Document:

Exhibit 10.68

 

	
  This instrument prepared by 

  	
   

  
	
  and when recorded, return to:

  	
   

  
	
  Kilpatrick Stockton LLP 

  	
   

  
	
  1100 Peachtree Street, Suite 2800

  	
   

  
	
  Atlanta, Georgia 30309 

  	
   

  
	
  Attn: Mark A. Palmer, Esq.

  	
   

  

 

ABOVE SPACE FOR RECORDER’S USE

 

ASSUMPTION AND RELEASE AGREEMENT

 

THIS ASSUMPTION AND RELEASE AGREEMENT (this “Agreement”) is
made  effective as of July     ,
2006, by and among A-S-K 41 ELDRIDGE-W.
LITTLE YORK,  L.P., a
Texas limited partnership (“Original Borrower”), STEVEN
D. ALVIS and JAY K. SEARS (collectively,
“Original
Borrower Principal), MB HOUSTON
ELDRIDGE LAKES LIMITED PARTNERSHIP, an Illinois limited partnership
(“Assumptor”), MINTO BUILDERS
(FLORIDA), INC., a Florida corporation (“New Borrower Principal”), and WELLS FARGO BANK, N.A., as Trustee for the
Registered Holders of J.P. Morgan Chase Commercial Mortgage Securities Corp.,
Commercial Mortgage Pass-Through Certificates, Series 2004-C3 (“Noteholder”).

 

RECITALS:

 

A.                     Original Borrower executed and delivered to
the order of JPMorgan Chase Bank, N.A., a national banking association (“Lender”), a certain Fixed Rate Note dated November
23, 2004 (together with all addenda, modifications, amendments, riders,
exhibits and supplements thereto, the “Note”), in
the stated principal amount of $8,100,000.00, which Note evidences a loan (the “Loan”) made by Lender to
Original Borrower. To secure the repayment of the Note, Original Borrower,
among other things, executed and delivered a Deed of Trust and Security
Agreement executed by Original Borrower to Kim Sobieski, as trustee, for the
benefit of Lender,

 

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as beneficiary,
dated as of November 23, 2004, recorded in the Office of the County Clerk of
Harris County, Texas, under County Clerk’s File No. Y082849 (together with all
addenda, modifications, amendments, riders, exhibits and supplements thereto,
the “Security
Instrument”), that
grants a lien on certain property described on Exhibit A attached hereto
and incorporated herein by reference and more particularly described in the
Security Instrument (the “Property”). Original
Borrower is liable for the payment and performance of all of Original
Borrower’s obligations under the Note, the Security Instrument and all those
other documents listed on Exhibit B attached hereto together with all
addenda, riders, exhibits and supplements thereto all of which are incorporated
herein by reference as though fully set forth herein (the Note, the Security
Instrument and such other documents and instruments are hereinafter referred to
as the “Loan Documents”).

 

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

 

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

 

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

 

E.                         Section
3.08 of that certain Pooling and Servicing Agreement dated as of December 1,
2004 (the “PSA”), authorizes
Midland Loan Services, Inc., a Delaware corporation (“Master Servicer”), as Master Servicer under the PSA, on
behalf of Noteholder, under certain terms and conditions to waive the due on
sale clause and facilitate the Transfer and the Assumption, and Master Servicer
has elected to do so on the terms and conditions set forth in this Agreement.
Master Servicer’s execution and delivery of this Agreement is binding upon
Noteholder pursuant to the PSA.

 

AGREEMENT:

 

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

 

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

 

2.                        Assumption
of Obligation. Assumptor agrees to and does hereby assume as of the
origination date of the Loan, all of the payment and performance obligations of
Original Borrower set forth in the Note, the Security Instrument and the other
Loan Documents in accordance with their respective terms and conditions, as the
same may be modified by this Agreement including, without limitation, payment
of all sums due and payable under the Note. Assumptor further agrees to abide
by and be bound by all of the terms of the Loan Documents, all as though each
of the Loan Documents had been made, executed and delivered by Assumptor.

 

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The provisions of
the Loan Documents are incorporated herein by reference as if fully set forth
herein. Assumptor acknowledges and agrees that any reference to Original
Borrower in the Loan Documents shall be deemed to refer to Assumptor. Assumptor
hereby adopts, ratifies and confirms as of the date hereof all of the
representations, warranties and covenants of Original Borrower contained in the
Loan Documents in connection with the Loan (including, but not limited to, the
warranty of title set forth in, and the other terms and provisions of, Section
5.2 of the Security Instrument) as if Assumptor was Original Borrower named in
the Loan Documents, and, without limitation of the foregoing, Assumptor hereby
represents, warrants, and covenants that Assumptor has good, indefeasible and
insurable fee simple title to the real property comprising part of the Property
and good and indefeasible title to the balance of the Property, free and clear
of all liens whatsoever except the Permitted Exceptions (as defined in the
Security Instrument), such other liens as are permitted pursuant to the Loan
Documents and the liens created by the Loan Documents.

 

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

 

(a)             The Note has an
unpaid principal balance as of the date of this Agreement, of $7,504,380.74 and
prior to default bears interest at the rate of 4.88% per annum, subject to
adjustment as, and to the extent, set forth in the Note. There are presently
the following balances in the indicated reserve accounts (each of the following
terms for the individual reserve accounts are defined in the Escrow Agreement,
as defined on Exhibit B) maintained by Noteholder in connection with the
Loan: (i) $179,772.62 in the Tax and Insurance Funds reserve account, (ii)
$0.00 in the TI & LC Funds reserve account, (iii) $0.00 in the On-going
Replacement Reserve, (iv) $0.00 in the Tenant Reserve Funds reserve account,
and (v) $0.00 in the Construction Reserve Funds reserve account.
Contemporaneously herewith, Original Borrower has transferred and assigned to
Assumptor all right, title and interest of Original Borrower in and to such
reserve accounts.

 

(b)            The Note requires that
monthly payments of principal and interest in the amount of $63,549.09 be made
on or before the first day of each month continuing to December 1, 2014,
whereupon the entire outstanding balance of the Loan shall be immediately due
and payable, if not sooner accelerated or paid.

 

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

 

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

 

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

 

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(f)               To the best of
Original Borrower’s knowledge, all provisions of the Note, the Security
Instrument and the other Loan Documents are valid, in full force and effect,
and enforceable in accordance with their terms.

 

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

 

Original Borrower
understands and intends that Noteholder and Assumptor will rely upon the
acknowledgments, representations and warranties contained herein in entering
into this Agreement.

 

4.                        Assumptor’s
and New Borrower Principal’s Representations and Warranties. Assumptor and
New Borrower Principal jointly and severally represent and warrant to
Noteholder as of the date of this Agreement that neither Assumptor nor New
Borrower Principal has any knowledge that any of the representations made by
Original Borrower in Section 3 above are not true and correct. Assumptor and
New Borrower Principal understand and intend that Noteholder will rely on the
representations and warranties contained herein.

 

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

 

6.                        Assumption
by New Borrower Principal of Liability for the Exceptions to Non-Recourse.
New Borrower Principal hereby adopts, 
ratifies and confirms all of the representations, warranties and
covenants of Original Borrower Principal under the Loan Documents as if New
Borrower Principal were the Original Borrower Principal named therein, and
jointly and severally assumes all liability of Original Borrower Principal
under the Loan Documents as of the origination date of the Loan, including,
without limitation, including, without limitation, the Environmental Indemnity
Agreement, the Guaranty, and Article 11 of the Security Instrument. Reference
in any Loan Document to Original Borrower Principal henceforth shall be deemed
to refer to New Borrower Principal.

 

7.                        Release
of Original Borrower and Original Borrower Principal. In reliance on
Original Borrower’s and Assumptor’s acknowledgments, representations and
warranties in this Agreement and in consideration for the releases contained in
Section 12 of this Agreement, Noteholder releases Original Borrower and Original
Borrower Principal from their respective obligations under the Loan Documents, provided that neither Original Borrower
nor Original Borrower Principal is released from any liability pursuant to this
Agreement or any of the Loan Documents including, without limitation, Section
11 of the Security Instrument, for any liability that relates to the period
prior to the date hereof regardless of when any environmental hazard or other
condition giving rise to any such liability thereunder is discovered. Nothing
contained herein shall be deemed to impair the right of Noteholder to name
Original Borrower, for

 

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purposes of
extinguishing Original Borrower’s interest in the Property, as a party
defendant in any action or suit for judicial foreclosure and sale under the
Security Instrument or for purposes of appointment of a receiver for the
Property, or for purposes of enforcement of the assignment of leases and rents
set forth in the Security Instrument.

 

8.                        No
Impairment of Lien. Nothing set forth herein shall affect the priority or
extent of the lien of the Security Instrument or any of the other Loan
Documents, nor, except as expressly set forth herein, release or change the
liability of any party who may now be or after the date of this Agreement may
become liable, primarily or secondarily, under the Loan Documents. Except as
expressly modified hereby, the Note, the Security Instrument and the other Loan
Documents remain unchanged, are hereby ratified and reaffirmed in all respects
and shall remain in full force and effect, and this Agreement shall have no
effect on the priority or validity of the liens, operation and effect of the
Security Instrument and the other Loan Documents, all of which are incorporated
herein by reference. Nothing herein shall be construed to constitute a novation
of the Loan or of any of the Loan Documents.

 

9.                        Costs.
Original Borrower agrees to pay all fees and costs (including reasonable
attorneys’ fees) incurred by Noteholder in connection with Noteholder’s consent
to and approval of the Transfer of the Property and the assumption fee equal to
1.0% of the outstanding principal balance of the Loan which is required to be
paid by Original Borrower to Noteholder in consideration of the consent to the
Transfer and to the Assumption.

 

10.                      Financial
Information. Assumptor and New Borrower Principal represent and warrant to
Noteholder that all financial information and information regarding the
management capability of Assumptor and New Borrower Principal provided to
Noteholder was true and correct as of the date provided to Noteholder and
remains materially true and correct as of the date of this Agreement.

 

11.                      Addresses.
From and after the date hereof, the addresses for notice for Assumptor, New
Borrower Principal and Noteholder hereunder and under the Loan Documents are as
follows:

 

Assumptor:

 

MB Houston
Eldridge Lakes Limited Partnership

2901 Butterfield Road

Oak Brook, Illinois 60523

Attn: Lori Foust

 

New Borrower Principal:

 

Minto Builders
(Florida), Inc.

2901 Butterfield Road

Oak Brook, Illinois 60523

Attn: Lori Foust

 

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Noteholder:

 

Wells Fargo Bank,
N.A., as Trustee for the Registered

Holders of J.P. Morgan Chase Commercial Mortgage

Securities Corp., Commercial Mortgage Pass-Through

Certificates, Series 2004-C3

c/o Midland Loan Services, Inc.

10851 Mastin, Suite 300

Overland Park, Kansas 66210

Attn: MLS Loan Number 03-0244356

 

12.                      Complete
Release. Assumptor, Original Borrower, Original Borrower Principal and New
Borrower Principal hereby jointly and severally, unconditionally and
irrevocably release and forever discharge Lender, Noteholder and Master
Servicer and their respective successors, assigns, agents, directors, officers,
employees and attorneys, and each current or substitute trustee, if any, under
the Security Instrument (collectively, “Indemnitees”) from all Claims
(as defined below). Further, each of Original Borrower and Original Borrower
Principal hereby covenants and agrees that it will not take or assert, and will
not request or cause any other person or entity to take or assert, any action,
claim or allegation in contradiction of, or inconsistent with, the following
statement: all provisions of the Note, the Security Instrument and the other
Loan Documents are valid, in full force and effect, and enforceable in
accordance with their terms. Original Borrower and Original Borrower Principal
jointly and severally agree to indemnify Indemnitees and defend and hold them
harmless from any and all claims, losses, causes of action, costs and expenses
of every kind or character incurred by or asserted against Indemnitees in
connection with (A) any Claims, the Transfer, or the breach by Original
Borrower or Original Borrower Principal of the Loan Documents, as amended
herein, but only to the extent that such claims, losses, causes of action,
costs and expenses arise out of or are in any way connected with or result from
the acts, actions or omissions of Original Borrower or Original Borrower
Principal, or (B) any actions or conduct taken or caused to be taken by
Original Borrower, Original Borrower Principal, or any person or entity
claiming by, through, under, or on behalf of Original Borrower or Original
Borrower Principal which are in contradiction of, inconsistent with, or in
breach of the terms and provisions of this Section 12 (including, without
limitation, the release and discharge set forth in this Section 12). Assumptor
and New Borrower Principal jointly and severally agree to indemnify
Indemnitees, and defend and hold them harmless from any and all claims, losses,
causes of action, costs and expenses of every kind or character incurred by or
asserted against Indemnitees in connection with Claims, the Transfer or the
breach by Assumptor or New Borrower Principal of the Loan Documents, as amended
herein, but only to the extent that such claims, losses, causes of action,
costs and expenses arise out of or are in any way connected with or result from
the acts, actions or omissions of Assumptor or New Borrower Principal.

 

As used in this Agreement, the term “Claims” shall mean any and all
possible claims, demands, actions, fees, costs, expenses and liabilities
whatsoever, known or unknown, at law or in equity, originating in whole or in
part, on or before the date of this Agreement, which Original Borrower,
Original Borrower Principal, or any of their respective partners, limited
partners, members, officers, directors, shareholders, agents or employees may
now or hereafter have against Indemnitees, and irrespective of whether any such
Claims arise out of contract, tort,

 

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

 

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

 

7

 

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

 

14.                      Further
Assurances. Original Borrower, Original Borrower Principal, Assumptor and
New Borrower Principal agree to perform such other and further acts, and to
execute such additional documents, agreements, notices or financing statements,
as Noteholder deems reasonably necessary or desirable from time to time to
create, preserve, continue, perfect, validate or carry out any of Noteholder’s
rights under this Agreement and/or the other Loan Documents.

 

15.                      Miscellaneous.

 

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

 

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

 

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

 

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

 

8

 

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

 

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

 

(g)            THIS WRITTEN AGREEMENT AND THE OTHER LOAN
DOCUMENTS, AS AMENDED, REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES AND
MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT
ORAL AGREEMENTS. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.

 

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

 

16.                      Reservation
of Rights. Nothing contained in this Agreement shall prevent or in any way
diminish or interfere with any rights or remedies including, without
limitation, the right to contribution, which Noteholder may have against
Original Borrower, Original Borrower Principal, Assumptor, New Borrower
Principal or any other party under the Comprehensive Environmental Response,
Compensation and Liability Act of 1980 (codified at Title 42, U.S.C. Section
9601, et. seq.), as it may be amended from time to time, any successor
statute thereto or any other applicable federal, state or local laws, all such
rights being hereby expressly reserved.

 

17.                      Compliance
with Anti-Terrorism, Embargo, Sanctions and Anti-Money Laundering Laws.
Assumptor shall comply with all Requirements of Law relating to money
laundering, anti-terrorism, trade embargos and economic sanctions now or
hereafter in effect. Upon Noteholder’s request from time to time during the
term of the Loan, Assumptor shall certify in writing to Noteholder that
Assumptor’s representations, warranties and obligations under this Section 17
remain true and correct and have not been breached. Assumptor shall immediately
notify Noteholder in writing if any of such representations, warranties or
covenants are no longer true or have been breached or if Assumptor has
reasonable basis to believe that they may no longer be true or have been
breached. In connection with such an event, Assumptor shall comply with all
Requirements of Law and directives of Governmental Authorities and, at
Noteholder’s request, provide to Noteholder copies of all notices, reports and
other communications exchanged with or received from Governmental Authorities
relating to such an event. Assumptor shall also reimburse Noteholder any
expense incurred by Noteholder in evaluating the effect of such an event on the
Loan and Noteholder’s interest in the collateral for the Loan, in obtaining any
necessary license from Governmental Authorities as may be necessary for
Noteholder to enforce its rights under the Loan Documents, and in complying
with all Requirements of Law applicable to Noteholder as the result of the
existence of such an event and for any penalties or fines imposed upon
Noteholder as a result thereof. Further, Assumptor shall immediately notify
Noteholder in writing if any future tenant of the Property (i) is identified on
the OFAC List, or (ii) is a Person 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

 

9

 

States law, regulation or Executive Order of the President of the United
States. For purposes of this Agreement, the following definitions shall apply:

 

“Governmental
Authority” means any
nation or government, any state or other political subdivision thereof, and any
Person exercising executive, legislative, judicial or administrative functions
of or pertaining to such government.

 

“OFAC List” means the list of specially designated
nationals and blocked Persons subject to financial sanctions that is maintained
by the U.S. Treasury Department, Office of Foreign Assets Control and any other
similar list maintained by the U.S. Treasury Department, Office of Foreign
Assets Control pursuant to any Requirements of Law including, without
limitation, trade embargo, economic sanctions or other prohibitions imposed by
Executive Order of the President of the United States. The OFAC List currently
is accessible through the internet website www.treas.gov/ofac/tl lsdn.pdf.

 

“Requirements of
Law” means (a) the
organizational documents of an entity, and (b) any law, regulation, ordinance,
code, decree, treaty, ruling or determination of an arbitrator, court or other
Governmental Authority or any Executive Order issued by the President of the
United States, in each case applicable to or binding upon such Person or to
which such Person any of its property or the conduct of its business is subject
including, without limitation, laws, ordinances and regulations pertaining to
the zoning, occupancy and subdivision of real property.

 

“Person” means an individual, partnership, limited
partnership, corporation, limited liability company, business trust, joint
stock company, trust, unincorporated association, joint venture, governmental
authority or other entity of whatever nature.

