods), such funds shall be applied first to past or currently
due taxes, assessments, charges or premiums, together with any penalties or
late charges with respect thereto, and the balance may be applied at Lender’s
option to the Secured Indebtedness in the order determined by Lender in its
sole discretion.  The conveyance or
transfer of Grantor’s interest in the Property for any reason (including
without limitation the foreclosure of a subordinate lien or security interest
or a transfer by operation of Law) shall constitute an assignment or transfer
of Grantor’s interest in and rights to such funds held by Lender under this
paragraph but subject to the rights of Lender hereunder.

 

(f)            Condemnation. 
Immediately upon obtaining knowledge thereof, Grantor shall notify
Lender of any threatened or pending proceeding for condemnation affecting the
Property or arising out of damage to the Property, and Grantor shall, at
Grantor’s expense, diligently prosecute any such proceedings, and shall consult
with Lender and its attorneys and experts, and cooperate with them in the
carrying on the defense of any such proceedings.  Lender shall have the right (but not the
obligation) to participate in any such proceeding and to be represented by
counsel of its own choice.  Subject to
the rights of the administrative agent and/or lenders in respect of the Senior
Loan, the Commercial Loan or the Senior DOTs, as applicable, Lender shall be
entitled to receive all sums which may be awarded or become payable to Grantor
for the condemnation of the Property, or any part thereof, for public or
quasi-public use, or by virtue of private sale in lieu thereof, and any sums
which may be awarded or become payable to Grantor for injury or damage to the
Property.  To the extent permitted by
applicable Law and except as otherwise expressly provided herein, Grantor
hereby specifically, unconditionally and 

 

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irrevocably
waives all rights of a property owner granted under applicable law which
provide for allocation of condemnation proceeds between a property owner and a
lienholder, including the provisions of NRS 37.115.  Grantor shall, promptly upon request of
Lender, execute such additional assignments and other documents as may be
necessary from time to time to permit such participation and, subject to the
rights of administrative agent and/or lenders in respect of the Senior Loan,
the Commercial Loan or the Senior DOTs, as applicable, to enable Lender to
collect and receipt for any such sums. 
Subject to the rights of the administrative agent and/or lenders in
respect of the Senior Loan, the Commercial Loan or the Senior DOTs, as
applicable, all such sums are hereby assigned to Lender, and shall be applied
as provided in the applicable provisions of the Mezzanine Loan Agreement.  In any event the unpaid portion of the
Secured Indebtedness shall remain in full force and effect and the payment
thereof shall not be excused.  Lender
shall not be, under any circumstances, liable or responsible for failure to
collect or to exercise diligence in the collection of any such sum or for
failure to see to the proper application of any amount paid over to
Grantor.  Lender is hereby authorized, in
the name of Grantor, to execute and deliver valid acquittances for, and to
appeal from, any such award, judgment or decree.  All reasonable costs and expenses (including
but not limited to reasonable attorneys’ fees) incurred by Lender in connection
with any condemnation shall be a demand obligation owing by Grantor (which
Grantor hereby promises to pay) to Lender pursuant to this Mortgage.

 

(g)           Compliance with Legal Requirements.  Grantor, the Property and the use, operation
and maintenance thereof and all activities thereon do and shall comply in all
material respects with all applicable Legal Requirements (hereinafter defined).  The Property is not, and shall not be,
dependent on any other property or premises or any interest therein other than
the Property to fulfill any requirement of any Legal Requirement.  Grantor shall not, by act or omission, permit
any building or other improvement not subject to the lien of this Mortgage to
rely on the Property or any interest therein to fulfill any requirement of any
Legal Requirement.  No improvement upon
or use of any part of the Property constitutes a nonconforming use under any
zoning Law or similar Law.  The Property
will contain within its boundaries a sufficient number of parking spaces to
satisfy all Laws.  There are no written
or oral agreements with any third parties regarding parking, ingress and
egress, use or maintenance of common areas or otherwise except as provided in
the Permitted Encumbrances.  Grantor has
obtained or will obtain when required and shall preserve and keep in full force
and effect, all requisite zoning, utility, building, health, environmental and
operating permits from the governmental authorities having jurisdiction over
the Property.  If Grantor receives a
notice or claim from any person that the Property, or any use, activity,
operation or maintenance thereof or thereon, is not in compliance with any Legal
Requirement, Grantor will promptly furnish a copy of such notice or claim to
Lender.  Without limiting the foregoing,
Grantor hereby agrees that upon receipt of any notice of noncompliance with
restrictive covenants affecting the Property because of the encroachment of the
Improvements over the building line, Grantor shall immediately (x) provide
Lender with written notice thereof and (y) commence to cure such
noncompliance and pursue such cure to completion. Grantor has received no
notice and has no knowledge of any such noncompliance.  As used in this Mortgage:  (i) the term “Legal Requirement” means
any Law (hereinafter defined), agreement, covenant, restriction, easement or
condition (including, without limitation of the foregoing, any condition or
requirement imposed by any insurance or surety company) that is binding on
Grantor or the Property, as any of the same now exists or may be 

 

DEED
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changed or amended or come into effect in the future; and (ii) the
term “Law” means any federal, state or local law, statute, ordinance, code,
rule, regulation, license, permit, authorization, decision, order, injunction
or decree, domestic or foreign.

 

(h)           Condition of Property.  Upon payment of applicable connection fees,
the Property will be separately served by electric, gas, storm and sanitary
sewers, sanitary water supply, telephone and other utilities required for the
use thereof as represented by Grantor at or within the boundary lines of the
Property or at points from which extensions of facilities contemplated by the
Mezzanine Loan Agreement will originate. 
All streets, alleys and easements necessary to serve the Property for
the use represented by Grantor have been completed and are serviceable and (i) such
streets have been dedicated and accepted by applicable governmental entities, (ii) such
streets benefit the Property pursuant to valid and binding easement agreements
which permit Grantor and its successors, assigns and mortgagees, the
uninterrupted use of the same for ingress and egress to and from the Property
or (iii) the right-of-way for such streets have been established and such
streets will be constructed as part of the improvements provided for in the
Mezzanine Loan Agreement.  To Grantor’s
knowledge, design conditions of the Property are such that no drainage or
surface or other water will, in any actionable way, drain across or rest upon
either the Property or land of others. 
No portion of any of the buildings that are or are to be part of the
Property is within a flood plain except as shown on a survey delivered to
Lender, and none of the Improvements creates (or when constructed will create)
an encroachment over, across or upon any of the Property boundary lines, rights
of way or easements, and no building or other improvement on adjoining land
creates such an encroachment onto the Property except as shown on a survey
delivered to Lender.

 

(i)            Maintenance, Repair and
Restoration.  Grantor will keep the
Property in first class order, repair, operating condition and appearance,
causing all necessary repairs, renewals, replacements, additions and
improvements to be promptly made, and will not allow any of the Property to be
misused, abused or wasted or to deteriorate. 
Notwithstanding the foregoing, Grantor will not, without the prior
written consent of Lender, (i) remove from the Property any fixtures or
personal property covered by this Mortgage except such as is replaced by
Grantor by an article of equal suitability and value, owned by Grantor, free
and clear of any lien or security interest (except Permitted Encumbrances and
the liens and security interests created by this Mortgage and the other Loan
Documents), or (ii) make any structural alteration to the Property or any
other alteration thereto which impairs the value thereof, or (iii) make
any alteration to the Property involving 
any single estimated expenditure exceeding $300,000, except pursuant to
plans and specifications approved in writing by Lender.  Upon request of Lender but no more often than
once in any twelve month period (unless Lender determines in its good faith
business judgment, that it needs a current inventory more frequently), Grantor
will deliver to Lender an inventory describing and showing the make, model, and
location of all fixtures and personal property used in the management,
maintenance and operation of the Property owned by Grantor with a certification
by Grantor that said inventory is a true and complete schedule of all such
fixtures and personal property owned by Grantor used in the management,
maintenance and operation of the Property, that such items specified in the
inventory constitute all of the fixtures and personal property required in the
management, maintenance and operation of the Property except for items
identified or leased by Grantor in accordance with this Mortgage and other 

 

DEED
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items owned by service providers and that all such items are owned by
Grantor free and clear of any lien or security interest (except Permitted
Encumbrances and the liens and security interests created by this Mortgage and
the other Loan Documents).  If any act or
occurrence of any kind or nature (including any condemnation or any casualty for
which insurance has not been obtained or is not obtainable) shall result in
damage to or loss or destruction of the Property in excess of $75,000.00,
Grantor shall give prompt notice thereof to Lender and, unless Lender agrees
otherwise, Grantor shall promptly, at Grantor’s sole cost and expense and
regardless of whether insurance or condemnation proceeds (if any) shall be
available or sufficient for the purpose, secure the Property as necessary and
commence and continue diligently to completion to restore, repair, replace and
rebuild the Property as nearly as possible to its value, condition and
character immediately prior to the damage, loss or destruction.

 

(j)            No Other Liens.   Grantor will not, without the prior written
consent of Lender, create, place or permit to be created or placed, or through
any act or failure to act, acquiesce in the placing of, or allow to remain, any
deed of trust, mortgage, voluntary or involuntary lien, whether statutory,
constitutional or contractual, security interest, encumbrance or charge, or
conditional sale or other title retention document, against or covering the
Property, or any part thereof, other than the Permitted Encumbrances,
regardless of whether the same are expressly or otherwise subordinate to the
lien or security interest created in this Mortgage, and should any of the
foregoing become attached hereafter in any manner to any part of the Property
without the prior written consent of Lender, Grantor will cause the same to be
promptly discharged and released; provided, however, that Grantor may contest
involuntary mechanics’ and materialmen’s liens to the extent and in the manner
permitted by Law if and so long as Grantor shall have satisfied all of the
conditions of Section 2.1 (c) (regarding contest by
Grantor of taxes or other impositions), which conditions shall also apply in
all respects to Grantor’s privilege to contest involuntary mechanics’ or
materialmen’s liens under this paragraph. 
Grantor will own all parts of the Property and will not acquire any
fixtures, equipment or other property (including software embedded therein)
forming a part of the Property pursuant to a lease, license, security agreement
or similar agreement, whereby any party has or may obtain the right to
repossess or remove same, without the prior written consent of Lender, except
that Grantor may lease certain furniture and accessories for display in the
model units on the Property, certain furniture and equipment for the clubhouse
and management offices and cable, television, telephone, internet access,
laundry and security equipment pursuant to lease agreements approved by
Lender.  If Lender consents to the
voluntary grant by Grantor of any deed of trust or mortgage, lien, security
interest, or other encumbrance (other than the Permitted Encumbrances)
(hereinafter called “Subordinate Mortgage”) covering any of the Property
or if the foregoing prohibition is determined by a court of competent
jurisdiction to be unenforceable as to a Subordinate Mortgage, any such
Subordinate Mortgage shall contain express covenants to the effect that:

 

(1)           the
Subordinate Mortgage is unconditionally subordinate to this Mortgage;

 

(2)           if
any action (whether judicial or pursuant to a power of sale) shall be
instituted to foreclose or otherwise enforce the Subordinate Mortgage, no
tenant of any of the Leases (hereinafter defined) shall be named as a party
defendant, and no action shall 

 

DEED
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be taken that would terminate any occupancy or tenancy
without the prior written consent of Lender;

 

(3)           Rents,
(hereinafter defined) if collected by or for the holder of the Subordinate
Mortgage, shall be applied first to the payment of the Senior Loan and the
Secured Indebtedness then due and expenses incurred in the ownership, operation
and maintenance of the Property, prior to being applied to any indebtedness
secured by the Subordinate Mortgage;

 

(4)           written
notice of default under the Subordinate Mortgage and written notice of the
commencement of any action (whether judicial or pursuant to a power of sale) to
foreclose or otherwise enforce the Subordinate Mortgage or to seek the
appointment of a receiver for all or any part of the Property shall be given to
Lender with or immediately after the occurrence of any such default or
commencement; and

 

(5)           neither
the holder of the Subordinate Mortgage, nor any purchaser at foreclosure
thereunder, nor anyone claiming by, through or under any of them shall succeed
to any of Grantor’s rights hereunder without the prior written consent of
Lender.

 

(k)           Operation of Property.  Grantor will operate the Property in a good
and workmanlike manner and in accordance with all Legal Requirements and will
pay all fees or charges of any kind in connection therewith (except for fees
and charges that Grantor is contesting in good faith in accordance with the
provisions of this Mortgage).  Grantor
will keep the Property occupied so as not to impair the insurance carried
thereon.  Grantor will not use or occupy,
or conduct any activity on, or allow the use or occupancy of or the conduct of
any activity on, the Property in any manner which violates any Legal
Requirement or which constitutes a public or private nuisance or which makes
void, voidable or cancelable, or increases the premium of, any insurance then
in force with respect thereto.  Grantor
will not initiate or permit any zoning reclassification of the Property or seek
any variance under existing zoning ordinances applicable to the Property or use
or permit the use of the Property in such a manner which would result in such
use becoming a nonconforming use under applicable zoning ordinances or any
other Legal Requirement.  Grantor will
not impose any easement, restrictive covenant or encumbrance upon the Property,
execute or file any subdivision plat affecting the Property or consent to the
annexation of the Property to any municipality, without the prior written
consent of Lender.  Grantor will not do
or suffer to be done any intentional act whereby the value of any part of the
Property may be lessened; provided, however, this sentence is not intended and
shall not be construed, to prohibit Grantor from making adjustments to the
rental rates for apartment units in the Property that are necessary to meet
market rental rates for apartment projects of similar quality located in the
general vicinity of the Property. 
Grantor will preserve, protect, renew, extend and retain all material
rights and privileges granted for or applicable to the Property.  Without the prior written consent of Lender,
there shall be no drilling or exploration for or extraction, removal or
production of any mineral, hydrocarbon, gas, natural element, compound or
substance (including sand and gravel) from the surface or subsurface of the
Land regardless of the depth thereof or the method of mining or extraction
thereof.

 

DEED
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(l)            Debts for Construction, Etc.  Grantor will cause all debts and liabilities
of any character (including without limitation all debts and liabilities for
labor, material and equipment (including software embedded therein) and all
debts and charges for utilities servicing the Property) incurred in the
construction, maintenance, operation and development of the Property to be
promptly paid, subject to Grantor’s right to contest the validity or amounts
thereof in accordance with procedures like those in Section 2.1(c).

 

(m)          Financial Matters.  Grantor is solvent after giving effect to all
borrowings contemplated by the Loan Documents and no proceeding under any
Debtor Relief Law (hereinafter defined) is pending (or, to Grantor’s knowledge,
threatened) by or against Grantor, as a debtor.

 

(n)           Status of Grantor; Suits and
Claims; Loan Documents.  If Grantor
is a corporation, partnership, limited liability company, or other legal
entity, Grantor is and will continue to be (i) duly organized, validly
existing and in good standing under the laws of its state of organization, (ii) authorized
to do business in, and in good standing in, each state in which the Property is
located, and (iii) possessed of all requisite power and authority to carry
on its business and to own and operate the Property.  This Mortgage has been duly authorized,
executed and delivered by Grantor, and the obligations hereunder and the
performance hereof by Grantor in accordance with its terms are and will
continue to be within Grantor’s power and authority (without the necessity of
joinder or consent of any other person), are not and will not be in
contravention of any Legal Requirement or any other document or agreement to
which Grantor or the Property is subject, and do not and will not result in the
creation of any encumbrance against any assets or properties of Grantor, except
for the liens of the Permitted Encumbrances and as otherwise expressly
contemplated by the Loan Documents. 
There is no suit, action, claim, investigation, inquiry, proceeding or
demand pending (or, to Grantor’s knowledge, threatened) against Grantor or
which affects the Property (including, without limitation, any which challenges
or otherwise pertains to Grantor’s title to the Property) or the validity,
enforceability or priority of any of the Loan Documents, except as has been
disclosed in writing to Lender in connection with the loan evidenced by the
Notes.  There is no judicial or
administrative action, suit or proceeding pending (or, to Grantor’s knowledge,
threatened) against Grantor, except as has been disclosed in writing to Lender
in connection with the loan evidenced by the Notes.  This Mortgage constitutes a legal, valid and
binding obligation of Grantor enforceable in accordance with its terms, except
as the enforceability hereof may be limited by Debtor Relief Laws (hereinafter
defined) and except as the availability of certain remedies may be limited by
general principles of equity.  Grantor is
not a “foreign person” within the meaning of the Internal Revenue Code of 1986,
as amended, Sections 1445 and 7701 (i.e. Grantor is not a non-resident alien,
foreign corporation, foreign partnership, foreign trust or foreign estate as
those terms are defined therein and in any regulations promulgated thereunder).  Grantor’s exact legal name is correctly set
forth at the end of this Mortgage.  If
Grantor is not an individual, Grantor is an organization of the type and (if
not an unregistered entity) is incorporated in or organized under the laws of
the state specified in the introductory paragraph of this Mortgage.  If Grantor is an unregistered entity
(including, without limitation, a general partnership) it is organized under
the laws of the state specified in the introductory paragraph of this
Mortgage.  Grantor will not cause or
permit any change to be made in its name, identity (including its trade 

 

DEED OF TRUST — Page 15

 

name or names), or corporate or partnership structure, unless Grantor
shall have notified Lender in writing of such change at least 30 days prior to
the effective date of such change, and shall have first taken all action
reasonably required by Lender for the purpose of further perfecting or
protecting the lien and security interest of Lender in the Property.  In addition, Grantor shall not change its
corporate or partnership structure without first obtaining the prior written
consent of Lender.  Grantor’s principal
place of business and chief executive office, and the place where Grantor keeps
its books and records, including recorded data of any kind or nature,
regardless of the medium of recording including, without limitation, software,
writings, plans, specifications and schematics concerning the Property, will be
(unless Grantor notifies Lender of any change in writing at least 30 days prior
to the date of such change) the address of Grantor set forth at the end of this
Mortgage and such other additional addresses within the United States of which
Grantor has notified Lender.  Grantor’s
organizational identification number, if any, assigned by the state of
incorporation or organization is correctly set forth on the first page of
this Mortgage.  Grantor shall promptly
notify Lender (i) of any change of its organizational identification
number, or (ii) if Grantor does not now have an organization
identification number and later obtains one, of such organizational
identification number.

 

(o)           Certain Environmental Matters.  To the extent applicable to Grantor, Grantor
shall comply with the terms and covenants and agreements with respect to
environmental matters of that certain Environmental Indemnity Agreement
pertaining to the Property (the “Environmental Indemnity”) among
Borrower and Lender.

 

(p)           Further Assurances.  Grantor will, promptly on request of Lender, (i) correct
any defect, error or omission which may be discovered in the contents,
execution or acknowledgment of this Mortgage; (ii) execute, acknowledge,
deliver, procure and record and/or file such further documents (including,
without limitation, further deeds of trust, security agreements, and
assignments of rents or leases) and do such further acts as are, in Lender’s
reasonable judgment, necessary, desirable or proper to carry out more
effectively the purposes of this Mortgage, to more fully identify and subject
to the liens and security interests hereof any property intended to be covered
hereby (including specifically, but without limitation, any renewals,
additions, substitutions, replacements, or appurtenances to the Property) or as
deemed advisable by Lender to protect the lien or the security interest
hereunder against the rights or interests of third persons; and (iii) provide
such certificates, documents, reports, information, affidavits and other
instruments and do such further acts as may be necessary, desirable or proper
in the reasonable determination of Lender to enable Lender to comply with the
requirements or requests of any agency having jurisdiction over Lender or any
examiners of such agencies with respect to the Grantor or the Property;
provided, however, such further acts shall be consistent with the terms
contained in this Mortgage and shall not unreasonably alter the rights and
obligations of Grantor under this Mortgage. 
Grantor shall pay all costs connected with any of the foregoing, which
shall be a demand obligation owing by Grantor (which Grantor hereby promises to
pay) to Lender pursuant to this Mortgage.

 

(q)           Reserved.

 

(r)            Reserved.

 

DEED OF TRUST — Page 16

 

(s)           Taxes on Notes or Mortgage.  In the event of the enactment after this date
of any Law of any governmental entity applicable to Lender, the Notes, the
Property or this Mortgage deducting from the value of property for the purpose
of taxation any lien or security interest thereon, or imposing upon Lender the
payment of the whole or any part of the taxes or assessments or charges or
liens herein required to be paid by Grantor, or changing in any way the Laws
relating to the taxation of deeds of trust or mortgages or security agreements
or debts secured by deeds of trust or mortgages or security agreements or the
interest of the mortgagee or secured party in the property covered thereby, or
the manner of collection of such taxes, so as to affect this Mortgage or the
Secured Indebtedness or Lender, then, and in any such event, Grantor, upon
demand by Lender, shall pay such taxes, assessments, charges or liens, or
reimburse Lender therefor; provided, however, that if in the opinion of counsel
for Lender (i) it might be unlawful to require Grantor to make such
payment or (ii) the making of such payment might result in the imposition
of interest beyond the maximum amount permitted by Law, then and in such event,
Lender may elect, to the extent permitted by applicable law, by notice in
writing given to Grantor, to declare all of the Secured Indebtedness to be and
become due and payable sixty (60) days from the giving of such notice.

 

(t)            Statement Concerning Mortgage.  Grantor shall at any time and from time to
time furnish within seven (7) days of request by Lender a written
statement in such form as may be reasonably required by Lender stating that (i) this
Mortgage is a valid and binding obligation of Grantor, enforceable against
Grantor in accordance with its terms; (ii) this Mortgage has not been
released, subordinated or modified; and (iii) Grantor has no offsets or
defenses against the enforcement of this Mortgage.  If any of the foregoing statements are
untrue, Grantor shall, alternatively, specify the reasons therefor.

 

Section 2.2.            Performance by Lender on Grantor’s
Behalf.  Grantor agrees that, if
Grantor fails to perform any act or to take any action which under this
Mortgage, Grantor is required to perform or take, and if such failure then
constitutes an Event of Default hereunder (whether or not the Secured
Indebtedness has been accelerated), Lender, in Grantor’s name or its own name,
may, but shall not be obligated to, perform or cause to be performed such act
or take such action or pay such money, and any expenses so incurred by Lender
and any money so paid by Lender, shall be a demand obligation owing by Grantor
to Lender (which obligation Grantor hereby promises to pay), shall be a part of
the Secured Indebtedness and Lender, upon making such payment, shall be
subrogated to all of the rights of the person, entity or body politic receiving
such payment.  After the occurrence and
during the continuance of an Event of Default, Lender shall have the right to
enter upon the Property at any time and from time to time for any such
purposes.  No such payment or performance
by Lender shall waive or cure any Event of Default or waive any right, remedy
or recourse of Lender.  Any such payment
may be made by Lender in reliance on any statement, invoice or claim without
inquiry into the validity or accuracy thereof. 
Each amount due and owing by Grantor to Lender pursuant to this Mortgage
shall bear interest, from the date such amount becomes due until paid, whether
before or after a sale as described in Section 5.2 at the Default
Interest Rate (as defined in the Mezzanine Loan Agreement) but never in excess
of the maximum nonusurious amount permitted by applicable Law, which interest
shall be payable to Lender on demand; and all such amounts, together with such
interest thereon, shall automatically and without notice be a part of the 

 

DEED OF TRUST — Page 17

 

Secured Indebtedness.  The amount
and nature of any expense by Lender hereunder and the time when paid shall be
fully established by the certificate of Lender or any of Lender’s officers or
agents.

 

Section 2.3.            Absence of Obligations of Lender
with Respect to Property. 
Notwithstanding anything in this Mortgage to the contrary, including,
without limitation, the definition of “Property” and/or the provisions of Article 3
hereof, (i) to the extent permitted by applicable Law, the Property is
composed of Grantor’s rights, title and interests therein but not Grantor’s
obligations, duties or liabilities pertaining thereto, (ii) Lender does
not assume or shall have any obligations, duties or liabilities in connection
with any portion of the items described in the definition of “Property” herein,
either prior to or after obtaining title to such Property, whether by
foreclosure sale, the granting of a deed in lieu of foreclosure or otherwise,
and (iii) Lender may, at any time prior to or after the acquisition of
title to any portion of the Property as above described, advise any party in
writing as to the extent of Lender’s interest therein and/or expressly
disaffirm in writing any rights, interests, obligations, duties and/or
liabilities with respect to such Property or matters related thereto.  Without limiting the generality of the
foregoing, it is understood and agreed that Lender shall not have any
obligations, duties or liabilities prior to or after acquisition of title to
any portion of the Property, as lessee under any lease or purchaser or seller
under any contract or option unless Lender elects otherwise by written notification.

 

Section 2.4.            Authorization to File Financing
Statements; Power of Attorney. 
Grantor hereby authorizes Lender at any time and from time to time to
file any initial financing statements, amendments thereto and continuation
statements as authorized by applicable Law, required by Lender to establish or
maintain the validity, perfection and priority of the security interests
granted in this Mortgage.  Grantor also
ratifies its authorization for Lender to have filed any like initial financing
statements, amendments thereto or continuation statements if filed prior to the
date of this Mortgage.  Grantor hereby
irrevocably constitutes and appoints Lender and any officer or agent of Lender,
with full power of substitution, as its true and lawful attorneys-in-fact with
full irrevocable power and authority in the place and stead of Grantor or in
Grantor’s own name to execute in Grantor’s name any such documents and to
otherwise carry out the purposes of this Section 2.4, to the extent
that Grantor’s authorization above is not sufficient.  To the extent permitted by law, Grantor
hereby ratifies all acts said attorneys-in-fact shall lawfully do, have done in
the past or cause to be done in the future by virtue hereof.  This power of attorney is a power coupled
with an interest and shall be irrevocable.

 

ARTICLE 3

Assignment of Rents and Leases

 

Section 3.1.            Assignment.  Subject to the rights of the administrative
agent and/or lenders in respect of the Senior Loan, the Commercial Loan or the
Senior DOTs, as applicable, Grantor hereby assigns to Lender all Rents (as
hereinafter defined) and all of Grantor’s rights in and under all Leases
(hereinafter defined).  So long as no
Event of Default (hereinafter defined) has occurred, Grantor shall have a
license (which license shall terminate automatically and 

 

DEED
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without further notice upon the occurrence of an Event of Default) to
collect, but not prior to accrual, the Rents under the Leases and, where applicable,
subleases (such Rents to be held in trust for Lender, subject to the rights of
the administrative agent and/or lenders in respect of the Senior Loan, the
Commercial Loan or the Senior DOTs, as applicable) and to otherwise deal with
all Leases as permitted by this Mortgage. 
Each month, provided no Event of Default has occurred, Grantor may
retain such Rents as were collected that month and held in trust for Lender;
provided, however, that all Rents collected by Grantor shall be applied solely
to the ordinary and necessary expenses of owning and operating the Property and
obligations under the Senior Loan Documents or paid to Lender before
application to any other purpose. 
Subject to the rights of the administrative agent and/or lenders in
respect of the Senior Loan, the Commercial Loan or the Senior DOTs, as
applicable, upon the revocation of such license, Lender shall have the right,
power and privilege (but shall be under no duty) to demand possession of the
Rents, which demand shall to the fullest extent permitted by applicable Law be
sufficient action by Lender to entitle Lender to immediate and direct payment
of the Rents (including delivery to Lender of Rents collected for the period in
which the demand occurs and for any subsequent period), for application as
provided in this Mortgage.  Subject to
the rights of the administrative agent and/or lenders in respect of the Senior
Loan, the Commercial Loan or the Senior DOTs, as applicable, Grantor hereby
authorizes and directs the tenants under the Leases to pay Rents to Lender upon
written demand by Lender, without further consent of Grantor, without any
obligation of such tenants to determine whether an Event of Default has in fact
occurred and regardless of whether Lender has taken possession of any portion
of the Property, and the tenants may rely upon any written statement delivered
by Lender to the tenants.  Any such
payments to Lender shall constitute payments to Grantor under the Leases, and,
subject to the rights of the administrative agent and/or lenders in respect of
the Senior Loan, the Commercial Loan or the Senior DOTs, as applicable, Grantor
hereby irrevocably appoints Lender as its attorney-in-fact to do all things,
after an Event of Default, which Grantor might otherwise do with respect to the
Property and the Leases thereon, including, without limitation, (i) collecting
Rents with or without suit and applying the same, less expenses of collection,
to the Senior Loan, with any excess applied to any of the obligations secured
hereunder or under the Loan Documents or to expenses of operating and
maintaining the Property, at the option of the Lender, all in such manner as
may be determined by Lender, (ii) leasing, in the name of Grantor, the
whole or any part of the Property which may become vacant, and (iii) employing
agents therefor and paying such agents reasonable compensation for their
services.  The curing of such Event of
Default, unless other Events of Default also then exist, shall entitle Grantor
to recover its aforesaid license to do any such things which Grantor might
otherwise do with respect to the Property and the Leases thereon and to again
collect such Rents.  The powers and
rights granted in this paragraph shall be in addition to the other remedies
herein provided for upon the occurrence of an Event of Default and may be
exercised independently of or concurrently with any of said remedies.  Nothing in the foregoing shall be construed
to impose any obligation upon Lender to exercise any power or right granted in
this paragraph, or to assume any liability under any Lease of any part of the
Property (and no liability shall attach to Lender for failure or inability to
collect any Rents under any such Lease), or as constituting Lender a mortgagee
in possession in the absence of the actual taking of possession of the Property
by Lender, or as constituting an action, rendering any of Grantor’s obligations
to Lender unenforceable, in violation of any of the provisions of NRS Section 40.430
or otherwise limiting any rights 

 

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available to Lender.  The
assignment contained in this Section shall become null and void upon the
release of this Mortgage.  As used
herein: (i) “Lease” means each existing or future lease, sublease
(to the extent of Grantor’s rights thereunder) or other agreement under the
terms of which any person has or acquires any right to occupy or use the
Property, or any part thereof, or interest therein, and each existing or future
guaranty of payment or performance thereunder, and all extensions, renewals,
modifications and replacements of each such lease, sublease, agreement or
guaranty; and (ii) “Rents” means all of the rents, revenue, income,
profits and proceeds derived and to be derived from the Property or arising
from the use or enjoyment of any portion thereof or from any Lease, including
but not limited to the proceeds from any negotiated lease termination or buyout
of such Lease, liquidated damages following default under any such Lease, all proceeds
payable under any policy of insurance covering loss of rents resulting from
untenantability caused by damage to any part of the Property, all of Grantor’s
rights to recover monetary amounts from any tenant in bankruptcy including,
without limitation, rights of recovery for use and occupancy and damage claims
arising out of Lease defaults, including rejections, under any applicable
Debtor Relief Laws (as defined in the Loan Agreement), together with any sums
of money that may now or at any time hereafter be or become due and payable to
Grantor by virtue of any and all royalties, overriding royalties, bonuses,
delay rentals and any other amount of any kind or character arising under any
and all present and all future oil, gas, mineral and mining leases covering the
Property or any part thereof, and all proceeds and other amounts paid or owing
to Grantor under or pursuant to any and all contracts and bonds relating to the
construction or renovation of the Property.

