Exhibit 10.46


 


WHEN RECORDED
RETURN TO:


 


Thompson &
Knight L.L.P.

1700 Pacific Avenue

Suite 3300

Dallas, Texas 75201

Attention: Jeanne M. Burton


 


MORTGAGE
AND SECURITY AGREEMENT


 


754867


 


A.                                   THIS
MORTGAGE AND SECURITY AGREEMENT (as the same may from time to time hereafter be
modified, supplemented or amended, this “Mortgage”) is made as of February 27,
2006, by and between MB KEENE MONADNOCK, L.L.C., a Delaware limited liability
company, having its principal
place of business and post office address at 2901 Butterfield Road, Oak Brook,
Illinois 60523 as “Borrower” (“Borrower” to be construed as “Borrowers”
if the context so requires), and PRINCIPAL COMMERCIAL FUNDING, LLC, a Delaware
limited liability company, having
a principal place of business and post office address c/o Principal Real Estate
Investors, LLC at 801 Grand Avenue, Des Moines, Iowa 50392-1450 as “Lender”.


 


WITNESSETH:


 


B.                                     Borrower
is justly indebted to Lender for money borrowed (the “Loan”) in the
original principal sum of Twenty Six Million Seven Hundred Eighty Five Thousand
and No/100 Dollars ($26,785,000.00) (the “Loan Amount”) evidenced by
Borrower’s secured promissory note of even date herewith, made payable and
delivered to Lender (as may be modified, amended, supplemented, extended or consolidated
in writing and any note(s) issued in exchange therefor or replacement thereof)
(the “Note”), in which Note Borrower promises to pay to Lender the Loan
Amount together with all accrued and unpaid interest thereon, interest accrued
at the Default Rate (if any), Late Charges (if any), the Make Whole Premium (if
any), and all other obligations and liabilities due or to become due to Lender
pursuant to the Loan Documents and all other amounts, sums and expenses paid by
or payable to Lender pursuant to the Loan Documents and the Environmental
Indemnity (collectively the “Indebtedness”) until the Indebtedness has
been paid, but in any event, the unpaid balance (if any) remaining due on the
Note shall be due and payable on March 1, 2013 (the “Maturity Date”)
or such earlier date resulting from the acceleration of the Indebtedness by
Lender.  Capitalized terms used herein
and not otherwise defined shall have those meanings given to them in the other
Loan Documents.


 


C.                                     NOW,
THEREFORE, to secure the payment of the Indebtedness in accordance with the
terms and conditions of the Loan Documents, and all extensions, modifications
and renewals thereof and the performance of the covenants and agreements
contained therein, and also to secure the payment of any and all other
Indebtedness, direct or contingent, that may now or hereafter become owing from
Borrower to Lender in connection with the Loan Documents, and in consideration
of the Loan


 


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Amount in hand
paid, receipt of which is hereby acknowledged, Borrower does by these presents
hereby grant and convey unto Lender, its successors and assigns forever with
MORTGAGE COVENANTS to secure the payment of Twenty Six Million Seven Hundred
Eighty Five Thousand and No/100 Dollars ($26,785,000.00), with interest thereon
and also perform all of the agreements and conditions as provided in the Note,
the Loan Agreement and the Loan Documents of even date herewith, that certain
real estate and all of Borrower’s estate, right, title and interest therein,
located in the Town of Keene, county of Cheshire, state of New Hampshire, more
particularly described in Exhibit A attached hereto and made a part
hereof (the “Land”), which Land, together with the following described
property, rights and interests, is collectively referred to herein as the “Premises”.  This Mortgage is upon the STATUTORY CONDITION
for any breach of which Lender shall have the STATUTORY POWER OF SALE.


 


D.                                    Together
with Borrower’s interest as lessor in and to all Leases and all Rents which are
pledged primarily and on a parity with the Land and not secondarily, including
but not limited to all right, title and interest of Borrower in the following
leases (individually a “Ground Lease” and collectively, the “Ground Leases”): (i) Ground
Lease Agreement in favor of Brinker Restaurant Corporation dba Chili’s, dated March 25,
2004, and (ii) Lease Agreement in favor of Rare Hospitality Management, Inc.,
dba Longhorn Steak House, dated May 28, 2004; the tenants thereunder being
herein collectively called “Ground Lessees” and individually, a “Ground Lessee”.


 


E.                                      Together
with all and singular the tenements, hereditaments, easements, appurtenances,
passages, waters, water courses, riparian rights, direct flow, ditch,
reservoir, well and other water rights, whether or not adjudicated, whether
tributary or nontributary and whether evidenced by deed, water stock, permit or
otherwise, sewer rights, rights in trade names, licenses, permits and
contracts, and all other rights, liberties and privileges of any kind or
character in any way now or hereafter appertaining to the Land, including but
not limited to, homestead and any other claim at law or in equity as well as
any after-acquired title, franchise or license and the reversion and reversions
and remainder and remainders thereof.


 


F.                                      Subject
to the terms of the Ground Leases, together with the right in the case of
foreclosure hereunder of the encumbered property for Lender to take and use the
name by which the buildings and all other improvements situated on the Premises
are commonly known and the right to manage and operate the said buildings under
any such name and variants thereof.


 


G.                                     Together
with all right, title and interest of Borrower in any and all buildings and
improvements of every kind and description now or hereafter erected or placed
on the said Land and all materials intended for construction, reconstruction,
alteration and repairs of such buildings and improvements now or hereafter
erected thereon, all of which materials shall be deemed to be included within
the Premises immediately upon the delivery thereof to the Premises, and all
fixtures now or hereafter owned by Borrower and attached to or contained in and
used in connection with the Premises including, but not limited to, all
machinery, motors, elevators, fittings, radiators, awnings, shades, screens,
and all plumbing, heating, lighting, ventilating, refrigerating, incinerating,
air-conditioning and sprinkler equipment and fixtures and appurtenances
thereto; and all items of furniture, furnishings, equipment and personal
property owned by Borrower used or useful in the operation of the Premises; and
all renewals or replacements of all


 


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of the
aforesaid property owned by Borrower or articles in substitution therefor,
whether or not the same are or shall be attached to said buildings or
improvements in any manner (collectively, the “Improvements”); it being
mutually agreed, intended and declared that all the aforesaid property owned by
Borrower and placed by it on the Land or used in connection with the operation
or maintenance of the Premises shall, so far as permitted by law, be deemed to
form a part and parcel of the Land and for the purpose of this Mortgage to be Land
and covered by this Mortgage, and as to any of the property aforesaid which
does not form a part and parcel of the Land or does not constitute a “fixture”
(as such term is defined in the Uniform Commercial Code (“UCC”)), this Mortgage
and the other Loan Documents (the terms of which grant a security interest in
personal property or real property, the proceeds of which may become personal
property) are each hereby deemed to be, as well, a security agreement under the
UCC for the purpose of creating a security interest in all items, including,
but not limited to all property and rights which Borrower may grant, assign,
bargain, sell, transfer, set over, deliver, or otherwise convey to Lender, as
secured party, under the terms of this Mortgage or any of the other Loan
Documents, including any and all proceeds thereof (as used herein, Borrower
shall mean “Debtor” under the UCC and Lender shall mean “Secured Party” under
the UCC).  Borrower hereby appoints
Lender as its attorney-in-fact to execute such documents necessary to perfect
Lender’s security interest and authorizes Lender at any time until the
Indebtedness is paid in full, to prepare and file, at Borrower’s expense, any
and all UCC financing statements, amendments, assignments, terminations and the
like, necessary to create and/or maintain a prior security interest in such
property all without Borrower’s execution of the same.  Furthermore, upon a default under the Loan
Documents, Lender will, in addition to all other remedies provided for in the
Loan Documents, have the remedies provided for under the UCC in effect in the
State in which the Premises is located.


 


H.                                    Together
with all right, title and interest of Borrower, now or hereafter acquired, in
and to any and all strips and gores of land adjacent to and used in connection
with the Premises and all right, title and interest of Borrower, now owned or
hereafter acquired, in, to, over and under the ways, streets, sidewalks and
alleys adjoining the Premises.


 


I.                                         Together
with all funds now or hereafter held by Lender under any property reserves
agreement (including any proceeds derived from any letter of credit) or escrow
security agreement or under any of the terms hereof or of the Loan Documents,
including but not limited to funds held under the provisions of the Loan
Agreement.


 


J.                                        Together
with all of Borrower’s payment intangibles, letter of credit rights, interest
rate cap agreements, tenant in common agreement rights, and any other contract
rights of Borrower related in any manner to the ownership, operation, or
management of the Premises, as well as any and all supporting obligations, and
all proceeds, renewals, replacements and substitutions thereof.


 


K.                                    Together
with all funds, accounts and proceeds thereof relating to the Premises whether
or not such funds, accounts or proceeds thereof are held by Lender under the
terms of any of the Loan Documents, including, but not limited to bankruptcy
claims of Borrower against any tenant at the Premises, and any proceeds
thereof; proceeds of any Rents, insurance proceeds from all insurance policies
required to be maintained by Borrower under the Loan Documents (subject to the
balance of the terms of this Mortgage) and all awards, decrees, proceeds,
settlements or claims for damage now or hereafter made to or for the benefit of
Borrower by reason of any damage to, destruction of


 


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or taking of
the Premises or any part thereof, whether the same shall be made by reason of
the exercise of the right of eminent domain or by condemnation or otherwise (a “Taking”).


 


L.                                      Notwithstanding
anything contained hereinto the contrary, this Mortgage is subject to the
Ground Leases and does not encumber or attach to the leasehold estates created
by the Ground Leases; provided however, this Mortgage does encumber Borrower’s
interest in the Ground Leases and all other Leases affecting the Premises.  So long as the Ground Leases have not been
terminated, this Mortgage is subordinate to the Ground Leases and all estates
arising from the Ground Leases, except for: (i) any amendments or
modifications to the Ground Leases made without Lender’s written consent, (ii) Borrower’s
interest which is encumbered by this Mortgage, and (iii) any other Lease
affecting the Premises.


 


M.                                 TO
HAVE AND TO HOLD the same unto the Lender, its successors and assigns forever,
for the purposes and uses herein expressed.


 


N.                                    Borrower
represents that it shall forever warrant and defend the title to the Premises
against all claims and demands of all persons whomsoever and will on demand
execute any additional instrument which may be required to give Lender a valid
first lien on all of the Premises, subject to the “Permitted Encumbrances”
set forth in the loan policy of title insurance for the Premises issued to Lender.


 


O.                                    Borrower
further represents that (i) the Premises is not subject to any casualty
damage; (ii) Borrower has not received any written notice of any eminent
domain or condemnation proceeding affecting the Premises; and (iii) to the
best of Borrower’s knowledge, following due and diligent inquiry, there are no
actions, suits or proceedings pending, completed or threatened against or
affecting Borrower or any person or entity owning an interest (directly or
indirectly) in Borrower (“Interest Owner(s)”) or any property of
Borrower or any Interest Owner in any court or before any arbitrator of any
kind or before or by any governmental authority (whether local, state, federal
or foreign) that, individually or in the aggregate, could reasonably be
expected by Lender to be material to the transaction contemplated hereby.


