Exhibit 10.12


 




 





 


	
  [                                                  ], 

  	
  as Individual Borrower

  
	
   

  	
   (Individual Borrower)

  
	
   

  	
   

  
	
  to

  
	
   

  
	
  COLUMN
  FINANCIAL, INC., as Lender

  
	
   

  	
  (Lender)

  
	
   

  
	
   

  
	
  MORTGAGE
  AND

  
	
  SECURITY
  AGREEMENT

  
	
   

  
	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Dated:    As of
  October  26, 2004

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Location:       [                                 ]

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  County:          [                                 ]

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  PREPARED BY AND UPON

  	
   

  
	
   

  	
  RECORDATION RETURN TO:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Cadwalader, Wickersham & Taft LLP

  	
   

  
	
   

  	
  100
  Maiden Lane

  	
   

  
	
   

  	
  New
  York, New York 10038

  	
   

  
	
   

  	
  Attention: 
  William P. McInerney, Esq.

  	
   

  
					





 


 





 






















 


MORTGAGE
AND SECURITY AGREEMENT


 


THIS MORTGAGE AND SECURITY AGREEMENT
(this “Security
Instrument”) is made as of this 26 day of October, 2004, by
[                                              ],
a Delaware limited liability company, having its principal place of business at
c/o BlueLinx Holdings, Inc., 4300 Wildwood Parkway, Atlanta, Georgia 30339,
Attention: President, as mortgagor (“Individual Borrower”) for the
benefit of COLUMN FINANCIAL, INC., a Delaware corporation, having an
address at 11 Madison Avenue, New York, New York 10010, as mortgagee (“Lender”).


 


W
I  T  N  E  S  S  E  T  H:


 


WHEREAS, this
Security Instrument is given to secure a loan (the “Loan”) in the principal sum of
[                                            ]
and No/100 Dollars
($[                                ])
advanced pursuant to that certain Loan Agreement, dated as of the date hereof,
between the parties identified on the signature pages thereof, collectively as
Borrower (each individually or collectively as the context may require, “Borrower”),
and Lender (as the same may be amended, restated, replaced, supplemented or
otherwise modified from time to time, the “Loan Agreement”) and evidenced
by that certain Promissory Note, dated the date hereof, made by Borrower in
favor of Lender (as the same may be amended, restated, replaced, supplemented
or otherwise modified from time to time, the “Note”);


 


WHEREAS, Individual
Borrower desires to secure the payment of the Debt and the performance of all
of the obligations of Borrower under the Note, the Loan Agreement and the other
Loan Documents (as herein defined); and


 


WHEREAS, this
Security Instrument is given pursuant to the Loan Agreement, and payment,
fulfillment, and performance by Borrower of its obligations thereunder and
under the other Loan Documents are secured hereby, and each and every term and
provision of the Loan Agreement, the Note, and that certain Assignment of
Leases and Rents of even date herewith made by Individual Borrower in favor of
Lender delivered in connection with this Security Agreement (as the same may be
amended, restated, replaced, supplemented or otherwise modified from time to
time, the “Assignment
of Leases”), including the rights, remedies, obligations, covenants,
conditions, agreements, indemnities, representations and warranties of the
parties therein, are intended to be, and are hereby, secured by this Security
Instrument (the Loan Agreement, the Note, this Security Instrument, the
Assignment of Leases and Rents and all other documents evidencing or securing
the Debt or executed or delivered in connection therewith, are hereinafter
referred to collectively as the “Loan Documents”).


 


NOW THEREFORE, in
consideration of the making of the Loan by Lender and the covenants,
agreements, representations and warranties set forth in this Security
Instrument:


 


ARTICLE 1  - GRANTS OF
SECURITY


 


Section
1.1            Property Mortgaged.  Individual Borrower does hereby irrevocably
mortgage, grant, bargain, sell, pledge, assign, warrant, transfer and convey to
Lender 


 






















 


and its
successors and assigns all of Individual Borrower’s right, title and interest
in and to the following property, rights, interests and estates, whether now
owned or hereafter acquired by Individual Borrower (collectively, the “Property”):


 


(a)           Land.  The real property described in Exhibit A
attached hereto and made a part hereof (the “Land”);


 


(b)           Additional
Land.  All additional lands, estates
and development rights hereafter acquired by Individual Borrower for use in
connection with the Land and the development of the Land which shall, from time
to time, by supplemental mortgage or otherwise, be expressly made subject to
the lien of this Security Instrument;


 


(c)           Improvements.  The buildings, structures, fixtures,
additions, enlargements, extensions, modifications, repairs, replacements and
improvements now or hereafter erected or located on the Land (collectively, the
“Improvements”);


 


(d)           Easements.  All easements, rights-of-way or use, rights,
strips and gores of land, streets, ways, alleys, passages, sewer rights, water,
water courses, water rights and powers, air rights and development rights, and
all estates, rights, titles, interests, privileges, liberties, servitudes,
tenements, hereditaments and appurtenances of any nature whatsoever, in any way
now or hereafter belonging, relating or pertaining to the Land and the
Improvements and the reversions and remainders, and all land lying in the bed
of any street, road or avenue, opened or proposed, in front of or adjoining the
Land, to the center line thereof and all the estates, rights, titles,
interests, rights of dower, rights of curtesy, property, possession, claim and
demand whatsoever, both at law and in equity, of Individual Borrower of, in and
to the Land and the Improvements and every part and parcel thereof, with the
appurtenances thereto;


 


(e)           Equipment.  All “equipment,” as such term is defined in
Article 9 of the Uniform Commercial Code (hereinafter defined), now owned or
hereafter acquired by Individual Borrower, which is used at or in connection
with the Improvements or the Land or is located thereon or therein (including,
but not limited to, all machinery, equipment, furnishings, and electronic
data-processing and other office equipment now owned or hereafter acquired by
Individual Borrower and any and all additions, substitutions and replacements
of any of the foregoing), together with all attachments, components, parts,
equipment and accessories installed thereon or affixed thereto (collectively,
the “Equipment”).  Notwithstanding the foregoing, Equipment
shall not include any property belonging to tenants under the Master Lease or
any other Leases (hereinafter defined) except to the extent that Individual
Borrower shall have any right or interest therein;


 


(f)            Fixtures.  All Equipment now owned, or the ownership of
which is hereafter acquired, by Individual Borrower which is so related to the
Land and Improvements forming part of the Property that it is deemed fixtures
or real property under the law of the particular state in which the Equipment
is located, including, without limitation, all building or construction
materials intended for construction, reconstruction, alteration or repair of or
installation on the Property, construction equipment, appliances, machinery,
plant equipment, fittings, apparatuses, fixtures and other items now or
hereafter attached to, installed in or used in connection with (temporarily or
permanently) any of the Improvements or the Land, including,


 


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but not limited to,
engines, devices for the operation of pumps, pipes, plumbing, call and
sprinkler systems, fire extinguishing apparatuses and equipment, heating,
ventilating, incinerating, electrical, air conditioning and air cooling
equipment and systems, gas and electric machinery, appurtenances and equipment,
pollution control equipment, security systems, disposals, dishwashers,
refrigerators and ranges, recreational equipment and facilities of all kinds,
and water, gas, electrical, storm and sanitary sewer facilities, utility lines
and equipment (whether owned individually or jointly with others, and, if owned
jointly, to the extent of Individual Borrower’s interest therein) and all other
utilities whether or not situated in easements, all water tanks, water supply,
water power sites, fuel stations, fuel tanks, fuel supply, and all other
structures, together with all accessions, appurtenances, additions,
replacements, betterments and substitutions for any of the foregoing and the
proceeds thereof (collectively, the “Fixtures”).  Notwithstanding the foregoing, “Fixtures”
shall not include any property which tenants own or are entitled to remove
pursuant to the Master Lease or any other Leases, except to the extent that
Individual Borrower shall have any right or interest therein;


 


(g)           Personal
Property.  All furniture,
furnishings, objects of art, machinery, goods, tools, supplies, appliances,
general intangibles, contract rights, accounts, accounts receivable, franchises,
licenses, certificates and permits, and all other personal property of any kind
or character whatsoever as defined in and subject to the provisions of the
Uniform Commercial Code, whether tangible or intangible, other than Fixtures,
which are now or hereafter owned by Individual Borrower and which are located
within or about the Land and the Improvements, together with all accessories,
replacements and substitutions thereto or therefor and the proceeds thereof
(collectively, the “Personal Property”), and the right, title and interest of
Individual Borrower in and to any of the Personal Property which may be subject
to any security interests, as defined in the Uniform Commercial Code, as
adopted and enacted by the state or states where any of the Property is located
(the “Uniform
Commercial Code”), superior in lien to the lien of this Security
Instrument and all proceeds and products of the above;