 

Section 3.2.            Reserved.

 

Section 3.3.            No Liability of Lender.
Lender’s acceptance of this assignment shall not be deemed to constitute Lender
a “mortgagee in possession,” nor obligate Lender to appear in or defend any
proceeding relating to any Lease or to the Property, or to take any action hereunder,
expend any money, incur any expenses, or perform any obligation or liability
under any Lease, or assume any obligation for any deposit delivered to Grantor
by any tenant and not as such delivered to and accepted by Lender.  Lender shall not be liable for any injury or
damage to person or property in or about the Property, or for Lender’s failure
to collect or to exercise diligence in collecting Rents, but shall be
accountable only for Rents that it shall actually receive.  Neither the assignment of Leases and Rents
nor enforcement of Lender’s rights regarding Leases and Rents (including
collection of Rents) nor possession of the Property by Lender nor Lender’s
consent to or approval of any Lease (nor all of the same), shall render Lender
liable on any obligation under or with respect to any Lease or constitute
affirmation of, or any subordination to, any Lease, occupancy, use or
option.  If Lender seeks or obtains any
judicial relief regarding Rents or Leases, the same shall in no way prevent the
concurrent or subsequent employment of any other appropriate rights or remedies
nor shall same constitute an election of judicial relief for any foreclosure or
any other purpose.  Lender shall not have
or assume any obligations as lessor or landlord with respect to any Lease.  The rights of Lender under this Article 3
shall be cumulative of all other rights of Lender under the Loan Documents or
otherwise.

 

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ARTICLE 4

Default

 

Section 4.1.            Events of Default.  The occurrence of any one of the following
shall be a default under this Mortgage (each, an “Event of Default”):

 

(a)           Failure to Pay Secured
Indebtedness.  The failure of
Borrower or Grantor to pay when due any amount required by this Mortgage, the
Promissory Note or any other Loan Document which continues, in the case of
monthly interest payments required under the Note for twenty (20) days or, in
the case of other sums payable under this Mortgage, the Promissory Note or any
other Loan Document, for ten (10) days following written demand for
payment on Borrower by Lender.

 

(b)           Nonperformance of Covenants.  The failure by Borrower or Grantor to perform
any of its obligations under this Mortgage, the Promissory Note or any other
Loan Document, as and when required, except as specifically set forth otherwise
herein, which continues for a period of thirty (30) days after notice of such
failure by Lender to Borrower and/or Grantor, if such failure is not reasonably
susceptible of cure within such thirty (30)-day period and, if Borrower and/or
Grantor promptly commences such cure within such thirty (30)-day period and
diligently prosecutes the same to completion, then the cure period shall be
extended for such period of time as may be reasonably necessary to effect a
cure but in no event shall such period exceed ninety (90) days.

 

(c)           Default under other Loan Documents.  The occurrence of an Event of Default (after
taking into consideration applicable notice, grace and cure periods) under any
other Loan Document.

 

Section 4.2.            Notice and Cure.  If any provision of this Mortgage or any
other Loan Document provides for Lender to give to Grantor or Borrower any
notice regarding an Event of Default or incipient Event of Default, then if
Lender shall fail to give such notice to Grantor or Borrower as provided, the
sole and exclusive remedy of Grantor for such failure shall be to seek
appropriate equitable relief to enforce the agreement to give such notice and
to have any acceleration of the maturity of the Notes and the Secured
Indebtedness postponed or revoked and foreclosure proceedings in connection
therewith delayed or terminated pending or upon the curing of such Event of
Default in the manner and during the period of time permitted by such agreement,
if any, and Grantor shall have no right to damages or any other type of relief
not herein specifically set out against Lender, all of which damages or other
relief are hereby waived by Grantor. 
Nothing herein or in any other Loan Document shall operate or be
construed to add on or make cumulative any cure or grace periods specified in
any of the Loan Documents and to the extent that Grantor and Borrower have any
cure rights with respect to any event or circumstance which, upon notice or the
passage of time, or both, could constitute an Event of Default hereunder, such
cure periods shall run concurrently and not consecutively.

 

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ARTICLE 5

 

Remedies

 

Section 5.1.            Certain Remedies.  If an Event of Default shall occur, Lender
may (but shall have no obligation to) exercise any one or more of the following
remedies, without notice (unless notice is required by applicable Law):

 

(a)           Acceleration; Termination.  Lender may at any time and from time to time
declare any or all of the Secured Indebtedness immediately due and
payable.  Upon any such declaration, such
Secured Indebtedness shall, subject to NRS Section 107.080, thereupon be
immediately due and payable, without presentment, demand, protest, notice of
protest, notice of acceleration or of intention to accelerate or any other
notice or declaration of any kind upon Grantor, all of which are hereby
expressly waived by Grantor.

 

(b)           Enforcement of Assignment of Rents.  In addition to the rights of Lender under Article 3
hereof, prior or subsequent to taking possession of any portion of the Property
or taking any action with respect to such possession, Lender may, subject to
the rights of the administrative agent and/or lenders in respect of the Senior
Loan, the Commercial Loan or the Senior DOTs, as applicable: (1) collect
and/or sue for the Rents in Lender’s own name, give receipts and releases
therefor, and after deducting all reasonable expenses of collection, including
reasonable attorneys’ fees and expenses, apply the net proceeds thereof to the
Secured Indebtedness in such manner and order as Lender may elect and/or to the
operation and management of the Property, including the payment of reasonable
management, brokerage and attorney’s fees and expenses; and (2) require
Grantor to transfer all security deposits and records thereof to Lender
together with original counterparts of the Leases, upon which transfer Lender
shall be responsible for returning such deposits to tenants.

 

(c)           Non-Judicial Sale. 
Subject to the rights of the administrative agent and/or lenders in
respect of the Senior Loan, the Commercial Loan or the Senior DOTs, as
applicable, Lender may (1) dispose of some or all of the Property, in any
combination consisting of both real and personal property, together in one sale
to be held in accordance with the Law and procedures applicable to real
property, as permitted by Section 9604 of the Uniform Commercial Code as
enacted in the State of Nevada, NRS Section 104.9604, and other applicable
laws, and Grantor agrees that such a sale of personal property together with
real property constitutes a commercially reasonable sale of the personal
property and (2) by delivery to Trustee and Grantor (and any other parties
to whom notice is required under NRS Section 107.080) of written notice of
declaration of default and demand for sale, cause to be filed of record a
written notice of default and election to sell the Property in accordance with
the requirements of applicable Nevada law.  If required by Trustee, Lender shall also
deposit with Trustee this Mortgage and Notes or other Loan Documents or other
agreements and such documents as required by Trustee evidencing expenditures or
advances secured hereby and Lender shall comply with the requirements of NRS Section 107.220.  After the lapse of such time as there may be
required by law following recordation of such notice of default, and notice of
sale having been given as then required by Law, Trustee, without demand on
Grantor, shall sell the Property, in accordance with 

 

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applicable
Law, either as a whole or in separate parcels, and in such order as it or
Lender may determine, at public auction to the highest bidder for cash in
lawful money of the United States. 
Lender may, in its sole discretion, elect that the Property be sold in
separate parcels through two or more successive sales.  If Lender elects more than one sale of
separate parcels of the Property, Lender may, at its option, cause the same to
be conducted simultaneously or successively, on the same day or at such
different days or times and in such order as Lender may deem to be in its best
interests, and no such sale shall terminate or otherwise effect the first lien
of this Mortgage or Trustee’s power of sale hereunder until all indebtedness
secured hereby has been fully paid.  The
place of sale shall be in the county in which the Property to be sold, or any
part thereof, is situated.  If Lender
elects to dispose of the Property through more than one sale, Grantor shall pay
the costs and expenses of each such sale and of any proceedings where the same
may be made or conducted.  Trustee may,
subject to applicable Law, postpone and change the time and place of sale of
all or any portion of the Property by public announcement at any time and place
fixed by it in said notice of sale and from time to time and place to place
thereafter, without any further posting or notice thereof, may postpone such
sale in public announcement to the time and place fixed by such postponement,
whether or not said place fixed by any postponement be in the same city or
other place as fixed in said notice of sale. Trustee shall deliver to such
purchaser its deed conveying the Property so sold, but without any covenants or
warranty, express or implied.  The
recital in such deed of any matters of fact or otherwise shall be prima facie
evidence of the truthfulness thereof.

 

(d)           Uniform
Commercial Code.  Without
limitation of Lender’s rights of enforcement with respect to the Collateral or
any part thereof in accordance with the procedures for foreclosure of real
estate, Lender may exercise its rights of enforcement with respect to the
Collateral or any part thereof under the UCC, as in effect from time to time,
as amended  (or under the Uniform
Commercial Code in force, from time to time, in any other state to the extent
the same is applicable Law), subject to the rights of the administrative agent
and/or lenders in respect of the Senior Loan, the Commercial Loan or the Senior
DOTs, as applicable, and in conjunction with, in addition to or in substitution
for those rights and remedies:

 

(1)           Subject to the rights of the administrative agent and/or
lenders in respect of the Senior Loan, the Commercial Loan or the Senior DOTs,
as applicable, Lender may enter upon Grantor’s premises to take possession of,
assemble and collect the Collateral or, to the extent and for those items of
the Collateral permitted under applicable Law, to render it unusable;

 

(2)           Subject to the rights of the administrative agent and/or
lenders in respect of the Senior Loan, the Commercial Loan or the Senior DOTs,
as applicable, Lender may require Grantor to assemble the Collateral and make
it available at a place Lender designates which is mutually convenient to allow
Lender to take possession or dispose of the Collateral;

 

(3)           written notice mailed to Grantor as provided herein at
least ten (10) days prior to the date of public sale of the Collateral or
prior to the date after which private sale of the Collateral will be made shall
constitute reasonable notice; provided that, if 

 

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Lender
fails to comply with this clause (3) in any respect, its liability for
such failure shall be limited to the liability (if any) imposed on it as a
matter of law under the UCC, as in effect from time to time (or under the
Uniform Commercial Code, in force from time to time, in any other state to the
extent the same is applicable law);

 

(4)           any sale made pursuant to the provisions of this paragraph
shall be deemed to have been a public sale conducted in a commercially
reasonable manner if held contemporaneously with and upon the same notice as
required for the sale of the Property under power of sale as provided in
paragraph (c) above in this Section 5.1;

 

(5)           in the event of a foreclosure sale, whether made by
Trustee under the terms hereof, or under judgment of a court, the Collateral
and the other Property may, at the option of Lender, be sold as a whole;

 

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

 

(7)           with respect to application of proceeds from disposition
of the Collateral under this Section 5.1 hereof, the costs and
expenses incident to disposition shall include the reasonable expenses of
retaking, holding, preparing for sale or lease, selling, leasing and the like
and the reasonable attorneys’ fees and legal expenses (including, without
limitation, the allocated costs for in-house legal services) incurred by
Lender;

 

(8)           any and all statements of fact or other recitals made in
any bill of sale or assignment or other instrument evidencing any foreclosure
sale hereunder as to nonpayment of the Secured Indebtedness or as to the
occurrence of any default, or as to Lender having declared all of such
indebtedness to be due and payable, or as to notice of time, place and terms of
sale and of the properties to be sold having been duly given, or as to any
other act or thing having been duly done by Lender, shall be taken as prima facie
evidence of the truth of the facts so stated and recited;

 

(9)           Lender may appoint or delegate any one or more persons as
agent to perform any act or acts necessary or incident to any sale held by
Lender, including the sending of notices and the conduct of the sale, but in
the name and on behalf of Lender;

 

(10)         Lender may comply with any applicable Laws in connection
with a disposition of the Collateral, and such compliance will not be
considered to affect adversely the commercial reasonableness of any sale of the
Collateral;

 

(11)         Lender may sell the Collateral without giving any warranties
as to the Collateral, and specifically disclaim all warranties including,
without limitation, warranties relating to title, possession, quiet enjoyment
and the like, and all warranties of quality, merchantability and fitness for a
specific purpose, and this procedure will not be 

 

DEED
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considered
to affect adversely the commercial reasonableness of any sale of the
Collateral;

 

(12)         Grantor acknowledges that a private sale of the Collateral
may result in less proceeds than a public sale (but such acknowledgement does
not authorize a private sale except when allowed by the UCC); and

 

(13)         Grantor acknowledges that the Collateral may be sold at a
loss to Grantor, and that, in such event, Lender shall have no liability or
responsibility to Grantor for such loss so long as Lender has acted as allowed
by this Mortgage, the UCC and other applicable Laws.

 

(e)           Lawsuits.  Lender may, to the fullest extent permitted
by applicable Law, proceed by a suit or suits in equity or at law, whether for
collection of the Secured Indebtedness, the specific performance of any
covenant or agreement herein contained or in aid of the execution of any power
herein granted, or for any foreclosure hereunder or for the sale of the
Property under the judgment or decree of any court or courts of competent
jurisdiction.

 

(f)            Entry on Property.  Lender is authorized, prior or subsequent to
the institution of any foreclosure proceedings, to the fullest extent permitted
by applicable Law subject to the rights of the administrative agent and/or
lenders in respect of the Senior Loan, the Commercial Loan or the Senior DOTs,
as applicable, to enter upon the Property, or any part thereof, and to take
possession of the Property and all books and records, and all recorded data of
any kind or nature, regardless of the medium of recording including, without
limitation, all software, writings, plans, specifications and schematics
relating thereto, and to exercise without interference from Grantor any and all
rights which Grantor has with respect to the management, possession, operation,
protection or preservation of the Property. 
Lender shall not be deemed to have taken possession of the Property or
any part thereof except upon the exercise of its right to do so, and then only
to the extent evidenced by its demand and overt act specifically for such
purpose.  All reasonable costs, expenses
and liabilities of every character incurred by Lender in managing, operating,
maintaining, protecting or preserving the Property shall constitute a demand
obligation of Grantor (which obligation Grantor hereby promises to pay) to
Lender pursuant to this Mortgage.  If
necessary to obtain the possession provided for above, Lender may invoke any
and all legal remedies to dispossess Grantor. 
In connection with any action taken by Lender pursuant to this Section,
Lender shall not be liable for any loss sustained by Grantor resulting from any
failure to let the Property or any part thereof, or from any act or omission of
Lender in managing the Property unless such loss is caused by the gross
negligence or willful misconduct of Lender, nor shall Lender be obligated to
perform or discharge any obligation, duty or liability of Grantor arising under
any lease or other agreement relating to the Property or arising under any
Permitted Encumbrance or otherwise arising. 
Grantor hereby assents to, ratifies and confirms any and all actions of
Lender with respect to the Property taken under this Section unless by the
gross negligence or willful misconduct of Lender.

 

(g)           Receiver.  Subject to the rights of the administrative
agent and/or lenders in respect of the Senior Loan, the Commercial Loan or the
Senior DOTs, as applicable, Lender 

 

DEED
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shall as a matter of right be entitled to the appointment of a receiver
or receivers for all or any part of the Property whether such receivership be
incident to a proposed sale (or sales) of such property or otherwise, and
without regard to the value of the Property or the solvency of any person or
persons liable for the payment of the Secured Indebtedness, and Grantor does
hereby irrevocably consent to the appointment of such receiver or receivers,
waives notice of such appointment, of any request therefor or hearing in
connection therewith, and any and all defenses to such appointment, agrees not
to oppose any application therefor by Lender, and agrees that such appointment
shall in no manner impair, prejudice or otherwise affect the rights of Lender
to application of Rents as provided in this Mortgage.  Nothing herein is to be construed to deprive
Lender of any other right, remedy or privilege it may have under the Law to
have a receiver appointed.  Any money
advanced by Lender in connection with any such receivership shall be a demand
obligation (which obligation Grantor hereby promises to pay) owing by Grantor
to Lender pursuant to this Mortgage.

 

(h)           Termination of Commitment to Lend.  Lender may terminate any commitment or
obligation to lend or disburse funds under any Loan Document.

 

(i)            Other Rights and Remedies.  Lender may exercise any and all other rights
and remedies which Lender may have under the Loan Documents, or at law or in
equity or otherwise.

 

Section 5.2.            Proceeds of Foreclosure.  The proceeds of any sale held by Trustee or
Lender or any receiver or public officer in foreclosure of the liens and
security interests evidenced hereby shall be applied in accordance with the
requirements of applicable Laws and to the extent consistent therewith, FIRST,
to the payment of all necessary costs and expenses incident to such foreclosure
sale, including but not limited to all reasonable attorneys’ fees and legal
expenses, advertising costs, auctioneer’s fees, costs of title rundowns and
lien searches, inspection fees, appraisal costs, fees for professional
services, environmental assessment and remediation fees, all court costs and
charges of every character insurance fees, costs of repairs, maintenance,
inspection and testing fees, receivers and management fees, leasing and sales
commissions, advertising costs and expenses, taxes and assessments, surveys,
engineering studies and reports, engineering fees and expenses, soils tests,
space planning costs and expenses, contractors fees, all other costs incurred
by Lender to maintain, preserve and protect the Property (not exceeding 5% of
the gross proceeds of such sale), and to the payment of the other Secured
Indebtedness, including specifically without limitation the principal, accrued
interest and attorneys’ fees due and unpaid on the Notes and the amounts due
and unpaid and owed to Lender under the Mezzanine Loan Agreement, this Mortgage,
the Environmental Indemnity, or any other Loan Document, the order and manner
of application to the items in this clause FIRST to be in the sole discretion
of Lender; and SECOND, the remainder, if any there shall be, shall be paid to
Grantor, or to Grantor’s heirs, devisees, representatives, successors or
assigns, or such other persons (including the holder or beneficiary of any
inferior lien) as may be entitled thereto by Law; provided, however, that if
Lender is uncertain which person or persons are so entitled, Lender may
interplead such remainder in any court of competent jurisdiction, and the
amount of any reasonable attorneys’ fees, court costs and expenses incurred in
such action shall be a part of the Secured Indebtedness and shall be reimbursable
(without limitation) from such remainder.

 

DEED
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Section 5.3.            Lender as Purchaser.  Lender shall have the right to become the
purchaser at any sale held by Trustee or substitute or successor or by any
receiver or public officer or at any public sale, and Lender shall have the
right to credit upon the amount of Lender’s successful bid, to the extent
necessary to satisfy such bid, all or any part of the Secured Indebtedness in
such manner and order as Lender may elect.

 

Section 5.4.            Foreclosure as to Matured Debt.  Lender shall have the right to proceed with
foreclosure (judicial or nonjudicial) of the liens and security interests
hereunder without declaring the entire Secured Indebtedness due, and in such
event any such foreclosure sale may be made subject to the unmatured part of
the Secured Indebtedness; and any such sale shall not in any manner affect the
unmatured part of the Secured Indebtedness, but as to such unmatured part this Mortgage
shall remain in full force and effect just as though no sale had been
made.  The proceeds of such sale shall be
applied as provided in Section 5.2 hereof except that the amount
paid under clause FIRST thereof shall be only the matured portion of the
Secured Indebtedness the remainder, if any, shall be applied as provided in
clause SECOND of Section 5.2 hereof.  Several sales may be made hereunder without
exhausting the right of sale for any unmatured part of the Secured
Indebtedness.

 

Section 5.5.            Remedies Cumulative.  All rights and remedies provided for herein
and in any other Loan Document are cumulative of each other and of any and all
other rights and remedies existing at law or in equity, and Trustee and Lender
shall, in addition to the rights and remedies provided herein or in any other
Loan Document, be entitled to avail themselves of all such other rights and
remedies as may now or hereafter exist at law or in equity for the collection
of the Secured Indebtedness and the enforcement of the covenants herein and the
foreclosure of the liens and security interests evidenced hereby, and the
resort to any right or remedy provided for hereunder or under any other Loan
Document or provided for by law or in equity shall not prevent the concurrent or
subsequent employment of any other appropriate right or rights or remedy or
remedies.

 

Section 5.6.            Discretion as to Security.  Lender may resort to any security given by
this Mortgage or to any other security now existing or hereafter given to
secure the payment of the Secured Indebtedness, in whole or in part, and in
such portions and in such order as may seem best to Lender in its sole and
uncontrolled discretion (but subject to any agreements between Lender
applicable thereto in the Mezzanine Loan Agreement), and any such action shall
not in anywise be considered as a waiver of any of the rights, benefits, liens
or security interests evidenced by this Mortgage.

 

Section 5.7.            Grantor’s Waiver of Certain
Rights.  To the full extent Grantor
may do so, and to the fullest extent permitted by applicable Law, Grantor
agrees that Grantor will not at any time insist upon, plead, claim or take the
benefit or advantage of any law now or hereafter in force providing for any
appraisement, valuation, stay, extension or redemption, homestead, moratorium,
reinstatement, marshaling or forbearance, and Grantor, for Grantor, Grantor’s
heirs, devisees, representatives, successors and assigns, and for any and all
persons ever claiming any interest in the Property, to the extent permitted by
applicable Law, hereby waives and releases all rights of redemption, valuation,
appraisement, stay of execution, notice of intention to mature or 

 

DEED
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declare due the whole of the Secured Indebtedness, notice of election
to mature or declare due the whole of the Secured Indebtedness and all rights
to a marshaling of assets of Grantor, including the Property, or to a sale in
inverse order of alienation in the event of foreclosure of the liens and/or
security interests hereby created. 
Grantor shall not have or assert any right under any statute or rule of
Law pertaining to the marshaling of assets, sale in inverse order of
alienation, the exemption of homestead, the administration of estates of
decedents, or other matters whatsoever to defeat, reduce or affect the right of
Lender under the terms of this Mortgage to a sale of the Property for the
collection of the Secured Indebtedness without any prior or different resort
for collection, or the right of Lender under the terms of this Mortgage to the
payment of the Secured Indebtedness out of the proceeds of sale of the Property
in preference to every other claimant whatsoever.  Grantor waives any right or remedy which
Grantor may have or be able to assert pursuant to any provision of any statute
or rule of law, pertaining to the rights and remedies of sureties.  If any law referred to in this Section and
now in force, of which Grantor or Grantor’s heirs, devisees, representatives,
successors or assigns or any other persons claiming any interest in the
Property might take advantage despite this Section, shall hereafter be repealed
or cease to be in force, such law shall not thereafter be deemed to preclude
the application of this Section.

 

Section 5.8.            Delivery of Possession After
Foreclosure.  Subject to the rights
of the administrative agent and/or lenders in respect of the Senior Loan, the
Commercial Loan or the Senior DOTs, as applicable, in the event there is a
foreclosure sale hereunder and at the time of such sale, Grantor or Grantor’s
heirs, devisees, representatives, or successors as owners of the Property are
occupying or using the Property, or any part thereof, each and all shall
immediately become the tenant of the purchaser at such sale, which tenancy
shall be a tenancy from day to day, terminable at the will of purchaser, at a
reasonable rental per day based upon the value of the property occupied, such
rental to be due daily to the purchaser; and to the extent permitted by
applicable Law, the purchaser at such sale shall, notwithstanding any language
herein apparently to the contrary, have the sole option to demand immediate
possession following the sale or to permit the occupants to remain as tenants
at will.  Subject to the rights of the
administrative agent and/or lenders in respect of the Senior Loan, the
Commercial Loan or the Senior DOTs, as applicable, after such foreclosure, any
Leases to tenants or subtenants that are subject to this Mortgage (either by
their date, their express terms, or by agreement of the tenant or subtenant)
shall, at the sole option of Lender or any purchaser at such sale, either (i) continue
in full force and effect, and the tenant(s) or subtenant(s) thereunder
will, upon request, attorn to and acknowledge in writing to the purchaser or
purchasers at such sale or sales as landlord thereunder, or (ii) upon
notice to such effect from Lender, the Trustees or any purchaser or purchasers,
terminate within thirty (30) days from the date of sale.  Subject to the rights of the administrative
agent and/or lenders in respect of the Senior Loan, the Commercial Loan or the
Senior DOTs, as applicable, in the event the tenant fails to surrender
possession of said property upon demand, the purchaser shall be entitled to
institute and maintain a summary action for possession of the Property (such as
an action for forcible detainer) in any court having jurisdiction.

 

DEED
OF TRUST — Page 28

 

ARTICLE 6

Miscellaneous

 

Section 6.1.            Scope of Mortgage.  This Mortgage is a deed of trust and mortgage
of both real and personal property, a security agreement, an assignment of
rents and leases, a financing statement and fixture filing and a collateral
assignment, and also covers proceeds and fixtures.

 

Section 6.2.            Effective as a Financing
Statement.  This Mortgage shall be
effective as a financing statement filed as a fixture filing with respect to
all fixtures included within the Property and is to be filed for record in the
real estate records of each county where any part of the Property (including
said fixtures) is situated.  This
Mortgage shall also be effective as a financing statement covering as-extracted
collateral (including oil and gas), accounts and general intangibles under the
UCC, as, in effect from time to time, and the Uniform Commercial Code, as in
effect from time to time, in any other state where the Property is situated
which will be financed at the wellhead or minehead of the wells or mines
located on the Property and is to be filed for record in the real estate
records of each county where any part of the Property is situated.  This Mortgage shall also be effective as a
financing statement covering any other Property and may be filed in any other
appropriate filing or recording office. 
The mailing address of Grantor is the address of Grantor set forth at
the end of this Mortgage and the address of Lender from which information
concerning the security interests hereunder may be obtained is the address of
Lender set forth at the end of this Mortgage. 
A carbon, photographic or other reproduction of this Mortgage or of any
financing statement relating to this Mortgage shall be sufficient as a financing
statement for any of the purposes referred to in this Section.

 

Section 6.3.            Notice to Account Debtors.  Subject to the rights of the administrative
agent and/or lenders in respect of the Senior Loan, the Commercial Loan or the
Senior DOTs, as applicable, in addition to the rights granted elsewhere in this
Mortgage, Lender may, from and after the occurrence of an Event of Default, so
long as such Event of Default remains uncured hereunder, notify the account
debtors or obligors of any accounts, chattel paper, general intangibles,
negotiable instruments or other evidences of indebtedness included in the
Collateral to pay Lender directly.

 

Section 6.4.            Waiver by Lender.  Lender may at any time and from time to time
by a specific writing intended for the purpose: (a) waive compliance by
Grantor with any covenant herein made by Grantor to the extent and in the
manner specified in such writing; (b) consent to Grantor’s doing any act
which hereunder Grantor is prohibited from doing, or to Grantor’s failing to do
any act which hereunder Grantor is required to do, to the extent and in the
manner specified in such writing; (c) release any part of the Property or
any interest therein from the lien and security interest of this Mortgage,
without the joinder of Trustee; or (d) release any party liable, either
directly or indirectly, for the Secured Indebtedness or for any covenant herein
or in any other Loan Document, without impairing or releasing the liability of
any other party.  No such act shall in
any way affect the rights or powers of Lender or Trustee hereunder except to
the extent specifically agreed to by Lender in such writing.

 

DEED
OF TRUST — Page 29

 

Section 6.5.            No Impairment of Security.  The lien, security interest and other
security rights of Lender hereunder or under any other Loan Document shall not
be impaired by any indulgence, moratorium or release granted by Lender
including, but not limited to, any renewal, extension or modification which
Lender may grant with respect to any Secured Indebtedness, or any surrender,
compromise, release, renewal, extension, exchange or substitution which Lender
may grant in respect of the Property, or any part thereof or any interest
therein, or any release or indulgence granted to any endorser, guarantor or
surety of any Secured Indebtedness.  The
taking of additional security by Lender shall not release or impair the lien,
security interest or other security rights of Lender hereunder or affect the
liability of Grantor or of any endorser, guarantor or surety, or improve the
right of any junior lienholder in the Property (without implying hereby Lender’s
consent to any junior lien).

 

Section 6.6.            Acts Not Constituting Waiver by
Lender.  Lender may waive any Event
of Default without waiving any other prior or subsequent Event of Default.  Lender may remedy any Event of Default
without waiving the Event of Default remedied. 
Neither failure by Lender to exercise, nor delay by Lender in
exercising, nor discontinuance of the exercise of any right, power or remedy
(including but not limited to the right to accelerate the maturity of the
Secured Indebtedness or any part thereof) upon or after any Event of Default
shall be construed as a waiver of such Event of Default or as a waiver of the
right to exercise any such right, power or remedy at a later date.  No single or partial exercise by Lender of
any right, power or remedy hereunder shall exhaust the same or shall preclude
any other or further exercise thereof, and every such right, power or remedy
hereunder may be exercised at any time and from time to time.  No modification or waiver of any provision
hereof nor consent to any departure by Grantor therefrom shall in any event be
effective unless the same shall be in writing and signed by Lender and then
such waiver or consent shall be effective only in the specific instance, for
the purpose for which given and to the extent therein specified.  No notice to nor demand on Grantor in any
case shall of itself entitle Grantor to any other or further notice or demand
in similar or other circumstances. 
Remittances in payment of any part of the Secured Indebtedness other
than in the required amount in immediately available U.S. funds shall not,
regardless of any receipt or credit issued therefor, constitute payment until
the required amount is actually received by Lender in immediately available
U.S. funds and shall be made and accepted subject to the condition that any
check or draft may be handled for collection in accordance with the practice of
the collecting bank or banks.  Acceptance
by Lender of any payment in an amount less than the amount then due on any
Secured Indebtedness shall be deemed an acceptance on account only and shall
not in any way excuse the existence of an Event of Default hereunder
notwithstanding any notation on or accompanying such partial payment to the
contrary.