 


P.                                      Borrower
further represents and warrants that as of the date hereof and until the
Indebtedness is paid in full:


 


(a)                                  Borrower and each
person or entity owning an interest in Borrower is not  (i) identified on the Specially
Designated Nationals and Blocked Persons List maintained by the Office of
Foreign Assets Control, Department of the Treasury (“OFAC”) and/or on
any other similar list maintained by OFAC pursuant to any authorizing statute,
executive order or regulation (collectively, the “List”), (ii) a
person or entity with whom a citizen of the United States is prohibited to
engage in transactions by any trade embargo, economic sanction, or other
prohibition of United States law, regulation, or Executive Order of the
President of the United States;


 


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(b)                                 none of the funds or
other assets of Borrower constitute property of, or are beneficially owned,
directly or indirectly, by any Embargoed Person (as hereinafter defined);


 


(c)                                  no Embargoed Person
has any interest of any nature whatsoever in Borrower (whether directly or
indirectly);


 


(d)                                 none of the funds of
Borrower have been derived from any unlawful activity with the result that the
investment in Borrower is prohibited by law or that the agreement is in
violation of law,


 


(e)                                  Borrower has and will
continue to implement procedures, and has consistently and will continue to
consistently apply those procedures, to ensure the foregoing representations
and warranties remain true and correct at all times.  The term “Embargoed Person” means any
person, entity or government subject to trade restrictions under U.S. law,
including but not limited to, the International Emergency Economic Powers Act,
50 U.S.C. §1701 et seq., The Trading with the Enemy Act, 50 U.S.C. App.
1 et seq., and any Executive Orders or regulations promulgated
thereunder with the result that the investment in Borrower is prohibited by law
or Borrower is in violation of law;


 


(f)                                    Borrower has
complied and will continue to comply with all requirements of law relating to
money laundering, anti-terrorism, trade embargos and economic sanctions, now or
hereafter in effect;


 


(g)                                 Borrower has not and
will not use funds from any “Prohibited Person” (as such term is defined
in the September 24, 2001 Executive Order Blocking Property and
Prohibiting Transactions With Persons Who Commit, Threaten to Commit, or
Support Terrorism) to make any payment due to Lender under the Loan Documents


 


Borrower will immediately notify Lender in writing if any of the
representations, warranties or covenants are no longer true or have been
breached or if Borrower has a reasonable basis to believe that they may no
longer be true or have been breached.  In
addition, Borrower will, at the request of Lender, provide such information as
may be requested by Lender to determine Borrower’s compliance with the terms
hereof.


 


BORROWER COVENANTS AND AGREES AS FOLLOWS:


 


1.                                       Borrower shall


 


(a)                                  pay each item of
Indebtedness secured by this Mortgage when due according to the terms of the
Loan Documents;


 


(b)                                 pay a Late Charge on
any payment of principal, interest, Make Whole Premium or Indebtedness which is
not paid on or before the due date thereof to cover the expense involved in
handling such late payment;


 


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(c)                                  pay on or before the
due date thereof any indebtedness
permitted to be incurred by Borrower pursuant to the Loan Documents and any
other claims which could become a lien on the Premises (unless otherwise
specifically addressed in paragraph 1(e) hereof), and upon request of
Lender exhibit satisfactory evidence of the discharge thereof;


 


(d)                                 complete within a
reasonable time, the construction of any Improvements now or at any time in
process of construction upon the Land which are required to be performed by
Borrower;


 


(e)                                  manage, operate and
maintain its interest in the Premises and keep the Premises, including but not
limited to, the Improvements, in good condition and repair (for so long as the
Ground Leases are in effect, subject to the terms of the Ground Leases, duly
enforced by Borrower) and free from mechanics’ liens or other liens or claims
for liens, provided however, that Borrower may in good faith, with reasonable
diligence and upon written Notice to Lender within twenty (20) days after
Borrower has knowledge of such lien or claim, contest the validity or amount of
any such lien or claim and defer payment and discharge thereof during the
pendency of such contest in the manner provided by law, provided that (i) such
contest may be made without the payment thereof; (ii) such contest shall
prevent the sale or forfeiture of the Premises or any part thereof, or any
interest therein, to satisfy such lien or claim; (iii) Borrower shall have
obtained a bond over such lien or claim from a bonding company acceptable to
Lender which has the effect of removing such lien or collection of the claim or
lien so contested; and (iv) Borrower shall pay all costs and expenses
incidental to such contest; and further provided, that in the event of a final,
non-appealable ruling or adjudication adverse to Borrower, and provided the
court of jurisdiction has not granted a stay of the enforcement of the ruling
or judgment, Borrower shall promptly pay such claim or lien, shall indemnify
and hold Lender and the Premises harmless from any loss for damage arising from
such contest and shall take whatever action necessary to prevent sale,
forfeiture or any other loss or damage to the Premises or to the Lender;
provided, however, Lender acknowledges and agrees that performance of the
obligations set forth in this Paragraph 1(e) by a Major Tenant (as defined
in Paragraph 4(c) hereof) or a Ground Lessee with respect to its leased
premises shall be deemed compliance with such provisions by Borrower with
respect to such portion of the Premises;


 


(f)                                    comply, and cause
each lessee or other user of the Premises to comply, with all requirements of
law and ordinance, and all rules and regulations, now or hereafter
enacted, by authorities having jurisdiction of the Premises and the use
thereof, including but not limited to all covenants, conditions and
restrictions of record pertaining to the Premises, the Improvements, and the
use thereof (collectively, “Legal Requirements”); provided, however,
Lender acknowledges and agrees that performance of the obligations set forth in
this Paragraph 1(f) by a Major Tenant or a Ground Lessee with respect to
its leased premises shall be


 


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deemed compliance with such provisions by
Borrower with respect to such portion of the Premises;


 


(g)                                 subject to the provisions of paragraph
6 hereof, promptly repair, restore or rebuild any Improvements, now or
hereafter a part of the Premises which may become damaged or be destroyed by
any cause whatsoever, so that upon completion of the repair, restoration and
rebuilding of such Improvements there will be no liens of any nature arising
out of the construction and the Premises will be of substantially the same
character and quality as it was prior to the damage or destruction; provided,
however, Lender acknowledges and agrees that performance of the obligations set
forth in this Paragraph 1(g) by a Major Tenant with respect to its leased
premises shall be deemed compliance with such provisions by Borrower with
respect to such portion of the Premises; and provided further, with respect to
the portion of the Premises subject to the Ground Leases, while a Ground Lease
is in full force and effect, Borrower’s obligation under this subparagraph (g) shall
be limited to Borrower’s use of diligent and continuous efforts to cause the
Ground Lessee thereunder to fulfill its obligations under the Ground Lease with
respect to repair, restoration or rebuilding of the Improvements located on the
portion of the Premises subject to the Ground Lease;


 


(h)                                 if other than a
natural person, do all things necessary to preserve and keep in full force and
effect its existence, franchises, rights and privileges under the laws of the
state of its formation and, if other than its state of formation, the State
where the Premises is located.  Borrower
shall notify Lender at least thirty (30) days prior to (i) any relocation
of Borrower’s principal place of business to a different state or any change in
Borrower’s state of formation, and/or (ii) if Borrower is an individual,
any relocation of Borrower’s principal residence to a different state;


 


(i)                                     do all things
necessary to preserve and keep in full force and effect Lender’s title
insurance coverage insuring the lien of this Mortgage as a first and prior
lien, subject only to the Permitted Encumbrances stated in the title insurance
policy issued to Lender and any other exceptions after the date of this
Mortgage approved in writing by Lender, including without limitation,
delivering to Lender not less than 30 days prior to the effective date of any
rate adjustment, modification or extension of the Note or any other Loan
Document, any new policy or endorsement which may be reasonably required to
assure Lender of such continuing coverage;


 


(j)                                     execute any and
all documents which may be required to perfect the security interest granted by
this Mortgage; and


 


(k)                                  remain a
Single-Purpose Entity.


 


2.                                       Borrower shall
not:


 


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(a)                                  construct any
building or structure nor make any alteration or addition (other than normal
repair and maintenance) to (i) the roof or any structural component of any
Improvements on the Premises, or (ii) the building operating systems,
including but not limited to, the mechanical, electrical, heating, cooling, or
ventilation systems (other than replacement with equal or better quality and
capacity).


 


Notwithstanding anything hereinabove to the contrary, the restrictions
set forth in this Paragraph 2(a) shall not be applicable if such activity
is (i) required by applicable Legal Requirements; or (ii) specifically
provided for in a Lease approved by Lender prior to closing of the Loan or
thereafter, in which a tenant has the right to complete any of the above
without Borrower’s prior consent in its capacity as landlord under such
Lease.  With respect to any Lease in
which the above activities require Borrower’s prior consent (in its capacity as
landlord under such Lease), Borrower shall also obtain Lender’s prior written
consent, not to be unreasonably withheld;


 


(b)                                 subject to the terms
of the Ground Leases, remove or demolish any material Improvements, or any
portion thereof, which at any time constitutes a part of the Premises.


 


Notwithstanding anything hereinabove to the
contrary, Borrower may construct, remove or demolish tenant improvements within
the then existing building(s) or other structures to the extent such work is
required solely under the terms of any Leases approved by Lender provided (i) no
Event of Default exists under the Loan Documents; (ii) the work is
completed on a timely basis, in a good, workmanlike, lien-free manner and in
accordance with all Legal Requirements, and (iii) such work does not
negatively affect the structural integrity of the Improvements or the value of
the Premises;


 


(c)                                  subject to the terms
of the Ground Leases, cause or permit any change to be made in the general use
of the Premises without Lender’s prior written consent; provided, however,
Borrower shall provide Lender with written notice of any change in the general
use of the Premises by a Ground Lessee as permitted under its Ground Lease
within fifteen (15) days after Borrower becomes aware of any such change;


 


(d)                                 initiate any or
acquiesce to a zoning reclassification or material change in zoning without
Lender’s prior written consent.  Borrower
shall use all reasonable efforts to contest any such zoning reclassification or
change;


 


(e)                                  make or permit any
use of the Premises that could with the passage of time result in the creation
of any right of use, or any claim of adverse possession or easement on, to or
against any part of the Premises in favor of any person or entity or the
public;


 


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(f)                                    allow any of the
following to occur (unless a Permitted Transfer) except as expressly permitted
herein:


 


(i)                                     a Transfer of all
or any portion of the Premises or any interest in the Premises;


 


(ii)                                  a Transfer of any
ownership interest in Borrower or any entity which owns, directly or
indirectly, an interest in Borrower at any level of the ownership structure;


 


(iii)                               in addition to (i) and
(ii) above, if the Borrower is a trust, or if a trust owns an interest,
directly or indirectly, in any entity which owns an interest in Borrower at any
level of the ownership structure, the addition, deletion or substitution of a
trustee of such trust.


 


If any of such events occur, it shall be null and void and shall
constitute an Event of Default under the Loan Documents.


 


It is understood and agreed that the Indebtedness evidenced by the Note
is personal to Borrower and in reliance upon the ownership structure of
Borrower and in accepting the same Lender has relied upon what it perceived as
the willingness and ability of Borrower and the Interest Owners to perform its
obligations under the Loan Documents and the Environmental Indemnity and as
lessor under the Leases of the Premises. 
Furthermore, Lender may consent to a Transfer and expressly waive
Borrower’s covenants contained in this paragraph 2(f), in writing to Borrower;
however any such consent and waiver shall not constitute any consent or waiver
of such covenants as to any Transfer other than that for which the consent and
waiver was expressly granted. 
Furthermore, Lender’s willingness to consent to any Transfer and waive
Borrower’s covenants contained in this paragraph 2(f), implies no standard of
reasonableness in determining whether or not such consent shall be granted and
the same may be based upon what Lender solely deems to be in its best interest.