 


(h)           Leases
and Rents.  All leases, subleases or
subsubleases, lettings, licenses, concessions or other agreements (whether
written or oral) (including, without limitation, the Master Lease) pursuant to
which any Person is granted a possessory interest in, or right to use or occupy
all or any portion of the Land and the Improvements, and every modification,
amendment or other agreement relating to such leases, subleases, subsubleases,
or other agreements entered into in connection with such leases, subleases,
subsubleases, or other agreements and every guarantee of the performance and
observance of the covenants, conditions and agreements to be performed and
observed by the other party thereto, heretofore or hereafter entered into
(collectively, the “Leases”), whether before or after the filing by or against
Individual Borrower of any petition for relief under 11 U.S.C. §101 et
seq., as the same may be amended from time to time (the “Bankruptcy Code”)
and all right, title and interest of Individual Borrower, its successors and
assigns therein and thereunder, including, without limitation, in and to any
and all cash or securities deposited thereunder to secure the performance by
the lessees of their obligations thereunder and all rents, additional rents,
revenues, issues and profits (including all oil and gas or other mineral
royalties and bonuses) from the Land and the Improvements whether paid or
accruing before or after the filing by or against Individual Borrower of any
petition for relief under the Bankruptcy Code (collectively, the “Rents”) and
all proceeds from the sale or other disposition of the Leases and the right to
receive and apply the Rents to the payment of the Debt;


 


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(i)            Condemnation
Awards.  All Awards which may
heretofore and hereafter be made with respect to the Property, whether from the
exercise of the right of eminent domain (including, but not limited to, any
transfer made in lieu of or in anticipation of the exercise of the right), or
for a change of grade, or for any other injury to or decrease in the value of
the Property;


 


(j)            Insurance
Proceeds.  All Insurance Proceeds in
respect of the Property under any Policies covering the Property, including,
without limitation, the right to receive and apply the proceeds of any
Policies, judgments, or settlements made in lieu thereof, in connection with a
Casualty to the Property;


 


(k)           Tax
Certiorari.  All refunds, rebates or
credits in connection with reduction in Taxes or Other Charges charged against
the Property;


 


(l)            Conversion.  All proceeds of the conversion, voluntary or
involuntary, of any of the foregoing including, without limitation, Insurance
Proceeds and Awards, into cash or liquidation claims;


 


(m)          Rights.  The right, in the name and on behalf of
Individual Borrower, to appear in and defend any action or proceeding brought
with respect to the Property and to commence any action or proceeding to
protect the interest of Lender in the Property;


 


(n)           Agreements.  All agreements, contracts, certificates,
instruments, franchises, permits, licenses, plans, specifications and other
documents, now or hereafter entered into, and all rights therein and thereto,
respecting or pertaining to the use, occupation, construction, management or
operation of the Land and any part thereof and any Improvements or any business
or activity conducted on the Land and any part thereof and all right, title and
interest of Individual Borrower therein and thereunder, including, without
limitation, the right, upon the happening of any default hereunder, to receive
and collect any sums payable to Individual Borrower thereunder;


 


(o)           Trademarks.  All tradenames, trademarks, servicemarks,
logos, copyrights, goodwill, books and records and all other general
intangibles relating to or used in connection with the operation of the
Property;


 


(p)           Accounts.  All reserves, escrows and deposit accounts
maintained by Individual Borrower, either individually or otherwise, with
respect to the Property, including, without limitation, all accounts
established or maintained pursuant to the Cash Management Agreement; together
with all deposits or wire transfers made to such accounts and all cash, checks,
drafts, certificates, securities, investment property, financial assets,
instruments and other property held therein from time to time and all proceeds,
products, distributions or dividends or substitutions thereon and thereof;


 


(q)           Interest
Rate Cap Agreement.  The Interest
Rate Cap Agreement, including, but not limited to, all “accounts”, “chattel
paper”, “general intangibles” and “investment property” (as such terms are
defined in the Uniform Commercial Code as from time to time in effect)
constituting or relating to the Interest Rate Cap Agreement; and all products
and proceeds of any thereof; and


 


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(r)            Other
Rights.  Any and all other rights of
Individual Borrower in and to the items set forth in Subsections (a) through
(q) above.


 


AND
without limiting any of the other provisions of this Security Instrument, to
the extent permitted by applicable law, Individual Borrower expressly grants to
Lender, as secured party, a security interest in the portion of the Property
which is or may be subject to the provisions of the Uniform Commercial Code
which are applicable to secured transactions; it being understood and agreed
that the Improvements and Fixtures are part and parcel of the Land (the Land,
the Improvements and the Fixtures collectively referred to as the “Real Property”)
appropriated to the use thereof and, whether affixed or annexed to the Real
Property or not, shall for the purposes of this Security Instrument be deemed
conclusively to be real estate and mortgaged hereby.


 


Section
1.2            Assignment of Rents.  Individual Borrower hereby absolutely and
unconditionally (subject only to the Permitted Encumbrances) assigns to Lender
all of Individual Borrower’s right, title and interest in and to all current
and future Leases and Rents; it being intended by Individual Borrower that this
assignment constitutes a present, absolute assignment and not an assignment for
additional security only.  Nevertheless,
subject to the terms of the Loan Agreement, the Assignment of Leases, the Cash
Management Agreement and Section 7.1(h) of this Security
Instrument, Lender grants to Individual Borrower a revocable (in accordance
with the provisions thereof) license to exercise and enjoy all incidences of
the status of a lessor under the Leases and the Rents, including, without
limitation, the right to collect, demand, sue for, attach, levy, recover,
receive, use and enjoy the Rents and to give proper receipts, releases and
acquittances therefor.  Except as
otherwise expressly permitted under the Loan Agreement, Individual Borrower
shall hold the Rents, or a portion thereof sufficient to discharge all current
sums due on the Debt, for use in the payment of such sums.


 


Section
1.3            Security Agreement.  This Security Instrument is both a real
property mortgage and a “security agreement” within the meaning of the Uniform
Commercial Code.  The Property includes
both real and personal property and all other rights and interests, whether
tangible or intangible in nature, of Individual Borrower in the Property.  By executing and delivering this Security
Instrument, Individual Borrower hereby grants to Lender, as security for the
Obligations (hereinafter defined), a security interest in the Fixtures, the
Equipment and the Personal Property to the full extent that the Fixtures, the
Equipment and the Personal Property may be subject to the Uniform Commercial
Code (said portion of the Property so subject to the Uniform Commercial Code being
called the “Collateral”).  If an Event of Default shall occur and be
continuing, Lender, in addition to any other rights and remedies which it may
have, shall have and may exercise immediately and without demand, any and all
rights and remedies granted to a secured party upon default under the Uniform
Commercial Code, including, without limiting the generality of the foregoing,
the right to take possession of the Collateral or any part thereof, and to take
such other measures as Lender may deem necessary for the care, protection and
preservation of the Collateral.  Upon
request or demand of Lender after the occurrence and during the continuance of
an Event of Default, Individual Borrower shall, at its expense, assemble the
Collateral and make it available to Lender at a convenient place (at the Land
if tangible property) reasonably acceptable to Lender.  Individual Borrower shall pay to Lender on
demand any and all reasonable out-of-pocket expenses, including reasonable
legal expenses and attorneys’ fees, incurred or paid by Lender in protecting
its interest in the


 


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Collateral and in
enforcing its rights hereunder with respect to the Collateral after the
occurrence and during the continuance of an Event of Default.  Any notice of sale, disposition or other
intended action by Lender with respect to the Collateral sent to Individual
Borrower in accordance with the provisions hereof at least ten (10)
Business Days prior to such action, shall, except as otherwise provided by
applicable law, constitute reasonable notice to Individual Borrower.  The proceeds of any disposition of the
Collateral, or any part thereof, may, except as otherwise required by
applicable law, be applied by Lender to the payment of the Debt in such
priority and proportions as Lender in its discretion shall deem proper.  Individual Borrower’s (debtor’s) principal
place of business is as set forth on page one hereof and the address of Lender
(secured party) is as set forth on page one hereof.


