Exhibit 10.18

 

DOCUMENT PREPARED BY AND WHEN RECORDED, RETURN TO:

 

Andrews & Kurth, L.L.P.

1717 Main Street, Suite 3700

Dallas, Texas 75201

Attention: Brian N. Jaeckle, Esq.

 

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BSRT/M&J NORTHLAKE LIMITED PARTNERSHIP

(Grantor)

 

to

 

GENERAL ELECTRIC CAPITAL CORPORATION

(Grantee)

 

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LEASEHOLD DEED TO SECURE DEBT AND SECURITY AGREEMENT

 

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Dated As of: November 12, 1997

 

Property Location: Tucker, Georgia

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LEASEHOLD DEED TO SECURE DEBT AND SECURITY AGREEMENT

 

This Leasehold Deed to Secure Debt and Security Agreement (this “Security Deed”)
is executed as of November 12, 1997, by BSRT/M&J NORTHLAKE LIMITED PARTNERSHIP,
an Illinois limited partnership (“Grantor”), whose address for notice hereunder
is c/o M&J Wilkow, Ltd., 180 N. Michigan Avenue, Suite 200, Chicago, Illinois
60601, Attention: Marc Wilkow, and c/o Banyan Strategic Realty Trust, 150 South
Wacker Drive, Suite 2900, Chicago, Illinois 60606, Attention: General Counsel,
for the benefit of GENERAL ELECTRIC CAPITAL CORPORATION, a New York corporation
(“Grantee”), whose address for notice is c/o GE Capital Asset Management
Corporation, 363 North Sam Houston Parkway East, Suite 1200, Houston, Texas
77060.

 

ARTICLE 1

 

DEFINITIONS

 

Section 1.1 Definitions. As used herein, the following terms shall have the
following meanings:

 

“Ground Lease”: That certain Ground Lease dated October 4, 1982 (as amended by
that certain Amendment to Ground Lease Agreement dated April 27, 1983, and
further amended by that certain Second Amendment to Ground Lease and Assignment
dated December 27, 1984), between Crow-Atlanta Retail, Ltd. and its successors
and assigns, as lessee, and Cox Communications, Inc., as lessors (such lessors
and their respective successors and assigns are hereinafter collectively
referred to as the “Ground Lessor”), a short form of which is recorded in the
Office of DeKalb County, Georgia, in Deed Book 4683, Page 186.

 

“Indebtedness”: The sum of all (a) principal, interest and all other amounts due
under or secured by the Loan Documents, including, without limitation, the
indebtedness evidenced by the Promissory Note (the “Note”) dated of even date,
made by Grantor, payable to the order of Grantee, in the stated principal amount
of SEVENTEEN MILLION SIX HUNDRED THOUSAND DOLLARS ($17,600,000.00), which
matures on November 1, 2027, unless extended in accordance with the terms of the
Loan Agreement, (b) principal, interest, and other amounts which may hereafter
be loaned by Grantee, its successors or assigns, to or for the benefit of the
owner of the Secured Property, when evidenced by a promissory note or other
instrument which, by its terms, is secured hereby, (c) any and all additional
advances made by Grantee to protect or preserve the Secured Property or the lien
hereof on the Secured Property, or to pay taxes, to pay premiums or insurance on
the Secured Property or to repair or maintain the Secured Property, or to
complete improvements on the Secured Property (whether or not the original
Grantor remains the owner of the Secured Property at the time of such advances
and whether or not the original Grantee remains the owner of the Indebtedness
and this Security Deed), (d) any and all expenses incident to the collection of
the Indebtedness secured hereby and

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the foreclosure hereof by action in any court or by exercise of the power of
sale herein contained and (e) all other indebtedness, obligations and
liabilities now or hereafter existing of any kind of Grantor to Grantee under
documents which recite that they are intended to be secured by this Security
Deed.

 

“Loan Documents”: The (a) Loan Agreement dated of even date between Grantor and
Grantee (the “Loan Agreement”), (b) the Note, (c) this Security Deed, (d) all
other documents now or hereafter executed by Grantor, or any other person or
entity, to evidence, or secure the payment of the Indebtedness or the
performance of the Obligations, and (e) all modifications, restatements,
extensions, renewals and replacements of the foregoing.

 

“Obligations”: All of the agreements, covenants, conditions, warranties,
representations and other obligations (other than to repay the Indebtedness)
made or undertaken by Grantor or any other person or entity to Grantee or others
as set forth in the Loan Documents.

 

“Permitted Encumbrances”: The outstanding liens, easements, restrictions,
security interests and other exceptions to title set forth in the policy of
title insurance insuring the priority of this Security Deed, together with the
liens and security interests in favor of Grantee created by the Loan Documents,
none of which, individually or in the aggregate, materially interferes with the
benefits intended to be provided by this Security Deed, materially and adversely
affects the value of the Secured Property, impairs the use or operations of the
Secured Property or impairs Grantor’s ability to pay its obligations in a timely
manner.

 

“Secured Property”: (a) the leasehold estate in the real property described in
Exhibit A, together with any greater estate therein as hereafter may be acquired
by Grantor, created by the Ground Lease (the “Land”), (b) all buildings,
structures and other improvements, now or at any time situated, placed or
constructed upon the Land (the “Improvements”), (c) the Ground Lease and the
leasehold estate created thereby, (d) all modifications, extensions and renewals
of the Ground Lease and all credits, deposits (including, without limitation,
any deposit of cash or securities or any other property which may be held to
secure Grantor’s performance of its obligations under the Ground Lease),
options, privileges and rights of Grantor as tenant under the Ground Lease,
including, but not limited to, the right, if any, to renew or extend the Ground
Lease for a succeeding term or terms, (e) all the estate, right, title, claim or
demand whatsoever of Grantor either in law or in equity, in possession or
expectancy, of, in and to the Secured Property or any part thereof, (f) all
materials, supplies, equipment, apparatus and other items of personal property
now owned or hereafter acquired by Grantor and now or hereafter attached to,
installed in or used in connection with any of the Improvements or the Land, and
water, gas, electrical, storm and sanitary sewer facilities and all other
utilities whether or not situated in easements (the “Fixtures”), (g) all right,
title and interest of Grantor in and to all goods, accounts, general
intangibles, instruments, documents, chattel paper and all other personal
property of any kind or character, including such items of personal property as
defined in the UCC, now owned or hereafter acquired by Grantor and now or
hereafter affixed to, placed upon, used in connection with, arising from or
otherwise related to the Land and Improvements or which may be used in or
relating to the planning, development, financing or operation of any of the
property or other items included in this definition, including, without
limitation, furniture, furnishings, machinery, money, insurance proceeds,
accounts, contract rights, trademarks, goodwill, chattel paper,

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Grantor to Grantee under documents which recite that they are intended to be
secured by this Security Deed.

 

“Loan Documents”: The (a) Loan Agreement dated of even date between Grantor and
Grantee (the “Loan Agreement”), (b) the Note, (c) this Security Deed, (d) all
other documents now or hereafter executed by Grantor, or any other person or
entity, to evidence, or secure the payment of the Indebtedness or the
performance of the Obligations, and (e) all modifications, restatements,
extensions, renewals and replacements of the foregoing.

 

“Obligations”: All of the agreements, covenants, conditions, warranties,
representations and other obligations (other than to repay the Indebtedness)
made or undertaken by Grantor or any other person or entity to Grantee or others
as set forth in the Loan Documents.

 

“Permitted Encumbrances”: The outstanding liens, easements, restrictions,
security interests and other exceptions to title set forth in the policy of
title insurance insuring the priority of this Security Deed, together with the
liens and security interests in favor of Grantee created by the Loan Documents,
none of which, individually or in the aggregate, materially interferes with the
benefits intended to be provided by this Security Deed, materially and adversely
affects the value of the Secured Property, impairs the use or operations of the
Secured Property or impairs Grantor’s ability to pay its obligations in a timely
manner.

 

“Secured Property”: (a) the leasehold estate in the real property described in
Exhibit A, together with any greater estate therein as hereafter may be acquired
by Grantor, created by the Ground Lease (the “Land”), (b) all buildings,
structures and other improvements, now or at any time situated, placed or
constructed upon the Land (the “Improvements”), (c) the Ground Lease and the
leasehold estate created thereby, (d) all modifications, extensions and renewals
of the Ground Lease and all credits, deposits (including, without limitation,
any deposit of cash or securities or any other property which may be held to
secure Grantor’s performance of its obligations under the Ground Lease),
options, privileges and rights of Grantor as tenant under the Ground Lease,
including, but not limited to, the right, if any, to renew or extend the Ground
Lease for a succeeding term or terms, (e) all the estate, right, title, claim or
demand whatsoever of Grantor either in law or in equity, in possession or
expectancy, of, in and to the Secured Property or any part thereof, (f) all
materials, supplies, equipment, apparatus and other items of personal property
now owned or hereafter acquired by Grantor and now or hereafter attached to,
installed in or used in connection with any of the Improvements or the Land, and
water, gas, electrical, storm and sanitary sewer facilities and all other
utilities whether or not situated in easements (the “Fixtures”), (g) all right,
title and interest of Grantor in and to all goods, accounts, general
intangibles, instruments, documents, chattel paper and all other personal
property of any kind or character, including such items of personal property as
defined in the UCC, now owned or hereafter acquired by Grantor and now or
hereafter affixed to, placed upon, used in connection with, arising from or
otherwise related to the Land and Improvements or which may be used in or
relating to the planning, development, financing or operation of any of the
property or other items included in this definition, including, without
limitation, furniture, furnishings, machinery, money, insurance proceeds,
accounts, contract rights, trademarks, goodwill, chattel paper, documents, trade
names, licenses and/or franchise agreements, rights of Grantor under leases of
Fixtures or other personal property or equipment, inventory, all refundable,
returnable or

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reimbursable fees, deposits or other funds or evidences of credit or
indebtedness deposited by or on behalf of Grantor with any governmental
authorities, boards, corporations, providers of utility services, public or
private, including specifically, but without limitation, all refundable,
returnable or reimbursable tap fees, utility deposits, commitment fees and
development costs (the “Personalty”), (h) all reserves, escrows or impounds
required under the Loan Agreement and all deposit accounts maintained by Grantor
with respect to any of the property or other items included in this definition,
(i) to the extent Grantor has an interest therein, all plans, specifications,
shop drawings and other technical descriptions prepared for construction, repair
or alteration of the Improvements, and all amendments and modifications thereof
(the “Plans”), (j) all leases, subleases, licenses, usufructs, concessions,
occupancy agreements, or other agreements (written or oral now or at any time in
effect) which grant a possessory interest in, or the right to use, all or any
part of the Secured Property, together with all guarantees, letters of credit
and other credit support, modifications, extensions and renewals thereof
(whether before or after the filing by or against Grantor of any petition of
relief under 11 U.S.C. § 101 et. seq., as same may be amended from time to time
(the “Bankruptcy Code”)) and property or other items included in this
definition, together with all related security and other deposits (the “Leases”)
and all of Grantor’s claims and rights (the “Bankruptcy Claims”) to the payment
of damages arising from any rejection by a lessee of any Lease under the
Bankruptcy Code, (k) all of the rents, revenues, income, proceeds, profits,
security and other types of deposits, and other benefits paid or payable by
parties to the Leases other than Grantor for using, leasing, licensing,
possessing, operating from, residing in, selling or otherwise enjoying the
Secured Property whether paid or accruing before or after the filing by or
against Grantor of any petition for relief under the Bankruptcy Code, any of the
property or other items included in this definition (the “Rents”), (l) all other
agreements, such as construction contracts, architects’ agreements, engineers’
contracts, utility contracts, maintenance agreements, franchise agreements,
management agreements, service contracts, supply contracts, permits (including
building and occupancy permits), approvals, licenses (including, to the extent
permitted by applicable law) liquor and other alcoholic beverage licenses,
certificates and entitlements in any way relating to the development,
construction, use, occupancy, operation, maintenance, enjoyment, acquisition or
ownership of any of the property or other items included in this definition (the
“Property Agreements”), unless prohibited by law, (m) all rights, privileges,
tenements, hereditaments, rights-of-way, easements, appendages and appurtenances
appertaining to the property or other items included in this definition, under
and by virtue of the Ground Lease, and all right, title and interest, if any, of
Grantor in and to any streets, ways, alleys, strips or gores of land adjoining
the Land or any part thereof, under and by virtue of the Ground Lease, (n) all
accessions, replacements and substitutions for any of the property or other
items included in this definition and all proceeds thereof, (o) all insurance
policies, unearned premiums therefor and proceeds from such policies covering
any of the above property now or hereafter acquired by Grantor, (p) all mineral,
water, oil and gas rights now or hereafter acquired and relating to all or any
part of any of the property or other items included in this definition, (q) all
tradenames, service marks, logos, copyrights, goodwill, books and records,
signage agreements, and all other general intangibles relating to or used in
connection with the operation of the Secured Property, and (r) all of Grantor’s
right, title and interest in and to any awards, remunerations, reimbursements,
settlements or compensation heretofore made or hereafter to be made by any
governmental authority pertaining to the Land, Improvements, Fixtures or
Personalty. As used in this Security Deed, the term “Secured

 

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Property” shall mean all or, where the context permits or requires, any portion
of the above or any interest therein.

 

“UCC”: The Uniform Commercial Code as enacted in the State of Georgia or, if the
creation, perfection and enforcement of any security interest herein granted is
governed by the laws of a state other than Georgia, then, as to the matter in
question, the Uniform Commercial Code in effect in that state.

 

Section 1.2 Other Terms. Capitalized terms not otherwise defined herein shall
have the meaning set forth in the Loan Agreement.

 

ARTICLE 2

 

GRANT

 

Section 2.1 Grant. To secure the full and timely payment of the Indebtedness and
the full and timely performance of the Obligations, Grantor hereby GRANTS,
BARGAINS, SELLS, and CONVEYS to Grantee the Secured Property, subject, however,
to the Permitted Encumbrances; TO HAVE AND TO HOLD the Secured Property and all
parts, rights, members and appurtenances thereof, to the use, benefit and behoof
of Grantee, its successors and assigns, IN FEE SIMPLE forever. THIS CONVEYANCE
is intended to operate and is to be constructed as a deed passing title to the
Secured Property to Grantee and is made under those provisions of the existing
laws of the State of Georgia relating to deeds to secure debt, and not as a
mortgage, and is given to secure the Indebtedness and the Obligations. Grantor
conveys no rights in the Premises greater than or extending beyond the rights of
Grantor as lessee under the Ground Lease.

 

ARTICLE 3

 

WARRANTIES, REPRESENTATIONS AND COVENANTS

 

Grantor warrants, represents and covenants to Grantee as follows:

 

Section 3.1 Title to Secured Property and Lien of this Instrument. Grantor owns
the Secured Property free and clear of any liens, claims or interests, except
the Permitted Encumbrances. This Security Deed creates valid, enforceable first
priority security titles, liens and security interests against the Secured
Property subject only to the Permitted Encumbrances. Grantor warrants that
Grantor has good, marketable and insurable title to the Secured Property and has
the full power, authority and right to execute, deliver and perform its
obligations under this Security Deed.

 

Section 3.2 First Lien Status. Grantor shall preserve and protect the first
security title, lien and security interest status of this Security Deed and the
other Loan Documents. If any lien or security interest other than the Permitted
Encumbrances is asserted against the Secured

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Property, Grantor shall promptly, and at its expense, (a) give Grantee a
detailed written notice of such title, lien or security interest (including
origin, amount and other terms), and (b) pay the underlying claim in full or
take such other action so as to cause it to be released or, in Grantee’s
discretion, provide a bond or other security satisfactory to Beneficiary for the
payment of such claim.

 

Section 3.3 Payment and Performance. Grantor shall pay the Indebtedness when due
under the Loan Documents and shall perform the Obligations in full when they are
required to be performed.

 

Section 3.4 Replacement of Fixtures and Personalty. Grantor shall not, without
the prior written consent of Grantee, permit any of the Fixtures or Personalty
to be removed at any time from the Land or Improvements, unless the removed item
is removed temporarily for maintenance and repair or, if removed permanently, is
obsolete and is replaced by an article of equal or better suitability and value,
owned by Grantor subject to the liens and security interests of this Security
Deed and the other Loan Documents, and free and clear of any other lien or
security interest except such as may be first approved in writing by Grantee.

 

Section 3.5 Maintenance of Rights of Way, Easements and Licenses. Grantor shall
maintain all rights of way, easements, grants, privileges, licenses,
certificates, permits, entitlements and franchises created by virtue of the
Ground Lease necessary for the use of the Secured Property and will not, without
the prior consent of Grantee, consent to any public restriction (including any
zoning ordinance) or private restriction as to the use of the Secured Property.
Grantor shall comply with all restrictive covenants affecting the Secured
Property, and all zoning ordinances and other public or private restrictions as
to the use of the Secured Property.

 

Section 3.6 Inspection. Grantor shall permit Grantee, and Grantee’s agents,
representatives and employees, upon reasonable prior notice to Grantor, to
inspect the Secured Property and conduct such environmental and engineering
studies as Grantee may require, provided that such inspections and studies shall
not materially interfere with the use and operation of the Secured Property, and
provided that such inspections and studies are permitted under the Ground Lease.

 

Section 3.7 Other Covenants. All of the covenants in the Loan Agreement are
incorporated herein by reference and, together with covenants in this Article 3,
shall be covenants running with the land. The covenants set forth in the Loan
Agreement include, without limitation:

 

(a) No Transfer or Encumbrance. The prohibition against the further sale,
transfer or encumbering of any of the Secured Property including:

 

(i) the further encumbrance, alienation, granting of a Lien (as defined in the
Loan Agreement) or the granting of any other interest in the Secured Property or
any part thereof (including any partnership or other ownership interest in
Grantor) provided, however, in the event that the Secured Property is subject to
a claim of lien in connection with work performed

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or materials supplied, or alleged to have been performed or supplied, the
Grantor shall have a period of 30 days from its receipt of actual knowledge
thereof, to bond off or discharge such lien or otherwise to provide satisfactory
security to the Grantee in connection therewith; and

 

(ii) the entering into any easement or other agreement granting rights in or
restricting the use or development of the Secured Property.

 

(b) Payment of Taxes. The obligation to pay when due all taxes on the Secured
Property or assessed against Grantee with respect to the Loan.

 

(c) Inspection. The right of Grantee to inspect the Secured Property.

 

(d) Insurance. The obligation to keep the Secured Property insured as Grantee
may require.

 

(e) Compliance with Laws. The obligation to comply with all legal requirements
(including environmental laws), maintain the Secured Property in good condition,
and promptly repair any damage or casualty.

 

(f) No Modification of Leases. Except as otherwise permitted under the Loan
Agreement, the obligation of Grantor to obtain Grantee’s consent prior to
entering into, modifying or taking other actions with respect to Leases of the
Secured Property.

 

Section 3.8 Condemnation Awards and Insurance Proceeds.

 

(a) Condemnation Awards. Grantor assigns all awards and compensation for any
condemnation or other taking, or any purchase in lieu thereof, to Grantee and
authorizes Grantee to collect and receive such awards and compensation and to
give proper receipts and acquittances therefor, subject to the terms of the Loan
Agreement.

 

(b) Insurance Proceeds. Grantor assigns to Grantee all proceeds of any insurance
policies insuring against loss or damage to the Secured Property. Grantor
authorizes Grantee to collect and receive such proceeds and authorizes and
directs the issuer of each of such insurance policies to make payment for all
such losses directly to Grantee, instead of to Grantor and Grantee jointly.

 

Section 3.9 Transfer or Encumbrance of Secured Property.

 

(a) Without the prior written consent of Grantee,

 

(i) neither Grantor nor any other Person having an ownership or beneficial
interest in Grantor shall (A) directly or indirectly sell, transfer, convey,
mortgage, pledge, or assign any interest in the Secured Property or any part
thereof (including any partnership or any other ownership interest in Grantor);
(B) further encumber, alienate, grant a Lien or grant any other interest in the
Secured Property or any part thereof (including any partnership or other
ownership interest in Grantor), whether voluntarily or involuntarily; or (C)
enter into any

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easement or other agreement granting rights in or restricting the use or
development of the Secured Property;

 

(ii) no new general partner, member, or limited partner having the ability to
control the affairs of Grantor shall be admitted to or created in Grantor (nor
shall any existing general partner or member or controlling limited partner
withdraw from Grantor), and no change in Grantor’s organizational documents
relating to control over Grantor and/or the Secured Property shall be effected;
and

 

(iii) no transfer shall be permitted which would cause BSRT Northlake Festival
Corporation (“BSRT”) to not have control over major decisions including the sale
and/or refinancing of the Secured Property, nor cause Northlake Tower
Corporation (“NTC”) to not have the power to manage the day-to-day
administration of Grantor and the Secured Property, nor cause Banyan Strategic
Realty Trust to own less than 100% of the voting stock in BSRT, nor cause David
W. Harvey, Clifton J. Wilkow or Marc R. Wilkow to own less than 100% of the
voting stock in NTC.

 

(b) As used in this Section 3.9, “transfer” shall include (i) an installment
sales agreement wherein Grantor agrees to sell the Secured Property or any part
thereof for a price to be paid in installments; (ii) an agreement by Grantor
leasing all or a substantial part of the Secured Property for other than actual
occupancy by a space tenant thereunder or a sale, assignment or other transfer
of, or the grant of a security interest in, Grantor’s right, title and interest
in and to any Leases or any Rents, (iii) the sale, transfer, conveyance,
mortgage, pledge, or assignment of the legal or beneficial ownership of any
partnership interest in any general partner in Grantor that is a partnership or
any membership interest in any managing member of Grantor that is a limited
liability company, and (iv) the sale, transfer, conveyance, mortgage, pledge, or
assignment of the legal or beneficial ownership of any voting stock in any
general partner in Grantor that is a corporation; “transfer” shall not include
(A) the leasing of individual units within the Secured Property so long as
Grantor complies with the provisions of the Loan Documents relating to such
leasing activity; or (B) the transfers of (x) limited partner interests in
Grantor, or (y) ownership interests in M&J/Retail Operations – GP, Inc., to
David W. Harvey, Clifton J. Wilkow or Marc R. Wilkow, or to any trust under the
sole control of David W. Harvey, Clifton J. Wilkow or Marc R. Wilkow, so long as
the results of such transfers do not result in the transfer of more than 49% of
the ownership or beneficial interest in the Grantor and the provisions of
Sections 3.9(a)(ii) and 3.9(a)(iii) are satisfied.

 

(c) Grantee shall not be required to demonstrate any actual impairment of its
security or any increased risk of default hereunder in order to declare the
Indebtedness immediately due and payable upon Grantor’s sale, conveyance,
alienation, mortgage, encumbrance, pledge or transfer of the Secured Property
without Grantee’s consent. This provision shall apply to every sale, conveyance,
alienation, mortgage, encumbrance, pledge or transfer of the Secured Property
regardless of whether voluntary or not, or whether or not Grantee has consented
to any previous sale, conveyance, alienation, mortgage, encumbrance, pledge or
transfer of the Secured Property.

 

(d) Grantee’s consent to one sale, conveyance, alienation, mortgage,
encumbrance, pledge or transfer of the Secured Property shall not be deemed to
be a waiver of Grantee’s right

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to require such consent to any future occurrence of same. Any sale, conveyance,
alienation, mortgage, encumbrance, pledge or transfer of the Secured Property
made in contravention of this paragraph shall be null and void and of no force
and effect.

 

(e) Grantor agrees to bear and shall pay or reimburse Grantee on demand for all
reasonable expenses (including, without limitation, reasonable attorneys’ fees
and disbursements, title search costs and title insurance endorsement premiums)
incurred by Grantee in connection with the review, approval and documentation of
any such sale, conveyance, alienation, mortgage, encumbrance, pledge or
transfer.

 

(f) Grantee’s consent to the sale or transfer of the Secured Property will not
be unreasonably withheld after consideration of all relevant factors, provided
that:

 

(i) no Event of Default or event which with the giving of notice or the passage
of time would constitute an Event of Default shall have occurred and remain
uncured;

 

(ii) the proposed transferee (“Transferee”) shall be a reputable entity or
person of good character, creditworthy, with sufficient financial worth
considering the obligations assumed and undertaken, as evidenced by financial
statements and other information reasonably requested by Grantee;

 

(iii) the Transferee and its property manager shall have sufficient experience
in the ownership and management of properties similar to the Secured Property,
and Grantee shall be provided with reasonable evidence thereof (and Grantee
reserves the right to approve the Transferee without approving the substitution
of the property manager);

 

(iv) Grantee shall have recommendations in writing from the Rating Agencies (as
hereinafter defined) to the effect that such transfer will not result in a
re-qualification, reduction or withdrawal of any rating initially assigned or to
be assigned in a Secondary Market Transaction (as defined in the Loan
Agreement). The term “Rating Agencies” as used herein shall mean each of
Standard & Poor’s Ratings Group, a division of McGraw-Hill, Inc., Moody’s
Investors Service, Inc., Duff & Phelps Credit Rating Co. and Fitch Investors
Service, L.P., or any other nationally-recognized statistical rating agency
which has been approved by Grantee;

 

(v) the Transferee shall have executed and delivered to Grantee an assumption
agreement in form and substance acceptable to Grantee, evidencing such
Transferee’s agreement to abide and be bound by the terms of the Note, this
Security Deed and the other Loan Documents, together with such legal opinions
and title insurance endorsements as may be reasonably requested by Grantee; and

 

(vi) Grantee shall have received an assumption fee equal to one percent (1%) of
the then unpaid principal balance of the Note in addition to the payment of all
costs and expenses incurred by Grantee in connection with such assumption
(including reasonable attorney’s fees and costs).

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ARTICLE 4

 

DEFAULT AND FORECLOSURE

 

Section 4.1 Remedies. If an Event of Default (as defined in the Loan Agreement)
exists, Grantee may, at Grantee’s election, exercise any or all of the following
rights, remedies and recourses:

 

(a) Acceleration. Declare the Indebtedness to be immediately due and payable,
without further notice, presentment, protest, notice of intent to accelerate,
notice of acceleration, demand or action of any nature whatsoever (each of which
hereby is expressly waived by Grantor), whereupon the same shall become
immediately due and payable.

 

(b) Entry on Secured Property. Enter the Secured Property and take exclusive
possession thereof and of all books, records and accounts relating thereto. If
Grantor remains in possession of the Secured Property after an Event of Default
and without Grantee’s prior written consent, Grantee may invoke any legal
remedies to dispossess Grantor.

 

(c) Operation of Secured Property. Hold, lease, develop, manage, operate or
otherwise use the Secured Property upon such terms and conditions as Grantee may
deem reasonable under the circumstances (making such repairs, alterations,
additions and improvements and taking other actions, from time to time, as
Grantee deems necessary or desirable), and apply all Rents and other amounts
collected by Grantee in connection therewith in accordance with the provisions
of Section 4.7.