 


For purposes of the Loan Documents, the following terms shall have the
respective meanings set forth below:


 


“Transfer” or “Transferred” shall mean with respect to
the Premises, an interest in the Premises, or an ownership interest or interest
therein (except for transactions not involving Borrower or any Interest Owner
that are expressly permitted to be undertaken by a Ground Lessee or those
claiming by, through or under a Ground Lessee by the terms of its Ground
Lease):


 


(i)                                     a sale,
assignment, transfer, conveyance or other disposition (whether voluntary,
involuntary or by operation of law);


 


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(ii)                                  the creation,
sufferance or granting of any lien, encumbrance, security interest or
collateral assignment (whether voluntarily, involuntarily or by operation of
law), other than the lien hereof, the leases of the Premises assigned to
Lender, the Permitted Encumbrances, the granting of a lien on a tenant’s interest
under any Lease in accordance with the terms specifically set forth therein,
and those liens which Borrower is contesting in accordance with the provisions
of paragraph 1(e);


 


(iii)                               the issuance or other
creation of ownership interests in an entity;


 


(iv)                              the reconstitution or
conversion from one entity to another type of entity;


 


(v)                                 a merger,
consolidation, reorganization or any other business combination; or


 


(vi)                              a conversion to or
operation of all or any portion of the Premises as a cooperative or condominium
form of ownership.


 


“Permitted Transfer” shall mean:


 


(i)                                     a minor (as
determined by Lender) conveyance of an interest in the Premises by Borrower,
such as a utility easement, and for which Lender has given its prior written
consent and imposed such conditions as Lender deems advisable and appropriate;
provided, however, with regard to those easements for which Lender’s consent is
required, if: (A) Borrower provides Lender with a written request for
consent to such easement and the request is accompanied by a copy of the
proposed easement together with a certificate executed by Borrower confirming
that such easement will not adversely affect the Premises now or in the future;
(B) the request is given in the manner provided for the giving of notices
in this Mortgage; (C) the request is boldly noted as a request for consent
to an easement for which Lender’s consent is required and specifically states
that the easement will be deemed approved if Lender fails to respond within 12
business days (Lender and Borrower hereby agree that such 12 business day
period shall commence on the date of Lender’s actual receipt of all information
reasonably required by Lender in connection with Lender’s review of said
easement); and (D) in the event Lender fails to respond to Borrower’s
request for consent within the time period set forth in subparagraph (C) above,
then said consent shall be deemed to have been given; or


 


(ii)                                  a sale, assignment,
transfer or conveyance of all or any portion of the Premises or an interest in
the Premises for which Borrower has complied with all of the Property Transfer
Requirements; or


 


(iii)                               any of the following
Transfers for which Borrower has complied with all of the Ownership Transfer
Requirements as applicable and Lender has given


 


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its prior written consent (and in connection with such consent, Lender
may impose any conditions it wishes in its sole discretion);


 


(A)                              a sale, assignment,
transfer, or conveyance of an ownership interest or interest therein;


 


(B)                                the issuance or other
creation of ownership interests in an entity;


 


(C)                                a reconstitution or
conversion from one entity to another type of entity;


 


(D)                               a merger, consolidation,
reorganization or any other business combination;


 


(iv)          with at least thirty (30) days advance
written notice, transfers of ownership interests in Borrower and entities
owning interests in Borrower among Minto Builders (Florida), Inc., a
Florida corporation (“Minto”), and/or IARETI (hereinafter defined), and its
wholly owned Affiliates for which Borrower has complied with all of the
Specific Transfer Requirements - 1;


 


(v)                                 with
at least thirty (30) days advance written notice, transfers of ownership
interests in Borrower and/or shares in entities owning interests in Borrower to
Qualified New Members (hereinafter defined), for which Borrower has complied
with all of the Specific Transfer Requirements - 2 (for purposes of this
Permitted Transfer, a “Qualified New Member” shall be defined as an
institutional investor or fund managed by an institutional investor having
assets of $100,000,000 or more);


 


(vi)                              with
at least thirty (30) days advance written notice, transfers of direct or
indirect ownership interests in Borrower and entities owning interests in
Borrower and transfers of direct or indirect ownership interests in Minto
and/or IARETI to a Qualified Successor (hereinafter defined) for which Borrower
has complied with all of the Specific Transfer Requirements - 3 (for purposes
of this Permitted Transfer, a “Qualified Successor” shall be defined as an
entity with a tangible net worth of $200,000,000 or more; a debt to equity
ratio of 1.5 or less; and management personnel experienced in the ownership and
management of retail properties similar to the Premises);


 


(vii)                           transfers
of ownership interests in Minto or, provided Minto is the surviving entity, the
merger of Minto with any of the following entities: (A) Inland Retail Real
Estate Trust, Inc., a Maryland corporation, (B) Inland Real Estate
Corporation, a Maryland corporation (“IREC”), (C) Inland Real Estate
Investment Corporation, a Delaware corporation (“IREIC”), (D) Inland
Western Retail Real Estate Trust, Inc., a Maryland corporation (“IWRRET”),
(E) Inland American Real Estate Trust, Inc., a Maryland corporation (“IARETI”),
(F) any other real estate investment trust


 


11

















 


sponsored by IREIC, or (G) any other entity composed entirely of
any of the foregoing, by merger or other business combination; or


 


(viii)                        within one
year of the closing of the Loan, a one time sale, assignment, transfer or
conveyance of the Premises to a Permitted Inland REIT for which Borrower has
complied with all of the One-Time Permitted Inland REIT Property Transfer
Requirements; or


 


(ix)                                within
one year of the closing of the Loan, a one time sale, assignment, transfer or
conveyance of the Premises to a joint venture of a Permitted Inland REIT, a New
Inland REIT or an Inland Affiliate with an institutional investor for which
Borrower has complied with all of the One-Time Property Transfer Requirements.


 


“Permitted Inland REIT” shall
collectively mean: Minto, IRRETI, IREC, IWRRET and IARETI.


 


“New Inland REIT” shall mean: a newly
formed real estate investment trust sponsored by or affiliated with a Permitted
Inland REIT or The Inland Group, Inc., an Illinois corporation (“TIGI”).


 


“Inland Affiliates” shall mean:
subsidiaries directly or indirectly wholly owned by a Permitted Inland REIT or
a New Inland REIT, or partnerships, trusts or limited liability companies or
other entities in which all of the equity interests are owned by a Permitted
Inland REIT, a New Inland REIT or TIGI.


 


“One-Time Permitted Inland REIT Property
Transfer Requirements” are all of the following:


 


1.                                       the Permitted
Inland REIT which is to become the successor borrower has a net worth equal to
or greater than such Permitted Inland REIT’s net worth as of the date hereof.


 


2.                                       Lender’s
exposure limitations to the successor borrower are acceptable to Lender;


 


3.                                       an experienced
individual or entity, acceptable to Lender, continues to manage and lease the
Premises;


 


4.                                       Borrower
satisfies subparagraphs 3 through 7 of the Property Transfer Requirements set
forth below; and


 


5.                                       payment to
Lender of an assumption fee equal to one half of one percent (0.5%) of the
principal balance of the Note; provided, however, such fee shall not exceed
$25,000 and shall not be less than $10,000. Lender will require $5,000.00 of
such fee to be paid at the beginning of Lender’s review


 


12

















 


process, and such sum shall be nonrefundable and earned upon receipt by
Lender whether or not the transaction is ultimately completed or Lender
ultimately approves successor borrower.


 


“One-Time Property Transfer Requirements”
are all of the following:


 


1.                                       For transfers of
the Premises to (a) a New Inland REIT; (b) an Inland
Affiliate; or (c) an entity comprised of a Permitted Inland REIT, a New
Inland REIT or an Inland Affiliate with an institutional investor, the OneTime
Permitted Inland REIT Property Transfer Requirements 1-5 above shall be
applicable;


 


2.                                       Borrower
satisfies subparagraph 1 of the Property Transfer Requirements set forth below
in Lender’s reasonable discretion (in lieu of sole discretion); and


 


3.                                       Lender receives
and approves the appropriate background and credit checks and ERISA review and
approvals.


 


“Property Transfer Requirements” are
all of the following:


 


1.                                       Prior review and
approval of the proposed purchaser or other transferee and the subject transaction
by Lender, at Lender’s sole discretion. 
Review of the proposed purchaser or other transferee and the subject
transaction shall encompass various factors, including, but not limited to, the
proposed purchaser’s or other transferee’s creditworthiness, financial
strength, and real estate management and leasing expertise as well as the
proposed transaction’s effect on the Premises, the Borrower, and other security
for the Loan;


 


2.                                       Payment to
Lender of an assumption fee equal to the greater of: (a) one half of one
percent (0.5%) of the principal balance of the Note; or (b) $15,000.00;
provided, however, that Lender will require $15,000.00 of such fee to be paid
at the beginning of Lender’s review process, and such sum shall be
nonrefundable and earned upon receipt by Lender whether or not the transaction
is ultimately completed or Lender ultimately approves the proposed purchaser or
other transferee;


 


3.                                       Receipt, at
Borrower’s expense, of either (at Lender’s discretion) a new ALTA standard loan
policy or an endorsement updating the Lender’s existing loan policy in the full
amount of the Loan, in form and by an issuer satisfactory to Lender, and which
insures this Mortgage to be a first and prior lien subject only to those
exceptions which were previously approved by Lender and provides coverage
against usury and mechanic’s liens;


 


13

















 


4.                                       Receipt by
Lender of copies of all relevant information and documentation relating to or
required by Lender in connection with the proposed transfer including but not
limited to (a) the organizational documents of the proposed transferee and
an opinion of counsel satisfactory to Lender as to its due formation, valid
existence and authority to enter into and carry out the proposed transaction; (b) the
deeds or other instruments of transfer and documents relating to the assignment
and assumption of Leases; (c) evidence of compliance with the insurance
requirements contained in the Loan Documents; (d) compliance with the
representations and warranties in the Loan Agreement regarding the proposed
transferee’s status as a Single Purpose Entity, and (e) compliance with
such other closing requirements as are customarily imposed by Lender in
connection with such transactions;


 


5.                                       Execution,
delivery, acknowledgment and recordation, as applicable, of new, revised and/or
replacement assumption agreements, loan modification agreements,
indemnification agreements, escrow security or property reserves agreements,
security instruments, financing statements, UCCs, new or revised letters of
credit and/or guarantees in form and substance satisfactory to Lender;


 


6.                                       Payment of
outside counsel fees and costs, other applicable professional’s fees and costs,
taxes, recording fees and the like, and any other fees and costs incurred;


 


7.                                       Receipt by
Lender of 60 days advance written notice of the proposed Transfer in question;


 


8.                                       Receipt by
Lender of a waiver from any tenant having a right or option to purchase the
Premises or any portion thereof, waiving such right or option in form and
substance acceptable to Lender; and


 


9.                                       At Lender’s
option, and if required by the procedures promulgated by any rating agency(ies)
associated with a securitization transaction with respect to the Loan, receipt
by Lender of written evidence from such agency(ies) to the effect that the
proposed transfer will not result in a re-qualification, reduction or
withdrawal of any rating in effect immediately prior to such transfer issued in
connection with the securitization transaction.


 


“Ownership Transfer Requirements” are
all of the Property Transfer Requirements which Lender deems appropriate in its
discretion, as well as a reasonable processing fee to be determined by Lender;
provided, however, that (i) with respect to item 2 of the Property
Transfer Requirements, the 0.5% component of the fee shall be prorated
(subject, however, to the $15,000 minimum) based on Lender’s calculation of the
effective percentage interest in Borrower transferred, and (ii) item 3 of
the Property Transfer Requirements shall be required, at Lender’s discretion,
only in the event of (A) a merger, consolidation, reorganization or any


 


14

















 


other business combination, or (B) a reconstitution or conversion
from one entity to another type of entity.


 


“Specific Transfer Requirements -1”
are all of the following which Borrower agrees to provide to Lender prior to
each proposed transfer: (i) a transfer fee of $2,000.00; (ii) all
relevant documentation and information related to the organization, authority,
and validity of the proposed ownership interest purchaser, transferee and the
transaction in general; (iii) all documents and instruments of conveyance,
transfer and assignment; (iv) at Lender’s discretion, a reaffirmation of
the obligations of the Guarantor(s) under the Guaranty; and (v) evidence
of payment of all outside counsel fees, professional fees, title insurance
fees, if any, and any and all other fees, costs and expenses related to the
proposed transfer (provided that no assumption or transfer fee other than the
$2,000 fee stated in (i) above shall be required).