 


Section
1.4            Fixture Filing.  Certain of the Property is or will become
“fixtures” (as that term is defined in the Uniform Commercial Code) on the
Land, and this Security Instrument, upon being filed for record in the real
estate records of the city or county wherein such fixtures are situated, shall
operate also as a financing statement filed as a fixture filing in accordance
with the applicable provisions of said Uniform Commercial Code upon such of the
Property that is or may become fixtures.


 


Section
1.5            Pledges of Monies Held.  Individual Borrower hereby pledges to Lender
all of its right, title and interest in and to any and all monies now or
hereafter held by Lender or on behalf of Lender in connection with the Loan,
including, without limitation, any sums deposited in the Lockbox Account, the
Cash Management Account, the Reserve Funds and Net Proceeds, as additional
security for the Obligations until expended or applied as provided in the Loan
Documents.


 


CONDITIONS TO GRANT


 


TO HAVE AND TO HOLD
the above granted and described Property unto and to the use and benefit of
Lender and its successors and assigns, forever;


 


PROVIDED, HOWEVER,
these presents are upon the express condition that, if Borrower shall well and
truly pay to Lender the Debt at the time and in the manner provided in the Note
and the Loan Agreement, shall well and truly perform the Other Obligations
(hereafter defined) and shall well and truly abide by and comply with each and
every covenant and condition set forth herein and in the Note, the Loan
Agreement and the other Loan Documents, these presents and the estate hereby
granted shall cease, terminate and be void; provided, however, that Individual
Borrower’s obligation to indemnify and hold harmless Lender pursuant to the
provisions hereof shall, to the extent expressly so provided, survive any such
payment or release.


 


ARTICLE 2 - DEBT AND
OBLIGATIONS SECURED


 


Section
2.1            Debt.  This Security Instrument and the grants,
assignments and transfers made in Article 1 are given for the purpose of
securing the Debt.


 


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Section
2.2            Other Obligations.  This Security Instrument and the grants,
assignments and transfers made in Article 1 are also given for the purpose of
securing the following (collectively, the “Other Obligations”):


 


(a)           the
performance of all other obligations of Individual Borrower contained herein;


 


(b)           the
performance of each obligation of Borrower contained in the Loan Agreement and
any other Loan Document; and


 


(c)           the
performance of each obligation of Borrower contained in any renewal, extension,
amendment, modification, consolidation, change of, or substitution or
replacement for, all or any part of the Note, the Loan Agreement or any other
Loan Document.


 


Section
2.3            Debt and Other
Obligations. 
Individual Borrower’s and Borrower’s obligations for the payment of the
Debt and the performance of the Other Obligations shall be referred to
collectively herein as the “Obligations.”


 


ARTICLE 3 - INDIVIDUAL
BORROWER COVENANTS


 


Individual
Borrower covenants and agrees that:


 


Section
3.1            Payment of Debt.  Individual Borrower will pay, or cause to be
paid, the Debt at the time and in the manner provided in the Loan Agreement and
the Note.


 


Section
3.2            Intentionally Omitted.


 


Section
3.3            Insurance.  Individual Borrower shall obtain and
maintain, or cause to be obtained and maintained, in full force and effect at
all times insurance with respect to Individual Borrower and the Property as
required pursuant to the Loan Agreement.


 


Section
3.4            Maintenance of Property.  Individual Borrower shall cause the Property
to be maintained in a good and safe condition and repair.  The Improvements, the Fixtures, the
Equipment and the Personal Property shall not be removed, demolished or
materially altered (except for normal replacement of the Fixtures, the
Equipment or the Personal Property, tenant finish and refurbishment of the
Improvements) without the consent of Lender or as otherwise permitted pursuant
to the Loan Agreement.  Individual
Borrower shall promptly repair, replace or rebuild, or cause to be repaired,
replaced or rebuilt, any part of the Property which may be destroyed by any
Casualty or become damaged, worn or dilapidated or which may be affected by any
Condemnation, and shall complete and pay for, or cause to be completed and paid
for, any structure at any time in the process of construction or repair on the
Land.


 


Section
3.5            Waste.  Individual Borrower shall not commit or
permit any waste of the Property or make any change in the use of the Property
which will in any way materially increase the risk of fire or other hazard
arising out of the operation of the Property, or take any action that might
invalidate or allow the cancellation of any Policy, or do or permit to be done
on the Property anything that may in any way materially impair the value of the
Property or the 


 


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security of this
Security Instrument.  Individual
Borrower shall not, without the prior written consent of Lender, permit any
drilling or exploration for or extraction, removal, or production of any
minerals from the surface or the subsurface of the Land, regardless of the
depth thereof or the method of mining or extraction thereof.


 


Section
3.6            Payment for Labor and Materials.  (a) 
Subject to Section 3.6(b) hereof, Individual Borrower will
promptly pay, or cause to be paid, when due all bills and costs for labor,
materials, and specifically fabricated materials (“Labor and Material Costs”)
incurred in connection with the Property and never permit to exist beyond the
due date thereof in respect of the Property or any part thereof any lien or
security interest, even though inferior to the liens and the security interests
hereof, and in any event never permit to be created or exist in respect of the
Property or any part thereof any other or additional lien or security interest
other than the liens or security interests hereof except for the Permitted
Encumbrances.


 


(b)           After
prior written notice to Lender, Individual Borrower, at its own expense, may
contest, or cause to be contested, by appropriate legal proceeding, promptly
initiated and conducted in good faith and with due diligence, the amount or
validity or application in whole or in part of any of the Labor and Material
Costs, provided that (i) no Event of Default has occurred and is
continuing under the Loan Agreement, the Note, this Security Instrument or any
of the other Loan Documents, (ii) Individual Borrower is permitted to do
so under the provisions of any other mortgage, deed of trust or deed to secure
debt affecting the Property, (iii) such proceeding shall suspend the
collection of the Labor and Material Costs from Individual Borrower and from
the Property or Individual Borrower shall have paid (or cause to be paid) or
deposited (or cause to be deposited) with Lender all of the Labor and Material
Costs under protest, (iv) such proceeding shall be permitted under and be
conducted in accordance with the provisions of any other instrument to which
Individual Borrower is subject and shall not constitute a default thereunder,
(v) neither the Property nor any part thereof or interest therein will be
in imminent danger of being sold, forfeited, terminated, canceled or lost, and
(vi) Individual Borrower shall have furnished (or cause to be furnished)
the security as may be required in the proceeding, or as may be reasonably
requested by Lender, to insure the payment of any contested Labor and Material
Costs, together with all interest and penalties thereon.


 


Section
3.7            Performance of Other Agreements.  Individual Borrower shall observe and
perform each and every term, covenant and provision to be observed or performed
by Individual Borrower pursuant to the Loan Agreement, any other Loan Document
and any other agreement or recorded instrument affecting or pertaining to the
Property and any amendments, modifications or changes thereto.


 


Section
3.8            Change of Name, Identity or Structure.  Individual Borrower shall not change
Individual Borrower’s name, identity (including its trade name or names) or, if
not an individual, Individual Borrower’s corporate, partnership or other
structure without notifying Lender of such change in writing at least
thirty (30) days prior to the effective date of such change and, in the
case of a change in Individual Borrower’s structure, without first obtaining
the prior written consent of Lender, except as otherwise permitted pursuant to
Section 5.2.10 of the Loan Agreement. 
Individual Borrower shall execute and deliver to Lender, prior to or
contemporaneously with the effective date of any such change, any financing
statement or financing statement change required by Lender to establish or
maintain the validity, perfection 


 


8






















 


and priority of
the security interest granted herein. 
At the request of Lender, Individual Borrower shall execute a
certificate in form satisfactory to Lender listing the trade names under which
Individual Borrower intends to operate the Property, and representing and
warranting that Individual Borrower does business under no other trade name
with respect to the Property.