 

Section 6.7.            Grantor’s Successors.  If the ownership of the Property or any part
thereof becomes vested in a person other than Grantor, Lender may, without
notice to Grantor, deal with such successor or successors in interest with
reference to this Mortgage and to the Secured Indebtedness in the same manner
as with Grantor, without in any way vitiating or discharging Grantor’s
liability hereunder or for the payment of the indebtedness or performance of
the obligations secured hereby.  No
transfer of the Property, no forbearance on the part of Lender, and no
extension of the time for the payment of the Secured Indebtedness given by
Lender shall operate to release, discharge, modify, change or affect, in whole
or in part, the liability of 

 

DEED
OF TRUST — Page 30

 

Grantor hereunder.  Grantor
agrees that it shall be bound by any modification of this Mortgage made by
Lender and any subsequent owner of the Property, with or without notice to
Grantor, and no such modifications shall impair the obligations of Grantor
under this Mortgage.  Nothing in this Section shall
be construed to imply Lender’s consent to any transfer of the Property.

 

Section 6.8.            Place of Payment; Forum; Waiver
of Jury Trial.  All Secured
Indebtedness which may be owing hereunder at any time by Grantor shall be
payable at the address of Lender set forth at the end of this Mortgage.  EACH PARTY HEREBY IRREVOCABLY SUBMITS GENERALLY
AND UNCONDITIONALLY FOR ITSELF AND IN RESPECT OF ITS PROPERTY TO THE
NON-EXCLUSIVE JURISDICTION OF ANY STATE COURT, OR ANY UNITED STATES FEDERAL
COURT, SITTING IN THE CITY OF DALLAS, STATE OF TEXAS, AND IN THE COUNTY IN
WHICH THE LAND IS LOCATED TO THE EXTENT OF ACTIONS REQUIRED TO BE MAINTAINED
WHERE THE LAND IS LOCATED, OVER ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF
OR RELATING TO THIS MORTGAGE OR THE SECURED INDEBTEDNESS.  EACH PARTY HEREBY IRREVOCABLY WAIVES, TO THE
FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION THAT THE PARTY MAY NOW OR
HEREAFTER HAVE TO THE LAYING OF VENUE IN ANY SUCH COURT AND ANY CLAIM THAT ANY
SUCH COURT IS AN INCONVENIENT FORUM. 
Each Party hereby agrees and consents that, in addition to any methods
of service of process provided for under applicable law, all service of process
in any such suit, action or proceeding in any such court may be made by
certified or registered mail, return receipt requested, directed to the other
party at its address stated at the end of this Mortgage, or at a subsequent
address of which the other parties received actual notice in accordance with
this Mortgage.  Nothing herein shall
affect the right of a party to serve process in any manner permitted by Law.  TO THE FULLEST EXTENT PERMITTED BY LAW, EACH
PARTY KNOWINGLY AND FREELY WAIVES THE RIGHT TO TRIAL BY JURY IN CONNECTION WITH
ANY ACTION, SUIT OR OTHER PROCEEDING ARISING OUT OF OR RELATING TO THIS
MORTGAGE.   EACH PARTY ACKNOWLEDGES THAT
THE RIGHT TO TRIAL BY JURY IS AN IMPORTANT RIGHT, THAT ITS WAIVER OF THIS RIGHT
IS A NEGOTIATED TERM OF THE LOAN AND THAT IT HAS HAD THE OPPORTUNITY TO CONSULT
WITH LEGAL COUNSEL OF ITS CHOOSING WITH RESPECT TO THIS WAIVER.

 

Section 6.9.            Subrogation to Existing Liens;
Vendor’s Lien. To the extent that proceeds of the Notes are used to pay
indebtedness secured by any outstanding lien, security interest, charge or
prior encumbrance against the Property, Lender shall be subrogated to any and
all rights, security interests, and liens and charges or encumbrances owned by
any owner or holder of such outstanding liens, security interests, charges or
encumbrances, however remote, irrespective of whether said liens, security
interests, charges or encumbrances are released, and all of the same are
recognized as valid and subsisting and are renewed and continued and merged
herein to secure the Secured Indebtedness, but the terms and provisions of this
Mortgage shall govern and control the manner and terms of enforcement of the
liens, security interests, charges and encumbrances to which Lender is
subrogated hereunder.  It is expressly
understood that, in consideration of the payment of such indebtedness by
Lender, Grantor hereby waives and releases all demands and causes of action for
offsets and payments in connection with the said 

 

DEED
OF TRUST — Page 31

 

indebtedness.  If all or any
portion of the proceeds of the loan evidenced by the Notes or of any other
Secured Indebtedness has been advanced for the purpose of paying the purchase
price for all or a part of the Property, no vendor’s lien or purchase money
lien is waived.  Lender may foreclose
under this Mortgage or under the vendor’s lien or purchase money lien without
waiving the other or may foreclose under both.

 

Section 6.10.          Application of Payments to Certain
Indebtedness.  If any part of the
Secured Indebtedness cannot be lawfully secured by this Mortgage or if any part
of the Property cannot be lawfully subject to the lien and security interest
hereof to the full extent of such indebtedness, then all payments made shall be
applied on said indebtedness first in discharge of that portion thereof which
is not secured by this Mortgage.

 

Section 6.11.          Nature of Loan; Compliance with
Usury Laws.  The loan evidenced by
the Notes is being made solely for the purpose of carrying on or acquiring a
business or commercial enterprise.  It is
the intent of Grantor and Lender to conform to and contract in strict
compliance with applicable usury law from time to time in effect.  All agreements between Lender and Grantor are
hereby limited by the provisions of this Section which shall override and
control all such agreements, whether now existing or hereafter arising.  In no way, nor in any event or contingency
(including but not limited to prepayment, default, demand for payment, or
acceleration of the maturity of any obligation), shall the interest taken,
reserved, contracted for, charged, chargeable, or received under this Mortgage,
the Notes or any other Loan Document or otherwise, exceed the maximum
nonusurious amount permitted by applicable law (the “Maximum Amount”).  If, from any possible construction of this
Mortgage, interest would otherwise be payable in excess of the Maximum Amount,
any such construction shall be subject to the provisions of this Section and
this Mortgage shall ipso facto be automatically reformed and the interest
payable shall be automatically reduced to the Maximum Amount, without the
necessity of execution of any amendment or new document.  If Lender shall ever receive anything of
value which is characterized as interest under applicable law and which would
apart from this provision be in excess of the Maximum Amount, an amount equal
to the amount which would have been excessive interest shall, without penalty,
be applied to the reduction of the principal amount owing on the Secured
Indebtedness in the inverse order of its maturity and not to the payment of
interest, or refunded to Borrower or Grantor or the other payor thereof if and
to the extent such amount which would have been excessive exceeds such unpaid
principal.  The right to accelerate
maturity of the Notes or any other Secured Indebtedness does not include the
right to accelerate any interest which has not otherwise accrued on the date of
such acceleration, and Lender does not intend to charge or receive any unearned
interest in the event of acceleration. 
All interest paid or agreed to be paid to Lender shall, to the extent
permitted by applicable law, be amortized, prorated, allocated and spread throughout
the full stated term (including any renewal or extension) of such indebtedness
so that the amount of interest on account of such indebtedness does not exceed
the Maximum Amount.  As used in this
Section, the term “applicable law” shall mean the laws of the State where the
Property is located or where the Secured Indebtedness is payable, or the
federal laws of the United States applicable to this transaction, whichever
laws allow the greatest interest, as such laws now exist or may be changed or amended
or come into effect in the future.

 

DEED
OF TRUST — Page 32

 

Section 6.12.          Substitute Trustee.  The Lender may, from time to time, by an
instrument in writing, substitute a successor or successors to any trustee
named herein or acting hereunder, which instrument, executed and acknowledged
by Lender and recorded in the office of the recorder of the county or counties
where the Property is situated, shall be conclusive proof of proper
substitution of such successor trustee or trustees, who shall, without
conveyances from the trustee predecessor, succeed in all its title, estate,
rights, powers and duties.  Such
instrument shall contain the name and address of the new trustee. The procedure
herein provided for substitution of trustees shall not be exclusive of other
provisions for substitution provided by law.

 

Section 6.13.          No Liability of Trustee.  The Trustee shall not be liable for any error
of judgment or act done by Trustee in good faith, or be otherwise responsible
or accountable under any circumstances whatsoever, except for Trustee’s gross
negligence or willful misconduct.  The
Trustee shall have the right to rely on any instrument, document or signature
authorizing or supporting any action taken or proposed to be taken by him
hereunder, believed by him in good faith to be genuine.  All moneys received by Trustee shall, until
used or applied as herein provided, be held in trust for the purposes for which
they were received, but need not be segregated in any manner from any other
moneys (except to the extent required by Law), and Trustee shall be under no
liability for interest on any moneys received by him hereunder.  Grantor hereby ratifies and confirms any and
all acts which the herein named Trustee or his successor or successors,
substitute or substitutes, in this trust, shall do lawfully by virtue hereof.
Grantor will reimburse Trustee for, and save him harmless against, any and all
liability and expenses which may be incurred by him in the performance of his
duties, and except those resulting from Trustee’s gross negligence or willful
misconduct.  The foregoing indemnity
shall not terminate upon discharge of the Secured Indebtedness or foreclosure,
or release or other termination, of this Mortgage.

 

Section 6.14.          Releases.  If all of the Secured Indebtedness be paid as
the same becomes due and payable and all of the covenants, warranties,
undertakings and agreements made in this Mortgage are kept and performed and
all obligations, if any, of Lender for further advances have been terminated or
Grantor is entitled to a reconveyance of this Mortgage in accordance with the
terms of the Loan Documents, then, and in that event only, all rights under
this Mortgage shall terminate (except to the extent expressly provided herein
with respect to indemnifications, representations and warranties and other
rights which are to continue following the release hereof) and the Property
shall become wholly clear of the liens, security interests, conveyances and
assignments evidenced hereby, and such liens and security interests shall be
released by Lender in due form at Grantor’s cost.  Without limitation, all provisions herein for
indemnity of Lender or Trustee shall survive discharge of the Secured
Indebtedness and any foreclosure, release or termination of this Mortgage.

 

Section 6.15.          Notices. All notices, requests,
consents, demands and other communications required or which any party desires
to give hereunder shall be in writing and, unless otherwise specifically provided
herein, shall be deemed sufficiently given or furnished if delivered by
personal delivery, by nationally recognized overnight courier service, or by
registered or certified United States mail, postage prepaid, addressed to the
party to whom 

 

DEED
OF TRUST — Page 33

 

directed at the addresses specified in this Mortgage (unless changed by
similar notice in writing given by the particular party whose address is to be
changed) or by facsimile.  Any such notice
or communication shall be deemed to have been given either at the time of
personal delivery or, in the case of courier or mail, as of the date of first
attempted delivery at the address and in the manner provided herein, or, in the
case of facsimile, upon receipt; provided that, service of a notice required by
NRS Section 107.080 shall be considered complete when the requirements of
that statute are met.  Notwithstanding
the foregoing, no notice of change of address shall be effective except upon
receipt.  This Section shall not be
construed in any way to affect or impair any waiver of notice or demand
provided in this Mortgage or to require giving of notice or demand to or upon
any person in any situation or for any reason.

 

Section 6.16.          Invalidity of Certain Provisions.  A determination that any provision of this
Mortgage is unenforceable or invalid shall not affect the enforceability or
validity of any other provision and the determination that the application of
any provision of this Mortgage to any person or circumstance is illegal or
unenforceable shall not affect the enforceability or validity of such provision
as it may apply to other persons or circumstances.

 

Section 6.17.          Gender; Titles; Construction.  Within this Mortgage, words of any gender shall
be held and construed to include any other gender, and words in the singular
number shall be held and construed to include the plural, unless the context
otherwise requires.  Titles appearing at
the beginning of any subdivisions hereof are for convenience only, do not
constitute any part of such subdivisions, and shall be disregarded in
construing the language contained in such subdivisions.  The use of the words “herein,” “hereof,” “hereunder”
and other similar compounds of the word “here” shall refer to this entire
Mortgage and not to any particular Article, Section, paragraph or
provision.  The term “person” and words
importing persons as used in this Mortgage shall include firms, associations,
partnerships (including limited partnerships), joint ventures, trusts,
corporations, limited liability companies and other legal entities, including
public or governmental bodies, agencies or instrumentalities, as well as
natural persons.

 

Section 6.18.          Reporting Compliance.  Grantor agrees to comply with any and all
reporting requirements applicable to this Mortgage which are imposed upon it by
Law, including but not limited to The International Investment Survey Act of
1976, The Agricultural Foreign Investment Disclosure Act of 1978, The Foreign
Investment in Real Property Tax Act of 1980 and the Tax Reform Act of 1984 and
further agrees upon request of Lender to furnish Lender with evidence of such
compliance.

 

Section 6.19.          Reserved.

 

Section 6.20.          Grantor.  Unless the context clearly indicates
otherwise, as used in this Mortgage, “Grantor” means the grantors named in Section 1.2
hereof or any of them.  The obligations
of Grantor hereunder shall be joint and several.  If any Grantor, or any signatory who signs on
behalf of any Grantor, is a corporation, partnership or other legal entity,
Grantor, represents and warrants to Lender that this instrument is executed,
acknowledged and delivered 

 

DEED
OF TRUST — Page 34

 

by Grantor’s duly authorized representatives.  If Grantor is an individual, no power of
attorney granted by Grantor herein shall terminate on Grantor’s disability.

 

Section 6.21.          Execution; Recording.  This Mortgage has been executed in several
counterparts, all of which are identical, and all of which counterparts
together shall constitute one and the same instrument.  The date or dates reflected in the
acknowledgments hereto indicate the date or dates of actual execution of this
Mortgage, but such execution is as of the date shown on the first page hereof,
and for purposes of identification and reference the date of this Mortgage
shall be deemed to be the date reflected on the first page hereof.  Grantor will cause this Mortgage and all
amendments and supplements thereto and substitutions therefor and all financing
statements and continuation statements relating thereto to be recorded, filed,
re-recorded and refiled in such manner and in such places as Trustee or Lender
shall reasonably request and will pay all such recording, filing, re-recording
and refiling taxes, fees and other charges.

 

Section 6.22.          Successors and Assigns.  The terms, provisions, covenants and
conditions hereof shall be binding upon Grantor, and the heirs, devisees,
representatives, successors and assigns of Grantor, and shall inure to the
benefit of Trustee and Lender shall constitute covenants running with the
Land.  All references in this Mortgage to
Grantor shall be deemed to include all such heirs, devisees, representatives,
successors and assigns of Grantor.

 

Section 6.23.          Modification or Termination.  The Loan Documents may only be modified or
terminated by a written instrument or instruments intended for that purpose and
executed by the party against which enforcement of the modification or
termination is asserted.  Any alleged
modification or termination which is not so documented shall not be effective
as to any party.

 

Section 6.24.          No Partnership, Etc.  The relationship between Lender and Grantor
is solely that of lender and owner of collateral.  Lender does not have a fiduciary or other
special relationship with Grantor. 
Nothing contained in the Loan Documents is intended to create any
partnership, joint venture, association or special relationship between Grantor
and Lender or in any way make Lender a co-principal with Grantor with reference
to the Property.  All agreed contractual
duties between or among Lender, Trustee and Grantor are set forth herein and
any additional implied covenants or duties are hereby disclaimed.  Any inferences to the contrary of any of the
foregoing are hereby expressly negated.

 

Section 6.25.          Applicable Law.  THIS MORTGAGE, AND ITS VALIDITY, ENFORCEMENT
AND INTERPRETATION, SHALL BE GOVERNED BY AND CONSTRUED, INTERPRETED AND
ENFORCED IN ACCORDANCE WITH AND PURSUANT TO THE LAWS OF THE STATE OF NEVADA
(WITHOUT REGARD TO ANY CONFLICT OF LAWS PRINCIPLES) AND APPLICABLE UNITED
STATES FEDERAL LAW, EXCEPT AS OTHERWISE REQUIRED BY MANDATORY PROVISIONS OF LAW
AND EXCEPT TO THE EXTENT THAT REMEDIES PROVIDED BY THE LAWS OF ANY JURISDICTION
OTHER THAN THE STATE OF NEVADA ARE GOVERNED BY THE LAWS OF SUCH OTHER
JURISDICTION.

 

DEED
OF TRUST — Page 35

 

Section 6.26.          Construction Mortgage.  This Mortgage constitutes a “construction
mortgage” as defined in NRS 104.9334 to the extent that it secures an
obligation incurred for the construction of the Improvements, including the
acquisition cost of the Land.

 

Section 6.27.          Entire Agreement.  This Mortgage, together with the Loan
Documents to which Grantor is a party, constitute the entire understanding and
agreement between Grantor and Lender with respect to the transactions arising
in connection with the liens and security interests granted hereby and
supersede all prior written or oral understandings and agreements between
Grantor and Lender with respect to such matters.  Grantor hereby acknowledges that, except as
incorporated in writing in the Loan Documents, there are not, and were not, and
no persons are or were authorized by Lender to make, any representations,
understandings, stipulations, agreements or promises, oral or written, with
respect to the matters addressed in the Loan Documents.

 

Section 6.28.  Adoption of
Statutory Covenants.  The following
covenants, Nos. 6 (provided that a default, as referenced in such covenant,
shall mean an Event of Default, as
defined in Section 4.1 of this Mortgage), 7 (a reasonable), 8 (provided
that the recital therein shall be prima facie proof of such default) and 9 of
NRS Section 107.030, where not in conflict with the provisions of the Loan
Documents, are hereby adopted and made a part of this Mortgage.

 

THE WRITTEN LOAN DOCUMENTS
REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE
CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL
AGREEMENTS OF THE PARTIES.

 

THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE
PARTIES.

 

[Remainder of
Page Intentionally Left Blank]

 

 

DEED
OF TRUST — Page 36

 

IN
WITNESS WHEREOF, Grantor has executed this instrument under seal as of the date
first written on page 1 hereof.

 

	
  The address of Grantor is: 

  	
  GRANTOR: 

  
	
   

  	
   

  
	
  2001 Bryan Street,
  Suite 3250 

  Dallas, Texas 75201 

  	
  SW 132 ST. ROSE SENIOR
  BORROWER LLC, 

  a Delaware limited liability company 

  
	
  Attention: Tim Hogan 

  	
   

  
	
  Telephone: (214) 922-8575 

  Facsimile: (214) 922-8553

  	
  By:           SW 131 St. Rose Mezzanine Borrower
  LLC, a Delaware limited liability company, its sole member 

   

  By:           SW 130 St. Rose Limited Partnership,
  a Delaware limited partnership, its sole member 

  
	
   

  	
   

  
	
   

  	
  By:          SW 129 St. Rose Limited Partnership,
  a Delaware limited partnership, its general partner 

  
	
   

  	
   

  
	
   

  	
  By:           SW 104 Development GP LLC,
  a Delaware limited liability company, its general partner 

  

 

	
   

  	
  By: 

  	
  /s/ Timothy J. Hogan

  	
   

  

 

	
   

  	
  Name:        Timothy J. Hogan 

  
	
   

  	
  Title:          Vice President

  

 

The address of Lender is:

 

Behringer Harvard St. Rose REIT, LLC

15601 Dallas Parkway, Suite 600

Addison, Texas  75001

Attention:  Chief Legal Officer

 

	
  STATE OF TEXAS

  	
  §

  
	
   

  	
  §

  
	
  COUNTY OF DALLAS

  	
  §

  

 

This
instrument was acknowledged before me on December 30, 2008, by Timothy J.
Hogan,  Vice President of SW 104
Development GP LLC, a Delaware limited liability company, on behalf of such
company, as general partner of SW 129 St. Rose Limited Partnership, a Delaware
limited partnership, general partner of SW 130 St. Rose Limited Partnership, a
Delaware limited partnership, sole member of SW 131 St. Rose Mezzanine Borrower
LLC, a Delaware limited liability company, sole member of SW 132 St. Rose
Senior Borrower LLC, a Delaware limited liability company.

 

	
   

  	
  /s/ Tai Lee

  	
   

  	
   

  
	
   

  	
  Printed Name:

  	
  T. Lee

  	
   

  
	
   

  	
  Notary Public, State of
  Texas

  	
   

  

 

DEED
OF TRUST — Signature Page

 

EXHIBIT
A

LAND

 

All
that land situated in the County of Clark, State of Nevada, more particularly
described as follows:

 

PARCEL
1:

 

The
North Half (N 1⁄2) of the Northwest Quarter (NW 1⁄4) of the Southwest Quarter (SW
1⁄4) of the Northwest Quarter (NW 1⁄4) of Section 35, Township 22 South, Range
61 East, M.D.B.&M., Clark County, Nevada.

 

PARCEL
2:

 

The
South Half (S 1⁄2) of the Northeast Quarter (NE 1⁄4) of the Southwest Quarter (SW
1⁄4) of the Northwest Quarter (NW 1⁄4) of Section 35, Township 22 South, Range
61 East, M.D.B.&M.

 

EXCEPTING
THEREFROM that portion lying within St. Rose Parkway.

 

PARCEL
3:

 

That
portion of the Northwest Quarter (NW 1⁄4) of Section 35, Township 22 South,
Range 61 East, M.D.M., City of Henderson, Clark County, Nevada, more
particularly described as follows:

 

The
South Half (S 1⁄2) of the Northwest Quarter (NW 1⁄4) of the Southwest Quarter (SW
1⁄4) of the Northwest Quarter (NW 1⁄4) of said Section 35.

 

TOGETHER
WITH:

 

Those
portions of the North Half (N 1⁄2) of the South Half (S 1⁄2) of the Southwest
Quarter (SW 1⁄4) of the Northwest Quarter (NW 1⁄4) of said Section 35 lying
Northwesterly of the Northwesterly right of way of St. Rose Parkway.

 

PARCEL
4:

 

Being
a portion of the South Half (S 1⁄2) of the Southeast Quarter (SE 1⁄4) of the
Northwest Quarter (NW 1⁄4) of the Northwest Quarter (NW 1⁄4) of Section 35,
Township 22 South, Range 61 East, M.D.B.&M., Clark County, Nevada.

 

TOGETHER
WITH that portion of the North Half (N 1⁄2) of the Northeast Quarter (NE 1⁄4) of
the Southwest Quarter (SW 1⁄4) of the Northwest Quarter (NW 1⁄4), also together
with that portion of the North Half (N 1⁄2) of the Northwest Quarter (NW 1⁄4) of
said Section 35, lying Northwesterly of St. Rose Parkway, further
described as follows:

 

DEED OF TRUST - EXHIBIT A — Page 1

 

BEGINNING
at the Southeast (SE) corner of the Northwest Quarter (NW 1⁄4) of the Northwest
Quarter (NW 1⁄4) of said Section 35, said corner being marked by an aluminum
cap marked “PLS 5269, 1994, NW 1/16”;

 

Thence
South 41°41’09” East,
174.75 feet to the Northwesterly line of St. Rose Parkway as granted in Book
250 as Document No. 202951, Official Records, Clark County, Nevada;

 

Thence
along said Northwesterly line, South 46°18’51” West, 297.97 feet to
a point of intersection of said Northwesterly line with the South line of the
North Half (N 1⁄2) of the Northeast Quarter (NE 1⁄4) of the Southwest Quarter (SW
1⁄4) of the Northwest Quarter (NW 1⁄4) of said Section 35;

 

Thence
along the lines of said North Half (N 1⁄2) the following Three (3) courses:
North 89°22’43” West,
553.55 feet; North 00°33’34” West, 330.00 feet;
South 89°22’04” East,
663.09 feet to the POINT OF BEGINNING;

 

EXCEPTING
THEREFROM:

 

A
portion of the South Half (S 1⁄2) of the Southeast Quarter (SE 1⁄4) of the
Northwest Quarter (NW 1⁄4) of the Northwest Quarter (NW 1⁄4) of said Section 35,
described as follows:

 

BEGINNING
at the Southwest (SW) corner of the South Half (S 1⁄2) of the Southeast Quarter
(SE 1⁄4) of the Northwest Quarter (NW 1⁄4) of the Northwest Quarter (NW 1⁄4) of said Section 35;
Thence North 00°33’55” West,
330.09 feet to the Northwest (NW) corner of the South Half (S 1⁄2) of the
Southeast Quarter (SE 1⁄4) of the Northwest Quarter (NW 1⁄4) of the Northwest
Quarter (NW 1⁄4) of said Section 35; Thence South 89°21’56” East,
663.21 feet to the Northeast Corner of the South Half (S1/2) of the Southeast
Quarter (SE 1⁄4) of the Northwest Quarter (NW 1⁄4) of the Northwest Quarter (NW 1⁄4)
of said Section 35; Thence South 00°32’39” East, 330.06 feet to
the Southeast (SE) corner of the South Half (S 1⁄2) of the Southeast Quarter (SE
1⁄4) of the Northwest Quarter (NW 1⁄4) of the Northwest Quarter (NW 1⁄4) of said Section 35;
Thence North 41°41’09” West,
316.13 feet; Thence South 48°18’51” West, 153.68 feet to
the beginning of a 500 foot radius curve, concave Northwesterly; Thence along
said curve to the right, 369.29 feet through a central angle of 42°19’05” to the
POINT OF BEGINNING.

(Deed Reference 20070720 / 2463 and 2464)

 

DEED OF TRUST - EXHIBIT A — Page 2

 

EXHIBIT
B

PERMITTED ENCUMBRANCES

 

1.                                       State, County
and/or City taxes for the fiscal year 2008-2009 a lien not yet due and payable.

 

2.                                       Any taxes that
may be due, but not assessed, for new construction which can be assessed on the
unsecured property rolls, in the Office of the Clark County Assessor, per
Nevada Statute 361.260.

 

3.                                       Water rights,
claims or title to water, whether or not shown by the public record.

 

4.                                       Mineral rights,
reservations, easements and exclusions in patent from the United States of America:

 

Recorded:                                                                                          January 24,
1962 in Book 339

Document No.:                                                                273895,
Official Records, Clark County, Nevada

Affects:                                                                                                     Parcel 1

 

Said patent further reserves, and is subject
to, a right-of-way not exceeding thirty-three (33) feet in width for roadway
and public utility purposes to be located along the boundaries of said land.

 

The above rights of way, not dedicated, have
been vacated by an instrument recorded August 15, 2007 in Book 20070815,
Instrument No. 0002160, Official Records, Clark County, Nevada.

 

5.                                       Mineral rights,
reservations, easements and exclusions in patent from the United States of
America:

 

Recorded:                                                                                          January 30,
1962 in Book 340

Document No.:                                                                274775,
Official Records, Clark County, Nevada.

Affects:                                                                                                     A portion of
Parcel 4

 

Said patent further reserves, and is subject
to, a right-of-way not exceeding thirty-three (33) feet in width for roadway
and public utility purposes to be located along the boundaries of said land.

 

The above rights of way, not dedicated, have
been vacated by an instrument recorded August 15, 2007 in Book 20070815,
Instrument No. 0002160, Official Records, Clark County, Nevada.

 

 

DEED OF
TRUST - EXHIBIT B — Page 1

6.                                       Mineral rights,
reservations, easements and exclusions in patent from the United States of
America:

 

Recorded:                                                                                          February 10,
1970 in Book 10

Document No.:                                                                7408, Official
Records, Clark County, Nevada

Affects:                                                                                                     Parcel 3 and a
portion of Parcel 4

 

7.                                       Mineral rights,
reservations, easements and exclusions in patent from the United States of
America:

 

Recorded:                                                                                          November 28,
1979 in Book 1152

Document No.:                                                                1111857,
Official Records, Clark County, Nevada

Affects:                                                                                                     Parcel 2

 

Said patent further reserves, and is subject
to, a right-of-way not exceeding thirty-three (33) feet in width for roadway
and public utility purposes to be located along the boundaries of said land.

 

There is also reserved a right of way for a
Federal Aid Highway under the Act of November 9, 1921 (42 Stat. 212).

 

The above rights of way, not dedicated, have
been vacated by an instrument recorded August 15, 2007 in Book 20070815,
Instrument No. 0002160, Official Records, Clark County, Nevada.

 

8.                                       The terms,
covenants, conditions and provisions as contained in an instrument, entitled “City
of Henderson Zoning Resolution No. 3635”:

 

Recorded:                                                                                          May 09,
2007 in Book 20070509

Document No.:                                                                0002301,
Official Records, Clark County, Nevada

 

9.                                       An Easement
affecting a portion of said land for the purpose stated herein, and incidental
purposes:

 

In Favor of:                                                                                  Cox Communications
Las Vegas, Inc.

For:                                                                                                                           Cable and
Information Facilities

Recorded:                                                                                          April 30,
2008 in Book 20080430

Document No.:                                                                0000512,
Official Records, Clark County, Nevada

 

 

 

 

DEED OF
TRUST - EXHIBIT B — Page 2

 

APN:                   177-35-201-001

                                                177-35-201-002

                                                177-35-201-003

                                                177-35-201-006

 

The mailing address to which
this Mortgage

should be returned after recordation is:

 

WICK PHILLIPS, LLP

 

2100 Ross Avenue, Suite 950

Dallas, Texas  75201

Attention:  Walt Miller, Esq.