 

(d) Foreclosure and Sale.

 

(i) Sell or offer for sale the Secured Property in such portions, order and
parcels as Grantee may determine, with or without having first taken possession
of same, to the highest bidder for cash at public auction. Such sale shall be
made in accordance with the provisions of Section 4.1(d)(ii) below relating to
the sale of real estate or by Chapter 9 of the UCC relating to the sale of
collateral after default by a debtor (as such laws now exist or may be hereafter
amended or succeeded), or by any other present or subsequent articles or
enactments relating to same. With respect to any notices required or permitted
under the UCC, Grantor agrees that ten (10) days’ prior written notice shall be
deemed commercially reasonable. At any such sale (A) whether made under the
power herein contained, the UCC, any other legal requirement or by virtue of any
judicial proceedings or any other legal right, remedy or recourse, it shall not
be necessary for Grantee to be physically present at or to have constructive
possession of the Secured Property (Grantor shall deliver to Grantee any portion
of the Secured Property not actually or constructively possessed by Grantee
immediately upon demand by Grantee), and the title to and right of possession of
any such property shall pass to the purchaser thereof as completely as if
Grantee had been actually present and delivered to purchaser at such sale, (B)
each instrument of conveyance executed by Grantee shall contain general
warranties of titles (or limited or no warranties if Grantee shall so elect),
binding upon Grantor, (C) each recital contained in any instrument of conveyance
made by Grantee shall conclusively establish the truth and accuracy of the
matters recited therein, including, without limitation, nonpayment of

--------------------------------------------------------------------------------

the Indebtedness and advertisement and conduct of such sale in the manner
provided herein and otherwise by law, (D) any prerequisites to the validity of
such sale shall be conclusively presumed to have been performed, (E) the receipt
of Grantee or other party making the sale shall be a sufficient discharge to the
purchaser or purchasers for his or their purchase money and no such purchaser or
purchasers, or his or their assigns or personal representatives, shall
thereafter be obligated to see to the application of such purchase money or be
in any way answerable for any loss, misapplication or nonapplication thereof,
and (F) to the fullest extent permitted by law, Grantor shall be completely and
irrevocably divested of all of its right, title, interest, claim, equity, equity
of redemption, and demand whatsoever, either at law or in equity, in and to the
property sold and such sale shall be a perpetual bar both at law and in equity
against Grantor, and against all other persons claiming or to claim the property
sold or any part thereof, by, through or under Grantor. Upon any sale made under
or by virtue of this Article 4 (whether made under the power of sale herein
granted or under or by virtue of judicial proceedings or of a judgment or decree
of foreclosure and sale), Grantee may bid for and acquire the Secured Property
or any part thereof and in lieu of paying cash therefore may make settlement for
the purchase price by crediting upon the Indebtedness the net sale price after
deducting therefrom the expenses of the sale and the costs of the action and any
other sums which Grantee is authorized to deduct under this Security Deed.

 

(ii) Sell the Secured Property or any part of the Secured Property at public
sale or sales before the door of the courthouse of the county in which the
Secured Property or any part of the Secured Property is situated, to the highest
bidder for cash in order to pay the Indebtedness secured hereby and accrued
interest thereon and insurance premiums, liens, assessments, taxes and charges,
including utility charges, if any, with accrued interest thereon, and all
expenses of the sale and of all proceedings in connection therewith, including
reasonable attorneys’ fees, after advertising the time, place and terms of sale
once a week for four (4) weeks immediately preceding such sale (but without
regard to the number of days) in a newspaper in which Sheriff’s sales are
advertised in said county. At any such public sale, Grantee may execute and
deliver to the purchaser a conveyance of the Secured Property or any part of the
Secured Property in fee simple, with full warranties of title (or without
warranties if Grantee shall so elect) and to this end, Grantor hereby
constitutes and appoints Grantee the agent and attorney-in-fact of Grantor to
make such sale and conveyance, and thereby to divest Grantor of all right, title
and interest, equity and equity of redemption that Grantor may have in and to
the Secured Property and to vest the same in the purchaser or purchasers at such
sale or sales, and all the acts and doings of said agent and attorney-in-fact
are hereby ratified and confirmed and any recitals in said conveyance or
conveyances as to facts essential to a valid sale shall be binding upon Grantor.
The aforesaid power of sale and agency hereby granted are coupled with an
interest and are irrevocable by death or otherwise, are granted as cumulative of
the other remedies provided hereby or by law for collection of the Indebtedness
secured hereby and shall not be exhausted by one exercise thereof but may be
exercised until full payment of all Indebtedness secured hereby. Grantee may
adjourn from time to time any sale by it to be made under or for such adjourned
sale or sales; and, except as otherwise provided by any applicable provision of
law, Grantee, without further notice or publication, may make such sale at the
time and place to which the same shall be so adjourned.

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(e) Receiver. Make application to a court of competent jurisdiction for, and
obtain from such court the appointment of a trustee, receiver, liquidant or
conservator of the Secured Property, without regard for the adequacy of the
security for the Indebtedness and without regard for the solvency of Grantor,
any guarantor of the Indebtedness, or any other person, firm or other entity
liable for the payment of the Indebtedness, and without regard for any other
statutory or common law requirements otherwise applicable to the appointment of
a trustee, receiver, liquidator or conservator, and Grantor irrevocably consents
to such appointment. Any such trustee, receiver, liquidator or conservator shall
have all the usual powers and duties of receivers in similar cases, including
the full power to rent, maintain and otherwise operate the Secured Property upon
such terms as may be approved by the court, and shall apply such Rents in
accordance with the provisions of Section 4.7.

 

(f) UCC. Exercise any and all rights and remedies granted to a secured party
under the Uniform Commercial Code, including, without limiting the generality of
the foregoing: (i) the right to take possession of the personal property or any
part thereof, and to take such other measures as Grantee may deem necessary for
the care, protection and preservation of the personal property, and (ii) request
Grantor at its expense to assemble the personal property and make it available
to Grantee at a convenient place acceptable to Grantee. Any notice of sale,
disposition or other intended action by Grantee with respect to the personal
property sent to Grantor in accordance with the provisions hereof at least ten
(10) days prior to such action, shall constitute commercially reasonable notice
to Grantor.

 

(g) Other. Exercise all other rights, remedies and recourses granted under the
Loan Documents or otherwise available at law or in equity (including an action
for specific performance of any covenant contained in the Loan Documents, or a
judgment on the Note either before, during or after any proceeding to enforce
this Security Deed).

 

Section 4.2 Separate Sales. The Secured Property may be sold in one or more
parcels and in such manner and order as Grantee in its sole discretion, may
elect; the right of sale arising out of any Event of Default shall not be
exhausted by any one or more sales.

 

Section 4.3 Remedies Cumulative, Concurrent and Nonexclusive. Grantee shall have
all rights, remedies and recourses granted in the Loan Documents and available
at law or equity (including the UCC), which rights (a) shall be cumulative and
concurrent, (b) may be pursued separately, successively or concurrently against
Grantor or others obligated under the Note and the other Loan Documents, or
against the Secured Property, or against any one or more of them, at the sole
discretion of Grantee, (c) may be exercised as often as occasion therefor shall
arise, and the exercise or failure to exercise any of them shall not be
construed as a waiver or release thereof or of any other right, remedy or
recourse, and (d) are intended to be, and shall be, nonexclusive. No action by
Grantee in the enforcement of any rights, remedies or recourses under the Loan
Documents or otherwise at law or equity shall be deemed to cure any Event of
Default.

 

Section 4.4 Release of and Resort to Collateral. Grantee may release, regardless
of consideration and without the necessity for any notice to a consent by the
holder of any subordinate lien on the Secured Property, any part of the Secured
Property without, as to the

--------------------------------------------------------------------------------

remainder, in any way impairing, affecting, subordinating or releasing the
security title, lien or security interests created in or evidenced by the Loan
Documents or their stature as a first and prior title, lien and security
interest in and to the Secured Property. For payment of the Indebtedness,
Grantee may resort to any other security in such order and manner as Grantee may
elect.

 

Section 4.5 Waiver of Redemption, Notice and Marshalling of Assets. To the
fullest extent permitted by law, Grantor hereby irrevocably and unconditionally
waives and releases (a) all benefit that might accrue to Grantor by virtue of
any present or future statute of limitations or law or judicial decision
exempting the Secured Property from attachment, levy or sale on execution or
providing for any appraisement, valuation, stay of execution, exemption from
civil process, redemption or extension of time for payment, (b) all notices of
any Event of Default or of Grantee’s election to exercise or its actual exercise
of any right, remedy or recourse provided for under the Loan Documents, and (c)
any right to a marshalling of assets or a sale in inverse order of alienation.

 

Section 4.6 Discontinuance of Proceedings. If Grantee shall have proceeded to
invoke any right, remedy or recourse permitted under the Loan Documents and
shall thereafter elect to discontinue or abandon it for any reason, Grantee
shall have the unqualified right to do so and, in such an event, Grantor and
Grantee shall be restored to their former positions with respect to the
Indebtedness, the Obligations, the Loan Documents, the Secured Property and
otherwise, and the rights, remedies, recourses and powers of Grantee shall
continue as if the right, remedy or recourse had never been invoked, but no such
discontinuance or abandonment shall waive any Event of Default which may then
exist or the right of Grantee thereafter to exercise any right, remedy or
recourse under the Loan Documents for such Event of Default. Grantor hereby
expressly waives any and all benefits Grantor may have under O.C.G.A. §44-14-85
to claim or assert that the Indebtedness has been reinstated in accordance with
its terms following the withdrawal of any foreclosure proceedings by Grantee,
and acknowledges and agrees that reinstatement shall occur only upon written
agreement of Grantee.

 

Section 4.7 Application of Proceeds. Following an Event of Default, the proceeds
of any sale of, and the Rents and other amounts generated by the holding,
leasing, management, operation or other use of the Secured Property, shall be
applied by Grantee (or the receiver, if one is appointed) in the following order
unless otherwise required by applicable law:

 

(a) to the payment of the costs and expenses of taking possession of the Secured
Property and of holding, using, leasing, repairing, improving and selling the
same, including, without limitation (1) receiver’s fees and expenses, (2) court
costs, (3) reasonable attorneys’ and accountants’ fees and expenses, (4) costs
of advertisement, and (5) the payment of all ground rent, real estate taxes and
assessments, except any taxes, assessments or other charges subject to which the
Secured Property shall have been sold;

 

(b) to the payment of all amounts (including interest), other than the unpaid
Indebtedness, which may be due to Grantee under the Loan Documents;

--------------------------------------------------------------------------------

 

(c) to the payment of the Indebtedness and performance of the Obligations in
such manner and order of preference as Grantee in its sole discretion may
determine; and

 

(d) the balance, if any, to the payment of the persons legally entitled thereto.

 

Section 4.8 Occupancy After Foreclosure. The purchaser or purchasers at any
foreclosure sale pursuant to Section 4.1 shall become the legal owner of the
Secured Property. All occupants of the Secured Property shall, at the option of
such purchaser, become tenants of the purchaser or purchasers at the foreclosure
sale and shall deliver possession thereof immediately to the purchaser or
purchasers upon demand. It shall not be necessary for the purchaser or
purchasers at said sale to bring any action for possession of the Secured
Property other than dispossessory actions according to applicable law in any
court having jurisdiction over the Secured Property. In the event of any such
foreclosure sale by Grantee, Grantor shall be deemed a tenant holding over and
shall forthwith deliver possession to the purchaser or purchasers at such sale
or be summarily dispossessed according to provisions of law applicable to
tenants holding over.

 

Section 4.9 Additional Advances and Disbursements; Costs of Enforcement.

 

(a) If any Event of Default exists, Grantee shall have the right, but not the
obligation, to cure such Event of Default in the name and on behalf of Grantor.
All sums advanced and expenses incurred at any time by Grantee under this
Section 4.9, or otherwise under this Security Deed or any of the other Loan
Documents or applicable law, shall bear interest from the date that such sum is
advanced or expense incurred, to and including the date of reimbursement,
computed at the Default Rate (as defined in the Loan Agreement), and all such
sums, together with interest thereon, shall be secured by this Security Deed.

 

(b) Grantor shall pay all expenses (including reasonable attorneys’ fees and
expenses) of or incidental to the perfection and enforcement of this Security
Deed and the other Loan Documents, or the enforcement, compromise or settlement
of the Indebtedness or any claim under this Security Deed and the other Loan
Documents, and for the curing thereof, or for defending or asserting the rights
and claims of Grantee in respect thereof, by litigation or otherwise.

 

Section 4.10 No Grantee in Possession. Neither the enforcement of any of the
remedies under this Article 4, the assignment of the Rents and Leases under
Article 5, the security interests under Article 6, nor any other remedies
afforded to Grantee under the Loan Documents, at law or in equity shall cause
Grantee to be deemed or construed to be a Grantee in possession of the Secured
Property, to obligate Grantee to lease the Secured Property or attempt to do so,
or to take any action, incur any expense, or perform or discharge any
obligation, duty or liability whatsoever under any of the Leases or otherwise.

 

Section 4.11 Actions and Proceedings. Grantee has the right to appear in and
defend any action or proceeding brought with respect to the Secured Property and
to bring any action or proceeding, in the name and on behalf of Grantor, which
Grantee, in its discretion, decides should be brought to protect its interest in
the Secured Property.

--------------------------------------------------------------------------------

 

Section 4.12 WAIVER OF GRANTOR’S RIGHTS. BY EXECUTION OF THIS SECURITY DEED AND
BY INITIALING THIS SECTION 4.12, GRANTOR EXPRESSLY: (a) ACKNOWLEDGES THE RIGHT
TO ACCELERATE THE INDEBTEDNESS EVIDENCED BY THE NOTE AND THE POWER OF ATTORNEY
GIVEN HEREIN TO GRANTEE TO SELL THE SECURED PROPERTY BY NONJUDICIAL FORECLOSURE
UPON AN EVENT OF DEFAULT BY GRANTOR WITHOUT ANY JUDICIAL HEARING AND WITHOUT ANY
NOTICE; (b) WAIVES ANY AND ALL RIGHTS WHICH GRANTOR MAY HAVE UNDER THE
CONSTITUTION OF THE UNITED STATES (INCLUDING THE FIFTH AND FOURTEENTH AMENDMENTS
THEREOF), THE VARIOUS PROVISIONS OF THE CONSTITUTIONS FOR THE SEVERAL STATES, OR
BY REASON OF ANY OTHER APPLICABLE LAW, TO NOTICE AND TO JUDICIAL HEARING PRIOR
TO THE EXERCISE BY GRANTEE OF ANY RIGHT OR REMEDY HEREIN PROVIDED TO GRANTEE,
PROVIDED THAT NOTHING CONTAINED HEREIN SHALL BE DEEMED TO DIMINISH OR IMPAIR ANY
RIGHTS OF THE GRANTOR TO RECEIVE NOTICES (INCLUDING NOTICES OF EVENTS OF
DEFAULT) TO THE EXTENT THAT SUCH NOTICES ARE REQUIRED BY THE LOAN DOCUMENTS; (c)
ACKNOWLEDGES THAT GRANTOR HAS READ THIS SECURITY DEED AND ITS PROVISIONS HAVE
BEEN EXPLAINED FULLY TO GRANTOR AND GRANTOR HAS CONSULTED WITH COUNSEL OF
GRANTOR’S CHOICE PRIOR TO EXECUTING THIS SECURITY DEED; AND (d) ACKNOWLEDGES
THAT ALL WAIVERS OF THE AFORESAID RIGHTS OF GRANTOR HAVE BEEN MADE KNOWINGLY,
INTENTIONALLY AND WILLINGLY BY GRANTOR AS PART OF A BARGAINED FOR LOAN
TRANSACTION.

 

INITIALED BY GRANTOR:

 

 

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(NAME OF GRANTOR):

 

 

--------------------------------------------------------------------------------

By:

 

 

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ARTICLE 5

 

ASSIGNMENT OF RENTS AND LEASES

 

Section 5.1 Assignment. Grantor acknowledges and confirms that it has executed
and delivered to Grantee an Assignment of Rents and Leases of even date (the
“Assignment of Rents and Leases”), intending that such instrument create a
present, absolute assignment to Grantee of the Leases and Rents. Without
limiting the intended benefits or the remedies provided under the Assignment of
Rents and Leases, Grantor hereby assigns to Grantee, as further security for the
Indebtedness and the Obligations, the Leases and Rents. While any Event of
Default exists, Grantee shall be entitled to exercise any or all of the remedies
provided in the Assignment of Rents and Leases and in Article 4 hereof,
including the right to have a receiver appointed. If any conflict or
inconsistency exists between the assignment of the Rents and the Leases in this
Security Deed and the absolute assignment of the Rents and the Leases in the
Assignment of Rents and Leases, the terms of the Assignment of Rents and Leases
shall control.

--------------------------------------------------------------------------------

 

Section 5.2 No Merger of Estates. So long as any part of the Indebtedness and
the Obligations secured hereby remain unpaid and undischarged, the fee and
leasehold estates to the Secured Property shall not merge, but shall remain
separate and distinct, notwithstanding the union of such estates either in
Grantor, Grantee, any lessee or any third party by purchase or otherwise.

 

ARTICLE 6

 

SECURITY AGREEMENT

 

Section 6.1 Security Interest. This Security Deed constitutes a “Security
Agreement” on personal property within the meaning of the UCC and other
applicable law and with respect to the Personalty, Fixtures, Plans, Leases,
Rents and Property Agreements. To this end, Grantor grants to Grantee, a first
and prior security interest in the Personalty, Fixtures, Plans, Leases, Rents
and Property Agreements and all other Secured Property which is personal
property to secure the payment of the Indebtedness and performance of the
Obligations, and agrees that Grantee shall have all the rights and remedies of a
secured party under the UCC with respect to such property.

 

Section 6.2 Financing Statements. Grantor shall execute and deliver to Grantee,
in form and substance satisfactory to Grantee, such financing statements and
such further assurances as Grantee may, from time to time, reasonably consider
necessary to create, perfect and preserve Grantee’s security interest hereunder
and Grantee may cause such statements and assurances to be recorded and filed,
at such times and places as may be required or permitted by law to so create,
perfect and preserve such security interest.

 

Section 6.3 No Obligation of Grantee. The security interest herein granted shall
in no event cause Grantee to be deemed or construed as a mortgagee in possession
of the Secured Property, to obligate Grantee to lease the Secured Property or
attempt to do so, or to take any action, incur any expense or perform or
discharge any obligation, duty or liability whatsoever under any of the Leases
or otherwise.

 

ARTICLE 7

 

MISCELLANEOUS

 

Section 7.1 Limitation on Interest. It is the intention of the parties hereto to
conform strictly to applicable usury laws. Accordingly, all agreements between
Grantor and Grantee with respect to the Loan are hereby expressly limited so
that in no event, whether by reason of acceleration of maturity or otherwise,
shall the amount paid or agreed to be paid to Grantee or charged by Grantee for
the use, forbearance or detention of the money to be lent hereunder or
otherwise, exceed the maximum amount allowed by law. If the Loan would be
usurious under applicable law (including the laws of the state where the Secured
Property is located and the laws

--------------------------------------------------------------------------------

 

of the United States of America), then, notwithstanding anything to the contrary
in the Loan Documents: (a) the aggregate of all consideration which constitutes
interest under applicable law that is contracted for, taken, reserved, charged
or received under the Loan Documents shall under no circumstances exceed the
maximum amount of interest allowed by applicable law, and any excess shall be
credited on the Indebtedness (or, if the Indebtedness has been paid in full,
refunded to Grantor); and (b) if maturity is accelerated by reason of an
election by Grantee, or in the event of any prepayment, then any consideration
which constitutes interest may never include more than the maximum amount
allowed by applicable law. In such case, excess interest, if any, provided for
in the Loan Documents or otherwise, to the extent permitted by applicable law,
shall be amortized, prorated, allocated and spread from the date of advance
until payment in full so that the actual rate of interest is uniform through the
term hereof. If such amortization, proration, allocation and spreading is not
permitted under applicable law, then such excess interest shall be canceled
automatically as of the date of such acceleration or prepayment and, if
theretofore paid, shall be credited on the Indebtedness (or, if the Indebtedness
has been paid in full, refunded to Grantor). The Loan Documents are contracts
made under and shall be construed in accordance with and governed by the laws of
the State of Georgia.

 

Section 7.2 Notices. Any notice required or permitted to be given under this
Security Deed shall be in writing or by telecopy (electronic facsimile
transmission) and, in the case of notice in writing, either shall be mailed by
certified mail, postage prepaid, return receipt requested, or sent by overnight
air courier service, or personally delivered to a representative of the
receiving party. All such communications shall be mailed, sent or delivered,
addressed to the party for whom it is intended at its address set forth on the
first page of this Security Deed. Any communication so addressed and mailed
shall be deemed to be given on the earliest of (a) when actually delivered, (b)
on the first Business Day (as defined in the Loan Agreement) after deposit with
an overnight air courier service, or (c) on the third Business Day after deposit
in the United States mail, postage prepaid, in each case to the address of the
intended addressee, and any communication so delivered in person shall be deemed
to be given when receipted for by, or actually received by, Grantee or Grantor,
as the case may be. If given by telecopy, a notice shall be deemed given and
received when the telecopy is transmitted to the party’s telecopy number
specified in the Loan Agreement and confirmation of complete receipt is received
by the transmitting party during normal business hours or on the next Business
Day if not confirmed during normal business hours. Any party may designate a
change of address by written notice to the other by giving at least ten (10)
days prior written notice of such change of address.

 

Section 7.3 Covenants Running with the Land. All Obligations contained in this
Security Deed are intended by Grantor and Grantee to be, and shall be construed
as, covenants running with the Secured Property. As used herein, “Grantor” shall
refer to the party named in the first paragraph of this Security Deed and to any
subsequent owner of all or any portion of the Secured Property (without in any
way implying that Grantee has or will consent to any such conveyance or transfer
of the Secured Property). All persons or entities who may have or acquire an
interest in the Secured Property shall be deemed to have notice of, and be bound
by, the terms of the Loan Agreement and the other Loan Documents; however, no
such party shall be entitled to any rights thereunder without the prior written
consent of Grantee.

--------------------------------------------------------------------------------

 

Section 7.4 Attorney-in-Fact. Grantor hereby irrevocably appoints Grantee and
its successors and assigns, as its attorney-in-fact, which agency is coupled
with an interest, (a) to execute and/or record any notices of completion,
cessation of labor or any other notices that Grantee deems appropriate to
protect Grantee’s interest, if Grantor shall fail to do so within ten (10) days
after written request by Grantee, (b) upon the issuance of a deed pursuant to
the foreclosure of this Security Deed or the delivery of a deed in lieu of
foreclosure, to execute all instruments of assignment, conveyance or further
assurance with respect to the Leases, Rents, Personalty, Fixtures, Plans and
Property Agreements in favor of the grantee of any such deed and as may be
necessary or desirable for such purpose, (c) to prepare, execute and file or
record financing statements, continuation statements, applications for
registration and like papers necessary to create, perfect or preserve Grantee’s
security titles, interests and rights in or to any of the collateral, and (d)
while any Event of Default exists, to perform any obligation of Grantor
hereunder; however: (i) Grantee shall not under any circumstances be obligated
to perform any obligation of Grantor; (ii) any sums advanced by Grantee in such
performance shall be added to and included in the Indebtedness and shall bear
interest at the Default Rate; (iii) Grantee as such attorney-in-fact shall only
be accountable for such funds as are actually received by Grantee; and (iv)
Grantee shall not be liable to Grantor or any other person or entity for any
failure to take any action which it is empowered to take under this Section.

 

Section 7.5 Successors and Assigns. This Security Deed shall be binding upon and
inure to the benefit of Grantee and Grantor and their respective successors and
assigns. Grantor shall not, without the prior written consent of Grantee, assign
any rights, duties or obligations hereunder.

 

Section 7.6 No Waiver. Any failure by Grantee to insist upon strict performance
of any of the terms, provisions or conditions of the Loan Documents shall not be
deemed to be a waiver of same, and Grantee shall have the right at any time to
insist upon strict performance of all of such terms, provisions and conditions.

 

Section 7.7 Subrogation. To the extent proceeds of the Note have been used to
extinguish, extend or renew any indebtedness against the Secured Property, then
Grantee shall be subrogated to all of the rights, liens and interests existing
against the Secured Property and held by the holder of such indebtedness and
such former rights, liens and interests, if any, are not waived, but are
continued in full force and effect in favor of Grantee.

 

Section 7.8 Loan Agreement. If any conflict or inconsistency exists between this
Security Deed and the Loan Agreement, the Loan Agreement shall govern.

 

Section 7.9 Cancellation and Surrender. Should the Indebtedness secured by this
Security Deed be paid according to the tenor and effect thereof when the same
shall become due and payable, and should Grantor perform all Obligations then
required to be performed, then this Security Deed shall be cancelled and
surrendered.

 

Section 7.10 Waiver of Stay, Moratorium and Similar Rights. Grantor agrees, to
the full extent that it may lawfully do so, that it will not at any time insist
upon or plead or in any way take advantage of any appraisement, valuation, stay,
marshalling of assets, extension,

--------------------------------------------------------------------------------

 

redemption or moratorium law now or hereafter in force and effect so as to
prevent or hinder the enforcement of the provisions of this Security Deed or the
indebtedness secured hereby, or any agreement between Grantor and Grantee or any
rights or remedies of Grantee.

 

Section 7.11 Limitation on Liability. Grantor’s liability hereunder is subject
to the limitation on liability provisions of Article 12 of the Loan Agreement.

 

Section 7.12 Obligations of Grantor, Joint and Several. If more than one person
or entity has executed this Security Deed as “Grantor,” the obligations of all
such persons or entities hereunder shall be joint and several.

 

Section 7.13 Governing Law. This Security Deed shall be governed by the laws of
the State of Georgia.

 

Section 7.14 Headings. The Article, Section and Subsection titles hereof are
inserted for convenience of reference only and shall in no way alter, modify or
define, or be used in construing, the text of such Articles, Sections or
Subsections.

 

Section 7.15 Entire Agreement. This Security Deed and the other Loan Documents
embody the entire agreement and understanding between Grantee and Grantor and
supersede all prior agreements and understandings between such parties relating
to the subject matter hereof and thereof. Accordingly, the Loan Documents 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.

 

EXECUTED and delivered under seal as of the date first above written.

