DEED OF TRUST and ABSOLUTE ASSIGNMENT OF RENTS AND LEASES and SECURITY AGREEMENT (AND FIXTURE FILING)

A.

Trustor proposes to borrow from Beneficiary, and Beneficiary proposes to lend to Trustor the maximum principal amount of ELEVEN MILLION FOUR HUNDRED FORTY AND NO/100THS DOLLARS ($11,440,000) (“Loan”). The Loan is evidenced by a promissory note (“Note”) executed by Trustor, dated the date of this Deed of Trust, payable to the order of Beneficiary in the maximum principal amount of the Loan. The maturity date of the Loan is December 19, 2010, subject to the extension options set forth in the Note. Capitalized terms not otherwise defined herein shall have the meanings given to them in the Note.

B.

The loan documents include this Deed of Trust, the Note and the other documents described in the Note as Loan Documents (“Loan Documents”).

1.1.

GRANT . For the purposes of and upon the terms and conditions of this Deed of Trust, Trustor irrevocably grants, conveys and assigns to Trustee, in trust, for the benefit of Beneficiary, with power of sale and right of entry and possession, all estate, right, title and interest which Trustor now has or may hereafter acquire in, to, under or derived from any or all of the following:

a.

That certain real property commonly known as Two Governor Park, located at 6310 Greenwich Drive, San Diego, County of San Diego, State of California, and more particularly described on Exhibit A-1 attached hereto (the “Two Governor Property”) and that certain real property commonly known as Five Governor Park, located at 5060 Shoreham Place, San Diego, County of San Diego, State of California, and more particularly described on Exhibit A-2 attached hereto (the “Five Governor Property”, together with the Two Governor Property, the “Land”);

b.

All appurtenances, easements, rights of way, water and water rights, pumps, pipes, flumes and ditches and ditch rights, water stock, ditch and/or reservoir stock or interests, royalties, development rights and credits, air rights, minerals, oil rights, and gas rights, now or later used or useful in connection with, appurtenant to or related to the Land;

c.

All buildings, structures, facilities, other improvements and fixtures now or hereafter located on the Land, including, without limitation, the buildings commonly known as Two Governor Park and Five Governor Park as well as any other buildings or structures located on the Land (collectively, the “Improvements”);

d.

All apparatus, equipment, machinery and appliances and all accessions thereto and renewals and replacements thereof and substitutions therefor used in the operation or occupancy of the Land, it being intended by the parties that all such items shall be conclusively considered to be a part of the Land, whether or not attached or affixed to the Land and all on-site parking;

e.

All land lying in the right-of-way of any street, road, avenue, alley or right-of-way opened, proposed or vacated, and all sidewalks, strips and gores of land adjacent to or used in connection with the Land;

f.

All additions and accretions to the property described above;

g.

All licenses, authorizations, certificates, variances, consents, approvals and other permits now or hereafter pertaining to the Land and all estate, right, title and interest of Trustor in, to, under or derived from all tradenames or business names relating to the Land or the present or future development, construction, operation or use of the Land, plan, specifications and drawings, rights of landlord under any leases or occupancy agreements, all property records (excluding historical accounting records), substantive correspondence and other documents related to any right occupy any of the Improvements; and

h.

All proceeds of any of the foregoing.

2.1.

OBLIGATIONS SECURED . Trustor makes the foregoing grant and assignment for the purpose of securing the following obligations (“Secured Obligations”):

a.

Full and punctual payment to Beneficiary of all sums at any time owing under the Note;

b.

Payment and performance of all covenants and obligations of Trustor under this Deed of Trust including, without limitation, indemnification obligations and advances made to protect the Property;

c.

Payment and performance of all additional covenants and obligations of Trustor under the Loan Documents;

d.

Payment and performance of all covenants and obligations, if any, which any rider attached as an exhibit to this Deed of Trust recites are secured hereby;

e.

Payment and performance of all future advances and other obligations that the then record owner of all or part of the Property may agree to pay and/or perform (whether as principal, surety or guarantor) for the benefit of Beneficiary, when the obligation is evidenced by a writing which recites that it is secured by this Deed of Trust;

f.

All interest and charges on all obligations secured hereby including, without limitation, prepayment charges, late charges and loan fees;

g.

All modifications, extensions and renewals of any of the obligations secured hereby, however evidenced, including, without limitation: (i) modifications of the required principal payment dates or interest payment dates or both, as the case may be, deferring or accelerating payment dates wholly or partly; and (ii) modifications, extensions or renewals at a different rate of interest whether or not any such modification, extension or renewal is evidenced by a new or additional promissory note or notes; and

h.

Payment and performance of any other obligations which are defined as “Secured Obligations” in the Note.

2.2.

OBLIGATIONS . The term “obligations” is used herein in its broadest and most comprehensive sense and shall be deemed to include, without limitation, all interest and charges, prepayment charges, late charges and loan fees at any time accruing or assessed on any of the Secured Obligations.