 

18.                      Additional Permitted Transfers. Notwithstanding any terms or provisions of
the Loan Documents to the contrary (including, without limitation, Article 8 of
the Security Instrument), so long as MB Houston Eldridge Lakes Limited
Partnership, an Illinois limited partnership, is the sole Borrower, the
following Transfers (each, a “Permitted Transfer” and,
collectively, the “Permitted
Transfers”) will
be permitted without Noteholder’s consent, subject to the terms and conditions
set forth in this Section 18:

 

(a)                       MB REIT Transfers. Subject to the terms and conditions of
subparagraphs (1), (2), and (3), below, the following series of transactions
(each, an “MB REIT
Transfer”) to be
consummated between the date of this Agreement and December 31, 2006, that will
lead to the full capitalization of Minto Builders (Florida), Inc., a Florida
corporation and a REIT (“MB REIT”):

 

(i)                       To
the extent not completed prior to the date of this Agreement, issuance to
individuals of 125 shares of non-voting Series B Preferred Stock in MB REIT to
satisfy certain REIT regulations requiring MB REIT to have at least 100
shareholders; such Series B Preferred Stock will be issued at a price of $1,000
per share with a 12.5% preferred return and shall have no voting rights;

 

(ii)                    Issuance
to Inland Western Real Estate Trust, Inc., a Maryland corporation and a public
REIT (“Inland Western”), of up to $60,000,000.00 in additional
Class C Preferred Stock in MB REIT and the subsequent redemption thereof by MB

 

10

 

REIT; such Class C
Preferred Stock will earn a preferred return of 7% and shall have no voting
rights; and

 

(iii)                 Issuance
to Inland American Real Estate Trust, Inc., a Maryland corporation and a public
REIT (“Inland American”), of up to $1,128,000,000.00 in additional
Special Voting Stock in MB REIT and the subsequent conversion thereof to Common
Stock so that after such issuance and conversion Inland American will own 80%
of the value of the stock of MB REIT and approximately 97.5% of the Common
Stock of MB REIT, with Minto (Delaware), LLC, a Delaware limited liability
company, owning the remaining approximately 2.5% of the Common Stock. Such
Special Voting Stock shall be convertible to Common Stock and entitled to 0.99
votes per share and a liquidation preference of $0.01 per share. The Common
Stock in MB REIT shall be entitled to one vote per share.

 

provided,
that, with respect to any of the transactions described in this Section
18(a):

 

(1)                    With
respect to any MB REIT Transfer resulting in Inland American becoming the owner
of greater than forty-nine percent (49%) of the direct or indirect ownership
interests in Borrower or MB REIT, Borrower shall deliver to Noteholder and
Noteholder’s counsel:  (A) written notice
of such MB REIT Transfer at least fifteen (15) business days prior to the
consummation thereof; which notice requirement may be satisfied by Borrower
giving written notice to Noteholder, at least fifteen (15) business days prior
to the commencement of such period, of the thirty (30) day period in which
Borrower anticipates such MB REIT Transfer will occur (e.g., if Borrower
anticipates that such transaction will occur during the period from July 1 to
July 30, 2006, Borrower shall give written notice thereof to Noteholder on or before
June 12, 2006), and, if such MB REIT Transfer does not occur during the
thirty-day period identified in any such notice, then Borrower shall give a
subsequent written notice to Noteholder at least fifteen (15) business days
prior to the commencement of a later thirty-day period in which Borrower then
anticipates such MB REIT Transfer will occur; in all events, Borrower shall
give written notice to Noteholder of such MB REIT Transfer within ten (10)
business days after the consummation thereof; and (B) at least ten (10)
business days prior to such MB REIT Transfer, a non-consolidation opinion in
form and substance, and issued by a law firm, satisfactory to Noteholder and
its counsel in their sole discretion,  it
being acknowledged that such non-consolidation opinion may be delivered to
Noteholder and its counsel at any time during the ninety (90) day period prior
to such MB REIT Transfer and Borrower shall promptly after the consummation of
such MB REIT Transfer cause to be delivered to Noteholder a re-dated original
of such non-consolidation opinion, dated as of the date of such consummation.

 

(2)                    Within
ten (10) business days after the end of each calendar quarter (commencing with
the calendar quarter ending June 30, 2006), Borrower shall give Noteholder
written notice of any MB REIT Transfer(s) that has occurred during said
calendar quarter, including the MB REIT Transfer described in subparagraph (1),
above; and

 

11

 

(3)                    Except
as contemplated in subparagraph (1), above, no MB REIT Transfer shall be a
“Permitted Transfer” under this Section 18 if it results in either (A) any
Person who does not now, as of the date of this Agreement, own greater than
forty-nine percent (49%) of the ownership interests in Borrower or MB REIT
becoming the owner (by itself or together with its Affiliates) of greater than
forty-nine percent (49%) of the ownership interests in Borrower or MB REIT, or
(B) any Person who does not now, as of the date of this Agreement, Control Borrower
or MB REIT, obtaining Control (by itself or together with its Affiliates) of
Borrower or MB REIT (as such term “Control” is hereinafter defined). Any
transaction described in this subparagraph (3) shall be subject to the
applicable terms and conditions of the Loan Documents, including, without
limitation, Article 8 of the Security Instrument, and, without limitation,
unless earlier notice is required under any such terms and conditions, Borrower
shall give Noteholder at least fifteen (15) business days advance written
notice of any transaction described in this subparagraph (3). “Control” means the possession, directly or
indirectly, of the power to direct or cause the direction of the management or
policies of a Person, whether through the ability to exercise voting power, by
contract or other agreement or otherwise; “Controlling” has a correlative meaning.

 

(b)                   Inland
American Transfers. The following Transfers of stock in Inland American:

 

(i)                       Transfer
of stock in Inland American to Inland Western, Inland Retail Real Estate Trust,
Inc., a Maryland corporation, Inland Real Estate Corporation, a Maryland
corporation, or Inland Real Estate Investment Corporation, a Delaware
corporation, in connection with a concurrent merger of Inland American with or
into such entity, so long as the applicable entity is a REIT that is a publicly
traded corporation and related to Inland American, it being acknowledged that
the term “publicly traded” (as used in this subparagraph (i)) shall not be
deemed to require that the corporation’s stock be traded on a public stock
exchange; and

 

(ii)                    Transfers
of stock in Inland American so long as all such Transfers, in the aggregate, do
not result in (i) any Person who does not now, as of the date of this
Agreement, own, directly or indirectly, greater than forty-nine percent (49%)
of the stock in Inland American, becoming the owner (by itself or together with
its Affiliates), directly or indirectly, of greater than forty-nine percent
(49%) of the stock in Inland American, or (ii) any Person who does not now, as
of the date of this Agreement, Control Inland American, obtaining Control (by
itself or together with its Affiliates) of Inland American.

 

Notwithstanding anything to the contrary
contained in this Agreement or in the Loan Documents, (i) this Agreement shall
not modify or amend, or constitute a waiver of, the terms and conditions of
Section 8.7 of the Security Instrument, and (ii) no Transfer shall be permitted
without Noteholder’s prior written consent, subject to satisfaction of the
requirements and conditions of Section 8.3(c) or the Security Instrument, that
would cause or result in Inland American, or its successor following a
permitted merger pursuant to subparagraph (b)(i), above,

 

12

 

(i) not owning at
least fifty-one percent (51%) of the Common Stock in MB REIT, or (ii) not
Controlling Borrower and MB REIT.

 

It is acknowledged and agreed that permitting
the Permitted Transfers (as defined in this Section 18) without Noteholder’s
consent as set forth in this Section 18 is a limited and conditional waiver of
certain restrictions on Transfers set forth in the Loan Documents that may
otherwise require such consent, and such waiver shall be effective only so long
as: (i) the conditions set forth in this Section 18 with respect to each such
Transfer are performed and satisfied; (ii) neither an Event of Default nor any
event that with the giving of notice or the passage of time would become an
Event of Default has occurred and subsists; and (iii) without limitation of any
other condition, MB Houston Eldridge Lakes Limited Partnership, an Illinois
limited partnership, an Illinois limited partnership, is the sole Borrower.
Without limitation, it is acknowledged and agreed that (a) upon the failure of
the condition described in clause (iii) of the preceding sentence, the waiver
set forth in this Section 18 shall automatically terminate and become null and
void, and any Transfers occurring thereafter shall be subject to the terms and
conditions of the Loan Documents without regard to this Section 18, and (b)
upon the failure of any other condition set forth in this Section 18, and
during the subsistence of any such failure, the waiver set forth in this
Section 18 shall not be effective, and any Transfers occurring while any such
failure subsists shall be subject to the terms and conditions of the Loan
Documents without regard to this Section 18. In no event shall this Section 18
be deemed or construed to modify or amend the Security Agreement or any of the
other Loan Documents.

 

19.                      Amendments to Loan Documents. Section 8.3(a) of the Security Instrument is
hereby amended by: (i) deleting the phrase “Steven D. Alvis and Jay K. Sears”
in clause (B) of said Section and substituting the phrase “Minto Builders
(Florida), Inc., a Florida corporation” in its place; (ii) deleting the phrase
“prior to the death or legal incapacity of all the Original Principals and is
thereafter assumed by persons who are acceptable to Lender in its sole and
absolute discretion” at the end of said clause (B); and (iii) deleting clause
(C) of said Section in its entirety and substituting the phrase “(C)
intentionally omitted,” in its place.

 

20.                      Noteholder Confirmation. Noteholder hereby confirms to Assumptor that
the representations and warranties of Original Borrower made in Sections 3(a)
and 3(b) of this Agreement are true and correct. Further, Noteholder hereby
confirms to Assumptor that there are no uncured defaults under the Loan
Documents with respect to the payment of principal and interest. Further,
Noteholder represents and warrants to Assumptor that to its actual knowledge,
no other Event of Default (as defined in the Security Instrument) exists under
the Loan. However, Noteholder is not waiving and does not hereby waive any
existing defaults if any in fact exist and nothing herein is intended to be nor
shall it be construed to be a waiver of any existing defaults, material or
immaterial, which may in fact exist. As used in this paragraph, “actual
knowledge” means the actual state of mind of the person or persons directly
responsible for the processing of Original Borrower’s request for consent to
the Transfer and Assumption and does not include any implied, constructive or
imputed knowledge.

 

[REMAINDER OF PAGE INTENTIONALLY
LEFT BLANK]

 

13

 

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

 

 

	
   

  	
   

  	
  ASSUMPTOR:

  
	
   

  	
   

  	
  

  MB HOUSTON ELDRIDGE LAKES LIMITED

  PARTNERSHIP, an Illinois limited partnership

  
	
  Witnesses:

  	
   

  	
  

  By:

  	
  MB Houston
  Eldridge GP, L.L.C, a Delaware 

  
	
   

  	
   

  	
   

  	
  limited
  liability company, its general partner

  
	
  /s/ LaVenia Smith

  	
   

  	
   

  	
   

  
	
  Name:

  	
  LaVenia Smith

  	
   

  	
   

  	
  By:

  	
  Minto Builders
  (Florida), Inc., its sole

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
  member

  
	
  Name:

  	
  /s/ Pamela Hayes

  	
   

  	
   

  	
   

  
	
  Pamela
  Hayes

  	
   

  	
   

  	
  By:

  	
  /s/ Debra A. Palmer

  	
   

  
	
   

  	
   

  	
   

  	
  Name:

  	
  Debra
  A. Palmer

  	
   

  
	
   

  	
   

  	
   

  	
  Title:

  	
  Assistant
  Secretary

  	
   

  

 

 

	
   

  	
   

  	
  NEW
  BORROWER PRINCIPAL:

  
	
  Witnesses:

  	
   

  	
  

  MINTO BUILDERS (FLORIDA), INC.,
  a

  
	
   

  	
   

  	
  Florida
  corporation

  
	
  /s/ LaVenia Smith

  	
   

  	
   

  
	
  Name:

  	
  LaVenia Smith

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ Debra A. Palmer

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Debra A. Palmer

  	
   

  
	
  Name:

  	
  /s/ Pamela Hayes

  	
   

  	
  Title:

  	
  Assistant Secretary

  	
   

  
	
  Pamela Hayes

  	
   

  	
   

  

 

[SIGNATURES CONTINUE ON THE NEXT PAGE]

 

 

[SIGNATURES CONTINUED FROM THE PREVIOUS PAGE]

 

 

	
   

  	
   

  	
  ORIGINAL BORROWER:

  
	
   

  	
   

  	
  

  A-S-K
  41 ELDRIDGE-W. LITTLE YORK, L.P.,
a Texas limited partnership

  
	
  Witnesses:

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  A-S-K 41, L.C., a Texas limited liability

  
	
   

  	
   

  	
   

  	
  company, its General Partner

  
	
  Name:

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
  Name:

  	
   

  	
   

  	
   

  	
  Name:

  	
  Steven D. Alvis

  
	
   

  	
   

  	
   

  	
  Title:

  	
  Member-Manager

  
								

 

 

	
   

  	
   

  	
  ORIGINAL
  BORROWER PRINCIPAL:

  
	
  Witnesses:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Name:

  	
   

  	
   

  	
  STEVEN D. ALVIS

  
					

 

	
  Name:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  

 

	
  Witnesses:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  JAY K. SEARS

  	
   

  
	
  Name:

  	
   

  	
   

  	
   

  
					

 

	
  Name:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  

 

 

[SIGNATURES CONTINUE ON THE NEXT PAGE]

 

 

[SIGNATURES CONTINUED FROM THE PREVIOUS PAGE]

 

 

	
   

  	
   

  	
  NOTEHOLDER:

  
	
   

  	
   

  	
  

  WELLS
  FARGO BANK, N.A., as
  Trustee under that certain Pooling and Servicing Agreement dated as of
  December 1, 2004 (the “PSA”),for the Registered Holders of J.P.
  Morgan Chase Commercial Mortgage Securities Corp., Commercial Mortgage
  Pass-Through Certificates, Series 2004-C3

  
	
   

  	
   

  	
   

  
	
  Witnesses:

  	
   

  	
  By:

  	
  Midland Loan Services, Inc., a Delaware

  
	
  

  /s/ Dave Wenthold

  	
   

  	
   

  	
  corporation, as Master Servicer under the PSA

  and Attorney-In-Fact

  
	
  Name:

  	
  Dave Wenthold

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  By:

  	
  Northmarq Capital, Inc., as Sub-Servicer

  under the Sub-Servicing Agreement

  
	
  /s/ Jason Lenz

  	
   

  	
   

  
	
  Name:

  	
  Jason Lenz

  	
   

  	
   

  	
   

  	
  By:

  	
  /s/ Karen L. Pribnow

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Name:

  	
  Karen L. Pribnow

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Title:

  	
  EVPExhibit 10.69

 

	
  AFTER RECORDING

  	
   

  	
   

  
	
  HOLD FOR

  	
   

  	
   

  
	
  AMERICAN TITLE COMPANY

  	
   

  	
   

  
	
  GF 560009.4

  	
   

  	
   

  
	
  CLOSER KS/TO

  	
   

  	
   

  

 

Loan No. V_47898

 

A-K-S 75 NEC SPRING TOWN
CENTER, L.P., as grantor 

(Borrower)

 

to

KIM SOBIESKI, as trustee 

(Trustee)

 

for the benefit of

 

JPMORGAN CHASE BANK,
N.A., as beneficiary 

(Lender)

 

 

DEED OF TRUST AND

SECURITY AGREEMENT

 

 

	
   

  	
  Dated:
  December 20, 2004

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  PREPARED
  BY

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Kelley
  Drye & Warren LLP

  	
   

  
	
   

  	
  200
  Kimball Drive

  	
   

  
	
   

  	
  Parsippany,
  New Jersey 07054

  	
   

  
	
   

  	
  Attention:
  Paul A. Keenan, Esq.

  	
   

  

 

 

NOTE TO CLERK/RECORDER:

THIS INSTRUMENT IS ALSO A FIXTURE FINANCING STATEMENT.

 

[SEAL]

 

 

TABLE
OF CONTENTS

 

	
   

  	
   

  	
  Page

  
	
  ARTICLE 1 - GRANTS OF SECURITY

  	
  1

  
	
  Section 1.1.

  	
  PROPERTY CONVEYED

  	
  1

  
	
  Section 1.2.

  	
  ASSIGNMENT OF RENTS

  	
  4

  
	
  Section 1.3.

  	
  DEFINITION OF PERSONAL PROPERTY

  	
  4

  
	
  Section 1.4.

  	
  PLEDGE OF MONIES HELD

  	
  4

  
	
  ARTICLE 2 - DEBT AND OBLIGATIONS SECURED

  	
  4

  
	
  Section 2.1.

  	
  DEBT

  	
  4

  
	
  Section 2.2.

  	
  OTHER OBLIGATIONS

  	
  5

  
	
  Section 2.3.

  	
  DEBT AND OTHER OBLIGATIONS

  	
  5

  
	
  Section 2.4.

  	
  PAYMENTS

  	
  5

  
	
  ARTICLE 3 - BORROWER COVENANTS

  	
  5

  
	
  Section 3.1.

  	
  INCORPORATION BY REFERENCE

  	
  6

  
	
  Section 3.2.

  	
  INSURANCE

  	
  6

  
	
  Section 3.3.

  	
  PAYMENT OF TAXES, ETC

  	
  13

  
	
  Section 3.4.

  	
  CONDEMNATION

  	
  13

  
	
  Section 3.5.

  	
  USE AND MAINTENANCE OF PROPERTY

  	
  14

  
	
  Section 3.6.

  	
  WASTE

  	
  15

  
	
  Section 3.7.

  	
  COMPLIANCE WITH LAWS; ALTERATIONS

  	
  15

  
	
  Section 3.8.

  	
  BOOKS AND RECORDS

  	
  16

  
	
  Section 3.9.

  	
  PAYMENT FOR LABOR AND MATERIALS

  	
  17

  
	
  Section 3.10.

  	
  PERFORMANCE OF OTHER AGREEMENTS

  	
  18

  
	
  ARTICLE 4 - SPECIAL COVENANTS

  	
  18

  
	
  Section 4.1.

  	
  PROPERTY USE

  	
  18

  
	
  Section 4.2.

  	
  ERISA

  	
  18

  
	
  Section 4.3.

  	
  SINGLE PURPOSE ENTITY

  	
  18

  
	
  ARTICLE 5 - REPRESENTATIONS AND WARRANTIES

  	
  21

  
	
  Section 5.1.

  	
  BORROWER’S REPRESENTATIONS

  	
  21

  
	
  Section 5.2.

  	
  WARRANTY OF TITLE

  	
  21

  
	
  Section 5.3.

  	
  STATUS OF PROPERTY

  	
  21

  
	
  Section 5.4.

  	
  NO FOREIGN PERSON

  	
  22

  

 

i

 

	
  Section 5.5.

  	
  SEPARATE TAX LOT

  	
  22

  
	
  ARTICLE 6 - OBLIGATIONS AND RELIANCES

  	
  23

  
	
  Section 6.1.