 

JUNIOR MEZZANINE DEED OF TRUST, ASSIGNMENT OF RENTS AND LEASES,

SECURITY AGREEMENT, FIXTURE
FILING AND FINANCING STATEMENT

 

(This Document Serves as a
Fixture Filing under

Nevada Revised Statutes Section 104.9502)

 

Dated to be effective as of December 31, 2008

 

made by

 

SW 132 ST. ROSE SENIOR BORROWER LLC,

a Delaware limited liability company (Grantor)

 

to

 

Chicago Title Agency of Nevada, Inc., as Trustee

(Trustee)

 

for the benefit of

 

BEHRINGER HARVARD ST. ROSE REIT, LLC,

a Delaware limited liability company (Lender)

 

DEED OF TRUST — Page 1

 

JUNIOR MEZZANINE DEED OF TRUST, ASSIGNMENT OF RENTS AND LEASES,

SECURITY AGREEMENT, FIXTURE
FILING AND FINANCING STATEMENT

 

Grantor’s Organizational Identification Number: 26-3831531

 

THIS JUNIOR MEZZANINE DEED OF
TRUST, ASSIGNMENT OF RENTS AND LEASES, SECURITY AGREEMENT, FIXTURE FILING AND
FINANCING STATEMENT (this “Mortgage”) is made this 31st day of
December, 2008, by Grantor, in favor of Trustee for the benefit of Lender.

 

R E C I
T A L S

 

A.            This
Mortgage is being executed by Grantor for the purpose of securing a loan from
Lender to SW 131 St. Rose Mezzanine Borrower LLC, a Delaware limited liability
company (the “Borrower”).  The
Borrower is directly or indirectly the legal and beneficial owner of all (100%)
of the equity interests in Grantor.

 

B.            Grantor
is the owner of the Land (as defined below) and is currently pursuing a
subdivision of the Land, and Grantor intends to convey approximately 6.272
acres of the Land (the “Commercial Tract”) to its affiliate, SW 122 St.
Rose Senior Borrower LLC, a Delaware limited liability company (the “Commercial
Tract Borrower”).  The Land other
than the Commercial Tract (the “Multi-Family Tract”) will be used by
Grantor to develop a 430-unit apartment complex.

 

C.            When
Commercial Tract Borrower acquires title to the Commercial Tract (the date of
such acquisition is referred to herein as the “Transfer Date”), Lender
will cause the lien of this Mortgage to be released as to the Commercial Tract.

 

D.            Concurrently
with the execution of this Mortgage, Grantor also is executing (1) that
certain Deed of Trust, Assignment of Rents and Leases, Security Agreement,
Fixture Filing and Financing Statement to and in favor of PRLAP, Inc., as
trustee, for the benefit of Bank of America, N.A., as administrative agent for
itself and certain other lenders (the “Multi-Family DOT”), to secure, in
part, the obligations of the Grantor in connection with a $38,600,000 loan (the
“Senior Loan”), (2) that certain Deed of Trust, Assignment of Rents
and Leases, Security Agreement, Fixture Filing and Financing Statement to and
in favor of PRLAP, Inc., as trustee, for the benefit of Bank of America,
N.A., for its own account as lender (the “Commercial DOT”), to secure,
in part, the obligations of the Commercial Tract Borrower in connection with a
$2,950,000 loan (the “Commercial Loan”), and (3) that certain
Senior Mezzanine Deed of Trust, Assignment of Rents and Leases, Security
Agreement, Fixture Filing and Financing Statement to and in favor of Trustee,
as trustee, for the benefit of Lender (the “Senior Mezzanine DOT”), to
secure, in part, the obligations of the Borrower under the Senior Mezzanine
Loan Documents.  The Multi-Family DOT and
the Commercial DOT are referred to herein as the “Senior DOTs”).

 

E.             This
Mortgage is subject and subordinate to (1) the Senior DOTs, the
obligations of the Grantor and/or Commercial Tract Borrower in respect of the
Senior Loan and the Commercial Loan, respectively, and the rights of the
administrative agent and/or lenders arising 

 

DEED OF TRUST — Page
2

 

in connection with the
Senior Loan and the Commercial Loan, respectively, and (2) the Senior
Mezzanine DOT, the obligations of the Grantor and/or the Borrower in respect of
the obligations under the Senior Mezzanine Loan Documents, and the rights of
the Lender arising in connection therewith.

 

ARTICLE
1

Definitions; Granting Clauses; Secured Indebtedness

 

Section 1.1.            Principal Secured.  This Mortgage secures the aggregate principal
amount of up to TWENTY ONE MILLION FORTY THREE THOUSAND ONE HUNDRED NINETY
SEVEN AND NO/100 DOLLARS ($21,043,197.00) together with interest thereon.  This instrument secures future advances as
defined in Nevada Revised Statutes (as amended, NRS) 106.320, and is goverened
by NRS 106.300 to 106.400, inclusive.

 

Section 1.2.            Definitions.

 

(a)           In
addition to other terms defined herein, each of the following terms shall have
the meaning assigned to it, such definitions to be applicable equally to the
singular and the plural forms of such terms and to all genders:

 

“Grantor”:  SW 132 ST. ROSE SENIOR BORROWER LLC, a
Delaware limited liability, whose mailing address is 2001 Bryan Street, Suite 3250,
Dallas, Texas 75201, Attention: Tim Hogan, and its permitted successors and
assigns.

 

“Lender”:  BEHRINGER HARVARD ST. ROSE REIT, LLC, a
Delaware limited liability company, or any subsequent holder(s) of the
Notes at the time in question.

 

“Mezzanine Loan Agreement”:  The Junior Mezzanine Loan Agreement dated of
even date herewith between Lender and Borrower, which is incorporated herein by
reference for all purposes.

 

“Promissory Note”:  The Junior Mezzanine Promissory Note made by
Borrower pursuant to the Mezzanine Loan Agreement, payable to the order of
Lender, in the principal face amount of up to $21,043,197.00, bearing interest
as therein provided.

 

“Trustee”:  Chicago Title
Agency of Nevada, Inc., a Nevada corporation.

 

“UCC”:   The Nevada
Uniform Commercial Code,  NRS Section 104.1101
et seq., as amended from time to time.

 

(b)           Any
term used or defined in the UCC, as in effect from time to time, and not
defined in this Mortgage has the meaning given to the term in the UCC, as in
effect from time to time, when used in this Mortgage. However, if a term is
defined in NRS Section 104.9101 et seq. of the UCC differently than in
another title of the UCC, the term has the meaning specified in said NRS Section 104.9101
et seq.

 

DEED
OF TRUST — Page 3

 

(c)           Unless
otherwise defined herein, capitalized terms used herein shall have the meanings
ascribed to such terms in the Mezzanine Loan Agreement.

 

Section 1.3.            Granting Clause.  In consideration of the provisions of this
Mortgage and the sum of TEN AND NO/100 DOLLARS ($10.00) cash in hand paid and
other good and valuable consideration the receipt and sufficiency of which are
acknowledged by Grantor, Grantor does hereby GRANT, BARGAIN, SELL, CONVEY,
TRANSFER, ASSIGN and SET OVER to Trustee, IN TRUST with the power of sale for
the benefit and security of Lender, with GENERAL WARRANTY, the following:  (a)  the real property described in Exhibit A
which is attached hereto and incorporated herein by reference (the “Land”)
together with: (i) any and all buildings, structures, improvements,
alterations or appurtenances now or hereafter situated or to be situated on the
Land (collectively the “Improvements”); and (ii) all right, title
and interest of Grantor, now owned or hereafter acquired, in and to (1) streets,
roads, alleys, easements, rights-of-way, licenses, rights of ingress and
egress, vehicle parking rights and public places, existing or proposed,
abutting, adjacent, used in connection with or pertaining to the Land or the
Improvements; (2) any strips or gores between the Land and abutting or
adjacent properties; (3) all options to purchase the Land or the
Improvements or any portion thereof or interest therein, and any greater estate
in the Land or the Improvements; (4) all water and water rights, ditches
and ditch rights, reservoirs, reservoir rights and storage rights, wells and
well rights, well permits, springs and spring rights, groundwater rights
(whether tributary, nontributary or not-nontributary), water contracts, water
allotments, water taps, stock certificates, shares in ditch or reservoir or
water companies, and all other rights of any kind or nature in or to the use of
water, whether or not adjudicated, which are appurtenant to, historically used
on or in connection with, or located on or under the Land (collectively, “Water
Rights”), together with any and all associated structures and facilities
for the diversion, carriage, transmission, conveyance, measurement, storage or
use of said Water Rights, and any and all easements, rights of way, fixtures,
personal property, contract rights, licenses, permits or decrees associated
with or used in connection with any such Water Rights or which may be necessary
for the development, operation or maintenance of such Water Rights; and (5) timber,
crops and mineral interests on or pertaining to the Land (the Land,
Improvements and other rights, titles and interests referred to in this clause (a) being
herein sometimes collectively called the “Premises”); (b) all
fixtures, equipment, systems, machinery, furniture, furnishings, appliances,
inventory, goods, building and construction materials, supplies, and articles
of personal property, of every kind and character, tangible and intangible
(including software embedded therein), now owned or hereafter acquired by
Grantor, which are now or hereafter attached to or situated in, on or about the
Land or the Improvements, or used in or necessary to the complete and proper
planning, development, use, occupancy or operation thereof, or acquired (whether
delivered to the Land or stored elsewhere) for use or installation in or on the
Land or the Improvements, and all renewals and replacements of, substitutions
for and additions to the foregoing (the properties referred to in this clause (b) being
herein sometimes collectively called the “Accessories,” all of which are
hereby declared to be permanent accessions to the Land); (c) Grantor’s
rights, but not liability for any breach by Grantor, under all (i) plans
and specifications for the Improvements; (ii) insurance policies to the
extent transferable, or proceeds thereof (to the extent not transferable) (or
additional or supplemental coverage related thereto, including  from an insurance provider meeting the
requirements of the Loan Documents or from or through any state or federal 

 

DEED
OF TRUST — Page 4

 

government
sponsored program or entity), contracts and agreements for the design,
construction, operation or inspection of the Improvements; (iii) Grantor’s
rights in tenants’ security deposits, deposits with respect to utility services
to the Premises, rebates or refunds of impact fees or other taxes, assessments
or charges; (iv) permits, licenses, franchises, certificates, development
rights, commitments and rights for utilities, and other rights and privileges
obtained in connection with the Premises or the Accessories; (v) leases,
rents, royalties, bonuses, issues, profits, revenues and other benefits of the
Premises and the Accessories (without derogation of Article 3
hereof); (vi) as-extracted collateral produced from or allocated to the
Land including, without limitation, oil, gas and other hydrocarbons and other
minerals and all products processed or obtained therefrom, and the proceeds
thereof; and (vii) engineering, accounting, title, legal, and other
technical or business data concerning the Property which are in the possession
of Grantor or in which Grantor can otherwise grant a security interest; and (d) all
(i) accounts and proceeds (cash or non-cash and including payment
intangibles) of or arising from the properties, rights, titles and interests
referred to above in this Section 1.3, including but not limited to
proceeds of any sale, lease or other disposition thereof, proceeds of each
policy of insurance (or additional or supplemental coverage related thereto,
including  from an insurance provider
meeting the requirements of the Loan Documents or from or through any state or
federal government sponsored program or entity) relating thereto (including
premium refunds), proceeds of the taking thereof or of any rights appurtenant
thereto, including change of grade of streets, curb cuts or other rights of
access, by condemnation, eminent domain or transfer in lieu thereof for public
or quasi-public use under any Law, and proceeds arising out of any damage
thereto; (ii) all letter-of-credit rights (whether or not the letter of
credit is evidenced by a writing) Grantor now has or hereafter acquires
relating to the properties, rights, titles and interests referred to in this Section 1.3;
(iii) all commercial tort claims Grantor now has or hereafter acquires
relating to the properties, rights, titles and interests referred to in this Section 1.3;
and (iv) other interests of every kind and character which Grantor now has
or hereafter acquires in, to or for the benefit of the properties, rights,
titles and interests referred to above in this Section 1.3 and all
property used or useful in connection therewith, including but not limited to
rights of ingress and egress and remainders, reversions and reversionary rights
or interests; and if the estate of Grantor in any of the property referred to
above in this Section 1.3 is a leasehold estate, this conveyance
shall include, and the lien and security interest created hereby shall encumber
and extend to, all other or additional title, estates, interests or rights
which are now owned or may hereafter be acquired by Grantor in or to the
property demised under the lease creating the leasehold estate;

 

TO HAVE AND TO HOLD the foregoing rights,
interests and properties, and all rights, estates, powers and privileges
appurtenant thereto (herein collectively called the “Property”), unto
Trustee, and its successors or substitutes in this trust, in trust, in fee
simple forever, subject to the terms, provisions and conditions herein set
forth, to secure the obligations of Borrower under the Notes and Loan Documents
(as hereinafter defined) and all other indebtedness and matters defined as “Secured
Indebtedness” in Section 1.5 of this Mortgage.

 

Notwithstanding any of the above, the lien of
this Mortgage does not extend to the names “Trammell Crow Residential”, “Alexan”
and “TCR” or any variant thereof or the “TCR” logo or to any written or printed
material that contains any of such names or such logo, and if Lender forecloses
against the Premises, or Lender acquires the Premises (whether through
foreclosure,

 

DEED
OF TRUST — Page 5

 

deed in lieu of foreclosure
or other means), or if Lender takes possession of the Premises, or if a
receiver is appointed for the Premises, then Lender will not use, and any
person acquiring the Premises through foreclosure, deed in lieu of foreclosure
or other means shall not use, in connection with the Premises any of the names “Trammell
Crow Residential”, “Alexan” or “TCR” or any variant thereof or the “TCR”
logo.  The limitation of names listed in
this Section 1.3 does not imply a license or right to use any other name,
service mark, trademark or logo that is proprietary to Grantor or any of its
affiliates.

 

Section 1.4.            Security Interest.  Grantor hereby grants to Lender a security
interest in all of the Property which constitutes personal property or
fixtures, all proceeds and products thereof, and all supporting obligations
ancillary to or arising in any way in connection therewith (herein sometimes
collectively called the “Collateral”) to secure the obligations of
Grantor under the Notes and Loan Documents and all other indebtedness and
matters defined as Secured Indebtedness in Section 1.5 of this
Mortgage.  In addition to its rights
hereunder or otherwise, Lender shall have all of the rights of a secured party
under the UCC, as in effect from time to time, or under the Uniform Commercial
Code in force, from time to time, in any other state to the extent the same is
applicable Law.

 

Section 1.5.            Secured Indebtedness, Notes, Loan
Documents, Other Obligations.  This
Mortgage is made to secure and enforce the payment and performance of the
following promissory notes, obligations, indebtedness, duties and liabilities
and all renewals, extensions, supplements, increases, and modifications thereof
in whole or in part from time to time (collectively the “Secured
Indebtedness”):  (a) the
Promissory Note and all other promissory notes given in substitution therefor
or in modification, supplement, increase, renewal or extension thereof, in
whole or in part (such promissory note or promissory notes, whether one or
more, as from time to time renewed, extended, supplemented, increased or
modified and all other notes given in substitution therefor, or in
modification, renewal or extension thereof, in whole or in part, being
hereinafter called the “Notes”); (b)  all indebtedness,
liabilities, duties, covenants, promises and other obligations whether joint or
several, direct or indirect, fixed or contingent, liquidated or unliquidated,
and the cost of collection of all such amounts, owed by Borrower to Lender now
or hereafter incurred or arising pursuant to or permitted by the provisions of
the Notes, this Mortgage, or any other document now or hereafter evidencing,
governing, guaranteeing or securing the loan evidenced by the Notes executed by
Borrower or any Guarantor (as defined in the Mezzanine Loan Agreement), including
but not limited to any loan or credit agreement, letter of credit or
reimbursement agreement, tri-party financing agreement or other agreement
between Borrower and Lender, or among Borrower, Lender and any other party or
parties, pertaining to the repayment or use of the proceeds of the loan
evidenced by the Notes (the Notes, this Mortgage and such other documents, as
they or any of them may have been or may be from time to time renewed,
extended, supplemented, increased or modified, being herein sometimes
collectively called the “Loan Documents”; provided, however, the
Environmental Indemnity is not a Loan Document); (c) all future advances
made by Lender to Grantor or Borrower; provided, however, this clause (c) shall
not operate or be effective to constitute or require any assumption or payment
by any person, in any way, of any debt of any other person to the extent that
the same would violate or exceed the limit provided in any applicable usury or
other Law; and (d) the obligations of Grantor under this Mortgage.  Should the Secured 

 

DEED
OF TRUST — Page 6

 

Indebtedness
decrease or increase pursuant to the terms of the Notes or otherwise, at any
time or from time to time, this Mortgage shall retain its priority position of
record until (a) the termination of Lender’s obligations to make advances
under the Loan Documents and the full, final and complete payment of all the
Secured Indebtedness then outstanding, or (b) the full release and
termination of the liens and security interests created by this Mortgage.

 

Section 1.6.            Subordinate Deed of Trust.  This Mortgage, the Promissory Note, the
Mezzanine Loan Agreement and the other Loan Documents, and all rights of Lender
under this Mortgage, are subject and subordinate to (a) the Senior DOTs,
the other Senior Loan Documents and the rights of the Senior Lender arising
thereunder, and (b) the Senior Mezzanine DOT, the other Senior Mezzanine
Loan Documents and the rights of the Lender arising thereunder.  In the event of a conflict between the
provisions of the Senior Loan Documents and the provisions of the Loan
Documents, the provisions of the Senior Loan Documents shall control.  To the extent that Grantor is required to perform
any obligation under (i) both the Senior Loan Documents and this Mortgage
or (ii) both the Senior Mezzanine Loan Documents and this Mortgage,
Grantor shall be deemed to have complied with the applicable provision of this
Mortgage as long as Grantor has performed the corresponding obligation for the
benefit of the Senior Lender pursuant to the Senior Loan Documents or for the
benefit of the Lender pursuant to the Senior Mezzanine Loan Documents, as
applicable.  Reference is hereby made to
that certain Intercreditor and Subordination Agreement executed by Lender and
the Senior Lender, acting in its own capacity or as administrative agent on
behalf of itself and/or other lenders (the “Intercreditor Agreement”).  This Mortgage is subject to termination and
release upon the occurrence of certain events or circumstances as more
particularly described in Section 7 of the Intercreditor Agreement.

 

ARTICLE
2

 

Representations,
Warranties and Covenants

 

Section 2.1.            Grantor represents, warrants, and
covenants as follows:

 

(a)           Payment and Performance.  Grantor will timely and properly perform and
comply with all of the covenants, agreements, and conditions imposed upon it by
this Mortgage and will not permit an Event of Default to occur hereunder.  Time shall be of the essence in this
Mortgage.

 

(b)           Title and Permitted Encumbrances.  Grantor has, in Grantor’s own right, and
Grantor covenants to maintain, lawful, good and marketable title to the
Property, is lawfully seized and possessed of the Property and every part
thereof, and has the right to convey the same, free and clear of all liens,
charges, claims, security interests, and encumbrances except for (i) the
matters, if any, set forth under on Exhibit B attached hereto, but
only to the extent that the same are valid and subsisting and affect the
Property, (ii) the liens and security interests evidenced by this
Mortgage, (iii) statutory liens for real estate taxes, assessments and
other governmental charges on the Property which are not yet delinquent or are
being contested in accordance with Section 2.1(c) or
comparable provisions of the documents evidencing or

 

DEED
OF TRUST — Page 7

 

securing
the Senior Loan or the Commercial Loan, (iv) rights of tenants under
leases, (v)  the liens and security interests evidenced by the Senior
DOTs, (vi) other liens and security interests (if any) in favor of Lender
or otherwise approved by Lender, (vii) mechanics’ liens being contested in
accordance with Section 2.1(l) or comparable provisions of the
documents evidencing or securing the Senior Loan or the Commercial Loan, and (viii) the
Senior Mezzanine DOT (the matters described in the foregoing clauses (i), (ii),
(iii), (iv), (v), (vi), (vii) and (viii) being herein called the “Permitted
Encumbrances”).  Grantor, and Grantor’s
successors and assigns, will warrant generally and forever defend title to the
Property, subject as aforesaid, to Trustee, and its successors or substitutes,
against the claims and demands of all persons claiming or to claim the same or
any part thereof.  Except as permitted in
the Mezzanine Loan Agreement, Grantor will punctually pay, perform, observe and
keep all covenants, obligations and conditions in or pursuant to any Permitted
Encumbrance and will not modify or permit modification of any Permitted
Encumbrance without the prior written consent of Lender.  Inclusion of any matter as a Permitted
Encumbrance does not constitute approval or waiver by Lender of any existing or
future violation or other breach thereof by Grantor, by the Property or otherwise.  No part of the Property constitutes all or
any part of the homestead of Grantor.  If
any right or interest of Lender in the Property or any part thereof shall be
endangered or questioned or shall be attacked directly or indirectly, Trustee
and Lender, or either of them (whether or not named as parties to legal
proceedings with respect thereto), are hereby authorized and empowered to take
such steps as in their discretion may be proper for the defense of any such
legal proceedings or the protection of such right or interest of Lender,
including the employment of independent counsel, the prosecution or defense of
litigation, and the compromise or discharge of adverse claims.  All reasonable expenditures so made of every
kind and character shall be a demand obligation (which obligation Grantor
hereby promises to pay) owing by Grantor to Lender or Trustee (as the case may
be) with interest as provided in the Notes, and the party (Lender or Trustee,
as the case may be) making such expenditures shall be subrogated to all rights
of the person receiving such payment.

 

(c)           Taxes and Other Impositions.  Grantor will pay, or cause to be paid, all
taxes, assessments and other charges or levies imposed upon or against or with
respect to the Property or the ownership, use, occupancy or enjoyment of any
portion thereof, or any utility service thereto, as the same become due and
payable, including but not limited to all ad valorem taxes assessed against the
Property or any part thereof, and shall deliver promptly to Lender such
evidence of the payment thereof as Lender may require; provided, however, that
Grantor may contest the payment of any such tax or other imposition to the
extent and in the manner permitted by Law if and so long as the following
conditions are satisfied: (i) Grantor shall have notified Lender of
Grantor’s contest; (ii) Grantor shall diligently and in good faith contest
the same by appropriate legal proceedings which shall operate to prevent the
enforcement or collection of the same and the sale of the Property, or any part
thereof, to satisfy the same; (iii) Grantor shall have furnished to Lender
a cash deposit reasonably satisfactory to Lender, or an indemnity bond
reasonably satisfactory to Lender with a surety reasonably satisfactory to
Lender, in the amount of the tax or other imposition plus a reasonable
additional sum to pay all costs, interest and penalties that may be imposed or
incurred in connection therewith (or in the statutory amount, in the case of a
bond authorized by statute), to assure payment of the matters under contest and
to prevent any sale or forfeiture of the Property or any part thereof, but in
each case, only to the 

 

DEED
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extent
Grantor has not furnished a cash deposit or indemnity bond to either the Senior
Lender pursuant to the Senior Loan Documents or the Lender pursuant to the
Senior Mezzanine Loan Documents; (iv) Grantor shall promptly upon final
determination thereof pay the amount of any such tax or other imposition so
determined, together with all costs, interest and penalties which may be
payable in connection therewith; and (v) the failure to pay the tax or
other imposition does not constitute an event of default under any other deed
of trust, mortgage or security interest covering or affecting any part of the
Property and does not subject Lender to any civil or criminal liability or to
any damages or expense not reimbursed by Grantor.  Notwithstanding the foregoing, Grantor shall
immediately upon request of Lender pay (and if Grantor shall fail so to do,
Lender may, but shall not be required to, pay or cause to be discharged or
bonded against) any such tax or other imposition notwithstanding such contest
if in the reasonable opinion of Lender, the Property shall be in jeopardy or in
danger of being forfeited or foreclosed. 
Lender may pay over any such cash deposit or part thereof to the
claimant entitled thereto at any time when, in the judgment of Lender, the
entitlement of such claimant is established.

 

(d)           Insurance. 
Grantor shall obtain and maintain at no expense to Lender or Trustee
insurance in respect of the Property by the Mezzanine Loan Agreement.  Grantor shall cause all premiums on policies
required hereunder to be paid as they become due and payable and promptly
deliver to Lender evidence reasonably satisfactory to Lender of the timely
payment thereof.  If any loss occurs at
any time when Grantor has failed to perform Grantor’s covenants and agreements
in this paragraph with respect to any insurance payable because of loss
sustained to any part of the Property, whether or not such insurance is
required by Lender, then subject to the rights of the Senior Lender and without
duplication of Lender’s rights under the Senior Mezzanine DOT or other Senior
Mezzanine Loan Documents, Lender shall nevertheless be entitled to the benefit
of all insurance covering the loss and held by or for Grantor, to the same
extent as if it had been made payable to Lender.  Upon any foreclosure hereof or transfer of
title to the Property in extinguishment of the whole or any part of the Secured
Indebtedness, all of Grantor’s right, title and interest in and to the
insurance policies (to the extent transferable) referred to in this Section (including
unearned premiums) and all proceeds payable thereunder shall thereupon vest in
the purchaser at foreclosure or other such transferee, to the extent
permissible under such policies, subject to the rights of the Senior Lender and
without duplication of Lender’s rights under the Senior Mezzanine DOT or other
Senior Mezzanine Loan Documents, Lender shall have the right (but not the
obligation) to receive the proceeds of, all insurance for loss of or damage to
the Property, and if an Event of Default exists (after taking into consideration
applicable notice, grace and cure periods) to make proof of loss for, settle
and adjust any claim under such insurance, regardless of whether or not such
insurance policies are required by Lender, and the reasonable expenses incurred
by Lender in the adjustment and collection of insurance proceeds shall be a
part of the Secured Indebtedness and shall be due and payable to Lender on
demand.  Lender shall not be, under any
circumstances, liable or responsible for failure to collect or exercise diligence
in the collection of any of such proceeds or for the obtaining, maintaining or
adequacy of any insurance or for failure to see to the proper application of
any amount paid over to Grantor or to any third party.  Any such proceeds received by Lender shall be
applied as provided in the applicable provisions of the Mezzanine Loan
Agreement.

 

DEED OF TRUST — Page 9

(e)           Reserve for Insurance, Taxes and Assessments.  Upon the occurrence of an Event of Default
(after taking into consideration applicable notice, grace and cure periods), in
order to secure the performance and discharge of Grantor’s obligations referred
to below, but not in lieu of such payment and performance, Grantor will deposit
with Lender a sum equal to real estate taxes, assessments and charges (which
charges for the purposes of this paragraph shall include without limitation any
recurring charge which could result in a lien against the Property) against the
Property for the current year and the premiums for such policies of insurance
for the current year (to the extent such premiums have not been paid), all as
estimated by Lender and prorated to the end of the calendar month following the
month during which Lender’s request is made, and thereafter will deposit with
Lender, on each date when an installment of principal and/or interest is due on
the Notes, sufficient funds (as estimated from time to time by Lender) to
permit Lender to pay at least fifteen (15) days prior to the due date thereof,
the next maturing real estate taxes, assessments and charges and premiums for
such policies of insurance; provided, however, Grantor shall not be obligated
to make any such deposits to the extent it makes deposits of a similar
character with the Senior Lender under the Senior Loan Documents or has made
such deposits to the Lender under the Senior Mezzanine DOT.  All such funds shall be deposited into an
interest bearing account and, provided that no Event of Default or event which,
with notice or passage of time or both, would constitute an Event of Default
has occurred and is then continuing, Grantor shall, upon written request to
Lender, be entitled to receive the interest accrued on such account.  Lender shall have the right to rely upon tax
information furnished by applicable taxing authorities in the payment of such
taxes or assessments and shall have no obligation to make any protest of any
such taxes or assessments.  To the extent
permitted by Law, any excess over the amounts required for such purposes shall
be held by Lender for future credit against amounts due under this paragraph or
refunded to Grantor, at Lender’s option, and any deficiency in such funds so
deposited shall be made up by Grantor upon demand of Lender.  All such funds so deposited (including any
interest to which Grantor is not entitled under the provisions above) shall be
applied by Lender toward the payment of such taxes, assessments, charges and
premiums when statements therefor are presented to Lender by Grantor (which
statements shall be presented by Grantor to Lender a reasonable time before the
applicable amount is due); provided, however, that, if an Event of Default
shall then exist hereunder (after taking into consideration applicable notice,
grace and cure periods), such funds shall be applied first to past or currently
due taxes, assessments, charges or premiums, together with any penalties or
late charges with respect thereto, and the balance may be applied at Lender’s
option to the Secured Indebtedness in the order determined by Lender in its
sole discretion.  The conveyance or
transfer of Grantor’s interest in the Property for any reason (including
without limitation the foreclosure of a subordinate lien or security interest
or a transfer by operation of Law) shall constitute an assignment or transfer
of Grantor’s interest in and rights to such funds held by Lender under this
paragraph but subject to the rights of Lender hereunder.

 

(f)            Condemnation. 
Immediately upon obtaining knowledge thereof, Grantor shall notify
Lender of any threatened or pending proceeding for condemnation affecting the
Property or arising out of damage to the Property, and Grantor shall, at
Grantor’s expense, diligently prosecute any such proceedings, and shall consult
with Lender and its attorneys and experts, and cooperate with them in the
carrying on the defense of any such proceedings.  Lender shall have the right (but not the
obligation) to participate in any such proceeding and to be represented by

 

DEED
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counsel of its own
choice.  Subject to the rights of the
administrative agent and/or lenders in respect of the Senior Loan, the Commercial
Loan or the Senior DOTs, as applicable, and without duplication of Lender’s
rights under the Senior Mezzanine DOT or other Senior Mezzanine Loan Documents,
Lender shall be entitled to receive all sums which may be awarded or become
payable to Grantor for the condemnation of the Property, or any part thereof,
for public or quasi-public use, or by virtue of private sale in lieu thereof,
and any sums which may be awarded or become payable to Grantor for injury or
damage to the Property.  To the extent permitted
by applicable Law and except as otherwise expressly provided herein, Grantor
hereby specifically, unconditionally and irrevocably waives all rights of a
property owner granted under applicable law which provide for allocation of
condemnation proceeds between a property owner and a lienholder, including the
provisions of NRS 37.115.  Grantor shall,
promptly upon request of Lender, execute such additional assignments and other
documents as may be necessary from time to time to permit such participation
and, subject to the rights of administrative agent and/or lenders in respect of
the Senior Loan, the Commercial Loan or the Senior DOTs, as applicable, and
without duplication of Lender’s rights under the Senior Mezzanine DOT or other
Senior Mezzanine Loan Documents, to enable Lender to collect and receipt for
any such sums.  Subject to the rights of
the administrative agent and/or lenders in respect of the Senior Loan, the
Commercial Loan or the Senior DOTs, as applicable, and without duplication of
Lender’s rights under the Senior Mezzanine DOT or other Senior Mezzanine Loan
Documents, all such sums are hereby assigned to Lender, and shall be applied as
provided in the applicable provisions of the Mezzanine Loan Agreement.  In any event the unpaid portion of the
Secured Indebtedness shall remain in full force and effect and the payment
thereof shall not be excused.  Lender
shall not be, under any circumstances, liable or responsible for failure to
collect or to exercise diligence in the collection of any such sum or for
failure to see to the proper application of any amount paid over to
Grantor.  Lender is hereby authorized, in
the name of Grantor, to execute and deliver valid acquittances for, and to
appeal from, any such award, judgment or decree.  All reasonable costs and expenses (including
but not limited to reasonable attorneys’ fees) incurred by Lender in connection
with any condemnation shall be a demand obligation owing by Grantor (which
Grantor hereby promises to pay) to Lender pursuant to this Mortgage.