2.3.

INCORPORATION . All terms and conditions of the documents which evidence any of the Secured Obligations are incorporated herein by this reference. All persons who may have or acquire an interest in the Property shall be deemed to have notice of the terms of the Secured Obligations and to have notice that the rate of interest on one or more Secured Obligation may vary from time to time.

3.1.

ASSIGNMENT . Trustor irrevocably assigns to Beneficiary all of Trustor’s right, title and interest in, to and under: (a) all present and future leases of the Property or any portion thereof, all licenses and agreements relating to the management, leasing or operation of the Property or any portion thereof, and all other agreements of any kind relating to the use or occupancy of the Property or any portion thereof, whether such leases, licenses and agreements are now existing or entered into after the date hereof (“Leases”); and (b) the rents, issues, deposits and profits of the Property, including, without limitation, all amounts payable and all rights and benefits accruing to Trustor under the Leases (“Payments”). The term “Leases” shall also include all guarantees of and security for the tenants’ performance thereunder, and all amendments, extensions, renewals or modifications thereto which are permitted hereunder. This is a present and absolute assignment, not an assignment for security purposes only, and Beneficiary’s right to the Leases and Payments is not contingent upon, and may be exercised without possession of, the Property.

3.2.

GRANT OF LICENSE . Beneficiary confers upon Trustor a revocable license (“License”) to collect and retain the Payments as they become due and payable, until the occurrence of a Default (as hereinafter defined). Upon the occurrence of a Default, the License shall be automatically revoked and Beneficiary may collect and apply the Payments pursuant to the terms hereof without notice and without taking possession of the Property. All Payments thereafter collected by Trustor shall be held by Trustor as trustee under a constructive trust for the benefit of Beneficiary. Trustor hereby irrevocably authorizes and directs the tenants under the Leases to rely upon and comply with any notice or demand by Beneficiary for the payment to Beneficiary of any rental or other sums which may at any time become due under the Leases, or for the performance of any of the tenants’ undertakings under the Leases, and the tenants shall have no right or duty to inquire as to whether any Default has actually occurred or is then existing. Trustor hereby relieves the tenants from any liability to Trustor by reason of relying upon and complying with any such notice or demand by Beneficiary. Beneficiary may apply, in its sole discretion, any Payments so collected by Beneficiary against any Secured Obligation or any other obligation of Trustor or any other person or entity, under any document or instrument related to or executed in connection with the Loan Documents, whether existing on the date hereof or hereafter arising. Collection of any Payments by Beneficiary shall not cure or waive any Default or notice of Default or invalidate any acts done pursuant to such notice.

3.3.

EFFECT OF ASSIGNMENT . The foregoing irrevocable assignment shall not cause Beneficiary to be: (a) a mortgagee in possession; (b) responsible or liable for the control, care, management or repair of the Property or for performing any of the terms, agreements, undertakings, obligations, representations, warranties, covenants and conditions of the Leases; (c) responsible or liable for any waste committed on the Property by the tenants under any of the Leases or by any other parties; for any dangerous or defective condition of the Property; or for any negligence in the management, upkeep, repair or control of the Property resulting in loss or injury or death to any tenant, licensee, employee, invitee or other person; or (d) responsible for or impose upon Beneficiary any duty to produce rents or profits. Beneficiary shall not directly or indirectly be liable to Trustor or any other person as a consequence of: (e) the exercise or failure to exercise any of the rights, remedies or powers granted to Beneficiary hereunder; or (f) the failure or refusal of Beneficiary to perform or discharge any obligation, duty or liability of Trustor arising under the Leases.

3.4.

COVENANTS-SHORT TERM LEASES . Trustor shall at Trustor’s sole cost and expense:

a.

perform the obligations of landlord contained in the Leases and use reasonable efforts to enforce performance by the tenants of the obligations of the tenants contained in the Leases;

b.

use commercially reasonable efforts to keep the Property leased at all times to tenants which Trustor reasonably and in good faith believes are creditworthy at rents not less than the fair market rental value (including, but not limited to, free or discounted rents to the extent the market so requires);

c.

Give Beneficiary prompt written notice of any default which occurs with respect to any of the Leases, whether the default be that of the lessee or of the lessor, which would allow either party to terminate the Lease or would allow the lessee to offset any amount against its payment of rent; and

d.

promptly upon Beneficiary’s request, execute and record any additional assignments to Beneficiary of landlord’s interest in any Lease or specific subordinations (or subordination, attornment and non-disturbance agreements executed by the lessor and lessee) of any Lease in form and substance satisfactory to Beneficiary.

e.

enter into any Leases after the date hereof;

f.

terminate, modify or amend any of the terms of the Leases or in any manner release or discharge the lessees from any obligations thereunder;

g.