 

Signed, sealed and delivered

in the presence of:

     

BSRT/M&J NORTHLAKE LIMITED PARTNERSHIP,

  an Illinois limited partnership

       

By:

 

BSRT NORTHLAKE FESTIVAL CORP.,

an Illinois corporation, Its General Partner

--------------------------------------------------------------------------------

         

By:

 

    /S/     NEIL D. HANSEN

--------------------------------------------------------------------------------

                          Witness

         

Name:

 

  Neil D. Hansen

           

Title:

 

    Vice President

           

[SEAL]

--------------------------------------------------------------------------------

 

       

By:

 

NORTHLAKE TOWER CORPORATION,

an Illinois corporation, Its General Partner

--------------------------------------------------------------------------------

     

By:

 

/S/    MARC R. WILKOW

--------------------------------------------------------------------------------

                                         Witness

     

Name:

     

Marc R. Wilkow

       

Title:

     

President

--------------------------------------------------------------------------------

     

[SEAL]

                                    Notary Public

       

My Commission Expires:

       

--------------------------------------------------------------------------------

       

                                [NOTARY SEAL]

       

 

--------------------------------------------------------------------------------

 

EXHIBIT A

 

[Legal Description]

--------------------------------------------------------------------------------

 

GENERAL ELECTRIC CAPITAL CORPORATION

(Lender)

 

 

 

 

to

 

 

 

 

BSRT/M&J NORTHLAKE LIMITED PARTNERSHIP

(Borrower)

 

 

 

--------------------------------------------------------------------------------

 

LOAN AGREEMENT

 

--------------------------------------------------------------------------------

 

 

 

Dated As of: November 12, 1997

 

 

Property Location: Tucker, Georgia

 

 

DOCUMENT PREPARED BY:

 

Andrews & Kurth LLP

1717 Main Street, Suite 3700

Dallas, Texas 75201

 

Attention: Brian N. Jaeckle

--------------------------------------------------------------------------------

 

TABLE OF CONTENTS

 

        

Page

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ARTICLE 1 – CERTAIN DEFINITIONS

  

27

    Section 1.1

 

Certain Definitions

  

27

ARTICLE 2 – LOAN TERMS

  

31

    Section 2.1

 

The Loan

  

31

    Section 2.2

 

Interest Rate; Late Charge

  

31

    Section 2.3

 

Terms of Payment

  

31

    Section 2.4

 

Security; Establishment of Funds

  

32

    Section 2.5

 

Accelerated Amortization

  

33

ARTICLE 3 – INSURANCE, CONDEMNATION, AND IMPOUNDS

  

35

    Section 3.1

 

Insurance

  

35

    Section 3.2

 

Use and Application of Insurance Proceeds

  

36

    Section 3.3

 

Condemnation Awards

  

37

    Section 3.4

 

Impounds

  

38

ARTICLE 4 – ENVIRONMENTAL MATTERS

  

39

    Section 4.1

 

Certain Definitions

  

39

    Section 4.2

 

Representations and Warranties on Environmental Matters

  

39

    Section 4.3

 

Covenants on Environmental Matters

  

40

    Section 4.4

 

Allocation of Risks and Indemnity

  

40

    Section 4.5

 

No Waiver

  

41

ARTICLE 5 – LEASING MATTERS

  

41

    Section 5.1

 

Representations and Warranties on Leases

  

41

    Section 5.2

 

Standard Lease Form; Approval Rights

  

42

    Section 5.3

 

Covenants

  

42

    Section 5.4

 

Tenant Estoppels

  

43

ARTICLE 6 – REPRESENTATIONS AND WARRANTIES

  

43

    Section 6.1

 

Organization, Power and Authority

  

43

    Section 6.2

 

Validity of Loan Documents

  

43

    Section 6.3

 

Liabilities; Litigation

  

44

    Section 6.4

 

Taxes and Assessments

  

44

    Section 6.5

 

Other Agreements; Defaults

  

44

    Section 6.6

 

Compliance with Law

  

44

    Section 6.7

 

Location of Borrower

  

45

    Section 6.8

 

ERISA

  

45

    Section 6.9

 

Forfeiture

  

45

    Section 6.10

 

Tax Filings

  

45

    Section 6.11

 

Solvency

  

46

    Section 6.12

 

Full and Accurate Disclosure

  

46

--------------------------------------------------------------------------------

 

   

Section 6.13

  

Flood Zone

  

46

   

Section 6.14

  

Single Purpose Entity/Separateness

  

46

   

Section 6.15

  

Ground Lease

  

48

   

Section 6.16

  

Property Specific Representations

  

49

ARTICLE 7 – FINANCIAL REPORTING

  

49

   

Section 7.1

  

Financial Statements

  

49

   

Section 7.2

  

Accounting Principles

  

50

   

Section 7.3

  

Other Information; Access

  

50

   

Section 7.4

  

Annual Budget

  

50

ARTICLE 8 – COVENANTS

  

50

   

Section 8.1

  

Due On Sale and Encumbrance; Transfers of Interests

  

51

   

Section 8.2

  

Taxes; Utility Charges

  

51

   

Section 8.3

  

Control; Management

  

51

   

Section 8.4

  

Operation; Maintenance; Inspection

  

51

   

Section 8.5

  

Taxes on Security

  

52

   

Section 8.6

  

Legal Existence; Name, Etc

  

52

   

Section 8.7

  

Further Assurances

  

52

   

Section 8.8

  

Estoppel Certificates

  

53

   

Section 8.9

  

Notice of Certain Events

  

53

   

Section 8.10

  

Indemnification

  

53

   

Section 8.11

  

Cooperation

  

53

   

Section 8.12

  

Payment For Labor and Materials

  

54

   

Section 8.13

  

Ground Lease

  

54

   

Section 8.14

  

No Merger of Fee and Leasehold Estates; Releases

  

56

   

Section 8.15

  

Borrower’s Acquisition of Fee Estate

  

56

   

Section 8.16

  

Rejection of the Ground Lease

  

56

ARTICLE 9 – EVENTS OF DEFAULT

  

57

   

Section 9.1

  

Payments

  

57

   

Section 9.2

  

Insurance

  

58

   

Section 9.3

  

Sale, Encumbrance, Etc

  

58

   

Section 9.4

  

Covenants

  

58

   

Section 9.5

  

Representations and Warranties

  

58

   

Section 9.6

  

Other Encumbrances

  

58

   

Section 9.7

  

Involuntary Bankruptcy or Other Proceeding

  

58

   

Section 9.8

  

Voluntary Petitions, etc

  

58

   

Section 9.9

  

Ground Lease

  

59

ARTICLE 10 – REMEDIES

  

59

   

Section 10.1

  

Remedies – Insolvency Events

  

59

   

Section 10.2

  

Remedies – Other Events

  

59

   

Section 10.3

  

Lender’s Right to Perform the Obligations

  

59

ARTICLE 11 – MISCELLANEOUS

  

60

--------------------------------------------------------------------------------

 

   

Section 11.1

  

Notices

  

60

   

Section 11.2

  

Amendments and Waivers

  

61

   

Section 11.3

  

Limitation on Interest

  

61

   

Section 11.4

  

Invalid Provisions

  

62

   

Section 11.5

  

Reimbursement of Expenses

  

62

   

Section 11.6

  

Approvals; Third Parties; Conditions

  

62

   

Section 11.7

  

Lender Not in Control; No Partnership

  

63

   

Section 11.8

  

Time of the Essence

  

63

   

Section 11.9

  

Successors and Assigns

  

63

   

Section 11.10

  

Renewal, Extension or Rearrangement

  

63

   

Section 11.11

  

Waivers

  

63

   

Section 11.12

  

Cumulative Rights; Joint and Several Liability

  

64

   

Section 11.13

  

Singular and Plural

  

64

   

Section 11.14

  

Phrases

  

64

   

Section 11.15

  

Exhibits and Schedules

  

64

   

Section 11.16

  

Titles of Articles, Sections and Subsections

  

64

   

Section 11.17

  

Promotional Material

  

64

   

Section 11.18

  

Survival

  

64

   

Section 11.19

  

Waiver of Jury Trial

  

65

   

Section 11.20

  

Waiver of Punitive or Consequential Damages

  

65

   

Section 11.21

  

Governing Law

  

65

   

Section 11.22

  

Entire Agreement

  

65

   

Section 11.23

  

Counterparts

  

65

ARTICLE 12 – LIMITATIONS ON LIABILITY

  

65

   

Section 12.1

  

Limitation on Liability

  

65

   

Section 12.2

  

Limitation on Liability of Lender’s Officers, Employees, etc

  

67

--------------------------------------------------------------------------------

 

LIST OF EXHIBITS AND SCHEDULES

 

EXHIBIT A LEGAL DESCRIPTION OF PROJECT

SCHEDULE I YIELD MAINTENANCE AMOUNT

SCHEDULE II REQUIRED REPAIRS

--------------------------------------------------------------------------------

 

LOAN AGREEMENT

 

This Loan Agreement (this “Agreement”) is entered into as of November     , 1997
between GENERAL ELECTRIC CAPITAL CORPORATION, a New York corporation (“Lender”),
and BSRT/M&J NORTHLAKE LIMITED PARTNERSHIP, an Illinois limited partnership
(“Borrower”).

 

ARTICLE 1

 

CERTAIN DEFINITIONS

 

Section 1.1 Certain Definitions. As used herein, the following terms have the
meanings indicated:

 

“Affiliate” means (a) any corporation in which Borrower or any partner,
shareholder, director, officer, member, or manager of Borrower directly or
indirectly owns or controls more than ten percent (10%) of the beneficial
interest, (b) any partnership, joint venture or limited liability company in
which Borrower or any partner, shareholder, director, officer, member, or
manager of Borrower is a partner, joint venturer or member, (c) any trust in
which Borrower or any partner, shareholder, director, officer, member or manager
of Borrower is a trustee or beneficiary, (d) any entity of any type which is
directly or indirectly owned or controlled by Borrower or any partner,
shareholder, director, officer, member or manager of Borrower, (e) any partner,
shareholder, director, officer, member, manager or employee of Borrower, (f) any
Person related by birth, adoption or marriage to any partner, shareholder,
director, officer, member, manager, or employee of Borrower, or (g) any Borrower
Party.

 

“Agreement” means this Loan Agreement, as amended from time to time.

 

“Assignment of Leases and Rents” means the Assignment of Leases and Rents,
executed by Borrower for the benefit of Lender, and pertaining to leases of
space in the Project.

 

“Award” has the meaning assigned in Section 3.3.

 

“Bankruptcy Party” has the meaning assigned in Section 9.7.

 

“Borrower Party” means any Joinder Party, any Guarantor, any general partner of
Borrower, and any general partner in any partnership that is a general partner
of Borrower any managing member of Borrower, and any managing member in any
limited liability company that is a managing member of Borrower, at any level.

 

“Business Day” means a day other than a Saturday, a Sunday, or a legal holiday
on which national banks located in the State of New York are not open for
general banking business.

 

“Casualty” has the meaning assigned in Section 3.2.

--------------------------------------------------------------------------------

 

“Closing Date” means the date the Loan is funded by Lender.

 

“Commitment” means the commitment letter, dated October 16, 1997, issued by
Lender and accepted by Borrower on October 21, 1997, as modified by an
Acceptance Letter dated October 21, 1997.

 

“Condemnation” has the meaning assigned in Section 3.3.

 

“Contract Rate” has the meaning assigned in Section 2.2.

 

“Debt” means, for any Person, without duplication: (a) all indebtedness of such
Person for borrowed money, for amounts drawn under a letter of credit, or for
the deferred purchase price of property for which such Person or its assets is
liable, (b) all unfunded amounts under a loan agreement, letter of credit, or
other credit facility for which such Person would be liable, if such amounts
were advanced under the credit facility, (c) all amounts required to be paid by
such Person as a guaranteed payment to partners or a preferred or special
dividend, including any mandatory redemption of shares or interests, (d) all
indebtedness guaranteed by such Person, directly or indirectly, (e) all
obligations under leases that constitute capital leases for which such Person is
liable, and (f) all obligations of such Person under interest rate swaps, caps,
floors, collars and other interest hedge agreements, in each case whether such
Person is liable contingently or otherwise, as obligor, guarantor or otherwise,
or in respect of which obligations such Person otherwise assures a creditor
against loss.

 

“Debt Service” means the aggregate interest, fixed principal, and other payments
due under the Loan, and on any other outstanding permitted Debt relating to the
Project approved by Lender for the period of time for which calculated.

 

“Default Rate” means the lesser of (a) the maximum rate of interest allowed by
applicable law, and (b) five percent (5%) per annum in excess of the Contract
Rate.

 

“Environmental Laws” has the meaning assigned in Section 4.1(a).

 

“ERISA” has the meaning assigned in Section 6.8.

 

“Event of Default” has the meaning assigned in Article 9.

 

“Funds” means the Required Repair Fund and the Replacement and Rollover Escrow
Fund.

 

“Ground Lease” means that certain instrument dated October 4, 1982, between Cox
Communications, Inc., as landlord (such landlord and its successors and assigns
are hereinafter referred to as the “Ground Lessor”) and Crow-Atlanta Retail,
Ltd. and its successors and assigns, as tenant, a short form of which was filed
on November 24, 1982 and recorded in the Office of DeKalb County, Georgia, in
Deed Book 4683, Page 186, as amended by that certain Amendment to Ground Lease
Agreement dated April 27, 1983, and further amended by that certain Second

--------------------------------------------------------------------------------

 

Amendment to Ground Lease and Assignment dated December 27, 1984, which modified
the terms of the Ground Lease and assigned the interest of the lessee to Atlanta
Northlake Associates, filed January 18, 1985 and recorded in the Office of
DeKalb County, Georgia, in Deed Book 5137, Page 201, and the further assignment
of the interest of lessee to Confederation Life Insurance Company by virtue of
that certain Deed under Power of Sale, dated April 7, 1992, and recorded in the
Office of DeKalb County, Georgia, in Deed Book 7235, Page 586, and the further
assignment of the interest of lessee to Borrower by virtue of that certain
Assignment and Assumption of Ground Lease dated July 28, 1995, filed July 31,
1995 and recorded in the Office of DeKalb County, Georgia, in Deed Book 8634,
Page 415.

 

“Guarantors” means any guarantor hereafter executing a Guaranty.

 

“Guaranty” means the instruments of guaranty, if any, hereafter in effect from a
Guarantor to Lender.

 

“Hazardous Materials” has the meaning assigned in Section 4.1(b).

 

“Insurance Premiums” has the meaning assigned in Section 3.1(c).

 

“Joinder Party” means the Persons, if any, executing the Joinder hereto.

 

“Lien” means any interest, or claim thereof, in the Project securing an
obligation owed to, or a claim by, any Person other than the owner of the
Project, whether such interest is based on common law, statute or contract,
including the lien or security interest arising from a deed of trust, mortgage,
assignment, encumbrance, pledge, security agreement, conditional sale or trust
receipt or a lease, consignment or bailment for security purposes. The term
“Lien” shall include reservations, exceptions, encroachments, easements, rights
of way, covenants, conditions, restrictions, leases and other title exceptions
and encumbrances affecting the Project.

 

“Loan” means the loan made by Lender to Borrower under this Agreement and all
other amounts secured by the Loan Documents.

 

“Loan Documents” means: (a) this Agreement, (b) the Note, (c) the Guaranty, (d)
the Mortgage, (e) the Assignment of Leases and Rents, (f) Uniform Commercial
Code financing statements, (g) such assignments of management agreements,
contracts and other rights as may be required under the Commitment or otherwise
requested by Lender, (h) all other documents evidencing, securing, governing or
otherwise pertaining to the Loan, and (i) all amendments, modifications,
renewals, substitutions and replacements of any of the foregoing; provided
however, in no event shall the term “Loan Documents” include that certain
Hazardous Materials Indemnity Agreement (the “Environmental Indemnity
Agreement”) dated the date hereof in favor of Lender (and in connection
therewith, Borrower hereby acknowledges and agrees that the obligations of the
indemnitors under such agreement shall survive any termination, satisfaction,
assignment, entry of a judgment of foreclosure or delivery of a deed in lieu of
foreclosure).

 

“Loan Year” means (a) for the first Loan Year, the period between the date
hereof and one calendar year from the last day of the month in which the Closing
Date occurs (unless the

--------------------------------------------------------------------------------

 

Closing Date is on the first day of a month, in which case the first Loan Year
shall commence on such Closing Date and end one calendar year from the last day
of the month immediately preceding the Closing Date) and (b) each consecutive
twelve month calendar period after the first Loan Year until the Maturity Date.

 

“Maturity Date” means, as applicable, the earlier of (a) December 1, 2027, or
(b) any earlier date on which the entire Loan is required to be paid in full, by
acceleration or otherwise, under this Agreement or any of the other Loan
Documents.

 

“Mortgage” means the Leasehold Deed to Secure Debt and Security Agreement,
executed by Borrower in favor of Lender, covering the Project.

 

“Note” means the Promissory Note of even date, in the stated principal amount of
$17,600,000.00, executed by Borrower, and payable to the order of Lender in
evidence of the Loan.

 

“Person” means any individual, corporation, partnership, joint venture,
association, joint stock company, trust, trustee, estate, limited liability
company, unincorporated organization, real estate investment trust, government
or any agency, authority or political subdivision thereof, or any other form of
entity.

 

“Potential Default” means the occurrence of any event or condition which, with
the giving of notice, the passage of time, or both, would constitute an Event of
Default.

 

“Project” means Northlake Tower Festival Shopping Center, Tucker, Georgia, and
all related facilities, amenities, fixtures, and personal property owned by
Borrower and any improvements now or hereafter located on the real property
described in Exhibit A created under and by virtue of the Ground Lease.

 

“Rating Agencies” means each of Standard & Poor’s Ratings Group, a division of
McGraw-Hill, Inc., Moody’s Investors Service, Inc., Duff & Phelps Credit Rating
Co. and Fitch Investors Service, L.P., or any other nationally recognized
statistical rating agency, which has been approved by Lender;

 

“Replacement and Rollover Escrow Fund” has the meaning assigned in Section 2.4.

 

“Required Repair Fund” has the meaning assigned in Section 2.4.

 

“Secondary Market Transaction” has the meaning assigned in Section 8.11.

 

“Single Purpose Entity” shall mean a Person (other than an individual, a
government or any agency or political subdivision thereof), which exists solely
for the purpose of owning the Project, observes corporate, company or
partnership formalities, as applicable, independent of any other entity, and
which otherwise complies with the covenants set forth in Section 6.14 hereof.

--------------------------------------------------------------------------------

 

“Site Assessment” means an environmental engineering report for the Project
prepared at Borrower’s expense by an engineer engaged by Borrower and approved
by Lender, and in a manner satisfactory to Lender, based upon an investigation
relating to and making appropriate inquiries concerning the existence of
Hazardous Materials on or about the Project, and the past or present discharge,
disposal, release or escape of any such substances, all consistent with ASTM
Standard E1527-93 or any successor thereto published by ASTM and good customary
and commercial practice.

 

“Tax Escrow Fund” has the meaning assigned in Section 3.4.

 

“Taxes” has the meaning assigned in Section 8.2.

 

“Yield Maintenance Amount” has the meaning assigned in Schedule 1.

 

ARTICLE 2

 

LOAN TERMS

 

Section 2.1 The Loan. Upon satisfaction of all the terms and conditions set
forth in the Commitment, Lender agrees to make a Loan of SEVENTEEN MILLION SIX
HUNDRED THOUSAND AND NO/100 DOLLARS ($17,600,000.00) to the Borrower, which
shall be funded in one advance and repaid in accordance with the terms of this
Agreement and the Note. Borrower hereby agrees to accept the Loan on the Closing
Date, subject to and upon the terms and conditions set forth herein.

 

Section 2.2 Interest Rate; Late Charge. Subject to adjustment in accordance with
Section 2.5 hereof, the outstanding principal balance of the Loan shall bear
interest at a rate of interest equal to seven and sixty-four one hundredths
percent (7.64%) per annum (the “Contract Rate”). Interest at the Contract Rate
shall be computed from the date of the initial disbursement under the Loan or
the date of the preceding interest installment due date, as the case may be, to
the date of the next interest installment due date or the Maturity Date by
computing a daily amount of interest for a hypothetical year of three hundred
sixty (360) days consisting of twelve months of thirty (30) days each, except
that interest due and payable for a period less than a full month shall be
calculated by multiplying the actual number of days elapsed in such period by a
daily rate based on said 360-day year. If Borrower fails to pay any installment
of interest or principal within five (5) days of (and including) the date on
which the same is due, Borrower shall pay to Lender a late charge on such
past-due amount, as liquidated damages and not as a penalty, equal to five
percent (5%) of such amount, but not in excess of the maximum amount of interest
allowed by applicable law. While any Event of Default exists, the Loan shall
bear interest at the Default Rate.

 

Section 2.3 Terms of Payment. The Loan shall be payable as follows, subject to
adjustment in accordance with Section 2.5 hereof:

--------------------------------------------------------------------------------

 

(a) Interest and Principal. A payment of interest only on the date hereof for
the period from the date hereof through the last day of the current month
(unless the Closing Date is the first day of a calendar month, in which case no
such interest is due). Thereafter, a constant payment of $124,753.36, on the
first day of January, 1998 and on the first day of each calendar month
thereafter; each of such payments, to be applied (i) to the payment of interest
computed at the Contract Rate and (ii) the balance applied toward reduction of
the principal sum. The constant payment required hereunder is calculated to pay
the entire principal sum over a 30 year amortization schedule.

 

(b) Maturity. On the Maturity Date, Borrower shall pay to Lender all outstanding
principal, accrued and unpaid interest, default interest, late charges and any
and all other amounts due under the Loan Documents.

 

(c) Prepayment. The Loan is closed to prepayment in whole or in part, during the
first three (3) Loan Years. From the beginning of the fourth (4th) Loan Year to
the Maturity Date, upon not less than thirty (30) days’ prior written notice to
Lender, Borrower may prepay the Loan, in whole but not in part, on any scheduled
monthly payment date and upon payment of (i) all amounts outstanding under the
Loan Documents and (ii) a prepayment premium equal to the greater of (A) one
percent (1%) of the outstanding balance of the Loan, and (B) the Yield
Maintenance Amount (except that no such prepayment premium shall be due if the
Loan is repaid during the ninety (90) day period prior to the scheduled Maturity
Date). If the Loan is accelerated for any reason other than casualty or
condemnation, and the Loan is otherwise closed to prepayment, Borrower shall
pay, in addition to all other amounts outstanding under the Loan Documents, a
prepayment premium equal to the sum of (1) the Yield Maintenance Amount and (2)
five percent (5%) of the outstanding balance of the Loan. If for any reason the
Loan is prepaid on a day other than a scheduled monthly payment date, the
Borrower shall pay, in addition to the principal, interest and premium, if any,
required under this Section, an amount equal to the interest that would have
accrued on the Loan from the date of prepayment to the next scheduled monthly
payment date.

 

Section 2.4 Security; Establishment of Funds. (a) The Loan shall be secured by
the Mortgage creating a first lien on the Project, the Assignment of Leases and
Rents and the other Loan Documents. As further security for the Loan, Borrower
agrees to establish the following reserves with Lender, to be held by Lender as
security for the Loan: (i) Borrower shall deposit with Lender the amount of
$269,563.00 (or a lower amount if approved by Lender prior to closing, based on
verification by Lender and Lender’s engineers of completion of a portion of the
required repairs prior to Closing) (the “Required Repair Fund”) to perform the
required repairs set forth on Schedule II annexed hereto by the deadlines set
forth in such Schedule (which deadlines shall in no event be later than six (6)
months from the date hereof); and (ii) Borrower shall deposit with Lender the
amount of $50,000.00 at closing, and shall pay to Lender on the day of each
calendar month a scheduled payment is due the amount of $10,000.00 until a
balance of $300,000.00 is reached, at which time monthly payments will be
suspended until the balance falls below $300,000.00, upon which event monthly
payments of $10,000.00 will be made until the balance is restored to
$300,000.00, for replacements and repairs and capital improvements required to
be made to the Project during the calendar year and for tenant improvement and
leasing commission obligations and other lease rollover costs incurred following
the date hereof

--------------------------------------------------------------------------------

 

(the “Replacement and Rollover Escrow Fund”). Failure by Borrower to maintain
the Replacement and Rollover Escrow Fund at a level initially or subsequently
required by Lender is and shall be an Event of Default under the Loan Documents.

 

(b) Pledge and Disbursement of Funds. Borrower hereby pledges to Lender, and
grants a security interest in, any and all monies now or hereafter deposited in
the Funds as additional security for the payment of the Loan. Lender shall make
disbursements from the Funds as requested by Borrower, and approved by Lender in
its reasonable discretion, on a quarterly basis in increments of no less than
$5,000.00 upon delivery by Borrower of Lender’s standard form of draw request
accompanied by copies of paid invoices for the amounts requested and, if
required by Lender, lien waivers and releases from all parties furnishing
materials and/or services in connection with the requested payment. Lender may
require an inspection of the Project at Borrower’s expense prior to making a
quarterly disbursement in order to verify completion of replacements and repairs
for which reimbursement is sought. The Funds shall be held with interest in
Lender’s name and may be commingled with Lender’s own funds at financial
institutions selected by Lender in its sole discretion. All earnings or interest
on the Funds shall be added to and become a part of the applicable Fund and
shall be disbursed as set forth herein. Upon the occurrence of an Event of
Default, Lender may apply any sums then present in the Funds to the payment of
the Loan in any order in its sole discretion. Until expended or applied as above
provided, the Funds shall constitute additional security for the Loan. Lender
shall have no obligation to release any of the Funds while any Event of Default
or Potential Default then exists. All costs and expenses incurred by Lender in
the disbursement of any of the Funds shall be paid by Borrower promptly upon
demand.

 

Section 2.5 Accelerated Amortization. Notwithstanding anything to the contrary
contained herein or in any of the Loan Documents:

 

(a) Commencing with the first (1st) day of the thirteenth (13th) Loan Year (the
“Accelerated Payment Date”), the Contract Rate shall increase to the greater of
(i) the Contract Rate plus 200 basis points, or (ii) the U.S. Treasury Rate (as
defined below) plus 200 basis points (the “Adjusted Contract Rate”). The “U.S.
Treasury Rate” is the yield calculated by linear interpolation (rounded to
one-thousandths of one percent [i.e., .001%] of the yields, as reported in
Federal Reserve Statistical Release H.15-Selected Interest Rates under the
heading U.S. Government Securities/ Treasury Constant Maturities for the week
ending prior to the Accelerated Payment Date, of the U.S. Treasury constant
maturities with terms (one longer and one shorter) most nearly approximately the
remaining term of the Loan as of the Accelerated Payment Date. In the event
Release H.15 is no longer published, Lender shall select a comparable
publication to determine the U.S. Treasury Rate.

 

(b) From and after the date that is ninety (90) days prior to the Accelerated
Payment Date, upon not less than thirty (30) days’ prior written notice,
Borrower may prepay the Loan in whole but not in part on any regularly scheduled
payment date without penalty, premium or payment of the Yield Maintenance
Amount.