 


“Specific Transfer Requirements - 2”
are all of the following which Borrower agrees to provide to Lender prior to
each proposed transfer: Minto or a wholly owned Affiliate thereof (i) (a) retains
51% or more of the ownership interest in the Borrower, or (b) retains
ownership of 20% to 50% of the ownership interest in the Borrower subject to
Lender’s review and approval in each instance of the proposed transferee and
the subject transaction; Lender’s review of the proposed transferee and the
subject transaction shall encompass various factors, including but not limited
to, transferee’s creditworthiness, financial strength, and  real estate management expertise, as well as
the proposed transaction’s effect on the Premises, Borrower and the other
security for the Loan, and (ii) otherwise retains operational and
management control of Borrower as determined by Lender, and further provided
Borrower provides Lender each of the following items prior to each proposed
transfer: (a) a transfer fee equal to the greater of $5,000.00 or the
product of the percentage ownership interest in Borrower to be transferred
multiplied by one percent (1%) of the outstanding principal balance of the
Loan; (b) all relevant documentation and information related to the
organization, authority, and validity of the proposed ownership interest
purchaser, transferee and the transaction in general; (c) all documents
and instruments of conveyance, transfer and assignment; (d) a
reaffirmation of the obligations of the Guarantor(s) under the Guaranty; and (e) evidence
of payment of all outside counsel fees, professional fees, title insurance fees
and any and all other fees, costs and expenses related to the proposed transfer
(provided that no assumption or transfer fee other than the $5,000.00 fee
stated in (a) above shall be required).


 


“Specific Transfer Requirements - 3”
are all of the following which Borrower agrees to provide to Lender prior to
each proposed transfer: (i) said transfers are made to accommodate either
the merger of Minto with the Qualified Successor or the sale of a majority of
Minto’s assets to the Qualified Successor; and (ii) the Qualified
Successor retains direct or indirect ownership of 51% or more of the ownership
interests in the Borrower and (iv) the Qualified Successor otherwise
retains operational and management control of Borrower as determined by Lender,


 


15

















 


and further provided, Borrower provides
Lender with each of the following items prior to the proposed transfer: (a) a
transfer fee of $10,000.00; (b) all relevant documentation and information
related to the organization, authority, and validity of the proposed ownership
interest purchaser, transferee and the transaction in general; (c) all
documents and instruments of conveyance, transfer and assignment; (d) a
reaffirmation of the obligations of the Guarantor(s) under the Guaranty or
assumption thereof by an individual(s) or entity(ies) acceptable to Lender in
its sole discretion; and (e) evidence of payment of all outside counsel
fees, professional fees, title insurance fees and any and all other fees, costs
and expenses related to the proposed transfer (provided that no assumption or
transfer fee other than the $10,000.00 fee stated in (a) above shall be
required).


 


(g)                                 cause, permit or
allow:


 


(i)                                     any person or
entity to own an interest in Borrower who is (A) identified on the
Specially Designated Nationals and Blocked Persons List maintained by OFAC
and/or on any other similar list maintained by OFAC, or (B) a party with
whom a citizen of the United States is prohibited to engage in transactions by
any trade embargo, economic sanction, or other prohibition of United States
law, regulation, or Executive Order of the President of the United States;


 


(ii)                                  any of the funds or
other assets of Borrower  to constitute
property of, or be beneficially owned, directly or indirectly, by any Embargoed
Person;


 


(iii)                               an Embargoed Person to
have any interest of any nature whatsoever in Borrower (whether directly or
indirectly); or


 


(iv)                              any of its funds to be
derived from any unlawful activity with the result that the investment in
Borrower is prohibited by law or that the agreement is in violation of law.


 


3.                                       (a)                                  Borrower shall pay or
cause to be paid when due and before any penalty attaches or interest accrues
all general taxes, special taxes, assessments (including assessments for
benefits from public works or improvements whenever begun or completed),
utility charges, water charges, sewer service charges, common area maintenance
charges, if any, vault or space charges and all other like charges against or
affecting the Premises or against any property or equipment located on the
Premises, or which might become a lien on the Premises, and shall, within 10
days following Lender’s request, furnish to Lender a duplicate receipt of such
payment.  If any such tax, assessment or
charge may legally be paid in installments, Borrower may, at its option, pay
such tax, assessment or charge in installments. 
Lender acknowledges and agrees that performance of the obligations set
forth in this Paragraph 3(a) by a Major Tenant or a Ground Lessee with
respect to its leased premises shall be deemed compliance with such provisions
by Borrower with respect to such portion of the Premises.


 


16

















 


(b)                                 If Borrower desires to
contest any tax, assessment or charge relating to the Premises, Borrower may do
so by paying the same in full, under protest, in the manner provided by law;
provided, however, that


 


(i)                                     if contest of any
tax, assessment or charge may be made without the payment thereof, and


 


(ii)                                  such contest shall
have the effect of preventing the collection of the tax, assessment or charge
so contested and the sale or forfeiture of the Premises or any part thereof or
any interest therein to satisfy the same,


 


then Borrower may in its discretion and upon
the giving of written notice to Lender of its intended action and upon the
furnishing to Lender of such security or bond as Lender may require, contest
any such tax, assessment or charge in good faith and in the manner provided by
law.  All costs and expenses incidental
to such contest shall be paid by Borrower. 
In the event of a ruling or adjudication adverse to Borrower, Borrower
shall promptly pay such tax, assessment or charge.  Borrower shall indemnify and save harmless
the Lender and the Premises from any loss or damage arising from any such
contest and shall, if necessary to prevent sale, forfeiture or any other loss
or damage to the Premises or to Lender, pay such tax, assessment or charge or
take whatever action is necessary to prevent any sale, forfeiture or loss.  Lender acknowledges and agrees that upon
compliance with the foregoing requirements, to the extent permitted under its
lease of the Premises, a Major Tenant or a Ground Lessee shall have all rights
of contest as set forth in this Paragraph 3(b).


 


4.                                       (a)                                  With respect to the
portion of the Premises subject to a Ground Lease, for so long as the Ground
Lease shall remain in full force and effect, (i) Borrower shall cause such
Ground Lessee to obtain and maintain all insurance required by the terms
thereof and, to comply with all requirements of such Ground Lease relating
thereto, (ii) all insurance shall be in form content and amounts and
written by insurance companies as required by such Ground Lease and shall
satisfy all other requirements of such Ground Lease, and (iii) Borrower shall
at all times keep or cause to be kept in force commercial general liability
insurance naming Lender as an additional insured protecting Borrower and Lender
against liability for bodily injury or property damage occurring in, on or
adjacent to the Premises in commercially reasonable amounts.  With respect to the portion of the Premises
not then subject to a Ground Lease, Borrower shall at all times keep or cause
to be kept in force (i) property insurance insuring all Improvements which
now are or hereafter become a part of the Premises for perils covered by a
causes of loss-special form insurance policy, including coverage against
terrorism containing both replacement cost and agreed amount endorsements or
equivalent coverage; (ii) commercial general liability insurance naming
Lender as an additional insured protecting Borrower and Lender against
liability for bodily injury or property damage occurring in, on or adjacent to
the Premises in


 


17

















 


commercially reasonable amounts; (iii) boiler
and machinery insurance if the property has a boiler or is an office building; (iv) rental
value insurance for the perils specified herein for one hundred percent (100%)
of the Rents (including operating expenses, real estate taxes, assessments and
insurance costs which are lessee’s liability) for a period of twelve (12)
months; (v) builders risk insurance during all periods of construction;
and (vi) insurance against all other hazards as may be reasonably required
by Lender, including, without limitation, insurance against loss or damage by
flood.  Notwithstanding anything herein
above to the contrary, if neither: (i) property insurance without an
exclusion for terrorism, terrorist acts or similar perils (“Terrorism”) nor; (ii) a
separate policy insuring specifically against Terrorism is available at a cost
which is in Lender’s opinion is commercially reasonable, taking into
consideration, among other things: (a) how properties similar in type,
size, quality and location are insured with respect to Terrorism; and (b) the
amount of coverage, premium and deductible applicable to such insurance, then
Lender agrees to waive the requirement to provide insurance covering Terrorism
until such coverage again becomes available at a cost, which in Lender’s
opinion is commercially reasonable.


 


(b)                                 All insurance required
to be maintained by Borrower (including deductibles and exclusions) shall be in
form, content and amounts approved by Lender and written by an insurance
company or companies approved by Lender and rated  A-, class size VIII or better in the most current issue of Best’s Insurance
Reports and which is licensed to do business in the State in which the Premises
are located or a governmental agency or instrumentality approved by
Lender.  The policies for such insurance
shall have attached thereto standard mortgagee clauses in favor of and
permitting Lender to collect any and all proceeds payable thereunder and shall
include a 30 day (except for nonpayment of premium, in which case, a 10 day)
notice of cancellation clause in favor of Lender.  All certificates of insurance (or policies if
requested by Lender) shall be delivered to and held by Lender as further
security for the payment of the Note and any other obligations arising under
the Loan Documents, with evidence of renewal coverage delivered to Lender at
least 30 days before the expiration date of any policy.  Borrower shall not carry or permit to be
carried separate insurance, concurrent in kind or form and contributing in the
event of loss, with any insurance required in the Loan Documents.


 


(c)                                  As used herein, the
term “Major Tenant” (collectively or individually as the context may require)
shall mean the tenants under the following leases: (i) Lease in favor of
Price Chopper Operating Co. of New Hampshire, Inc. dated December 18,
2003 (“Price Chopper”), (ii) Lease in favor of Michael’s Stores, Inc.
dated February 14, 2005, (iii) Lease in favor of Bed Bath &
Beyond, Inc. dated May 2, 2003, (iv) Lease in favor of GMRI, Inc.
dated May 11, 2004 (“Olive Garden”), (v) Lease in favor of Border’s, Inc.
dated March 26, 2003, (vi) Lease in favor of Circuit City Stores, Inc.,
dated May 16, 2005 (“Circuit City”), and (vii) Lease in favor of Pier
1 Imports (U.S.), Inc. dated September 8, 2003, as amended, or any
lease to any replacement tenant under such leases


 


18

















 


approved by Lender (a “Replacement Tenant”).  To the contrary notwithstanding, so long as
there is no Event of Default hereunder and so long as the leases with Price
Chopper, Olive Garden or Circuit City or any Replacement Tenant under such
Lease remains in full force and effect and there are no material breaches
thereof beyond the expiration of any applicable notice and cure periods, Lender
will allow Price Chopper, Olive Garden or Circuit City or any said Replacement
Tenant to keep in force the insurance required herein, except with respect to
coverage for rental insurance, and such performance by Price Chopper, Olive
Garden or Circuit City shall be deemed performance by Borrower with respect to
such required insurance hereunder.  All
insurance coverages and requirements that are not maintained by Price Chopper,
Olive Garden or Circuit City or a Replacement Tenant in accordance with the
Lender’s insurance requirements herein shall at all times during the Loan be
maintained by Borrower.


 


(d)                                 To the contrary
notwithstanding, so long as there is no Event of Default hereunder and so long
as the lease between Borrower and Major Tenant remains in full force and effect
and there are no material breaches thereof beyond the expiration of any
applicable notice and cure periods, Lender agrees to accept self-insurance by
Circuit City for its leased premises. 
Lender will only accept self-insurance by Circuit City under the terms
of its lease if Circuit City maintains the minimum tangible net worth as
required by its Lease.  All insurance
coverages and requirements that are not self insured by Circuit City in
accordance with the Lender’s insurance requirements herein shall at all times
during the Loan be maintained by Circuit City or Borrower (with the exception
of coverage for rental insurance, which shall be provided by Borrower).