  	
  RELATIONSHIP OF BORROWER AND LENDER

  	
  23

  
	
  Section 6.2.

  	
  NO RELIANCE ON LENDER

  	
  23

  
	
  Section 6.3.

  	
  NO LENDER OBLIGATIONS

  	
  23

  
	
  Section 6.4.

  	
  RELIANCE

  	
  23

  
	
  ARTICLE 7 - FURTHER ASSURANCES

  	
  23

  
	
  Section 7.1.

  	
  RECORDING FEES

  	
  23

  
	
  Section 7.2.

  	
  FURTHER ACTS

  	
  23

  
	
  Section 7.3.

  	
  CHANGES IN TAX, DEBT CREDIT AND DOCUMENTARY STAMP
  LAWS

  	
  23

  
	
  Section 7.4.

  	
  CONFIRMATION STATEMENT

  	
  24

  
	
  Section 7.5.

  	
  SPLITTING OF SECURITY INSTRUMENT

  	
  24

  
	
  Section 7.6.

  	
  REPLACEMENT DOCUMENTS

  	
  25

  
	
  ARTICLE 8 - DUE ON SALE/ENCUMBRANCE

  	
  25

  
	
  Section 8.1.

  	
  LENDER RELIANCE

  	
  25

  
	
  Section 8.2.

  	
  NO SALE/ENCUMBRANCE

  	
  25

  
	
  Section 8.3.

  	
  EXCLUDED AND PERMITTED TRANSFERS

  	
  26

  
	
  Section 8.4.

  	
  NO IMPLIED FUTURE CONSENT

  	
  28

  
	
  Section 8.5.

  	
  COSTS OF CONSENT

  	
  27

  
	
  Section 8.6.

  	
  CONTINUING SEPARATENESS REQUIREMENTS

  	
  27

  
	
  ARTICLE 9 - DEFAULT

  	
  28

  
	
  Section 9.1.

  	
  EVENTS OF DEFAULT

  	
  28

  
	
  Section 9.2.

  	
  DEFAULT INTEREST

  	
  30

  
	
  ARTICLE 10 - RIGHTS AND REMEDIES

  	
  31

  
	
  Section 10.1.

  	
  REMEDIES

  	
  31

  
	
  Section 10.2.

  	
  RIGHT OF ENTRY

  	
  36

  
	
  ARTICLE 11 - INDEMNIFICATION; SUBROGATION

  	
  36

  
	
  Section 11.1.

  	
  GENERAL INDEMNIFICATION

  	
  36

  
	
  Section 11.2.

  	
  ENVIRONMENTAL INDEMNIFICATION

  	
  38

  
	
  Section 11.3.

  	
  DUTY TO DEFEND AND ATTORNEYS AND OTHER FEES AND
  EXPENSES

  	
  40

  
	
  Section 11.4.

  	
  SURVIVAL OF INDEMNITIES

  	
  40

  

 

ii

 

	
  ARTICLE 12 - SECURITY AGREEMENT

  	
  41

  
	
  Section 12.1.

  	
  SECURITY AGREEMENT

  	
  41

  
	
  ARTICLE 13 - WAIVERS

  	
  42

  
	
  Section 13.1.

  	
  MARSHALLING AND OTHER MATTERS

  	
  42

  
	
  Section 13.2.

  	
  WAIVER OF NOTICE

  	
  43

  
	
  Section 13.3.

  	
  SOLE DISCRETION OF LENDER

  	
  43

  
	
  Section 13.4.

  	
  SURVIVAL

  	
  43

  
	
  Section 13.5.

  	
  WAIVER OF TRIAL BY JURY

  	
  43

  
	
  Section 13.6.

  	
  WAIVER OF AUTOMATIC OR SUPPLEMENTAL STAY

  	
  44

  
	
  ARTICLE 14 - NOTICES

  	
  44

  
	
  Section 14.1.

  	
  NOTICES

  	
  44

  
	
  ARTICLE 15 - APPLICABLE LAW

  	
  45

  
	
  Section 15.1.

  	
  GOVERNING LAW; JURISDICTION

  	
  45

  
	
  Section 15.2.

  	
  USURY LAWS

  	
  45

  
	
  Section 15.3.

  	
  PROVISIONS SUBJECT TO APPLICABLE LAW

  	
  46

  
	
  ARTICLE 16 - SECONDARY MARKET

  	
  46

  
	
  Section 16.1.

  	
  TRANSFER OF LOAN

  	
  46

  
	
  ARTICLE 17 - COSTS

  	
  46

  
	
  Section 17.1.

  	
  PERFORMANCE AT BORROWER’S EXPENSE

  	
  46

  
	
  Section 17.2.

  	
  ATTORNEY’S FEES FOR ENFORCEMENT

  	
  46

  
	
  ARTICLE 18 - DEFINITIONS

  	
  47

  
	
  Section 18.1.

  	
  GENERAL DEFINITIONS

  	
  47

  
	
  ARTICLE 19 - MISCELLANEOUS PROVISIONS

  	
  47

  
	
  Section 19.1.

  	
  NO ORAL CHANGE

  	
  47

  
	
  Section 19.2.

  	
  LIABILITY

  	
  47

  
	
  Section 19.3.

  	
  INAPPLICABLE PROVISIONS

  	
  47

  
	
  Section 19.4.

  	
  HEADINGS, ETC

  	
  47

  
	
  Section 19.5.

  	
  DUPLICATE ORIGINALS; COUNTERPARTS

  	
  47

  
	
  Section 19.6.

  	
  NUMBER AND GENDER

  	
  48

  
	
  Section 19.7.

  	
  SUBROGATION

  	
  48

  
	
  Section 19.8.

  	
  ENTIRE AGREEMENT

  	
  48

  
	
  ARTICLE 20 - TRUSTEE

  	
  48

  
	
  ARTICLE 21 - SPECIAL STATE OF TEXAS PROVISIONS

  	
  49

  

 

iii

 

Index of Defined Terms

 

	
  ADA

  	
  15

  
	
  ALR

  	
  4

  
	
  Applicable
  Laws

  	
  15

  
	
  attorneys

  	
  38

  
	
  attorneys’
  fees

  	
  47

  
	
  Bankruptcy
  Code

  	
  2

  
	
  Borrower

  	
  1, 47

  
	
  Business
  Day

  	
  45

  
	
  Collateral

  	
  41

  
	
  counsel
  fees

  	
  47

  
	
  Debt

  	
  4

  
	
  Environmental
  Indemnity

  	
  6

  
	
  Environmental
  Law

  	
  39

  
	
  Environmental
  Lien

  	
  40

  
	
  ERISA

  	
  18

  
	
  Escrow
  Agreement

  	
  3

  
	
  Event

  	
  46

  
	
  Event
  of Default

  	
  29

  
	
  Exculpated
  Portion

  	
  37

  
	
  fees
  and expenses

  	
  38

  
	
  Guarantor

  	
  19

  
	
  Hazardous
  Substances

  	
  40

  
	
  Improvements

  	
  1

  
	
  Indemnified
  Parties

  	
  40

  
	
  Insurance
  Premiums

  	
  8

  
	
  Insured
  Casualty

  	
  10

  
	
  Intangibles

  	
  3

  
	
  Investor

  	
  46

  
	
  Land

  	
  1

  
	
  Lease

  	
  2

  
	
  Leases

  	
  2

  
	
  legal
  fees

  	
  47

  
	
  Lender

  	
  1, 47

  
	
  Loan

  	
  28

  
	
  Loan
  Documents

  	
  6

  
	
  Losses

  	
  40

  
	
  Note

  	
  1, 47

  
	
  Obligations

  	
  5

  
	
  Original
  Principals

  	
  27

  
	
  Other
  Charges

  	
  13

  
	
  Other
  Loan Documents

  	
  6

  
	
  Other
  Obligations

  	
  5

  

 

Index-1

 

	
  Permitted Exceptions

  	
  21

  
	
  person

  	
  47

  
	
  Personal
  Property

  	
  4

  
	
  Policies

  	
  8

  
	
  Policy

  	
  8

  
	
  Property

  	
  1,47

  
	
  Qualified
  Insurer

  	
  8

  
	
  Rating
  Agency

  	
  46

  
	
  Release

  	
  40

  
	
  Remediation

  	
  41

  
	
  Rents

  	
  2

  
	
  Securities

  	
  46

  
	
  Security
  Instrument

  	
  1

  
	
  Taxes

  	
  13

  
	
  Trustee

  	
  1

  
	
  Uniform Commercial
  Code

  	
  2

  

 

Index-2

 

THIS DEED OF TRUST AND SECURITY AGREEMENT (this “Security
Instrument”) is
made as of the 20 day of
December, 2004, by A-K-S 75 NEC SPRING TOWN CENTER, L.P., a Texas limited
partnership, having its principal place of business c/o NewQuest Properties,
8807 W. Sam Houston Parkway N., Suite 200, Houston, Texas 77040 (“Borrower”), to KIM SOBIESKI, an individual, having an
address at American Title Company of Houston, 4400 Post Oak Parkway, Suite 1900,
Houston, Texas 77027 (“Trustee”), for the benefit of JPMORGAN CHASE BANK, N.A., a banking
association chartered under the laws of the United States of America, having
its principal place of business at 270 Park Avenue, New York, New York 10017,
as beneficiary (“Lender”).

 

RECITALS:

 

Borrower by its Fixed Rate Note of even date herewith
given to Lender is indebted to Lender in the principal sum of $8,200,000.00 in
lawful money of the United States of America (such Fixed Rate Note, together
with all extensions, renewals, modifications, substitutions and amendments
thereof, shall collectively be referred to as the “Note”), with interest from the date
thereof at the rates set forth in the Note, principal and interest to be
payable in accordance with the terms and conditions provided in the Note, and
with a final maturity date of January 1, 2015.

 

Borrower desires to secure the payment of the Debt (as
defined in Article 2) and the performance of all of its obligations
under the Note and the Other Obligations (as defined in Article 2).

 

ARTICLE 1 - GRANTS OF SECURITY

 

Section 1.1.                       PROPERTY CONVEYED.
Borrower does hereby irrevocably, unconditionally and absolutely, grant,
bargain, sell, pledge, enfeoff, assign, warrant, transfer and convey to Trustee
(with power of sale) in trust for the purposes herein set forth, the following
property, rights, interests and estates now owned, or hereafter acquired by
Borrower (collectively, the “Property”):

 

(a)                      Land.
The real property described in Exhibit A attached hereto and made a
part hereof (the “Land”), together with additional
lands, estates and development rights hereafter acquired by Borrower for use in
connection with the development, ownership or occupancy of such real property,
and all additional lands and estates therein which may, from time to time, by
supplemental deed of trust or otherwise be expressly made subject to the lien
of this Security Instrument;

 

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

 

(c)                      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 reversion and
reversions, remainder 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,
dower and rights of dower, curtesy and rights of curtesy, property, possession,
claim and demand whatsoever, both at law and in equity, of Borrower of, in and
to the Land and the Improvements and every part and parcel thereof, with
the appurtenances thereto;

 

(d)                     Fixtures
and Personal Property. All machinery, equipment, goods, inventory, consumer
goods, fixtures (including, but not limited to, all heating, air conditioning,
plumbing, lighting, communications and elevator fixtures) and other property of
every kind and nature whatsoever owned by Borrower, or in which Borrower has or
shall have an interest, now or hereafter located upon the Land and the
Improvements, or appurtenant thereto, and usable in connection with the present
or future use, maintenance, enjoyment, operation and occupancy of the Land and
the Improvements and all building equipment, materials and supplies of any
nature whatsoever owned by Borrower, or in which Borrower has or shall have an
interest, now or hereafter located upon the Land and the Improvements, or
appurtenant thereto, or usable in connection with the present or future
operation and occupancy of the Land and the Improvements, and the right, title
and interest of Borrower in and to any of the Personal Property (as hereinafter
defined) 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;

 

(e)                      Leases
and Rents. All leases and other agreements affecting the use, enjoyment or
occupancy of the Land and the Improvements heretofore or hereafter entered
into, whether before or after the filing by or against 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”) (individually, a “Lease”;
collectively, the “Leases”) and all right, title and
interest of Borrower, its successors and assigns therein and thereunder,
including, without limitation, cash or securities deposited thereunder to
secure the performance by the lessees of their obligations thereunder and all
rents (including all tenant security and other deposits), 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 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;

 

(f)                        Condemnation
Awards. All awards or payments, including interest thereon, 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;

 

(g)                     Insurance
Proceeds. All proceeds of and any unearned premiums on any insurance
policies covering the Property, including, without limitation, the right to

 

2

 

receive and apply the proceeds of any insurance,
judgments, or settlements made in lieu thereof, for damage to the Property;

 

(h)                     Tax
Certiorari. All refunds, rebates or credits in connection with a reduction
in real estate taxes and assessments charged against the Property as a result
of tax certiorari or any applications or proceedings for reduction;

 

(i)                         Conversion.
All proceeds of the conversion, voluntary or involuntary, of any of the
foregoing including, without limitation, proceeds of insurance and condemnation
awards, into cash or liquidation claims;

 

(j)                         Rights.
The right, in the name and on behalf of 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 Trustee and/or Lender in the
Property;

 

(k)                      Agreements.
All agreements, contracts (including purchase, sale, option, right of first
refusal and other contracts pertaining to the Property), certificates,
instruments, franchises, permits, licenses, approvals, consents, 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 Property (including any
Improvements or respecting any business or activity conducted on the Land and
any part thereof) and all right, title and interest of Borrower therein
and thereunder, including, without limitation, the right, upon the happening of
any default hereunder, to receive and collect any sums payable to Borrower
thereunder;

 

(l)                         Trademarks.
All tradenames (except that of NewQuest Properties), 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;

 

(m)                   Accounts.
All accounts, accounts receivable, escrows (including, without limitation, all
escrows, deposits, reserves and impounds established pursuant to that certain
Escrow Agreement for Reserves and Impounds of even date herewith between
Borrower and Lender; hereinafter, the “Escrow Agreement”), documents,
instruments, chattel paper, deposit accounts, investment property, claims,
reserves (including deposits) representations, warranties and general
intangibles, as one or more of the foregoing terms may be defined in the
Uniform Commercial Code, and all contract rights, franchises, books,
records, plans, specifications, permits, licenses (to the extent assignable),
approvals, actions, choses, commercial tort claims, suits, proofs of claim in
bankruptcy and causes of action which now or hereafter relate to, are derived
from or are used in connection with the Property, or the use, operation,
maintenance, occupancy or enjoyment thereof or the conduct of any business or
activities thereon (hereinafter collectively called the “Intangibles”); and

 

(n)                     Other
Rights. Any and all other rights of Borrower in and to the Property and any
accessions, renewals, replacements and substitutions of all or any portion of
the Property and all proceeds derived from the sale, transfer, assignment or
financing of the Property or any portion thereof.

 

3

 

Section 1.2.                       ASSIGNMENT OF RENTS.
Borrower hereby absolutely and unconditionally assigns to Lender Borrower’s
right, title and interest in and to all current and future Leases and Rents; it
being intended by Borrower that this assignment constitutes a present, absolute
and unconditional assignment and not an assignment for additional security
only. Nevertheless, subject to the terms of this Section 1.2 and
the terms and conditions of that certain Assignment of Leases and Rents of even
date herewith from Borrower to Lender (the “ALR”), Lender grants
to Borrower a revocable license to collect and receive the Rents. 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.                       DEFINITION OF PERSONAL
PROPERTY. For purposes of this Security Instrument, the Property identified
in Subsections 1.1(d) through 1.1(n), inclusive, shall be collectively
referred to herein as the “Personal Property.”

 

Section 1.4.                       PLEDGE OF MONIES HELD.
Borrower hereby pledges to Lender any and all monies now or hereafter held by
Lender, including, without limitation, all insurance proceeds described in Section 3.2
and condemnation awards or payments described in Section 3.4, as
additional security for the Obligations until expended or applied as provided
in this Security Instrument.

 

CONDITIONS TO GRANT

 

TO HAVE AND TO HOLD the above granted and described
Property unto and to the use and benefit of Trustee, and the successors and
assigns of Trustee, forever, by, through and under Borrower, but not otherwise;

 

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 this Security Instrument, shall
well and truly perform the Other Obligations as set forth in this Security
Instrument and shall well and truly abide by and comply with each and every
covenant and condition set forth herein and in the Note, these presents and the
estate hereby granted shall cease, terminate and be void; provided  however,
that Borrower’s obligation to indemnify and hold harmless Lender pursuant to
the provisions hereof with respect to matters relating to any period of time
during which this Security Instrument was in effect shall 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 following, in such order of priority
as Lender may determine in its sole discretion (the “Debt”):

 

(a)                      the
payment of the indebtedness evidenced by the Note in lawful money of the United
States of America;

 

(b)                     the
payment of interest, default interest, late charges and other sums, as provided
in the Note, this Security Instrument or the Other Loan Documents (as
hereinafter defined);

 

4

 

(c)                      the
payment of all other moneys agreed or provided to be paid by Borrower in the
Note, this Security Instrument or the Other Loan Documents;

 

(d)                     the
payment of all sums advanced pursuant to this Security Instrument to protect
and preserve the Property and the lien and the security interest created
hereby; and

 

(e)                      the
payment of all sums advanced, costs and expenses incurred, and processing fees
charged, by Lender in connection with the Debt or any part thereof, any
renewal, extension, or change of or substitution for the Debt or any part thereof,
or the acquisition or perfection of the security therefor, whether made or
incurred at the request of Borrower or Lender.

 

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 (the “Other
Obligations”):

 

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

 

(b)                     the
performance of each obligation of Borrower contained in any other agreement
given by Borrower to Lender which is for the purpose of further securing the
obligations secured hereby, and any amendments, modifications and changes
thereto; 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, this Security Instrument or
the Other Loan Documents.

 

Section 2.3.                       DEBT AND OTHER OBLIGATIONS.
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.”

 

Section 2.4.                       PAYMENTS. Unless payments
are made in the required amount in immediately available funds at the place
where the Note is payable, remittances in payment of all or any part of
the Debt shall not, regardless of any receipt or credit issued therefor,
constitute payment until the required amount is actually received by Lender in
funds immediately available at the place where the Note is payable (or any
other place as Lender, in Lender’s sole discretion, may have established
by delivery of written notice thereof to Borrower) and shall be made and
accepted subject to the condition that any check or draft may be handled
for collection in accordance with the practice of the collecting bank or banks.
Acceptance by Lender of any payment in an amount less than the amount then due
shall be deemed an acceptance on account only, and the failure to pay the
entire amount then due shall (subject to any right to notice and opportunity to
cure provided herein) be and continue to be an Event of Default (as hereinafter
defined).