 

(c) From and after the Accelerated Payment Date, interest shall accrue on the
unpaid principal balance of the Loan at the Adjusted Contract Rate, but shall
continue to be payable at

--------------------------------------------------------------------------------

 

the original Contract Rate and the additional interest attributable to the
Adjusted Contract Rate shall be deferred and added to the unpaid principal
balance of the Loan as of the first day of each month. To the extent permitted
by applicable law, such deferred and capitalized interest shall earn interest at
the Adjusted Contract Rate.

 

(d) One (1) month prior to the Accelerated Payment Date, Borrower shall
establish a lock box account (the “Lock Box”) satisfactory to Lender in its sole
discretion pursuant to which all rents and other income (including prepaid
rents, if any) from the Project from and after the Accelerated Payment Date
shall be deposited. Borrower shall pay Lender’s costs and expenses in connection
with establishing and administering the Lock Box.

 

(e) Three (3) months prior to the Accelerated Payment Date, Borrower shall
submit an annual operating statement and budget to Lender for its review and
approval, which approval shall not be unreasonably withheld or delayed, (as
approved by Lender, the “Budget”).

 

(f) Commencing on the Accelerated Payment Date and on the first day of each
month thereafter, all rents and other income from the Project shall be applied
in the following priority:

 

(i) First, to payment of the Tax Escrow Fund;

 

(ii) Second, to payment of an amount equal to interest on the Loan at the
original Contract Rate (without giving effect to the Adjusted Contract Rate),
and then to an amount equal to the regularly scheduled principal installment due
on the Loan (without giving effect to the Adjusted Contract Rate);

 

(iii) Third, to payment of any other reserves then required under the Loan
(i.e., for capital improvements, major repairs and/or lease rollover);

 

(iv) Fourth, to payment of operating expenses in accordance with the Budget;

 

(v) Fifth, to payment of other operating expenses not set forth in the Budget
and approved by Lender in its sole but reasonable discretion;

 

(vi) Sixth, to reduction of the principal balance of the Loan (without giving
effect to any deferred and capitalized interest);

 

(vii) Seventh, to payment of deferred and capitalized interest;

 

(viii) Eighth, to payment of any other amounts due Lender under the Loan
Documents; and

 

(ix) Ninth, the balance to Borrower.

 

Nothing contained herein shall limit, reduce or otherwise affect Borrower’s
obligation to make payments due under the Loan in respect of the first three
items specified in subsection 2.5(f)

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above whether or not rents and other income from the Project are available to
make such payments.

 

ARTICLE 3

 

INSURANCE, CONDEMNATION, AND IMPOUNDS

 

Section 3.1 Insurance. Borrower shall maintain insurance as follows:

 

(a) Casualty; Business Interruption. Borrower shall keep the Project insured
against damage by fire and the other hazards covered by a standard extended
coverage and all-risk insurance policy for the full insurable value thereof on a
replacement cost claim recovery basis (without reduction for depreciation or
co-insurance), and shall maintain such other casualty insurance as reasonably
required by Lender. Lender reserves the right to require the following
additional insurance: boiler and machinery; flood; earthquake/sinkhole; workers
compensation and/or building ordinance. Borrower shall keep the Project insured
against loss by flood if the Project is located currently or at any time in the
future in an area identified by the Federal Emergency Management Agency as an
area having special flood hazards and in which flood insurance has been made
available under the National Flood Insurance Act of 1968, the Flood Disaster
Protection Act of 1973 or the National Flood Insurance Reform Act of 1994 (as
such acts may from time to time be amended) in an amount at least equal to the
lesser of (i) the maximum amount of the Loan or (ii) the maximum limit of
coverage available under said acts. Any such flood insurance policy shall be
issued in accordance with the requirements and current guidelines of the Federal
Insurance Administration. Borrower shall maintain use and occupancy insurance
covering, as applicable, rental income or business interruption, with coverage
in an amount not less than twelve (12) months anticipated gross rental income or
gross business earnings, as applicable in each case, attributable to the
Project. Borrower shall not maintain any separate or additional insurance, which
is contributing in the event of loss unless it is properly endorsed and
otherwise satisfactory to Lender in all respects. The proceeds of insurance paid
on account of any damage or destruction to the Project shall be paid to Lender
to be applied as provided in Section 3.2.

 

(b) Liability. Borrower shall maintain (i) commercial general liability
insurance with respect to the Project providing for limits of liability of not
less than $5,000,000 for both injury to or death of a person and for property
damage per occurrence, and (ii) other liability insurance as reasonably required
by Lender.

 

(c) Form and Quality. All insurance policies shall be endorsed in form and
substance acceptable to Lender to name Lender as an additional insured, loss
payee or mortgagee thereunder, as its interest may appear, with loss payable to
Lender, without contribution, under a standard New York (or local equivalent)
mortgagee clause. All such insurance policies and endorsements shall be fully
paid for and contain such provisions and expiration dates and be in such form
and issued by such insurance companies licensed to do business in the State of
Georgia, with a general company and financial size rating of “A-IX” or better as
established by Best’s Rating Guide and “AA” or better by Standard & Poor’s
Ratings Group. Each policy shall

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provide that such policy may not be canceled or materially changed except upon
thirty (30) days’ prior written notice of intention of non-renewal, cancellation
or material change to Lender and that no act or thing done by Borrower shall
invalidate any policy as against Lender. Blanket policies shall be permitted
only if Lender receives evidence of appropriate endorsements containing Lender’s
right to continue coverage on a pro rata pass-through basis and that coverage
will not be affected by any loss on other properties covered by the policies.
Borrower shall pay the premiums for such policies (the “Insurance Premiums”) as
the same become due and payable annually in advance. Borrower shall furnish to
Lender evidence of payment of all Insurance Premiums as such times as the
Insurance Premiums are paid. If Borrower fails to pay the premiums when due,
Lender may obtain such insurance and pay the premium therefor and Borrower
shall, on demand, reimburse Lender for all expenses incurred in connection
therewith. Borrower shall assign the policies or proofs of insurance to Lender,
in such manner and form that Lender and its successors and assigns shall at all
times have and hold the same as security for the payment of the Loan. Borrower
shall deliver copies of all original policies certified to Lender by the
insurance company or authorized agent as being true copies, together with the
endorsements required hereunder, or deliver original certificates of insurance
evidencing such policies and endorsements. The proceeds of insurance policies
coming into the possession of Lender shall not be deemed trust funds, and Lender
shall be entitled to apply such proceeds as herein provided.

 

(d) Adjustments. Borrower shall give immediate written notice of any loss to the
insurance carrier and to Lender. Upon the occurrence of an Event of Default,
Borrower hereby irrevocably authorizes and empowers Lender, as attorney-in-fact
for Borrower coupled with an interest, to make proof of loss, to adjust and
compromise any claim under insurance policies, to appear in and prosecute any
action arising from such insurance policies, to collect and receive insurance
proceeds, and to deduct therefrom Lender’s expenses incurred in the collection
of such proceeds. Nothing contained in this Section 3.1(d), however, shall
require Lender to incur any expense or take any action hereunder.

 

Section 3.2 Use and Application of Insurance Proceeds.

 

(a) If the Project shall be damaged or destroyed, in whole or in part, by fire
or other casualty (a “Casualty”), Borrower shall give prompt notice thereof to
Lender. Following the occurrence of a Casualty, Borrower, to the extent
insurance proceeds are made available, shall promptly proceed to restore,
repair, replace or rebuild the same to be of at least equal value and of
substantially the same character as prior to such damage or destruction, all to
be effected in accordance with applicable law.

 

(b) Lender shall apply insurance proceeds to costs of restoring the Project or
to the Loan as follows:

 

(i) if the loss is less than or equal to $50,000, Lender shall apply the
insurance proceeds to restoration provided (A) no Event of Default or Potential
Default exists, and (B) Borrower promptly commences and is diligently pursuing
restoration of the Project;

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(ii) if the loss exceeds $50,000 but is not more than 20% of the replacement
value of the improvements, Lender shall apply the insurance proceeds to
restoration provided that (A) at all times during such restoration no Event of
Default or Potential Default exists; (B) Lender determines throughout the
restoration that there are sufficient funds available to restore and repair the
Project to a condition approved by Lender; (C) Lender determines that the net
operating income of the Project during restoration will be sufficient to pay
Debt Service; (D) Lender determines (based on leases which will remain in effect
after restoration is complete if the Project is not a multi-family project) that
after restoration the ratio of net operating income to Debt Service will equal
at least the ratio that existed on the Closing Date; (E) Lender determines that
the ratio of the outstanding principal balance of the Loan to appraised value of
the project after restoration will not exceed the loan-to-value ratio that
existed on the Closing Date; (F) Lender determines that restoration and repair
of the Project to a condition approved by Lender will be completed within six
months after the date of loss or casualty and in any event ninety (90) days
prior to the Maturity Date; (G) Borrower promptly commences and is diligently
pursuing restoration of the Project; and (H) the Project after the restoration
will be in compliance with and permitted under all applicable zoning, building
and land use laws, rules, regulations and ordinances; and

 

(iii) if the conditions set forth in (i) and (ii) above are not satisfied in
Lender’s sole but reasonable discretion, Lender may apply any insurance proceeds
it may receive to the payment of the Loan or allow all or a portion of such
proceeds to be used for the restoration of the Project.

 

(c) Insurance proceeds applied to restoration will be disbursed on receipt of
satisfactory plans and specifications, contracts and subcontracts, schedules,
budgets, lien waivers and architects’ certificates, and otherwise in accordance
with prudent commercial construction lending practices for construction loan
advances (including appropriate retainages to ensure that all work is completed
in a workmanlike manner).

 

Section 3.3 Condemnation Awards. Borrower shall promptly give Lender written
notice of the actual or threatened commencement of any condemnation or eminent
domain proceeding (a “Condemnation”) and shall deliver to Mortgagee copies of
any and all papers served in connection with such Condemnation. Following the
occurrence of a Condemnation, Mortgagor, to the extent any award or compensation
(an “Award”) is made available, shall promptly proceed to restore, repair,
replace or rebuild the same to the extent practicable to be of at least equal
value and of substantially the same character as prior to such Condemnation, all
to be effected in accordance with applicable law. Lender may participate in any
such proceeding and Borrower will deliver to Lender all instruments necessary or
required by Lender to permit such participation. Without Lender’s prior consent
(which consent shall not be unreasonably withheld or delayed), Borrower (a)
shall not agree to any compensation or award, and (b) shall not take any action
or fail to take any action which would cause the compensation to be determined.
All Awards for the taking or purchase in lieu of condemnation of the Project or
any part thereof are hereby assigned to and shall be paid to Lender. Borrower
authorizes Lender to collect and receive such Awards, to give proper receipts
and acquittances therefor, and in Lender’s sole discretion to apply the same
toward the payment of the Loan, notwithstanding that the Loan may not then be
due and payable, or to the restoration of the Project; provided,

--------------------------------------------------------------------------------

 

however, if the award is less than or equal to $50,000 and Borrower requests
that such proceeds be used for non-structural site improvements (such as
landscape, driveway, walkway and parking area repairs) required to be made as a
result of such condemnation, Lender will apply the award to such restoration in
accordance with disbursement procedures applicable to insurance proceeds
provided there exists no Potential Default or Event of Default. Borrower, upon
request by Lender, shall execute all instruments requested to confirm the
assignment of the Awards to Lender, free and clear of all liens, charges or
encumbrances.

 

Section 3.4 Impounds. Borrower shall deposit with Lender, monthly, one-twelfth
(1/12th) of the Taxes that Lender estimates will be payable during the next
ensuing twelve (12) months in order to accumulate with Lender sufficient funds
to pay all such Taxes at least thirty (30) days prior to their respective due
dates, (said amounts hereinafter called the “Tax Escrow Fund”). At or before the
advance of the Loan, Borrower shall deposit with Lender a sum of money, which
together with the monthly installments will be sufficient to make each of such
payments thirty (30) days prior to the date, any delinquency or penalty becomes
due with respect to such payments. Deposits shall be made on the basis of
Lender’s estimate from time to time of the charges for the current year (after
giving effect to any reassessment or, at Lender’s election, on the basis of the
charges for the prior year, with adjustments when the charges are fixed for the
then current year). All funds so deposited shall be held by Lender, with
interest, and may be commingled with Lender’s general funds. To the extent the
earnings or interest on the amounts held by Lender for the Tax Escrow Fund
exceed the required reserve requirements, Lender shall disburse such excess to
Borrower within sixty (60) days following the end of each calendar year.
Borrower hereby grants to Lender a security interest in all funds so deposited
with Lender for the purpose of securing the Loan. While an Event of Default
exists, the funds deposited may be applied in payment of the charges for which
such funds have been deposited, or to the payment of the Loan or any other
charges affecting the security of Lender, as Lender may elect, but no such
application shall be deemed to have been made by operation of law or otherwise
until actually made by Lender. Borrower shall furnish Lender with bills for the
charges for which such deposits are required at least thirty (30) days prior to
the date on which the charges first become payable. If at any time the amount on
deposit with Lender, together with amounts to be deposited by Borrower before
such charges are payable, is insufficient to pay such charges, Borrower shall
deposit any deficiency with Lender immediately upon demand. Lender shall pay
such charges when the amount on deposit with Lender is sufficient to pay such
charges and Lender has received a bill for such charges.

 

Section 3.5 COLLATERAL PROTECTION. UNLESS BORROWER HEREBY PROVIDES LENDER WITH
EVIDENCE OF INSURANCE COVERAGE REQUIRED BY THE LOAN DOCUMENTS, LENDER MAY
PURCHASE INSURANCE AT BORROWER’S EXPENSE TO PROTECT LENDER’S INTEREST IN THE
PROPERTY. THIS INSURANCE MAY, BUT NEED NOT, PROTECT BORROWER’S INTEREST. THE
COVERAGE THAT LENDER MAY PURCHASE MAY NOT PAY ANY CLAIM THAT LENDER MAKES OR ANY
CLAIM THAT IT MIGHT MAKE AGAINST BORROWER IN CONNECTION WITH THE PROPERTY.
BORROWER MAY LATER CANCEL ANY INSURANCE PURCHASED BY LENDER BUT ONLY AFTER
PROVIDING LENDER WITH EVIDENCE THAT BORROWER HAS OBTAINED INSURANCE AS REQUIRED
BY THE LOAN DOCUMENTS. IF LENDER PURCHASES INSURANCE FOR THE PROPERTY,

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BORROWER WILL BE RESPONSIBLE FOR THE COST OF THAT INSURANCE, INCLUDING INTEREST
AND OTHER CHARGES LENDER MAY IMPOSE IN CONNECTION WITH THE PLACEMENT OF THE
INSURANCE, UNTIL THE EFFECTIVE DATE OF THE CANCELLATION OR EXPIRATION OF THE
INSURANCE. THE COST OF THE INSURANCE MAY BE ADDED TO BORROWER’S TOTAL SECURED
OBLIGATIONS. THE COST OF THE INSURANCE MAY BE MORE THAN THE COST OF INSURANCE
BORROWER MAY BE ABLE TO OBTAIN ON ITS OWN. BY EXECUTING THIS DOCUMENT, BORROWER
ACKNOWLEDGES THE FOREGOING.

 

ARTICLE 4

 

ENVIRONMENTAL MATTERS

 

Section 4.1 Certain Definitions. As used herein, the following terms have the
meanings indicated:

 

(a) “Environmental Laws” means any federal, state or local law (whether imposed
by statute, ordinance, rule, regulation, administrative or judicial order, or
common law), now or hereafter enacted, governing health, safety, industrial
hygiene, the environment or natural resources, or Hazardous Materials,
including, without limitation, such laws governing or regulating (i) the use,
generation, storage, removal, recovery, treatment, handling, transport,
disposal, control, release, discharge of, or exposure to, Hazardous Materials,
(ii) the transfer of property upon a negative declaration or other approval of a
governmental authority of the environmental condition of such property, or (iii)
requiring notification or disclosure of releases of Hazardous Materials or other
environmental conditions whether or not in connection with a transfer of title
to or interest in property.

 

(b) “Hazardous Materials” means (i) petroleum or chemical products, whether in
liquid, solid, or gaseous form, or any fraction or by-product thereof, (ii)
asbestos or asbestos-containing materials, (iii) polychlorinated biphenyls
(pcbs), (iv) radon gas, (v) underground storage tanks, (vi) any explosive or
radioactive substances, (vii) lead or lead-based paint, or (viii) any other
substance, material, waste or mixture which is or shall be listed, defined, or
otherwise determined by any governmental authority to be hazardous, toxic,
dangerous or otherwise regulated, controlled or giving rise to liability under
any Environmental Laws.

 

Section 4.2 Representations and Warranties on Environmental Matters. To
Borrower’s knowledge, except as set forth in the Site Assessment, (a) no
Hazardous Material is now or was formerly used, stored, generated, manufactured,
installed, treated, discharged, disposed of or otherwise present at or about the
Project or any property adjacent to the Project (except for cleaning and other
products currently used in connection with the routine maintenance or repair of
the Project in full compliance with Environmental Laws) and no Hazardous
Material was removed or transported from the Project, (b) all permits, licenses,
approvals and filings required by Environmental Laws have been obtained, and the
use, operation and condition of the Project does not, and did not previously,
violate any Environmental Laws, (c) no civil, criminal or administrative action,
suit, claim, hearing,

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investigation or proceeding has been brought or been threatened, nor have any
settlements been reached by or with any parties or any liens imposed in
connection with the Project concerning Hazardous Materials or Environmental
Laws; and (d) no underground storage tanks exist on any part of the Project.

 

Section 4.3 Covenants on Environmental Matters.

 

(a) Borrower shall (i) comply strictly and in all respects with applicable
Environmental Laws; (ii) notify Lender immediately upon Borrower’s discovery of
any spill, discharge, release or presence of any Hazardous Material at, upon,
under, within, contiguous to or otherwise affecting the Project; (iii) promptly
remove such Hazardous Materials and remediate the Project in full compliance
with Environmental Laws and in accordance with the reasonable recommendations
and specifications of an independent environmental consultant approved by
Lender; and (iv) promptly forward to Lender copies of all orders, notices,
permits, applications or other communications and reports in connection with any
spill, discharge, release or the presence of any Hazardous Material or any other
matters relating to the Environmental Laws or any similar laws or regulations,
as they may affect the Project or Borrower.

 

(b) Borrower shall not cause, shall prohibit any other Person within the control
of Borrower from causing, and shall use prudent, commercially reasonable efforts
to prohibit other Persons (including tenants) from (i) causing any spill,
discharge or release, or the use, storage, generation, manufacture,
installation, or disposal, of any Hazardous Materials at, upon, under, within or
about the Project or the transportation of any Hazardous Materials to or from
the Project (except for cleaning and other products used in connection with
routine maintenance or repair of the Project in full compliance with
Environmental Laws), (ii) installing any underground storage tanks at the
Project, or (iii) conducting any activity that requires a permit or other
authorization under Environmental Laws.

 

(c) Borrower shall provide to Lender, at Borrower’s expense promptly upon the
written request of Lender from time to time, a Site Assessment or, if required
by Lender, an update to any existing Site Assessment, to assess the presence or
absence of any Hazardous Materials and the potential costs in connection with
abatement, cleanup or removal of any Hazardous Materials found on, under, at or
within the Project. Borrower shall pay the cost of no more than one such Site
Assessment or update in any twelve (12)-month period, unless Lender’s request
for a Site Assessment is based on information provided under Section 4.3(a), a
reasonable suspicion of Hazardous Materials at or near the Project, a breach of
representations under Section 4.2, or an Event of Default, in which case any
such Site Assessment or update shall be at Borrower’s expense.

 

Section 4.4 Allocation of Risks and Indemnity. Subject to the provisions of this
Section 4.4, as between Borrower and Lender, all risk of loss associated with
non-compliance with Environmental Laws, or with the presence of any Hazardous
Material at, upon, within, contiguous to or otherwise affecting the Project,
shall lie solely with Borrower. Accordingly, Subject to the provisions of this
Section 4.4, Borrower shall bear all risks and costs associated with any loss
(including any loss in value attributable to Hazardous Materials), damage or
liability therefrom, including all costs of removal of Hazardous Materials or
other remediation

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required by Lender or by law. Borrower shall indemnify, defend and hold Lender
and its shareholders, directors, officers, employees and agents harmless from
and against all loss, liabilities, damages, claims, costs and expenses
(including reasonable costs of defense and consultant fees, investigation and
laboratory fees, court costs, and other litigation expenses) arising out of or
associated, in any way, with (a) the non-compliance with Environmental Laws, or
(b) the existence of Hazardous Materials in, on, or about the Project, (c) any
personal injury (including wrongful death) or property damage (real or personal)
arising out of or related to Hazardous Materials; (d) any lawsuit brought or
threatened, settlement reached, or government order relating to such Hazardous
Materials, (e) a breach of any representation, warranty or covenant contained in
this Article 4, whether based in contract, tort, implied or express warranty,
strict liability, criminal or civil statute or common law, or (f) the imposition
of any environmental lien encumbering the Project; provided, however, Borrower
shall not be liable under such indemnification to the extent such loss,
liability, damage, claim, cost or expense results solely from Lender’s gross
negligence or willful misconduct. Borrower’s obligations under this Section 4.4
shall arise whether or not any governmental authority has taken or threatened
any action in connection with the presence of any Hazardous Material, and
whether or not the existence of any such Hazardous Material or potential
liability on account thereof is disclosed in the Site Assessment and shall
continue except as provided in Section 12.1 hereof, notwithstanding the
repayment of the Loan or any transfer or sale of any right, title and interest
in the Project (by foreclosure, deed in lieu of foreclosure or otherwise).
Additionally, if any Hazardous Materials affect or threaten to affect the
Project, Lender may (but shall not be obligated to) give such notices and take
such actions as it reasonably deems necessary or advisable at the expense of the
Borrower in order to abate the discharge of any Hazardous Materials or remove
the Hazardous Materials. Any amounts payable to Lender by reason of the
application of this Section 4.4 shall become immediately due and payable and
shall bear interest at the Default Rate from the date Borrower is notified that
loss or damage has been sustained by Lender until paid. The obligations and
liabilities of Borrower under this Section 4.4 shall survive any termination,
satisfaction, assignment, entry of a judgment of foreclosure or delivery of a
deed in lieu of foreclosure.

 

Section 4.5 No Waiver. Notwithstanding any provision in this Article 4 or
elsewhere in the Loan Documents, or any rights or remedies granted by the
Environmental Indemnity Agreement or the Loan Documents, Lender does not waive
and expressly reserves all rights and benefits now or hereafter accruing to
Lender under the “security interest” or “secured creditor” exception under
applicable Environmental Laws, as the same may be amended. No action taken by
Lender pursuant to the Environmental Indemnity Agreement or the Loan Documents
shall be deemed or construed to be a waiver or relinquishment of any such rights
or benefits under the “security interest exception.”

 

ARTICLE 5

 

LEASING MATTERS

 

Section 5.1 Representations and Warranties on Leases. Borrower represents and
warrants to Lender with respect to leases of the Project that, except as set
forth in any writing

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delivered to Lender prior to the Closing Date: (a) the rent roll delivered to
Lender is true and correct, and the leases are valid and in and full force and
effect; (b) the leases (including amendments) are in writing, and there are no
oral agreements with respect thereto; (c) the copies of the leases delivered to
Lender are true and complete; (d) neither the landlord nor any tenant is in
default under any of the leases; (e) Borrower has no knowledge of any notice of
termination or default with respect to any lease; (f) Borrower has not assigned
or pledged any of the leases, the rents or any interests therein except to
Lender; (g) except as set forth in any writing delivered to Lender prior to the
Closing Date, no tenant or other party has an option to purchase all or any
portion of the Project; (h) except as set forth in any writing delivered to
Lender prior to the Closing Date, no tenant has the right to terminate its lease
prior to expiration of the stated term of such lease; and (i) no tenant has
prepaid more than one month’s rent in advance (except for bona fide security
deposits not in excess of an amount equal to two month’s rent).

 

Section 5.2  Standard Lease Form; Approval Rights. All existing leases and other
rental arrangements required to be reviewed by Lender have been approved by
Lender as of the Closing Date, and all future leases and other rental
arrangements shall be on a standard lease form which has been approved by Lender
as of the Closing Date, with no material modifications (except as approved by
Lender). Such lease form shall provide that (a) the lease is subordinate to the
Mortgage, (b) the tenant shall attorn to Lender, and (c) that any cancellation,
surrender, or amendment (except for minor modifications and amendments entered
into in the ordinary course of business, consistent with prudent property
management practices, not affecting the economic terms of the lease) of such
lease without the prior written consent of Lender shall be voidable by Lender.
Borrower shall hold, in trust, all tenant security deposits in a segregated
account, and, to the extent required by applicable law, shall not commingle any
such funds with any other funds of Borrower. Within ten (10) days after Lender’s
request, Borrower shall furnish to Lender a statement of all tenant security
deposits, and copies of all leases not previously delivered to Lender, certified
by Borrower as being true and correct. Notwithstanding anything contained in the
Loan Documents, Lender’s approval shall not be required for future leases or
lease extensions of 10,000 square feet or less if the following conditions are
satisfied: (i) there exists no Potential Default or Event of Default; (ii) the
lease is on the standard lease form approved by Lender with no material
modifications; (iii) the lease does not conflict with any restrictive covenant
affecting the Project; and (iv) the rental rate and the economic terms are
within written parameters approved by Lender. For any lease that requires the
approval of Lender Borrower shall submit a term sheet for such lease to Lender
at least seven (7) days prior to the proposed execution date of the lease. If
Borrower has not received a response from Lender within seven (7) days from the
date the term sheet was submitted to Lender, the proposed terms shall be deemed
approved by Lender. If the term sheet is approved or deemed approved by Lender,
Borrower shall not be required to submit the lease for approval unless (i) there
are material differences from the term sheet approved by Lender or (ii) the
lease is not on the standard form approved by Lender. All costs and expenses
incurred by Lender in its review and approval of any lease shall be paid by
Borrower promptly upon request.