Subordinate or agree to subordinate any of the Leases to any other security deed or encumbrance;

h.

grant any tenant under any Lease any option, right of first refusal or other right to purchase all or any portion of the Property under any circumstances; or

i.

execute any other assignment of landlord’s interest in any of the Leases.

3.5.

RIGHT OF SUBORDINATION . To the extent permitted by applicable law, Beneficiary may at any time and from time to time by specific written instrument intended for the purpose unilaterally subordinate the lien of this Deed of Trust to any Lease, without joinder or consent of, or notice to, Trustor, any tenant or any other person. Notice is hereby given to each tenant under a Lease of such right to subordinate. No subordination referred to in this Section shall constitute a subordination to any lien or other encumbrance, whenever arising, or improve the right of any junior lienholder. Nothing herein shall be construed as subordinating this Deed of Trust to any Lease.

4.1.

SECURITY INTEREST . Trustor grants and assigns to Beneficiary a security interest to secure payment and performance of all of the Secured Obligations, in all of the following described personal property in which Trustor now or at any time hereafter has any interest (“Collateral”):

4.2.

COVENANTS . Trustor agrees: (a) to execute and deliver such documents as Beneficiary deems necessary to create, perfect and continue the security interests contemplated hereby; (b) not to change its name, and, as applicable, its chief executive offices, its principal residence or the jurisdiction in which it is organized without giving Beneficiary at least 30 days’ prior written notice thereof; and (c) to cooperate with Beneficiary in perfecting all security interests granted herein and in obtaining such agreements from third parties as Beneficiary deems necessary, proper or convenient in connection with the preservation, perfection or enforcement of any of Beneficiary’s rights hereunder.

4.3.

RIGHTS OF BENEFICIARY . In addition to Beneficiary’s rights as a “Secured Party” under the UCC, Beneficiary may, but shall not be obligated to, at any time without notice and at the expense of Trustor: (a) give notice to any person of Beneficiary’s rights hereunder and enforce such rights at law or in equity; (b) insure, protect, defend and preserve the Collateral or any rights or interests of Beneficiary therein; and (c) subject to the rights of tenants under any Leases, inspect the Collateral. Notwithstanding the above, in no event shall Beneficiary be deemed to have accepted any property other than cash in satisfaction of any obligation of Trustor to Beneficiary unless Beneficiary shall make an express written election of said remedy under the UCC or other applicable law.

4.4.

RIGHTS OF BENEFICIARY UPON DEFAULT . Upon the occurrence of a Default, then in addition to all of Beneficiary’s rights as a “Secured Party” under the UCC or otherwise at law:

a.

Disposition of Collateral . Beneficiary may: (i) upon written notice, require Trustor to assemble any or all of the Collateral and make it available to Beneficiary at a place designated by Beneficiary; (ii) without prior notice, enter upon the Property or other place where the Collateral may be located and take possession of, collect, sell, lease, license and otherwise dispose of the Collateral, and store the same at locations acceptable to Beneficiary at Trustor’s expense; or (iii) sell, assign and deliver the Collateral at any place or in any lawful manner and bid and become purchaser at any such sales; and

b.

Other Rights . Beneficiary may, for the account of Trustor and at Trustor’s expense: (i) operate, use, consume, sell, lease, license or otherwise dispose of the Collateral as Beneficiary deems appropriate for the purpose of performing any or all of the Secured Obligations; (ii) enter into any agreement, compromise or settlement including insurance claims,

which Beneficiary may deem desirable or proper with respect to any of the Collateral; and (iii) endorse and deliver evidences of title for, and receive, enforce and collect by legal action or otherwise, all indebtedness and obligations now or hereafter owing to Trustor in connection with or on account of any or all of the Collateral.

4.5.

POWER OF ATTORNEY . Trustor hereby irrevocably appoints Beneficiary as Trustor’s attorney-in-fact (such agency being coupled with an interest), and as such attorney-in-fact, Beneficiary may, without the obligation to do so, in Beneficiary’s name or in the name of Trustor, prepare, execute, file and record financing statements, continuation statements, applications for registration and like papers necessary to create, perfect or preserve any of Beneficiary’s security interests and rights in or to the Collateral, and upon a Default, take any other action required of Trustor; provided, however, that Beneficiary as such attorney-in-fact shall be accountable only for such funds as are actually received by Beneficiary.

5.1.

REPRESENTATIONS AND WARRANTIES . Trustor represents and warrants to Beneficiary that, to Trustor’s current actual knowledge after reasonable investigation and inquiry, the following statements are true and correct as of the date hereof:

a.

Legal Status . Trustor is duly organized and existing and in good standing under the laws of the state(s) in which Trustor is organized. Trustor is qualified or licensed to do business in all jurisdictions in which such qualification or licensing is required.

b.