 

ARTICLE 3 - BORROWER
COVENANTS

 

Borrower covenants and agrees that:

 

5

 

Section 3.1.                       INCORPORATION BY REFERENCE.
All the covenants, conditions and agreements contained in (a) the Note,
and (b) all and any of the documents other than the Note or this Security
Instrument now or hereafter executed by Borrower and/or others and by or in
favor of Lender in connection with the creation of the Obligations, the payment
of any other sums owed by Borrower to Lender or the performance of any
Obligations (collectively the “Other Loan Documents”), are hereby
made a part of this Security Instrument to the same extent and with the
same force as if fully set forth herein. The term “Loan Documents” as
used herein shall individually and collectively refer to the Note, this
Security Instrument and the Other Loan Documents; provided, however,
that notwithstanding any provision of this Security Instrument to the contrary,
the Obligations of the Borrower under that certain Environmental Indemnity
Agreement of even date herewith executed by Borrower in favor of Lender (the “Environmental
Indemnity”) shall not be deemed or construed to be secured by
this Security Instrument or otherwise restricted or affected by the foreclosure
of the lien hereof or any other exercise by Lender of its remedies hereunder or
under any other Loan Document, such Environmental Indemnity being intended by
the signatories thereto to be its (or their) unsecured obligation.

 

Section 3.2.                       INSURANCE.

 

(a)                      Borrower
shall obtain and maintain (or cause to be obtained and maintained, and for the
purposes of this Section 3.2, satisfaction of any of the
requirements herein by a tenant under any Lease shall be deemed to be
satisfaction by Borrower hereunder), and shall pay (or cause to be paid) all
premiums in accordance with Subsection 3.2(b) below for, insurance
for Borrower and the Property providing at least the following coverages:

 

(i)                         all
risk insurance (including, without limitation, riot and civil commotion,
vandalism, malicious mischief, water, fire, burglary and theft and without any
exclusion for terrorism) on the Improvements and the Personal Property and in
each case (A) in an amount equal to 100% of the “Full Replacement Cost,”
which for purposes of this Security Instrument shall mean actual replacement
value (exclusive of costs of excavations, foundations, underground utilities
and footings) with a waiver of depreciation; (B) containing an agreed
amount endorsement with respect to the Improvements and Personal Property
waiving all co-insurance provisions; (C) providing for no deductible in
excess of $100,000.00; and (D) containing Demolition Costs, Increased Cost
of Construction and “Ordinance or Law Coverage” or “Enforcement” endorsements
in amounts satisfactory to Lender if any of the Improvements or the use of the
Property shall at any time constitute legal non-conforming structures or uses
or the ability to rebuild the Improvements is restricted or prohibited. The
Full Replacement Cost may be redetermined from time to time by an
appraiser or contractor designated and paid by Lender or by an engineer or
appraiser in the regular employ of the insurer. No omission on the part of
Lender to request any such appraisals shall relieve Borrower of any of its
obligations under this Subsection;

 

(ii)                      commercial
general liability insurance against claims for personal injury, bodily injury,
death or property damage occurring upon, in or about the

 

6

 

Property, such insurance (A) to be on the so-called
“occurrence” form with a combined single limit of not less than $1,000,000.00
and not less than $3,000,000.00 if the Property has one or more elevators, as
well as liquor liability insurance in a minimum amount of $2,000,000.00 if any part of
the Property is covered by a liquor license and an aggregate coverage limit
acceptable to Lender; (B) to continue at not less than the aforesaid limit
until required to be changed by Lender in writing by reason of changed economic
conditions making such protection inadequate; (C) to cover at least the
following hazards: (1) premises and operations; (2) products and
completed operations on an “if any” basis; (3) independent contractors; (4) blanket
contractual liability for all written and oral contracts; (5) contractual
liability covering the indemnities contained in Section 11.1 hereof
to the extent the same is available; and (D) to be without deductible;

 

(iii)                   business income insurance (A) with
loss payable to Lender; (B) covering losses of income and Rents derived
from the Property; (C) containing an extended period of indemnity endorsement
which provides that after the physical loss to the Improvements and Personal
Property has been repaired, the continued loss of income will be insured until
such income either returns to the same level it was at prior to the loss, or
the expiration of twelve (12) months from the date of the loss, whichever first
occurs, and notwithstanding that the policy may expire prior to the end of
such period; and (D) in an amount equal to 100% of the projected gross
income from the Property (on an actual loss sustained basis) for a period
continuing until the restoration of the Property is completed. The amount of
such business income insurance shall be determined by Lender prior to the date
hereof and at least once each year thereafter based on Borrower’s reasonable
estimate of the gross income from the Property for the succeeding twelve (12)
month period. All insurance proceeds payable to Lender pursuant to this Subsection 3.2(a)
shall be held by Lender and shall be applied first to the obligations secured
hereunder from time to time due and payable hereunder and under the Note; provided,
however, that nothing herein contained shall be deemed to relieve
Borrower of its obligations to pay the obligations secured hereunder on the
respective dates of payment provided for in the Note except to the extent such
amounts are actually paid out of the proceeds of such business income
insurance;

 

(iv)                  at
all times during which structural construction, repairs or alterations are
being made with respect to the Improvements: (A) owners will be named as
additional insureds on tenant’s or contractor’s liability policies; and (B) the
insurance provided for in Subsection 3.2(a)(i) written in a
so-called builder’s risk completed value form (1) on a non-reporting
basis, (2) against all risks insured against pursuant to Subsection 3.2(a)(i),
(3) including permission to occupy the Property, and (4) with an
agreed amount endorsement waiving coinsurance provisions;

 

(v)                     workers’
compensation, subject to the statutory limits of the state in which the
Property is located, and employer’s liability insurance with a limit of at
least $2,000,000.00 per accident and per disease per employee, and

 

7

 

$2,000,000.00 for disease aggregate in respect of any
work or operations on or about the Property, or in connection with the Property
or its operation (if applicable);

 

(vi)                  comprehensive
boiler and machinery insurance (without exclusion for explosion), if
applicable, in amounts as shall be reasonably required by Lender and covering
all boilers or other pressure vessels, machinery and equipment located at or
about the Property (including, without limitation, electrical equipment,
sprinkler systems, heating and air conditioning equipment, refrigeration equipment
and piping);

 

(vii)               if any portion of the Improvements is
currently or at any time in the future located in a federally designated “special
flood hazard area,” flood hazard insurance in an amount equal to the lesser of (A) the
Full Replacement Cost or (B) the maximum amount of such insurance
available under the National Flood Insurance Act of 1968, the Flood Disaster
Protection Act of 1973 or the National Flood Insurance Reform Act of 1994,
as each may be amended; and

 

(viii)            such other insurance and in such amounts as
Lender from time to time may reasonably request against such other
insurable hazards which at the time are commonly insured against for property
similar to the Property located in or around the region in which the Property
is located, including, without limitation, earthquake insurance (in the event
the Property is located in an area with a high degree of seismic activity),
sinkhole insurance, mine subsidence insurance and environmental insurance.

 

(b)                     All
insurance provided for in Subsection 3.2(a) hereof shall be
obtained under valid and enforceable policies (the “Policies” or in the singular, the “Policy”),
in such forms and, from time to time after the date hereof, in such amounts as may from
time to time be reasonably satisfactory to Lender, issued by financially sound
and responsible insurance companies authorized to do business in the state in
which the Property is located as admitted or unadmitted carriers which, in
either case, have been approved by Lender (with such approval not to be
unreasonably withheld) and which have a claims paying ability rating of A or
better issued by Standard & Poor’s Ratings Group or with a claims
paying ability rating otherwise acceptable to Lender (each such insurer shall
be referred to below as a “Qualified Insurer”). Such Policies shall not be subject to
invalidation due to the use or occupancy of the Property for purposes more
hazardous than the use of the Property at the time such Policies were issued.
No Policy required under Sections 3.2(a)(i) and (iii) hereof shall
contain an exclusion from coverage under such Policy for loss or damage
incurred as a result of an act of terrorism or similar acts of sabotage. Not
less than thirty (30) days prior to the expiration dates of the Policies
theretofore furnished to Lender pursuant to Subsection 3.2(a),
certified copies of the Policies marked “premium paid” or accompanied by
evidence satisfactory to Lender of payment of the premiums due thereunder (the “Insurance
Premiums”), shall
be delivered by Borrower to Lender; provided, however, that in the case of
renewal Policies, Borrower may furnish Lender with binders therefor to be
followed by the original Policies when issued.

 

8

 

(c)                      Borrower
shall not obtain (i) separate insurance concurrent in form or
contributing in the event of loss with that required in Subsection 3.2(a)
to be furnished by, or which may be reasonably required to be furnished
by, Borrower, or (ii) any umbrella or blanket liability or casualty Policy
unless, in each case, Lender’s interest is included therein as provided in this
Security Instrument and such Policy is issued by a Qualified Insurer. If
Borrower obtains separate insurance or an umbrella or a blanket Policy,
Borrower shall notify Lender of the same and shall cause certified copies of
each Policy to be delivered as required in Subsection 3.2(a). Any
blanket insurance Policy shall specifically allocate to the Property the amount
of coverage from time to time required hereunder and shall otherwise provide
the same protection as would a separate Policy insuring only the Property in
compliance with the provisions of Subsection 3.2(a).

 

(d)                     All
Policies of insurance provided for or contemplated by Subsection 3.2(a)
shall name Lender, its successors and assigns, including any servicers,
trustees or other designees of Lender, and Borrower as the insured or
additional insured, as their respective interests may appear, and in the
case of property damage, boiler and machinery, and flood insurance, shall
contain a so-called New York standard non-contributing Lender clause in favor
of Lender providing that the loss thereunder shall be payable to Lender.

 

(e)                      All
Policies of insurance provided for in Subsection 3.2(a) shall
contain clauses or endorsements to the effect that:

 

(i)                         no
act or negligence of Borrower, or anyone acting for Borrower, or of any tenant
under any Lease or other occupant, or failure to comply with the provisions of
any Policy which might otherwise result in a forfeiture of the insurance or any
part thereof, shall in any way affect the validity or enforceability of
the insurance insofar as Lender is concerned;

 

(ii)                      the
Policy shall not be canceled without at least thirty (30) days’ prior written
notice to Lender;

 

(iii)                   each Policy shall provide that the
issuers thereof shall give written notice to Lender if the Policy has not been
renewed thirty (30) days prior to its expiration; and

 

(iv)                  Lender
shall not be liable for any Insurance Premiums thereon or subject to any
assessments thereunder.

 

(f)                        Borrower
shall furnish to Lender within ten (10) calendar days after Lender’s
request therefor (but not more than once per calendar year), a statement
certified by Borrower or a duly authorized officer of Borrower of the amounts
of insurance maintained in compliance herewith, of the risks covered by such
insurance and of the insurance company or companies which carry such insurance.

 

(g)                     If
at any time Lender is not in receipt of written evidence that all insurance
required hereunder is in full force and effect, Lender shall have the right but
not the obligation, without notice to Borrower, to take such action as Lender
deems reasonably

 

9

 

necessary to protect its interest in the Property,
including, without limitation, the obtaining of such insurance coverage in the form and
amounts required hereunder, and all expenses incurred by Lender in connection
with such action or in obtaining such insurance and keeping it in effect shall
be paid by Borrower to Lender upon demand and until paid shall be secured by
this Security Instrument and shall bear interest at the Default Rate (as
defined in the Note). Lender shall endeavor to provide Borrower with 24 hours
notice prior to taking the action contemplated in this subsection provided,
that, the failure of Lender to provide such notice shall not, in any way,
prejudice Lender’s right to take any such action.

 

(h)                     If
the Property shall be damaged or destroyed, in whole or in part, by fire or
other casualty, Borrower shall give prompt notice thereof to Lender.

 

(i)                         In
case of loss covered by Policies, Lender may either (1) settle and
adjust any claim without the consent of Borrower, or (2) allow Borrower to
agree with the insurance company or companies on the amount to be paid upon the
loss; provided that, if no Event of Default shall have occurred and be
continuing (A) Borrower may adjust losses aggregating not in excess
of $100,000.00 if such adjustment is carried out in a competent and timely
manner and (B) Lender shall not settle or adjust any such claim without
the consent of Borrower, which consent shall not be unreasonably withheld or
delayed. In any case Lender shall and is hereby authorized to collect and
receive any such insurance proceeds; and the expenses incurred by Lender in the
adjustment and collection of insurance proceeds shall become part of the
Debt and be secured hereby and shall be reimbursed by Borrower to Lender upon
demand (unless deducted by and
reimbursed to Lender from such proceeds).

 

(ii)                      In
the event of any insured damage to or destruction of the Property or any part thereof
(herein called an “Insured Casualty”), if (A) less
than 30% of the total floor area of the Improvements has been damaged,
destroyed or rendered unusable as a result of such Insured Casualty and in the
reasonable judgment of Lender, the Property can be restored within six (6) months
after insurance proceeds are made available and at least six (6) months
prior to the Maturity Date (as defined in the Note) to an economic unit not
less valuable (including an assessment by Lender of the impact of the
termination of any Leases due to such Insured Casualty) and not less useful
than the same was prior to the Insured Casualty, and after such restoration
will adequately secure the outstanding balance of the Debt; (B) Leases
demising in the aggregate a percentage amount equal to or greater than
seventy-five percent (75%) of the total rentable space in the Property which
has been demised under executed and delivered Leases in effect as of the date
of the occurrence of such fire or other casualty shall remain in full force and
effect during and after the completion of the restoration, notwithstanding the
occurrence of any such Insured Casualty and Borrower furnishes to Lender evidence
satisfactory to Lender that all tenants under Material Leases (as defined in
the ALR) shall continue to operate their respective space at the Property after
the completion of the Restoration; and (C) no Event of Default
(hereinafter defined) shall have occurred and be

 

10

 

continuing (except a non-monetary Event of Default
resulting solely from such casualty), then the proceeds of insurance shall be
applied to reimburse Borrower for the cost of restoring, repairing, replacing
or rebuilding the Property or part thereof subject to Insured Casualty, as
provided below. Additionally, in the event of any insured damage to or
destruction to any portion of the Property which Borrower is required to
restore pursuant to any Lease, provided no Event of Default shall have occurred
and be then continuing, then the proceeds of insurance shall be applied to
reimburse Borrower for the cost of restoring, repairing, replacing or
rebuilding the Property or part thereof subject to Insured Casualty, as
provided below. In any such case, Borrower hereby covenants and agrees
forthwith to commence and diligently to prosecute such restoring, repairing,
replacing or rebuilding; provided, however, in any event Borrower
shall pay all costs (and if required by Lender, Borrower shall deposit the
total thereof with Lender in advance) of such restoring, repairing, replacing
or rebuilding in excess of the net proceeds of insurance made available
pursuant to the terms hereof.

 

(iii)                   Except as provided above, the
proceeds of insurance collected upon any Insured Casualty shall, at the option
of Lender in its sole reasonable discretion, be applied to the payment of the
Debt or applied to reimburse Borrower for the cost of restoring, repairing, replacing
or rebuilding the Property or part thereof subject to the Insured
Casualty, in the manner set forth below. Any such application to the Debt shall
not be considered a voluntary prepayment requiring payment of the prepayment
consideration provided in the Note, and shall not reduce or postpone any
payments otherwise required pursuant to the Note, other than the final payment
on the Note.

 

(iv)                  Regardless
of whether proceeds of insurance, if any, are made available to Borrower for
the restoring, repairing, replacing or rebuilding of the Property, Borrower
hereby covenants to restore, repair, replace or rebuild the same to be of at
least equal value and of substantially the same character as prior to such
damage or destruction, all to be effected in accordance with applicable law and
plans and specifications approved in advance by Lender, which approval shall
not be unreasonably withheld, conditioned or delayed. Notwithstanding the
foregoing, Lender shall not compel Borrower to rebuild portions of the Improvements
damaged in connection with an Insured Casualty for which no Lease is then in
effect (other than to remove debris and to restore the affected area to a good
and safe condition in keeping with the condition of the balance of the
Property), in which case any related insurance proceeds shall, unless Lender is
otherwise entitled to apply such proceeds to the payment of the Debt in
accordance with the provisions hereof, be held by Lender in an interest bearing
account and disbursed for the costs of rebuilding such Improvements in the
manner provided herein upon the execution of a Lease for such space.

 

(v)                     If
Borrower is entitled to reimbursement out of insurance proceeds held by Lender,
such proceeds shall be disbursed from time to time upon Lender being furnished
with (1) evidence reasonably satisfactory to it (which evidence

 

11

 

may include inspections of the work performed)
that such portion of the restoration, repair, replacement and rebuilding
covered by the disbursement has been completed in accordance with plans and
specifications approved by Lender, (2) evidence reasonably satisfactory to
it of the estimated cost of completion of the restoration, repair, replacement
and rebuilding, (3) funds, or, at Lender’s option, assurances reasonably
satisfactory to Lender that such funds are available, sufficient in addition to
the proceeds of insurance to complete the proposed restoration, repair,
replacement and rebuilding, and (4) such architect’s certificates, waivers
of lien, contractor’s sworn statements, title insurance endorsements, bonds,
plats of survey and such other evidences of cost, payment and performance as
Lender may reasonably require and approve; and Lender may, in any event,
require that all plans and specifications for such restoration, repair,
replacement and rebuilding be submitted to and approved by Lender (which
approval shall not be unreasonably withheld, conditioned or delayed) prior to
commencement of work. With respect to disbursements to be made by Lender: (A) no
payment made prior to the final completion of the restoration, repair,
replacement and rebuilding shall exceed ninety percent (90%) of the value of
the work performed from time to time; (B) funds other than proceeds of
insurance shall be disbursed prior to disbursement of such proceeds; and (C) at
all times, the undisbursed balance of such proceeds remaining in the hands of
Lender, together with funds deposited for that purpose or irrevocably committed
to the satisfaction of Lender by or on behalf of Borrower for that purpose,
shall be at least sufficient in the reasonable judgment of Lender to pay for
the cost of completion of the restoration, repair, replacement or rebuilding,
free and clear of all liens or claims for lien and the costs described in Subsection 3.2(h)(vi)
below. Any surplus which may remain out of insurance proceeds held by
Lender after payment of such costs of restoration, repair, replacement or
rebuilding shall be paid to any party entitled thereto. In no event shall
Lender assume any duty or obligation for the adequacy, form or content of
any such plans and specifications, nor for the performance, quality or
workmanship of any restoration, repair, replacement and rebuilding.
Notwithstanding the foregoing provisions of this Subsection 3.2(h)(v),
if the insurance proceeds shall be less than $100,000.00 and the costs of
completing the restoration shall be less than $100,000.00, the insurance
proceeds will be disbursed by Lender to Borrower upon receipt, provided that
the conditions set forth in Subsection 3.2(h)(ii) hereof are met
and Borrower delivers to Lender a written undertaking to expeditiously commence
and to satisfactorily complete with due diligence the restoration in accordance
with the terms of this Security Instrument.