 

Section 5.3 Covenants. Borrower (a) shall perform the obligations which Borrower
is required to perform under the leases; (b) shall enforce in a commercially
reasonable manner the obligations to be performed by the tenants; (c) shall
promptly furnish to Lender any notice of default or termination received by
Borrower from any tenant, and any notice of default or

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termination given by Borrower to any tenant; (d) shall not collect any rents for
more than thirty (30) days in advance of the time when the same shall become
due, except for bona fide security deposits not in excess of an amount equal to
two months rent; (e) shall not enter into any ground lease or master lease of
any part of the Project; (f) shall not further assign or encumber any lease; (g)
shall not, except with Lender’s prior written consent, cancel or accept
surrender or termination of any lease (except upon the terms set forth in such
lease); and (h) shall not, except with Lender’s prior written consent, modify or
amend any lease (except for minor modifications and amendments entered into in
the ordinary course of business, consistent with prudent property management
practices, not affecting the economic terms of the lease), (i) shall not lease
or permit to be leased any space in the Project for the purpose of operating an
on-site dry cleaning plant; and (j) with respect to retail property, any lease
termination or cancellation fees shall be paid to Lender and held in the
Rollover Escrow Account. Any action in violation of clauses (e), (f), (g), (h)
and (i) of this Section 5.3 shall be void at the election of Lender.

 

Section 5.4 Tenant Estoppels. At Lender’s request, Borrower shall use reasonable
efforts to obtain and furnish to Lender, written estoppels in form and substance
satisfactory to Lender, executed by tenants under leases in the Project and
confirming the term, rent, and other provisions and matters relating to the
leases, and whether any default exists.

 

ARTICLE 6

 

REPRESENTATIONS AND WARRANTIES

 

Borrower represents, warrants and covenants to Lender that:

 

Section 6.1 Organization, Power and Authority. Borrower and each Borrower Party
(a) is duly organized, validly existing and in good standing under the laws of
the state of its formation or existence, (b) is in compliance with all legal
requirements applicable to doing business in the State of Georgia, and (c) has
the necessary governmental approvals to own and operate the Project and conduct
the business now conducted or to be conducted thereon. Borrower has the full
power, authority and right to execute, deliver and perform its obligations
pursuant to this Loan Agreement and the other Loan Documents, and to mortgage
the Project pursuant to the terms of the Mortgage and to keep and observe all of
the terms of this Loan Agreement and the other Loan Documents on Borrower’s part
to be performed. Borrower is not a “foreign person” within the meaning of §
1445(f)(3) of the Internal Revenue Code.

 

Section 6.2 Validity of Loan Documents. The execution, delivery and performance
by Borrower and each Borrower Party of the Loan Documents: (a) are duly
authorized and do not require the consent or approval of any other Person,
including governmental authority or court, which has not been obtained; and (b)
will not violate any law or result in the imposition of any lien, charge or
encumbrance upon the assets of any such Person, except as contemplated by the
Loan Documents. The Loan Documents constitute the legal, valid and binding
obligations of Borrower and each Borrower Party, enforceable in accordance with
their respective terms,

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subject to applicable bankruptcy, insolvency, or similar laws generally
affecting the enforcement of creditors’ rights.

 

Section 6.3 Liabilities; Litigation.

 

(a) The financial statements delivered by Borrower and each Borrower Party are
true and correct with no significant change since the date of preparation.
Except as disclosed in such financial statements, there are no liabilities
(fixed or contingent) affecting the Project, Borrower or any Borrower Party.
Except as disclosed in such financial statements, there is no litigation,
administrative proceeding, investigation or other legal action (including any
proceeding under any state or federal bankruptcy or insolvency law) pending or,
to the knowledge of Borrower, threatened, against the Project, Borrower or any
Borrower Party which if adversely determined could have a material adverse
effect on such party, the Project or the Loan.

 

(b) Neither Borrower nor any Borrower Party is contemplating either the filing
of a petition by it under state or federal bankruptcy or insolvency laws or the
liquidation of all or a major portion of its assets or property, and neither
Borrower nor any Borrower Party has knowledge of any Person contemplating the
filing of any such petition against it.

 

Section 6.4 Taxes and Assessments. The Project is comprised of one or more
parcels, each of which constitutes a separate tax lot and none of which
constitutes a portion of any other tax lot. There are no pending or, to
Borrower’s best knowledge, proposed, special or other assessments for public
improvements or otherwise affecting the Project, nor are there any contemplated
improvements to the Project that may result in such special or other
assessments.

 

Section 6.5 Other Agreements; Defaults. Neither Borrower nor any Borrower Party
is a party to any agreement or instrument or subject to any court order,
injunction, permit, or restriction which might adversely affect the Project or
the business, operations, or condition (financial or otherwise) of Borrower or
any Borrower Party. Neither Borrower nor any Borrower Party is in violation of
any agreement which violation would have an adverse effect on the Project,
Borrower, or any Borrower Party or Borrower’s or any Borrower Party’s business,
properties, or assets, operations or condition, financial or otherwise.

 

Section 6.6 Compliance with Law.

 

(a) Borrower and each Borrower Party have all requisite licenses, permits,
franchises, qualifications, certificates of occupancy or other governmental
authorizations to own, lease and operate the Project and carry on its business,
and the Project is in compliance with all applicable legal requirements and is
free of structural defects, and all building systems contained therein are in
good working order, subject to ordinary wear and tear, except as set forth in
that certain Property Condition Report dated August 6, 1997, prepared by Eckland
Consultants, Inc. The Project does not constitute, in whole or in part, a
legally non-conforming use under applicable legal requirements;

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(b) No condemnation has been commenced or, to Borrower’s knowledge, is
contemplated with respect to all or any portion of the Project or for the
relocation of roadways providing access to the Project; and

 

(c) The Project has adequate rights of access to public ways and is served by
adequate water, sewer, sanitary sewer and storm drain facilities. All public
utilities necessary or convenient to the full use and enjoyment of the Project
are located in the public right-of-way abutting the Project, and all such
utilities are connected so as to serve the Project without passing over other
property, except to the extent such other property is subject to a perpetual
easement for such utility benefiting the Project. All roads necessary for the
full utilization of the Project for its current purpose have been completed and
dedicated to public use and accepted by all governmental authorities.

 

Section 6.7 Location of Borrower. Borrower’s principal place of business and
chief executive offices are located at the address stated in Section 11.1.

 

Section 6.8 ERISA.

 

(a) As of the date hereof and throughout the term of the Loan, (i) Borrower is
not and will not be an “employee benefit plan” as defined in Section 3(3) of the
Employee Retirement Income Security Act of 1974, as amended (“ERISA”), which is
subject to Title I of ERISA, and (ii) the assets of Borrower do not and will not
constitute “plan assets” of one or more such plans for purposes of Title I of
ERISA; and

 

(b) As of the date hereof and throughout the term of the Loan (i) Borrower is
not and will not be a “governmental plan” within the meaning of Section 3(3) of
ERISA and (ii) transactions by or with Borrower are not and will not be subject
to state statutes applicable to Borrower regulating investments of and fiduciary
obligations with respect to governmental plans.

 

Section 6.9 Forfeiture. There has not been committed by Borrower or any other
person in occupancy of or involved with the operation or use of the Project, and
there shall never be committed by Borrower, any act or omission affording the
federal government or any state or local government the right of forfeiture as
against the Project or any part thereof or any monies paid in performance of
Borrower’s obligations under any of the Loan Documents. Borrower hereby
covenants and agrees not to commit, permit or suffer to exist any act or
omission affording such right of forfeiture.

 

Section 6.10 Tax Filings. Borrower and each Borrower Party have filed (or have
obtained effective extensions for filing) all federal, state and local tax
returns required to be filed and have paid or made adequate provision for the
payment of all federal, state and local taxes, charges and assessments payable
by Borrower and each Borrower Party, respectively. Borrower and each Borrower
Party believe that their respective tax returns properly reflect the income and
taxes of Borrower and each Borrower Party, respectively, for the periods covered
thereby, subject only to reasonable adjustments required by the Internal Revenue
Service or other applicable tax authority upon audit.

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Section 6.11 Solvency. Giving effect to the Loan, the fair saleable value of
Borrower’s assets exceeds and will, immediately following the making of the
Loan, exceed Borrower’s total liabilities, including, without limitation,
subordinated, unliquidated, disputed and contingent liabilities. The fair
saleable value of Borrower’s assets is and will, immediately following the
making of the Loan, be greater than Borrower’s probable liabilities, including
the maximum amount of its contingent liabilities on its Debts as such Debts
become absolute and matured, Borrower’s assets do not and, immediately following
the making of the Loan will not, constitute unreasonably small capital to carry
out its business as conducted or as proposed to be conducted. Borrower does not
intend to, and does not believe that it will, incur Debts and liabilities
(including contingent liabilities and other commitments) beyond its ability to
pay such Debts as they mature (taking into account the timing and amounts of
cash to be received by Borrower and the amounts to be payable on or in respect
of obligations of Borrower). Except as expressly disclosed to Lender in writing,
no petition in bankruptcy has been filed against Borrower, Guarantor or any
Borrower Party in the last seven (7) years, and neither Borrower, Guarantor or
any Borrower Party in the last seven (7) years has ever made an assignment for
the benefit of creditors or taken advantage of any insolvency act for the
benefit of debtors.

 

Section 6.12 Full and Accurate Disclosure. No statement of fact made by or on
behalf of Borrower or any Borrower Party in this Agreement or in any of the
other Loan Documents contains any untrue statement of a material fact or omits
to state any material fact necessary to make statements contained herein or
therein not misleading. There is no fact presently known to Borrower which has
not been disclosed to Lender which adversely affects, nor as far as Borrower can
foresee, might adversely affect, the Project or the business, operations or
condition (financial or otherwise) of Borrower or any Borrower Party.

 

Section 6.13 Flood Zone. No portion of the improvements comprising the Project
is located in an area identified by the Secretary of Housing and Urban
Development or any successor thereto as an area having special flood hazards
pursuant to the National Flood Insurance Act of 1968, the Flood Disaster
Protection Act of 1973 or the National Flood Insurance Act of 1994, as amended,
or any successor law, or, if located within any such area, Borrower has obtained
and will maintain the insurance prescribed in Section 3.1 hereof.

 

Section 6.14 Single Purpose Entity/Separateness. Borrower represents, warrants
and covenants as follows:

 

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

 

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

 

(c) Borrower will not enter into any contract or agreement with any Affiliate of
the Borrower, any constituent party of Borrower, the Guarantors or any Affiliate
of any constituent party or Guarantor, except upon terms and conditions that are
intrinsically fair and substantially

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similar to those that would be available on an arms-length basis with third
parties other than any such Person.

 

(d) Borrower has not incurred and will not incur any Debt other than (i) the
Loan, (ii) trade and operational debt incurred in the ordinary course of
business with trade creditors and in amounts as are normal and reasonable under
the circumstances, provided such debt is not evidenced by a note and is paid
when due, and (iii) Debt incurred in the financing of equipment and other
personal property used on the Project. No indebtedness other than the Loan may
be secured (subordinate or pari passu) by the Project.

 

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

 

(f) Borrower is and will use best efforts to remain solvent and Borrower will
pay, to the extent proceeds are available from the Project, its debts and
liabilities (including, as applicable, shared personnel and overhead expenses)
from its assets as the same shall become due.

 

(g) Borrower has done or caused to be done and will do all things necessary to
observe organizational formalities and preserve its existence, and Borrower will
not, nor will Borrower permit any constituent party or any Guarantor to amend,
modify or otherwise change the partnership certificate, partnership agreement,
articles of incorporation and bylaws, operating agreement, trust or other
organizational documents of Borrower or such constituent party or Guarantor
without the prior written consent of Lender.

 

(h) Borrower will maintain all of its books, records, financial statements and
bank accounts separate from those of its Affiliates and any constituent party
and Borrower will file its own tax returns. Borrower shall maintain its books,
records, resolutions and agreements as official records.

 

(i) Borrower will be, and at all times will hold itself out to the public as, a
legal entity separate and distinct from any other entity (including any
Affiliate of Borrower, any constituent party of Borrower, any Guarantor or any
Affiliate of any constituent party or Guarantor), shall correct any known
misunderstanding regarding its status as a separate entity, shall conduct
business in its own name, shall not identify itself or any of its Affiliates as
a division or part of the other and shall maintain and utilize separate
invoices, bank accounts and checks.

 

(j) Borrower will maintain adequate capital, to the extent proceeds are
available from the Project, for the normal obligations reasonably foreseeable in
a business of its size and character and in light of its contemplated business
operations.

 

(k) Neither Borrower nor any constituent party will seek the dissolution,
winding up, liquidation, consolidation or merger in whole or in part, of the
Borrower.

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(l) Borrower will not commingle the funds and other assets of Borrower with
those of any Affiliate or constituent party, any Guarantor, or any Affiliate of
any constituent party or Guarantor, or any other Person.

 

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

 

(n) Borrower does not and will not hold itself out to be responsible for the
debts or obligations of any other Person.

 

Section 6.15 Ground Lease. Provided the Ground Lessor receives written notice
from Lender of the Mortgage, Borrower hereby represents and warrants to Lender
the following with respect to the Ground Lease:

 

(a) Recording; Modification. A memorandum of the Ground Lease has been duly
recorded, the Ground Lease permits the interest of the Borrower to be encumbered
by a mortgage or the Ground Lessor has approved and consented to the encumbrance
of the Project by the Mortgage and there have not been amendments or
modifications to the terms of the Ground Lease since its recordation other than
that certain Amendment to Ground Lease Agreement dated April 27, 1983, and that
certain Second Amendment to Ground Lease and Assignment dated December 27, 1984,
which modified the terms of the Ground Lease and assigned the interest of the
lessee to Atlanta Northlake Associates, filed January 18, 1985 and recorded in
the Office of DeKalb County, Georgia, in Deed Book 5137, Page 201, and the
further assignment of the interest of lessee to Confederation Life Insurance
Company by virtue of that certain Deed under Power of Sale, dated April 7, 1992,
and recorded in the Office of DeKalb County, Georgia, in Deed Book 7235, Page
586, and the further assignment of the interest of lessee to Borrower by virtue
of that certain Assignment and Assumption of Ground Lease dated July 28, 1995,
filed July 31, 1995 and recorded in the Office of DeKalb County, Georgia, in
Deed Book 8634, Page 415. The Ground Lease may not be cancelled, terminated,
surrendered or amended without the prior written consent of Lender.

 

(b) No Liens. Except for the Permitted Encumbrances (defined in the Mortgage),
the Borrower’s interest in the Ground Lease is not subject to any liens or
encumbrances superior to, or of equal priority with, the Mortgage other than the
Ground Lessor’s related fee interest.

 

(c) Ground Lease Assignable. The Borrower’s interest in the Ground Lease is
assignable to the Lender upon notice to, but without the consent of, the Ground
Lessor (or, if any such consent is required, it has been obtained prior to the
Closing Date). The Ground Lease is further assignable by Lender, its successors
and assigns without Ground Lessor’s consent.

 

(d) Default. To the best of Borrower’s knowledge, as of the date hereof, the
Ground Lease is in full force and effect and no default has occurred under the
Ground Lease and there is

--------------------------------------------------------------------------------

no existing condition which, but for the passage of time or the giving of
notice, could result in a default under the terms of the Ground Lease.

 

(e) Notice. Pursuant to the terms of the Ground Lease and the ground lease
estoppel letter executed by the Ground Lessor dated October 24, 1997, the Ground
Lessor is required to give notice of any default by the Borrower to the Lender.
The Ground Lease, or an estoppel letter received by the Lender from Ground
Lessor, further provides that notice of termination given under the Ground Lease
is not effective against the Lender unless a copy of the notice has been
delivered to the Lender in the manner described in the Ground Lease.

 

(f) Cure. The Lender is permitted the opportunity (including, where necessary,
time to gain possession of the interest of the Borrower under the Ground Lease)
to cure any default under the Ground Lease, which is curable after the receipt
of notice of any of the default before the Landlord thereunder may terminate the
Ground Lease.

 

(g) Term. The Ground Lease has a term which extends not less than ten (10) years
beyond the Maturity Date of the Loan.

 

(h) New Lease. The Ground Lease requires the Ground Lessor to enter into a new
lease upon termination of the Ground Lease for any reason, including rejection
of the Ground Lease in a bankruptcy proceeding, provided the Ground Lessor
receives written notice from Lender of Lender’s option to do so within thirty
(30) days from the date of termination of the Ground Lease.

 

(i) Insurance Proceeds. Under the terms of the Ground Lease and the Mortgage,
taken together, any related insurance and condemnation proceeds will be applied
either to the repair or restoration of all or part of the Project, with the
Lender having the right to hold and disburse the proceeds as the repair or
restoration progresses, or to the payment of the outstanding principal balance
of the Loan together with any accrued interest thereon.

 

(j) Subleasing. The Ground Lease does not impose any restrictions on subleasing.

 

Section 6.16 Property Specific Representations. The management agreement for the
Project (i) is in full force and effect, (ii) there is no default or violation
by any party thereunder, and (iii) provides for a management fee of not more
than 4% of rental collections.

 

ARTICLE 7

 

FINANCIAL REPORTING

 

Section 7.1 Financial Statements.

 

(a) Monthly Reports. During the first twelve (12) months of the term of the
Loan, Borrower shall furnish to Lender within thirty (30) days after the end of
each calendar month, a detailed operating statement (showing monthly activity
and year-to-date) stating operating

--------------------------------------------------------------------------------

 

revenues, operating expenses, operating income and net cash flow for the
calendar month just ended.

 

(b) Quarterly Reports. Within forty-five (45) days after the end of each
calendar quarter, Borrower shall furnish to Lender a detailed operating
statement (showing quarterly activity and year-to-date) stating operating
revenues, operating expenses, operating income and net cash flow for the
calendar quarter just ended.

 

(c) Annual Reports. Within ninety (90) days after the end of each fiscal year of
Borrower’s operation of the Project, Borrower shall furnish to Lender a current
(as of the end of such fiscal year) balance sheet, a detailed operating
statement stating operating revenues, operating expenses, operating income and
net cash flow for each of Borrower and the Project, and, if required by Lender,
prepared on a review basis and certified by an independent public accountant
satisfactory to Lender. Borrower’s annual financial statements shall include 1)
a list of the tenants, if any, occupying more than twenty percent (20%) of the
total floor area of the Project, 2) a breakdown showing the year in which each
Lease then in effect expires, and 3) a breakdown of the percentage of total
floor area of the Project and the percentage of base rent with respect to which
Leases shall expire in each year, each such percentage to be expressed on both a
per year and a cumulative basis.

 

(d) Certification; Supporting Documentation. Each such financial statement shall
be in scope and detail satisfactory to Lender and certified by the chief
financial representative of Borrower.

 

Section 7.2 Accounting Principles. All financial statements shall be prepared in
accordance with generally accepted accounting principles in the United States of
America as in effect on the date so indicated and consistently applied (or such
other accounting basis reasonably acceptable for Lender).

 

Section 7.3 Other Information; Access. Borrower shall deliver to Lender such
additional information regarding Borrower, its subsidiaries, its business, any
Borrower Party, and the Project within 30 days after Lender’s request therefor.
Borrower shall permit Lender to examine such records, books and papers of
Borrower which reflect upon its financial condition and the income and expenses
of the Project.

 

Section 7.4 Annual Budget. At least thirty (30) days prior to the commencement
of each fiscal year, Borrower will provide to Lender its proposed annual
operating and capital improvements budget for such fiscal year for review and
approval by Lender.

 

ARTICLE 8

 

COVENANTS

 

Borrower covenants and agrees with Lender as follows:

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Section 8.1 Due On Sale and Encumbrance; Transfers of Interests. Without the
prior written consent of Lender, neither Borrower nor any other Person having an
ownership or beneficial interest in Borrower shall sell, transfer, convey,
mortgage, pledge, or assign any interest in the Project or any part thereof or
further encumber, alienate, grant a Lien or grant any other interest in the
Project or any part thereof, whether voluntarily or involuntarily, in violation
of the covenants and conditions set forth in the Mortgage.

 

Section 8.2 Taxes; Utility Charges. Except to the extent sums sufficient to pay
all Taxes (defined herein) have been previously deposited with Lender as part of
the Tax Escrow Fund, Borrower shall pay before any fine, penalty, interest or
cost may be added thereto, and shall not enter into any agreement to defer, any
real estate taxes and assessments, franchise taxes and charges, and other
governmental charges (the “Taxes”) that may become a Lien upon the Project or
become payable during the term of the Loan; provided, however; Borrower may
contest the validity of Taxes so long as (a) Borrower notifies Lender that it
intends to contest such Taxes, (b) Borrower provides Lender with an indemnity,
bond or other security satisfactory to Lender assuring the discharge of
Borrower’s obligations for such Taxes, including interest and penalties, (c)
Borrower is diligently contesting the same by appropriate legal proceedings in
good faith and at its own expense and concludes such contest prior to the tenth
(10th) day preceding the earlier to occur of the Maturity Date or the date on
which the Project is scheduled to be sold for non-payment, (d) Borrower promptly
upon final determination thereof pay the amount of any such Taxes, together with
all costs, interest and penalties which may be payable in connection therewith;
and (e) notwithstanding the foregoing, Borrower shall immediately upon request
of Lender pay any such Taxes notwithstanding such contest if, in the opinion of
Lender, the Project or any part thereof or interest therein may be in danger of
being sold, forfeited, foreclosed, terminated, canceled or lost. Lender may pay
over any 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. Borrower’s compliance with Section 3.4 of this Agreement relating
to impounds for Taxes shall, with respect to payment of such Taxes, be deemed
compliance with this Section 8.2. Borrower shall not suffer or permit the joint
assessment of the Project with any other real property constituting a separate
tax lot or with any other real or personal property. Borrower shall promptly pay
for all utility services provided to the Project.

 

Section 8.3 Control; Management. There shall be no change in the day-to-day
control and management of Borrower or Borrower’s general partner or managing
member without the prior written consent of Lender. Borrower shall not
terminate, replace or appoint any manager or terminate or amend the management
agreement for the Project without Lender’s prior written approval. Any change in
ownership or control of the manager shall be cause for Lender to re-approve such
manager and management agreement. Each manager shall hold and maintain all
necessary licenses, certifications and permits required by law. Borrower shall
fully perform all of its covenants, agreements and obligations under the
management agreement. The management fee payable under the management agreement
shall not exceed four percent (4%) of rental collections.

 

Section 8.4 Operation; Maintenance; Inspection. Borrower shall observe and
comply with all legal requirements applicable to the ownership, use and
operation of the Project.

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Borrower shall maintain the Project in good condition and promptly repair any
deterioration, and, subject to the provisions of Article 3 hereof, promptly
repair any casualty. Borrower shall permit Lender and its agents,
representatives and employees, upon reasonable prior notice to Borrower, to
inspect the Project and conduct such environmental and engineering studies as
Lender may require, provided such inspections and studies do not materially
interfere with the use and operation of the Project.

 

Section 8.5 Taxes on Security. Borrower shall pay all taxes, charges, filing,
registration and recording fees, excises and levies payable with respect to the
Note or the Liens created or secured by the Loan Documents, other than income,
franchise and doing business taxes imposed on Lender. If there shall be enacted
any law (a) deducting the Loan from the value of the Project for the purpose of
taxation, (b) affecting any Lien on the Project, or (c) changing existing laws
of taxation of mortgages, deeds of trust, security deeds, or debts secured by
real property, or changing the manner of collecting any such taxes, Borrower
shall promptly pay to Lender, on demand, all taxes, costs and charges for which
Lender is or may be liable as a result thereof; however, if such payment would
be prohibited by law or would render the Loan usurious, then instead of
collecting such payment, Lender may declare all amounts owing under the Loan
Documents to be immediately due and payable.

 

Section 8.6 Legal Existence; Name, Etc. Borrower shall preserve and keep in full
force and effect its entity status, franchises, rights and privileges under the
laws of the state of its formation, and all qualifications, licenses and permits
applicable to the ownership, use and operation of the Project. Neither Borrower
nor any general partner or managing member of Borrower shall wind up, liquidate,
dissolve, reorganize, merge, or consolidate with or into, or convey, sell,
assign, transfer, lease, or otherwise dispose of all or substantially all of
Borrower’s assets, or cause Borrower to acquire all or substantially all of the
assets of the business of any Person, or permit any constituent party of
Borrower or any member of Borrower to do so on behalf of Borrower. Borrower
shall not change its name, identity, or organizational structure, or the
location of its chief executive office or principal place of business unless
Borrower (a) shall have obtained the prior written consent of Lender to such
change, and (b) shall have taken all actions necessary or requested by Lender to
file or amend any financing statement or continuation statement to assure
perfection and continuation of perfection of security interests under the Loan
Documents.

 

Section 8.7 Further Assurances. Borrower shall promptly (a) cure any defects in
the execution and delivery of the Loan Documents and the Environmental Indemnity
Agreement, and (b) execute and deliver, or cause to be executed and delivered,
all such other documents, agreements and instruments as Lender may reasonably
request to further evidence and more fully describe the collateral for the Loan,
to correct any omissions in the Loan Documents, to perfect, protect or preserve
any liens created under any of the Loan Documents and the Environmental
Indemnity Agreement, or to make any recordings, file any notices, or obtain any
consents, as may be necessary or appropriate in connection therewith. Borrower
grants Lender an irrevocable power of attorney coupled with an interest for the
purpose of exercising and perfecting any and all rights and remedies available
to Lender under the Loan Documents and the Environmental Indemnity Agreement, at
law and in equity, including without limitation such rights and remedies
available to Lender pursuant to this Section 8.7.

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Section 8.8 Estoppel Certificates. Borrower, within ten (10) days after request,
shall furnish to Lender a written statement, duly acknowledged, setting forth
the amount due on the Loan, the terms of payment of the Loan, the date to which
interest has been paid, whether any offsets or defenses exist against the Loan
and, if any are alleged to exist, the nature thereof in detail, and such other
matters as Lender reasonably may request.

 

Section 8.9 Notice of Certain Events. Borrower shall promptly notify Lender of
(a) any Potential Default or Event of Default, together with a detailed
statement of the steps being taken to cure such Potential Default or Event of
Default; (b) any notice of default received by Borrower under other obligations
relating to the Project or otherwise material to Borrower’s business; and (c)
any threatened or pending legal, judicial or regulatory proceedings, including
any dispute between Borrower and any governmental authority, affecting Borrower
or the Project.

 

Section 8.10 Indemnification. Borrower shall protect, defend, indemnify and save
harmless Lender its shareholders, directors, officers, employees and agents from
and against all liabilities, obligations, claims, damages, penalties, causes of
action, costs and expenses (including without limitation reasonable attorneys’
fees and expenses), imposed upon or incurred by or asserted against Lender by
reason of (a) ownership of the Mortgage, the Project or any interest therein or
receipt of any rents; (b) any accident, injury to or death of persons or loss of
or damage to property occurring in, on or about the Project or any part thereof
or on the adjoining sidewalks, curbs, adjacent property or adjacent parking
areas, streets or ways; (c) any use, nonuse or condition in, on or about the
Project or any part thereof or on the adjoining sidewalks, curbs, adjacent
property or adjacent parking areas, streets or ways; (d) performance of any
labor or services or the furnishing of any materials or other property in
respect of the Project or any part thereof; and (e) the failure of any Person to
file timely with the Internal Revenue Service an accurate Form 1099-B, Statement
for Recipients of Proceeds from Real Estate, Broker and Barter Exchange
Transactions, which may be required in connection with this Agreement, or to
supply a copy thereof in a timely fashion to the recipient of the proceeds of
the transaction in connection with which this Agreement is made; except to the
extent caused by or arising out of Lender’s gross negligence or willful
misconduct. Any amounts payable to Lender by reason of the application of this
section shall become immediately due and payable and shall bear interest at the
Default Rate from the date loss or damage is sustained by Lender until paid.