Permits . Trustor possess all permits, franchises and licenses and all rights to all trademarks, trade names, patents and fictitious names, if any, necessary to enable Trustor to conduct the business(es) in which Trustor is now engaged in compliance with applicable law.

c.

Authorization and Validity . The execution and delivery of the Loan Documents have been duly authorized and the Loan Documents constitute valid and binding obligations of Trustor or the party which executed the same, enforceable

in accordance with their respective terms, except as such enforcement may be limited by bankruptcy, insolvency, moratorium or other laws affecting the enforcement of creditors’ rights, or by the application of rules of equity.

d.

Violations . The execution, delivery and performance by Trustor of each of the Loan Documents does not violate any provision of any law or regulation, or result in any breach or default under any contract, obligation, indenture or other instrument to which Trustor is a party or by which Trustor is bound.

e.

Litigation . There are no pending or threatened actions, claims, investigations, suits or proceedings before any governmental authority, court or administrative agency which may adversely affect the financial condition or operations of Trustor other than those previously disclosed in writing by Trustor to Beneficiary.

f.

Financial Statements . The financial statements of Trustor, of each general partner (if Trustor is a partnership), of the managing member (if Trustor is a limited liability company) and of Limited Guarantor previously delivered by Trustor to Beneficiary: (i) are true, complete and correct; (ii) present fairly the financial condition of such party; and (iii) have been prepared in accordance with the same accounting standard used by Trustor to prepare the financial statements delivered to and approved by Beneficiary in connection with the making of the Loan, or other accounting standards approved by Beneficiary. Since the date of such financial statements, there has been no material adverse change in the financial condition of Trustor or Limited Guarantor.

g.

Reports . All reports, documents, instruments and information delivered to Beneficiary in connection with the Loan: (i) are correct and sufficiently complete to give Beneficiary accurate knowledge of their subject matter; and (ii) do not contain any misrepresentation of a material fact or omission of a material fact which omission makes the provided information misleading.

h.

Income Taxes . There are no pending assessments or adjustments of Trustor’s income tax payable with respect to any year.

i.

Subordination . There is no agreement or instrument to which Trustor is a party or by which Trustor is bound that would require the subordination in right of payment of any of Trustor’s obligations under the Note to an obligation owed to another party.

j.

Title . Trustor lawfully holds and possesses fee simple title to the Property, without limitation on the right to encumber same. This Deed of Trust is a first lien on the Property prior and superior to all other liens and encumbrances on the Property except: (i) liens for real estate taxes and assessments not yet due and payable; (ii) senior exceptions previously approved by Beneficiary and shown in the title insurance policy insuring the lien of this Deed of Trust; and (iii) other matters, if any, approved by Beneficiary in a writing (collectively, the “Permitted Exceptions”).

k.

Collateral . Trustor has good title to the existing Collateral, free and clear of all liens and encumbrances except those, if any, previously approved by Beneficiary in writing. Trustor’s chief executive office (or principal residence, if applicable) is located at the address shown on page one of this Deed of Trust. Trustor is an organization organized solely under the laws of the State of Delaware. All organizational documents of Trustor delivered to Beneficiary are complete and accurate in every respect. Trustor’s legal name is exactly as shown on page one of this Deed of Trust.

l.

Homestead . There is no homestead or other exemption available to Trustor which would materially interfere with the right to sell the Property at a trustee’s sale or the right to foreclose this Deed of Trust.

m.

Solvency . None of the transactions contemplated by the Loan will be or have been made with an actual intent to hinder, delay or defraud any present or future creditors of Trustor, and Trustor, on the Effective Date (as defined in the Note), will have received fair and reasonably equivalent value in good faith for the grant of the liens or security interests effected by the Loan Documents. On the Effective Date, Trustor will be solvent and will not be rendered insolvent by the transactions contemplated by the Loan Documents. Trustor is able to pay its debts as they become due.

n.

Mechanics’ Liens . There are no mechanics’ or similar liens or claims which have been filed for work, labor or material (and no rights are outstanding that under law could give rise to any such liens) affecting the Property which are or may be prior to or equal to the lien of this Deed of Trust.

o.

Encroachments . Except as shown in the survey, if any, previously delivered to Beneficiary, none of the buildings or other improvements which were included for the purpose of determining the appraised value of the Property lies outside of the boundaries or building restriction lines of the Property and no buildings or other improvements located on adjoining properties encroach upon the Property.

p.

Leases . Except as disclosed in any rent roll provided to Beneficiary or otherwise disclosed to Beneficiary in writing (i) all existing Leases are in full force and effect and are enforceable in accordance with their respective terms, (ii) no material breach or default by any party, or event which would constitute a material breach or default by any party after notice or the passage of time, or both, exists under any existing Lease and (iii) none of the landlord’s interests under any of the Leases, including, but not limited to, rents, additional rents, charges, issues or profits, has been transferred or assigned.

q.