 

(vi)                  Notwithstanding
anything to the contrary contained herein, the proceeds of insurance reimbursed
to Borrower in accordance with the terms and provisions of this Security
Instrument shall be reduced by the reasonable costs (if any) incurred by Lender
in the adjustment and collection thereof and in the reasonable costs incurred
by Lender of paying out such proceeds (including, without limitation,
reasonable attorneys’ fees and costs paid to third parties for inspecting the
restoration, repair, replacement and rebuilding and reviewing the plans and
specifications therefor).

 

12

 

Section 3.3.                       PAYMENT OF TAXES. ETC.

 

(a)                      Borrower
shall pay (or cause to be paid) all taxes, assessments, water rates, sewer
rents, governmental impositions, and other charges, including without
limitation, vault charges and license fees for the use of vaults, chutes and
similar areas adjoining the Land, now or hereafter levied or assessed or
imposed against the Property or any part thereof (the “Taxes”), all ground rents, maintenance
charges and similar charges, now or hereafter levied or assessed or imposed
against the Property or any part thereof (the “Other Charges”), and
all charges for utility services provided to the Property as same become due
and payable. Borrower will deliver to Lender, promptly upon Lender’s request,
evidence satisfactory to Lender that the Taxes, Other Charges and utility
service charges which Borrower is obligated to pay have been so paid or are not
then delinquent. Borrower shall not allow and shall promptly cause to be paid
and discharged all Taxes and Other Charges which may be or become a lien
or charge against the Property. Except to the extent sums sufficient to pay all
Taxes and Other Charges have been deposited with Lender in accordance with the
terms of this Security Instrument, Borrower shall furnish to Lender paid
receipts for the payment of the Taxes prior to the date the same shall become
delinquent.

 

(b)                     After
prior written notice to Lender, Borrower, at its own expense, may contest
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 Taxes, Other Charges, utility service charges, and any lien or
charge whatsoever (each, a “Contested Obligation”), provided
that (i) no Event of Default has occurred and is continuing under the
Note, this Security Instrument or any of the Other Loan Documents, (ii) 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 such Contested Obligation from Borrower and from the
Property or Borrower shall have paid all of the Contested Obligation under
protest, (iv) such proceeding shall be permitted under and be conducted in
accordance with the provisions of any other instrument to which Borrower is
subject and shall not constitute a default thereunder, (v) neither the
Property nor any part thereof or interest therein will be in danger of
being sold, forfeited, terminated, canceled or lost, (vi) without
duplication of amounts deposited pursuant to subclause (vii) hereof,
Borrower shall have set aside and deposited with Lender adequate reserves for
the payment of the Contested Obligation, together with all interest and
penalties thereon, unless Borrower has paid all of the Contested Obligation
under protest, and (vii) Borrower shall have furnished the security as may be
required in the proceeding to insure the payment of any Contested Obligation,
together with all interest and penalties thereon.

 

Section 3.4.                       CONDEMNATION. Borrower
shall promptly give Lender notice of the actual or threatened commencement of
any condemnation or eminent domain proceeding and shall deliver to Lender
copies of any and all papers served in connection with such proceedings. Lender
is hereby irrevocably appointed as Borrower’s attorney-in-fact, coupled with an
interest, with exclusive power to collect, receive and retain any award or
payment for said condemnation or eminent domain and to make any compromise or
settlement in connection with such proceeding, subject to the provisions of
this Security Instrument. Notwithstanding any taking by

 

13

 

any public or quasi-public authority through eminent domain or
otherwise (including but not limited to any transfer made in lieu of or in
anticipation of the exercise of such taking), Borrower shall continue to pay
the Debt at the time and in the manner provided for its payment in the Note and
in this Security Instrument and the Debt shall not be reduced until any award
or payment therefor shall have been actually received and applied by Lender, after
the deduction of expenses of collection, to the reduction or discharge of the
Debt. Lender shall not be limited to the interest paid on the award by the
condemning authority but shall be entitled to receive out of the award interest
at the rate or rates provided herein or in the Note. Borrower shall cause the
award or payment made in any condemnation or eminent domain proceeding, which
is payable to Borrower, to be paid directly to Lender. Provided less than ten
percent (10%) of the Land constituting the Property is taken, and such Land is
located along the perimeter or periphery of the Property or along a public
street, and no portion of the Improvements is the subject of such proceeding,
Lender shall allow Borrower to use the proceeds of such condemnation toward the
repair and restoration of the Property subject to and in accordance with terms
and conditions similar to those set forth in Section 3.2(h) hereof,
including, without limitation, the satisfaction of the conditions set forth in Section 3.2(h)(ii).
Lender may apply any award or payment to the reduction or discharge of the
Debt whether or not then due and payable (such application to be free from any
prepayment consideration provided in the Note, except that if an Event of
Default, or an event which with notice and/or the passage of time, or both,
would constitute an Event of Default, has occurred, then such application shall
be subject to the full prepayment consideration computed in accordance with the
Note). If the Property is sold, through foreclosure or otherwise, prior to the
receipt by Lender of the award or payment, Lender shall have the right, whether
or not a deficiency judgment on the Note shall have been sought, recovered or
denied, to receive the award or payment, or a portion thereof sufficient to pay
the Debt. Regardless of whether any award or payment is made available to
Borrower for the restoring, repairing, replacing or rebuilding of the Property,
Borrower hereby covenants to restore, repair, replace or rebuild the same to be
of at least equal value and of substantially the same character as prior to
such condemnation or eminent domain proceeding, all to be effected in
accordance with applicable law and plans and specifications approved in advance
by Lender, which approval shall not be unreasonably withheld, conditioned or
delayed. Notwithstanding the foregoing, Lender shall not compel Borrower to
rebuild portions of the Improvements affected by a taking by any public or
quasi-public authority through eminent domain or otherwise for which no Lease
is then in effect (other than to remove debris and to restore the affected area
to a good and safe condition in keeping with the condition of the balance of
the Property), in which case any condemnation proceeds shall, unless Lender is
otherwise entitled to apply such proceeds to the payment of the Debt in
accordance with the provisions hereof, be held by Lender in an interest bearing
account and disbursed for the costs of rebuilding such Improvements in the
manner provided herein upon the execution of a Lease for such space.

 

Section 3.5.                       USE AND MAINTENANCE OF
PROPERTY. Borrower shall cause the Property to be maintained and operated
in a good and safe condition and repair and in keeping with the condition and
repair of properties of a similar use, value, age, nature and construction.
Borrower shall not use, maintain or operate the Property in any manner which
constitutes a public or private nuisance or which makes void, voidable, or
cancelable, or increases the premium of, any insurance then in force with
respect thereto. The Improvements and the Personal Property shall not be
removed, demolished (except in connection with a casualty) or materially
altered (except for normal replacement of the Personal Property with items of
the

 

14

 

same utility and of equal or greater value, and except as permitted by
any existing Leases) without the prior written consent of Lender, which
approval shall nor be unreasonably withheld, conditioned or delayed. Except as
otherwise expressly permitted herein, Borrower shall promptly repair, replace
or rebuild any part of the Property which may be destroyed by any
casualty, or becomes damaged, worn or dilapidated or which may be affected
by any proceeding of the character referred to in Section 3.4
hereof and shall complete and pay for any structure at any time in the process
of construction or repair on the Land. Borrower shall not initiate, without
Lender’s prior written consent, which consent shall not be unreasonably withheld,
delayed or conditioned, join in, acquiesce in, or consent to any change in any
private restrictive covenant (other than use restrictions under the Leases),
zoning law or other public or private restriction, limiting or defining the
uses which may be made of the Property or any part thereof. If under
applicable zoning provisions the use of all or any portion of the Property is
or shall become a nonconforming use, Borrower will not cause or permit the
nonconforming use to be discontinued or abandoned without the express written
consent of Lender. Borrower shall not take any steps whatsoever to convert the
Property, or any portion thereof, to a condominium or cooperative form of
management. In connection with any proposed new easement or restrictive covenant
or modification of any existing easement or restrictive covenant, Lender shall
use good faith efforts to respond within twenty (20) days after Lender’s
receipt of both Borrower’s written request for approval or consent and all
relevant information regarding such request. If Lender fails to respond to such
request within such twenty (20) day period, and such request contained a legend
clearly marked in not less than fourteen (14) point bold face type, underlined,
in all capital letters “REQUEST DEEMED APPROVED IF NO RESPONSE WITHIN 20 DAYS”,
Lender shall be deemed to have approved or consented to such matter.

 

Section 3.6.                       WASTE. Borrower shall not
commit or suffer any waste of the Property or, without first obtaining such
additional insurance as may be necessary to cover a proposed change in use
of the Property, 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 give
cause for cancellation of any Policy, or do or permit to be done thereon
anything that may in any way impair the value of the Property or the
security of this Security Instrument. Borrower will 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 3.7.                       COMPLIANCE WITH LAWS;
ALTERATIONS.

 

(a)                      Borrower
shall promptly comply (or cause to be complied) with all existing and future
federal, state and local laws, orders, ordinances, governmental rules and
regulations or court orders affecting or which may be interpreted to affect
the Property, or the use thereof, including, but not limited to, the Americans
with Disabilities Act (the “ADA”)
(collectively “Applicable Laws”).

 

(b)                     Notwithstanding
any provisions set forth herein or in any document regarding Lender’s approval
of alterations of the Property, Borrower shall not alter the Property in any
manner which would increase Borrower’s responsibilities for compliance with
Applicable Laws without the prior written approval of Lender. Lender’s approval
of

 

15

 

the plans, specifications, or working drawings for
alterations of the Property shall create no responsibility or liability on
behalf of Lender for their completeness, design, sufficiency or their
compliance with Applicable Laws. The foregoing shall apply to tenant
improvements constructed by Borrower or by any of its tenants. Lender may condition
any such approval upon receipt of a certificate of compliance with Applicable
Laws from an independent architect, engineer, or other person acceptable to
Lender.

 

(c)                      Borrower
shall give prompt notice to Lender of the receipt by Borrower of any notice
related to a violation of any Applicable Laws and of the commencement of any
proceedings or investigations which relate to compliance with Applicable Laws.

 

(d)                     Borrower
shall take appropriate measures to prevent and will not engage in or knowingly
permit any illegal activities at the Property.

 

Section 3.8.                        BOOKS AND RECORDS.

 

(a)                      Borrower
shall keep accurate books and records of account in accordance with sound
accounting principles in which full, true and correct entries shall be promptly
made with respect to Borrower, the Property and the operation thereof, and will
permit all such books and records (including without limitation all contracts,
statements, invoices, bills and claims for labor, materials and services
supplied for the construction, repair or operation to Borrower of the
Improvements) to be inspected or audited and copies made by Lender and its
representatives during normal business hours and at any other reasonable times.
Borrower represents that its chief executive office is as set forth in the
introductory paragraph of this Security Instrument and that all books and
records pertaining to the Property are maintained at the Property or such other
location as may be expressly disclosed to Lender in writing. Borrower will
furnish, or cause to be furnished, to Lender on or before forty-five (45)
calendar days after the end of each calendar quarter the following items, each
certified by Borrower as being true and correct in all material respects, in
such format and in such detail as Lender or its servicer may reasonably
request:

 

(i)                         a written statement (rent roll) dated
as of the last day of each such calendar quarter identifying each of the Leases
by the term, space occupied, rental required to be paid (including percentage
rents and tenant sales), security deposit paid, any rental concessions, all
rent escalations, any rents paid more than one (1) month in advance, any
special provisions or inducements granted to tenants, any taxes, maintenance
and other common charges paid by tenants, all vacancies and identifying any defaults or payment delinquencies
thereunder; and

 

(ii)                      quarterly
and year-to-date operating statements prepared for each calendar quarter during
each such reporting period detailing the total revenues received, total
expenses incurred, total cost of all capital improvements, total debt service
and total cash flow.

 

16

 

(b)                     Within
one hundred twenty (120) calendar days following the end of each calendar year,
Borrower shall furnish a statement of the financial affairs and condition of
the Borrower and the Property including a statement of profit and loss for the
Property in such format and in such detail as Lender or its servicer may reasonably
request, and setting forth the financial condition and the income and expenses
for the Property for the immediately preceding calendar year prepared and
certified by Borrower as being true and correct in all material respects.
Borrower shall deliver to Lender copies of all income tax returns, requests for
extension and other similar items within fifteen (15) days of delivery of same
to the Internal Revenue Service.

 

(c)                      Borrower
will permit representatives appointed by Lender, including independent
accountants, agents, attorneys, appraisers and any other persons, to visit and
inspect, subject to the rights of tenants and other occupants of the Property,
during its normal business hours and at any other reasonable times any of the
Property and to make photographs thereof, and to write down and record any
information such representatives obtain, and shall permit Lender or its
representatives to investigate and verify the accuracy of the information
furnished to Lender under or in connection with this Security Instrument or any
of the Other Loan Documents and to discuss all such matters with its officers,
employees and representatives. Borrower will furnish to Lender at Borrower’s
expense all evidence which Lender may from time to time reasonably request
as to the accuracy and validity of or compliance with all representations and
warranties made by Borrower in the Loan Documents and satisfaction of all
conditions contained therein. Any inspection or audit of the Property or the
books and records of Borrower, or the procuring of documents and financial and
other information, by or on behalf of Lender, shall be at Borrower’s expense
(not to exceed $1,000.00 per year unless an Event of Default then exists) and
shall be for Lender’s protection only, and shall not constitute any assumption
of responsibility or liability by Lender to Borrower or anyone else with regard
to the condition, construction, maintenance or operation of the Property, nor
Lender’s approval of any certification given to Lender nor relieve Borrower of
any of Borrower’s obligations.

 

(d)                     Prior
to the transfer of the Loan by Lender pursuant to Section 16.1
hereof, Borrower shall deliver to Lender the reports required by Section 3.8(a) on
a monthly basis. Such reports shall be delivered within twenty (20) calendar
days after the end of each calendar month.

 

Section 3.9.                       PAYMENT FOR LABOR AND
MATERIALS. Borrower will promptly pay (or cause to be paid) when due all
bills and costs for labor, materials, and specifically fabricated materials
incurred in connection with the Property and, except for liens being contested
in accordance with Section 3.3(b) above, 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 Exceptions (as hereinafter defined).

 

17

 

Section 3.10.                  PERFORMANCE OF OTHER AGREEMENTS.
Borrower shall observe and perform each and every term to be observed or
performed by Borrower pursuant to the terms of any agreement or recorded
instrument affecting or pertaining to the Property, or given by Borrower to
Lender for the purpose of further securing an obligation secured hereby and any
amendments, modifications or changes thereto.

 

ARTICLE 4 - SPECIAL
COVENANTS

 

Borrower covenants and agrees that:

 

Section 4.1.                        PROPERTY USE. The
Property shall be used only for a retail shopping center, retail office and
business office uses and related ancillary commercial uses that are consistent
with similar first-class retail shopping centers, and for no other use
without the prior written consent of Lender, which consent may be withheld
in Lender’s sole and absolute discretion.

 

Section 4.2.                        ERISA.

 

(a)                      It
shall not engage in any transaction which would cause any obligation, or action
taken or to be taken, hereunder (or the exercise by Lender of any of its rights
under the Note, this Security Instrument and the Other Loan Documents) to be a
non-exempt (under a statutory or administrative class exemption) prohibited
transaction under the Employee Retirement Income Security Act of 1974, as
amended (“ERISA”).

 

(b)                     It
shall deliver to Lender such certifications or other evidence from time to time
throughout the term of the Security Instrument, as requested by Lender in its
sole discretion, that (i) Borrower is not an “employee benefit plan” as
defined in Section 3(3) of ERISA, which is subject to Title I of
ERISA, or a “governmental plan” within the meaning of Section 3(32)
of ERISA; (ii) Borrower is not subject to state statutes regulating
investments and fiduciary obligations with respect to governmental plans; and (iii) one
or more of the following circumstances is true:

 

(i)                         Equity
interests in Borrower are publicly offered securities, within the meaning of 29
C.F.R. §2510.3-101(b)(2);

 

(ii)                      Less
than twenty-five percent (25%) of each outstanding class of equity
interests in Borrower are held by “benefit plan investors” within the meaning
of 29 C.F.R. §2510.3-101(f)(2); or

 

(iii)                   Borrower qualifies as an “operating
company” or a “real estate operating company” within the meaning of 29 C.F.R.
§2510.3-101(c) or (e) or an investment company registered under The
Investment Company Act of 1940.

 

Section 4.3.                        SINGLE PURPOSE ENTITY.
Borrower covenants and agrees that it shall not:

 

(a)                      engage
in any business or activity other than the acquisition, ownership, operation
and maintenance of the Property, and activities incidental thereto; or

 

18

 

(b)                     acquire
or own any material asset other than (i) the Property, and (ii) such
incidental Personal Property as may be necessary for the operation of the
Property.