 

(g)           Compliance with Legal Requirements.  Grantor, the Property and the use, operation
and maintenance thereof and all activities thereon do and shall comply in all
material respects with all applicable Legal Requirements (hereinafter defined).  The Property is not, and shall not be,
dependent on any other property or premises or any interest therein other than
the Property to fulfill any requirement of any Legal Requirement.  Grantor shall not, by act or omission, permit
any building or other improvement not subject to the lien of this Mortgage to
rely on the Property or any interest therein to fulfill any requirement of any
Legal Requirement.  No improvement upon
or use of any part of the Property constitutes a nonconforming use under any
zoning Law or similar Law.  The Property
will contain within its boundaries a sufficient number of parking spaces to
satisfy all Laws.  There are no written
or oral agreements with any third parties regarding parking, ingress and
egress, use or maintenance of common areas or otherwise except as provided in
the Permitted Encumbrances.  Grantor has
obtained or will obtain when required and shall preserve and keep in full force
and effect, all requisite zoning, utility, building, health, environmental and
operating permits from the governmental authorities having jurisdiction over
the Property.  If Grantor receives a
notice or claim from any person that 

 

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the
Property, or any use, activity, operation or maintenance thereof or thereon, is
not in compliance with any Legal Requirement, Grantor will promptly furnish a
copy of such notice or claim to Lender. 
Without limiting the foregoing, Grantor hereby agrees that upon receipt
of any notice of noncompliance with restrictive covenants affecting the
Property because of the encroachment of the Improvements over the building
line, Grantor shall immediately (x) provide Lender with written notice
thereof and (y) commence to cure such noncompliance and pursue such cure
to completion. Grantor has received no notice and has no knowledge of any such
noncompliance.  As used in this
Mortgage:  (i) the term “Legal
Requirement” means any Law (hereinafter defined), agreement, covenant,
restriction, easement or condition (including, without limitation of the
foregoing, any condition or requirement imposed by any insurance or surety
company) that is binding on Grantor or the Property, as any of the same now
exists or may be changed or amended or come into effect in the future; and (ii) the
term “Law” means any federal, state or local law, statute, ordinance, code,
rule, regulation, license, permit, authorization, decision, order, injunction
or decree, domestic or foreign.

 

(h)           Condition of Property.  Upon payment of applicable connection fees,
the Property will be separately served by electric, gas, storm and sanitary
sewers, sanitary water supply, telephone and other utilities required for the
use thereof as represented by Grantor at or within the boundary lines of the Property
or at points from which extensions of facilities contemplated by the Mezzanine
Loan Agreement will originate.  All
streets, alleys and easements necessary to serve the Property for the use
represented by Grantor have been completed and are serviceable and (i) such
streets have been dedicated and accepted by applicable governmental entities, (ii) such
streets benefit the Property pursuant to valid and binding easement agreements
which permit Grantor and its successors, assigns and mortgagees, the uninterrupted
use of the same for ingress and egress to and from the Property or (iii) the
right-of-way for such streets have been established and such streets will be
constructed as part of the improvements provided for in the Mezzanine Loan
Agreement.  To Grantor’s knowledge,
design conditions of the Property are such that no drainage or surface or other
water will, in any actionable way, drain across or rest upon either the
Property or land of others.  No portion
of any of the buildings that are or are to be part of the Property is within a
flood plain except as shown on a survey delivered to Lender, and none of the
Improvements creates (or when constructed will create) an encroachment over,
across or upon any of the Property boundary lines, rights of way or easements,
and no building or other improvement on adjoining land creates such an
encroachment onto the Property except as shown on a survey delivered to Lender.

 

(i)            Maintenance, Repair and Restoration.  Grantor will keep the Property in first class
order, repair, operating condition and appearance, causing all necessary
repairs, renewals, replacements, additions and improvements to be promptly
made, and will not allow any of the Property to be misused, abused or wasted or
to deteriorate.  Notwithstanding the
foregoing, Grantor will not, without the prior written consent of Lender, (i) remove
from the Property any fixtures or personal property covered by this Mortgage
except such as is replaced by Grantor by an article of equal suitability and
value, owned by Grantor, free and clear of any lien or security interest
(except Permitted Encumbrances and the liens and security interests created by
this Mortgage and the other Loan Documents), or (ii) make any structural
alteration to the Property or any other alteration thereto which impairs the
value thereof, or (iii) make any alteration to the 

 

DEED
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Property involving  any single
estimated expenditure exceeding $300,000, except pursuant to plans and
specifications approved in writing by Lender. 
Upon request of Lender but no more often than once in any twelve month
period (unless Lender determines in its good faith business judgment, that it
needs a current inventory more frequently), Grantor will deliver to Lender an
inventory describing and showing the make, model, and location of all fixtures
and personal property used in the management, maintenance and operation of the
Property owned by Grantor with a certification by Grantor that said inventory
is a true and complete schedule of all such fixtures and personal property
owned by Grantor used in the management, maintenance and operation of the
Property, that such items specified in the inventory constitute all of the
fixtures and personal property required in the management, maintenance and
operation of the Property except for items identified or leased by Grantor in
accordance with this Mortgage and other items owned by service providers and
that all such items are owned by Grantor free and clear of any lien or security
interest (except Permitted Encumbrances and the liens and security interests
created by this Mortgage and the other Loan Documents).  If any act or occurrence of any kind or
nature (including any condemnation or any casualty for which insurance has not
been obtained or is not obtainable) shall result in damage to or loss or
destruction of the Property in excess of $75,000.00, Grantor shall give prompt
notice thereof to Lender and, unless Lender agrees otherwise, Grantor shall
promptly, at Grantor’s sole cost and expense and regardless of whether
insurance or condemnation proceeds (if any) shall be available or sufficient
for the purpose, secure the Property as necessary and commence and continue
diligently to completion to restore, repair, replace and rebuild the Property
as nearly as possible to its value, condition and character immediately prior
to the damage, loss or destruction.

 

 

(j)            No
Other Liens.   Grantor will not,
without the prior written consent of Lender, create, place or permit to be
created or placed, or through any act or failure to act, acquiesce in the
placing of, or allow to remain, any deed of trust, mortgage, voluntary or
involuntary lien, whether statutory, constitutional or contractual, security
interest, encumbrance or charge, or conditional sale or other title retention
document, against or covering the Property, or any part thereof, other than the
Permitted Encumbrances, regardless of whether the same are expressly or
otherwise subordinate to the lien or security interest created in this
Mortgage, and should any of the foregoing become attached hereafter in any
manner to any part of the Property without the prior written consent of Lender,
Grantor will cause the same to be promptly discharged and released; provided,
however, that Grantor may contest involuntary mechanics’ and materialmen’s
liens to the extent and in the manner permitted by Law if and so long as
Grantor shall have satisfied all of the conditions of Section 2.1 (c) (regarding
contest by Grantor of taxes or other impositions), which conditions shall also
apply in all respects to Grantor’s privilege to contest involuntary mechanics’
or materialmen’s liens under this paragraph. 
Grantor will own all parts of the Property and will not acquire any
fixtures, equipment or other property (including software embedded therein)
forming a part of the Property pursuant to a lease, license, security agreement
or similar agreement, whereby any party has or may obtain the right to
repossess or remove same, without the prior written consent of Lender, except
that Grantor may lease certain furniture and accessories for display in the
model units on the Property, certain furniture and equipment for the clubhouse
and management offices and cable, television, telephone, internet access,
laundry and security equipment pursuant to lease agreements approved by
Lender.  If Lender consents to the
voluntary grant by Grantor of any deed of trust or mortgage, lien, security

 

DEED
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interest, or other encumbrance (other than the Permitted Encumbrances)
(hereinafter called “Subordinate Mortgage”) covering any of the Property
or if the foregoing prohibition is determined by a court of competent
jurisdiction to be unenforceable as to a Subordinate Mortgage, any such
Subordinate Mortgage shall contain express covenants to the effect that:

 

(1)           the
Subordinate Mortgage is unconditionally subordinate to this Mortgage;

 

(2)           if any
action (whether judicial or pursuant to a power of sale) shall be instituted to
foreclose or otherwise enforce the Subordinate Mortgage, no tenant of any of
the Leases (hereinafter defined) shall be named as a party defendant, and no
action shall be taken that would terminate any occupancy or tenancy without the
prior written consent of Lender;

 

(3)           Rents,
(hereinafter defined) if collected by or for the holder of the Subordinate
Mortgage, shall be applied first to the payment of the Senior Loan and the
Secured Indebtedness then due and expenses incurred in the ownership, operation
and maintenance of the Property, prior to being applied to any indebtedness
secured by the Subordinate Mortgage;

 

(4)           written
notice of default under the Subordinate Mortgage and written notice of the
commencement of any action (whether judicial or pursuant to a power of sale) to
foreclose or otherwise enforce the Subordinate Mortgage or to seek the
appointment of a receiver for all or any part of the Property shall be given to
Lender with or immediately after the occurrence of any such default or
commencement; and

 

(5)           neither
the holder of the Subordinate Mortgage, nor any purchaser at foreclosure
thereunder, nor anyone claiming by, through or under any of them shall succeed
to any of Grantor’s rights hereunder without the prior written consent of
Lender.

 

(k)           Operation of Property.  Grantor will operate the Property in a good
and workmanlike manner and in accordance with all Legal Requirements and will
pay all fees or charges of any kind in connection therewith (except for fees
and charges that Grantor is contesting in good faith in accordance with the
provisions of this Mortgage).  Grantor
will keep the Property occupied so as not to impair the insurance carried
thereon.  Grantor will not use or occupy,
or conduct any activity on, or allow the use or occupancy of or the conduct of
any activity on, the Property in any manner which violates any Legal
Requirement or which constitutes a public or private nuisance or which makes
void, voidable or cancelable, or increases the premium of, any insurance then
in force with respect thereto.  Grantor
will not initiate or permit any zoning reclassification of the Property or seek
any variance under existing zoning ordinances applicable to the Property or use
or permit the use of the Property in such a manner which would result in such
use becoming a nonconforming use under applicable zoning ordinances or any
other Legal Requirement.  Grantor will
not impose any easement, restrictive covenant or encumbrance upon the Property,
execute or file any subdivision plat affecting the Property or consent to the
annexation of the Property to any municipality, without the prior written
consent of Lender.  Grantor will not do
or suffer to be done any intentional act whereby the value of any part of the Property
may be lessened; provided, however, this sentence is not

 

DEED
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intended
and shall not be construed, to prohibit Grantor from making adjustments to the
rental rates for apartment units in the Property that are necessary to meet
market rental rates for apartment projects of similar quality located in the
general vicinity of the Property. 
Grantor will preserve, protect, renew, extend and retain all material
rights and privileges granted for or applicable to the Property.  Without the prior written consent of Lender,
there shall be no drilling or exploration for or extraction, removal or
production of any mineral, hydrocarbon, gas, natural element, compound or
substance (including sand and gravel) from the surface or subsurface of the
Land regardless of the depth thereof or the method of mining or extraction
thereof.

 

(l)            Debts for Construction, Etc.  Grantor will cause all debts and liabilities
of any character (including without limitation all debts and liabilities for
labor, material and equipment (including software embedded therein) and all
debts and charges for utilities servicing the Property) incurred in the
construction, maintenance, operation and development of the Property to be
promptly paid, subject to Grantor’s right to contest the validity or amounts
thereof in accordance with procedures like those in Section 2.1(c).

 

(m)          Financial Matters. 
Grantor is solvent after giving effect to all borrowings contemplated by
the Loan Documents and no proceeding under any Debtor Relief Law (hereinafter
defined) is pending (or, to Grantor’s knowledge, threatened) by or against
Grantor, as a debtor.

 

(n)           Status of Grantor; Suits and Claims; Loan Documents.  If Grantor is a corporation, partnership,
limited liability company, or other legal entity, Grantor is and will continue
to be (i) duly organized, validly existing and in good standing under the
laws of its state of organization, (ii) authorized to do business in, and
in good standing in, each state in which the Property is located, and (iii) possessed
of all requisite power and authority to carry on its business and to own and
operate the Property.  This Mortgage has
been duly authorized, executed and delivered by Grantor, and the obligations
hereunder and the performance hereof by Grantor in accordance with its terms
are and will continue to be within Grantor’s power and authority (without the
necessity of joinder or consent of any other person), are not and will not be
in contravention of any Legal Requirement or any other document or agreement to
which Grantor or the Property is subject, and do not and will not result in the
creation of any encumbrance against any assets or properties of Grantor, except
for the liens of the Permitted Encumbrances and as otherwise expressly
contemplated by the Loan Documents. 
There is no suit, action, claim, investigation, inquiry, proceeding or
demand pending (or, to Grantor’s knowledge, threatened) against Grantor or
which affects the Property (including, without limitation, any which challenges
or otherwise pertains to Grantor’s title to the Property) or the validity,
enforceability or priority of any of the Loan Documents, except as has been
disclosed in writing to Lender in connection with the loan evidenced by the
Notes.  There is no judicial or
administrative action, suit or proceeding pending (or, to Grantor’s knowledge,
threatened) against Grantor, except as has been disclosed in writing to Lender
in connection with the loan evidenced by the Notes.  This Mortgage constitutes a legal, valid and
binding obligation of Grantor enforceable in accordance with its terms, except
as the enforceability hereof may be limited by Debtor Relief Laws (hereinafter
defined) and except as the availability of certain remedies may be limited by
general principles of equity.  Grantor is
not a “foreign person” within the meaning

 

DEED
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of
the Internal Revenue Code of 1986, as amended, Sections 1445 and 7701 (i.e.
Grantor is not a non-resident alien, foreign corporation, foreign partnership,
foreign trust or foreign estate as those terms are defined therein and in any
regulations promulgated thereunder). 
Grantor’s exact legal name is correctly set forth at the end of this
Mortgage.  If Grantor is not an
individual, Grantor is an organization of the type and (if not an unregistered
entity) is incorporated in or organized under the laws of the state specified
in the introductory paragraph of this Mortgage. 
If Grantor is an unregistered entity (including, without limitation, a
general partnership) it is organized under the laws of the state specified in
the introductory paragraph of this Mortgage. 
Grantor will not cause or permit any change to be made in its name,
identity (including its trade name or names), or corporate or partnership
structure, unless Grantor shall have notified Lender in writing of such change
at least 30 days prior to the effective date of such change, and shall have
first taken all action reasonably required by Lender for the purpose of further
perfecting or protecting the lien and security interest of Lender in the
Property.  In addition, Grantor shall not
change its corporate or partnership structure without first obtaining the prior
written consent of Lender.  Grantor’s
principal place of business and chief executive office, and the place where
Grantor keeps its books and records, including recorded data of any kind or
nature, regardless of the medium of recording including, without limitation,
software, writings, plans, specifications and schematics concerning the
Property, will be (unless Grantor notifies Lender of any change in writing at
least 30 days prior to the date of such change) the address of Grantor set
forth at the end of this Mortgage and such other additional addresses within
the United States of which Grantor has notified Lender.  Grantor’s organizational identification
number, if any, assigned by the state of incorporation or organization is
correctly set forth on the first page of this Mortgage.  Grantor shall promptly notify Lender (i) of
any change of its organizational identification number, or (ii) if Grantor
does not now have an organization identification number and later obtains one,
of such organizational identification number.

 

(o)           Certain Environmental Matters.  To the extent applicable to Grantor, Grantor
shall comply with the terms and covenants and agreements with respect to
environmental matters of that certain Environmental Indemnity Agreement
pertaining to the Property (the “Environmental Indemnity”) among
Borrower and Lender.

 

(p)           Further Assurances. 
Grantor will, promptly on request of Lender, (i) correct any
defect, error or omission which may be discovered in the contents, execution or
acknowledgment of this Mortgage; (ii) execute, acknowledge, deliver,
procure and record and/or file such further documents (including, without
limitation, further deeds of trust, security agreements, and assignments of
rents or leases) and do such further acts as are, in Lender’s reasonable
judgment, necessary, desirable or proper to carry out more effectively the
purposes of this Mortgage, to more fully identify and subject to the liens and
security interests hereof any property intended to be covered hereby (including
specifically, but without limitation, any renewals, additions, substitutions,
replacements, or appurtenances to the Property) or as deemed advisable by
Lender to protect the lien or the security interest hereunder against the
rights or interests of third persons; and (iii) provide such certificates,
documents, reports, information, affidavits and other instruments and do such
further acts as may be necessary, desirable or proper in the reasonable
determination of Lender to enable Lender to comply with the requirements or
requests of any agency having jurisdiction over Lender or any examiners of such
agencies with respect to the

 

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Grantor or the Property; provided, however, such further acts shall be
consistent with the terms contained in this Mortgage and shall not unreasonably
alter the rights and obligations of Grantor under this Mortgage.  Grantor shall pay all costs connected with
any of the foregoing, which shall be a demand obligation owing by Grantor
(which Grantor hereby promises to pay) to Lender pursuant to this Mortgage.

 

(q)           Reserved.

 

(r)            Reserved.

 

(s)           Taxes on Notes or Mortgage.  In the event of the enactment after this date
of any Law of any governmental entity applicable to Lender, the Notes, the
Property or this Mortgage deducting from the value of property for the purpose
of taxation any lien or security interest thereon, or imposing upon Lender the
payment of the whole or any part of the taxes or assessments or charges or liens
herein required to be paid by Grantor, or changing in any way the Laws relating
to the taxation of deeds of trust or mortgages or security agreements or debts
secured by deeds of trust or mortgages or security agreements or the interest
of the mortgagee or secured party in the property covered thereby, or the
manner of collection of such taxes, so as to affect this Mortgage or the
Secured Indebtedness or Lender, then, and in any such event, Grantor, upon
demand by Lender, shall pay such taxes, assessments, charges or liens, or
reimburse Lender therefor; provided, however, that if in the opinion of counsel
for Lender (i) it might be unlawful to require Grantor to make such
payment or (ii) the making of such payment might result in the imposition
of interest beyond the maximum amount permitted by Law, then and in such event,
Lender may elect, to the extent permitted by applicable law, by notice in
writing given to Grantor, to declare all of the Secured Indebtedness to be and
become due and payable sixty (60) days from the giving of such notice.

 

(t)            Statement Concerning Mortgage.  Grantor shall at any time and from time to
time furnish within seven (7) days of request by Lender a written
statement in such form as may be reasonably required by Lender stating that (i) this
Mortgage is a valid and binding obligation of Grantor, enforceable against
Grantor in accordance with its terms; (ii) this Mortgage has not been
released, subordinated or modified; and (iii) Grantor has no offsets or
defenses against the enforcement of this Mortgage.  If any of the foregoing statements are
untrue, Grantor shall, alternatively, specify the reasons therefor.

 

Section 2.2.            Performance by Lender on Grantor’s
Behalf.  Grantor agrees that, if
Grantor fails to perform any act or to take any action which under this
Mortgage, Grantor is required to perform or take, and if such failure then
constitutes an Event of Default hereunder (whether or not the Secured
Indebtedness has been accelerated), Lender, in Grantor’s name or its own name,
may, but shall not be obligated to, perform or cause to be performed such act
or take such action or pay such money, and any expenses so incurred by Lender
and any money so paid by Lender, shall be a demand obligation owing by Grantor
to Lender (which obligation Grantor hereby promises to pay), shall be a part of
the Secured Indebtedness and Lender, upon making such payment, shall be
subrogated to all of the rights of the person, entity or body politic receiving
such payment.  After the occurrence and
during the continuance of an Event of 

 

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Default,
Lender shall have the right to enter upon the Property at any time and from
time to time for any such purposes.  No
such payment or performance by Lender shall waive or cure any Event of Default
or waive any right, remedy or recourse of Lender.  Any such payment may be made by Lender in
reliance on any statement, invoice or claim without inquiry into the validity
or accuracy thereof.  Each amount due and
owing by Grantor to Lender pursuant to this Mortgage shall bear interest, from
the date such amount becomes due until paid, whether before or after a sale as
described in Section 5.2 at the Default Interest Rate (as defined
in the Mezzanine Loan Agreement) but never in excess of the maximum nonusurious
amount permitted by applicable Law, which interest shall be payable to Lender
on demand; and all such amounts, together with such interest thereon, shall
automatically and without notice be a part of the Secured Indebtedness.  The amount and nature of any expense by
Lender hereunder and the time when paid shall be fully established by the
certificate of Lender or any of Lender’s officers or agents.

 

Section 2.3.            Absence of Obligations of Lender
with Respect to Property. 
Notwithstanding anything in this Mortgage to the contrary, including,
without limitation, the definition of “Property” and/or the provisions of Article 3
hereof, (i) to the extent permitted by applicable Law, the Property is
composed of Grantor’s rights, title and interests therein but not Grantor’s
obligations, duties or liabilities pertaining thereto, (ii) Lender does
not assume or shall have any obligations, duties or liabilities in connection
with any portion of the items described in the definition of “Property” herein,
either prior to or after obtaining title to such Property, whether by
foreclosure sale, the granting of a deed in lieu of foreclosure or otherwise,
and (iii) Lender may, at any time prior to or after the acquisition of
title to any portion of the Property as above described, advise any party in
writing as to the extent of Lender’s interest therein and/or expressly
disaffirm in writing any rights, interests, obligations, duties and/or
liabilities with respect to such Property or matters related thereto.  Without limiting the generality of the
foregoing, it is understood and agreed that Lender shall not have any
obligations, duties or liabilities prior to or after acquisition of title to
any portion of the Property, as lessee under any lease or purchaser or seller
under any contract or option unless Lender elects otherwise by written
notification.

 

Section 2.4.            Authorization to File Financing
Statements; Power of Attorney. 
Grantor hereby authorizes Lender at any time and from time to time to
file any initial financing statements, amendments thereto and continuation
statements as authorized by applicable Law, required by Lender to establish or
maintain the validity, perfection and priority of the security interests granted
in this Mortgage.  Grantor also ratifies
its authorization for Lender to have filed any like initial financing
statements, amendments thereto or continuation statements if filed prior to the
date of this Mortgage.  Grantor hereby
irrevocably constitutes and appoints Lender and any officer or agent of Lender,
with full power of substitution, as its true and lawful attorneys-in-fact with
full irrevocable power and authority in the place and stead of Grantor or in
Grantor’s own name to execute in Grantor’s name any such documents and to
otherwise carry out the purposes of this Section 2.4, to the extent
that Grantor’s authorization above is not sufficient.  To the extent permitted by law, Grantor
hereby ratifies all acts said attorneys-in-fact shall lawfully do, have done in
the past or cause to be done in the future by virtue hereof.  This power of attorney is a power coupled
with an interest and shall be irrevocable.

 

DEED OF TRUST — Page 18

ARTICLE 3

Assignment of Rents and Leases

 

Section 3.1.                                   Assignment.  Subject to the rights of the administrative
agent and/or lenders in respect of the Senior Loan, the Commercial Loan or the
Senior DOTs, as applicable, and without duplication of Lender’s rights under
the Senior Mezzanine DOT or other Senior Mezzanine Loan Documents, Grantor
hereby assigns to Lender all Rents (as hereinafter defined) and all of Grantor’s
rights in and under all Leases (hereinafter defined).  So long as no Event of Default (hereinafter
defined) has occurred, Grantor shall have a license (which license shall
terminate automatically and without further notice upon the occurrence of an
Event of Default) to collect, but not prior to accrual, the Rents under the
Leases and, where applicable, subleases (such Rents to be held in trust for
Lender, subject to the rights of the administrative agent and/or lenders in
respect of the Senior Loan, the Commercial Loan or the Senior DOTs, as
applicable, and without duplication of Lender’s rights under the Senior
Mezzanine DOT or other Senior Mezzanine Loan Documents) and to otherwise deal
with all Leases as permitted by this Mortgage. 
Each month, provided no Event of Default has occurred, Grantor may retain
such Rents as were collected that month and held in trust for Lender; provided,
however, that all Rents collected by Grantor shall be applied solely to the
ordinary and necessary expenses of owning and operating the Property and
obligations under the Senior Loan Documents or paid to Lender before
application to any other purpose. 
Subject to the rights of the administrative agent and/or lenders in
respect of the Senior Loan, the Commercial Loan or the Senior DOTs, as
applicable, and without duplication of Lender’s rights under the Senior Mezzanine
DOT or other Senior Mezzanine Loan Documents, upon the revocation of such
license, Lender shall have the right, power and privilege (but shall be under
no duty) to demand possession of the Rents, which demand shall to the fullest
extent permitted by applicable Law be sufficient action by Lender to entitle
Lender to immediate and direct payment of the Rents (including delivery to
Lender of Rents collected for the period in which the demand occurs and for any
subsequent period), for application as provided in this Mortgage.  Subject to the rights of the administrative
agent and/or lenders in respect of the Senior Loan, the Commercial Loan or the
Senior DOTs, as applicable, and without duplication of Lender’s rights under
the Senior Mezzanine DOT or other Senior Mezzanine Loan Documents, Grantor
hereby authorizes and directs the tenants under the Leases to pay Rents to
Lender upon written demand by Lender, without further consent of Grantor,
without any obligation of such tenants to determine whether an Event of Default
has in fact occurred and regardless of whether Lender has taken possession of
any portion of the Property, and the tenants may rely upon any written
statement delivered by Lender to the tenants. 
Any such payments to Lender shall constitute payments to Grantor under
the Leases, and, subject to the rights of the administrative agent and/or
lenders in respect of the Senior Loan, the Commercial Loan or the Senior DOTs,
as applicable, and without duplication of Lender’s rights under the Senior Mezzanine
DOT or other Senior Mezzanine Loan Documents, Grantor hereby irrevocably
appoints Lender as its attorney-in-fact to do all things, after an Event of
Default, which Grantor might otherwise do with respect to the Property and the
Leases thereon, including, without limitation, (i) collecting Rents with
or without suit and applying the same, less expenses of collection, to the
Senior Loan, with any excess applied to any of the obligations secured
hereunder, under the Loan Documents or the Senior Mezzanine Loan Documents or
to expenses 

 

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of operating and maintaining
the Property, at the option of the Lender, all in such manner as may be
determined by Lender, (ii) leasing, in the name of Grantor, the whole or
any part of the Property which may become vacant, and (iii) employing
agents therefor and paying such agents reasonable compensation for their
services.  The curing of such Event of
Default, unless other Events of Default also then exist, shall entitle Grantor
to recover its aforesaid license to do any such things which Grantor might
otherwise do with respect to the Property and the Leases thereon and to again
collect such Rents.  The powers and
rights granted in this paragraph shall be in addition to the other remedies
herein provided for upon the occurrence of an Event of Default and may be
exercised independently of or concurrently with any of said remedies.  Nothing in the foregoing shall be construed
to impose any obligation upon Lender to exercise any power or right granted in
this paragraph, or to assume any liability under any Lease of any part of the
Property (and no liability shall attach to Lender for failure or inability to
collect any Rents under any such Lease), or as constituting Lender a mortgagee
in possession in the absence of the actual taking of possession of the Property
by Lender, or as constituting an action, rendering any of Grantor’s obligations
to Lender unenforceable, in violation of any of the provisions of NRS Section 40.430
or otherwise limiting any rights available to Lender.  The assignment contained in this Section shall
become null and void upon the release of this Mortgage.  As used herein: (i) “Lease” means
each existing or future lease, sublease (to the extent of Grantor’s rights
thereunder) or other agreement under the terms of which any person has or
acquires any right to occupy or use the Property, or any part thereof, or
interest therein, and each existing or future guaranty of payment or performance
thereunder, and all extensions, renewals, modifications and replacements of
each such lease, sublease, agreement or guaranty; and (ii) “Rents”
means all of the rents, revenue, income, profits and proceeds derived and to be
derived from the Property or arising from the use or enjoyment of any portion
thereof or from any Lease, including but not limited to the proceeds from any
negotiated lease termination or buyout of such Lease, liquidated damages
following default under any such Lease, all proceeds payable under any policy
of insurance covering loss of rents resulting from untenantability caused by
damage to any part of the Property, all of Grantor’s rights to recover monetary
amounts from any tenant in bankruptcy including, without limitation, rights of
recovery for use and occupancy and damage claims arising out of Lease defaults,
including rejections, under any applicable Debtor Relief Laws (as defined in
the Loan Agreement), together with any sums of money that may now or at any
time hereafter be or become due and payable to Grantor by virtue of any and all
royalties, overriding royalties, bonuses, delay rentals and any other amount of
any kind or character arising under any and all present and all future oil,
gas, mineral and mining leases covering the Property or any part thereof, and
all proceeds and other amounts paid or owing to Grantor under or pursuant to
any and all contracts and bonds relating to the construction or renovation of
the Property.

 

Section 3.2.                                   Reserved.