 


5.                                       Borrower shall
deposit with and pay to Lender the estimated taxes and assessments assessed or
levied against and next due on the Premises and the estimated premiums for the
insurance required pursuant to the Loan Documents, all in accordance with and
subject to the requirements of the Loan Agreement.


 


6.                                       In the event of
any damage to or destruction of the Premises, or any part thereof:


 


(a)                                  Borrower will
immediately notify Lender thereof in the manner provided in this Mortgage for
the giving of notices.  Lender shall have
the right (which may be waived by Lender in writing) to settle and adjust any
claim under such insurance policies required to be maintained by Borrower.  In all circumstances, the proceeds thereof
shall be paid to Lender and Lender is authorized to collect and to give
receipts therefor.  Borrower agrees and
acknowledges that such proceeds shall be held by Lender without any allowance
of interest and that in any bankruptcy proceeding of Borrower, all such
proceeds shall be deemed to be “Cash Collateral” as that term is defined in Section 363
of the Bankruptcy Code.  Provided that no
Event of Default exists, Borrower shall have the right to participate in any
settlement or adjustment; provided, however, that any settlement or adjustment
shall be subject to the written approval of Lender, not to be unreasonably
withheld.


 


19

















 


(b)                                 Such proceeds, after
deducting therefrom any reasonable expenses incurred by Lender in the
collection thereof (including but not limited to reasonable attorneys’ fees and
costs), shall be applied by Lender to pay the Indebtedness secured hereby
including, but not limited to the Make Whole Premium, whether or not then due
and payable, provided, however, that if no Event of Default exists at the time
of such application, no Make Whole Premium shall be due.


 


Notwithstanding anything hereinabove to the contrary,


 


(i)                                     in the event the
casualty occurs more than six (6) months prior to the Maturity Date and no
Event of Default exists, Lender shall apply such proceeds as follows:


 


(A)                              If the aggregate amount
of such proceeds is less than $250,000, Lender shall pay such proceeds directly
to Borrower, to be held in trust for Lender and applied to the cost of
rebuilding and restoring the Premises.


 


(B)                                If the aggregate amount
of such proceeds equals or exceeds $250,000 Lender shall disburse such amounts
of the proceeds as Lender reasonably deems necessary for the repair or
replacement of the Premises, subject to the conditions set forth in paragraph 6(c) below.


 


(ii)                                  in the event (x) an
Event of Default exists, or (y) the casualty occurs during the last (6) months
prior to the Maturity Date and Lender determines that the repair and
restoration of such casualty cannot be completed prior to the Maturity Date, or
(z) the conditions set forth in paragraph 6(c) are not met, then Lender,
in its sole and absolute discretion may either:


 


(A)                              declare the entire
Indebtedness to be immediately due and payable, provided, however, that if no
Event of Default exists, no Make Whole Premium shall be due.  All proceeds shall be applied toward payment
of the Indebtedness in such priority as Lender elects; or


 


(B)                                disburse such proceeds
as Lender reasonably deems necessary for the repair or replacement of the
Premises subject to those conditions set forth in paragraph 6(c) which
Lender in its sole and absolute discretion may require.


 


(c)           (i)                                     In
the event that Borrower is to be reimbursed out of the insurance proceeds or
out of any award or payment received with respect to a Taking, Lender shall
from time to time make available such proceeds, subject to the following
conditions: (a) there continues to exist no Event of Default; (b) the
delivery to Lender of satisfactory evidence of the estimated cost of


 


20

















 


completion of such repair and restoration work and any architect’s
certificates, waivers of lien, contractor’s sworn statements, and other
evidence of cost and of payment and of the continued priority of the lien
hereof over any potential liens of mechanics and materialmen (including,
without limitation, title policy endorsements) as Lender may reasonably require
and approve; (c) the time required to complete the repair and restoration
work and for the income from the Premises to return to the level it was prior
to the loss will not exceed the coverage period of the rental value insurance
required hereunder; (d) the annual net cash flow (annual net operating
income after deduction for tenant improvements, leasing commissions, annual
replacement reserves and a management fee) shall equal or exceed 1.5 times the
annual debt service on the Note.  Only
net operating income from approved executed Leases in effect on the Premises,
having at least three (3) years remaining prior to the expiration of their
term, with no uncured defaults, shall be used in Lender’s determination of the
annual net cash flow; (e) Lender approves the plans and specifications of
such work before such work is commenced if the estimated cost of rebuilding and
restoration exceeds 25% of the Indebtedness or involves any structural changes
or modifications.  If said plans and
specifications substantially comply with those previously approved by Lender,
Lender’s approval shall not be unreasonably withheld; (f) if the amount of
any insurance proceeds, award or other payment is insufficient to cover the
cost of restoring and rebuilding the Premises, Borrower shall pay such cost in
excess of such proceeds, award or other payment before being entitled to
reimbursement out of such funds; (g) Borrower pays to Lender a
nonrefundable processing fee equal to the greater of $5,000.00 or .25% of the
amount of such proceeds within sixty (60) days of the occurrence of any such
damage or destruction and before Lender disburses any proceeds; and (h) such
other conditions to such disbursements, in Lender’s reasonable discretion, as
would be customarily required by a construction lender doing business in the
area where the Premises is located or which are otherwise required by any
rating agency rating a securitization transaction with respect to the Loan.


 


(ii)                                  No payment made by
Lender prior to the final completion of the repair or restoration work shall,
together with all payments theretofore made, exceed 90% of the cost of such
work performed to the time of payment, and at all times the undisbursed balance
of said proceeds shall be at least sufficient to pay for the cost of completion
of such work free and clear of all liens. 
Any proceeds remaining after payment of the cost of rebuilding and
restoration shall, at the option of Lender, either be (a) applied in
reduction of the Indebtedness secured hereby, provided, however, that if no
Event of Default exists at the time of such application, no Make Whole Premium
shall be due, or (b) paid to Borrower.


 


21


 

















 


 


(iii)                               Repair and restoration
of the Premises shall be commenced promptly after the occurrence of the loss
and shall be prosecuted to completion diligently, and the Premises shall be so
restored and rebuilt to substantially the same character and quality as prior
to such damage and destruction and shall comply with all Legal Requirements.


 


(d)                                 Should such damage or
destruction occur after foreclosure or sale proceedings have been instituted,
the proceeds of any such insurance policy or policies, if not applied in
rebuilding or restoration of the Improvements, shall be used to pay (i) the
Indebtedness then due and owing in the event of a non-judicial sale in such
priority as Lender elects, or (ii) the amount due in accordance with any
decree of foreclosure or deficiency judgment that may be entered in connection
with such proceedings, and the balance, if any, shall be paid to the owner of
the equity of redemption if it shall then be entitled to the same, or otherwise
as any court having jurisdiction may direct.


 


(e)                                  To the contrary
notwithstanding, so long as there is no Event of Default hereunder and so long
as the lease with Major Tenant remains in full force and effect, Lender agrees
that the provisions of the lease with Major Tenant governing the application of
insurance proceeds and restoration shall apply with respect to the Premises.


 


(f)                                    To the contrary
notwithstanding, at any time while a Ground Lease is in full force and effect, (i) the
disbursement and use of insurance proceeds resulting from damage or destruction
to such portion of the Premises shall be governed by the terms and provisions
of the Ground Lease with respect thereto and (ii) Lender shall have no
right to receive any loss proceeds except to the extent (and under the
conditions) payable to Borrower, as landlord under the Ground Lease, or a fee
mortgagee under the Ground Lease.  All
proceeds payable to Lender thereunder, if any, shall be applied in accordance
with the preceding subparagraphs of this Section 6.  Whether or not a Ground Lease is in full
force and effect, Borrower shall pay to Lender the actual costs incurred by Lender,
if any, in connection with the settlement of the insurance claim.


 


7.                                       In
the event of the commencement of a Taking affecting the Premises:


 


(a)                                  Borrower shall notify
Lender thereof in the manner provided in this Mortgage for the giving of
notices.  Lender may participate in such
proceeding, and Borrower shall deliver to Lender all documents requested by it
to permit such participation.


 


(b)                                 Borrower shall cause
the proceeds of any award or other payment made relating to a Taking, to be
paid directly to Lender.  Lender, in its
sole and absolute discretion: (i) may apply all such proceeds to pay the
Indebtedness in such priority as Lender elects, provided however, that if no
Event of Default exists at the time of such application no Make Whole Premium
shall be due; or (ii) subject to and in accordance with the provisions set
forth in paragraph 6(c) above, may


 


22

















 


disburse such amounts of the proceeds as Lender reasonably deems
necessary for the repair or replacement of the Premises; provided, however,
with respect to the portion of the Premises subject to a Ground Lease, if the
Ground Lease is in full force and effect, only those proceeds payable to
Borrower in accordance with the Ground Lease shall be so payable.


 


(c)                                  Notwithstanding
anything herein above to the contrary, provided no Event of Default exists,
Lender agrees to disburse the proceeds received from any Inconsequential
Taking, as hereinafter defined, to Borrower for the repair and/or replacement
of the Premises.  An Inconsequential
Taking shall be a Taking which (i) results in less than $250,000 in
proceeds; (ii) does not, in Lender’s determination, materially or
adversely affect the Improvements, parking, access, ingress, egress or use of
the Premises; and (iii) does not trigger any rights or options of tenants
under the Leases.


 


(d)                                 To the contrary
notwithstanding, so long as there is no Event of Default hereunder and so long
as the lease with Major Tenant remains in full force and effect, Lender agrees
that the provisions of the lease with Major Tenant governing the application of
the proceeds of a Taking shall apply with respect to the Premises.


 


8.                                       If by the laws
of the United States of America or of any state or governmental subdivision having
jurisdiction over Borrower or of the Premises or of the Loan evidenced by the
Loan Documents or any amendments or modifications thereof, any tax or fee is
due or becomes due or is imposed upon Lender in respect of the issuance of the
Note hereby secured or the making, recording and registration of this Mortgage
or otherwise in connection with the Loan Documents, the Environmental Indemnity
or the Loan, except for Lender’s income or franchise tax, Borrower covenants
and agrees to pay such tax or fee in the manner required by such law, and to
hold harmless and indemnify Lender, its successors and assigns, against any
liability incurred by reason of the imposition of any such tax or fee.


 


9.                                       (a)                                  Upon the occurrence
of any Event of Default, Lender may, but need not, make any payment or perform
any act herein required of Borrower, in any form and manner deemed expedient
and may, but need not, make full or partial payments of principal or interest
on prior encumbrances, if any, and purchase, discharge, compromise or settle
any tax lien or other prior lien or title or claim thereof, or redeem from any
tax sale or forfeiture affecting said Premises, or contest any tax or
assessment.  All moneys paid for any of
the purposes herein authorized and all reasonable expenses paid or incurred in
connection therewith, including but not limited to, reasonable attorneys’ fees
and costs and reasonable attorneys’ fees and costs on appeal, and any other
money advanced by Lender to protect the Premises and the lien hereof, shall be
so much additional Indebtedness secured hereby and shall become immediately due
and payable without notice and with interest thereon at the Default Rate from
the date of expenditure or advance until paid.


 


23

















 


(b)                                 In making any payment
hereby authorized relating to taxes or assessments or for the purchase,
discharge, compromise or settlement of any prior lien, Lender may make such
payment according to any bill, statement or estimate secured from the appropriate
public office without inquiry into the accuracy thereof or into the validity of
any tax, assessment, sale, forfeiture, tax lien or title or claim thereof or
without inquiry as to the validity or amount of any claim for lien which may be
asserted.