 

(c)                      merge
into or consolidate with any person or entity or dissolve, terminate or
liquidate in whole or in part, transfer or otherwise dispose of all or
substantially all of its assets or change its legal structure, without in each
case Lender’s consent;

 

(d)                     fail
to preserve its existence as an entity duly organized, validly existing and in
good standing (if applicable) under the laws of the jurisdiction of its
organization or formation, or without the prior written consent of Lender,
amend, modify, terminate or fail to comply with the provisions of Borrower’s
Partnership Agreement, Articles or Certificate of Incorporation, Articles of
Organization, Operating Agreement or similar organizational documents, as the
case may be;

 

(e)                      own
any subsidiary or make any investment in or acquire the obligations or
securities of any other person or entity without the consent of Lender;

 

(f)                        commingle
its assets with the assets of any of its partner(s), members, shareholders,
affiliates, or of any other person or entity or transfer any assets to any such
person or entity other than distributions on account of equity interests in the
Borrower permitted hereunder and properly accounted for;

 

(g)                     incur
any debt, secured or unsecured, direct or contingent (including guaranteeing
any obligation), other than the Debt, except trade payables incurred in the
ordinary course of its business of owning and operating the Property, provided
that such debt is (i) not evidenced by a note, (ii) is paid within
sixty (60) days of the date incurred, (iii) does not exceed, in the
aggregate, four percent (4%) of the outstanding principal balance of the Note
and (iv) is payable to trade creditors and in amounts as are normal and
reasonable under the circumstances;

 

(h)                     allow
any person or entity to pay its debts and liabilities (except a Guarantor or
Indemnitor) or fail to pay its debts and liabilities solely from its own
assets;

 

(i)                         fail
to maintain its records, books of account and bank accounts separate and apart from
those of the shareholders, partners, members, principals and affiliates of
Borrower, the affiliates of a shareholder, partner or member of Borrower, and
any other person or entity or fail to prepare and maintain its own financial
statements in accordance with sound accounting practices and susceptible to
audit, or if such financial statements are consolidated fail to cause such
financial statements to contain footnotes disclosing that the Property is
actually owned by the Borrower;

 

(j)                         enter
into any contract or agreement with any shareholder, partner, member, principal
or affiliate of Borrower, any guarantor of all or a portion of the Debt (a “Guarantor”)
or any shareholder, partner, member, principal or affiliate thereof, except
upon terms and conditions that are intrinsically fair and substantially similar
to those that would be available on an arms-length basis with third parties
other than any shareholder, partner, member, principal or affiliate of Borrower
or Guarantor, or any shareholder, partner, member, principal or affiliate
thereof;

 

19

 

(k)                      seek dissolution or winding up in whole, or in
part;

 

(l)                         fail to correct any known misunderstandings
regarding the separate identity of Borrower;

 

(m)                   guarantee or become obligated for the debts of
any other entity or person or hold itself out to be responsible or pledge its
assets or credit worthiness for the debts of another person or entity or allow
any person or entity to hold itself out to be responsible or pledge its assets
or credit worthiness for the debts of the Borrower (except for a Guarantor or
Indemnitor);

 

(n)                     make any loans or advances to any third party,
including any shareholder, partner, member, principal or affiliate of Borrower,
or any shareholder, partner, member, principal or affiliate thereof;

 

(o)                     fail to file its own tax returns or to use
separate contracts, purchase orders, stationery, invoices and checks;

 

(p)                     fail
either to hold itself out to the public as a legal entity separate and distinct
from any other entity or person or to conduct its business solely in its own
name in order not (i) to mislead others as to the entity with which such
other party is transacting business, or (ii) to suggest that Borrower is
responsible for the debts of any third party (including any shareholder,
partner, member, principal or affiliate of Borrower, or any shareholder,
partner, member, principal or affiliate thereof);

 

(q)                     fail
to allocate fairly and reasonably among Borrower and any third party
(including, without limitation, any Guarantor) any overhead for common employees,
shared office space or other overhead and administrative expenses;

 

(r)                        allow any person or entity to pay the salaries
of its own employees or fail to maintain a sufficient number of employees for
its contemplated business operations;

 

(s)                      fail to maintain adequate capital for the
normal obligations reasonably foreseeable in a business of its size and
character and in light of its contemplated business operations;

 

(t)                        file a voluntary petition or otherwise
initiate proceedings to have the Borrower or any general partner or managing
member adjudicated bankrupt or insolvent, or consent to the institution of
bankruptcy or insolvency proceedings against the Borrower or any general
partner or managing member, or file a petition seeking or consenting to reorganization
or relief of the Borrower or any general partner or managing member as debtor
under any applicable federal or state law relating to bankruptcy, insolvency,
or other relief for debtors with respect to the Borrower or any general partner
or managing member; or seek or consent to the appointment of any trustee,
receiver, conservator, assignee, sequestrator, custodian, liquidator (or other
similar official) of the Borrower or any general partner or managing member or
of all or any substantial part of the properties and assets of the
Borrower or any general partner or managing member, or make any general
assignment for the benefit of creditors of the Borrower or any general

 

20

 

partner or managing member, or admit in writing the
inability of the Borrower or any general partner or managing member to pay its
debts generally as they become due or declare or effect a moratorium on the
Borrower or any general partner or managing member debt or take any action in
furtherance of any such action;

 

(u)                     share
any common logo with or hold itself out as or be considered as a department or
division of (i) any shareholder, partner, principal, member or affiliate
of Borrower, (ii) any affiliate of a shareholder, partner, principal,
member or affiliate of Borrower, or (iii) any other person or entity or
allow any person or entity to identify the Borrower as a department or division
of that person or entity; or

 

(v)                     conceal
assets from any creditor, or enter into any transaction with the intent to
hinder, delay or defraud creditors of the Borrower or the creditors of any
other person or entity.

 

ARTICLE 5 - REPRESENTATIONS AND WARRANTIES

 

Section 5.1.                        BORROWER’S REPRESENTATIONS.
  Borrower represents and warrants to Lender that each of the
representations and warranties set forth in that certain Closing Certificate of
even date herewith executed by Borrower in favor of Lender are true and correct
as of the date hereof and are hereby incorporated and restated in this Security
Instrument by this reference.

 

Section 5.2.                        WARRANTY OF TITLE.   Borrower
represents and warrants that it has good and indefeasible title to the Property
and has the right to grant, bargain, sell, pledge, assign, warrant, transfer
and convey the same and that Borrower possesses an unencumbered fee simple
absolute estate in the Land and the Improvements and that it owns the Property
free and clear of all liens, encumbrances and charges whatsoever except for
those exceptions shown in the title insurance policy insuring the lien of this
Security Instrument (the “Permitted Exceptions”). Borrower
represents and warrants that none of the Permitted Exceptions will materially
and adversely affect the ability of the Borrower to pay in full the Loan, the
use of the Property for the use currently being made thereof, the operation of
the Property or the value of the Property. Borrower shall, at its sole cost and
expense, forever warrant, defend and preserve the title and the validity and
priority of the lien of this Security Instrument and shall, at its sole cost
and expense, forever warrant and defend the same to Trustee and Lender against
the claims of all persons whomsoever, by, through or under Borrower, but not
otherwise.

 

Section 5.3.                        STATUS OF PROPERTY.

 

(a)                      No
portion of the Improvements is located in an area identified by the Secretary
of Housing and Urban Development or any successor thereto as an area having
special flood hazards pursuant to the National Flood Insurance Act of 1968 or
the Flood Disaster Protection Act of 1973, as amended, or any successor law,
or, if located within any such area, Borrower has obtained and will maintain
the insurance prescribed in Section 3.2 hereof.

 

(b)                     To
Borrower’s actual knowledge, Borrower has obtained all necessary certificates,
permits, licenses and other approvals, governmental and otherwise, necessary

 

21

 

for the use, occupancy and operation of the Property
and the conduct of its business (including, without limitation, certificates of
completion and certificates of occupancy) and all required zoning, building
code, land use, environmental and other similar permits or approvals, all of
which are in full force and effect as of the date hereof and not subject to
revocation, suspension, forfeiture or modification.

 

(c)                      The
Property and the present and contemplated use and occupancy thereof are to the
actual knowledge of Borrower in full compliance with all Applicable Laws,
including, without limitation, zoning ordinances, building codes, land use and
environmental laws, laws relating to the disabled (including, but not limited
to, the ADA) and other similar laws.

 

(d)                     The
Property is served by all utilities required for the current or contemplated
use thereof. All utility service is provided by public utilities and the
Property has accepted or is equipped to accept such utility service.

 

(e)                      All
public roads and streets necessary for service of and access to the Property
for the current or contemplated use thereof have been completed, are
serviceable and are physically and legally open for use by the public.

 

(f)                        The
Property is served by public water and sewer systems.

 

(g)                     The
Property is free from damage caused by fire or other casualty. There is no
pending or, to the actual knowledge of Borrower, threatened condemnation
proceedings affecting the Property or any portion thereof.

 

(h)                     All costs and expenses of any and all labor,
materials, supplies and equipment used in the construction of the Improvements
have been (or will be) paid in full and no notice of any mechanics’ or
materialmen’s liens or of any claims of right to any such liens have been
received.

 

(i)                         Borrower has (or will have) paid in full for,
and is the owner of, all furnishings, fixtures and equipment (other than tenants’
property) used in connection with the operation of the Property, free and clear
of any and all security interests, liens or encumbrances, except the lien and
security interest created hereby.

 

(j)                         All liquid and solid waste disposal, septic
and sewer systems located on the Property are to the actual knowledge of
Borrower in a good and safe condition and repair and in compliance with all
Applicable Laws.

 

(k)                      All Improvements lie within the boundary of
the Land.

 

Section 5.4.                        NO FOREIGN PERSON.   Borrower is not a “foreign
person” within the meaning of Section 1445(f)(3) of the Internal Revenue Code of 1986, as amended, and the related
Treasury Department regulations, including temporary regulations.

 

Section 5.5.                        SEPARATE TAX LOT.   The Property is assessed for
real estate tax purposes as one or more wholly independent tax lot or lots,
separate from any adjoining land or

 

22

 

improvements not constituting a part of such lot or lots, and no
other land or improvements is assessed and taxed together with the Property or
any portion thereof.

 

ARTICLE 6 -
OBLIGATIONS AND RELIANCES

 

Section 6.1.                        RELATIONSHIP OF BORROWER AND
LENDER.   The relationship between Borrower and Lender is solely
that of debtor and creditor, and Lender has no fiduciary or other special
relationship with Borrower, and no term or condition of any of the Note, this
Security Instrument and the other Loan Documents shall be construed so as to
deem the relationship between Borrower and Lender to be other than that of
debtor and creditor.

 

Section 6.2.                        NO RELIANCE ON LENDER.   The
partners, members, principals and (if Borrower is a trust) beneficial owners of
Borrower are experienced in the ownership and operation of properties similar
to the Property, and Borrower and Lender are relying solely upon such expertise
and business plan in connection with the ownership and operation of the
Property. Borrower is not relying on Lender’s expertise, business acumen or
advice in connection with the Property.

 

Section 6.3.                        NO LENDER OBLIGATIONS.

 

(a)                      Notwithstanding
the provisions of Subsections 1.1(e) and 1.1(l) or Section 1.2,
Lender is not undertaking (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 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 insurance policy, Lender shall not be deemed to have
warranted, consented to, or affirmed the sufficiency, legality or effectiveness
of same, and such acceptance or approval thereof shall not constitute any
warranty or affirmation with respect thereto by Lender.

 

Section 6.4.                        RELIANCE.   Borrower
recognizes and acknowledges that in accepting 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 Article 5 and that certain Closing Certificate of even
date herewith executed by Borrower, 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
such warranties and representations are a material inducement to Lender in
accepting the Note, this Security Instrument and the Other Loan Documents; and
that Lender would not be willing to make the Loan (as hereinafter defined) and
accept this Security Instrument in the absence of the warranties and
representations as set forth in Article 5 and such Closing
Certificate.

 

23

 

ARTICLE 7 - FURTHER
ASSURANCES

 

Section 7.1.                     RECORDING FEES.   Borrower
will pay all taxes, filing, registration or recording fees, and all expenses
incident to the preparation, execution, acknowledgment and/or recording of the
Note, this Security Instrument, the Other Loan Documents, any note or deed of
trust 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 arising out of or in connection with
the execution and delivery of this Security Instrument, any deed of trust
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 7.2.                     FURTHER ACTS.   Borrower
will, at the cost of Borrower, and without expense to Lender, do, execute,
acknowledge and deliver all and every such further acts, deeds, conveyances,
deeds of trust, 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 granted, bargained, sold, conveyed, confirmed,
pledged, assigned, warranted and transferred or intended now or hereafter so to
be, or which 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 Applicable
Laws. Borrower, on demand, will execute and deliver and hereby authorizes
Lender to execute in the name of Borrower or without the signature of Borrower
to the extent Lender may lawfully do so, one or more financing statements,
chattel mortgages or other instruments, to evidence more effectively the
security interest of Lender in the Property. 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 7.2.

 

Section 7.3.                     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 imposes a tax, either directly or indirectly, on the Debt or
Lender’s interest in the Property, requires revenue or other stamps to be
affixed to the Note, this Security Instrument, or the Other Loan Documents, or
imposes any other tax or charge on the same, Borrower will pay the same, with
interest and penalties thereon, if any. If Lender is advised by counsel chosen
by it that the payment of tax by 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
eighty (180) calendar days, to declare the Debt immediately due and payable, in
which event no prepayment penalty will be due.

 

(b)                     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

 

24

 

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 eighty (180) calendar days, to declare the Debt immediately due and
payable, in which event no prepayment penalty will be due.

 

Section 7.4.                     CONFIRMATION STATEMENT.

 

(a)                      After
written request by Lender, Borrower, within ten (10) days following such
request, shall furnish Lender or any proposed assignee with a statement, duly
acknowledged and certified, confirming to Lender (or its designee) (i) the
amount of the original principal amount of the Note, (ii) the unpaid
principal amount of the Note, (iii) the rate of interest of the Note, (iv) the
terms of payment and maturity date of the Note, (v) the date installments
of interest and/or principal were last paid, and (vi) that, except as provided
in such statement, there are no defaults or events which with the passage of
time or the giving of notice or both, would constitute an event of default
under the Note or this Security Instrument; provided, however, Lender shall not
be entitled hereunder to receive more than one (1) such statement in each
calendar year.

 

(b)                     Subject
to the provisions of the Leases, Borrower shall deliver to Lender, promptly
upon request (but not more frequently than once annually so long no Event of
Default is continuing hereunder), duly executed estoppel certificates from any
one or more lessees as required by Lender attesting to such facts regarding the
Lease as Lender may require, including but not limited to attestations
that each Lease covered thereby is in full force and effect with no defaults
thereunder on the part of any party, that none of the Rents have been paid
more than one month in advance, and that the lessee claims no defense or offset
against the full and timely performance of its obligations under the Lease.

 

(c)                      Upon
any transfer or proposed transfer contemplated by Section 16.1
hereof, at Lender’s request, Borrower, any Guarantors and any Indemnitors shall
provide an estoppel certificate to the Investor (defined in Section 16.1)
or any prospective Investor in such form, substance and detail as Lender, such
Investor or prospective Investor may reasonably require.

 

Section 7.5.                     SPLITTING OF SECURITY
INSTRUMENT.   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 and at no expense to Borrower unless an Event of Default then exists, be
split or divided into two or more notes and two or more security instruments,
each of which shall cover all or a portion of the Property to be more
particularly described therein. To that end, Borrower, upon written request of
Lender, shall execute, acknowledge and deliver, or cause to be executed,
acknowledged and delivered by the then owner of the Property, 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
of Debt, 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. If Note and/or this Security Instrument is split into

 

25

 

two or more notes or security instruments, all approvals or consents
required from Lender hereunder shall nonetheless be obtained from a single lead
lender (or its servicer or special servicer, as applicable).

 

Section 7.6.                     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, Borrower, at its expense,
will issue, 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 8 - DUE ON SALE/ENCUMBRANCE

 

Section 8.1.                     LENDER RELIANCE.   Borrower
acknowledges that Lender has examined and relied on the creditworthiness of
Borrower and experience of Borrower and its partners, members, principals and
(if 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
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. 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 by a sale of the Property.

 

Section 8.2.                     NO SALE/ENCUMBRANCE.

 

(a)                      Borrower
agrees that Borrower shall not, without the prior written consent of Lender,
Transfer the Property or any part thereof or permit the Property or any part thereof
to be Transferred. Lender shall not be required to demonstrate any actual
impairment of its security or any increased risk of default hereunder in order
to declare the Debt immediately due and payable upon Borrower’s Transfer of the
Property without Lender’s consent.

 

(b)                     As
used in Section 8.2(a), “Transfer” shall mean any voluntary or involuntary
sale, conveyance, mortgage, grant, bargain, encumbrance, pledge, assignment or
transfer of all or any part of the Property or Borrower or any direct or
indirect interest therein including, but not limited to: (i) an
installment sales agreement wherein Borrower agrees to sell the Property or any
part thereof for a price to be paid in installments; (ii) an
agreement by Borrower leasing all or a substantial part of the Property
for other than actual occupancy by a space tenant thereunder; (iii) a
sale, assignment or other transfer of, or the grant of a security interest in,
Borrower’s right, title and interest in and to any Leases or any Rents; (iv) if
Borrower, Guarantor, or any managing member or general partner of Borrower or
Guarantor is a corporation, any Transfer of such corporation’s stock (or the
stock of any corporation directly or indirectly controlling such Borrower,
Guarantor, managing member or general partner by operation of law or otherwise)
or the creation or issuance of new stock in one or a series of
transactions by which an aggregate of forty-nine percent (49%) or more of such
corporation’s stock shall directly or

 

26

 

indirectly be vested in or pledged to a party or
parties who are not now stockholders (provided, however, in no
event shall this subpart [iv] apply to any Guarantor whose stock or shares
are traded on a nationally recognized stock exchange); (v) if Borrower,
Guarantor, or any managing member or general partner of Borrower or Guarantor
is a limited liability company or partnership, the Transfer by which an
aggregate of forty-nine percent (49%) or more of the ownership interest in such
limited liability company or forty-nine percent (49%) or more of the
partnership interests in such partnership shall directly or indirectly be
vested in or pledged to parties not having an ownership interest as of the date
of this Security Instrument; (vi) if Borrower, any Guarantor or any
managing member or general partner of Borrower or any Guarantor is a
partnership, limited liability company or joint venture, the change, removal or
resignation of a general partner, managing member or joint venturer or the
Transfer directly or indirectly of all or any portion of the partnership or
ownership interest of any general partner, managing member or joint venturer;
and (vii) except as expressly permitted by Section 8.3, any
Transfer by an Original Principal, directly or indirectly, of its ownership
interest in the Borrower.