 

Section 3.3.                                   No Liability of
Lender. Lender’s acceptance of this assignment shall not be deemed to
constitute Lender a “mortgagee in possession,” nor obligate Lender to appear in
or defend any proceeding relating to any Lease or to the Property, or to take
any action hereunder, expend any money, incur any expenses, or perform any
obligation or liability under any Lease, or assume any obligation for any
deposit delivered to Grantor by any tenant and not as such delivered to and
accepted by Lender.  Lender shall not be
liable for any injury or damage to 

 

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person or property in or
about the Property, or for Lender’s failure to collect or to exercise diligence
in collecting Rents, but shall be accountable only for Rents that it shall
actually receive.  Neither the assignment
of Leases and Rents nor enforcement of Lender’s rights regarding Leases and
Rents (including collection of Rents) nor possession of the Property by Lender
nor Lender’s consent to or approval of any Lease (nor all of the same), shall
render Lender liable on any obligation under or with respect to any Lease or
constitute affirmation of, or any subordination to, any Lease, occupancy, use
or option.  If Lender seeks or obtains
any judicial relief regarding Rents or Leases, the same shall in no way prevent
the concurrent or subsequent employment of any other appropriate rights or
remedies nor shall same constitute an election of judicial relief for any
foreclosure or any other purpose.  Lender
shall not have or assume any obligations as lessor or landlord with respect to
any Lease.  The rights of Lender under
this Article 3 shall be cumulative of all other rights of Lender
under the Loan Documents or otherwise.

 

ARTICLE 4

Default

 

Section 4.1.                                   Events of
Default.  The occurrence of any one of
the following shall be a default under this Mortgage (each, an “Event of
Default”):

 

(a)                                  Failure to Pay
Secured Indebtedness.  The failure
of Borrower or Grantor to pay when due any amount required by this Mortgage,
the Promissory Note or any other Loan Document which continues, in the case of
monthly interest payments required under the Note for twenty (20) days or, in
the case of other sums payable under this Mortgage, the Promissory Note or any
other Loan Document, for ten (10) days following written demand for
payment on Borrower by Lender.

 

(b)                                 Nonperformance
of Covenants.  The failure
by Borrower or Grantor to perform any of its obligations under this Mortgage,
the Promissory Note or any other Loan Document, as and when required, except as
specifically set forth otherwise herein, which continues for a period of thirty
(30) days after notice of such failure by Lender to Borrower and/or Grantor, if
such failure is not reasonably susceptible of cure within such thirty (30)-day
period and, if Borrower and/or Grantor promptly commences such cure within such
thirty (30)-day period and diligently prosecutes the same to completion, then
the cure period shall be extended for such period of time as may be reasonably
necessary to effect a cure but in no event shall such period exceed ninety (90)
days.

 

(c)                                  Default under
other Loan Documents.  The
occurrence of an Event of Default (after taking into consideration applicable
notice, grace and cure periods) under any other Loan Document.

 

Section 4.2.                                   Notice and Cure.  If any provision of this Mortgage or any
other Loan Document provides for Lender to give to Grantor or Borrower any
notice regarding an Event of Default or incipient Event of Default, then if
Lender shall fail to give such notice to Grantor or Borrower as provided, the
sole and exclusive remedy of Grantor for such failure shall be to seek 

 

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appropriate equitable relief
to enforce the agreement to give such notice and to have any acceleration of
the maturity of the Notes and the Secured Indebtedness postponed or revoked and
foreclosure proceedings in connection therewith delayed or terminated pending
or upon the curing of such Event of Default in the manner and during the period
of time permitted by such agreement, if any, and Grantor shall have no right to
damages or any other type of relief not herein specifically set out against
Lender, all of which damages or other relief are hereby waived by Grantor.  Nothing herein or in any other Loan Document
shall operate or be construed to add on or make cumulative any cure or grace
periods specified in any of the Loan Documents and to the extent that Grantor
and Borrower have any cure rights with respect to any event or circumstance
which, upon notice or the passage of time, or both, could constitute an Event
of Default hereunder, such cure periods shall run concurrently and not
consecutively.

 

ARTICLE 5

Remedies

 

Section 5.1.                                   Certain
Remedies.  If an Event
of Default shall occur, Lender may (but shall have no obligation to) exercise
any one or more of the following remedies, without notice (unless notice is
required by applicable Law):

 

(a)                                  Acceleration;
Termination.  Lender may
at any time and from time to time declare any or all of the Secured
Indebtedness immediately due and payable. 
Upon any such declaration, such Secured Indebtedness shall, subject to
NRS Section 107.080, thereupon be immediately due and payable, without
presentment, demand, protest, notice of protest, notice of acceleration or of
intention to accelerate or any other notice or declaration of any kind upon
Grantor, all of which are hereby expressly waived by Grantor.

 

(b)                                 Enforcement of
Assignment of Rents.  In addition
to the rights of Lender under Article 3 hereof, prior or subsequent
to taking possession of any portion of the Property or taking any action with
respect to such possession, Lender may, subject to the rights of the
administrative agent and/or lenders in respect of the Senior Loan, the
Commercial Loan or the Senior DOTs, as applicable, and without duplication of
Lender’s rights under the Senior Mezzanine DOT or other Senior Mezzanine Loan
Documents: (1) collect and/or sue for the Rents in Lender’s own name, give
receipts and releases therefor, and after deducting all reasonable expenses of
collection, including reasonable attorneys’ fees and expenses, apply the net
proceeds thereof to the Secured Indebtedness in such manner and order as Lender
may elect and/or to the operation and management of the Property, including the
payment of reasonable management, brokerage and attorney’s fees and expenses;
and (2) require Grantor to transfer all security deposits and records
thereof to Lender together with original counterparts of the Leases, upon which
transfer Lender shall be responsible for returning such deposits to tenants.

 

(c)                                  Non-Judicial
Sale.  Subject to the rights of the
administrative agent and/or lenders in respect of the Senior Loan, the
Commercial Loan or the Senior DOTs, as applicable, and without duplication of
Lender’s rights under the Senior Mezzanine DOT or other Senior Mezzanine Loan
Documents, Lender may (1) dispose of some or all of the Property, in any 

 

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combination consisting of
both real and personal property, together in one sale to be held in accordance
with the Law and procedures applicable to real property, as permitted by Section 9604
of the Uniform Commercial Code as enacted in the State of Nevada, NRS Section 104.9604,
and other applicable laws, and Grantor agrees that such a sale of personal
property together with real property constitutes a commercially reasonable sale
of the personal property and (2) by delivery to Trustee and Grantor (and
any other parties to whom notice is required under NRS Section 107.080) of
written notice of declaration of default and demand for sale, cause to be filed
of record a written notice of default and election to sell the Property in
accordance with the requirements of applicable Nevada law.  If required by Trustee, Lender shall also
deposit with Trustee this Mortgage and Notes or other Loan Documents or other
agreements and such documents as required by Trustee evidencing expenditures or
advances secured hereby and Lender shall comply with the requirements of NRS Section 107.220.  After the lapse of such time as there may be
required by law following recordation of such notice of default, and notice of
sale having been given as then required by Law, Trustee, without demand on
Grantor, shall sell the Property, in accordance with applicable Law, either as
a whole or in separate parcels, and in such order as it or Lender may
determine, at public auction to the highest bidder for cash in lawful money of
the United States.  Lender may, in its
sole discretion, elect that the Property be sold in separate parcels through
two or more successive sales.  If Lender
elects more than one sale of separate parcels of the Property, Lender may, at
its option, cause the same to be conducted simultaneously or successively, on
the same day or at such different days or times and in such order as Lender may
deem to be in its best interests, and no such sale shall terminate or otherwise
effect the first lien of this Mortgage or Trustee’s power of sale hereunder
until all indebtedness secured hereby has been fully paid.  The place of sale shall be in the county in
which the Property to be sold, or any part thereof, is situated.  If Lender elects to dispose of the Property
through more than one sale, Grantor shall pay the costs and expenses of each
such sale and of any proceedings where the same may be made or conducted.  Trustee may, subject to applicable Law,
postpone and change the time and place of sale of all or any portion of the
Property by public announcement at any time and place fixed by it in said
notice of sale and from time to time and place to place thereafter, without any
further posting or notice thereof, may postpone such sale in public
announcement to the time and place fixed by such postponement, whether or not
said place fixed by any postponement be in the same city or other place as
fixed in said notice of sale. Trustee shall deliver to such purchaser its deed
conveying the Property so sold, but without any covenants or warranty, express
or implied.  The recital in such deed of
any matters of fact or otherwise shall be prima facie evidence of the
truthfulness thereof.

 

(d)                                 Uniform
Commercial Code.  Without
limitation of Lender’s rights of enforcement with respect to the Collateral or
any part thereof in accordance with the procedures for foreclosure of real
estate, Lender may exercise its rights of enforcement with respect to the
Collateral or any part thereof under the UCC, as in effect from time to time,
as amended  (or under the Uniform
Commercial Code in force, from time to time, in any other state to the extent
the same is applicable Law), subject to the rights of the administrative agent
and/or lenders in respect of the Senior Loan, the Commercial Loan or the Senior
DOTs, as applicable, and without duplication of Lender’s rights under the
Senior Mezzanine DOT or other Senior Mezzanine Loan Documents, and in
conjunction with, in addition to or in substitution for those rights and
remedies:

 

DEED
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(1)                                  Subject to the
rights of the administrative agent and/or lenders in respect of the Senior
Loan, the Commercial Loan or the Senior DOTs, as applicable, and without
duplication of Lender’s rights under the Senior Mezzanine DOT or other Senior
Mezzanine Loan Documents, Lender may enter upon Grantor’s premises to take
possession of, assemble and collect the Collateral or, to the extent and for
those items of the Collateral permitted under applicable Law, to render it
unusable;

 

(2)                                  Subject to the
rights of the administrative agent and/or lenders in respect of the Senior
Loan, the Commercial Loan or the Senior DOTs, as applicable, and without
duplication of Lender’s rights under the Senior Mezzanine DOT or other Senior
Mezzanine Loan Documents, Lender may require Grantor to assemble the Collateral
and make it available at a place Lender designates which is mutually convenient
to allow Lender to take possession or dispose of the Collateral;

 

(3)                                  written notice
mailed to Grantor as provided herein at least ten (10) days prior to the
date of public sale of the Collateral or prior to the date after which private
sale of the Collateral will be made shall constitute reasonable notice;
provided that, if Lender fails to comply with this clause (3) in any
respect, its liability for such failure shall be limited to the liability (if
any) imposed on it as a matter of law under the UCC, as in effect from time to
time (or under the Uniform Commercial Code, in force from time to time, in any
other state to the extent the same is applicable law);

 

(4)                                  any sale made
pursuant to the provisions of this paragraph shall be deemed to have been a
public sale conducted in a commercially reasonable manner if held
contemporaneously with and upon the same notice as required for the sale of the
Property under power of sale as provided in paragraph (c) above in this Section 5.1;

 

(5)                                  in the event of
a foreclosure sale, whether made by Trustee under the terms hereof, or under
judgment of a court, the Collateral and the other Property may, at the option
of Lender, be sold as a whole;

 

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

 

(7)                                  with respect to
application of proceeds from disposition of the Collateral under this Section 5.1
hereof, the costs and expenses incident to disposition shall include the
reasonable expenses of retaking, holding, preparing for sale or lease, selling,
leasing and the like and the reasonable attorneys’ fees and legal expenses
(including, without limitation, the allocated costs for in-house legal
services) incurred by Lender;

 

(8)                                  any and all
statements of fact or other recitals made in any bill of sale or assignment or
other instrument evidencing any foreclosure sale hereunder as to nonpayment of
the Secured Indebtedness or as to the occurrence of any default, or as to
Lender having declared all of such indebtedness to be due and payable, or as to
notice of 

 

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time, place and terms of
sale and of the properties to be sold having been duly given, or as to any
other act or thing having been duly done by Lender, shall be taken as prima
facie evidence of the truth of the facts so stated and recited;

 

(9)                                  Lender may
appoint or delegate any one or more persons as agent to perform any act or acts
necessary or incident to any sale held by Lender, including the sending of
notices and the conduct of the sale, but in the name and on behalf of Lender;

 

(10)                            Lender may
comply with any applicable Laws in connection with a disposition of the
Collateral, and such compliance will not be considered to affect adversely the
commercial reasonableness of any sale of the Collateral;

 

(11)                            Lender may sell
the Collateral without giving any warranties as to the Collateral, and specifically
disclaim all warranties including, without limitation, warranties relating to
title, possession, quiet enjoyment and the like, and all warranties of quality,
merchantability and fitness for a specific purpose, and this procedure will not
be considered to affect adversely the commercial reasonableness of any sale of
the Collateral;

 

(12)                            Grantor
acknowledges that a private sale of the Collateral may result in less proceeds
than a public sale (but such acknowledgement does not authorize a private sale
except when allowed by the UCC); and

 

(13)                            Grantor
acknowledges that the Collateral may be sold at a loss to Grantor, and that, in
such event, Lender shall have no liability or responsibility to Grantor for
such loss so long as Lender has acted as allowed by this Mortgage, the UCC and
other applicable Laws.

 

(e)                                  Lawsuits.  Lender may, to the fullest extent permitted
by applicable Law, proceed by a suit or suits in equity or at law, whether for
collection of the Secured Indebtedness, the specific performance of any
covenant or agreement herein contained or in aid of the execution of any power
herein granted, or for any foreclosure hereunder or for the sale of the
Property under the judgment or decree of any court or courts of competent
jurisdiction.

 

(f)                                    Entry on
Property.  Lender is
authorized, prior or subsequent to the institution of any foreclosure
proceedings, to the fullest extent permitted by applicable Law subject to the
rights of the administrative agent and/or lenders in respect of the Senior Loan,
the Commercial Loan or the Senior DOTs, as applicable, and without duplication
of Lender’s rights under the Senior Mezzanine DOT or other Senior Mezzanine
Loan Documents, to enter upon the Property, or any part thereof, and to take
possession of the Property and all books and records, and all recorded data of
any kind or nature, regardless of the medium of recording including, without
limitation, all software, writings, plans, specifications and schematics
relating thereto, and to exercise without interference from Grantor any and all
rights which Grantor has with respect to the management, possession, operation,
protection or preservation of the Property. 
Lender shall not be deemed to have taken possession of the Property or
any part thereof except upon the exercise of its right to do so, and then only
to the extent evidenced by its demand and overt act 

 

DEED
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specifically for such
purpose.  All reasonable costs, expenses
and liabilities of every character incurred by Lender in managing, operating,
maintaining, protecting or preserving the Property shall constitute a demand
obligation of Grantor (which obligation Grantor hereby promises to pay) to
Lender pursuant to this Mortgage.  If
necessary to obtain the possession provided for above, Lender may invoke any
and all legal remedies to dispossess Grantor. 
In connection with any action taken by Lender pursuant to this Section,
Lender shall not be liable for any loss sustained by Grantor resulting from any
failure to let the Property or any part thereof, or from any act or omission of
Lender in managing the Property unless such loss is caused by the gross
negligence or willful misconduct of Lender, nor shall Lender be obligated to
perform or discharge any obligation, duty or liability of Grantor arising under
any lease or other agreement relating to the Property or arising under any
Permitted Encumbrance or otherwise arising. 
Grantor hereby assents to, ratifies and confirms any and all actions of
Lender with respect to the Property taken under this Section unless by the
gross negligence or willful misconduct of Lender.

 

(g)                                 Receiver.  Subject to the rights of the administrative
agent and/or lenders in respect of the Senior Loan, the Commercial Loan or the
Senior DOTs, as applicable, and without duplication of Lender’s rights under
the Senior Mezzanine DOT or other Senior Mezzanine Loan Documents, Lender shall
as a matter of right be entitled to the appointment of a receiver or receivers
for all or any part of the Property whether such receivership be incident to a
proposed sale (or sales) of such property or otherwise, and without regard to
the value of the Property or the solvency of any person or persons liable for
the payment of the Secured Indebtedness, and Grantor does hereby irrevocably
consent to the appointment of such receiver or receivers, waives notice of such
appointment, of any request therefor or hearing in connection therewith, and
any and all defenses to such appointment, agrees not to oppose any application
therefor by Lender, and agrees that such appointment shall in no manner impair,
prejudice or otherwise affect the rights of Lender to application of Rents as
provided in this Mortgage.  Nothing
herein is to be construed to deprive Lender of any other right, remedy or
privilege it may have under the Law to have a receiver appointed.  Any money advanced by Lender in connection
with any such receivership shall be a demand obligation (which obligation
Grantor hereby promises to pay) owing by Grantor to Lender pursuant to this
Mortgage.

 

(h)                                 Termination of
Commitment to Lend.  Lender may
terminate any commitment or obligation to lend or disburse funds under any Loan
Document.

 

(i)                                     Other Rights
and Remedies.  Lender may
exercise any and all other rights and remedies which Lender may have under the
Loan Documents, or at law or in equity or otherwise.

 

Section 5.2.                                   Proceeds of
Foreclosure.  The
proceeds of any sale held by Trustee or Lender or any receiver or public
officer in foreclosure of the liens and security interests evidenced hereby
shall be applied in accordance with the requirements of applicable Laws and to
the extent consistent therewith, FIRST, to the payment of all necessary costs
and expenses incident to such foreclosure sale, including but not limited to
all reasonable attorneys’ fees and legal expenses, advertising costs,
auctioneer’s fees, costs of title rundowns and lien searches, inspection fees,
appraisal costs, fees for professional services, environmental assessment and 

 

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remediation fees, all court
costs and charges of every character insurance fees, costs of repairs,
maintenance, inspection and testing fees, receivers and management fees,
leasing and sales commissions, advertising costs and expenses, taxes and
assessments, surveys, engineering studies and reports, engineering fees and
expenses, soils tests, space planning costs and expenses, contractors fees, all
other costs incurred by Lender to maintain, preserve and protect the Property
(not exceeding 5% of the gross proceeds of such sale), and to the payment of
the other Secured Indebtedness, including specifically without limitation the
principal, accrued interest and attorneys’ fees due and unpaid on the Notes and
the amounts due and unpaid and owed to Lender under the Mezzanine Loan
Agreement, this Mortgage, the Environmental Indemnity, or any other Loan
Document, the order and manner of application to the items in this clause FIRST
to be in the sole discretion of Lender; and SECOND, the remainder, if any there
shall be, shall be paid to Grantor, or to Grantor’s heirs, devisees,
representatives, successors or assigns, or such other persons (including the
holder or beneficiary of any inferior lien) as may be entitled thereto by Law;
provided, however, that if Lender is uncertain which person or persons are so
entitled, Lender may interplead such remainder in any court of competent
jurisdiction, and the amount of any reasonable attorneys’ fees, court costs and
expenses incurred in such action shall be a part of the Secured Indebtedness
and shall be reimbursable (without limitation) from such remainder.

 

Section 5.3.                                   Lender as
Purchaser.  Lender
shall have the right to become the purchaser at any sale held by Trustee or
substitute or successor or by any receiver or public officer or at any public
sale, and Lender shall have the right to credit upon the amount of Lender’s
successful bid, to the extent necessary to satisfy such bid, all or any part of
the Secured Indebtedness in such manner and order as Lender may elect.

 

Section 5.4.                                   Foreclosure as
to Matured Debt.  Lender
shall have the right to proceed with foreclosure (judicial or nonjudicial) of
the liens and security interests hereunder without declaring the entire Secured
Indebtedness due, and in such event any such foreclosure sale may be made
subject to the unmatured part of the Secured Indebtedness; and any such sale
shall not in any manner affect the unmatured part of the Secured Indebtedness,
but as to such unmatured part this Mortgage shall remain in full force and
effect just as though no sale had been made. 
The proceeds of such sale shall be applied as provided in Section 5.2
hereof except that the amount paid under clause FIRST thereof shall be
only the matured portion of the Secured Indebtedness the remainder, if any,
shall be applied as provided in clause SECOND of Section 5.2
hereof.  Several sales may be made
hereunder without exhausting the right of sale for any unmatured part of the Secured
Indebtedness.

 

Section 5.5.                                   Remedies
Cumulative.  All rights
and remedies provided for herein and in any other Loan Document are cumulative
of each other and of any and all other rights and remedies existing at law or
in equity, and Trustee and Lender shall, in addition to the rights and remedies
provided herein or in any other Loan Document, be entitled to avail themselves
of all such other rights and remedies as may now or hereafter exist at law or
in equity for the collection of the Secured Indebtedness and the enforcement of
the covenants herein and the foreclosure of the liens and security interests
evidenced hereby, and the resort to any right or remedy provided for hereunder
or under any other Loan Document or provided for by law or in equity shall not 

 

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prevent the concurrent or
subsequent employment of any other appropriate right or rights or remedy or
remedies.

 

Section 5.6.                                   Discretion as
to Security.  Lender may
resort to any security given by this Mortgage or to any other security now
existing or hereafter given to secure the payment of the Secured Indebtedness,
in whole or in part, and in such portions and in such order as may seem best to
Lender in its sole and uncontrolled discretion (but subject to any agreements
between Lender applicable thereto in the Mezzanine Loan Agreement), and any
such action shall not in anywise be considered as a waiver of any of the
rights, benefits, liens or security interests evidenced by this Mortgage.

 

Section 5.7.                                   Grantor’s
Waiver of Certain Rights.  To
the full extent Grantor may do so, and to the fullest extent permitted by
applicable Law, Grantor agrees that Grantor will not at any time insist upon,
plead, claim or take the benefit or advantage of any law now or hereafter in
force providing for any appraisement, valuation, stay, extension or redemption,
homestead, moratorium, reinstatement, marshaling or forbearance, and Grantor,
for Grantor, Grantor’s heirs, devisees, representatives, successors and
assigns, and for any and all persons ever claiming any interest in the
Property, to the extent permitted by applicable Law, hereby waives and releases
all rights of redemption, valuation, appraisement, stay of execution, notice of
intention to mature or declare due the whole of the Secured Indebtedness,
notice of election to mature or declare due the whole of the Secured
Indebtedness and all rights to a marshaling of assets of Grantor, including the
Property, or to a sale in inverse order of alienation in the event of
foreclosure of the liens and/or security interests hereby created.  Grantor shall not have or assert any right
under any statute or rule of Law pertaining to the marshaling of assets,
sale in inverse order of alienation, the exemption of homestead, the
administration of estates of decedents, or other matters whatsoever to defeat,
reduce or affect the right of Lender under the terms of this Mortgage to a sale
of the Property for the collection of the Secured Indebtedness without any
prior or different resort for collection, or the right of Lender under the
terms of this Mortgage to the payment of the Secured Indebtedness out of the
proceeds of sale of the Property in preference to every other claimant
whatsoever.  Grantor waives any right or
remedy which Grantor may have or be able to assert pursuant to any provision of
any statute or rule of law, pertaining to the rights and remedies of
sureties.  If any law referred to in this
Section and now in force, of which Grantor or Grantor’s heirs, devisees,
representatives, successors or assigns or any other persons claiming any
interest in the Property might take advantage despite this Section, shall
hereafter be repealed or cease to be in force, such law shall not thereafter be
deemed to preclude the application of this Section.

 

Section 5.8.                                   Delivery of
Possession After Foreclosure.  Subject to the rights of the administrative
agent and/or lenders in respect of the Senior Loan, the Commercial Loan or the
Senior DOTs, as applicable, and without duplication of Lender’s rights under
the Senior Mezzanine DOT or other Senior Mezzanine Loan Documents, in the event
there is a foreclosure sale hereunder and at the time of such sale, Grantor or
Grantor’s heirs, devisees, representatives, or successors as owners of the
Property are occupying or using the Property, or any part thereof, each and all
shall immediately become the tenant of the purchaser at such sale, which
tenancy shall be a tenancy from day to day, terminable at the will of purchaser,
at a reasonable rental per 

 

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day based upon the value of
the property occupied, such rental to be due daily to the purchaser; and to the
extent permitted by applicable Law, the purchaser at such sale shall,
notwithstanding any language herein apparently to the contrary, have the sole
option to demand immediate possession following the sale or to permit the
occupants to remain as tenants at will.  Subject
to the rights of the administrative agent and/or lenders in respect of the
Senior Loan, the Commercial Loan or the Senior DOTs, as applicable, and without
duplication of Lender’s rights under the Senior Mezzanine DOT or other Senior
Mezzanine Loan Documents, after such foreclosure, any Leases to tenants or
subtenants that are subject to this Mortgage (either by their date, their
express terms, or by agreement of the tenant or subtenant) shall, at the sole
option of Lender or any purchaser at such sale, either (i) continue in
full force and effect, and the tenant(s) or subtenant(s) thereunder
will, upon request, attorn to and acknowledge in writing to the purchaser or
purchasers at such sale or sales as landlord thereunder, or (ii) upon
notice to such effect from Lender, the Trustees or any purchaser or purchasers,
terminate within thirty (30) days from the date of sale.  Subject to the rights of the administrative
agent and/or lenders in respect of the Senior Loan, the Commercial Loan or the
Senior DOTs, as applicable, and without duplication of Lender’s rights under
the Senior Mezzanine DOT or other Senior Mezzanine Loan Documents, in the event
the tenant fails to surrender possession of said property upon demand, the
purchaser shall be entitled to institute and maintain a summary action for
possession of the Property (such as an action for forcible detainer) in any
court having jurisdiction.

 

ARTICLE 6

 

Miscellaneous

 

Section 6.1.                                   Scope of
Mortgage.  This
Mortgage is a deed of trust and mortgage of both real and personal property, a
security agreement, an assignment of rents and leases, a financing statement
and fixture filing and a collateral assignment, and also covers proceeds and
fixtures.

 

Section 6.2.                                   Effective as a
Financing Statement.  This
Mortgage shall be effective as a financing statement filed as a fixture filing
with respect to all fixtures included within the Property and is to be filed
for record in the real estate records of each county where any part of the
Property (including said fixtures) is situated. 
This Mortgage shall also be effective as a financing statement covering
as-extracted collateral (including oil and gas), accounts and general
intangibles under the UCC, as, in effect from time to time, and the Uniform
Commercial Code, as in effect from time to time, in any other state where the
Property is situated which will be financed at the wellhead or minehead of the
wells or mines located on the Property and is to be filed for record in the
real estate records of each county where any part of the Property is situated.  This Mortgage shall also be effective as a
financing statement covering any other Property and may be filed in any other
appropriate filing or recording office. 
The mailing address of Grantor is the address of Grantor set forth at
the end of this Mortgage and the address of Lender from which information
concerning the security interests hereunder may be obtained is the address of
Lender set forth at the end of this Mortgage. 
A carbon, photographic or other reproduction of this Mortgage or of any
financing statement relating to this Mortgage shall be sufficient as a
financing statement for any of the purposes referred to in this Section.

 

DEED OF TRUST — Page 29

 

Section 6.3.            Notice to Account Debtors.  Subject to the rights of the administrative
agent and/or lenders in respect of the Senior Loan, the Commercial Loan or the
Senior DOTs, as applicable, in addition to the rights granted elsewhere in this
Mortgage (but without duplication of any of Lender’s rights under the Senior
Mezzanine DOT or other Senior Mezzanine Loan Documents), Lender may, from and
after the occurrence of an Event of Default, so long as such Event of Default
remains uncured hereunder, notify the account debtors or obligors of any
accounts, chattel paper, general intangibles, negotiable instruments or other
evidences of indebtedness included in the Collateral to pay Lender directly.

 

Section 6.4.            Waiver by Lender.  Lender may at any time and from time to time
by a specific writing intended for the purpose: (a) waive compliance by
Grantor with any covenant herein made by Grantor to the extent and in the
manner specified in such writing; (b) consent to Grantor’s doing any act
which hereunder Grantor is prohibited from doing, or to Grantor’s failing to do
any act which hereunder Grantor is required to do, to the extent and in the
manner specified in such writing; (c) release any part of the Property or
any interest therein from the lien and security interest of this Mortgage,
without the joinder of Trustee; or (d) release any party liable, either
directly or indirectly, for the Secured Indebtedness or for any covenant herein
or in any other Loan Document, without impairing or releasing the liability of
any other party.  No such act shall in
any way affect the rights or powers of Lender or Trustee hereunder except to
the extent specifically agreed to by Lender in such writing.

 

Section 6.5.            No Impairment of Security.  The lien, security interest and other
security rights of Lender hereunder or under any other Loan Document shall not
be impaired by any indulgence, moratorium or release granted by Lender
including, but not limited to, any renewal, extension or modification which
Lender may grant with respect to any Secured Indebtedness, or any surrender,
compromise, release, renewal, extension, exchange or substitution which Lender
may grant in respect of the Property, or any part thereof or any interest
therein, or any release or indulgence granted to any endorser, guarantor or
surety of any Secured Indebtedness.  The
taking of additional security by Lender shall not release or impair the lien,
security interest or other security rights of Lender hereunder or affect the
liability of Grantor or of any endorser, guarantor or surety, or improve the
right of any junior lienholder in the Property (without implying hereby Lender’s
consent to any junior lien).

 

Section 6.6.            Acts Not Constituting Waiver by
Lender.  Lender may waive any Event
of Default without waiving any other prior or subsequent Event of Default.  Lender may remedy any Event of Default
without waiving the Event of Default remedied. 
Neither failure by Lender to exercise, nor delay by Lender in
exercising, nor discontinuance of the exercise of any right, power or remedy
(including but not limited to the right to accelerate the maturity of the
Secured Indebtedness or any part thereof) upon or after any Event of Default
shall be construed as a waiver of such Event of Default or as a waiver of the
right to exercise any such right, power or remedy at a later date.  No single or partial exercise by Lender of
any right, power or remedy hereunder shall exhaust the same or shall preclude
any other or further exercise thereof, and every such right, power or remedy
hereunder may be exercised at any time and from time to time.  No modification or waiver of any provision
hereof nor consent to any departure by Grantor therefrom shall in any event be
effective unless the same shall be in writing and signed 

 

DEED
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by
Lender and then such waiver or consent shall be effective only in the specific
instance, for the purpose for which given and to the extent therein
specified.  No notice to nor demand on
Grantor in any case shall of itself entitle Grantor to any other or further
notice or demand in similar or other circumstances.  Remittances in payment of any part of the
Secured Indebtedness other than in the required amount in immediately available
U.S. funds shall not, regardless of any receipt or credit issued therefor,
constitute payment until the required amount is actually received by Lender in
immediately available U.S. funds and shall be made and accepted subject to the
condition that any check or draft may be handled for collection in accordance
with the practice of the collecting bank or banks.  Acceptance by Lender of any payment in an
amount less than the amount then due on any Secured Indebtedness shall be
deemed an acceptance on account only and shall not in any way excuse the
existence of an Event of Default hereunder notwithstanding any notation on or
accompanying such partial payment to the contrary.