 

Section 8.11 Cooperation. Borrower acknowledges that Lender and its successors
and assigns may (a) sell this Agreement, the Mortgage, the Note, the other Loan
Documents, and the Environmental Indemnity Agreement, and any and all servicing
rights thereto to one or more investors as a whole loan, (b) participate the
Loan to one or more investors, (c) deposit this Agreement, the Note, other Loan
Documents, and the Environmental Indemnity Agreement with a trust, which trust
may sell certificates to investors evidencing an ownership interest in the trust
assets, or (d) otherwise sell the Loan or interest therein to investors (the
transactions referred to in clauses (a) through (d) are hereinafter each
referred to as “Secondary Market Transaction”). Borrower shall cooperate with
Lender in effecting any such Secondary Market Transaction and shall cooperate to
implement all reasonable requirements imposed by any Rating Agency involved in
any Secondary Market Transaction. Borrower shall provide such information, legal

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opinions and documents relating to the Borrower, the Guarantors, the Project and
any tenants of the Project as Lender may reasonably request in connection with
such Secondary Market Transaction. In addition, Borrower shall make available to
Lender all information concerning its business and operations that Lender may
reasonably request. Lender shall be permitted to share all such information with
the investment banking firms, Rating Agencies, accounting firms, law firms and
other third-party advisory firms involved with the Loan and the Loan Documents
or the applicable Secondary Market Transaction. It is understood that the
information provided by Borrower to Lender may ultimately be incorporated into
the offering documents for the Secondary Market Transaction and thus various
investors may also see some or all of the information. Lender and all of the
aforesaid third-party advisors and professional firms shall be entitled to rely
on the information supplied by, or on behalf of, Borrower and Borrower
indemnifies Lender as to any losses, claims, damages or liabilities that arise
out of or are based upon any untrue statement or alleged untrue statement of any
material fact contained in such information or arise out of or are based upon
the omission or alleged omission to state therein a material fact required to be
stated in such information or necessary in order to make the statements in such
information, or in light of the circumstances under which they were made, not
misleading.

 

Section 8.12 Payment For Labor and Materials. Borrower will promptly pay when
due all bills and costs for labor, materials, and specifically fabricated
materials incurred in connection with the Project and never permit to exist
beyond the due date thereof in respect of the Project or any part thereof any
lien or security interest, even though inferior to the liens and the security
interest hereof, and in any event never permit to be created or exist in respect
of the Project or any part thereof any other or additional lien or security
interest other than the liens or security interests hereof, except for the
Permitted Encumbrances. Notwithstanding the foregoing, Borrower shall, upon
prior written notice to Lender, have the right to contest diligently and in good
faith, by appropriate proceedings, any such liens, claims and demands, in a
manner not prejudicial to Lender or Lender’s rights under the Loan Documents. In
the event Lender, in its sole discretion, deems such action necessary or
appropriate, Borrower shall, within ten (10) days after Lender’s demand
therefor, deposit with Lender a bond or other security satisfactory to Lender in
such amount as Lender shall reasonably require, but not more than one hundred
fifty percent (150%) of the amount of the claim, and provided further that
Borrower shall thereafter diligently proceed to cause such lien to be removed
and discharged. If at the unsuccessful conclusion of such proceedings, Borrower
shall fail to discharge any such lien, then, in addition to any other right or
remedy of Lender, Lender may, but shall not be obligated to, discharge the same,
either by paying the amount claimed to be due, or by procuring the discharge of
such lien by depositing in court a bond for the amount claimed, or otherwise
giving security for such claim, or by taking such action as may be prescribed by
law.

 

Section 8.13 Ground Lease. Borrower shall (i) pay all rents, additional rents
and other sums required to be paid by Borrower, as tenant under and pursuant to
the provisions of the Ground Lease as and when such rent or other charge is
payable, (ii) diligently perform and observe all of the terms, covenants and
conditions of the Ground Lease on the part of Borrower, as tenant thereunder, to
be performed and observed prior to the expiration of any applicable grace period
therein provided, and (iii) promptly notify Lender of the giving of any notice
by the Ground Lessor to Borrower of any default by Borrower in the performance
or observance of any

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of the terms, covenants or conditions of the Ground Lease on the part of
Borrower, as tenant thereunder, to be performed or observed and deliver to
Lender a true copy of each such notice. Borrower shall not, without the prior
consent of Lender, surrender the leasehold estate created by the Ground Lease or
terminate or cancel the Ground Lease or modify, change, supplement, alter or
amend the Ground Lease, in any respect, either orally or in writing, and
Borrower hereby assigns to Lender, as further security for the payment of the
Debt and for the performance and observance of the terms, covenants and
conditions of this Loan Agreement, all of the rights, privileges and
prerogatives of Borrower, as tenant under the Ground Lease, to surrender the
leasehold estate created by the Ground Lease or to terminate, cancel, modify,
change, supplement, alter or amend the Ground Lease, and any such surrender of
the leasehold estate created by the Ground Lease or termination, cancellation,
modification, change, supplement, alteration or amendment of the Ground Lease
without the prior consent of Lender shall be void and of no force and effect. If
Borrower shall default in the performance or observance of any term, covenant or
condition of the Ground Lease on the part of Borrower, as tenant thereunder, to
be performed or observed, then, without limiting the generality of the other
provisions of this Loan Agreement, and without waiving or releasing Borrower
from any of its obligations hereunder, Lender shall have the right, but shall be
under no obligation, to pay any sums and to perform any act or take any action
as may be appropriate to cause all of the terms, covenants and conditions of the
Ground Lease on the part of Borrower, as tenant thereunder, to be performed or
observed or to be promptly performed or observed on behalf of Borrower, to the
end that the rights of Borrower in, to and under the Ground Lease shall be kept
unimpaired and free from default, even though the existence of such event of
default or the nature thereof be questioned or denied by Borrower or by any
party on behalf of Borrower. If Lender shall make any payment or perform any act
or take action in accordance with the preceding sentence, Lender will notify
Borrower of the making of any such payment, the performance of any such act, or
the taking of any such action. In any such event, subject to the rights of
tenants, subtenants and other occupants under the Leases, Lender and any person
designated by Lender shall have, and are hereby granted, the right to enter upon
the Project at any time and from time to time for the purpose of taking any such
action. Lender may pay and expend such sums of money as Lender deems necessary
for any such purpose and upon so doing shall be subrogated to any and all rights
of the Ground Lessor. Borrower hereby agrees to pay to Lender immediately and
without demand, all such sums so paid and expended by Lender, together with
interest thereon from the day of such payment at the Default Rate. All sums so
paid and expended by Lender and the interest thereon shall be secured by the
legal operation and effect of the Mortgage. If the Ground Lessor shall deliver
to Lender a copy of any notice of default sent by said Ground Lessor to
Borrower, as tenant under the Ground Lease, such notice shall constitute full
protection to Lender for any action taken or omitted to be taken by Lender, in
good faith, in reliance thereon. Borrower will not subordinate or consent to the
subordination of the Ground Lease to any mortgage, security deed, lease or other
interest on or in the Ground Lessor’s interest in all or any part of the
Project, unless, in each such case, the written consent of Lender shall have
been first had and obtained. Each Lease hereafter made and each renewal of any
existing Lease shall provide that, (a) in the event of the termination of the
Ground Lease, the Lease shall not terminate or be terminated by the tenant; (b)
in the event of any action for the foreclosure of the Mortgage, the Lease shall
not terminate or be terminable by the subtenant by reason of the termination of
the Ground Lease unless the tenant is specifically named and joined in any such
action and unless a judgment is obtained therein against the tenant; and (c) in
the event that the

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Ground Lease is terminated as aforesaid, the tenant shall attorn to the Ground
Lessor or to the purchaser at the sale of the Project on such foreclosure, as
the case may be.

 

Section 8.14 No Merger of Fee and Leasehold Estates; Releases. So long as any
portion of the Debt shall remain unpaid, unless Lender shall otherwise consent,
the fee title to the Project and the leasehold estate therein created pursuant
to the provisions of the Ground Lease shall not merge but shall always be kept
separate and distinct, notwithstanding the union of such estates in Borrower,
Lender, or in any other person by purchase, operation of law or otherwise.
Lender reserves the right, at any time, to release portions of the Project,
including, but not limited to, the leasehold estate created by the Ground Lease,
with or without consideration, at Lender’s election, without waiving or
affecting any of its rights hereunder or under the Note or the other Loan
Documents and any such release shall not affect Lender’s rights in connection
with the portion of the Project not so released.

 

Section 8.15 Borrower’s Acquisition of Fee Estate. In the event that Borrower,
so long as any portion of the Debt remains unpaid, shall be the owner and holder
of the fee title to the Project, the lien of the Mortgage shall be spread to
cover Borrower’s fee title to the Project and said fee title shall be deemed to
be included in the Project. Borrower agrees, at its sole cost and expense
(including without limitation Lender’s reasonable attorneys’ fees) to (i)
execute any and all documents or instruments necessary to subject its fee title
to the Project to the lien of the Mortgage; and (ii) provide a title insurance
policy which shall insure that the lien of the Mortgage is a first lien on
Borrower’s fee title to the Project. Notwithstanding the foregoing, if the
Ground Lease is for any reason whatsoever terminated prior to the natural
expiration of its term, and if, pursuant to any provisions of the Ground Lease
or otherwise, Lender or its designee shall acquire from the Ground Lessor
thereunder another lease of the Project, Borrower shall have no right, title or
interest in or to such other lease or the leasehold estate created thereby.

 

Section 8.16 Rejection of the Ground Lease.

 

(a) If the Ground Lease is terminated for any reason in the event of the
rejection or disaffirmance of the Ground Lease pursuant to the United States
Bankruptcy Code, or any other law affecting creditor’s rights, (i) the Borrower,
immediately after obtaining notice thereof, shall give notice thereto Lender,
(ii) Borrower, without the prior written consent of Lender, shall not elect to
treat the Ground Lease as terminated pursuant to Section 365(h) of the
Bankruptcy Code or any comparable federal or state statute or law, and any
election by Borrower made without such consent shall be void and (iii) the
Mortgage and this Loan Agreement and all the liens, terms, covenants and
conditions of the Mortgage and this Loan Agreement shall extend to and cover
Borrower’s possessory rights under Section 365(h) of the Bankruptcy Code and to
any claim for damages due to the rejection of the Ground Lease or other
termination of the Ground Lease. In addition, Borrower hereby assigns
irrevocably to Lender, Borrower’s rights to treat the Ground Lease as terminated
pursuant to Section 365(h) of the Bankruptcy Code and to offset rents under such
Ground Lease in the event any case, proceeding or other action is commenced by
or against the Ground Lessor under the Bankruptcy Code or any comparable federal
or state statute or law, provided that Lender shall not exercise such rights and
shall permit Borrower to exercise such rights with the prior written consent of
Lender, not to be unreasonably withheld or delayed, unless an Event of Default
shall have occurred and be continuing.

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(b) Borrower hereby assigns to Lender, Borrower’s right to reject the Ground
Lease under Section 365 of the Bankruptcy Code or any comparable federal or
state statute or law with respect to any case, proceeding or other action
commenced by or against Borrower under the Bankruptcy Code or comparable federal
or state statute or law, provided the Lender shall not exercise such right, and
shall permit Borrower to exercise such right with the prior written consent of
Lender, not to be unreasonably withheld or delayed, unless an Event of Default
shall have occurred and be continuing. Further, if Borrower shall desire to so
reject the Ground Lease, at Lender’s request, Borrower shall assign its interest
in the Ground Lease to Lender in lieu of rejecting such Ground Lease as
described above, upon receipt by Borrower of written notice from Lender of such
request together with Lender’s agreement to cure any existing defaults of
Borrower under such Ground Lease.

 

(c) Borrower hereby assigns to Lender, Borrower’s right to seek an extension of
the 60-day period within which Borrower must accept or reject the Ground Lease
under Section 365 of the Code or any comparable federal or state statute or law
with respect to any case, proceeding or other action commenced by or against
Borrower under the Bankruptcy Code or comparable federal or state statute or
law, provided the Lender shall not exercise such right, and shall permit
Borrower to exercise such right with the prior written consent of Lender, not to
be unreasonably withheld or delayed, unless an Event of Default shall have
occurred and be continuing. Further, if Borrower shall desire to so reject the
Ground Lease, at Lender’s request, Borrower shall assign its interest in the
Ground Lease to Lender in lieu of rejecting such Ground Lease as described
above, upon receipt by Borrower of written notice from Lender of such request
together with Lender’s agreement to cure any existing defaults of Borrower under
such Ground Lease.

 

(d) Borrower hereby agrees that if the Ground Lease is terminated for any reason
in the event of the rejection or disaffirmance of the Ground Lease pursuant to
the Code or any other law affecting creditor’s rights, any property not removed
by the Borrower as permitted or required by the Ground Lease, shall at the
option of Lender be deemed abandoned by Borrower, provided that Lender may
remove any such property required to be removed by Borrower pursuant to the
Ground Lease and all costs and expenses associated with such removal shall be
paid by Borrower within five (5) days of receipt by Borrower of an invoice for
such removal costs and expenses.

 

ARTICLE 9

 

EVENTS OF DEFAULT

 

Each of the following shall constitute an Event of Default under the Loan:

 

Section 9.1 Payments. Borrower’s failure to pay any regularly scheduled
installment of principal, interest or other amount due under the Loan Documents
within five (5) days of (and including) the date when due, or Borrower’s failure
to pay the Loan at the Maturity Date, whether by acceleration or otherwise.

--------------------------------------------------------------------------------

 

Section 9.2 Insurance. Borrower’s failure to maintain insurance as required
under Section 3.1 of this Agreement.

 

Section 9.3 Sale, Encumbrance, Etc. The sale, transfer, conveyance, pledge,
mortgage or assignment of any part or all of the Project, or any interest
therein, or of any interest in Borrower, in violation of the Mortgage.

 

Section 9.4 Covenants. Borrower’s failure to perform or observe any of the
agreements and covenants contained in this Agreement or in any of the other Loan
Documents (other than payments under Section 9.1, insurance requirements under
Section 9.2, transfers and encumbrances under Section 9.3, and the Events of
Default described in Sections 9.7 and 9.8 below), and the continuance of such
failure for ten (10) days after notice by Lender to Borrower; however, subject
to any shorter period for curing any failure by Borrower as specified in any of
the other Loan Documents, Borrower shall have an additional sixty (60) days to
cure such failure if (a) such failure does not involve the failure to make
payments on a monetary obligation; (b) such failure cannot reasonably be cured
within ten (10) days; (c) Borrower is diligently undertaking to cure such
default, and (d) Borrower has provided Lender with security reasonably
satisfactory to Lender against any interruption of payment or impairment of
collateral as a result of such continuing failure.

 

Section 9.5 Representations and Warranties. Any representation or warranty made
in any Loan Document proves to be untrue in any material respect when made or
deemed made.

 

Section 9.6 Other Encumbrances. Any default under any document or instrument,
other than the Loan Documents, evidencing or creating a Lien on the Project or
any part thereof.

 

Section 9.7 Involuntary Bankruptcy or Other Proceeding. Commencement of an
involuntary case or other proceeding against Borrower, any Borrower Party or any
other Person having an ownership or security interest in the Project (each, a
“Bankruptcy Party”) which seeks liquidation, reorganization or other relief with
respect to it or its debts or other liabilities under any bankruptcy, insolvency
or other similar law now or hereafter in effect or seeks the appointment of a
trustee, receiver, liquidator, custodian or other similar official of it or any
of its property, and such involuntary case or other proceeding shall remain
undismissed or unstayed for a period of ninety (90) days; or an order for relief
against a Bankruptcy Party shall be entered in any such case under the Federal
Bankruptcy Code.

 

Section 9.8 Voluntary Petitions, etc. Commencement by a Bankruptcy Party of a
voluntary case or other proceeding seeking liquidation, reorganization or other
relief with respect to itself or its Debts or other liabilities under any
bankruptcy, insolvency or other similar law or seeking the appointment of a
trustee, receiver, liquidator, custodian or other similar official for it or any
of its property, or consent by a Bankruptcy Party to any such relief or to the
appointment of or taking possession by any such official in an involuntary case
or other proceeding commenced against it, or the making by a Bankruptcy Party of
a general assignment for the benefit of creditors, or the failure by a
Bankruptcy Party, or the admission by a Bankruptcy Party in writing of its
inability, to pay its debts generally as they become due, or any action by a
Bankruptcy Party to authorize or effect any of the foregoing;

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Section 9.9 Ground Lease. (a) Borrower fails in the payment of any rent or other
charge mentioned in or made payable by the Ground Lease as and when such rent or
other charge is payable; or (b) there shall occur any default by Borrower, as
tenant under the Ground Lease, in the observance or performance of any term,
covenant or condition of the Ground Lease on the part of Borrower, to be
observed or performed, and said default is not cured prior to the expiration of
any applicable grace period therein provided, or if any one or more of the
events referred to in the Ground Lease shall occur which would cause the Ground
Lease to terminate without notice or action by the Ground Lessor or which would
entitle the Ground Lessor to terminate the Ground Lease and the term thereof by
giving notice to Borrower, as tenant thereunder, or if the leasehold estate
created by the Ground Lease shall be surrendered or the Ground Lease shall be
terminated or cancelled for any reason or under any circumstances whatsoever, or
if any of the terms, covenants or conditions of the Ground Lease shall in any
manner be modified, changed, supplemented, altered, or amended without consent
of Lender.

 

ARTICLE 10

 

REMEDIES

 

Section 10.1 Remedies – Insolvency Events. Upon the occurrence of any Event of
Default described in Section 9.7 or 9.8, all amounts due under the Loan
Documents immediately shall become due and payable, all without written notice
and without presentment, demand, protest, notice of protest or dishonor, notice
of intent to accelerate the maturity thereof, notice of acceleration of the
maturity thereof, or any other notice of default of any kind, all of which are
hereby expressly waived by Borrower; however, if the Bankruptcy Party under
Section 9.7 or 9.8 is other than Borrower, then all amounts due under the Loan
Documents shall become immediately due and payable at Lender’s election, in
Lender’s sole discretion.

 

Section 10.2 Remedies – Other Events. Except as set forth in Section 10.1 above,
while any Event of Default exists, Lender may (a) declare the entire Loan to be
immediately due and payable without presentment, demand, protest, notice of
protest or dishonor, notice of intent to accelerate the maturity thereof, notice
of acceleration of the maturity thereof, or other notice of default of any kind,
all of which are hereby expressly waived by Borrower, and (b) exercise all
rights and remedies therefor under the Loan Documents and at law or in equity.

 

Section 10.3 Lender’s Right to Perform the Obligations. If Borrower shall fail,
refuse or neglect to make any payment or perform any act required by the Loan
Documents, then while any Event of Default exists, and without notice to or
demand upon Borrower and without waiving or releasing any other right, remedy or
recourse Lender may have because of such Event of Default, Lender may (but shall
not be obligated to) make such payment or perform such act for the account of
and at the expense of Borrower, and shall have the right to enter upon the
Project for such purpose and to take all such action thereon and with respect to
the Project as it may deem necessary or appropriate. If Lender shall elect to
pay any sum due with reference to the Project, Lender may do so in reliance on
any bill, statement or assessment procured from the appropriate governmental
authority or other issuer thereof without inquiring into the accuracy or

--------------------------------------------------------------------------------

 

validity thereof. Similarly, in making any payments to protect the security
intended to be created by the Loan Documents, Lender shall not be bound to
inquire into the validity of any apparent or threatened adverse title, lien,
encumbrance, claim or charge before making an advance for the purpose of
preventing or removing the same. Borrower shall indemnify Lender for all losses,
expenses, damages, claims and causes of action, including reasonable attorneys’
fees, incurred or accruing by reason of any acts performed by Lender pursuant to
the provisions of this Section 10.3, except to the extent caused by or arising
out of Lender’s gross negligence or willful misconduct. All sums paid by Lender
pursuant to this Section 10.3, and all other sums expended by Lender to which it
shall be entitled to be indemnified, together with interest thereon at the
Default Rate from the date of such payment or expenditure until paid, shall
constitute additions to the Loan, shall be secured by the Loan Documents and
shall be paid by Borrower to Lender upon demand.

 

ARTICLE 11

 

MISCELLANEOUS

 

Section 11.1 Notices. Any notice required or permitted to be given under this
Agreement shall be in writing and either shall be mailed by certified mail,
postage prepaid, return receipt requested, or sent by overnight air courier
service, or personally delivered to a representative of the receiving party, or
sent by telecopy (provided an identical notice is also sent simultaneously by
mail, overnight courier, or personal delivery as otherwise provided in this
Section 11.1). All such communications shall be mailed, sent or delivered,
addressed to the party for whom it is intended at its address set forth below.

 

.

If to Borrower:

 

c/o M&J Wilkow, Ltd

180 North Michigan Avenue, Suite 200

Chicago, Illinois 60601

Attention: Marc Wilkow

Telecopy: (312) 658-2467

with a copy to:

 

Banyan Strategic Realty Trust

150 South Wacker Drive, Suite 2900

Chicago, Illinois 60606

Attention: General Counsel

Telecopy: (312) 553-0450

If to Lender:

 

General Electric Capital Corporation

c/o GE Capital Asset Management Corporation

363 North Sam Houston Parkway East, Suite 1200

Houston, Texas 77060

Attention: Robert H. Hayes

Telecopy: (281) 405-7132

 

 

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with a copy to:

 

General Electric Capital Corporation

13355 Noel Road, Suite 2000

One Galleria Tower, LB54

Dallas, Texas 75240

Attention: David R. Martindale

Telecopy: (972) 866-9656

 

Any communication so addressed and mailed shall be deemed to be given on the
earliest of (a) when actually delivered, (b) on the first Business Day after
deposit with an overnight air courier service, or (c) on the third Business Day
after deposit in the United States mail, postage prepaid, in each case to the
address of the intended addressee, and any communication so delivered in person
shall be deemed to be given when receipted for by, or actually received by
Lender or Borrower, as the case may be. If given by telecopy, a notice shall be
deemed given and received when the telecopy is transmitted to the party’s
telecopy number specified above confirmation of complete receipt is received by
the transmitting party during normal business hours or on the next Business Day
if not confirmed during normal business hours. Either party may designate a
change of address by written notice to the other by giving at least ten (10)
days prior written notice of such change of address.

 

Section 11.2 Amendments and Waivers. No amendment or waiver of any provision of
the Environmental Indemnity Agreement and the Loan Documents shall be effective
unless in writing and signed by the party against whom enforcement is sought.

 

Section 11.3 Limitation on Interest. It is the intention of the parties hereto
to conform strictly to applicable usury laws. Accordingly, all agreements
between Borrower and Lender with respect to the Loan are hereby expressly
limited so that in no event, whether by reason of acceleration of maturity or
otherwise, shall the amount paid or agreed to be paid to Lender or charged by
Lender for the use, forbearance or detention of the money to be lent hereunder
or otherwise, exceed the maximum amount allowed by law. If the Loan would be
usurious under applicable law (including the laws of the State of Georgia and
the laws of the United States of America), then, notwithstanding anything to the
contrary in the Loan Documents: (a) the aggregate of all consideration which
constitutes interest under applicable law that is contracted for, taken,
reserved, charged or received under the Loan Documents shall under no
circumstances exceed the maximum amount of interest allowed by applicable law,
and any excess shall be credited on the Note by the holder thereof (or, if the
Note and any other amount due under the Loan has been paid in full, refunded to
Borrower); and (b) if maturity is accelerated by reason of an election by
Lender, or in the event of any prepayment, then any consideration which
constitutes interest may never include more than the maximum amount allowed by
applicable law. In such case, excess interest, if any, provided for in the Loan
Documents or otherwise, to the extent permitted by applicable law, shall be
amortized, prorated, allocated and spread from the date of advance until payment
in full so that the actual rate of interest is uniform through the term hereof.
If such amortization, proration, allocation and spreading is not permitted under
applicable law, then such excess interest shall be canceled automatically as of
the date of such acceleration or prepayment and, if theretofore paid, shall be
credited on the Note (or, if the Note and any other amount due under the Loan
has been paid in full, refunded to Borrower). The terms and provisions of this
Section 11.3 shall control and

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supersede every other provision of the Loan Documents. The Loan Documents are
contracts made under and shall be construed in accordance with and governed by
the laws of the State of Georgia, except that if at any time the laws of the
United States of America permit Lender to contract for, take, reserve, charge or
receive a higher rate of interest than is allowed by the laws of the State of
Georgia (whether such federal laws directly so provide or refer to the law of
any state), then such federal laws shall to such extent govern as to the rate of
interest which Lender may contract for, take, reserve, charge or receive under
the Loan Documents.

 

Section 11.4 Invalid Provisions. If any provision of any Loan Document or the
Environmental Indemnity Agreement is held to be illegal, invalid or
unenforceable, such provision shall be fully severable; the Environmental
Indemnity Agreement and the Loan Documents shall be construed and enforced as if
such illegal, invalid or unenforceable provision had never comprised a part
thereof; the remaining provisions thereof shall remain in full effect and shall
not be affected by the illegal, invalid, or unenforceable provision or by its
severance therefrom; and in lieu of such illegal, invalid or unenforceable
provision there shall be added automatically as a part of such Environmental
Indemnity Agreement and such Loan Document a provision as similar in terms to
such illegal, invalid or unenforceable provision as may be possible to be legal,
valid and enforceable.

 

Section 11.5 Reimbursement of Expenses. Borrower shall pay all reasonable
expenses incurred by Lender in connection with the Loan, including fees and
expenses of Lender’s attorneys, environmental, engineering and other
consultants, and fees, charges or taxes for the recording or filing of Loan
Documents. Borrower shall pay all reasonable expenses of Lender in connection
with the administration of the Loan, including audit costs, inspection fees,
settlement of condemnation and casualty awards, and premiums for title insurance
and endorsements thereto. Borrower shall, upon request, promptly reimburse
Lender for all amounts expended, advanced or incurred by Lender to collect the
Note, or to enforce the rights of Lender under this Agreement, the Environmental
Indemnity Agreement, or any Loan Document, or to defend or assert the rights and
claims of Lender under the Environmental Indemnity Agreement or the Loan
Documents or with respect to the Project (by litigation or other proceedings),
which amounts will include all reasonable court costs, attorneys’ fees and
expenses, fees of auditors and accountants, and investigation expenses as may be
incurred by Lender in connection with any such matters (whether or not
litigation is instituted), together with interest at the Default Rate on each
such amount from the date of disbursement until the date of reimbursement to
Lender, all of which shall constitute part of the Loan and shall be secured by
the Loan Documents.