 


Section
3.9            Title.  Individual Borrower has good, marketable and
insurable fee simple title to the real property comprising part of the Property
and good title to the balance of such Property, free and clear of all Liens
whatsoever except the Permitted Encumbrances, such other Liens as are permitted
pursuant to the Loan Documents and the Liens created by the Loan
Documents.  The Permitted Encumbrances
in the aggregate do not materially and adversely affect the value, operation or
use of the Property or Individual Borrower’s ability to repay the Loan.  This Security Instrument, when properly
recorded in the appropriate records, together with any Uniform Commercial Code
financing statements required to be filed in connection therewith, will create
(a) a valid, perfected first priority Lien on the Property, subject only
to Permitted Encumbrances and the Liens created by the Loan Documents and
(b) perfected security interests in and to, and perfected collateral
assignments of, all personalty (including the Leases), all in accordance with
the terms thereof, in each case subject only to any applicable Permitted
Encumbrances, such other Liens as are permitted pursuant to the Loan Documents
and the Liens created by the Loan Documents. 
There are no claims for payment for work, labor or materials affecting
the Property which are past due and are or may become a Lien prior to, or of equal
priority with, the Liens created by the Loan Documents unless such claims for
payments are being contested in accordance with the terms and conditions of
this Security Instrument.


 


ARTICLE 4 - OBLIGATIONS
AND RELIANCES


 


Section
4.1            Relationship of Individual Borrower and Lender.  The relationship between Individual Borrower
and Lender is solely that of debtor and creditor, and Lender has no fiduciary
or other special relationship with Individual Borrower, and no term or
condition of the Loan Agreement, the Note, this Security Instrument and the
other Loan Documents shall be construed so as to deem the relationship between
Individual Borrower and Lender to be other than that of debtor and creditor.


 


Section
4.2            No Reliance on Lender.  Neither Individual Borrower, any other
Borrower nor any other Person that is or may become obligated for the
performance of the Obligations is relying on Lender’s expertise, business
acumen or advice in connection with the Property.


 


Section
4.3            No Lender Obligations.  (a) 
Notwithstanding the provisions of Subsections 1.1(h) and (n)
or Section 1.2, Lender is not undertaking the performance of
(i) any obligations under the Leases; or (ii) any obligations with
respect to such agreements, contracts, certificates, instruments, franchises,
permits, trademarks, licenses and other documents.


 


(b)           By
accepting or approving anything required to be observed, performed or fulfilled
or to be given to Lender pursuant to this Security Instrument, the Loan
Agreement, the Note or the other Loan Documents, including, without limitation,
any Officer’s Certificate, balance sheet, statement of profit and loss or other
financial statement, survey, appraisal, or Policy, Lender shall not be deemed
to have warranted, consented to, or affirmed the sufficiency,


 


9






















 


the legality or effectiveness of same, and such acceptance or approval
thereof shall not constitute any warranty or affirmation with respect thereto
by Lender.


 


Section
4.4            Reliance.  Individual Borrower recognizes and
acknowledges that in accepting the Loan Agreement, the Note, this Security
Instrument and the other Loan Documents, Lender is expressly and primarily
relying on the truth and accuracy of the warranties and representations set
forth in Section 4.1 of the Loan Agreement without any obligation to
investigate the Property and notwithstanding any investigation of the Property
by Lender; that such reliance existed on the part of Lender prior to the date
hereof, that the warranties and representations are a material inducement to
Lender in making the Loan; and that Lender would not be willing to make the
Loan and accept this Security Instrument in the absence of the warranties and
representations as set forth in Section 4.1 of the Loan Agreement.


 


ARTICLE 5 - FURTHER
ASSURANCES


 


Section
5.1            Recording of Security Instrument, etc. 
Individual Borrower forthwith upon the execution and delivery of this
Security Instrument and thereafter, from time to time, promptly after written
request from Lender, will cause this Security Instrument and any of the other
Loan Documents creating a Lien or security interest or evidencing the Lien
hereof upon the Property and each instrument of further assurance to be filed,
registered or recorded in such manner and in such places as may be required by any
present or future law in order to publish notice of and fully to protect and
perfect the Lien or security interest hereof upon, and the interest of Lender
in, the Property.  Individual Borrower
will pay, or cause to be paid, all taxes, filing, registration or recording
fees, and all reasonable expenses incident to the preparation, execution,
acknowledgment and/or recording of the Note, this Security Instrument, the
other Loan Documents, any note, deed of trust or mortgage supplemental hereto,
any security instrument with respect to the Property and any instrument of
further assurance, and any modification or amendment of the foregoing
documents, and all federal, state, county and municipal taxes, duties, imposts,
assessments and charges (other than any income, franchise or similar taxes)
arising out of or in connection with the execution and delivery of this
Security Instrument, any deed of trust or mortgage supplemental hereto, any
security instrument with respect to the Property or any instrument of further
assurance, and any modification or amendment of the foregoing documents, except
where prohibited by law so to do.


 


Section
5.2            Further Acts, etc. 
Individual Borrower will, at the cost of Individual Borrower, and
without expense to Lender, do, execute, acknowledge and deliver all further
acts, deeds, conveyances, deeds of trust, mortgages, assignments, notices of
assignments, transfers and assurances as Lender shall, from time to time,
reasonably require, for the better assuring, conveying, assigning, transferring,
and confirming unto Lender the property and rights hereby mortgaged, deeded,
granted, bargained, sold, conveyed, confirmed, pledged, assigned, warranted and
transferred or intended now or hereafter so to be, or which Individual Borrower
may be or may hereafter become bound to convey or assign to Lender, or for
carrying out the intention or facilitating the performance of the terms of this
Security Instrument or for filing, registering or recording this Security
Instrument, or for complying with all Legal Requirements.  Individual Borrower, on demand, will execute
and deliver, and in the event it shall fail to so execute and deliver, hereby
authorizes Lender to execute in the name of Individual Borrower or without the
signature of Individual Borrower to the extent Lender may lawfully do so, one
or


 


10






















 


more financing
statements to evidence more effectively the security interest of Lender in the
Property.  Individual Borrower grants to
Lender an irrevocable power of attorney coupled with an interest for the
purpose of exercising and perfecting any and all rights and remedies available
to Lender at law and in equity, including without limitation, such rights and
remedies available to Lender pursuant to this Section 5.2.


 


Section
5.3            Changes in Tax, Debt,
Credit and Documentary Stamp Laws.  (a) 
If any law is enacted or adopted or amended after the date of this
Security Instrument which deducts the Debt from the value of the Property for
the purpose of taxation or which imposes a tax, either directly or indirectly,
on the Debt or Lender’s interest in the Property, Individual Borrower will pay,
or cause to be paid, the tax, with interest and penalties thereon, if any.  If Lender is advised by counsel chosen by it
and reasonably acceptable to Individual Borrower that the payment of tax by
Individual Borrower and/or Borrower would be unlawful or taxable to Lender or
unenforceable or provide the basis for a defense of usury then Lender shall
have the option by written notice of not less than one hundred
twenty (120) days to declare the Debt immediately due and payable.


 


(b)           Individual
Borrower will not claim or demand or be entitled to any credit or credits on
account of the Debt for any part of the Taxes or Other Charges assessed against
the Property, or any part thereof, and no deduction shall otherwise be made or
claimed from the assessed value of the Property, or any part thereof, for real
estate tax purposes by reason of this Security Instrument or the Debt.  If such claim, credit or deduction shall be
required by law, Lender shall have the option, by written notice of not less
than one hundred twenty (120) days, to declare the Debt immediately due
and payable.


 


(c)           If
at any time the United States of America, any State thereof or any subdivision
of any such State shall require revenue or other stamps to be affixed to the
Note, this Security Instrument, or any of the other Loan Documents or impose
any other tax or charge on the same, Individual Borrower will pay, or cause to
be paid, for the same, with interest and penalties thereon, if any.


 


Section
5.4            Severing of Mortgage.  This Security Instrument and the Note shall,
at any time until the same shall be fully paid and satisfied, at the sole
election of Lender, be severed into two or more notes and two or more security
instruments in such denominations as Lender shall determine in its sole
discretion, each of which shall cover all or a portion of the Property to be
more particularly described therein.  To
that end, Individual Borrower, upon written request of Lender, shall execute,
acknowledge and deliver, and/or cause to be executed, acknowledged and
delivered by the then owner of the Property and/or Borrower, to Lender and/or
its designee or designees, substitute notes and security instruments in such
principal amounts, aggregating not more than the then unpaid principal amount
then secured by this Security Instrument, and containing terms, provisions and
clauses similar to those contained herein and in the Note, and such other
documents and instruments as may be required by Lender.