 

Section 8.3.                     EXCLUDED AND PERMITTED
TRANSFERS.

 

(a)                      A
Transfer within the meaning of this Article 8 shall not include (i) transfers
of ownership interests in the Borrower, any general partner or managing member
or any Guarantor made by devise or descent or by operation of law upon the
death of a joint tenant, partner, member or shareholder, subject, however, to
all the following requirements: (A) written notice of any transfer under
this Section 8.3, whether by will, trust or other written
instrument, operation of law or otherwise, is provided to Lender or its
servicer, together with copies of such documents relating to the transfer as
Lender or its servicer may reasonably request, (B) control over the
management and operation of the Property is retained by one or more of Steven
D. Alvis, Kyle D. Lippman, David R. Klein and Jay K. Sears (the “Original Principals”, whether one or more)
at all times prior to the death or legal incapacity of all the Original
Principals and is thereafter assumed by persons who are acceptable in all
respects to Lender in its sole and absolute discretion, (C) no such
transfer by devise or descent by any of the Original Principals will release
the respective estate from any liability as a Guarantor, and (D) no such
transfer, death or other event has any material adverse effect on the status of
Borrower as a continuing legal entity liable for the payment of the Debt and
the performance of all other obligations secured hereby, (ii) transfers
otherwise by operation of law in the event of a bankruptcy, or (iii) a
Lease of a portion of the Property.

 

(b)                     The
prohibitions in Subsection 8.2(a) shall not apply to an inter vivos
or testamentary transfer of all or any portion of ownership interests in the
Borrower, any general partner or managing member or any Guarantor to one or
more family members of Original Principals or a trust in which all of the
beneficial interest is held by one or more family members of Original
Principals or a partnership or limited liability company in which a majority of
the capital and profits interests are held by one or more family members of
Original Principals, provided, that any inter vivos transfer of all or
any portion of the ownership interests in the Borrower, such general partner or
managing member or such Guarantor is made in connection with Original
Principals’ bona fide,

 

27

 

good faith estate planning and that the person(s) with
voting control of Borrower or the management of the Property are (i) the same
person(s) who had such voting control and management rights immediately prior
to the transfer in question, or (ii) reasonably acceptable to Lender.
Lender acknowledges that Original Principals and/or an Original Principal’s
spouse are acceptable to exercise voting control of Borrower and the management
of the Property. As used herein, “family members” shall include the spouse,
children and grandchildren and any lineal descendants.

 

(c)                      Notwithstanding
the provisions of Section 8.2 above, Lender will give its consent
to three separate sales or transfers of the Property or ownership interests in
the Borrower, a general partner or managing member of the Borrower, or any
Guarantor, if (but only if) no Event of Default under the Loan Documents has
occurred and is continuing, and if each of the following conditions precedent
have been fully satisfied (as determined in Lender’s sole and absolute
discretion): (i) the grantee’s or transferee’s integrity, reputation,
financial condition, character and management ability are satisfactory to
Lender in its sole discretion, and all information relating thereto requested
by Lender is delivered to Lender at least 30 days prior to the proposed
transfer, (ii) the grantee’s or transferee’s (and its sole general partner’s
or managing member’s) single purpose character are satisfactory to Lender in
its sole discretion, and all information relating thereto requested by Lender
is delivered to Lender at least 30 days prior to the proposed transfer, (iii) Lender
has obtained such estoppels from any guarantors of the Note or replacement
guarantors and such other legal opinions regarding substantive consolidation
issues, enforceability of the assumption documents, no adverse impact on the
Securities or any REMIC holding the Note and similar matters as Lender may require,
(iv) all of Lender’s costs and expenses associated with the sale or
transfer (including reasonable attorneys’ fees) are paid by Borrower or the
grantee or transferee (provided that Lender will advise Borrower if such legal
fees are estimated to exceed $5,000.00 prior to incurring such expense), (v) the
payment of a transfer fee not to exceed 1% of the then unpaid principal balance
of the loan evidenced by the Note and secured hereby (the “Loan”), (vi) the execution and delivery
to Lender of a written assumption agreement and/or substitute guaranty (in its
sole reasonable discretion) and such modifications to the Loan Documents
executed by such parties and containing such terms and conditions as Lender may require
in its sole reasonable discretion prior to such sale or transfer (provided that
in the event the Loan is included in a REMIC and is a performing Loan, no
modification to the terms and conditions shall be made or permitted that would
cause (A) any adverse tax consequences to the REMIC or any holders of any
Mortgage-Backed Pass-Through Securities, (B) the Security Instrument to
fail to be a Qualifying Security Instrument under applicable federal law
relating to REMIC’s, or (C) result in a taxation of the income from the
Loan to the REMIC or cause a loss of REMIC status), (vii) if applicable,
the delivery to Lender of an endorsement (at Borrower’s sole cost and expense)
to Lender’s policy of title insurance then insuring the lien created by this
Security Instrument in form and substance acceptable to Lender in its sole
judgment and (viii) written confirmation from the Rating Agencies that
such transfer will not result in a qualification, downgrade or withdrawal of
the then-current rating of the Securities

 

(d)                     Without
limiting the foregoing, if Lender shall consent to a transfer of the Property,
the written assumption agreement described in Subsection 8.3(c)(vi) above

 

28

 

shall provide for the release of Borrower and each
Guarantor and Indemnitor of personal liability under the Note and Other Loan
Documents, but only as to acts or events occurring, or obligations arising,
after the closing of such transfer; provided, however, that the environmental
indemnities shall be subject to termination as provided in Article 8 of
the Environmental Indemnity.

 

Section 8.4.                     NO IMPLIED FUTURE CONSENT.   Lender’s
consent to one sale, conveyance, alienation, mortgage, encumbrance, pledge or
transfer of the Property shall not be deemed to be a waiver of Lender’s right
to require such consent (in accordance with the terms and provisions hereof) to
any future occurrence of same. Any sale, conveyance, alienation, mortgage,
encumbrance, pledge or transfer of the Property made in contravention of this Article 8
shall be null and void and of no force and effect.

 

Section 8.5.                     COSTS OF CONSENT.   Borrower
agrees to bear and shall pay or reimburse Lender on demand for all reasonable
expenses (including, without limitation, all recording costs, reasonable
attorneys’ fees and disbursements and title search costs) incurred by Lender in
connection with the review, approval and documentation of any such sale,
conveyance, alienation, mortgage, encumbrance, pledge or transfer.

 

Section 8.6.                     CONTINUING SEPARATENESS
REQUIREMENTS.   In no event shall any of the terms and provisions
of this Article 8 amend or modify the terms and provisions
contained in Section 4.3 herein.

 

ARTICLE 9 - DEFAULT

 

Section 9.1.                     EVENTS OF DEFAULT.   The
occurrence of any one or more of the following events shall constitute an “Event of Default”:

 

(a)                      if
any portion of the Debt is not paid on or before the seventh (7th)
calendar day after the same is due or if the entire Debt is not paid on or
before the maturity date, along with applicable prepayment premiums, if any;

 

(b)                     if
Borrower, or its general partner or managing member, if applicable, violates or
does not comply with any of the provisions of Section 4.3 or Article 8;

 

(c)                      if
any representation or warranty of Borrower or of its members, general partners,
or principals or of any Guarantor made herein or in the Environmental Indemnity
or in any other Loan Document, in any guaranty, or in any certificate, report,
financial statement or other instrument or document furnished to Lender shall
have been false or misleading in any material respect when made;

 

(d)                     if
Borrower or any Guarantor shall make an assignment for the benefit of creditors
or if Borrower or any Guarantor shall admit in writing its inability to pay, or
Borrower’s or any Guarantor’s failure to pay its debts as they become due;

 

(e)                      if
(i) Borrower or any subsidiary or general partner or managing member of
Borrower, or any Guarantor shall commence any case, proceeding or other action (A) under
any existing or future law of any jurisdiction, domestic or foreign, relating
to

 

29

 

bankruptcy, insolvency, reorganization,
conservatorship or relief of debtors, seeking to have an order for relief
entered with respect to it, or seeking to adjudicate it a bankrupt or
insolvent, or seeking reorganization, arrangement, adjustment, winding-up,
liquidation, dissolution, composition or other relief with respect to it or its
debts, or (B) seeking appointment of a receiver, trustee, custodian,
conservator or other similar official for it or for all or any substantial part of
its assets, or Borrower or any subsidiary or general partner or managing member
of Borrower, or any Guarantor shall make a general assignment for the benefit
of its creditors; or (ii) there shall be commenced against Borrower or any
subsidiary or general partner or managing member of Borrower, or any Guarantor
any case, proceeding or other action of a nature referred to in clause (i) above
which (A) results in the entry of an order for relief or any such
adjudication or appointment or (B) remains undismissed, undischarged or
unbonded for a period of sixty (60) calendar days; or (iii) there shall be
commenced against Borrower or any subsidiary or general partner or managing member
of Borrower or any Guarantor any case, proceeding or other action seeking
issuance of a warrant of attachment, execution, distraint or similar process
against all or any substantial part of its assets which results in the
entry of any order for any such relief which shall not have been vacated,
discharged, or stayed or bonded pending appeal within sixty (60) calendar days
from the entry thereof; or (iv) Borrower or any subsidiary or general
partner or managing member of Borrower, or any Guarantor shall take any action
in furtherance of, or indicating its consent to, approval of, or acquiescence
in, any of the acts set forth in clause (i), (ii) or (iii) above; or (v) Borrower
or any subsidiary or general partner or managing member of Borrower, or any Guarantor
shall generally not, or shall be unable to, or shall admit in writing its
inability to, pay its debts as they become due;

 

(f)                        subject
to Borrower’s right to contest certain liens as provided in this Security
Instrument, if the Property becomes subject to any mechanic’s, materialman’s or
other lien other than a lien for local real estate taxes and assessments not
then due and payable and the lien shall remain undischarged of record (by
payment, bonding or otherwise) for a period of sixty (60) calendar days after
Borrower becomes aware of such lien;

 

(g)                     if
any federal tax lien is filed against Borrower, any general partner or managing
member of Borrower, any Guarantor or the Property and same is not discharged of
record within sixty (60) calendar days after same is filed;

 

(h)                     except
as permitted in this Security Instrument, and except as required by the Leases,
the actual or threatened alteration, improvement, demolition or removal of any
of the Improvements without the prior consent of Lender;

 

(i)                         damage
to the Property in any manner which is not covered by insurance, which lack of
coverage arises solely as a result of Borrower’s failure to maintain the
insurance required under this Security Instrument;

 

(j)                         without
Lender’s prior consent, (i) any managing agent for the Property resigns or
is removed, (ii) the ownership, management or control of such managing
agent

 

30

 

is transferred to a person or entity other than one or
more of the Original Principals, or (iii) there is any material change in
the property management agreement of the Property;

 

(k)                      this
Security Instrument shall cease to constitute a first-priority lien on the
Property (other than in accordance with its terms), except with respect to mechanic’s
or materialman’s claims that have been bonded over and/or are being contested
in accordance with the provisions hereof;

 

(1)                      seizure
or forfeiture of the Property, or any portion thereof, or Borrower’s interest
therein, resulting from criminal wrongdoing or other unlawful action of Borrower or its affiliates under any federal,
state or local law;

 

(m)                   if
Borrower consummates a transaction which would cause this Security Instrument
or Lender’s exercise of its rights under this Security Instrument, the Note or
the Other Loan Documents to constitute a nonexempt prohibited transaction under
ERISA or result in a violation of a state statute regulating governmental
plans, subjecting Lender to liability for a violation of ERISA or a state
statute;

 

(n)                     if
any default occurs under any guaranty or indemnity including the Environmental
Indemnity executed in connection herewith and such default continues after the
expiration of applicable grace periods, or such guaranty or indemnity shall
cease to be in full force and effect, or any guarantor or indemnitor shall deny
or disaffirm its obligation thereunder; and

 

(o)                     if
Borrower or any Guarantor, as the case may be, shall continue to be in
default under any other term, covenant or condition of this Security Instrument
or any Other Loan Documents for thirty (30) calendar days after notice from
Lender; provided that if such default cannot reasonably be cured within
such thirty (30) calendar day period and Borrower (or such Guarantor as the
case may be) shall have commenced to cure such default within such thirty
(30) calendar day period and thereafter diligently and expeditiously proceeds
to cure the same, such thirty (30) calendar day period shall be extended for so
long as it shall require Borrower (or such Guarantor as the case may be)
in the exercise of due diligence to cure such default, it being agreed that no
such extension shall be for a period in excess of ninety (90) calendar days
after the notice from Lender referred to above.

 

Section 9.2.                     DEFAULT INTEREST.   Borrower
will pay, from the date of an Event of Default through the earlier of the date
upon which the Event of Default is cured or the date upon which the Debt is
paid in full, interest on the unpaid principal balance of the Note at the
Default Rate.

 

ARTICLE 10 - RIGHTS AND REMEDIES

 

Section 10.1.               REMEDIES.   Upon the
occurrence of any Event of Default, Borrower agrees that Lender may take
such action, by or through Trustee, by Lender itself or otherwise, without
notice or demand, as it deems advisable to protect and enforce its rights
against 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

 

31

 

determine, in its sole discretion, without impairing or otherwise
affecting the other rights and remedies of Lender:

 

(a)                      Right
to Perform Borrower’s Covenants.   If Borrower has failed to
keep or perform any covenant whatsoever contained in this Security
Instrument or the Other Loan Documents, Lender may, but shall not be obligated
to any person to do so, perform or attempt to perform said covenant
and any payment made or expense incurred in the performance or attempted performance
of any such covenant, together with any sum expended by Lender that is
chargeable to Borrower or subject to reimbursement by Borrower under the Loan
Documents, shall be and become a part of the “Debt”, and Borrower
promises, upon demand, to pay to Lender, at the place where the Note is
payable, all sums so incurred, paid or expended by Lender, with interest from
the date when paid, incurred or expended by Lender at the Default Rate.

 

(b)                     Right of Entry.   Lender may, prior or subsequent
to the institution of any foreclosure proceedings, enter upon the
Property, or any part thereof, and take exclusive possession of the
Property and of all books, records, and accounts relating thereto and to
exercise without interference from Borrower any and all rights which Borrower
has with respect to the management, possession, operation, protection, or
preservation of the Property, including without limitation the right to rent
the same for the account of Borrower and to deduct from such Rents all costs,
expenses, and liabilities of every character incurred by Lender in collecting
such Rents and in managing, operating, maintaining, protecting, or preserving
the Property and to apply the remainder of such Rents on the Debt in such
manner as Lender may elect. All such costs, expenses, and liabilities
incurred by Lender in collecting such Rents and in managing, operating,
maintaining, protecting, or preserving the Property, if not paid out of Rents
as hereinabove provided, shall constitute a demand obligation owing by Borrower
and shall bear interest from the date of expenditure until paid at the Default
Rate, all of which shall constitute a portion of the Debt. If necessary to
obtain the possession provided for above, Lender may invoke any and all
legal remedies to dispossess Borrower, including specifically one or more
actions for forcible entry and detainer, trespass to try title, and
restitution. In connection with any action taken by Lender pursuant to this Subsection 10.1(b),
Lender shall not be liable for any loss sustained by Borrower resulting from
any failure to let the Property, or any part thereof, or from any other
act or omission of Lender in managing the Property unless such loss is caused
by the willful misconduct of Lender, nor shall Lender be obligated to perform or
discharge any obligation, duty, or liability under any Lease or under or by
reason hereof or the exercise of rights or remedies hereunder. Borrower shall
and does hereby agree to indemnify Lender for, and to hold Lender harmless
from, any and all liability, loss, or damage, which may or might be
incurred by Lender under any such Lease or under or by reason hereof or the
exercise of rights or remedies hereunder, and from 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 such
Lease. Should Lender incur any such liability, the amount thereof, including
without limitation costs, expenses, and reasonable attorneys’ fees, together
with interest thereon from the date of expenditure until paid at the Default
Rate, shall be secured hereby, and Borrower shall reimburse Lender therefor

 

32

 

immediately upon demand. Nothing in this Subsection 10.1(b)
shall impose any duty, obligation, or responsibility upon Lender for the
control, care, management, leasing, or repair of the Property, nor for the
carrying out of any of the terms and conditions of any such Lease; nor shall it
operate to make Lender responsible or liable for any waste committed on the
Property by the tenants or by any other parties, or for any hazardous
substances or environmental conditions on or under the Property, or for any
dangerous or defective condition of the Property or for any negligence in the
management, leasing, upkeep, repair, or control of the Property resulting in
loss or injury or death to any tenant, licensee, employee, or stranger.
Borrower hereby assents to, ratifies, and confirms any and all actions of
Lender with respect to the Property taken under this subsection.

 

(c)                      Acceleration.
  Upon the occurrence of an Event of Default (other than an Event of
Default described in Section 9.1 (d) or (e) above) and at
any time thereafter Lender may, without notice, demand, presentment, notice of
nonpayment or nonperformance, protest, notice of protest, notice of intent to
accelerate, notice of acceleration, or any other notice or any other action,
all of which are hereby waived by Borrower and all other parties obligated in
any manner whatsoever on the Debt, declare the entire unpaid balance of the
Debt immediately due and payable, and upon such declaration, the entire unpaid
balance of the Debt shall be immediately due and payable. Upon the occurrence
of an Event of Default described in Section 9.1(d) or (e) above,
the entire unpaid balance of the Debt shall immediately and automatically
become due and payable, without notice or demand.

 

(d)                     Foreclosure-Power
of Sale.   Lender may institute a proceeding or proceedings,
judicial, or nonjudicial, by advertisement or otherwise, for the complete or
partial foreclosure of this Security Instrument or the complete or partial sale
of the Property under power of sale or under any applicable provision of law.
Lender may, through the Trustee, sell the Property, and all estate, right,
title, interest, claim and demand of Borrower therein, and all rights of
redemption thereof, at one or more sales, as an entirety or in parcels, with
such elements of real and/or personal property, and at such time and place and
upon such terms as it may deem expedient, or as may be required by
applicable law, and in the event of a sale, by foreclosure or otherwise, of
less than all of the Property, this Security Instrument shall continue as a
lien and security interest on the remaining portion of the Property.