 


10.                                 If one or more of the
following events (herein called an “Event of Default” or “Events of Default” as
the context so requires) shall have occurred:


 


(a)                                  failure to pay when
due any principal, interest, Make Whole Premium or other Indebtedness,
utilities, taxes or assessments or insurance premiums required pursuant to the
Loan Documents or the Environmental Indemnity, and such failure shall have
continued for 5 days, as to payment of any principal, interest or taxes or
assessments, or insurance premiums or for 5 days after written notice
specifying such default is given by Lender to Borrower as to payment of any
Make Whole Premium; or


 


(b)                                 Borrower, Interest
Owner or any guarantor voluntarily brings or acquiesces to any of the
following:  (A) any action for dissolution,
act of dissolution or dissolution or the like of Borrower, Interest Owner or
any guarantor under the Federal Bankruptcy Code as now or hereafter
constituted; (B) the filing of a petition or answer proposing the
adjudication of Borrower, Interest Owner or any guarantor as a bankrupt or its
reorganization or arrangement, or any composition, readjustment, liquidation,
dissolution or similar relief with respect to it pursuant to any present or
future federal or state bankruptcy or similar law; or (C) the appointment
by order of a court of competent jurisdiction of a receiver, trustee or
liquidator of the Premises or any part thereof or of Borrower, Interest Owner
or any guarantor or of substantially all of the assets of Borrower, Interest
Owner or any guarantor; or


 


(c)                                  one or more of the
items set forth in paragraph 10(b) above occur which were either not (i) voluntarily
brought by Borrower, Interest Owner or any guarantor or (ii) acquiesced in
by Borrower, Interest Owner or any guarantor, and which are not discharged or
dismissed within 90 days after the action, filing or appointment, as the case
may be; or


 


With respect to the matters in (b) and (c) above
for an Interest Owner only, no Event of Default shall occur until an interested
party or Interest Owner asserts a claim or right against Borrower or the
Premises which delays or otherwise affects Lender’s rights, remedies, or
interests granted under the Loan Documents (whether or not such assertion is
successful).


 


(d)                                 with respect to the
matters not described in the other subparagraphs of this paragraph 10, failure to duly observe or perform any
covenant, condition or


 


24

















 


agreement of the Borrower or any guarantor contained in this Mortgage,
the Loan Agreement, the Guaranty, the Note or the Assignment of Leases from
Borrower to Lender or in any other instrument or agreement which evidences or
secures the Loan (the “Loan Documents”), or in the Environmental Indemnity, and
such failure shall have continued for 30 days after Notice specifying such
failure is given by Lender to Borrower; or


 


If any failure to observe or perform under (d) above shall be of
such nature that it cannot be cured or remedied within 30 days, Borrower shall
be entitled to a reasonable period of time to cure or remedy such failure (not
to exceed 90 days following the giving of Notice), provided Borrower commences the cure or remedy thereof within
the 30 day period following the giving of Notice and thereafter proceeds with
diligence, as determined by Lender, to complete such cure or remedy.


 


(e)                                  the failure of
Borrower to duly observe or perform any of the covenants, conditions and
agreements of the Borrower contained in paragraph 2(f) of this Mortgage;
or


 


(f)                                    any representation
when made by or on behalf of Borrower, Interest Owner or any guarantor
regarding the Premises, the making or delivery of any of the Loan Documents or
the Environmental Indemnity or in any material written information provided by
or on behalf of Borrower, Interest Owner or any guarantor in connection with
the Loan shall prove to be untrue or inaccurate in any material respect; or


 


(g)                                 the failure of
Borrower to give Notice to Lender within 90 days after the death of any
individual who is personally liable for any obligation under the Loan Documents
or the Environmental Indemnity, as Borrower, indemnitor or guarantor, whether
or not such individual had executed the Note or this Mortgage; or


 


(h)                                 subject to the
provisions of paragraph 2(f), the
failure of Borrower to provide Lender with an assumption agreement in form and
substance and executed by a person(s) or entity(ies) acceptable to Lender in
its sole discretion to assume the obligations of any deceased individual who is
personally liable for any obligation under the Loan Documents or the
Environmental Indemnity, as Borrower, indemnitor or guarantor, whether or not
such individual had executed the Note or this Mortgage, and such failure shall
have continued for 90 days after the death of such individual; or


 


(i)                                     the failure of
Borrower to remain a Single-Purpose Entity;


 


then, in each and every such case, the whole of said principal sum
hereby secured shall, at the option of the Lender and without further notice to
Borrower, become immediately due and payable together with accrued interest
thereon, a Make Whole


 


25

















 


Premium calculated in accordance with the provisions of the Loan
Documents and all other Indebtedness, and whether or not Lender has exercised
said option, interest shall accrue on the entire principal balance and any
interest or Make Whole Premium or other Indebtedness then due, at the Default
Rate until fully paid or if Lender has not exercised said option, for the
duration of any Event of Default.


 


11.                                 Borrower agrees that
if Lender accelerates the whole or any part of the principal sum hereby secured
after the occurrence of an Event of Default, or applies any proceeds pursuant
to the provisions hereof, Borrower waives any right to prepay the principal sum
hereby secured in whole or in part without premium and agrees to pay, as yield
maintenance protection and not as a penalty, a “Make Whole Premium”.  However, in the event any proceeds from a
casualty or Taking of the Premises are applied to reduce the principal balance
under the Note, no Make Whole Premium shall be due so long as no Event of
Default exists at the time of such application.


 


12.                                 Upon the occurrence of
any Event of Default, in addition to any other rights or remedies provided in
the Loan Documents, at law, in equity or otherwise, Lender shall have the right
to foreclose the lien hereof, and to the extent permitted herein and by
applicable law to sell the Premises by sale independent of the foreclosure
proceedings.  In any suit to foreclose the
lien hereof, and in any sale of the Premises, there shall be allowed and
included as additional Indebtedness payable by Borrower to Lender and secured
hereby all expenditures and expenses which may be paid or incurred by or on
behalf of Lender for attorneys’ fees and costs, including attorneys’ fees and
costs on appeal, appraisers’ fees, expenditures for documentary and expert
evidence, stenographer’s charges, publication and advertising costs, survey
costs, environmental audits and costs (which may be estimated as to items to be
expended after the entry of any decree) of procuring all such abstracts of
title, title searches and examinations, title insurance policies, torrens
certificates and similar data and assurances with respect to title as Lender deems
reasonably necessary either to prosecute such suit or to consummate such sale
or to evidence to bidders at any sale the true condition of the title to or the
value of the Premises.


 


13.                                 The proceeds of any
foreclosure sale, or other sale of the Premises in accordance with the terms
hereof or as permitted by law, shall be distributed and applied in the
following order of priority:  first, to
the payment of all costs and expenses incident to the foreclosure and/or sale
proceedings, including all items as are mentioned in any preceding or
succeeding paragraph hereof; second, to the payment of all other items which
under the terms hereof constitute secured Indebtedness in addition to that
evidenced by the Note, with interest thereon as herein provided; third, to the
payment of all principal, accrued interest remaining unpaid on the Note and
Make Whole Premium; fourth, any surplus to the Borrower or Borrower’s
successors or assigns, as their rights may appear.


 


14.                                 Following the
occurrence of an Event of Default, unless the same has been specifically waived
in writing, Borrower shall forthwith upon demand of Lender surrender to Lender
possession of the Premises, and Lender shall be entitled to take actual


 


26

















 


possession of the Premises or any part thereof personally or by its
agents or attorneys, and Lender in its discretion may, with or without force
and with or without process of law, enter upon and take and maintain possession
of all or any part of the Premises together with all documents, books, records,
papers and accounts of the Borrower or the then owner of the Premises relating
thereto, and may exclude Borrower, its agents or assigns wholly therefrom, and
may as attorney-in-fact or agent of the Borrower, or in its own name as Lender
and under the powers herein granted:


 


(a)                                  hold, operate,
maintain, repair, rebuild, replace, alter, improve, manage or control the
Premises as it deems judicious, insure and reinsure the same and any risks
related to Lender’s possession, operation and management thereof and receive
all Rents, either personally or by its agents, and with full power to use such
measures, legal or equitable, as in its discretion it deems proper or necessary
to enforce the payment or security of the Rents, including actions for the
recovery of Rent, actions in forcible detainer and actions in distress for
Rents, hereby granting full power and authority to exercise each and every of
the rights, privileges and powers herein granted at any and all times hereafter,
without notice to Borrower; and


 


(b)                                 conduct leasing
activity pursuant to the provisions of the Assignment of Leases.


 


Lender shall not be obligated to perform or discharge, nor does it
hereby undertake to perform or discharge, any obligation, duty or liability
under any Lease.  Except to the extent
that the same is caused solely by Lender’s gross negligence or willful
misconduct, should Lender incur any liability, loss or damage under any Leases,
or under or by reason of the Assignment of Leases, or in the defense of any
claims or demands whatsoever which may be asserted against Lender by reason of
any alleged obligations or undertakings on its part to perform or discharge any
of the terms, covenants or agreements in any Lease, the amount thereof,
including costs, expenses and reasonable attorneys’ fees and costs, including
reasonable attorneys’ fees and costs on appeal, shall be added to the
Indebtedness and secured hereby.


 


15.                                 Upon the occurrence of
an Event of Default, Lender in the exercise of the rights and powers conferred
upon it shall have the full power to use and apply the Rents, less costs and
expenses of collection to the payment of or on account of the items listed in (a) —
(c) below (subject to the Ground Leases), at the election of Lender and in
such order as Lender may determine as follows:


 


(a)                                  to the payment of (i) the
expenses of operating and maintaining Borrower’s interest in the Premises,
including, but not limited to the cost of management, leasing (which shall
include reasonable compensation to Lender and its agent or agents if management
and/or leasing is delegated to an agent or agents), repairing, rebuilding,
replacing, altering and improving the Premises, (ii) premiums on insurance
as hereinabove authorized, (iii) taxes and special assessments now due or
which may hereafter become due on the Premises and (iv) expenses of
placing


 


27

















 


the Premises in such condition as will, in the sole judgment of Lender,
make it readily rentable;


 


(b)                                 to the payment of any
principal, interest or any other Indebtedness secured hereby or any deficiency
which may result from any foreclosure sale;


 


(c)                                  to the payment of
established claims for damages, if any, reasonable attorneys’ fees and costs and
reasonable attorneys’ fees and costs on appeal.


 


The manner of the application of Rents, the reasonableness of the costs
and charges to which such Rents are applied and the item or items which shall
be credited thereby shall be within the sole and unlimited discretion of
Lender.  To the extent that the costs and
expenses in (a) and (c) above exceed the amounts collected, the
excess shall be added to the Indebtedness and secured hereby.


 


16.                                 Upon the occurrence of
any Event of Default, unless the same has been specifically waived in writing,
Lender may apply to any court having jurisdiction for the appointment of a
receiver of the Premises.  Such
appointment may be made either before or after sale, without notice, without
regard to the solvency or insolvency of Borrower at the time of application for
such receiver and without regard to the then value of the Premises or the
adequacy of Lender’s security.  Lender
may be appointed as such receiver.  The
receiver shall have the power to collect the Rents during the pendency of any
foreclosure proceeding and, in case of a sale, during the full statutory period
of redemption, if any, as well as during any further times when Borrower,
except for the intervention of such receiver, would be entitled to collect such
Rents.  In addition, the receiver shall
have all other powers which shall be necessary or are usual in such cases for
the protection, possession, control, management and operation of the Premises
during the whole of said period.  The
court from time to time may authorize the receiver to apply the net income in
its possession at Lender’s election and in such order as Lender may determine
in payment in full or in part of those items listed in paragraph 15.