 


Section
5.5            Replacement Documents.  Upon receipt of an affidavit of an officer
of Lender as to the loss, theft, destruction or mutilation of the Note or any
other Loan Document which is not of public record, and, in the case of any such
mutilation, upon surrender and cancellation of such Note or other Loan
Document, Individual Borrower will issue, or cause


 


11






















 


to be issued, in
lieu thereof, a replacement Note or other Loan Document, dated the date of such
lost, stolen, destroyed or mutilated Note or other Loan Document in the same
principal amount thereof and otherwise of like tenor.


 


ARTICLE 6 - DUE ON
SALE/ENCUMBRANCE


 


Section
6.1            Lender Reliance.  Individual Borrower acknowledges that Lender
has examined and relied on the experience of Individual Borrower and its
general partners, members, principals and (if Individual Borrower is a trust)
beneficial owners in owning and operating properties such as the Property in
agreeing to make the Loan, and will continue to rely on Individual Borrower’s
ownership of the Property as a means of maintaining the value of the Property
as security for repayment of the Debt and the performance of the Other
Obligations.  Individual Borrower
acknowledges that Lender has a valid interest in maintaining the value of the
Property so as to ensure that, should Borrower default in the repayment of the
Debt or the performance of the Other Obligations, Lender can recover the Debt,
or a part thereof, by a sale of the Property.


 


Section
6.2            No Sale/Encumbrance.  Neither Individual Borrower nor any
Restricted Party shall Transfer the Property or any part thereof or any
interest therein or permit or suffer the Property or any part thereof or any
interest therein to be Transferred other than as expressly permitted pursuant
to the terms of the Loan Agreement.


 


ARTICLE 7 - RIGHTS AND
REMEDIES UPON DEFAULT


 


Section
7.1            Remedies.  Upon the occurrence and during the
continuance of any Event of Default, Individual Borrower agrees that Lender may
take such action, without notice or demand, as it deems advisable to protect
and enforce its rights against Individual Borrower and in and to the Property,
including, but not limited to, the following actions, each of which may be
pursued concurrently or otherwise, at such time and in such order as Lender may
determine, in its sole discretion, without impairing or otherwise affecting the
other rights and remedies of Lender:


 


(a)           declare
the entire unpaid Debt to be immediately due and payable;


 


(b)           institute
proceedings, judicial or otherwise, for the complete foreclosure of this
Security Instrument under any applicable provision of law, in which case the
Property or any interest therein may be sold for cash or upon credit in one or
more parcels or in several interests or portions and in any order or manner;


 


(c)           with
or without entry, to the extent permitted and pursuant to the procedures
provided by applicable law, institute proceedings for the partial foreclosure
of this Security Instrument for the portion of the Debt then due and payable,
subject to the continuing Lien and security interest of this Security
Instrument for the balance of the Debt not then due, unimpaired and without loss
of priority;


 


(d)           sell
for cash or upon credit the Property or any part thereof and all estate, claim,
demand, right, title and interest of Individual Borrower therein and rights of
redemption 


 


12






















 


thereof, pursuant to power of sale or otherwise, at one or more sales,
as an entirety or in parcels, at such time and place, upon such terms and after
such notice thereof as may be required or permitted by law;


 


(e)           institute
an action, suit or proceeding in equity for the specific performance of any
covenant, condition or agreement contained herein, in the Note, the Loan
Agreement or in the other Loan Documents;


 


(f)            recover
judgment on the Note either before, during or after any proceedings for the
enforcement of this Security Instrument or the other Loan Documents;


 


(g)           apply
for the appointment of a receiver, trustee, liquidator or conservator of the
Property, without notice and without regard for the adequacy of the security
for the Debt and without regard for the solvency of Individual Borrower, any
other Borrower or any guarantor or indemnitor with respect to the Loan or of
any Person liable for the payment of the Debt;


 


(h)           the
license granted to Individual Borrower under Section 1.2 hereof shall
automatically be revoked and Lender may enter into or upon the Property, either
personally or by its agents, nominees or attorneys and dispossess Individual
Borrower and its agents and servants therefrom, without liability for trespass,
damages or otherwise and exclude Individual Borrower and its agents or servants
wholly therefrom, and take possession of all books, records and accounts
relating thereto and Individual Borrower agrees to surrender possession of the
Property and of such books, records and accounts to Lender upon demand, and
thereupon Lender may (i) use, operate, manage, control, insure, maintain,
repair, restore and otherwise deal with all and every part of the Property and
conduct the business thereat; (ii) complete any construction on the Property
in such manner and form as Lender deems advisable; (iii) make alterations,
additions, renewals, replacements and improvements to or on the Property;
(iv) exercise all rights and powers of Individual Borrower with respect to
the Property, whether in the name of Individual Borrower or otherwise,
including, without limitation, the right to make, cancel, enforce or modify
Leases, obtain and evict tenants, and demand, sue for, collect and receive all
Rents; (v) require Individual Borrower to pay monthly in advance to Lender,
or any receiver appointed to collect the Rents, the fair and reasonable rental
value for the use and occupation of such part of the Property as may be
occupied by Individual Borrower; (vi) require Individual Borrower to
vacate and surrender possession of the Property to Lender or to such receiver
and, in default thereof, Individual Borrower may be evicted by summary
proceedings or otherwise; and (vii) apply the receipts from the Property
to the payment of the Debt, in such order, priority and proportions as Lender
shall deem appropriate in its sole discretion after deducting therefrom all
expenses (including reasonable attorneys’ fees) incurred in connection with the
aforesaid operations and all amounts necessary to pay the Taxes, Other Charges,
Insurance Premium and other expenses in connection with the Property, as well
as just and reasonable compensation for the services of Lender, its counsel,
agents and employees;


 


(i)            exercise
any and all rights and remedies granted to a secured party upon default under
the Uniform Commercial Code, including, without limiting the generality of the
foregoing:  (i) the right to take
possession of the Fixtures, the Equipment, the Personal Property or any part
thereof, and to take such other measures as Lender may deem necessary for the
care, protection and preservation of the Fixtures, the Equipment, the Personal
Property, and


 


13






















 


(ii) request
Individual Borrower at its expense to assemble the Fixtures, the Equipment, the
Personal Property and make it available to Lender at a convenient place
acceptable to Lender.  Any notice of
sale, disposition or other intended action by Lender with respect to the
Fixtures, the Equipment, the Personal Property sent to Individual Borrower in
accordance with the provisions hereof at least five (5) days prior to such
action shall constitute commercially reasonable notice to Individual Borrower;


 


(j)            apply
any sums then deposited or held in escrow or otherwise by or on behalf of
Lender in accordance with the terms of the Loan Agreement, this Security
Instrument or any other Loan Document to the payment of the following items in
any order in its sole discretion:


 


(i)      Taxes and Other Charges;


 


(ii)     Insurance Premiums;


 


(iii)    Interest on the unpaid principal balance of
the Note;


 


(iv)    Amortization of the unpaid principal balance
of the Note; or


 


(v)     All other sums payable pursuant to the
Note, the Loan Agreement, this Security Instrument and the other Loan
Documents, including, without limitation, advances made by Lender pursuant to
the terms of this Security Instrument;


 


(k)           pursue
such other remedies as Lender may have under applicable law; or


 


(l)            apply
the undisbursed balance of any Net Proceeds Deficiency deposit, together with
interest thereon, to the payment of the Debt in such order, priority and
proportions as Lender shall deem to be appropriate in its discretion.


 


In the
event of a sale, by foreclosure, power of sale or otherwise, of less than all
of Property, this Security Instrument shall continue as a lien and security
interest on the remaining portion of the Property unimpaired and without loss
of priority.


 


Section
7.2            Application of Proceeds.  The purchase money, proceeds and avails of
any disposition of the Property, and or any part thereof, or any other sums
collected by Lender pursuant to the Note, this Security Instrument or the other
Loan Documents, may be applied by Lender to the payment of the Debt in such
priority and proportions as Lender in its discretion shall deem proper.