Condition of Property . Except as shown in the property condition survey or other engineering reports, if any, previously delivered to or obtained by Beneficiary, the Property is in good condition and repair and is free from any damage that would materially and adversely affect the value of the Property as security for the Loan or the intended use of the Property.

r.

Hazardous Materials . Except as shown in the environmental assessment report(s), if any, previously delivered to or obtained by Beneficiary, and except for de minimus amounts of Hazardous Materials (defined herein) used in connection with the normal operations and maintenance of the Property and used, stored and disposed of in accordance with all Hazardous Materials Laws (defined herein), the Property is not and has not been a site for the use, generation, manufacture, storage, treatment, release, threatened release, discharge, disposal, transportation or presence of Hazardous Materials (as hereinafter defined) except as otherwise previously disclosed in writing by Trustor to Beneficiary.

s.

Hazardous Materials Laws . Except as shown in the environmental assessment report(s), if any, previously delivered to or obtained by Beneficiary, the Property complies with all Hazardous Materials Laws (as hereinafter defined).

t.

Hazardous Materials Claims . Except as shown in the environmental assessment report(s), if any, previously delivered to or obtained by Beneficiary, are no pending or threatened Hazardous Materials Claims (as hereinafter defined).

u.

Compliance With Laws . Except as shown on the Property condition report or any other engineering reports delivered to or obtained by Beneficiary, all federal, state and local laws, rules and regulations applicable to the Property, including, without limitation, all zoning and building requirements and all requirements of the Americans With Disabilities Act of 1990, as amended from time to time (42 U. S. C. Section 12101 et seq.) have been satisfied or complied with. Trustor is in possession of all certificates of occupancy and all other licenses, permits and other authorizations required by applicable law for the existing use of the Property. All such certificates of occupancy and other licenses, permits and authorizations are valid and in full force and effect.

v.

Property Taxes and Other Liabilities . Except for those items being contested in good faith and in accordance with applicable laws and Section 8.4 hereof) all taxes, governmental assessments, insurance premiums, water, sewer and municipal charges, and ground rents, if any, which previously became due and owing in respect of the Property have been paid.

5.2.

Beneficiary’s Knowledge . Beneficiary (or an affiliate thereof) had an interest in the Property prior to the Effective Date. In recognition thereof, to the extent that Beneficiary had actual knowledge as of the Effective Date that any of the representations set forth in Section 5.1.n through 5.1.v is not true and correct as of the Effective Date, then such representation shall be deemed modified by such actual knowledge of Beneficiary. For purposes of the foregoing, the “actual knowledge” of Beneficiary shall be deemed to be the actual, current knowledge of Thomas P. O’Hanlon as of the Effective Date, without the duty of investigation.

5.3.

REPRESENTATIONS, WARRANTIES AND COVENANTS REGARDING STATUS .

a.

such entity was organized solely for the purpose of owning and operating the Property;

b.

such entity has not and will not engage in any business unrelated to the ownership and operation of the Property;

c.

such entity has not and will not have any assets other than the Property (and personal property incidental to the ownership and operation of the Property);

d.

such entity has not and will not engage in, seek or consent to any dissolution, winding up, liquidation, consolidation, merger, asset sale, or amendment of its articles of incorporation, articles of organization, certificate of formation, operating agreement or partnership agreement, as applicable;

e.

such entity, without the unanimous consent of all of its directors (including all Independent Directors (as defined herein), general partners or members, as applicable, shall not file or consent to the filing of any bankruptcy or insolvency petition or otherwise institute insolvency proceedings;

f.

such entity has no indebtedness (and will have no indebtedness) other than (i) the Loan; and (ii) unsecured trade debt, which is not evidenced by a note and is incurred in the ordinary course of its business in connection with owning, operating and maintaining the Property and is paid within sixty (60) days from the date incurred;

g.

such entity does not have and will not fail to correct any known misunderstanding regarding the separate identity of such entity;

h.

such entity has maintained and will maintain its accounts, books and records separate from any other person or entity;

i.

such entity has maintained and will maintain its books, records, resolutions and agreements as official records;

j.

such entity (i) has not and will not commingle its funds or assets with those of any other entity; and (ii) has held and will hold its assets in its own name;

k.

such entity has conducted and will conduct its business in its own name;

l.

such entity has maintained and will maintain its accounting records and other entity documents separate from any other person or entity;

m.

such entity has prepared and will prepare separate tax returns and financial statements, or if part of a consolidated group, is shown as a separate member of such group;

n.

such entity has paid and will pay its own liabilities and expenses out of its own funds and assets;

o.

such entity has held and will hold regular meetings, as appropriate, to conducts its business and has observed and will observe all corporate, partnership or limited liability company formalities and record keeping, as applicable;

p.