 


17.                                 (a)                                  Borrower agrees that
all reasonable costs, charges and expenses, including but not limited to,
reasonable attorneys’ fees and costs, incurred or expended by Lender arising
out of or in connection with any action, proceeding or hearing, legal,
equitable or quasi-legal, including the preparation therefor and any appeal
therefrom, in any way affecting or pertaining to the Loan Documents, the
Environmental Indemnity or the Premises, shall be promptly paid by
Borrower.  All such sums not promptly
paid by Borrower shall be added to the Indebtedness secured hereby and shall
bear interest at the Default Rate from the date of such advance and shall be
due and payable on demand.


 


(b)                                 Borrower hereby agrees
that upon the occurrence of an Event of Default and the acceleration of the
principal sum secured hereby pursuant to this Mortgage, to the full extent that
such rights can be lawfully waived, Borrower hereby waives and agrees not to
insist upon, plead, or in any manner take advantage of, any notice of


 


28

















 


acceleration, any stay, extension, exemption, homestead, marshaling or
moratorium law or any law providing for the valuation or appraisement of all or
any part of the Premises prior to any sale or sales thereof under any provision
of this Mortgage or before or after any decree, judgment or order of any court
or confirmation thereof, or claim or exercise any right to redeem all or any
part of the Premises so sold and hereby expressly waives to the full extent
permitted by applicable law on behalf of itself and each and every person or
entity acquiring any right, title or interest in or to all or any part of the
Premises, all benefit and advantage of any such laws which would otherwise be
available to Borrower or any such person or entity, and agrees that neither Borrower
nor any such person or entity will invoke or utilize any such law to otherwise
hinder, delay or impede the exercise of any remedy granted or delegated to
Lender herein but will permit the exercise of such remedy as though any such
laws had not been enacted.  Borrower
hereby further expressly waives to the full extent permitted by applicable law
on behalf of itself and each and every person or entity acquiring any right,
title or interest in or to all or any part of the Premises any and all rights
of redemption from any sale or any order or decree of foreclosure obtained
pursuant to provisions of this Mortgage.


 


18.                                 In accordance with and
subject to the terms and conditions of the Assignment of Leases, Borrower
hereby assigns to Lender directly and absolutely, and not merely collaterally,
the interest of Borrower as lessor under the Leases of the Premises, and the
Rents payable under any Lease and/or with respect to the use of the Premises,
or portion thereof, including any oil, gas or mineral lease, or any
installments of money payable pursuant to any agreement or any sale of the
Premises or any part thereof, subject only to a license, if any, granted by
Lender to Borrower with respect thereto prior to the occurrence of an Event of
Default.  Borrower has executed and
delivered the Assignment of Leases which grants to Lender specific rights and
remedies in respect of said Leases and governs the collection of Rents
thereunder and from the use of the Premises, and such rights and remedies so
granted shall be cumulative of those granted herein.


 


The collection of such Rents and the application thereof as aforesaid
shall not cure or waive any Event of Default or notice of default hereunder or
invalidate any act done pursuant to such notice, except to the extent any such
Event of Default is fully cured.  Failure
or discontinuance of Lender at any time, or from time to time, to collect any
such moneys shall not impair in any manner the subsequent enforcement by Lender
of the right, power and authority herein conferred on Lender.  Nothing contained herein, including the
exercise of any right, power or authority herein granted to Lender, shall be,
or be construed to be, an affirmation by Lender of any tenancy, Lease or
option, or an assumption of liability under, or the subordination of the lien
or charge of this Mortgage to any such tenancy, Lease or option.  Borrower hereby agrees that, in the event
Lender exercises its rights as provided for in this paragraph or in the Assignment
of Leases, Borrower waives any right to compensation for the use of Borrower’s
furniture, furnishings or equipment in the Premises for the period such
assignment of rents or receivership is in effect, it being understood that the
Rents derived from the use


 


29

















 


of any such items shall be applied to Borrower’s obligations hereunder
as above provided.


 


19.                                 All rights and
remedies granted to Lender in the Loan Documents shall be in addition to and
not in limitation of any rights and remedies to which it is entitled in equity,
at law or by statute, and the invalidity of any right or remedy herein provided
by reason of its conflict with applicable law or statute shall not affect any
other valid right or remedy afforded to Lender. 
No waiver of any default or Event of Default under any of the Loan
Documents shall at any time thereafter be held to be a waiver of any rights of
the Lender hereunder, nor shall any waiver of a prior Event of Default or
default operate to waive any subsequent Event of Default or default.  All remedies provided for in the Loan
Documents are cumulative and may, at the election of Lender, be exercised
alternatively, successively or concurrently. 
No act of Lender shall be construed as an election to proceed under any
one provision herein to the exclusion of any other provision or to proceed
against one portion of the Premises to the exclusion of any other portion.  Time is of the essence under this Mortgage
and the Loan Documents.


 


20.                                 By accepting payment
of any sum secured hereby after its due date, Lender does not waive its right
either to require prompt payment when due of all other sums or installments so
secured or to declare a default for failure to pay such other sums or
installments.


 


21.                                 The usury provisions
of paragraph 6 of the Note and the limitation of recourse liability provisions
of paragraph 9 of the Note are fully incorporated herein by reference as if the
same were specifically stated here.


 


22.                                 In the event one or
more provisions of the Loan Documents shall be held to be invalid, illegal or
unenforceable in any respect, such invalidity, illegality or unenforceability
shall not affect any other provision hereof, and the Loan Documents shall be
construed as if any such provision had never been contained herein.


 


23.                                 If the payment of the
Indebtedness secured hereby or of any part thereof shall be extended or varied,
or if any part of the security be released, all persons now or at any time
hereafter liable therefor, or interested in said Premises, shall be held to assent
to such extension, variation or release, and their liability and the lien and
all provisions hereof shall continue in full force, the right of recourse
against all such persons being expressly reserved by Lender notwithstanding
such variation or release.


 


24.                                 Upon payment in full
of the principal sum, interest and other Indebtedness secured by the Loan
Documents, these presents shall be null and void, and Lender shall release this
Mortgage and the lien hereof by proper instrument executed in recordable form.


 


25.                                 (a)                                  Borrower hereby
grants to Lender and its respective agents, attorneys, employees, consultants,
contractors and assigns an irrevocable license and authorization to enter upon
and inspect the Premises and all facilities located thereon at reasonable
times, subject to the inspection rights provisions afforded


 


30

















 


to Borrower under the Leases. 
Lender shall make reasonable efforts to ensure that the operations of
tenants are not disrupted.


 


(b)                                 In connection with any
sale or conveyance of this Mortgage, Borrower grants to Lender and its
respective agents, attorneys, employees, consultants, contractors and assigns
an irrevocable license and authorization to conduct, at Lender’s expense, a
Phase I environmental audit of the Premises, subject to the inspection rights
provisions afforded to Borrower under the Leases.


 


(c)                                  In the event there
has been an Event of Default or in the event Lender has formed a reasonable
belief, based on its inspection of the Premises or other factors known to it,
that Hazardous Materials may be present on the Premises, then Borrower grants
to Lender and its respective agents, attorneys, employees, consultants,
contractors and assigns an irrevocable license and authorization to conduct, at
Borrower’s expense using GEI Consultants, Inc. or the firm of Borrower’s
choice, subject to Lender’s reasonable approval, environmental tests of the
Premises, including without limitation, a Phase I environmental audit,
subsurface testing, soil and ground water testing, and other tests which may
physically invade the Premises or facilities (the “Tests”).  The scope of the Tests shall be such as
Lender, in its sole discretion, determines is necessary to (i) investigate
the condition of the Premises, (ii) protect the security interests created
under this Mortgage, or (iii) determine compliance with Environmental
Laws, the provisions of the Loan Documents and the Environmental Indemnity and
other matters relating thereto.  Lender
shall make reasonable efforts to ensure that the operations of the tenants are
not disrupted.


 


(d)                                 Provided no Event of
Default has occurred, Lender will provide Borrower with reasonable notice of
Lender’s intent to enter, inspect and conduct the Tests provided for in this
paragraph.  In addition, Lender shall
conduct such  inspections and Tests
during normal business hours and use reasonable efforts to minimize disruption
of the lessees’ business operations.


 


The foregoing licenses and authorizations are intended to be a means of
protection of Lender’s security interest in the Premises and not as
participation in the management of the Premises.


 


26.                                 Within 15 days after
any written request by either party to this Mortgage, the requested party shall
certify, by a written statement duly acknowledged, the amount of principal,
interest and other Indebtedness then owing on the Note, the terms of payment,
Maturity Date and the date to which interest has been paid.  Borrower shall further certify whether any
defaults, offsets or defenses exist against the Indebtedness secured
hereby.  Borrower shall also furnish to
Lender, within 30 days of its request therefor, tenant estoppel letters from
such tenants of the Premises as Lender may reasonably require; which Lender
shall not request more than one (1) time per annum, nor more than one (1) time
prior to the date of the Securitization Transaction.


 


31

















 


27.                                 Each notice, consent,
request, report or other communication under this Mortgage or any other Loan
Document (each a “Notice”) which any party hereto may desire or be required to
give to the other shall be deemed to be an adequate and sufficient notice if
given in writing and service is made by either (i) registered or certified
mail, postage prepaid, in which case notice shall be deemed to have been
received three (3) business days following deposit to U.S. mail; or (ii) nationally
recognized overnight air courier, next day delivery, prepaid, in which case
such notice shall be deemed to have been received one (1) business day
following delivery to such nationally recognized overnight air courier.  All Notices shall be addressed to Borrower at
its address given on the first page hereof or to Lender at c/o Principal
Real Estate Investors, LLC, 801
Grand Avenue, Des Moines, Iowa 50392-1450, Attn:  Commercial Real Estate Servicing, Loan No. 754867,
or to such other place as either party may by written notice to the other
hereafter designate as a place for service of notice.  Borrower shall not be permitted to designate
more than one place for service of Notice concurrently.


 


28.                                 This Mortgage and all
provisions hereof shall inure to the benefit of the heirs, successors and
assigns of Lender and shall bind the heirs and permitted successors and assigns
of Borrower.


 


29.                                 Borrower has had the
opportunity to fully negotiate the terms hereof and modify the draftsmanship of
the Loan Documents and the Environmental Indemnity.  Therefore, the terms of the Loan Documents
and the Environmental Indemnity shall be construed and interpreted without any
presumption, inference, or rule requiring construction or interpretation
of any provision of the Loan Documents and the Environmental Indemnity against
the interest of the party causing the Loan Documents and the Environmental
Indemnity or any portion of it to be drafted. 
Borrower is entering into the Loan Documents and the Environmental
Indemnity freely and voluntarily without any duress, economic or otherwise.


 


30.                                 This Mortgage shall be
governed by, and construed in accordance with the laws of the state of New
Hampshire, without regard to its conflicts of law principles.


 


31.                                 As used herein, the
term “Default Rate” means a rate equal to the lesser of (i) four
percent (4%) per annum above the then applicable interest rate payable under
the Note or (ii) the maximum rate allowed by applicable law.


 


32.                                 BORROWER AND LENDER EACH KNOWINGLY, VOLUNTARILY AND
INTENTIONALLY WAIVE, TO THE EXTENT PERMITTED BY LAW, TRIAL BY JURY IN ANY
ACTIONS BROUGHT BY BORROWER OR LENDER IN CONNECTION WITH THIS MORTGAGE, ANY OF
THE LOAN DOCUMENTS, THE INDEBTEDNESS SECURED HEREBY, OR ANY OTHER STATEMENTS OR
ACTIONS OF LENDER.