 


Section
7.3            Right to Cure Defaults.  Upon the occurrence and during the
continuance of any Event of Default, Lender may, but without any obligation to
do so and without notice to or demand on Individual Borrower and without
releasing Individual Borrower from any obligation hereunder, make any payment
or do any act required of Individual Borrower hereunder in such manner and to
such extent as Lender may deem necessary to protect the security hereof.  Lender is authorized to enter upon the
Property for such purposes, or appear in, defend, or bring any action or
proceeding to protect its interest in the Property or to foreclose this


 


14






















 


Security
Instrument or collect the Debt, and the cost and expense thereof (including
reasonable attorneys’ fees to the extent permitted by law), with interest as
provided in this Section 7.3, shall constitute a portion of the Debt and
shall be due and payable to Lender upon demand.  All such costs and expenses incurred by Lender in remedying such
Event of Default or such failed payment or act or in appearing in, defending,
or bringing any such action or proceeding shall bear interest at the Default
Rate, for the period after notice from Lender that such cost or expense was incurred
to the date of payment to Lender.  All
such costs and expenses incurred by Lender together with interest thereon
calculated at the Default Rate shall be deemed to constitute a portion of the
Debt and be secured by this Security Instrument and the other Loan Documents
and shall be immediately due and payable upon demand by Lender therefor.


 


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


 


Section
7.5            Recovery of Sums Required To Be Paid.  Lender shall have the right from time to
time to take action to recover any sum or sums which constitute a part of the
Debt as the same become due, without regard to whether or not the balance of
the Debt shall be due, and without prejudice to the right of Lender thereafter
to bring an action of foreclosure, or any other action, for a default or
defaults by Individual Borrower hereunder or under the other Loan Documents or
by any other Borrower under the Loan Documents existing at the time such
earlier action was commenced.


 


Section
7.6            Examination of Books and Records.  At reasonable times and upon reasonable
notice, Lender, its agents, accountants and attorneys shall have the right to
examine the records, books, management and other papers of Individual Borrower
which reflect upon their financial condition, at the Property or at any office
regularly maintained by Individual Borrower where the books and records are
located.  Lender and its agents shall
have the right to make copies and extracts from the foregoing records and other
papers.  In addition, at reasonable
times and upon reasonable notice, Lender, its agents, accountants and attorneys
shall have the right to examine and audit the books and records of Individual
Borrower pertaining to the income, expenses and operation of the Property during
reasonable business hours at any office of Individual Borrower where the books
and records are located.  This Section
7.6 shall apply throughout the term of the Note and without regard to
whether an Event of Default has occurred or is continuing.


 


Section
7.7            Other Rights, etc. 
(a)  The failure of Lender to
insist upon strict performance of any term hereof shall not be deemed to be a
waiver of any term of this Security Instrument.  Individual Borrower shall not be relieved of Individual
Borrower’s obligations hereunder by reason of (i) the failure of Lender to
comply with any request of Individual Borrower, any other Borrower or any
guarantor or indemnitor with respect to the Loan to take any action to
foreclose this Security Instrument or otherwise enforce any of the provisions
hereof or of the Note or the other Loan Documents, (ii) the release,
regardless of consideration, of the whole or any part of the Property, or of
any person liable for the Debt or any portion thereof, or (iii) any agreement
or stipulation by Lender extending the time of payment or otherwise


 


15






















 


modifying or
supplementing the terms of the Note, this Security Instrument or the other Loan
Documents.


 


(b)           It
is agreed that the risk of loss or damage to the Property is on Individual
Borrower and Borrower, and Lender shall have no liability whatsoever for
decline in value of the Property, for failure to maintain the Policies, or for
failure to determine whether insurance in force is adequate as to the amount of
risks insured.  Possession by Lender
shall not be deemed an election of judicial relief if any such possession is
requested or obtained with respect to any Property or collateral not in Lender’s
possession.


 


(c)           Lender
may resort for the payment of the Debt to any other security held by Lender in
such order and manner as Lender, in its discretion, may elect.  Lender may take action to recover the Debt,
or any portion thereof, or to enforce any covenant hereof or of any other Loan
Document without prejudice to the right of Lender thereafter to foreclose this
Security Instrument.  The rights of
Lender under this Security Instrument or under any other Loan Document shall be
separate, distinct and cumulative and none shall be given effect to the
exclusion of the others.  No act of
Lender shall be construed as an election to proceed under any one provision
herein or in any other Loan Document to the exclusion of any other provision
herein and/or therein.  Lender shall not
be limited exclusively to the rights and remedies herein stated or stated in
any other Loan Document but shall be entitled to every right and remedy now or
hereafter afforded at law or in equity.


 


Section
7.8            Right to Release Any Portion of the Property.  Lender may release any portion of the
Property for such consideration as Lender may require without, as to the
remainder of the Property, in any way impairing or affecting the lien or
priority of this Security Instrument, or improving the position of any
subordinate lienholder with respect thereto, except to the extent that the
obligations hereunder shall have been reduced by the actual monetary
consideration, if any, received by Lender for such release, and may accept by
assignment, pledge or otherwise any other property in place thereof as Lender
may require without being accountable for so doing to any other
lienholder.  This Security Instrument
shall continue as a lien and security interest in the remaining portion of the
Property.


 


Section
7.9            Violation of Laws.  If the Property is not in material
compliance with Legal Requirements, Lender may impose additional requirements
upon Individual Borrower in connection herewith including, without limitation,
monetary reserves or financial equivalents.


 


Section
7.10         Recourse and Choice of Remedies.  Notwithstanding any other provision of this
Security Instrument or the Loan Agreement, including, without limitation,
Section 9.4 of the Loan Agreement, Lender and other Indemnified Parties (as
hereinafter defined) are entitled to enforce the obligations of Individual
Borrower and any guarantor and indemnitor contained in Sections 8.2 and 8.3
herein without first resorting to or exhausting any security or collateral and
without first having recourse to the Note or any of the Property, through
foreclosure or acceptance of a deed in lieu of foreclosure or otherwise, and in
the event Lender commences a foreclosure action against the Property, Lender is
entitled to pursue a deficiency judgment with respect to such obligations
against Individual Borrower and any guarantor or indemnitor with respect to the
Loan.  The provisions of Sections 8.2
and 8.3 herein are exceptions to any non-recourse or exculpation
provisions in the Loan Agreement, the Note, 


 


16






















 


this Security
Instrument or the other Loan Documents, and Individual Borrower and any
guarantor or indemnitor with respect to the Loan are fully and personally
liable for the obligations pursuant to Sections 8.2 and 8.3
herein.  The liability of Individual
Borrower and any guarantor or indemnitor with respect to the Loan pursuant to Sections
8.2 and 8.3 herein is not limited to the original principal amount
of the Note.  Notwithstanding the
foregoing, nothing herein shall inhibit or prevent Lender from foreclosing or
exercising any other rights and remedies pursuant to the Loan Agreement, the
Note, this Security Instrument and the other Loan Documents, whether
simultaneously with foreclosure proceedings or in any other sequence.  A separate action or actions may be brought
and prosecuted against Individual Borrower pursuant to Sections 8.2 and 8.3
herein whether or not action is brought against any other Person or whether or
not any other Person is joined in the action or actions.


 


Section
7.11         Right of Entry.  Upon reasonable notice to Individual
Borrower, Lender and its agents shall have the right to enter and inspect the
Property at all reasonable times.


 


ARTICLE 8 - INDEMNIFICATION


 


Section
8.1            General Indemnification.  Individual Borrower shall, at its sole cost
and expense, protect, defend, indemnify, release and hold harmless, or cause to
be protected, defended, indemnified, released and held harmless, the
Indemnified Parties (hereinafter defined) from and against any and all claims,
suits, liabilities (including, without limitation, strict liabilities),
actions, proceedings, obligations, debts, damages, losses, costs, expenses,
diminutions in value, fines, penalties, charges, fees, expenses, judgments,
awards, amounts paid in settlement, punitive damages, foreseeable and
unforeseeable consequential damages, of whatever kind or nature (including, but
not limited, to reasonable attorneys’ fees and other costs of defense)
(collectively, the “Losses”) imposed upon or incurred by or asserted against any
Indemnified Parties and directly or indirectly arising out of or in any way
relating to any one or more of the following, except to the extent arising out
of the gross negligence, illegal acts, bad faith, fraud or willful misconduct
of such Indemnified Party: 
(a) ownership of this Security Instrument, the Property or any
interest therein or receipt of any Rents; (b) any amendment to, or
restructuring of, the Debt, the Note, the Loan Agreement, this Security
Instrument, or any other Loan Documents; (c) any and all lawful action
that may be taken by Lender in connection with the enforcement of the
provisions of this Security Instrument, the Loan Agreement, the Note or any of
the other Loan Documents, whether or not suit is filed in connection with same,
or in connection with Individual Borrower, any other Borrower, and/or any
guarantor or indemnitor of the Loan becoming a party to a voluntary or
involuntary federal or state bankruptcy, insolvency or similar proceeding;
(d) any accident, injury to, or death of, persons or loss of or damage to
property occurring in, on or about the Property or any part thereof or on the
adjoining sidewalks, curbs, adjacent property or adjacent parking areas,
streets or ways; (e) any use, nonuse or condition in, on or about the
Property or any part thereof or on the adjoining sidewalks, curbs, adjacent
property or adjacent parking areas, streets or ways; (f) any failure on
the part of Individual Borrower or any other Borrower, to perform or be in
compliance with any of the terms of this Security Instrument, the Note, the
Loan Agreement or any of the other Loan Documents; (g) performance of any
labor or services or the furnishing of any materials or other property in
respect of the Property or any part thereof; (h) the failure of any
Borrower or any of