 

Section 11.6 Approvals; Third Parties; Conditions. All approval rights retained
or exercised by Lender with respect to leases, contracts, plans, studies and
other matters are solely to facilitate Lender’s credit underwriting, and shall
not be deemed or construed as a determination that Lender has passed on the
adequacy thereof for any other purpose and may not be relied upon by Borrower or
any other Person. This Agreement is for the sole and exclusive use of Lender and
Borrower and may not be enforced, nor relied upon, by any Person other than
Lender and Borrower. All conditions of the obligations of Lender hereunder,
including the obligation to make advances, are imposed solely and exclusively
for the benefit of Lender, its successors and assigns, and no other Person shall
have standing to require satisfaction of such conditions or be entitled to
assume that Lender will refuse to make advances in the absence of

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strict compliance with any or all of such conditions, and no other Person shall,
under any circumstances, be deemed to be a beneficiary of such conditions, any
and all of which may be freely waived in whole or in part by Lender at any time
in Lender’s sole discretion.

 

Section 11.7 Lender Not in Control; No Partnership. None of the covenants or
other provisions contained in this Agreement shall, or shall be deemed to, give
Lender the right or power to exercise control over the affairs or management of
Borrower, the power of Lender being limited to the rights to exercise the
remedies referred to in the Environmental Indemnity Agreement or the Loan
Documents. The relationship between Borrower and Lender is, and at all times
shall remain, solely that of debtor and creditor. No covenant or provision of
the Environmental Indemnity Agreement or the Loan Documents is intended, nor
shall it be deemed or construed, to create a partnership, joint venture, agency
or common interest in profits or income between Lender and Borrower or to create
an equity in the Project in Lender. Lender neither undertakes nor assumes any
responsibility or duty to Borrower or to any other Person with respect to the
Project or the Loan, except as expressly provided in the Environmental Indemnity
Agreement and the Loan Documents; and notwithstanding any other provision of the
Environmental Indemnity Agreement or the Loan Documents: (a) Lender is not, and
shall not be construed as, a partner, joint venturer, alter ego, manager,
controlling person or other business associate or participant of any kind of
Borrower or its stockholders, members, or partners and Lender does not intend to
ever assume such status; (b) Lender shall in no event be liable for any Debts,
expenses or losses incurred or sustained by Borrower; and (c) Lender shall not
be deemed responsible for or a participant in any acts, omissions or decisions
of Borrower or its stockholders, members, or partners. Lender and Borrower
disclaim any intention to create any partnership, joint venture, agency or
common interest in profits or income between Lender and Borrower, or to create
an equity in the Project in Lender, or any sharing of liabilities, losses, costs
or expenses.

 

Section 11.8 Time of the Essence. Time is of the essence with respect to this
Agreement.

 

Section 11.9 Successors and Assigns. This Agreement shall be binding upon and
inure to the benefit of Lender and Borrower and their respective successors and
assigns of Lender and Borrower, provided that neither Borrower nor any other
Borrower Party shall, without the prior written consent of Lender, assign any
rights, duties or obligations hereunder.

 

Section 11.10 Renewal, Extension or Rearrangement. All provisions of the
Environmental Indemnity Agreement and the Loan Documents shall apply with equal
effect to each and all promissory notes and amendments thereof hereinafter
executed which in whole or in part represent a renewal, extension, increase or
rearrangement of the Loan.

 

Section 11.11 Waivers. No course of dealing on the part of Lender, its officers,
employees, consultants or agents, nor any failure or delay by Lender with
respect to exercising any right, power or privilege of Lender under the
Environmental Indemnity Agreement and any of the Loan Documents, shall operate
as a waiver thereof.

--------------------------------------------------------------------------------

 

Section 11.12 Cumulative Rights; Joint and Several Liability. Rights and
remedies of Lender under the Environmental Indemnity Agreement and the Loan
Documents shall be cumulative, and the exercise or partial exercise of any such
right or remedy shall not preclude the exercise of any other right or remedy. If
more than one person or entity has executed this Agreement as “Borrower,” the
obligations of all such persons or entities hereunder shall be joint and
several.

 

Section 11.13 Singular and Plural. Words used in this Agreement, the other Loan
Documents, and the Environmental Indemnity Agreement in the singular, where the
context so permits, shall be deemed to include the plural and vice versa. The
definitions of words in the singular in this Agreement, the other Loan
Documents, and the Environmental Indemnity Agreement shall apply to such words
when used in the plural where the context so permits and vice versa.

 

Section 11.14 Phrases. When used in this Agreement, the other Loan Documents,
and the Environmental Indemnity Agreement, the phrase “including” shall mean
“including, but not limited to,” the phrase “satisfactory to Lender” shall mean
“in form and substance satisfactory to Lender in all respects,” the phrase “with
Lender’s consent” or “with Lender’s approval” shall mean such consent or
approval at Lender’s discretion, and the phrase “acceptable to Lender” shall
mean “acceptable to Lender at Lender’s sole discretion.”

 

Section 11.15 Exhibits and Schedules. The exhibits and schedules attached to
this Agreement are incorporated herein and shall be considered a part of this
Agreement for the purposes stated herein.

 

Section 11.16 Titles of Articles, Sections and Subsections. All titles or
headings to articles, sections, subsections or other divisions of this
Agreement, the other Loan Documents, and the Environmental Indemnity Agreement
or the exhibits hereto and thereto are only for the convenience of the parties
and shall not be construed to have any effect or meaning with respect to the
other content of such articles, sections, subsections or other divisions, such
other content being controlling as to the agreement between the parties hereto.

 

Section 11.17 Promotional Material. Borrower authorizes Lender to issue press
releases, advertisements and other promotional materials in connection with
Lender’s own promotional and marketing activities, including in connection with
a Secondary Market Transaction, and such materials may describe the Loan in
general terms or in detail and Lender’s participation therein in the Loan. All
references to Lender contained in any press release, advertisement or
promotional material issued by Borrower shall be approved in writing by Lender
in advance of issuance.

 

Section 11.18 Survival. Except as set forth in Section 12.1 hereof, all of the
representations, warranties, covenants, and indemnities hereunder (including
environmental matters under Article 4), under the indemnification provisions of
the other Loan Documents and under the Environmental Indemnity Agreement, shall
survive the repayment in full of the Loan and the release of the liens
evidencing or securing the Loan, and shall survive the transfer (by

--------------------------------------------------------------------------------

 

sale, foreclosure, conveyance in lieu of foreclosure or otherwise) of any or all
right, title and interest in and to the Project to any party, whether or not an
Affiliate of Borrower.

 

Section 11.19 Waiver of Jury Trial. To the maximum extent permitted by law,
Borrower and Lender hereby knowingly, voluntarily and intentionally waive the
right to a trial by jury in respect of any litigation based hereon, arising out
of, under or in connection with this Agreement, any other Loan Document, or the
Environmental Indemnity Agreement, or any course of conduct, course of dealing,
statement (whether verbal or written) or action of either party or any exercise
by any party of their respective rights under the Loan Documents and the
Environmental Indemnity Agreement or in any way relating to the Loan or the
Project (including, without limitation, any action to rescind or cancel this
Agreement, and any claim or defense asserting that this Agreement was
fraudulently induced or is otherwise void or voidable). This waiver is a
material inducement for Lender to enter this Agreement.

 

Section 11.20 Waiver of Punitive or Consequential Damages. Neither Lender nor
Borrower shall be responsible or liable to the other or to any other Person for
any punitive, exemplary or consequential damages which may be alleged as a
result of the Loan or the transaction contemplated hereby, including any breach
or other default by any party hereto.

 

Section 11.21 Governing Law. The Loan Documents and the Environmental Indemnity
Agreement shall be governed by and construed in accordance with the laws of the
State of Georgia and the applicable laws of the United States of America.

 

Section 11.22 Entire Agreement. This Agreement, the other Loan Documents and the
Environmental Indemnity Agreement embody the entire agreement and understanding
between Lender and Borrower and supersede all prior agreements and
understandings between such parties relating to the subject matter hereof and
thereof. Accordingly, the Loan Documents and the Environmental Indemnity
Agreement 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. If any conflict or inconsistency exists between
the Commitment and this Agreement, any of the other Loan Documents, or the
Environmental Indemnity Agreement, the terms of this Agreement, the other Loan
Documents, and the Environmental Indemnity Agreement shall control.

 

Section 11.23 Counterparts. This Agreement may be executed in multiple
counterparts, each of which shall constitute an original, but all of which shall
constitute one document.

 

ARTICLE 12

 

LIMITATIONS ON LIABILITY

 

Section 12.1 Limitation on Liability. Except as provided below, Borrower shall
not be personally liable for amounts due under the Loan Documents, or for any
deficiency judgment Lender may obtain related thereto or in connection with any
other actions Lender may take relative to the Loan. Borrower shall be personally
liable to Lender for any deficiency, loss or

--------------------------------------------------------------------------------

 

damage suffered by Lender because of: (a) Borrower’s commission of a criminal
act, as determined by a court having jurisdiction over Borrower, (b) the failure
to comply with provisions of the Loan Documents prohibiting the sale, transfer
or encumbrance of the Project, any other collateral, or any direct or indirect
ownership interest in Borrower; (c) the misapplication by Borrower or any
Borrower Party of any funds derived from the Project, including security
deposits, insurance proceeds and condemnation awards; (d) the fraud or
misrepresentation by Borrower or any Borrower Party made in or in connection
with the Loan Documents or the Loan; (e) Borrower’s collection of rents more
than one month in advance or entering into or modifying leases, or receipt of
monies by Borrower or any Borrower Party in connection with the modification of
any leases, in violation of this Agreement or any of the other Loan Documents;
(f) Borrower’s failure to apply proceeds of rents or any other payments in
respect of the leases and other income of the Project or any other collateral to
the costs of maintenance and operation of the Project and to the payment of
taxes, lien claims, insurance premiums, Debt Service and other amounts due under
the Loan Documents; (g) Borrower’s willful interference with Lender’s exercise
of rights under the Assignment of Leases and Rents; (h) Borrower’s failure to
maintain insurance as required by this Agreement; (i) damage or destruction to
the Project caused by the willful or negligent acts or omissions of Borrower,
its agents, employees, or contractors; (j) Borrower’s obligations with respect
to environmental matters under Article 4; (k) Borrower’s failure to pay for any
loss, liability or expense (including attorneys’ fees) incurred by Lender
arising out of any claim or allegation made by Borrower, or its successors or
assigns that this Agreement or the transactions contemplated by the Loan
Documents and the Environmental Indemnity Agreement establishes a joint venture,
partnership or other similar arrangement between Borrower and Lender; or (l) any
brokerage commission or finder’s fees claimed through Borrower, any Borrower
Party, or any agent or employee of Borrower or any Borrower Party in connection
with the transactions contemplated by the Loan Documents. None of the foregoing
limitations on the personal liability of Borrower shall modify, diminish or
discharge the personal liability of any Guarantor. Nothing herein shall be
deemed to be a waiver of any right which Lender may have under Sections 506(a),
506(b), 1111(b) or any other provision of the United States Bankruptcy Code, to
file a claim for the full amount due to Lender under the Loan Documents or to
require that all collateral shall continue to secure the amounts due under the
Loan Documents. Notwithstanding anything contained in this Agreement, any Loan
Document or the Environmental Indemnity Agreement to the contrary, upon payment
in full of the Loan and all amounts secured by the Loan Documents, or upon the
sale of the Project approved by Lender in accordance with the terms of the
Mortgage and the assumption of all of Borrower’s obligations thereunder by such
transferee and replacement indemnitors approved by Lender, and Lender’s
determination that no accrued, actual, pending or threatened actions or claims
then exist against Lender, Borrower or the Project, Borrower and each Borrower
Party shall be released from liability under Section 12.1(j) in the event that
Borrower delivers to Lender a Phase I Site Assessment prior to the Maturity Date
evidencing the presence of no Hazardous Materials on the Project (except for
cleaning and other products used in connection with routine maintenance or
repair of the Project and retail sale and/or use of such materials by tenants of
the Project in the ordinary course of their business, each in full compliance
with Environmental Laws) and no violations of any Environmental Laws with
respect to the Project.

--------------------------------------------------------------------------------

 

Section 12.2 Limitation on Liability of Lender’s Officers, Employees, etc. Any
obligation or liability whatsoever of Lender which may arise at any time under
this Agreement, any other Loan Document, or the Environmental Indemnity
Agreement shall be satisfied, if at all, out of the Lender’s assets only. No
such obligation or liability shall be personally binding upon, nor shall resort
for the enforcement thereof be had to, the property of any of Lender’s
shareholders, directors, officers, employees or agents, regardless of whether
such obligation or liability is in the nature of contract, tort or otherwise.

 

[Signature Page Follows]

--------------------------------------------------------------------------------

 

EXECUTED under seal as of the date first written above.

 

LENDER:

     

GENERAL ELECTRIC CAPITAL CORPORATION,

a New York corporation

           

By:

 

--------------------------------------------------------------------------------

           

Name:

 

 

--------------------------------------------------------------------------------

           

Title:

 

 

--------------------------------------------------------------------------------

BORROWER:

     

BSRT/M&J NORTHLAKE LIMITED PARTNERSHIP,

an Illinois limited partnership

       

By:

 

BSRT NORTHLAKE FESTIVAL CORP.,

an Illinois corporation, Its General Partner

           

By:

 

/S/    NEIL D. HANSEN

--------------------------------------------------------------------------------

           

Name:

 

Neil D. Hansen

           

Title:

 

Vice President

       

(SEAL)

       

By:

 

NORTHLAKE TOWER CORPORATION,

an Illinois corporation, Its General Partner

           

By:

 

/S/    MARC R. WILKOW

--------------------------------------------------------------------------------

           

Name:

 

Marc R. Wilkow

           

Title:

 

President

       

(SEAL)

 

--------------------------------------------------------------------------------

 

EXHIBIT A

 

[LEGAL DESCRIPTION OF PROJECT]

--------------------------------------------------------------------------------

 

SCHEDULE I

 

YIELD MAINTENANCE AMOUNT

 

As used herein, “Yield Maintenance Amount” means the sum of the present value on
the date of prepayment of each Monthly Interest Shortfall (as hereinafter
defined) for the remaining term of the Loan discounted at the Discount Rate.

 

The Monthly Interest Shortfall is calculated for each monthly payment date and
is the product of (A) the prepaid principal balance of the Loan divided by 12,
and (B) the positive result, if any, from (1) the yield derived from compounding
semi-annually the Loan’s Contract Rate minus (2) the Replacement Treasury Rate
(as hereinafter defined).

 

The Discount Rate is the monthly compounded Replacement Treasury Rate.

 

The Replacement Treasury Rate is the yield calculated by linear interpolation
(rounded to one-thousandths of one percent (i.e., .001%) of the yields, as
reported in Federal Reserve Statistical Release H.15-Selected Interest Rates
under the heading U.S. Government Securities/Treasury Constant Maturities for
the week ending prior to the prepayment date, of U.S. Treasury constant
maturities with terms (one longer and one shorter) most nearly approximately the
remaining Weighted Average Life of the loan as of the prepayment date. In the
event Release H.15 is no longer published, Lender shall select a comparable
publication to determine the Replacement Treasury Rate.

 

The Weighted Average Life of the Loan is determined as of the prepayment date by
(i) multiplying the amount of each monthly principal payment that would have
been paid had the prepayment not occurred by the number of months from the
prepayment date to each payment date, (ii) adding the results, and (iii)
dividing the sum by the balance remaining on the Loan on the prepayment date
multiplied by 12.

--------------------------------------------------------------------------------

 

SCHEDULE II

 

REQUIRED REPAIRS

 

All as set forth in that certain Property Condition Report dated August 6, 1997,
prepared by Eckland Consultants.

--------------------------------------------------------------------------------

 

PROMISSORY NOTE

 

$17,600,000.00

 

November 12, 1997

 

For value received, BSRT/M&J NORTHLAKE LIMITED PARTNERSHIP, an Illinois limited
partnership (“Borrower”), promises and agrees to pay to the order of GENERAL
ELECTRIC CAPITAL CORPORATION, a New York corporation (“Lender”), in lawful money
of the United States of America, the principal sum of SEVENTEEN MILLION SIX
HUNDRED THOUSAND AND NO/100 DOLLARS ($17,600,000.00) or so much thereof as may
be outstanding under the Loan Agreement of even date herewith between Borrower
and Lender (the “Loan Agreement”), with interest on the unpaid principal sum
owing thereunder at the rate or rates or in the amounts computed in accordance
with the Loan Agreement, together with all other amounts due Lender under the
Loan Agreement, all payable in the manner and at the time or times provided in
the Loan Agreement. Capitalized terms used herein, but not defined, shall have
the meanings assigned to them in the Loan Agreement.

 

If not sooner due and payable in accordance with the Loan Agreement, Borrower
shall pay to Lender all amounts due and unpaid under the Loan Agreement on
December 1, 2027, or on any earlier Maturity Date as set forth in the Loan
Agreement. Unless otherwise specified in writing by Lender, all payments
hereunder shall be paid to Lender at c/o GE Capital Asset Management
Corporation, P. O. Box 420250, Houston, Texas 77042. Lender reserves the right
to require any payment on this Note, whether such payment is a regular
installment, prepayment or final payment, to be by wired federal funds or other
immediately available funds.

 

Borrower, co-makers, sureties, endorsers and guarantors, and each of them,
expressly waive demand and presentment for payment, notice of nonpayment,
protest, notice of protest, notice of dishonor, notice of intent to accelerate
the maturity hereof, notice of the acceleration of the maturity hereof, bringing
of suit and diligence in taking any action to collect amounts called for
hereunder and in the handling of securities at any time existing in connection
herewith; such parties are and shall be jointly, severally, directly and
primarily liable for the payment of all sums owing and to be owing hereon,
regardless of and without any notice, diligence, act or omission as or with
respect to the collection of any amount called for hereunder or in connection
with any right, lien, interest or property at any and all times had or existing
as security for any amount called for hereunder.

 

This Note evidences all advances made, interest due and all amounts otherwise
owed to Lender under the Loan Agreement. This Note is executed in conjunction
with the Loan Agreement and is secured by the liens and security interests
created under the Loan Documents (including those arising under the Mortgage).
Reference is made to the Loan Agreement for provisions relating to repayment of
the indebtedness evidenced by this Note, including mandatory repayment,
acceleration following default, late charges, default rate of interest,
limitations on interest, and restrictions on prepayment.

--------------------------------------------------------------------------------

 

Borrower’s liability hereunder is subject to the limitation on liability
provisions of Article 12 of the Loan Agreement. This Note has been executed and
delivered in and shall be construed in accordance with and governed by the laws
of the State of Georgia and of the United States of America.

--------------------------------------------------------------------------------

 

EXECUTED under seal as of the date first written above.

 

BSRT/M&J NORTHLAKE LIMITED PARTNERSHIP,

an Illinois limited partnership

By:

 

BSRT NORTHLAKE FESTIVAL CORP.

an Illinois corporation, Its General Partner

By:

 

/s/    NEIL D. HANSEN

--------------------------------------------------------------------------------

Name:

 

Neil D. Hansen

Title:

 

Vice President

(SEAL)

   

By:

 

NORTHLAKE TOWER CORPORATION,

an Illinois corporation, Its General Partner

By:

 

/s/    MARC R. WILKOW

--------------------------------------------------------------------------------

Name:

 

Marc. R. Wilkow

Title:

 

President    

(SEAL)

   

--------------------------------------------------------------------------------

 

This instrument prepared by

and when recorded, return to:

Kilpatrick Stockton LLP

1100 Peachtree Street

Suite 2800

Atlanta, Georgia 30309

Attn: Rex Veal, Esq.

 

RE: Deed Book 9699, Page 527 and Page 544 of the Dekalb County Public Records

 

ASSUMPTION AND RELEASE AGREEMENT

 

THIS ASSUMPTION AND RELEASE AGREEMENT (“Agreement”) is made effective as of the
15th day of October, 2002 by and among BSRT NORTHLAKE LIMITED PARTNERSHIP, an
Illinois limited partnership (f/k/a BSRT/M&J Northlake Limited Partnership, an
Illinois limited partnership) (“Original Borrower”), NORTHLAKE FESTIVAL, LLC, a
Delaware limited liability company (“Assumptor”), and STATE STREET BANK AND
TRUST COMPANY, as Trustee under that certain Pooling and Servicing Agreement
(“PSA”) dated as of December 1, 1997 for Certificateholders of Merrill Lynch
Mortgage Investors, Inc. Commercial Mortgage Pass-Through Certificates, Series
1997-C2 (“Noteholder”).

 

RECITALS:

 

Original Borrower executed and delivered to the order of GENERAL ELECTRIC
CAPITAL CORPORATION, a New York corporation (“Lender”) a certain Promissory Note
dated November 12, 1997 (together with all addenda, modifications, amendments,
riders, exhibits and supplements thereto, the “Note”), in the stated principal
amount of $17,600,000.00 which Note evidences a loan (“Loan”) made by Lender to
Original Borrower. To secure the repayment of the Note, the Original Borrower,
among other things, executed and delivered a Leasehold Deed to Secure Debt and
Security Agreement dated November 12, 1997 (together with all addenda,
modifications, amendments, riders, exhibits and supplements thereto, the
“Security Instrument”), recorded in the Clerk of Superior Court of Dekalb
County, Georgia on November 13, 1997, in Deed Book 9699 at Page 527, that grants
a lien on certain property described on Exhibit A attached hereto and
incorporated herein by this reference and more particularly described in the
Security Instrument (the “Premises”). The Original Borrower is liable for the
payment and performance of all of the Original Borrower’s obligations under the
Note, the Security Instrument, that certain Loan Agreement of even date with the
Note (together

--------------------------------------------------------------------------------

with all addenda, modifications, amendments, riders, exhibits and supplements,
thereto, the “Loan Agreement”) and all other documents evidencing, securing,
guaranteeing or otherwise pertaining to the Loan (together with all addenda,
modifications, amendments, riders, exhibits and supplements thereto, the “Loan
Documents”), including, without limitation, those documents listed on Exhibit B
attached to this Agreement and incorporated herein by this reference as though
fully set forth herein. The term Loan Documents for the purposes of this
Agreement shall also be deemed to include the Hazardous Materials Indemnity
Agreement (hereinafter defined).

 

A. Each of the Loan Documents has been duly assigned or endorsed to Noteholder.

 

Noteholder as the holder of the Note and beneficiary under the Security
Instrument has been asked to consent to the transfer of the Premises to the
Assumptor (the “Transfer”) and the assumption by the Assumptor of the
obligations of the Original Borrower under the Loan Documents (the
“Assumption”).

 

B. Noteholder has agreed to consent to the Transfer and Assumption subject to
the terms and conditions stated below.

 

C. Section 3.08 of the PSA authorizes GEMSA Loan Services, Inc. (“Master
Servicer”), on behalf of the Noteholder, under certain terms and conditions to
waive the due on sale clause and facilitate the Transfer and Assumption, and the
Master Servicer has elected to do so on the terms and conditions set forth in
this Agreement. Master Servicer’s execution and delivery of this Agreement is
binding upon the Noteholder pursuant to the PSA.

 

AGREEMENT:

 

In consideration of the foregoing and the mutual covenants and promises set
forth in this Agreement and other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, Noteholder, Original Borrower,
and Assumptor agree as follows:

 

1. Incorporation of Recitals. The foregoing recitals are incorporated herein as
a substantive, contractual part of this Agreement.

 

2. Assumption of Obligation. The Assumptor agrees to and does hereby assume all
of the payment and performance obligations of the Original Borrower set forth in
the Note, the Security Instrument and the Loan Documents in accordance with
their respective terms and conditions, as the same may be modified by this
Agreement, including without limitation, payment of all sums due and payable
under the Note. The Assumptor further agrees to abide by and be bound by all of
the terms of the Loan Documents, all as though each of the Loan Documents had
been made, executed and delivered by the Assumptor. The provisions of the Loan
Documents are incorporated herein by this reference, as if fully set forth
herein. The Assumptor acknowledges and agrees that any reference to the Borrower
in the Loan Documents shall be deemed to refer to the Assumptor. The Assumptor
hereby adopts, ratifies and confirms as of the date hereof all of the
representations, warranties and covenants of Original Borrower contained in the
Loan Documents, in connection with the Loan, as if the Assumptor was the

 

2

--------------------------------------------------------------------------------

Original Borrower named in the Loan Documents. In addition to the foregoing,
Assumptor has executed and delivered to Noteholder that certain Hazardous
Materials Indemnity Agreement dated of even date herewith (the “New Hazardous
Materials Indemnity”).

 

3. Original Borrower’s Acknowledgments, Representations and Warranties. The
Original Borrower acknowledges, represents and warrants to Noteholder and
Assumptor as of the date of this Agreement that:

 

(a) The Note has an unpaid principal balance as of the date of this Agreement,
of $16,712,366.03 and prior to default bears interest at the rate of 7.64% per
annum, subject to adjustment as set forth in the Loan Agreement. There is
presently a balance of $186,754.77 in the tax escrow account, a balance of $0.00
in the insurance escrow account and a balance of $279,122.17 in the replacement
reserves escrow account, maintained by Noteholder in connection with the Loan.
Contemporaneously herewith, Original Borrower has transferred and assigned to
Assumptor all right, title and interest of Assumptor in and to such tax,
insurance and reserve escrow accounts.

 

(b) The Note requires that monthly payments of principal and interest in the
amount of $124,753.36 be made on or before the first day of each month,
continuing to the first day of the thirteenth Loan Year (as defined in the Loan
Agreement), the Accelerated Payment Date, when payments shall be made in
accordance with Section 2.5 of the Loan Agreement, provided that all sums due
under the Loan Documents will be immediately due and payable in full on December
1, 2027, if not sooner accelerated or paid.

 

(c) The Security Instrument is a valid first lien on the Premises for the full
unpaid principal amount of the Loan and all other amounts as stated in the Loan
Documents.

 

(d) There are no defenses, offsets or counterclaims to the Note, the Security
Instrument or the other Loan Documents.

 

(e) There are no defaults by the Original Borrower under the provisions of the
Note, the Security Instrument or the other Loan Documents, nor are there any
conditions which with the giving of notice or the passage of time or both may
constitute a default by the Original Borrower under the provisions of the Note,
the Security Instrument or the other Loan Documents.