such entity has not and will not assume or guarantee or become obligated for the debts of any other entity or hold out its credit as being available to satisfy the obligations of any other entity;

q.

such entity has not and will not acquire obligations or securities of its shareholders, partners or members, as applicable;

r.

such entity has allocated and will allocate fairly and reasonably the costs associated with common employees and any overhead for shared office space and such entity has used and will use separate stationery, invoices and checks;

s.

such entity has not and will not pledge its assets for the benefit of any other person or entity;

t.

such entity has held and identified itself and will hold itself out and identify itself as a separate and distinct entity under its own name and not as a division or part of any other person or entity;

u.

such entity has not made and will not make loans to any person or entity;

v.

such entity has not and will not identify its shareholders, partners or members, as applicable, or any affiliates of any of the foregoing, as a division or part of it;

w.

such entity has not entered into and will not enter into or be a party to, any transaction with its shareholders, partners or members, as applicable, or any affiliates of any of the foregoing, except in the ordinary course of its business pursuant to written agreements and on terms which are intrinsically fair and are no less favorable to it than would be obtained in a comparable arm’s-length transaction with an unrelated third party;

x.

if any such entity is a corporation, the directors of such entity shall consider the interests of the creditors of such entity in connection with all corporate action;

y.

such entity has paid and will pay the salaries of its own employees and has maintained and will maintain a sufficient number of employees in light of its contemplated business operations;

z.

such entity has maintained and will maintain adequate capital in light of its contemplated business operations;

aa.

[Intentionally Omitted].

bb.

if any such entity is a partnership with more than one general partner, its partnership agreement requires the remaining partners to continue the partnership as long as one solvent general partner exists; and

cc.

if any such entity is a limited liability company, its operating agreement, if any such entity is a partnership, its partnership agreement and if any such entity is a corporation, to the fullest extent permitted by applicable law, its articles of incorporation, contain the provisions set forth in this Section 5.2 and such entity shall conduct its business and operations in strict compliance with the terms contained therein.

6.1.

MAINTENANCE AND PRESERVATION OF THE PROPERTY . Subject to the rights of tenants under any Leases, Trustor shall: (a) keep the Property and Collateral in good condition and repair; (b) complete or restore promptly and in good and workmanlike manner the Property and Collateral or any part thereof which may be damaged or destroyed (unless, if and to the extent permitted under Section 6.11, Beneficiary elects to require that insurance proceeds be used to reduce the Secured Obligations); (c) comply and cause the Property to comply with (i) all laws, ordinances, regulations and standards, (ii) all covenants, conditions, restrictions and equitable servitudes, whether public or private, of every kind and character and (iii) all requirements of insurance companies and any bureau or agency which establishes standards of insurability, which laws, covenants or requirements affect the Property and pertain to acts committed or conditions existing thereon, including, without limitation, any work of alteration, improvement or demolition as such laws, covenants or requirements mandate; (d) operate and manage the Property at all times in a professional manner and do all other acts which from the character or use of the Property may be reasonably necessary to maintain and preserve its value; (e) engage a property manager of the Property and enter into a property management agreement concerning the Property, each approved by Beneficiary in advance and in writing, including with respect to all amendments thereto and waivers thereof; and (f) execute and acknowledge all further documents, instruments and other papers as Beneficiary or Trustee deems necessary or appropriate to preserve, continue, perfect and enjoy the benefits of this Deed of Trust and perform Trustor’s obligations, including, without limitation, statements of the amount secured hereby then owing and statements of no offset. Subject to the rights of tenants under any Leases, Trustor shall not: (g) remove or demolish all or any part of the Property (other than demolition of interior space with respect to tenant improvements as set forth in the then-current Business Plan approved in writing by Beneficiary); (h) alter either (i) the exterior

of the Property in a manner which materially and adversely affects the value of the Property or (ii) the roof or other structural elements of the Property; (i) initiate or acquiesce in any change in any zoning or other land classification which affects the Property; (j) materially alter the type of occupancy or use of all or any part of the Property; or (k) commit or permit physical waste of the Property.

6.2.

HAZARDOUS MATERIALS . Without limiting any other provision of this Deed of Trust, Trustor agrees as follows:

a.

Trustor shall not cause or permit the Property to be used as a site for the use, generation, manufacture, storage, treatment, release, discharge, disposal, transportation or presence of any oil or other petroleum products, flammable explosives, asbestos, urea formaldehyde insulation, radioactive materials, hazardous wastes, toxic or contaminated substances or similar materials, including, without limitation, any substances which are “hazardous substances,” “hazardous wastes,” “hazardous materials” or “toxic substances” under the Hazardous Materials Laws (defined below) and/or other applicable environmental laws, ordinances or regulations (“Hazardous Materials”).

b.