 


17






















 


its affiliates to
file timely with the Internal Revenue Service an accurate Form 1099-B,
Statement for Recipients of Proceeds from Real Estate, Broker and Barter
Exchange Transactions, if required by Legal Requirements in connection with
this Security Instrument, or to supply a copy thereof in a timely fashion to
the recipient of the proceeds of the transaction in connection with which this
Security Instrument is made; (i) any failure of the Property to be in
compliance with any Legal Requirements; (j) the enforcement by any
Indemnified Party of the provisions of this Article 8; (k) any and all
claims and 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 contained in any Lease; (l) the
payment of any commission, charge or brokerage fee to anyone claiming through
Individual Borrower or any other Borrower which may be payable in connection
with the funding of the Loan; or (m) any misrepresentation made by
Individual Borrower or any other Borrower in this Security Instrument or any
other Loan Document.  Any amounts
payable to Lender by reason of the application of this Section 8.1 shall
become due and payable on the date that is five (5) days after Individual
Borrower’s receipt of notice thereof and shall bear interest at the Default
Rate from the date loss or damage is sustained by Lender until paid.  For purposes of this Article 8, the term “Indemnified Parties”
means Lender and any Person who is or will have been involved in the
origination of the Loan, any Person who is or will have been involved in the
servicing of the Loan, any Person in whose name the encumbrance created by this
Security Instrument is or will have been recorded, Persons who may hold or
acquire or will have held a full or partial interest in the Loan (including,
but not limited to, investors or prospective investors in the Securities, as
well as custodians, trustees and other fiduciaries who hold or have held a full
or partial interest in the Loan for the benefit of third parties) as well as
the respective directors, officers, shareholders, partners, employees, agents,
servants, representatives, contractors, subcontractors, affiliates,
subsidiaries, participants, successors and assigns of any and all of the
foregoing (including, but not limited to, any other Person who holds or
acquires or will have held a participation or other full or partial interest in
the Loan, whether during the term of the Loan or as a part of or following a
foreclosure of the Loan and any successors by merger, consolidation or
acquisition of all or a substantial portion of Lender’s assets and business).


 


Section
8.2            Mortgage and/or Intangible Tax.  Individual Borrower shall, at its sole cost
and expense, protect, defend, indemnify, release and hold harmless, or cause to
be protected, defended, indemnified, released and held harmless, the
Indemnified Parties from and against any and all Losses imposed upon or
incurred by or asserted against any Indemnified Parties and directly or
indirectly arising out of or in any way relating to any tax on the making
and/or recording of this Security Instrument, the Note or any of the other Loan
Documents, but excluding any income, franchise or other similar taxes.


 


Section
8.3            ERISA Indemnification.  Individual Borrower shall, at its sole cost
and expense, protect, defend, indemnify, release and hold harmless, or cause to
be protected, defended, indemnified, released and held harmless, the
Indemnified Parties from and against any and all Losses (including, without
limitation, reasonable attorneys’ fees and costs incurred in the investigation,
defense, and settlement of Losses incurred in correcting any prohibited
transaction or in the sale of a prohibited loan, and in obtaining any
individual prohibited transaction exemption under ERISA that may be required,
in Lender’s sole discretion) that Lender may incur, directly or indirectly, as
a result of a default under Sections 4.1.9 or 5.2.9 of the Loan Agreement.


 


18






















 


Section
8.4            Duty to Defend;
Attorneys’ Fees and Other Fees and Expenses.  Upon written request by any Indemnified
Party, Individual Borrower shall defend, or cause to be defended, such
Indemnified Party (if requested by any Indemnified Party, in the name of the
Indemnified Party) by attorneys and other professionals approved by the
Indemnified Parties.  Notwithstanding
the foregoing, if the defendants in any such claim or proceeding include both
Individual Borrower and/or any other Borrower and any Indemnified Party and
Individual Borrower and/or such other Borrower and such Indemnified Party shall
have reasonably concluded that there are any legal defenses available to
Individual Borrower, such other Borrower and/or other Indemnified Parties that
are different from or additional to those available to Individual Borrower
and/or such other Borrower, such Indemnified Party shall have the right to
select separate counsel to assert such legal defenses and to otherwise
participate in the defense of such action on behalf of such Indemnified Party,
provided that no compromise or settlement shall be entered without Individual
Borrower’s consent, which consent shall not be unreasonably withheld.  Upon demand, Individual Borrower shall pay
(or cause to be paid) or, in the sole and absolute discretion of the
Indemnified Parties, reimburse (or cause to be reimbursed), the Indemnified
Parties for the payment of reasonable fees and disbursements of attorneys,
engineers, environmental consultants, laboratories and other professionals in
connection therewith.


 


ARTICLE 9 - WAIVERS


 


Section
9.1            Waiver of Counterclaim.  To the extent permitted by applicable law,
Individual Borrower hereby waives the right to assert a counterclaim, other
than a mandatory or compulsory counterclaim, in any action or proceeding
brought against it by Lender arising out of or in any way connected with this
Security Instrument, the Loan Agreement, the Note, any of the other Loan
Documents, or the Obligations.


 


Section
9.2            Marshalling and Other Matters.  To the extent permitted by applicable law,
Individual Borrower hereby waives the benefit of all appraisement, valuation,
stay, extension, reinstatement and redemption laws now or hereafter in force
and all rights of marshalling in the event of any sale hereunder of the
Property or any part thereof or any interest therein.  Further, Individual Borrower hereby expressly waives any and all
rights of redemption from sale under any order or decree of foreclosure of this
Security Instrument on behalf of Individual Borrower, and on behalf of each and
every Person acquiring any interest in or title to the Property subsequent to
the date of this Security Instrument and on behalf of all Persons to the extent
permitted by applicable law.


 


Section
9.3            Waiver of Notice.  To the extent permitted by applicable law,
Individual Borrower shall not be entitled to any notices of any nature whatsoever
from Lender except with respect to matters for which this Security Instrument
specifically and expressly provides for the giving of notice by Lender to
Individual Borrower and except with respect to matters for which Lender is
required by applicable law to give notice, and Individual Borrower hereby
expressly waives the right to receive any notice from Lender with respect to
any matter for which this Security Instrument does not specifically and
expressly provide for the giving of notice by Lender to Individual Borrower.


 


19






















 


Section
9.4            Waiver of Statute of Limitations.  To the extent permitted by applicable law,
Individual Borrower hereby expressly waives and releases to the fullest extent
permitted by law, the pleading of any statute of limitations as a defense to
payment of the Debt or performance of its Other Obligations.


 


Section
9.5            Survival.  The indemnifications made pursuant to Section
8.3 herein shall continue indefinitely in full force and effect and shall
survive and shall in no way be impaired by any of the following:  any satisfaction or other termination of
this Security Instrument, any assignment or other transfer of all or any
portion of this Security Instrument or Lender’s interest in the Property (but,
in such case, shall benefit both Indemnified Parties and any assignee or
transferee), any exercise of Lender’s rights and remedies pursuant hereto
including, but not limited to, foreclosure or acceptance of a deed in lieu of
foreclosure, any exercise of any rights and remedies pursuant to the Loan
Agreement, the Note or any of the other Loan Documents, any transfer of all or
any portion of the Property (whether by Individual Borrower or by Lender
following foreclosure or acceptance of a deed in lieu of foreclosure or at any
other time), any amendment to this Security Instrument, the Loan Agreement, the
Note or the other Loan Documents, and any act or omission that might otherwise
be construed as a release or discharge of Individual Borrower from the
obligations pursuant hereto.