 


33.                                 This Mortgage and the
Indebtedness secured hereby is for the sole purpose of conducting or acquiring
a lawful business, professional or commercial activity or for


 


32

















 


the acquisition or management of real or personal property as a
commercial investment, and all proceeds of such Indebtedness shall be used for
said business or commercial investment purpose. 
Such proceeds will not be used for the purchase of any security within
the meaning of the Securities Exchange Act of 1934, as amended, or any
regulation issued pursuant thereto, including without limitation, Regulations
U, T and X of the Board of Governors of the Federal Reserve System.  This is not a purchase money mortgage where a
seller is providing financing to a buyer for the payment of all or any portion
of the purchase price, and the Premises secured hereby is not a residence or
homestead or used for mining, grazing, agriculture, timber or farming purposes.


 


34.                                 Unless Lender shall
otherwise direct in writing, Borrower shall appear in and defend all actions or
proceedings purporting to affect the security hereunder, or any right or power
of the Lender, excluding any Federal regulatory proceedings against Lender that
are not instituted because of any act or omission by Borrower, any Interest
Owner or which result from the Premises. 
The Lender shall have the right to appear in such actions or
proceedings.  Borrower shall save Lender
harmless from all reasonable costs and expenses, including but not limited to,
reasonable attorneys’ fees and costs, and costs of a title search, continuation
of abstract and preparation of survey incurred by reason of any action, suit,
proceeding, hearing, motion or application before any court or administrative
body in and to which Lender may be or become a party by reason hereof,
excluding any Federal regulatory proceedings against Lender that are not
instituted because of any act or omission by Borrower, any Interest Owner or
which result from the Premises.  Such
proceedings shall include but not be limited to condemnation, bankruptcy,
probate and administration proceedings, as well as any other action, suit,
proceeding, right, motion or application wherein proof of claim is by law
required to be filed or in which it becomes necessary to defend or uphold the
terms of this Mortgage or the Loan Documents or otherwise purporting to affect
the security hereof or the rights or powers of Lender.  All money paid or expended by Lender in that
regard, together with interest thereon from date of such payment at the Default
Rate shall be additional Indebtedness secured hereby and shall be immediately
due and payable by Borrower without notice.


 


35.                                 Upon the occurrence of
an Event of Default, unless the same has been specifically waived in writing,
all Rents collected or received by Borrower shall be accepted and held for
Lender in trust and shall not be commingled with the funds and property of
Borrower, but shall be promptly paid over to Lender.


 


36.                                 If more than one, all
obligations and agreements of Borrower are joint and several.


 


37.                                 This Mortgage may be
executed in counterparts, each of which shall be deemed an original; and such
counterparts when taken together shall constitute but one agreement.


 


38.                                 This Mortgage is upon
the STATUTORY CONDITION and upon further condition that all covenants and
agreements of Borrower contained herein and in the Note shall be


 


33

















 


kept and fully performed, for any breach of
which, Lender shall have the STATUTORY POWER OF SALE.


 


39.                                 Future advances from
Lender shall be secured by this Mortgage.


 


40.                                 Price Chopper Expansion.


 


(a)                                  By its acceptance of
this Mortgage, Lender acknowledges that pursuant to Section 8.3 of the
Price Chopper Lease, Price Chopper has the option to expand the square footage
of its leased premises by not more than 10,000 square feet (the “Expansion”)
which will involve an expansion of the building currently occupied by Price
Chopper.  Notwithstanding any provision
contained in the Loan Documents to the contrary, the Expansion shall not
constitute an Event of Default provided the following terms and conditions are
satisfied:


 


(i)                                     at the time of the
commencement of the Expansion there shall exist no Event of Default under the
Loan Documents;


 


(ii)                                  Borrower shall pay to
Lender a $2,500 fee for the processing and handling of the Expansion; review of
all legal documentation relating to the Expansion shall be handled by local
counsel for Lender at Borrower’s sole cost and expense;


 


(iii)                               Borrower shall deliver
to Lender, no later than 60 days prior to the estimated date that construction
is to begin, prior written notice to Lender of Price Chopper’s intent to
construct the Expansion and, simultaneous with such notice, Borrower shall
provide Lender with  complete copies of
the proposed plans and specifications for the Expansion in form and substance
customarily required by an institutional commercial real estate lender;


 


(iv)                              Borrower shall deliver to
Lender evidence that the proposed Expansion is in compliance with all codes,
laws, rules and regulations affecting the Premises and all private
covenants, conditions, restrictions and leases affecting the Premises and that
upon completion of the Expansion, the improvements will be in substantially the
same quality and character of the improvements on the Premises existing
immediately prior to the construction of the Expansion; and


 


(v)                                 Borrower shall deliver
to Lender a fully executed copy of the amendment to the Price Chopper Lease
addressing the change in square footage of the leased premises, the adjustment
of rental due under the lease and any other applicable matters, all of which
shall be in form and substance as would be reasonably acceptable to an
institutional commercial real estate lender.


 


34

















 


(b)                                 Borrower covenants and
agrees with Lender that:


 


(i)                                     Borrower will
enforce its rights under the Price Chopper Lease to ensure that the Expansion
shall be completed in a workmanlike, lien-free fashion and prosecuted to
completion diligently in accordance with: (A) all codes, laws, rules and
regulations affecting the Premises; and (B) the terms and conditions of
the Loan Documents, all lease(s) of the Premises and any private covenants,
conditions and restrictions affecting the Premises;


 


(ii)                                  upon completion of
construction, Borrower shall furnish to Lender the following, all at Borrower’s
expense:


 


(A)                              final, unconditional
certificate(s) of occupancy for the improved space in customary form from the
local authority responsible for issuing such certificate(s);


 


(B)                                either (i) an
updated property physical condition report in form and substance similar to
what Borrower provided to Lender in connection with the Loan closing and
prepared by the same engineering firm or an engineering firm with similar
qualifications and experience, or (ii) a certification from an independent
project architect or independent engineer indicating that the Expansion has
been completed in accordance with all codes, laws, rules and regulations
affecting the Premises;


 


(C)                                an updated as-built
survey showing the completed Expansion that: (i) is in form and substance
similar to what Borrower provided to Lender in connection with the Loan
closing; and (ii) is acceptable to the title insurance company; and


 


(D)                               after a sufficient
period of time shall have elapsed since the date of completion of construction
of the Expansion so that under applicable law no mechanic’s or materialmen’s
liens could be perfected against the Premises, an endorsement to the loan
policy of title insurance for the Premises issued to Lender or other assurances
as are customarily required by an institutional commercial real estate lender
insuring the continued first lien priority of the Loan Documents, without
exception for mechanics’ or materialmen’s liens and subject only to those
exceptions previously approved by Lender.


 


(c)                                  Borrower
shall be responsible for all costs, fees and expenses incurred by Lender and
associated with the Expansion.


 


35

















 


IN WITNESS WHEREOF, Borrower has caused this Mortgage and Security
Agreement to be duly executed and delivered as of the date first above written.


 


REMAINDER OF PAGE INTENTIONALLY BLANK


(Signatures on next page)


 


36

















 


SIGNATURE PAGE
OF BORROWER TO

MORTGAGE AND SECURITY AGREEMENT


 


	
   

  	
  MB KEENE MONADNOCK,
  L.L.C., a Delaware

  limited liability company

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  MINTO
  BUILDERS (FLORIDA), INC., a

  
	
   

  	
   

  	
  Florida
  corporation, Sole Member

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  	
  /s/Valerie Medina

  	
   

  
	
   

  	
   

  	
   

  	
  Name:

  	
  Valerie Medina

  	
   

  
	
   

  	
   

  	
   

  	
  Title:

  	
  Assistant
  Secretary

  	
   

  
	
  STATE OF
  ILLINOIS        )

  	
   

  	
   

  	
   

  	
   

  
	
                                                              )

  	
  SS.

  	
   

  	
   

  	
   

  	
   

  
	
  COUNTY OF  DuPage )

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
									



 


The foregoing instrument was acknowledged before me the  23rd day
of  February, 2006, by Valerie Medina, the Assistant Secretary
of Minto Builders (Florida), Inc., a Florida corporation, on behalf of the
corporation, in its capacity as the sole member of MB Keene Monadnock, L.L.C.,
a Delaware limited liability company, on behalf of the limited liability
company.


 


 


	
  My
  commission expires:

  	
   

  	
  /s/Elizabeth
  Ann Irving

  	
   

  
	
  11-14-2008

  	
   

  	
   

  	
  Notary
  Public

  	
   

  
					



 


37

















 


EXHIBIT A


 


Legal Description


 




	
  Unit

  	
   

  	
  Address

  	
   

  	
  Tax
  Parcel Number

  
	
  2

  	
   

  	
  30 Ash Brook
  Road, Keene, NH

  	
   

  	
  502-01-001.0200

  
	
  3

  	
   

  	
  32 Ash Brook
  Road, Keene, NH

  	
   

  	
  502-01-001.0300

  
	
  4A

  	
   

  	
  36 Ash Brook
  Road, Keene, NH

  	
   

  	
  502-01-001.0400

  
	
  4B

  	
   

  	
  38 Ash Brook
  Road,

  	
   

  	
  502-01-001.0500

  
	
  7

  	
   

  	
  41-43 Ash
  Brook Road, Keene, NH

  	
   

  	
  502-01-001.1300

  
	
  8

  	
   

  	
  16 Ash Brook
  Road, Keene, NH

  	
   

  	
  502-01-001.1000

  
	
  9

  	
   

  	
  14 Ash Brook
  Road, Keene, NH

  	
   

  	
  502-01-001.0900

  
	
  10

  	
   

  	
  8 Ash Brook
  Road, Keene, NH

  	
   

  	
  502-01-001.0600

  
	
  11

  	
   

  	
  4 Ash Brook
  Road, Keene, NH

  	
   

  	
  502-01-001.0800

  
	
  12

  	
   

  	
  2 Ash Brook
  Road, Keene, NH

  	
   

  	
  502-01-001.0700

  
	
  13

  	
   

  	
  7 Ash Brook
  Road, Keene, NH

  	
   

  	
  502-01-001.1400

  
	
  14

  	
   

  	
  9 Ash Brook
  Road, Keene, NH

  	
   

  	
  502-01-001.1500

  






 


Units 2, 3,
4A, 4B, 7, 8, 9, 10, 11, 12, 13 and 14 in Keene, New Hampshire, as defined,
described and identified in the Declaration of Monadnock Condominium, dated September 4,
2002 and recorded in the Cheshire County Registry of Deeds at Volume 1925, Page 176,
Bylaws of Monadnock Condominium Association, dated September 4, 2002 and
recorded in the Cheshire County Registry of Deeds at Volume 1925, Page 240;
First Amendment to Declaration, dated September 4, 2002 and recorded in
the Cheshire County Registry of Deeds at Volume 1925, Page 252; Second
Amendment to Declaration, dated September 4, 2002 and recorded in the
Cheshire County Registry of Deeds at Volume 1925, Page 257; Third
Amendment to Declaration dated January 8, 2004 and recorded in the
Cheshire County Registry of Deeds at Volume 2106, Page 866;  Fourth Amendment to Declaration, dated June 29,
2004 and recorded in the Cheshire County Registry of Deeds at Volume 2152, Page 456;
Fifth Amendment to Declaration, dated December 10, 2004 and recorded in
the Cheshire County Registry of Deeds at Volume 2206, Page 860; Sixth
Amendment to Declaration, dated February 17, 2005 and recorded in the
Cheshire County Registry of Deeds at Volume 2219, Page 961; and, Seventh
Amendment to Declaration, dated May 13, 2005 and recorded in the Cheshire
County Registry of Deeds at Volume 2249, Page 465, and certain abstract
site and floor plans recorded in said Registry of Deeds in Cabinet 12, Drawer
10, Slides 118-128, together with undivided fractional interests in the Common
Area appurtenant to each of the above Units, as defined, described and
identified in said Declaration.


 


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