Trustor shall comply and cause the Property to comply with all federal, state and local laws, ordinances and regulations relating to Hazardous Materials (“Hazardous Materials Laws”), including, without limitation: the Clean Air Act, as amended, 42 U.S.C. Section 7401 et seq.; the Federal Water Pollution Control Act, as amended, 33 U.S.C. Section 1251 et seq.; the Resource Conservation and Recovery Act of 1976, as amended, 42 U.S.C. Section 6901 et seq.; the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended (including the Superfund Amendments and Reauthorization Act of 1986, “CERCLA”), 42 U.S.C. Section 9601 et seq.; the Toxic Substances Control Act, as amended, 15 U.S.C. Section 2601 et seq.; the Occupational Safety and Health Act, as amended, 29 U.S.C. Section 651; the Emergency Planning and Community Right-to-Know Act of 1986, 42 U.S.C. Section 11001 et seq.; the Mine Safety and Health Act of 1977, as amended, 30 U.S.C. Section 801 et seq.; the Safe Drinking Water Act, 42 U.S.C. Section 300f et seq.; and all comparable state and local laws, laws of other jurisdictions or orders and regulations.

c.

Trustor shall promptly notify Beneficiary in writing of: (i) the discovery of any Hazardous Materials on, under or about the Property (other than Hazardous Materials permitted under Section 6.2(a)); (ii) any knowledge by Trustor that the Property does not comply with any Hazardous Materials Laws; (iii) any claims or actions (“Hazardous Materials Claims”) pending or threatened against Trustor or the Property by any governmental entity or agency or any other person or entity relating to Hazardous Materials or pursuant to the Hazardous Materials Laws; and (iv) the discovery of any occurrence or condition on any real property adjoining or in the vicinity of the Property that could cause the Property or any part thereof to become contaminated by or with Hazardous Materials.

d.

In response to the presence of any Hazardous Materials on, under or about the Property, Trustor shall immediately take, at Trustor’s sole expense, all remedial action required by any Hazardous Materials Laws or any judgment, consent decree, settlement or compromise in respect to any Hazardous Materials Claims.

e.

Upon reasonable prior notice to Trustor and subject to the rights of tenants under any Leases, Beneficiary, its employees and agents, may from time to time (whether before or after the commencement of a nonjudicial or judicial foreclosure proceeding), enter and inspect the Property for the purpose of determining the existence, location, nature and magnitude of any past or present release or threatened release of any Hazardous Materials into, onto, beneath or from the Property. If Beneficiary has reason to believe, in its good faith discretion, that an audit may disclose the presence or release of Hazardous Materials, or if an environmental audit deems further testing is necessary, Beneficiary has the right to obtain, at Beneficiary’s expense, such environmental audit and/or further testing.

f.

Trustor and Beneficiary agree that: (i) this Hazardous Materials Section is intended as Beneficiary’s written request for information (and Trustor’s response) concerning the environmental condition of the real property security as required by California Code of Civil Procedure Section 726.5; and (ii) each representation and warranty and covenant in this Section (together with any indemnity applicable to a breach of any such representation and warranty) with respect to the environmental condition of the Property is intended by Beneficiary and Trustor to be an “environmental provision” for purposes of California Code of Civil Procedure Section 736.

6.3.

COMPLIANCE WITH LAWS . Trustor shall use commercially reasonable efforts to comply, or cause its tenants under any Leases to comply, with all federal, state and local laws, rules and regulations applicable to the Property, including, without limitation, all zoning and building requirements and all requirements of the Americans With Disabilities Act of 1990 (42 U.S.C. Section 12101 et seq.), as amended from time to time. Trustor shall possess and maintain in full force and effect at all

times (a) all certificates of occupancy and other licenses, permits and authorizations required by applicable law for the existing use and operation of the Property and (b) all permits, franchises and licenses and all rights to all trademarks, trade names, patents and fictitious names, if any, required by applicable law for Trustor to conduct the business(es) in which Trustor is now engaged and necessary or reasonably considered by Beneficiary to be desirable for the contemplated use, operation and maintenance of the Property unless the failure to so comply or maintain is not reasonably expected to have a material adverse effect.

6.4.

LITIGATION . Trustor shall promptly notify Beneficiary in writing of any litigation pending or threatened against Trustor or any guarantor claiming damages in excess of $100,000 and of all pending or threatened litigation against Trustor or Limited Guarantor if the aggregate damage claims against Trustor or any guarantor exceed $300,000.

6.5.

MERGER, CONSOLIDATION, TRANSFER OF ASSETS . Trustor shall not: (a) merge or consolidate with any other entity; (b) make any substantial change in the nature of Trustor’s business or structure; (c) acquire all or substantially all of the assets of any other entity; or (d) sell, lease, assign, transfer or otherwise dispose of a material part of Trustor’s assets except in the ordinary course of Trustor’s business.

6.6.