 


ARTICLE 10 - EXCULPATION


 


The
provisions of Section 9.4 of the Loan Agreement are hereby incorporated by
reference into this Security Instrument to the same extent and with the same
force as if fully set forth herein.


 


ARTICLE 11 - NOTICES


 


All
notices or other written communications hereunder shall be delivered in
accordance with Section 10.6 of the Loan Agreement.


 


ARTICLE 12 - APPLICABLE
LAW


 


Section
12.1         Governing Law.  This security instrument shall be governed
in accordance with the terms and provisions of Section 10.3 of the Loan
Agreement.


 


Section
12.2         Usury Laws.  Notwithstanding anything to the contrary,
(a) all agreements and communications between Individual Borrower and/or
Borrower and Lender are hereby and shall automatically be limited so that,
after taking into account all amounts deemed interest, the interest contracted
for, charged or received by Lender shall never exceed the Maximum Legal Rate or
amount, (b) in calculating whether any interest exceeds the Maximum Legal
Rate, all such interest shall be amortized, prorated, allocated and spread over
the full amount and term of all principal indebtedness of Borrower to Lender,
and (c) if through any contingency or event, Lender receives or is deemed
to receive interest in excess of the Maximum Legal Rate, any such excess shall
be deemed to have been applied toward payment of the principal of any and all
then outstanding indebtedness of Borrower to Lender, or if there is no such
indebtedness, shall immediately be returned to Borrower.


 


20






















 


Section
12.3         Provisions Subject to Applicable Law.  All rights, powers and remedies provided in
this Security Instrument may be exercised only to the extent that the exercise thereof
does not violate any applicable provisions of law and are intended to be
limited to the extent necessary so that they will not render this Security
Instrument invalid, unenforceable or not entitled to be recorded, registered or
filed under the provisions of any applicable law.  If any term of this Security Instrument or any application
thereof shall be invalid or unenforceable, the remainder of this Security
Instrument and any other application of the term shall not be affected thereby.


 


ARTICLE 13 - DEFINITIONS


 


All
capitalized terms not defined herein shall have the respective meanings set
forth in the Loan Agreement.  Unless the
context clearly indicates a contrary intent or unless otherwise specifically
provided herein, words used in this Security Instrument may be used
interchangeably in singular or plural form and the term “Individual Borrower”
shall mean “Individual Borrower and any subsequent owner or owners of the
Property or any part thereof or any interest therein,” the term “Individual
Borrower” ” shall be deemed to refer to each and every Person
comprising an Individual Borrower from time to time, jointly and severally, and
to include the successors and assigns of each such Person, the term “Borrower”
shall be deemed to refer to each and every Person comprising a Borrower from
time to time, jointly and severally, and to include the successors and assigns
of each such Person, the word “Lender” shall mean “Lender and any subsequent holder of the
Note,” the word “Note”
shall mean “the Note and any other evidence of indebtedness secured by this
Security Instrument,” the word “Property” shall include any portion of the Property and any
interest therein, and the phrases “attorneys’ fees”, “legal fees” and “counsel fees”
shall include any and all attorneys’, paralegal and law clerk fees and
disbursements, including, but not limited to, fees and disbursements at the
pre-trial, trial and appellate levels incurred or paid by Lender in protecting
its interest in the Property, the Leases and the Rents and enforcing its rights
hereunder.


 


ARTICLE 14 - MISCELLANEOUS
PROVISIONS


 


Section
14.1         No Oral Change.  This Security Instrument, and any provisions
hereof, may not be modified, amended, waived, extended, changed, discharged or
terminated orally or by any act or failure to act on the part of Individual
Borrower or Lender, but only by an agreement in writing signed by the party
against whom enforcement of any modification, amendment, waiver, extension,
change, discharge or termination is sought.


 


Section
14.2         Successors
and Assigns. 
This Security Instrument shall be binding upon and inure to the benefit
of Individual Borrower and Lender and their respective successors and assigns
forever.


 


Section
14.3         Inapplicable Provisions.  If any term, covenant or condition of the
Loan Agreement, the Note or this Security Instrument is held to be invalid,
illegal or unenforceable in any respect, the Loan Agreement, the Note and this
Security Instrument shall be construed without such provision.


 


21






















 


Section
14.4         Headings, etc. 
The headings and captions of various Sections of this Security
Instrument are for convenience of reference only and are not to be construed as
defining or limiting, in any way, the scope or intent of the provisions hereof.


 


Section
14.5         Number and Gender.  Whenever the context may require, any
pronouns used herein shall include the corresponding masculine, feminine or
neuter forms, and the singular form of nouns and pronouns shall include the
plural and vice versa.


 


Section
14.6         Subrogation.  If any or all of the proceeds of the Note
have been used to extinguish, extend or renew any indebtedness heretofore
existing against the Property, then, to the extent of the funds so used, Lender
shall be subrogated to all of the rights, claims, liens, titles, and interests
existing against the Property heretofore held by, or in favor of, the holder of
such indebtedness and such former rights, claims, liens, titles, and interests,
if any, are not waived but rather are continued in full force and effect in
favor of Lender and are merged with the lien and security interest created
herein as cumulative security for the repayment of the Debt, the performance
and discharge of Individual Borrower’s and Borrower’s obligations hereunder,
under the Loan Agreement, the Note and the other Loan Documents and the
performance and discharge of the Other Obligations.


 


Section
14.7         Entire Agreement.  The Note, the Loan Agreement, this Security
Instrument and the other Loan Documents constitute the entire understanding and
agreement between Individual Borrower (or Borrower, as applicable) and Lender
with respect to the transactions arising in connection with the Debt and
supersede all prior written or oral understandings and agreements between
Individual Borrower (or Borrower, as applicable) and Lender with respect
thereto.  Individual Borrower hereby
acknowledges that, except as incorporated in writing in the Note, the Loan
Agreement, this Security Instrument and the other Loan Documents, there are
not, and were not, and no Persons are or were authorized by Lender to make, any
representations, understandings, stipulations, agreements or promises, oral or
written, with respect to the transaction which is the subject of the Note, the
Loan Agreement, this Security Instrument and the other Loan Documents.


 


Section
14.8         Limitation on Lender’s
Responsibility. 
No provision of this Security Instrument shall operate to place any
obligation or liability for the control, care, management or repair of the
Property upon Lender, nor shall it operate to make Lender responsible or liable
for any waste committed on the Property by the tenants or any other Person, or
for any dangerous or defective condition of the Property, or for any negligence
in the management, upkeep, repair or control of the Property resulting in loss
or injury or death to any tenant, licensee, employee or stranger.  Nothing herein contained shall be construed
as constituting Lender a “mortgagee in possession.”


 


ARTICLE 15 - STATE-SPECIFIC
PROVISIONS


 


Section
15.1         Principles of Construction. 
In the event of any inconsistencies between the terms and conditions of
this Article 15 and the terms and conditions of this Security Instrument, the
terms and conditions of this Article 15 shall control and be binding.


 


[PROVISIONS
TO BE INSERTED FOR STATE IN WHICH PROPERTY IS LOCATED]


 


22






















 


IN WITNESS WHEREOF,
this Security Instrument has been executed by Individual Borrower as of the day
and year first above written.


 


	
   

  	
  [INDIVIDUAL BORROWER]

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  



 


23






















 


ACKNOWLEDGMENT


 


	
  STATE OF 

  	
  )

  
	
   

  	
  ) SS

  
	
  COUNTY OF 

  	
  )

  



 


 


On this
             
day of October, 2004, before me, the undersigned notary public, personally
appeared
                                                                                  ,
proved to me through satisfactory evidence of identification, which were
                                                                                  ,
to be the person whose name is signed on the preceding or attached document,
and acknowledged to me that he/she signed it voluntarily for its stated purpose
as                                   
for                                                                                   ,
a Delaware limited liability company.


 


 


	
   

  	
  Notary Public [Official
  Signature and Seal of Notary]

  
	
   

  	
   

  
	
   

  	
  My Commission
  Expires:

  



 


[Local counsel to provide
state appropriate acknowledgement for out-of-state execution]


 


 


EXHIBIT A