 

(f) All provisions of the Note, the Security Instrument and the other Loan
Documents are valid, in full force and effect and enforceable in accordance with
their terms, subject to the effect of bankruptcy and creditors’ rights statutes.

 

(g) There are no subordinate liens of any kind covering or relating to the
Premises, nor are there any mechanics liens or liens for unpaid taxes or
assessments encumbering the Premises, nor has notice of a lien or notice of
intent to file a lien been received.

 

3

--------------------------------------------------------------------------------

 

The Original Borrower understands and intends that Noteholder and Assumptor will
rely upon the acknowledgments, representations and warranties contained herein.

 

4. Assumptor’s Representations and Warranties. The Assumptor represents and
warrants to Noteholder as of the date of this Agreement that the Assumptor has
no knowledge that any of the representations made by the Original Borrower in
paragraph 3 above are not true and correct. The Assumptor understands and
intends that Noteholder will rely on the representations and warranties
contained herein.

 

5. Consent to Transfer and Assumption. Noteholder hereby consents to the
Transfer and to the Assumption, subject to the terms and conditions set forth in
this Agreement. Noteholder’s consent to the Transfer of the Premises to the
Assumptor and Noteholder’s consent to the Assumption, are not intended to be and
shall not be construed as a consent to any subsequent transfer or assumption
which requires the Noteholder’s consent pursuant to the terms of the Loan
Documents.

 

6. Assumption of Liability for the Exceptions to Non-Recourse. Assumptor hereby
adopts, ratifies and confirms as of the date hereof all of the representations,
warranties and covenants of the Original Borrower under the Loan Documents as if
the Assumptor was the Original Borrower named therein and assumes all liability
of the Original Borrower under the Loan Documents, including without limitation,
the provisions of Section 12.1 of the Loan Agreement, and the Hazardous
Materials Indemnity Agreement dated November 12, 1997 made by the Original
Borrower for the benefit of the Lender.

 

7. Release of Original Borrower. In reliance on the Original Borrower’s and the
Assumptor’s acknowledgments, representations and warranties in this Agreement
and in consideration for releases contained in Paragraph 12 of this Agreement,
Noteholder releases the Original Borrower from its obligations under the Loan
Documents, provided that the Original Borrower is not released from any
liability pursuant to this Agreement, the provisions of the Hazardous Materials
Indemnity from Original Borrower for the Lender’s benefit, or Article 4 of the
Loan Agreement, for any liability that relates to the period prior to the date
hereof regardless of when any environmental hazard or other condition giving
rise to any such liability thereunder is discovered. If any material element of
the representations and warranties contained herein as the same relate to the
Original Borrower is false as of the date of this Agreement or in the event the
Original Borrower takes or causes any other party hereto (other than Noteholder)
to take any actions which are in contradiction with the provisions of Paragraph
12 of this Agreement, then the release set forth in this Paragraph 7 shall be
deemed canceled effective as of the date of this Agreement and the Original
Borrower shall remain obligated under the Loan Documents as though there had
been no such release. In the event this release is deemed to be ineffective,
then the release of Lender by Original Borrower pursuant to paragraph 12 shall
likewise be ineffective.

 

8. No Impairment of Lien. Nothing set forth herein shall affect the priority or
extent of the lien of the Security Instrument or any of the other Loan
Documents, nor, except as expressly set forth herein, release or change the
liability of any party who may now be or after the date of this Agreement may
become liable, primarily or secondarily, under the Loan Documents.

 

4

--------------------------------------------------------------------------------

Except as expressly modified hereby, the Note, the Security Instrument, the Loan
Agreement and the other Loan Documents remain unchanged, are hereby ratified and
reaffirmed in all respects and shall remain in full force and effect and this
Agreement shall have no effect on the priority or validity of the liens,
operation and effect of the Security Instrument and the other Loan Documents,
all of which are incorporated herein by this reference. Nothing herein shall be
construed to constitute a novation of the Loan or of any of the Loan Documents.

 

9. Costs. The Original Borrower agrees to pay or cause to be paid by Assumptor
all fees and costs (including reasonable attorneys’ fees) incurred by Noteholder
in connection with Noteholder’s consent to and approval of the Transfer of the
Premises. The Assumptor agrees to pay the assumption fee equal to 1% of the
outstanding principal balance of the Loan or $167,123.66, which is required to
be paid to the Noteholder in consideration of the consent to the Transfer and to
the Assumption.

 

10. Financial Information. The Assumptor represents and warrants to Noteholder
that all financial information and information regarding the management
capability of the Assumptor provided to Noteholder was true and correct as of
the date provided to Noteholder and remains materially true and correct as of
the date of this Agreement.

 

11. Addresses. Assumptor’s address for notice hereunder and under the Loan
Documents is:

 

Northlake Festival, LLC

c/o West Coast Realty Investors, Inc.

3000 Sand Hill Road

Building Three, Suite 140

Menlo Park, CA 94025

 

12. Complete Release. Assumptor and Original Borrower hereby jointly and
severally, unconditionally and irrevocably release and forever discharge Lender,
Noteholder and Master Servicer, and their respective successors, assigns,
agents, directors, officers, employees, and attorneys, and each current or
substitute trustee, if any, under the Security Instrument (collectively, the
“Indemnitees”) from all Claims, as defined below. Original Borrower agrees to
indemnify Indemnitees, and defend and hold them harmless from any and all
claims, losses, causes of action, costs and expenses of every kind or character
incurred by or asserted against Indemnitees in connection with the Claims, the
Transfer or the breach by Original Borrower of the Loan Documents, as amended
herein, but only to the extent that such claims, losses, causes of action, costs
and expenses arise out of or are in any way connected with or result from the
acts, actions or omissions of Original Borrower. Assumptor agrees to indemnify
Indemnitees, and defend and hold them harmless from any and all claims, losses,
causes of action, costs and expenses of every kind or character incurred by or
asserted against Indemnitees in connection with the Claims, the Transfer or the
breach by Assumptor of the Loan Documents, as amended herein, but only to the
extent that such claims, losses, causes of action, costs and expenses arise out
of or are in any way connected with or result from the acts, actions or
omissions of Assumptor.

 

5

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As used in this Agreement, the term “Claims” shall mean any and all possible
claims, demands, actions, fees, costs, expenses and liabilities whatsoever,
known or unknown, at law or in equity, originating in whole or in part, on or
before the date of this Agreement, which the Original Borrower, or any
respective partners, limited partners, members, officers, directors,
shareholders, agents or employees, may now or hereafter have against the
Indemnitees, and irrespective of whether any such Claims arise out of contract,
tort, violation of laws, or regulations, or otherwise, arising out of or
relating to the Loan or any of the Loan Documents, including, without
limitation, any contracting for, charging, taking, reserving, collecting or
receiving interest in excess of the highest lawful rate applicable thereto and
any loss, cost or damage, of any kind or character, arising out of or in any way
connected with or in any way resulting from the acts, actions or omissions of
Indemnitees, including any requirement that the Loan Documents be modified as a
condition to the transactions contemplated by this Agreement, any charging,
collecting or contracting for prepayment premiums, transfer fees, or assumption
fees, any breach of fiduciary commitment, undue influence, duress, economic
coercion, violation of any federal or state securities or Blue Sky laws or
regulations, conflict of interest, bad faith, malpractice, violations of the
Racketeer Influenced and Corrupt Organizations Act, intentional or negligent
infliction of mental or emotional distress, tortious interference with
contractual relations, tortious interference with corporate governance or
prospective business advance, breach of contract, deceptive trade practices,
libel, slander, conspiracy or any claim for wrongfully accelerating the Note or
wrongfully attempting to foreclose on any collateral relating to the Note but in
each case only to the extent permitted by applicable law. Original Borrower and
Assumptor agree that Noteholder has no fiduciary or similar obligations to any
of such parties and that their relationship is strictly that of creditor and
debtor. This release is accepted by Noteholder pursuant to this Agreement and
shall not be construed as an admission of liability on the part of any party
hereto. Original Borrower and Assumptor hereby represent and warrant that they
are the current legal and beneficial owners of all Claims, if any, released
hereby and have not assigned, pledged or contracted to assign or pledge any such
Claims to any other person.

 

13. Usury. It is expressly stipulated and agreed to be the intent of all of the
parties hereto at all times to comply with the applicable law governing the
maximum rate or amount of interest payable on or in connection with the Note and
the Loan (or applicable United States federal law to the extent that it permits
Noteholder to contract for, charge, take, reserve or receive a greater amount of
interest payable on or in connection with the Note and the Loan than under
applicable law). If the applicable law is ever judicially interpreted so as to
render usurious any amount called for under the Note or under the Security
Instrument, this Agreement or any other Loan Document, or contracted for,
charged, taken, reserved or received with respect to the Loan, or if Original
Borrower or Assumptor having paid any interest in excess of that permitted by
law, then it is the express intent of all of the parties that all excess amounts
theretofore collected by Noteholder or Lender be credited to the then
outstanding principal balance of the Note (or, if the Note has been or would
thereby be paid in full, any surplus refunded to Original Borrower or
Assumptor), and the provisions of the Note, this Agreement, the Security
Instrument and the other Loan Documents immediately be deemed reformed and the
amounts thereafter collectible hereunder and thereunder reduced, without the
necessity of the execution of any new documents, so as to comply with such
applicable law, but so as to permit the recovery of the fullest amount otherwise
called for hereunder and thereunder. The right to accelerate the maturity of the
Note does not include the right to accelerate any interest which has not
otherwise accrued on the date

 

6

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of such acceleration, and Noteholder does not intend to collect any unearned
interest in the event of acceleration. All sums paid or agreed to be paid to
Lender or Noteholder for the use, forbearance or detention of the indebtedness
evidenced by the Note or other Loan Documents shall, to the extent permitted by
applicable law, be amortized, prorated, allocated and spread through the full
term of such indebtedness until payment in full so that the rate or amount of
interest on account of such indebtedness does not exceed the applicable usury
ceiling. Notwithstanding any provision contained in the Note, the Security
Instrument, this Agreement or in any of the other Loan Documents, as amended
herein, that permits the compounding of interest, including, without limitation,
any provision by which any of the accrued interest is added to the principal
amount of the Note, the total amount of interest that Original Borrower or
Assumptor is obligated to pay and Noteholder is entitled to receive with respect
to the Loan shall not exceed the amount calculated on a simple (i.e.,
non-compounded) interest basis at the maximum rate allowed by applicable law on
principal amounts actually advanced to or for the account of Original Borrower
or Assumptor, including all current and prior advances and any advances made
pursuant to the Security Instrument, this Agreement or the other Loan Documents,
as amended herein (including, but not limited to, the payment of taxes,
insurance premiums and the like). The provisions of the Note and the other Loan
Documents limiting the amount of interest which may be contracted for, charged
or received on the indebtedness evidenced thereby and dealing with the rights
and duties of the parties with respect to the charging or receiving of interest
in excess of the maximum rate, are hereby incorporated in this Agreement by
reference as though fully set forth herein. To the extent permitted by law, the
Original Borrower and the Assumptor hereby waive and release all claims and
defenses based upon usury in connection with the execution and delivery of the
Note and the other Loan Documents and the borrowing of the funds represented by
the Loan.

 

14. Modification of Security Instrument. Section 3.9 of the Security Instrument
is hereby amended as follows:

 

(i) Subparagraph 3.9(a)(iii) is hereby deleted in its entirety; and

 

(ii) Section 3.9(b) is hereby deleted in its entirety and the following is
substituted in lieu thereof: “As used in this Section 3.9, “transfer” shall
include (i) an installment sales agreement wherein Grantor agrees to sell the
Secured Property or any part thereof for a price to be paid in installments;
(ii) an agreement by Grantor leasing all or a substantial part of the Secured
Property for other than actual occupancy by a space tenant thereunder or a sale,
assignment or other transfer of, or the grant of a security interest in,
Grantor’s right, title and interest in and to any Leases or any Rents; (iii) the
sale, transfer, conveyance, mortgage, pledge, or assignment of the legal or
beneficial ownership of any general partnership interest in Grantor to the
extent Grantor is a partnership or of any membership interest to the extent
Grantor is a limited liability company; and (iv) the sale, transfer, conveyance,
mortgage, pledge or assignment of the legal or beneficial ownership of any
voting stock in any general partner in Grantor to the extent Grantor is a
partnership or in any managing member or sole member, to the extent Grantor is a
limited liability company; provided, however, that with respect to subparagraph
(iv), “transfer” shall not include the sale, transfer or issuance of stock in
West Coast Realty Investors, Inc. provided such stock is listed on the New York
Stock Exchange, NASDAQ, National or SmallCap Markets, or such other nationally
recognized stock exchange and provided that no such transfer, sale, or

 

7

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issuance of stock results in a merger, reorganization or change in “control” of
West Coast Realty Investors, Inc. For purposes of this Section 3.9, the term
“control” means the power to direct the management and policies of West Coast
Realty Investors, Inc., directly or indirectly, whether through the ownership of
voting securities or other beneficial interests, by contract or otherwise.
Notwithstanding anything to the contrary contained in Section 8.6 of the Loan
Agreement or the limitations on the sale, transfer or conveyance of shares in
voting stock of the managing member of Borrower contained in item (iv) above,
Lender’s consent shall not be unreasonably withheld with respect to the one-time
subsequent change of the Borrower’s managing member into a privately held
corporation or the Borrower’s managing member not remaining a real estate
investment trust (but still remaining a corporation), provided the following
conditions are satisfied: (i) Allen K. Meredith shall remain the Chief Executive
Officer of Borrower’s managing member with operational control of the managing
member; (ii) Borrower’s managing member shall have a net worth equal to or
greater than that of the Borrower’s managing member after such reorganization,
as reasonably determined by Lender; (iii) after such reorganization, the
operational capabilities and management expertise of the Borrower’s managing
member shall be equivalent to that which existed prior to such reorganization,
as reasonably determined by Lender; (iv) Borrower shall deliver to Lender an
updated nonconsolidation opinion in form and substance satisfactory to Lender
and its counsel; (vi) each Rating Agency (as defined in the Loan Agreement)
shall have determined that such reorganization will not result in a reduction or
withdrawal of the then current rating of any securities issued in connection
with any securitization of the Loan; (vii) the Borrower shall pay Lender’s
assumption/transfer fee equal to 1% of the outstanding principal balance of the
Loan at the time such reorganization occurs, together with all costs and
expenses incurred by Lender in connection with Lender’s review of such
reorganization and Lender’s obtaining approvals for such reorganization,
including, but not limited to, reasonable attorneys’ fees and costs and Rating
Agency fees; (viii) Borrower shall execute and deliver such documentation as
Lender may require in connection with such reorganization, including, but not
limited to, assumption agreements and Borrower’s certificates; and (ix) Borrower
shall deliver to Lender all documentation evidencing such reorganization and
such other documentation as Lender may reasonably require, including, but not
limited to, amendments to the organizational documents of Borrower’s managing
member, projected operating statements, pro forma financial statements, and
amended tax filings. Once Borrower has been granted an approval by Lender under
the immediately preceding sentence, Borrower shall have no rights to request any
further consents under the immediately preceding sentence and Section 8.6 shall
apply as set forth in the Loan Agreement. Borrower acknowledges and agrees that
nothing contained herein shall constitute a waiver by Lender of the right to
collect any transfer or assumption fees that may be due in connection with the
foregoing.

 

15. Miscellaneous.

 

(a) This Agreement shall be construed according to and governed by the laws of
the jurisdiction(s) which are specified by the Security Instrument. In the event
the Security Instrument does not specifically state what jurisdictions laws
govern, this Agreement shall be construed according to and governed by the laws
in which the Premises is located without regard to its conflicts of law
principles.

 

8

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(b) If any provision of this Agreement is adjudicated to be invalid, illegal or
unenforceable, in whole or in part, it will be deemed omitted to that extent and
all other provisions of this Agreement will remain in full force and effect.

 

(c) No change or modification of this Agreement shall be valid unless the same
is in writing and signed by all parties hereto.

 

(d) The captions contained in this Agreement are for convenience of reference
only and in no event define, describe or limit the scope or intent of this
Agreement or any of the provisions or terms hereof.

 

(e) This Agreement shall be binding upon and inure to the benefit of the parties
and their respective heirs, legal representatives, successors and permitted
assigns.

 

(f) This Agreement may be executed in any number of counterparts with the same
effect as if all parties hereto had signed the same document. All such
counterparts shall be construed together and shall constitute one instrument,
but in making proof hereof it shall only be necessary to produce one such
counterpart.

 

(g) THIS WRITTEN AGREEMENT AND THE OTHER LOAN DOCUMENTS, AS AMENDED, 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.

 

(h) THIS AGREEMENT CONTAINS INDEMNIFICATION PROVISIONS AS SET FORTH IN SECTION
12 HEREOF.

 

[SIGNATURES APPEAR ON THE FOLLOWING PAGE]

 

 

9

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IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written, with the intent that this shall be deemed an instrument
under seal.

 

Signed, sealed and delivered in the presence of

     

ASSUMPTOR:

 

NORTHLAKE FESTIVAL, LLC,

a Delaware limited liability company

--------------------------------------------------------------------------------

     

By:

 

WEST COAST REALTY INVESTORS, INC.,

Unofficial Witness

         

a Delaware corporation, its sole member

--------------------------------------------------------------------------------

     

By:

 

/s/    ALLEN K. MEREDITH

--------------------------------------------------------------------------------

Notary Public

My Commission Expires

     

Name:

Title:

 

Allen K. Meredith

President

 

 

 

 

[NOTARY SEAL]

[NOTARY STAMP]

[CORPORATE SEAL]

 

[SIGNATURES CONTINUE ON THE NEXT PAGE]

 

--------------------------------------------------------------------------------

 

[SIGNATURES CONTINUED FROM THE PREVIOUS PAGE]

 

Signed, sealed and delivered in the presence of

     

ORIGINAL BORROWER:

 

BSRT NORTHLAKE LIMITED PARTNERSHIP,

an Illinois limited partnership (f/k/a BSRT/M&J Northlake Limited Partnership,
an Illinois limited partnership)

--------------------------------------------------------------------------------

     

By:

 

BSRT UPREIT CORP.,

Unofficial Witness

         

an Illinois corporation, its sole general partner

--------------------------------------------------------------------------------

     

By:

 

/s/    ROBERT HIGGINS

--------------------------------------------------------------------------------

Notary Public

My Commission Expires

     

Name:

Title:

 

Robert Higgins

Vice President

 

 

 

 

 

[NOTARY SEAL]

[NOTARY STAMP]

 

[SIGNATURES CONTINUE ON THE NEXT PAGE]

 

--------------------------------------------------------------------------------

 

[SIGNATURES CONTINUED FROM THE PREVIOUS PAGE]

 

Signed, sealed and delivered in the presence of

     

NOTEHOLDER:

 

STATE STREET BANK AND TRUST COMPANY,

as Trustee under that certain Pooling and Servicing Agreement dated as of
December 1, 1997 for Certificateholders of Merrill Lynch Mortgage Investors,
Inc. Commercial Mortgage Pass-Through Certificates, Series 1997-C2

--------------------------------------------------------------------------------

     

By:

 

GEMSA LOAN SERVICES, L.P.

Unofficial Witness

         

(successor by merger of GE Capital Loan Services, Inc.), as Master Servicer
pursuant to the PSA

--------------------------------------------------------------------------------

     

By:

 

/s/    PAT MCENTEE (SEAL)

--------------------------------------------------------------------------------

Notary Public

My Commission Expires

     

Name:

Title

 

Pat McEntee

Director, Portfolio Mangement

 

 

--------------------------------------------------------------------------------

 

EXHIBIT A

 

LEGAL DESCRIPTION OF THE PREMISES

 

ALL THAT TRACT or parcel of land lying and being in Land Lots 190 and 209 of the
18th District of DeKalb County, Georgia, and being more particularly described
as follows:

 

BEGINNING at an iron pin at the intersection of the westerly margin of the
right-of-way of Weems Road (60-foot right-of-way) and the Land Lot line common
to Land Lots 190 and 209 of said District; thence running North 89 degrees 59
minutes 11 seconds West a distance of 212.49 feet to a point; thence running
South 00 degrees 08 minutes 52 seconds West a distance of 133.47 feet to a
point; thence running South 89 degrees 51 minutes 21 seconds West a distance of
112.35 feet to a point; thence running South 00 degrees 09 minutes 53 seconds
West a distance of 201.17 feet to a point; thence running North 89 degrees 36
minutes 14 seconds East a distance of 324.32 feet to an iron pin set on the
westerly right-of-way line of Weems Road; thence running along and coincident
with the westerly right-of-way line of Weems Road South 00 degrees 12 minutes 19
seconds West a distance of 672.58 feet to an iron pin found; thence leave the
westerly right-of-way line of Weems Road and run South 89 degrees 48 minutes 52
seconds West a distance of 1,331.03 feet to an iron pin found; thence running
North 00 degrees 26 minutes 46 seconds East a distance of 1,014.40 feet to an
iron pin found; thence running North 40 degrees 25 minutes 47 seconds West a
distance of 93.32 feet to the southeasterly right-of-way line of LaVista Road
(State Road 236) (said right-of-way line being 60 feet from the centerline of
LaVista Road) to an iron pin set; thence running North 49 degrees 12 minutes 43
seconds East a distance of 300.46 feet to a point; thence running along the arc
of a curve to the right (which arc is subtended by a chord running North 70
degrees 28 minutes 03 seconds East a distance of 501.88 feet) an arc distance of
513.58 feet to a point; thence running along the arc of a curve to the right
(which arc is subtended by a chord running North 81 degrees 10 minutes 31
seconds East a distance of 31.18 feet) an arc distance of 31.18 feet to a point;
thence running along the arc of a curve to the right (which arc is subtended by
a chord running North 87 degrees 05 minutes 40 seconds East a distance of 111.72
feet) an arc distance of 111.84 feet to an iron pin set; thence running South 88
degrees 16 minutes 37 seconds East a distance of 317.84 feet to an iron pin set;
thence running South 43 degrees 55 minutes 00 seconds East a distance of 35.76
feet to an iron pin set; thence running South 00 degrees 26 minutes 46 seconds
West a distance of 26.64 feet to a point; thence continuing South 00 degrees 26
minutes 46 seconds West a distance of 54.57 feet to an iron pin set; thence
along the arc of a curve to the left (which arc is subtended by a chord running
South 07 degrees 46 minutes 33 seconds East a distance of 62.92 feet) an arc
distance of 63.14 feet to a point; thence running along the arc of a curve to
the left (which arc is subtended by a chord running South 31 degrees 30 minutes
58 seconds East a distance of 117.70 feet) an arc distance of 119.14 feet to a
point; thence along the arc of a curve to the left (which arc is subtended

 

A-1

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by a chord running South 68 degrees 17 minutes 22 seconds East a distance of
159.58 feet) an arc distance of 163.30 feet to an iron pin set; thence running
South 89 degrees 33 minutes 15 seconds East a distance of 123.40 feet to an iron
pin set on the westerly right-of-way line of Weems Road; thence running along
and coincident with the westerly right-of-way line of Weems Road South 01 degree
58 minutes 27 seconds East, along the westerly right-of-way line of Weems Road;
a distance of 2.00 feet to a point; thence continuing along the westerly
right-of-way line of Weems Road, South 01 degree 58 minutes 27 seconds East a
distance of 98.84 feet to an iron pin found, which iron pin found is the POINT
OF BEGINNING.

 

Said Tract being shown on an “As-Built” Survey of Northlake Festival prepared
for BSRT/M&J Northlake Limited Partnership, Northlake Tower Corporation, BSRT
Northlake Festival Corp., Confederation Life Insurance Company (U.S.) in
Rehabilitation, and Ticor Title Insurance Company, prepared by Mallett &
Associates, dated August 8, 1984, last revised July 26, 1995 and bearing the
seal of Michael F. Lawler, GRLS No. 1946.

 

TOGETHER WITH any right, title and interest now existing in connection with the
adjoining property to the south and west described on Exhibits “B” and “C”
contained in that certain instrument entitled Grant of Easements and Imposition
of Restrictive Covenants, dated 1983, recorded February 9, 1988, in Deed Book
6057, page 265, DeKalb County, Georgia Records.

 

TOGETHER WITH any right, title and interest now existing in and to certain
sanitary sewer easements pipe/culvert drainage easements, recorded in Deed Book
4754, page 462, DeKalb County, Georgia Records, rerecorded August 11, 1983 in
Deed Book 4811, page 671, DeKalb County, Georgia Records.

 

LESS AND EXCEPT:

 

ALL THAT TRACT or parcel of land lying and being in Land Lot 190 of the 18th
Land District of DeKalb County, Georgia, being a circular tract of land with a
radius of 100 feet, the center point of said circular tract being more
particularly described as follows:

 

Commencing at an iron pin located at the intersection of the western
right-of-way line of Weems Road (60 feet R/W) and the north line of Land Lot
190; thence departing said right-of-way line and running South 67 degrees 27
minutes 48 seconds West for 845.43 feet to a point at the center of the base of
the existing radio antenna tower, said point being the center point of said
circular tract.

 

 

A-2

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EXHIBIT B

 

LOAN DOCUMENTS

 

1.   Promissory Note dated November 12, 1997 made by the Original Borrower and
payable to the Lender, in the stated principal amount of $17,600,000.00
(together with all addenda, modifications, amendments, riders, exhibits and
supplements thereto, the “Note”).

 

2.   Leasehold Deed to Secure Debt and Security Agreement dated November 12,
1997 made by the Original Borrower for the benefit of the Lender (together with
all addenda, modifications, amendments, riders, exhibits and supplements
thereto, the “Security Instrument”) recorded with the Clerk of Superior Court,
Dekalb County, Georgia on November 13, 1997 in Deed Book 9699 at Page 527.

 

3.   Loan Agreement dated November 12, 1997 made by and between the Original
Borrower and the Lender (together with all addenda, modifications, amendments,
riders, exhibits and supplements, thereto, the “Loan Agreement”).

 

4.   Assignment of Leases and Rents dated November 12, 1997 made by the Original
Borrower for the benefit of the Lender (together will all addenda,
modifications, amendments, riders, exhibits and supplements thereto, the
“Assignment of Leases and Rents”), recorded in the Public Records of Dekalb
County, Georgia on November 13, 1997, in Deed Book 9699, at Page 544.

 

5.   Hazardous Materials Indemnity Agreement dated November 12, 1997, made by
Original Borrower for the benefit of the Lender (together with all addenda,
modifications, amendments, riders, exhibits and supplements thereto, the
“Hazardous Indemnity Agreement”).

 

6.   Financing Statement made by the Original Borrower for the benefit of the
Lender, recorded in the Public Records of Dekalb County, Georgia on November 13,
1997, in Deed Book 9699, at Page 552.