ACCOUNTING RECORDS . Trustor shall maintain adequate books and records for the Property and/or Trustor in accordance with the same accounting standard used by Trustor to prepare the financial statements delivered to and approved by Beneficiary in connection with the making of the Loan or other accounting standards approved by Beneficiary. Trustor shall permit any representative of Beneficiary, at any reasonable time and from time to time upon reasonable prior notice, to inspect, audit and examine such books and records and make copies of same.

6.7.

COSTS, EXPENSES AND ATTORNEYS’ FEES . Trustor shall pay to Beneficiary from time to time the full amount of all costs and expenses, including, without limitation, reasonable attorneys’ fees and expenses of Beneficiary’s in-house or outside counsel, incurred by Beneficiary in connection with: (a) appraisals and inspections of the Property or Collateral required by Beneficiary as a result of (i) a Transfer or proposed Transfer (as defined below), or (ii) a Default; (b) appraisals and inspections of the Property or Collateral required by applicable law, including, without limitation, federal or state regulatory reporting requirements; and (c) any acts performed by Beneficiary at Trustor’s request or wholly or partially for the benefit of Trustor (including, without limitation, the preparation or review of amendments, assumptions, waivers, releases, reconveyances, estoppel certificates or statements of amounts owing under any Secured Obligation). In connection with appraisals and inspections, Trustor specifically (but not by way of limitation) acknowledges that: (aa) a formal written appraisal of the Property by a state certified or licensed appraiser may be required by Beneficiary’s internal procedures and/or federal regulatory reporting requirements on not more than an annual or more frequent basis; and (bb) Beneficiary may require inspection of the Property by an independent supervising architect, a cost engineering specialist, or both in association with a Default or in connection with a draw request. Trustor shall pay all indebtedness arising under this Section within five (5) Business Days of demand by Beneficiary together with interest thereon following notice of such indebtedness at the rate of

interest then applicable to the principal balance of the Note as specified therein. As used herein, “Business Days” shall mean Monday through Friday of each calendar week, exclusive of federal holidays

6.8.

LIENS, ENCUMBRANCES AND CHARGES . Subject to Trustor’s right to contest the same in accordance with Section 8.4 herein, Trustor shall immediately discharge by bonding or otherwise any lien, charge or other encumbrance which attaches to the Property in violation of Section 6.15. Subject to Trustor’s right to contest such matters under this Deed of Trust or as expressly permitted in the Loan Documents, Trustor shall pay when due all obligations secured by or reducible to liens and encumbrances which shall now or hereafter encumber or appear to encumber all or any part of the Property or any interest therein, whether senior or subordinate hereto, including, without limitation, all claims for work or labor performed, or materials or supplies furnished, in connection with any work of demolition, alteration, repair, improvement or construction of or upon the Property, except such as Trustor may in good faith contest or as to which a bona fide dispute may arise (provided provision is made to the satisfaction of Beneficiary for eventual payment thereof in the event that Trustor is obligated to make such payment and that any recorded claim of lien, charge or other encumbrance against the Property is immediately discharged by bonding or otherwise).

6.9.

TAXES AND OTHER LIABILITIES . Subject to Trustor’s right to contest the same in accordance with Section 8.4 herein, Trustor shall pay and discharge when due any and all indebtedness, obligations, assessments and taxes, both real and personal and including federal and state income taxes and state and local property taxes and assessments. Trustor shall promptly provide to Beneficiary copies of all tax and assessment notices pertaining to the Property.

6.10.

INSURANCE COVERAGE . Trustor shall obtain, and so long as any of the Secured Obligations remain outstanding maintain, the following insurance coverage: (a) “All Risk” or “Special Form” property insurance, including coverages for real and personal property, earthquake, acts of terrorism, boiler and machinery, wind storm, extra expense and rent loss or business interruption (covering at least twelve (12) months), insuring 100% of the insurable replacement value of the Property and Collateral, with no coinsurance or similar penalty; (b) Commercial General Liability insurance (including contractual liability) in an amount not less than $1,000,000 per occurrence and $5,000,000 in the aggregate, with a “Per Location” aggregate endorsement if multiple properties are insured under the same policy; and (c) umbrella or excess liability insurance in the amount of at least $20,000,000. All insurance required hereunder must have deductibles in an amount of $10,000 or less (other than those applicable to earthquake and terrorism insurance, which must be satisfactory to Beneficiary in Beneficiary’s sole, good faith discretion). Beneficiary may from time to time also require that Trustor maintain insurance for flood, builder’s risk, commercial auto, workers compensation, environmental and such other insurance as Beneficiary may require. Each insurance company providing coverage must have an A. M. Best rating of no less than A-IX. Trustor shall from time to time, at Beneficiary’s request, promptly deliver to Beneficiary the following evidence of insurance: (i) an insurance binder or other

evidence of property insurance provided by an authorized insurance agent or broker; and (ii) a certificate of insurance, provided by an authorized insurance agent, co