 

Section 6.7.            Grantor’s Successors.  If the ownership of the Property or any part
thereof becomes vested in a person other than Grantor, Lender may, without
notice to Grantor, deal with such successor or successors in interest with
reference to this Mortgage and to the Secured Indebtedness in the same manner
as with Grantor, without in any way vitiating or discharging Grantor’s
liability hereunder or for the payment of the indebtedness or performance of
the obligations secured hereby.  No
transfer of the Property, no forbearance on the part of Lender, and no
extension of the time for the payment of the Secured Indebtedness given by
Lender shall operate to release, discharge, modify, change or affect, in whole
or in part, the liability of Grantor hereunder. 
Grantor agrees that it shall be bound by any modification of this
Mortgage made by Lender and any subsequent owner of the Property, with or
without notice to Grantor, and no such modifications shall impair the
obligations of Grantor under this Mortgage. 
Nothing in this Section shall be construed to imply Lender’s
consent to any transfer of the Property.

 

Section 6.8.            Place of Payment; Forum; Waiver
of Jury Trial.  All Secured
Indebtedness which may be owing hereunder at any time by Grantor shall be
payable at the address of Lender set forth at the end of this Mortgage.  EACH PARTY HEREBY IRREVOCABLY SUBMITS
GENERALLY AND UNCONDITIONALLY FOR ITSELF AND IN RESPECT OF ITS PROPERTY TO THE
NON-EXCLUSIVE JURISDICTION OF ANY STATE COURT, OR ANY UNITED STATES FEDERAL
COURT, SITTING IN THE CITY OF DALLAS, STATE OF TEXAS, AND IN THE COUNTY IN
WHICH THE LAND IS LOCATED TO THE EXTENT OF ACTIONS REQUIRED TO BE MAINTAINED
WHERE THE LAND IS LOCATED, OVER ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF
OR RELATING TO THIS MORTGAGE OR THE SECURED INDEBTEDNESS.  EACH PARTY HEREBY IRREVOCABLY WAIVES, TO THE
FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION THAT THE PARTY MAY NOW OR
HEREAFTER HAVE TO THE LAYING OF VENUE IN ANY SUCH COURT AND ANY CLAIM THAT ANY
SUCH COURT IS AN INCONVENIENT FORUM. 
Each Party hereby agrees and consents that, in addition to any methods
of service of process provided for under applicable law, all service of process
in any such suit, action or proceeding in any such court may be made by
certified or registered mail, return receipt requested, directed to the other
party at its address stated at the end of this Mortgage, or at a subsequent
address of which the other parties received actual notice in accordance with
this Mortgage.  Nothing herein shall
affect the right of a party to serve process 

 

DEED
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in
any manner permitted by Law.  TO THE
FULLEST EXTENT PERMITTED BY LAW, EACH PARTY KNOWINGLY AND FREELY WAIVES THE
RIGHT TO TRIAL BY JURY IN CONNECTION WITH ANY ACTION, SUIT OR OTHER PROCEEDING
ARISING OUT OF OR RELATING TO THIS MORTGAGE.  
EACH PARTY ACKNOWLEDGES THAT THE RIGHT TO TRIAL BY JURY IS AN IMPORTANT
RIGHT, THAT ITS WAIVER OF THIS RIGHT IS A NEGOTIATED TERM OF THE LOAN AND THAT
IT HAS HAD THE OPPORTUNITY TO CONSULT WITH LEGAL COUNSEL OF ITS CHOOSING WITH
RESPECT TO THIS WAIVER.

 

Section 6.9.            Subrogation to Existing Liens;
Vendor’s Lien. To the extent that proceeds of the Notes are used to pay
indebtedness secured by any outstanding lien, security interest, charge or
prior encumbrance against the Property, Lender shall be subrogated to any and
all rights, security interests, and liens and charges or encumbrances owned by
any owner or holder of such outstanding liens, security interests, charges or
encumbrances, however remote, irrespective of whether said liens, security interests,
charges or encumbrances are released, and all of the same are recognized as
valid and subsisting and are renewed and continued and merged herein to secure
the Secured Indebtedness, but the terms and provisions of this Mortgage shall
govern and control the manner and terms of enforcement of the liens, security
interests, charges and encumbrances to which Lender is subrogated
hereunder.  It is expressly understood
that, in consideration of the payment of such indebtedness by Lender, Grantor
hereby waives and releases all demands and causes of action for offsets and
payments in connection with the said indebtedness.  If all or any portion of the proceeds of the
loan evidenced by the Notes or of any other Secured Indebtedness has been
advanced for the purpose of paying the purchase price for all or a part of the
Property, no vendor’s lien or purchase money lien is waived.  Lender may foreclose under this Mortgage or
under the vendor’s lien or purchase money lien without waiving the other or may
foreclose under both.

 

Section 6.10.          Application of Payments to Certain
Indebtedness.  If any part of the
Secured Indebtedness cannot be lawfully secured by this Mortgage or if any part
of the Property cannot be lawfully subject to the lien and security interest hereof
to the full extent of such indebtedness, then all payments made shall be
applied on said indebtedness first in discharge of that portion thereof which
is not secured by this Mortgage.

 

Section 6.11.          Nature of Loan; Compliance with
Usury Laws.  The loan evidenced by
the Notes is being made solely for the purpose of carrying on or acquiring a
business or commercial enterprise.  It is
the intent of Grantor and Lender to conform to and contract in strict
compliance with applicable usury law from time to time in effect.  All agreements between Lender and Grantor are
hereby limited by the provisions of this Section which shall override and
control all such agreements, whether now existing or hereafter arising.  In no way, nor in any event or contingency
(including but not limited to prepayment, default, demand for payment, or
acceleration of the maturity of any obligation), shall the interest taken,
reserved, contracted for, charged, chargeable, or received under this Mortgage,
the Notes or any other Loan Document or otherwise, exceed the maximum
nonusurious amount permitted by applicable law (the “Maximum Amount”).  If, from any possible construction of this
Mortgage, interest would otherwise be payable in excess of the Maximum Amount,
any such construction shall be subject 

 

DEED
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to
the provisions of this Section and this Mortgage shall ipso facto be
automatically reformed and the interest payable shall be automatically reduced
to the Maximum Amount, without the necessity of execution of any amendment or
new document.  If Lender shall ever
receive anything of value which is characterized as interest under applicable
law and which would apart from this provision be in excess of the Maximum Amount,
an amount equal to the amount which would have been excessive interest shall,
without penalty, be applied to the reduction of the principal amount owing on
the Secured Indebtedness in the inverse order of its maturity and not to the
payment of interest, or refunded to Borrower or Grantor or the other payor
thereof if and to the extent such amount which would have been excessive
exceeds such unpaid principal.  The right
to accelerate maturity of the Notes or any other Secured Indebtedness does not
include the right to accelerate any interest which has not otherwise accrued on
the date of such acceleration, and Lender does not intend to charge or receive
any unearned interest in the event of acceleration.  All interest paid or agreed to be paid to
Lender shall, to the extent permitted by applicable law, be amortized,
prorated, allocated and spread throughout the full stated term (including any
renewal or extension) of such indebtedness so that the amount of interest on
account of such indebtedness does not exceed the Maximum Amount.  As used in this Section, the term “applicable
law” shall mean the laws of the State where the Property is located or where
the Secured Indebtedness is payable, or the federal laws of the United States
applicable to this transaction, whichever laws allow the greatest interest, as
such laws now exist or may be changed or amended or come into effect in the
future.

 

Section 6.12.          Substitute Trustee.  The Lender may, from time to time, by an
instrument in writing, substitute a successor or successors to any trustee
named herein or acting hereunder, which instrument, executed and acknowledged
by Lender and recorded in the office of the recorder of the county or counties
where the Property is situated, shall be conclusive proof of proper
substitution of such successor trustee or trustees, who shall, without
conveyances from the trustee predecessor, succeed in all its title, estate,
rights, powers and duties.  Such
instrument shall contain the name and address of the new trustee. The procedure
herein provided for substitution of trustees shall not be exclusive of other
provisions for substitution provided by law.

 

Section 6.13.          No Liability of Trustee.  The Trustee shall not be liable for any error
of judgment or act done by Trustee in good faith, or be otherwise responsible
or accountable under any circumstances whatsoever, except for Trustee’s gross
negligence or willful misconduct.  The
Trustee shall have the right to rely on any instrument, document or signature
authorizing or supporting any action taken or proposed to be taken by him
hereunder, believed by him in good faith to be genuine.  All moneys received by Trustee shall, until
used or applied as herein provided, be held in trust for the purposes for which
they were received, but need not be segregated in any manner from any other
moneys (except to the extent required by Law), and Trustee shall be under no
liability for interest on any moneys received by him hereunder.  Grantor hereby ratifies and confirms any and
all acts which the herein named Trustee or his successor or successors,
substitute or substitutes, in this trust, shall do lawfully by virtue hereof.
Grantor will reimburse Trustee for, and save him harmless against, any and all
liability and expenses which may be incurred by him in the performance of his
duties, and except those resulting from Trustee’s gross negligence or willful
misconduct.  The foregoing indemnity
shall 

 

DEED
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not
terminate upon discharge of the Secured Indebtedness or foreclosure, or release
or other termination, of this Mortgage.

 

Section 6.14.          Releases.  If all of the Secured Indebtedness be paid as
the same becomes due and payable and all of the covenants, warranties,
undertakings and agreements made in this Mortgage are kept and performed and
all obligations, if any, of Lender for further advances have been terminated or
Grantor is entitled to a reconveyance of this Mortgage in accordance with the
terms of the Loan Documents, then, and in that event only, all rights under
this Mortgage shall terminate (except to the extent expressly provided herein
with respect to indemnifications, representations and warranties and other
rights which are to continue following the release hereof) and the Property
shall become wholly clear of the liens, security interests, conveyances and
assignments evidenced hereby, and such liens and security interests shall be
released by Lender in due form at Grantor’s cost.  Without limitation, all provisions herein for
indemnity of Lender or Trustee shall survive discharge of the Secured
Indebtedness and any foreclosure, release or termination of this Mortgage.

 

Section 6.15.          Notices. All notices, requests,
consents, demands and other communications required or which any party desires
to give hereunder shall be in writing and, unless otherwise specifically
provided herein, shall be deemed sufficiently given or furnished if delivered
by personal delivery, by nationally recognized overnight courier service, or by
registered or certified United States mail, postage prepaid, addressed to the
party to whom directed at the addresses specified in this Mortgage (unless
changed by similar notice in writing given by the particular party whose
address is to be changed) or by facsimile. 
Any such notice or communication shall be deemed to have been given
either at the time of personal delivery or, in the case of courier or mail, as
of the date of first attempted delivery at the address and in the manner
provided herein, or, in the case of facsimile, upon receipt; provided that,
service of a notice required by NRS Section 107.080 shall be considered
complete when the requirements of that statute are met.  Notwithstanding the foregoing, no notice of
change of address shall be effective except upon receipt.  This Section shall not be construed in
any way to affect or impair any waiver of notice or demand provided in this
Mortgage or to require giving of notice or demand to or upon any person in any
situation or for any reason.

 

Section 6.16.          Invalidity of Certain Provisions.  A determination that any provision of this
Mortgage is unenforceable or invalid shall not affect the enforceability or
validity of any other provision and the determination that the application of
any provision of this Mortgage to any person or circumstance is illegal or
unenforceable shall not affect the enforceability or validity of such provision
as it may apply to other persons or circumstances.

 

Section 6.17.          Gender; Titles; Construction.  Within this Mortgage, words of any gender
shall be held and construed to include any other gender, and words in the
singular number shall be held and construed to include the plural, unless the
context otherwise requires.  Titles
appearing at the beginning of any subdivisions hereof are for convenience only,
do not constitute any part of such subdivisions, and shall be disregarded in
construing the language contained in such subdivisions.  The use of the words “herein,” “hereof,” “hereunder”
and other similar compounds of the word “here” shall refer to this entire
Mortgage and not to any particular 

 

DEED
OF TRUST — Page 34

 

Article,
Section, paragraph or provision.  The
term “person” and words importing persons as used in this Mortgage shall
include firms, associations, partnerships (including limited partnerships),
joint ventures, trusts, corporations, limited liability companies and other
legal entities, including public or governmental bodies, agencies or
instrumentalities, as well as natural persons.

 

Section 6.18.          Reporting Compliance.  Grantor agrees to comply with any and all
reporting requirements applicable to this Mortgage which are imposed upon it by
Law, including but not limited to The International Investment Survey Act of
1976, The Agricultural Foreign Investment Disclosure Act of 1978, The Foreign
Investment in Real Property Tax Act of 1980 and the Tax Reform Act of 1984 and
further agrees upon request of Lender to furnish Lender with evidence of such
compliance.

 

Section 6.19.          Reserved.

 

Section 6.20.          Grantor.  Unless the context clearly indicates
otherwise, as used in this Mortgage, “Grantor” means the grantors named in Section 1.2
hereof or any of them.  The obligations
of Grantor hereunder shall be joint and several.  If any Grantor, or any signatory who signs on
behalf of any Grantor, is a corporation, partnership or other legal entity,
Grantor, represents and warrants to Lender that this instrument is executed,
acknowledged and delivered by Grantor’s duly authorized representatives.  If Grantor is an individual, no power of
attorney granted by Grantor herein shall terminate on Grantor’s disability.

 

Section 6.21.          Execution; Recording.  This Mortgage has been executed in several
counterparts, all of which are identical, and all of which counterparts
together shall constitute one and the same instrument.  The date or dates reflected in the
acknowledgments hereto indicate the date or dates of actual execution of this
Mortgage, but such execution is as of the date shown on the first page hereof,
and for purposes of identification and reference the date of this Mortgage
shall be deemed to be the date reflected on the first page hereof.  Grantor will cause this Mortgage and all
amendments and supplements thereto and substitutions therefor and all financing
statements and continuation statements relating thereto to be recorded, filed,
re-recorded and refiled in such manner and in such places as Trustee or Lender
shall reasonably request and will pay all such recording, filing, re-recording
and refiling taxes, fees and other charges.

 

Section 6.22.          Successors and Assigns.  The terms, provisions, covenants and
conditions hereof shall be binding upon Grantor, and the heirs, devisees,
representatives, successors and assigns of Grantor, and shall inure to the
benefit of Trustee and Lender shall constitute covenants running with the
Land.  All references in this Mortgage to
Grantor shall be deemed to include all such heirs, devisees, representatives,
successors and assigns of Grantor.

 

Section 6.23.          Modification or Termination.  The Loan Documents may only be modified or
terminated by a written instrument or instruments intended for that purpose and
executed by the party against which enforcement of the modification or
termination is asserted.  Any alleged
modification or termination which is not so documented shall not be effective
as to any party.

 

DEED
OF TRUST — Page 35

 

Section 6.24.          No Partnership, Etc.  The relationship between Lender and Grantor
is solely that of lender and owner of collateral.  Lender does not have a fiduciary or other
special relationship with Grantor. 
Nothing contained in the Loan Documents is intended to create any
partnership, joint venture, association or special relationship between Grantor
and Lender or in any way make Lender a co-principal with Grantor with reference
to the Property.  All agreed contractual
duties between or among Lender, Trustee and Grantor are set forth herein and
any additional implied covenants or duties are hereby disclaimed.  Any inferences to the contrary of any of the
foregoing are hereby expressly negated.

 

Section 6.25.          Applicable Law.  THIS MORTGAGE, AND ITS VALIDITY, ENFORCEMENT
AND INTERPRETATION, SHALL BE GOVERNED BY AND CONSTRUED, INTERPRETED AND
ENFORCED IN ACCORDANCE WITH AND PURSUANT TO THE LAWS OF THE STATE OF NEVADA
(WITHOUT REGARD TO ANY CONFLICT OF LAWS PRINCIPLES) AND APPLICABLE UNITED
STATES FEDERAL LAW, EXCEPT AS OTHERWISE REQUIRED BY MANDATORY PROVISIONS OF LAW
AND EXCEPT TO THE EXTENT THAT REMEDIES PROVIDED BY THE LAWS OF ANY JURISDICTION
OTHER THAN THE STATE OF NEVADA ARE GOVERNED BY THE LAWS OF SUCH OTHER
JURISDICTION.

 

Section 6.26.          Construction Mortgage.  This Mortgage constitutes a “construction
mortgage” as defined in NRS 104.9334 to the extent that it secures an
obligation incurred for the construction of the Improvements, including the
acquisition cost of the Land.

 

Section 6.27.          Entire Agreement.  This Mortgage, together with the Loan
Documents to which Grantor is a party, constitute the entire understanding and
agreement between Grantor and Lender with respect to the transactions arising
in connection with the liens and security interests granted hereby and
supersede all prior written or oral understandings and agreements between
Grantor and Lender with respect to such matters.  Grantor hereby acknowledges that, except as
incorporated in writing in the Loan Documents, there are not, and were not, and
no persons are or were authorized by Lender to make, any representations,
understandings, stipulations, agreements or promises, oral or written, with
respect to the matters addressed in the Loan Documents.

 

Section 6.28.          Adoption
of Statutory Covenants.  The
following covenants, Nos. 6 (provided that a default, as referenced in such
covenant, shall mean an Event of Default, as defined in Section 4.1 of
this Mortgage), 7 (a reasonable), 8 (provided that the recital therein shall be
prima facie proof of such default) and 9 of NRS Section 107.030, where not
in conflict with the provisions of the Loan Documents, are hereby adopted and
made a part of this Mortgage.

 

THE WRITTEN LOAN DOCUMENTS REPRESENT THE FINAL
AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF
PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES.

 

THERE
ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.

 

DEED OF TRUST — Page 36

 

[Remainder of Page Intentionally Left Blank]

 

 

DEED OF TRUST — Page 37

 

 

IN
WITNESS WHEREOF, Grantor has executed this instrument under seal as of the date
first written on page 1 hereof.

 

	
  The address of Grantor is:

  	
   

  	
  GRANTOR:

  
	
   

  	
   

  	
   

  
	
  2001 Bryan Street, Suite 3250

  Dallas, Texas 75201

  Attention: Tim Hogan

  	
   

  	
  SW 132 ST. ROSE SENIOR BORROWER LLC,

  a Delaware limited liability company

  
	
  Telephone: (214) 922-8575

  	
   

  	
  By:

  	
  SW 131 St. Rose Mezzanine Borrower LLC, a Delaware

  
	
  Facsimile: (214) 922-8553

  	
   

  	
   

  	
  limited liability company, its sole member

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  By:

  	
  SW 130 St. Rose Limited Partnership, a Delaware

  
	
   

  	
   

  	
   

  	
   

  	
  limited partnership, its sole member

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  By:

  	
  SW 129 St. Rose Limited Partnership, a Delaware

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
  limited partnership, its general partner

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
  By:

  	
  SW 104 Development GP LLC, a Delaware

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  limited liability company, its general partner

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  By:

  	
  /s/ Timothy J. Hogan

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Name:     Timothy J. Hogan

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Title:       Vice President

  

 

The address of Lender is:

 

Behringer Harvard St. Rose
REIT, LLC

15601 Dallas Parkway, Suite 600

Addison, Texas  75001

Attention:  Chief Legal Officer

 

	
  STATE OF TEXAS

  	
   

  	
  §

  
	
   

  	
   

  	
  §

  
	
  COUNTY OF DALLAS

  	
   

  	
  §

  

 

This
instrument was acknowledged before me on December 30, 2008, by Timothy J.
Hogan,  Vice President of SW 104
Development GP LLC, a Delaware limited liability company, on behalf of such
company, as general partner of SW 129 St. Rose Limited Partnership, a Delaware
limited partnership, general partner of SW 130 St. Rose Limited Partnership, a
Delaware limited partnership, sole member of SW 131 St. Rose Mezzanine Borrower
LLC, a Delaware limited liability company, sole member of SW 132 St. Rose
Senior Borrower LLC, a Delaware limited liability company.

 

	
   

  	
   

  	
  /s/ Tai Lee

  
	
   

  	
   

  	
  Printed Name:

  	
  T. Lee

  
	
   

  	
   

  	
  Notary Public, State of Texas

  

 

DEED OF TRUST — Signature Page

 

EXHIBIT
A

LAND

 

All
that land situated in the County of Clark, State of Nevada, more particularly
described as follows:

 

PARCEL
1:

 

The
North Half (N 1⁄2) of the Northwest Quarter (NW 1⁄4) of the Southwest Quarter (SW
1⁄4) of the Northwest Quarter (NW 1⁄4) of Section 35, Township 22 South, Range
61 East, M.D.B.&M., Clark County, Nevada.

 

PARCEL
2:

 

The
South Half (S 1⁄2) of the Northeast Quarter (NE 1⁄4) of the Southwest Quarter (SW
1⁄4) of the Northwest Quarter (NW 1⁄4) of Section 35, Township 22 South, Range
61 East, M.D.B.&M.

 

EXCEPTING
THEREFROM that portion lying within St. Rose Parkway.

 

PARCEL
3:

 

That
portion of the Northwest Quarter (NW 1⁄4) of Section 35, Township 22 South,
Range 61 East, M.D.M., City of Henderson, Clark County, Nevada, more
particularly described as follows:

 

The
South Half (S 1⁄2) of the Northwest Quarter (NW 1⁄4) of the Southwest Quarter (SW
1⁄4) of the Northwest Quarter (NW 1⁄4) of said Section 35.

 

TOGETHER
WITH:

 

Those
portions of the North Half (N 1⁄2) of the South Half (S 1⁄2) of the Southwest
Quarter (SW 1⁄4) of the Northwest Quarter (NW 1⁄4) of said Section 35 lying
Northwesterly of the Northwesterly right of way of St. Rose Parkway.

 

PARCEL
4:

 

Being
a portion of the South Half (S 1⁄2) of the Southeast Quarter (SE 1⁄4) of the
Northwest Quarter (NW 1⁄4) of the Northwest Quarter (NW 1⁄4) of Section 35,
Township 22 South, Range 61 East, M.D.B.&M., Clark County, Nevada.

 

TOGETHER
WITH that portion of the North Half (N 1⁄2) of the Northeast Quarter (NE 1⁄4) of
the Southwest Quarter (SW 1⁄4) of the Northwest Quarter (NW 1⁄4), also together
with that portion of the North Half (N 1⁄2) of the Northwest Quarter (NW 1⁄4) of
said Section 35, lying Northwesterly of St. Rose Parkway, further
described as follows:

 

DEED OF TRUST — EXHIBIT A — Page 1

 

BEGINNING
at the Southeast (SE) corner of the Northwest Quarter (NW 1⁄4) of the Northwest
Quarter (NW 1⁄4) of said Section 35, said corner being marked by an aluminum
cap marked “PLS 5269, 1994, NW 1/16”;

 

Thence
South 41°41’09” East,
174.75 feet to the Northwesterly line of St. Rose Parkway as granted in Book
250 as Document No. 202951, Official Records, Clark County, Nevada;

 

Thence
along said Northwesterly line, South 46°18’51” West, 297.97 feet to
a point of intersection of said Northwesterly line with the South line of the
North Half (N 1⁄2) of the Northeast Quarter (NE 1⁄4) of the Southwest Quarter (SW
1⁄4) of the Northwest Quarter (NW 1⁄4) of said Section 35; Thence along the
lines of said North Half (N 1⁄2) the following Three (3) courses: North 89°22’43” West,
553.55 feet; North 00°33’34” West, 330.00 feet;
South 89°22’04” East,
663.09 feet to the POINT OF BEGINNING;

 

EXCEPTING
THEREFROM:

 

A
portion of the South Half (S 1⁄2) of the Southeast Quarter (SE 1⁄4) of the
Northwest Quarter (NW 1⁄4) of the Northwest Quarter (NW 1⁄4) of said Section 35,
described as follows:

 

BEGINNING
at the Southwest (SW) corner of the South Half (S 1⁄2) of the Southeast Quarter
(SE 1⁄4) of the Northwest Quarter (NW 1⁄4) of the Northwest Quarter (NW 1⁄4) of said Section 35;
Thence North 00°33’55” West,
330.09 feet to the Northwest (NW) corner of the South Half (S 1⁄2) of the
Southeast Quarter (SE 1⁄4) of the Northwest Quarter (NW 1⁄4) of the Northwest
Quarter (NW 1⁄4) of said Section 35; Thence South 89°21’56” East,
663.21 feet to the Northeast Corner of the South Half (S1/2) of the Southeast
Quarter (SE 1⁄4) of the Northwest Quarter (NW 1⁄4) of the Northwest Quarter (NW 1⁄4)
of said Section 35; Thence South 00°32’39” East, 330.06 feet to
the Southeast (SE) corner of the South Half (S 1⁄2) of the Southeast Quarter (SE
1⁄4) of the Northwest Quarter (NW 1⁄4) of the Northwest Quarter (NW 1⁄4) of said Section 35;
Thence North 41°41’09” West,
316.13 feet; Thence South 48°18’51” West, 153.68 feet to
the beginning of a 500 foot radius curve, concave Northwesterly; Thence along
said curve to the right, 369.29 feet through a central angle of 42°19’05” to the
POINT OF BEGINNING.

(Deed
Reference 20070720 / 2463 and 2464)

 

DEED OF TRUST — EXHIBIT A — Page 2

 

 

EXHIBIT
B

PERMITTED ENCUMBRANCES

 

1.                                       State, County
and/or City taxes for the fiscal year 2008-2009 a lien not yet due and payable.

 

2.                                       Any taxes that
may be due, but not assessed, for new construction which can be assessed on the
unsecured property rolls, in the Office of the Clark County Assessor, per
Nevada Statute 361.260.

 

3.                                       Water rights,
claims or title to water, whether or not shown by the public record.

 

4.                                       Mineral rights,
reservations, easements and exclusions in patent from the United States of America:

 

Recorded:                                          January 24,
1962 in Book 339

Document
No.:                273895, Official Records,
Clark County, Nevada

Affects:                                                     Parcel 1

 

Said
patent further reserves, and is subject to, a right-of-way not exceeding
thirty-three (33) feet in width for roadway and public utility purposes to be
located along the boundaries of said land.

 

The
above rights of way, not dedicated, have been vacated by an instrument recorded
August 15, 2007 in Book 20070815, Instrument No. 0002160, Official
Records, Clark County, Nevada.

 

5.                                       Mineral rights,
reservations, easements and exclusions in patent from the United States of
America:

 

Recorded:                                          January 30,
1962 in Book 340

Document
No.:                274775, Official Records,
Clark County, Nevada.

Affects:                                                     A portion of
Parcel 4

 

Said
patent further reserves, and is subject to, a right-of-way not exceeding
thirty-three (33) feet in width for roadway and public utility purposes to be
located along the boundaries of said land.

 

The
above rights of way, not dedicated, have been vacated by an instrument recorded
August 15, 2007 in Book 20070815, Instrument No. 0002160, Official
Records, Clark County, Nevada.

 

DEED OF TRUST — EXHIBIT B — Page 1

 

6.                                       Mineral rights,
reservations, easements and exclusions in patent from the United States of
America:

 

Recorded:                                          February 10,
1970 in Book 10

Document
No.:                7408, Official Records,
Clark County, Nevada

Affects:                                                     Parcel 3 and a
portion of Parcel 4

 

7.                                       Mineral rights,
reservations, easements and exclusions in patent from the United States of
America:

 

Recorded:                                          November 28,
1979 in Book 1152

Document
No.:                1111857, Official Records,
Clark County, Nevada

Affects:                                                     Parcel 2

 

Said
patent further reserves, and is subject to, a right-of-way not exceeding
thirty-three (33) feet in width for roadway and public utility purposes to be
located along the boundaries of said land.

 

There
is also reserved a right of way for a Federal Aid Highway under the Act of November 9,
1921 (42 Stat. 212).

 

The
above rights of way, not dedicated, have been vacated by an instrument recorded
August 15, 2007 in Book 20070815, Instrument No. 0002160, Official
Records, Clark County, Nevada.

 

8.                                       The terms,
covenants, conditions and provisions as contained in an instrument, entitled “City
of Henderson Zoning Resolution No. 3635”:

 

Recorded:                                          May 09,
2007 in Book 20070509

Document
No.:                0002301, Official Records,
Clark County, Nevada

 

9.                                       An Easement
affecting a portion of said land for the purpose stated herein, and incidental
purposes:

 

In
Favor of:                                  Cox Communications
Las Vegas, Inc.

For:                                                                           Cable and
Information Facilities

Recorded:                                          April 30,
2008 in Book 20080430

Document
No.:                0000512, Official Records,
Clark County, Nevada

 

DEED OF TRUST — EXHIBIT B — Page 2Exhibit 10.8

 

MEZZANINE GUARANTY

 

This Mezzanine Guaranty (“Guaranty”)
is entered into as of December 31, 2008, by CFP Residential, L.P., a Texas
limited partnership, Kenneth J. Valach, an individual, Bruce Hart, an
individual, and J. Ronald Terwilliger, an individual (collectively, the “Guarantor”) for the benefit of Behringer Harvard St. Rose
REIT, LLC, a Delaware limited liability company, and/or any subsequent holder
of the Note (the “Lender”).

 

RECITALS

 

A.                                   SW 131 St. Rose
Mezzanine Borrower LLC, a Delaware limited liability company (the “Borrower”) has requested that Lender make one or more loans
(structured as one loan, or as a senior loan and a junior loan, or in another
manner agreed on by the Mezzanine Lender and the Borrower) in the aggregate
amount of up to Twenty One Million Forty Three Thousand One Hundred Ninety
Seven and No/100 Dollars ($21,043,197) (the “Loan”).  The Loan will be evidenced by a Senior
Mezzanine Promissory Note and a Junior Mezzanine Promissory Note from Borrower
to Lender each dated as of the date of this Guaranty (collectively, the “Note”).  As of the
date of this Guaranty, the Note will be secured by liens on the Land (as
defined in the Loan Agreement) created by subordinate deeds of trust, dated the
same date as the Note, for the benefit of Lender (each, a “Deed of Trust”), made by SW 132 St. Rose
Senior Borrower LLC, a Delaware limited liability company (“Mortgagor”), which is a wholly owned subsidiary of
Borrower.  Each Deed of Trust is referred
to herein collectively as the “Security Instrument.”

 

B.                                     The Loan is
being made as more particularly described in the Senior Mezzanine Loan
Agreement and Junior Mezzanine Loan Agreement, each dated as of the date of
this Guaranty, between Borrower and Lender (collectively, the “Loan Agreement”). 
Borrower will cause Mortgagor to construct on the Land (as defined in
the Loan Agreement) the Project (as defined in the Loan Agreement).

 

C.                                     The Project is
to be constructed in accordance with, and pursuant to the terms and conditions
and requirements of, the Loan Agreement and other Loan Documents.

 

D.                                    As a condition
to making the Loan to Borrower, Lender requires that the Guarantor execute this
Guaranty.  Guarantor has an economic
interest in Borrower or will otherwise obtain a material financial benefit from
the Loan.

 

NOW, THEREFORE, in order to induce Lender to make
the Loan to Borrower, and in consideration thereof, the Guarantor hereby
agrees, unconditionally and irrevocably as follows:

 

1.                                       Defined Terms. 
Unless otherwise expressly defined herein, capitalized terms used in
this Guaranty shall have the meaning given to such terms in the Loan Agreement.

 

2.                                       Guaranteed Obligations.

 

(a)                                  As an inducement to Lender to extend or
continue to extend credit and other financial accommodations to Borrower,
Guarantor, for value received, does hereby unconditionally and absolutely
guarantee the prompt and complete performance and 

 

-1-

payment of the Guaranteed
Obligations.  For purposes of this Guaranty,
the term “Guaranteed Obligations” shall mean (i) the
“Completion Obligations” (as hereinafter
defined), and (ii) the “Bankruptcy Obligations”
(as hereinafter defined).

 

(i)                                     For purposes of this Guaranty, the term “Completion Obligations” shall mean that (i) Guarantor
will cause the Completion of the Project in substantial accordance with the
Plans, and in accordance with the terms and conditions of the Loan Agreement
and other Loan Documents, if for any reason, or under any contingency,
Mortgagor shall abandon construction of the Project or shall fail to cause the
Completion of the Project within the construction time set forth in the Loan
Agreement and Loan Documents, and (ii) Guarantor will pay all cost
overruns for construction of the Project. 
In the preceding sentence, “cost overruns” means costs of constructing
the Project that, in the aggregate, exceed the amount provided in the
Construction Budget, except that the following expenses shall not be included
in calculating cost overruns: operating deficits, taxes and, solely to the
extent increased by force majeure, construction interest.  “Completion” of
the Project will occur upon the issuance of the final certificate of occupancy;
the receipt of evidence reasonably satisfactory to Lender that no building has
been constructed over any easements or setback areas and no other improvements
prohibited by the terms of the easements or setbacks have been constructed
within such easements or setbacks, as applicable; the issuance of a certificate
of substantial completion from the Mortgagor’s architect; and receipt of a
contractor’s release and the receipt of lien waivers or similar evidence of
payment from the general contractor and all major subcontractors (i.e., subcontractors whose contract amount exceeds $100,000)
to Lender’s reasonable satisfaction; provided, however, that if Senior Lender
shall deem the Project to have reached Completion, then Lender shall deem the
Project to have reached Completion.

 

(ii)                                  For purposes of this Guaranty, the term “Bankruptcy Obligations” shall mean all principal, interest
and other amounts due and owing by Borrower under the Note, the Security
Instruments and any other Loan Documents, but only if there is a filing of a
voluntary bankruptcy or insolvency proceeding of the Borrower prior to
Completion.

 

(b)                                 Without limiting the rights and remedies
of Lender, if after the occurrence of an Event of Default and after Lender has
so requested, Guarantor does not promptly proceed with and diligently prosecute
the applicable Completion Obligations, then Lender may, at its option, without
notice to Guarantor or anyone else, cause Completion of the Project either
before or after commencement of foreclosure proceedings, and either on or
before the exercise of any other right or remedy of Lender against Borrower or
Guarantor, with such changes to the Plans that Lender deems necessary or
advisable to complete the Project, and Guarantor waives any right to contest
such necessary expenditures.  The amount
of any and all expenditures made by Lender for the foregoing purposes, to the
extent they exceed the unexpended portion of the Construction Budget shall bear
interest from the date made until repaid to Lender, at a rate per annum equal
to the Interest Rate provided for in the Note and, together with such interest,
shall be due 

 

-2-

and payable by Guarantor
to Lender upon demand.  Lender does not
have and shall never have any obligation to cause the Completion of the Project
or take such action.

 

3.                                       Survival.  The
obligations of Guarantor under this Guaranty shall survive any foreclosure
proceeding, any foreclosure sale, any delivery of any deed in lieu of
foreclosure, and any release of record of the Security Instruments.

 

4.                                       Guaranty of Performance and Payment. 
Guarantor’s performance and payment obligations under this Guaranty
constitute a guaranty of performance and payment and not merely a guaranty of
collection.

 

5.                                       Present, Unconditional and Irrevocable
Guaranty; Waivers.  The obligations of Guarantor under this
Guaranty shall be performed without demand by Lender, other than as provided
herein and shall be present, unconditional, absolute and irrevocable
irrespective of the genuineness, validity, regularity or enforceability of the
Note, the Security Instruments, or any other Loan Document, and without regard
to any other circumstance which might otherwise constitute a legal or equitable
discharge of a surety or a guarantor. 
This Guaranty shall be effective as a waiver of, and Guarantor expressly
waives, any and all rights to which Guarantor may otherwise have been entitled
under any suretyship laws in effect from time to time, including (without
limitation) any rights pursuant to Rule 31 of the Texas Rules of
Civil Procedure, Section 17.001 of the Texas Civil Practice and
Remedies Code, and Chapter 34 of the Texas Business and Commerce
Code.  Without limiting the generality of
the foregoing, Guarantor hereby waives, to the fullest extent permitted by law,
diligence in collecting the Guaranteed Obligations, presentment, demand for
payment, protest, all notices with respect to the Note and this Guaranty which
may be required by statute, rule of law or otherwise to preserve Lender’s
rights against Guarantor under this Guaranty, including notice of acceptance,
notice of any amendment of the Loan Documents, notice of the occurrence of any
default or Event of Default, notice of intent to accelerate, notice of
acceleration, notice of dishonor, notice of foreclosure, notice of protest, and
notice of the incurring by Borrower of any obligation or indebtedness.  Guarantor also waives, to the fullest extent
permitted by law, all rights to require Lender to (a) proceed against
Borrower or any other guarantor of Borrower’s payment or performance with respect
to the Guaranteed Obligations (an “Other Guarantor”),
(b) if Borrower or any Other Guarantor is a partnership, proceed against
any general partner of Borrower or the Other Guarantor, (c) proceed
against or exhaust any collateral held by Lender to secure the repayment of the
Guaranteed Obligations, or (d) pursue any other remedy it may now or
hereafter have against Borrower, or, if Borrower is a partnership, any general
partner of Borrower.

 

6.                                       Valuation of the Property Upon
Foreclosure.  The following shall be the basis for the
determination of the fair market value of any property encumbered by the Deed
of Trust (the “Mortgaged Property”) as of the
date of the foreclosure sale in proceedings governed by Sections 51.003, 51.004
and 51.005 of the Texas Property Code (as amended from time to time), to the
extent those provision apply: (i) the Mortgaged Property shall be valued
in an “as is” condition as of the date of the foreclosure sale, without any
assumption or expectation that the Mortgaged Property will be repaired or
improved in any manner before a resale of the Mortgaged Property after
foreclosure; (ii) the valuation shall be based upon an assumption that the
foreclosure purchaser desires a resale of the Mortgaged Property for cash
promptly (but no 

 

-3-

later than twelve (12) months) following the
foreclosure sale; (iii) all reasonable closing costs customarily borne by
the seller in commercial real estate transactions should be deducted from the
gross fair market value of the Mortgaged Property, including, without
limitation, brokerage commissions, title insurance, a survey of the Property,
tax prorations, attorneys’ fees, and marketing costs; (iv) the gross fair
market value of the Mortgaged Property shall be further discounted to account
for any estimated holding costs associated with maintaining the Mortgaged
Property pending sale, including, without limitation, utilities expenses,
property management fees, taxes and assessments (to the extent not accounted
for in (iii) above), and other maintenance, operational and ownership
expenses; and (v) any expert opinion testimony given or considered in
connection with a determination of the fair market value of the Mortgaged
Property must be given by persons having at least five (5) years
experience in appraising property similar to the Mortgaged Property and who
have conducted and prepared a complete written appraisal of the Mortgaged
Property taking into consideration the factors set forth above.

 

7.                                       Modification of Loan Documents. 
At any time or from time to time and any number of times, without notice
to Guarantor and without affecting the liability of Guarantor, (a) the
time for payment of the principal of or interest on the Guaranteed Obligations
may be extended or the Guaranteed Obligations may be renewed in whole or in
part; (b) the time for Borrower’s performance of or compliance with any
covenant or agreement contained in the Note, the Loan Agreement, the Security
Instruments or any other Loan Document, whether presently existing or
hereinafter entered into, may be extended or such performance or compliance may
be waived; (c) the Maturity Date may be accelerated as provided in the
Note, the Security Instruments or any other Loan Document; (d) the Note,
the Loan Agreement, the Security Instruments or any other Loan Document may be
modified or amended by Lender and Borrower in any respect, including an
increase in the principal amount; and (e) any security for the Guaranteed
Obligations may be modified, exchanged, surrendered or otherwise dealt with or
additional security may be pledged or mortgaged for the Guaranteed Obligations.

 

8.                                       Joint and Several Guaranty. 
If more than one person executes this Guaranty, the obligations of those
persons under this Guaranty shall be joint and several.  Lender, in its discretion, may (a) bring
suit against Guarantor, or any one or more of the Persons constituting
Guarantor, and any Other Guarantor, jointly and severally, or against any one
or more of them; (b) compromise or settle with any one or more of the
Persons constituting Guarantor, or any Other Guarantor, for such consideration
as Lender may deem proper; (c) release one or more of the Persons
constituting Guarantor, or any Other Guarantor, from liability; and (d) otherwise
deal with Guarantor and any Other Guarantor, or any one or more of them, in any
manner, and no such action shall impair the rights of Lender to collect from
another Guarantor any amount guaranteed by such other Guarantor under this
Guaranty.  Nothing contained in this
paragraph shall in any way affect or impair the rights or obligations of
Guarantor with respect to any Other Guarantor.

 

9.                                       Subordination. 
Any indebtedness of Borrower held by Guarantor now or in the future
(including but not limited to (i) all debts and liabilities of Borrower to
Guarantor whether the obligations of Borrower are direct, contingent, primary,
secondary, joint and several or otherwise, whether the obligations are
evidenced by note, contract, open account or otherwise and irrespective of the
creation of such debts or liabilities or manner acquired by Guarantor, (ii) any
dividends and payments pursuant to debtor relief or insolvency proceedings
referred to 

 

-4-

below
and (iii) all liens, security interests, judgment liens, charges or other
encumbrances on Borrower’s assets securing payment thereof) is and shall be
subordinated to the Guaranteed Obligations, and upon the occurrence of an Event
of Default, but without reducing or affecting in any manner the liability of
Guarantor under the other provisions of this Guaranty, except to the extent
that such amounts are actually applied toward Borrower’s or Mortgagor’s
obligations under the Loan Documents, Guarantor shall not receive, or collect,
directly or indirectly any amount in connection with the foregoing.  If any amount is received by Guarantor on
such indebtedness of Borrower held by Guarantor at the time an Event of Default
exists, it shall be received by Guarantor in trust, as trustee for Lender, and
Guarantor agrees to pay such amounts promptly to Lender.  In the event of
receivership, bankruptcy, reorganization, arrangement or other debtor relief or
insolvency proceedings involving Borrower as debtor, Lender shall have the
right to prove its claims in any such proceeding so as to establish its rights
hereunder and shall have the right to receive directly from the receiver,
trustee or other custodian (whether or not an Event of Default shall have
occurred or be continuing under any of the Loan Documents), dividends and
payments that are payable upon any obligation of Borrower to Guarantor now
existing or hereafter arising, and to have all benefits of any security
therefor, until the Guaranteed Obligations have been fully and finally paid and
performed.  Guarantor hereby acknowledges and agrees that the
foregoing provisions shall be operative without the necessity of execution of
any further documents.  Notwithstanding
the foregoing, upon the request of Lender, Guarantor hereby agrees to execute a
subordination agreement, in form and content reasonably acceptable to Lender,
evidencing the provisions of this Section 9.

 

10.                                 Waiver of Subrogation Rights. 
Any right or claim for subrogation or reimbursement against Borrower by reason
of any payment by Guarantor under this Guaranty, is subordinated to the
Guaranteed Obligations on the terms provided in Section 9 above, whether
such right or claim arises at law or in equity or under any contract or
statute.

 

11.                                 No Discharge of Guarantor. 
If any payment by Borrower is held to constitute a preference under any
applicable bankruptcy, insolvency, or similar laws, or if for any other reason
Lender is required to refund any sums to Borrower, such refund shall not
constitute a release of any liability of Guarantor under this Guaranty.

 

12.                                 Financial Statements. 
Guarantor agrees that, until Completion, Guarantor will provide to
Lender no later than December 31 of each year a Collateral Value Statement
for each of the Persons constituting Guarantor dated as of the preceding June 30,
prepared using substantially the same methodology as the Collateral Value
Statements of the Guarantors dated as of June 30, 2008, with the exception
that the capitalization rate employed in establishing property values may be
reduced to a rate not lower than 6.5%. 
Each such Collateral Value Statement shall be accompanied by a
certificate executed by the Person to whom such Collateral Value Statement
relates certifying that, to the knowledge of such Person, the Collateral Value
Statement fairly presents the collateral value of the assets shown in such
Collateral Value Statement determined on the same basis as described in the
notes to the Collateral Value Statements, dated as of June 30, 2008,
qualified as appropriate if the capitalization rate employed in establishing
property values is reduced as contemplated above.

 

13.                                 Representation and Warranty. 
Guarantor represents and warrants to Lender, jointly and severally, that
(i) CFP Residential, L.P., has the limited partnership power and 

 

-5-

authority
to enter into this Guaranty, to incur the obligations provided for herein, and
to execute and deliver the same to Lender, (ii) when executed and
delivered, this Guaranty will constitute a valid and legally binding obligation
of each Guarantor, enforceable against such Guarantor in accordance with its
terms (subject to bankruptcy, insolvency, reorganization and similar laws and
to general principles of equity) and (iii) each Guarantor will directly or
indirectly benefit from the Loan.

 

14.                                 Counterparts. 
This Guaranty may be executed in one or more counterparts, each of which
shall be deemed an original, and all of which, when taken together, shall
constitute one and the same instrument. 
The persons comprising Guarantor may execute different counterparts of
this Guaranty.

 

15.                                 Notices.  Any notice,
election, communication, request, approval or other document or demand required
or permitted under this Guaranty shall be in writing.  Each notice, election, communication,
request, approval or other document or demand shall be addressed to the
intended recipient, in the case of Lender, at its address set forth in the Loan
Agreement or, in the case of a Guarantor, at its address set forth on the
signature page of this Guaranty. 
Each notice, election, communication, request, approval or other
document or demand shall be deemed given on the earliest to occur of (1) the
date when the notice is received by the addressee; (2) the first Business
Day after the notice is delivered to a recognized overnight courier service,
with arrangements made for payment of charges, for next Business Day delivery;
or (3) the third Business Day after the notice is deposited in the United
States mail with postage prepaid, certified mail, return receipt
requested.  As used in this Section 15,
the term “Business Day” means any day other than a Saturday, a Sunday or any
other legal holiday.  Any party to this
Agreement may change the address to which notices intended for it are to be
directed by means of notice given to the other party in accordance with this Section 15.

 

16.                                 Assignment by Lender. 
Lender may assign its rights under this Guaranty in whole or in part
and, upon any such assignment, all the terms and provisions of this Guaranty
shall inure to the benefit of such assignee to the extent so assigned. The
terms used to designate any of the parties herein shall be deemed to include
the estate, legal representatives, successors and assigns of such party.

 

17.                                 Entire Agreement. 
This Guaranty and the other Loan Documents represent the final agreement
between the parties and may not be contradicted by evidence of prior,
contemporaneous or subsequent oral agreements. There are no unwritten oral
agreements between the parties.  All
prior or contemporaneous agreements, understandings, representations, and
statements, oral or written, are merged into this Guaranty and the other Loan
Documents.  Guarantor acknowledges that
it has received a copy of the Note and all other Loan Documents.  Neither this Guaranty nor any of its
provisions may be waived, modified, amended, discharged, or terminated except
by an agreement in writing signed by the party against which the enforcement of
the waiver, modification, amendment, discharge, or termination is sought, and
then only to the extent set forth in that agreement.

 

18.                                 Governing Law. 
This Guaranty shall be governed by, and construed in accordance with,
the substantive law of the State of Texas without regard to the application of
choice of law principles.

 

-6-

19.                                 SUBMISSION TO
JURISDICTION/SERVICE OF PROCESS.  GUARANTOR HEREBY IRREVOCABLY
SUBMITS TO THE PERSONAL JURISDICTION OF THE STATE COURTS OF THE STATE OF TEXAS
LOCATED IN DALLAS COUNTY, TEXAS FOR THE PURPOSES OF ANY SUIT, ACTION OR OTHER
PROCEEDING ARISING OUT OF OR BASED UPON THIS GUARANTY, THE SUBJECT MATTER
HEREOF, OR THE LOAN. GUARANTOR TO THE EXTENT PERMITTED BY APPLICABLE LAW (A) HEREBY
WAIVES, AND AGREES NOT TO ASSERT, BY WAY OF MOTION, AS A DEFENSE, OR OTHERWISE,
IN ANY SUCH SUIT, ACTION OR OTHER PROCEEDING BROUGHT IN THE ABOVE-NAMED COURTS
ANY CLAIM THAT IT IS NOT SUBJECT PERSONALLY TO THE JURISDICTION OF SUCH COURTS,
THAT THE SUIT, ACTION OR PROCEEDING IS BROUGHT IN AN INCONVENIENT FORUM, THAT
THE VENUE OF THE SUIT, ACTION OR PROCEEDING IS IMPROPER OR THAT THIS GUARANTY,
THE SUBJECT MATTER HEREOF, OR THE LOAN (AS APPLICABLE) MAY NOT BE ENFORCED
IN OR BY SUCH COURT AND (B) HEREBY WAIVES THE RIGHT TO REMOVE ANY SUCH
ACTION, SUIT OR PROCEEDING INSTITUTED BY LENDER IN STATE COURT TO FEDERAL
COURT, OR TO REMAND AN ACTION INSTITUTED IN FEDERAL COURT TO STATE COURT
(UNLESS THE FEDERAL COURT HAS NO SUBJECT MATTER JURISDICTION).  EACH GUARANTOR HEREBY CONSENTS TO SERVICE OF
PROCESS BY MAIL AT THE ADDRESS TO WHICH NOTICES ARE TO BE GIVEN TO IT PURSUANT
HERETO, BUT SERVICE WILL BE EFFECTIVE ONLY UPON DELIVERY.  GUARANTOR AGREES THAT ITS SUBMISSION TO
JURISDICTION AND CONSENT TO SERVICE OF PROCESS BY MAIL IS MADE FOR THE EXPRESS
BENEFIT OF LENDER AND ITS ASSIGNS.  FINAL
JUDGMENT AGAINST GUARANTOR IN ANY SUCH ACTION, SUIT OR PROCEEDING SHALL BE
CONCLUSIVE, AND MAY BE ENFORCED IN ANY OTHER JURISDICTION (X) BY
SUIT, ACTION OR PROCEEDING ON THE JUDGMENT, A CERTIFIED OR TRUE COPY OF WHICH
SHALL BE CONCLUSIVE EVIDENCE OF THE FACT AND OF THE AMOUNT OF INDEBTEDNESS OR
LIABILITY OF GUARANTOR THEREIN DESCRIBED, OR (Y) IN ANY OTHER MANNER
PROVIDED BY OR PURSUANT TO THE LAWS OF SUCH OTHER JURISDICTION.  LENDER MAY AT ITS OPTION BRING SUIT, OR
INSTITUTE OTHER JUDICIAL PROCEEDINGS, AGAINST GUARANTOR OR ANY OF ITS ASSETS IN
ANY STATE OR FEDERAL COURT OF THE UNITED STATES OR OF ANY COUNTRY OR PLACE
WHERE THE SUBMITTING PARTY OR SUCH ASSETS MAY BE FOUND.

 

20.                                 WAIVER WITH RESPECT TO DAMAGES.  GUARANTOR
ACKNOWLEDGES THAT LENDER DOES NOT HAVE ANY FIDUCIARY RELATIONSHIP WITH, OR
FIDUCIARY DUTY TO, GUARANTOR ARISING OUT OF OR IN CONNECTION WITH THIS GUARANTY
OR ANY OTHER LOAN DOCUMENT, AND THE RELATIONSHIP BETWEEN LENDER AND GUARANTOR,
IN CONNECTION HEREWITH AND THEREWITH IS SOLELY THAT OF GUARANTOR OF A DEBTOR
AND CREDITOR.  TO THE EXTENT PERMITTED BY
APPLICABLE LAW, GUARANTOR AND LENDER EACH SHALL NOT ASSERT, AND GUARANTOR AND
LENDER EACH HEREBY WAIVES, ANY CLAIMS AGAINST THE OTHER, ON ANY THEORY OF
LIABILITY, FOR SPECIAL, INDIRECT, CONSEQUENTIAL OR PUNITIVE DAMAGES 

 

-7-

(AS
OPPOSED TO DIRECT OR ACTUAL DAMAGES) ARISING OUT OF, IN CONNECTION WITH, OR AS
A RESULT OF, THIS GUARANTY, ANY OTHER LOAN DOCUMENT, ANY AGREEMENT OR
INSTRUMENT CONTEMPLATED HEREBY OR THEREBY, OR THE TRANSACTIONS CONTEMPLATED
HEREBY OR THEREBY.

 

21.                                 Liability.

 

(a)                                  Notwithstanding anything in this Guaranty
to the contrary, Lender shall look for satisfaction of the obligations of a Guarantor
under this Guaranty only to the following real and personal property of such
Guarantor (the “Available Assets”):

 

(1)                                                                                  the legal and beneficial interests of
such Guarantor in any entity that is, at the time of enforcement of this
Guaranty, (i) engaged in the business of holding, constructing, developing
or providing property management or overhead services for real estate designed
for residential use in the United States and (ii) affiliated in any way
with Trammell Crow Residential Company, or any subsidiary thereof or any
successor or assign of all or substantially all of the assets thereof; and

 

(2)                                                                                  any receivables due the Guarantors from
any entity described in the foregoing item (1).

 

Except
for the Available Assets, Lender shall not look to a Guarantor’s tangible or
intangible real and personal property (including cash, cash equivalents,
securities, partnership interests, receivable or similar intangible personal
property) for satisfaction of any Guarantor’s obligations under this
Guaranty.  Subject to Section 21(b),
Lender may not look to the tangible or intangible proceeds of any assets of a
Guarantor, including proceeds of the Available Assets, except as specifically
provided in paragraph (2) above.

 

(b)                                 Notwithstanding the limitations in Section 21(a),
Lender may look to proceeds of Available Assets realized by a Guarantor (i) after
the Aggregate Collateral Value, as reported in the annual Collateral Value
Statements prepared for the Guarantors, is less than $80,000,000 or (ii) as
a result of a transaction that causes the Aggregate Collateral Value to be less
than $80,000,000.  As used in this
paragraph, the term “Aggregate Collateral Value” means the aggregate value of
the Available Assets as calculated on the basis provided in the notes to the
Collateral Value Statements of the Guarantors dated as of June 30, 2008,
with the exception that the capitalization rate employed in establishing
property values may be reduced to a rate not lower than 6.5% at the option of
Guarantor.  However, notwithstanding this
Section 21(b), in no event will Lender be entitled to satisfy any
obligation of a Guarantor from any of the following assets (collectively, “Excluded
Assets”): (i) the personal residences of the Guarantor, (ii) the
Guarantor’s nonbusiness real estate, including rural, vacation and resort
property, up to $1,000,000 in value, (iii) the Guarantor’s personal
automobiles and other tangible personal property, including household goods,
clothing, silverware, gems, jewelry and works of art, not to exceed $1,500,000
in values, (iv) the interests listed in Section 21(c) and (v) proceeds
of Excluded Assets.

 

-8-

(c)                                  In no case may Lender look to any of the
following owned by a Guarantor (even if it otherwise would be available under
the terms of this Section 21) or any proceeds thereof: stock in AvalonBay
Communities, Inc., units in Avalon DownREIT V, L.P., stock in Gables
Residential Trust, units in Gables Realty Limited Partnership, units in Equity
Residential Properties Trust, units in ERP Operating Limited Partnership, stock
in BRE Properties, Inc, units in BRE Property Investors, LLC, units in AMLI
Residential Property Trust, units in AMLI Residential Properties, L.P., units
in Merry Land DownREIT I, L.P., ownership in J. Ronald Terwilliger Grantor
Trust, stock in JRT Holdings, Inc., ownership in Terwilliger Partners,
LLLP and interests in TCR Affordable Housing Limited Partnership.

 

(d)                                 The term “residential” as used in this Section 21
means single family and multi family dwellings, residential land/lot
developments, and senior living communities.

 

(e)                                  If the collective aggregate value of the
Available Assets of the Guarantor, as reported in the Collateral Value
Statement delivered under Section 12 (prepared using substantially the
same methodology as the Collateral Value Statements of the Guarantors dated as
of June 30, 2008, with the exception that the capitalization rate employed
in establishing property values may be reduced to a rate not lower than 6.5%)
falls to less than $80,000,000 and if the Guarantor, Mortgagor and/or Borrower
fail to correct such deficiency within 30 days following delivery of a
deficiency notice from Lender, then such failure shall, at the option of
Lender, constitute an Event of Default on the part of Borrower under the Loan
Documents.  Guarantor, Mortgagor and/or
the Borrower shall have the right to correct any deficiency in Available Assets
by (i) obtaining and delivering to Lender one or more new guaranties, each
of which shall be in the form and content substantially the same as this
Guaranty from one or more persons whose Available Assets  are sufficient to correct the deficiency, (ii) delivering
to Lender and thereafter maintaining in full force and effect (for so long as
the deficiency exists) an unconditional and irrevocable letter of credit, in a
face amount sufficient to correct the deficiency, naming Lender as beneficiary,
and otherwise in form and content and issued by an institution acceptable to
Lender in the exercise of good faith business judgment, or (iii) the
amendment of this Guaranty (in form and substance acceptable to Lender in the
exercise of its good faith business judgment) in such a manner such that the
definition of Available Assets is expanded to include  additional assets that are not then included
in the definition of Available Assets, sufficient to correct the deficiency and
otherwise acceptable to Lender in its good faith business judgment.

 

22.                                 Change of Address. 
Guarantor (or each Guarantor, if more than one) agrees to notify Lender
(in the manner for giving notices provided in Section 15 above) of
any change in Guarantor’s address within a reasonable time after such change of
address occurs.

 

23.                                 Successors and Assigns. 
This Guaranty shall be binding upon Guarantor and Guarantor’s executors,
personal representatives, successors and assigns and shall inure to the benefit
of Lender and its successors and assigns.

 

-9-

24.                                 Attorney’s Fees. 
If it becomes necessary for Lender to employ counsel to enforce the
obligations of Guarantor hereunder, Guarantor agrees to pay the reasonable
attorneys’ fees and expenses incurred by Lender in connection therewith.

 

25.                                 WAIVER OF JURY TRIAL. 
GUARANTOR AND LENDER EACH (A) AGREES NOT TO ELECT A TRIAL BY JURY
WITH RESPECT TO ANY ISSUE ARISING OUT OF THIS GUARANTY OR THE RELATIONSHIP
BETWEEN THE PARTIES AS GUARANTOR AND LENDER THAT IS TRIABLE OF RIGHT BY A JURY
AND (B) WAIVES ANY RIGHT TO TRIAL BY JURY WITH RESPECT TO SUCH ISSUE TO
THE EXTENT THAT ANY SUCH RIGHT EXISTS NOW OR IN THE FUTURE.  THIS WAIVER OF RIGHT TO TRIAL BY JURY IS
SEPARATELY GIVEN BY EACH PARTY, KNOWINGLY AND VOLUNTARILY WITH THE BENEFIT OF
COMPETENT LEGAL COUNSEL.

 

[Signature Pages Follow]

 

-10-

IN WITNESS WHEREOF, Guarantor has signed and
delivered this Guaranty or has caused this Guaranty to be signed and delivered
by its duly authorized representative.

 

	
   

  	
  GUARANTOR:

  
	
   

  	
   

  
	
   

  	
  CFP Residential, L.P., a
  Texas limited partnership

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  Crow Family, Inc., a
  Texas corporation, its general partner

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ Harlan R. Crow

  
	
   

  	
   

  	
   

  	
  Harlan R. Crow, Chief
  Executive Officer

  
					

 

 

	
   

  	
  Kenneth Valach, an
  individual

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  /s/ Kenneth Valach

  

 

 

	
   

  	
  J. Ronald Terwilliger, an
  individual

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  /s/ J. Ronald Terwilliger

  

 

 

	
   

  	
  Bruce Hart, an individual

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  /s/ Bruce Hart

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