 

(e)                      Rights
Pertaining to Sales.   Subject to the requirements of applicable
law and except as otherwise provided herein, the following provisions shall
apply to any sale or sales of all or any portion of the Property under or by
virtue of Subsection 10.l(d) above, whether made under the power of
sale herein granted or by virtue of judicial proceedings or of a judgment or
decree of foreclosure and sale:

 

(i)                         Trustee
or Lender may conduct any number of sales from time to time. The power of
sale set forth above shall not be exhausted by any one or more such sales as to
any part of the Property which shall not have been sold, nor by any sale
which is not completed or is defective in Lender’s opinion, until the Debt
shall have been paid in full.

 

33

 

(ii)                      Any
sale may be postponed or adjourned by public announcement at the time and
place appointed for such sale or for such postponed or adjourned sale without
further notice.

 

(iii)                   After each sale, Lender, Trustee or
an officer of any court empowered to do so shall execute and deliver to the
purchaser or purchasers at such sale a good and sufficient instrument or
instruments granting, conveying, assigning and transferring all right, title
and interest of Borrower in and to the property and rights sold and shall
receive the proceeds of said sale or sales and apply the same as specified in
the Note. Each of Trustee and Lender is hereby appointed the true and lawful
attorney-in-fact of Borrower, which appointment is irrevocable and shall be
deemed to be coupled with an interest, in Borrower’s name and stead, to make
all necessary conveyances, assignments, transfers and deliveries of the
property and rights so sold, Borrower hereby ratifying and confirming all that
said attorney or such substitute or substitutes shall lawfully do by virtue
thereof. Nevertheless, Borrower, if requested by Trustee or Lender, shall ratify
and confirm any such sale or sales by executing and delivering to Trustee,
Lender or such purchaser or purchasers all such instruments as may be
advisable, in Trustee’s or Lender’s judgment, for the purposes as may be
designated in such request.

 

(iv)                  Any
and all statements of fact or other recitals made in any of the instruments
referred to in Subsection 10.1(e)(iii) given by Trustee or
Lender shall be taken as conclusive and binding against all persons as to
evidence of the truth of the facts so stated and recited.

 

(v)                     Any
such sale or sales shall operate to divest all of the estate, right, title,
interest, claim and demand whatsoever, whether at law or in equity, of Borrower
in and to the properties and rights so sold, and shall be a perpetual bar both
at law and in equity against Borrower and any and all persons claiming or who may claim
the same, or any part thereof or any interest therein, by, through or
under Borrower to the fullest extent permitted by applicable law.

 

(vi)                  Upon any such sale or sales, Lender may bid
for and acquire the Property and, in lieu of paying cash therefor, may make
settlement for the purchase price by crediting against the Debt the amount of
the bid made therefor, after deducting therefrom the expenses of the sale, the
cost of any enforcement proceeding hereunder, and any other sums which Trustee
or Lender is authorized to deduct under the terms hereof, to the extent
necessary to satisfy such bid.

 

(vii)               Upon any such sale, it shall not be necessary
for Trustee, Lender or any public officer acting under execution or order of
court to have present or constructively in its possession any of the Property.

 

(f)                        Lender’s
Judicial Remedies.   Lender, or Trustee upon written request of
Lender, may proceed by suit or suits, at law or in equity, to enforce the
payment of the Debt to foreclose the liens and security interests of this
Security Instrument as against all

 

34

 

or any part of the Property, and to have all or
any part of the Property sold under the judgment or decree of a court of
competent jurisdiction. This remedy shall be cumulative of any other
nonjudicial remedies available to Lender under this Security Instrument, the
Note or the Other Loan Documents. Proceeding with a request or receiving a
judgment for legal relief shall not be or be deemed to be an election of
remedies or bar any available nonjudicial remedy of Lender.

 

(g)                     Lender’s
Right to Appointment of Receiver.   Lender, as a matter of right
and (i) without regard to the sufficiency of the security for repayment of
the Debt and without notice to Borrower, (ii) without any showing of
insolvency, fraud, or mismanagement on the part of Borrower, (iii) without
the necessity of filing any judicial or other proceeding other than the
proceeding for appointment of a receiver, and (iv) without regard to the
then value of the Property, shall be entitled to the appointment of a receiver
or receivers for the protection, possession, control, management and operation
of the Property, including (without limitation), the power to collect the
Rents, enforce this Security Instrument and, in case of a sale and deficiency,
during the full statutory period of redemption (if any), whether there be a
redemption or not, as well as during any further times when Borrower, except
for the intervention of such receiver, would be entitled to collection of such
Rents. Borrower hereby irrevocably consents to the appointment of a receiver or
receivers. Any receiver appointed pursuant to the provisions of this subsection shall
have the usual powers and duties of receivers in such matters.

 

(h)                     Commercial
Code Remedies.   Lender may 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 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 Personal Property, and (ii) request
Borrower at its expense to assemble 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 Personal Property
sent to Borrower in accordance with the provisions hereof at least five (5) days
prior to such action, shall constitute commercially reasonable notice to
Borrower.

 

(i)                         Apply
Escrow Funds. Lender may apply any Funds (as defined in the Escrow
Agreement) and any other sums held in escrow or otherwise by Lender in
accordance with the terms of this Security Instrument or any Other Loan
Document to the payment of the following items in any order in its uncontrolled
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; and

 

35

 

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

 

(j)                         Other
Rights.   Lender (i) may apply any funds held by Lender
toward payment of the Debt; and (ii) shall have and may exercise any
and all other rights and remedies which Lender may have at law or in
equity, or by virtue of any of the Loan Documents, or otherwise.

 

(k)                      Discontinuance
of Remedies.   In case Lender shall have proceeded to invoke any
right, remedy, or recourse permitted under the Loan Documents and shall
thereafter elect to discontinue or abandon same for any reason, Lender shall
have the unqualified right so to do and, in such event, Borrower and Lender
shall be restored to their former positions with respect to the Debt, the Loan
Documents, the Property or otherwise, and the rights, remedies, recourses and
powers of Lender shall continue as if same had never been invoked.

 

(1)                      Remedies
Cumulative.   All rights, remedies, and recourses of Lender
granted in the Note, this Security Instrument and the Other Loan Documents, any
other pledge of collateral, or otherwise available at law or equity: (i) shall
be cumulative and concurrent; (ii) may be pursued separately,
successively, or concurrently against Borrower, the Property, or any one or
more of them, at the sole discretion of Lender; (iii) may be
exercised as often as occasion therefor shall arise, it being agreed by
Borrower that the exercise or failure to exercise any of same shall in no event
be construed as a waiver or release thereof or of any other right, remedy, or
recourse; (iv) shall be nonexclusive; (v) shall not be conditioned
upon Lender exercising or pursuing any remedy in relation to the Property prior
to Lender bringing suit to recover the Debt; and (vi) in the event Lender
elects to bring suit on the Debt and obtains a judgment against Borrower prior
to exercising any remedies in relation to the Property, all liens and security
interests, including the lien of this Security Instrument, shall remain in full
force and effect and may be exercised thereafter at Lender’s option.

 

(m)                   Bankruptcy
Acknowledgment.   In the event the Property or any portion
thereof or any interest therein becomes property of any bankruptcy estate or
subject to any state or federal insolvency proceeding (other than pursuant to a
bankruptcy by or against a tenant under a Lease), then Lender shall immediately
become entitled, in addition to all other relief to which Lender may be
entitled under this Security Instrument, to obtain (i) an order from the
Bankruptcy Court or other appropriate court granting immediate relief from the
automatic stay pursuant to § 362 of the Bankruptcy Code so to
permit Lender to pursue its rights and remedies against Borrower as provided
under this Security Instrument and all other rights and remedies of Lender at
law and in equity under applicable state law, and (ii) an order from the
Bankruptcy Court prohibiting Borrower’s use of all “cash collateral” as defined
under § 363 of the Bankruptcy Code. In connection with such
Bankruptcy Court orders, Borrower shall not contend or allege in any pleading
or petition filed in any court proceeding that Lender does not have sufficient
grounds for relief from the automatic stay. Any bankruptcy petition or other
action taken by the Borrower to stay, condition, or inhibit Lender from
exercising its remedies are

 

36

 

hereby admitted by Borrower to be in bad faith and
Borrower further admits that Lender would have just cause for relief from the
automatic stay in order to take such actions authorized under state law.

 

(n)                     Application
of Proceeds.   The proceeds from any sale, lease, or other
disposition made pursuant to this Security Instrument, or any Rents collected
by Lender from the Property, if any, or proceeds from insurance which Lender
elects to apply to the Debt pursuant to Article 3 hereof, shall be
applied by Trustee, or by Lender, as the case may be, to the Debt in the
following order and priority: (1) to the payment of all expenses of
advertising, selling, and conveying the Property or part thereof, and/or
prosecuting or otherwise collecting Rents, proceeds, premiums or other sums
including reasonable attorneys’ fees and a reasonable fee or commission to
Trustee, not to exceed five percent of the proceeds thereof or sums so
received; (2) to that portion, if any, of the Debt with respect to which
no person or entity has personal or entity liability for payment (the “Exculpated
Portion”), and with respect to the Exculpated Portion as
follows: first, to accrued but unpaid interest, second, to matured principal,
and third, to unmatured principal in inverse order of maturity; (3) to the
remainder of the Debt as follows: first, to the remaining accrued but unpaid
interest, second, to the matured portion of principal of the Debt, and third,
to prepayment of the unmatured portion, if any, of principal of the Debt
applied to installments of principal in inverse order of maturity; (4) the
balance, if any or to the extent applicable, remaining after the full and final
payment of the Debt to the holder or beneficiary of any inferior liens covering
the Property, if any, in order of the priority of such inferior liens (Trustee
and Lender shall hereby be entitled to rely exclusively on a commitment for
title insurance issued to determine such priority); and (5) the cash
balance, if any, to the Borrower. The application of proceeds of sale or other
proceeds as otherwise provided herein shall be deemed to be a payment of the
Debt like any other payment. The balance of the Debt remaining unpaid, if any,
shall remain fully due and owing in accordance with the terms of the Note and
the other Loan Documents.

 

Section 10.2.               RIGHT OF ENTRY.   Lender
and its agents shall have the right to enter and inspect the Property at all
reasonable times, subject, however, to the rights of tenants and other
occupants of the Property.

 

ARTICLE 11 - INDEMNIFICATION; SUBROGATION

 

Section 11.1.               GENERAL INDEMNIFICATION.

 

(a)                      Borrower
shall indemnify, defend and hold Lender and Trustee harmless against: (i) any
and all claims, by, through or under Borrower, for brokerage, leasing, finder’s
or similar fees which may be made relating to the Property or the Debt,
and (ii) any and all liability, obligations, losses, damages, penalties,
claims, actions, suits, costs and expenses (including Lender’s reasonable
attorneys’ fees, together with reasonable appellate counsel fees, if any) of
whatever kind or nature which may be asserted against, imposed on or
incurred by Lender or Trustee in connection with the Debt, this Security
Instrument, the Property, or any part thereof, or the exercise by Lender
or Trustee of any rights or remedies granted to it under this Security
Instrument; provided, however, that nothing herein shall be
construed to obligate Borrower to indemnify, defend and hold

 

37

 

harmless Lender from and against any and all
liabilities, obligations, losses, damages, penalties, claims, actions, suits,
costs and expenses enacted against, imposed on or incurred by Lender by reason
of Lender’s willful misconduct or gross negligence.

 

(b)                     If
Lender is made a party defendant to any litigation or any claim is threatened
or brought against Lender concerning the secured indebtedness, this Security
Instrument, the Property, or any part thereof, or any interest therein, or
the construction, maintenance, operation or occupancy or use thereof, then
Lender shall notify Borrower of such litigation or claim and Borrower shall
indemnify, defend and hold Lender harmless from and against all liability by
reason of said litigation or claims, including reasonable attorneys’ fees
(together with reasonable appellate counsel fees, if any). The right to such attorneys’
fees (together with reasonable appellate counsel fees, if any) and expenses
incurred by Lender in any such litigation or claim of the type described in
this Subsection 11.1(b), whether or not any such litigation or
claim is prosecuted to judgment, shall be deemed to have accrued on the
commencement of such claim or action and shall be enforceable whether or not
such claim or action is prosecuted to judgment. If Lender commences an action
against Borrower to enforce any of the terms hereof or to prosecute any breach
by Borrower of any of the terms hereof or to recover any sum secured hereby,
Borrower shall pay to Lender its reasonable attorneys’ fees (together with
reasonable appellate counsel fees, if any) and expenses. If Borrower breaches
any term of this Security Instrument, Lender may engage the services of an
attorney or attorneys to protect its rights hereunder, and in the event of such
engagement following any breach by Borrower, Borrower shall pay Lender
reasonable attorneys’ fees (together with reasonable appellate counsel fees, if
any) and expenses incurred by Lender, whether or not an action is actually
commenced against Borrower by reason of such breach. All references to “attorneys” in this Subsection 11.1(b) and
elsewhere in this Security Instrument shall include without limitation any
attorney or law firm engaged by Lender and Lender’s in-house counsel, and all
references to “fees  and expenses” in this Subsection 11.1(b)
and elsewhere in this Security Instrument shall include without limitation any
fees of such attorney or law firm and any allocation charges and allocation
costs of Lender’s in-house counsel.

 

(c)                      A
waiver of subrogation shall be obtained by Borrower from its insurance carrier
and, consequently, Borrower waives any and all right to claim or recover
against Lender, its officers, employees, agents and representatives, for loss
of or damage to Borrower, the Property, Borrower’s property or the property of
others under Borrower’s control from any cause insured against or required to
be insured against by the provisions of this Security Instrument.

 

Section 11.2.               ENVIRONMENTAL INDEMNIFICATION.   Borrower
shall, at its sole cost and expense, protect, defend, indemnify, release and
hold harmless the Indemnified Parties from and against any and all Losses (as
hereinafter defined) imposed upon or incurred by or asserted against any
Indemnified Parties (other than those arising solely from a state of facts that
first came into existence after Lender (or any other party) acquired title to
the Property through foreclosure or a deed in lieu thereof), and directly or
indirectly arising out of or in any way relating to any one or more of the
following: (a) any presence of any Hazardous Substances (as hereinafter
defined) in, on, above, or under the Property; (b) any past, present or
future Release

 

38

 

(as hereinafter defined) of Hazardous Substances in, on, above, under
or from the Property; (c) any activity by Borrower, any person or entity affiliated
with Borrower, and any tenant or other user of the Property in connection with
any actual, proposed or threatened use, treatment, storage, holding, existence,
disposition or other Release, generation, production, manufacturing,
processing, refining, control, management, abatement, removal, handling,
transfer or transportation to or from the Property of any Hazardous Substances
at any time located in, under, on or above the Property; (d) any activity
by Borrower, any person or entity affiliated with Borrower, and any tenant or
other user of the Property in connection with any actual or proposed
Remediation (as hereinafter defined) of any Hazardous Substances at any time
located in, under, on or above the Property, whether or not such Remediation is
voluntary or pursuant to court or administrative order, including but not
limited to any removal, remedial or corrective action; (e) any past,
present or threatened non-compliance or violations of any Environmental Law (as
hereinafter defined) (or permits issued pursuant to any Environmental Law) in
connection with the Property or operations thereon, including but not limited
to any failure by Borrower, any person or entity affiliated with Borrower, and
any tenant or other user of the Property to comply with any order of any
governmental authority in connection with any Environmental Laws; (f) the
imposition, recording or filing or the future imposition, recording or filing
of any Environmental Lien (as hereinafter defined) encumbering the Property; (g) any
administrative processes or proceedings or judicial proceedings in any way
connected with any matter addressed in this Section 11.2; (h) any
material misrepresentation or inaccuracy in any representation or warranty or
material breach or failure to perform any covenants or other obligations
under the Environmental Indemnity of even date executed by Borrower and
Indemnitor; and (i) any diminution in value of the Property in any way
connected with any occurrence or other matter referred to in this Section 11.2.

 

The term “Environmental Law” means any present and future
federal, state and local laws, statutes, ordinances, rules, regulations and the
like, as well as common law, relating to protection of human health or the
environment, relating to Hazardous Substances, relating to liability for or
costs of Remediation or prevention of Releases of Hazardous Substances or
relating to liability for or costs of other actual or threatened danger to
human health or the environment. The term “Environmental Law” includes, but is not limited to,
the following statutes, as amended, any successor thereto, and any regulations
promulgated pursuant thereto, and any state or local statutes, ordinances,
rules, regulations and the like addressing similar issues: the Comprehensive Environmental
Response, Compensation and Liability Act; the Emergency Planning and Community
Right-to-Know Act; the Hazardous Substances Transportation Act; the Resource
Conservation and Recovery Act (including but not limited to Subtitle I relating
to underground storage tanks); the Solid Waste Disposal Act; the Clean Water
Act; the Clean Air Act; the Toxic Substances Control Act; the Safe Drinking
Water Act; the Occupational Safety and Health Act; the Federal Water Pollution
Control Act; the Federal Insecticide, Fungicide and Rodenticide Act; the
Endangered Species Act; the National Environmental Policy Act; and the River
and Harbors Appropriation Act. The term “Environmental Law” also includes, but is not limited
to, any present and future federal, state and local laws, statutes, ordinances,
rules, regulations and the like, as well as common law: conditioning transfer
of property upon a negative declaration or other approval of a governmental
authority of the environmental condition of the Property; requiring
notification or disclosure of Releases of Hazardous Substances or other
environmental condition of the Property to any governmental authority or other
person or entity, whether or not in connection with

 

39

 

transfer of title to or interest in property; imposing conditions or
requirements in connection with permits or other authorization for lawful
activity; relating to nuisance, trespass or other causes of action related to
the Property; and relating to wrongful death, personal injury, or property or
other damage in connection with any physical condition or use of the Property.

 

The term “Environmental
Lien” includes
but is not limited to any lien or other encumbrance imposed pursuant to
Environmental Law, whether due to any act or omission of Borrower or any other
person or entity.

 

The term “Hazardous
Substances” includes
but is not limited to any and all substances (whether solid, liquid or gas)
defined, listed, or otherwise classified as pollutants, hazardous wastes,
hazardous substances, hazardous materials, extremely hazardous wastes, or words
of similar meaning or regulatory effect under any present or future
Environmental Laws, including but not limited to petroleum and petroleum
products, asbestos and asbestos-containing materials, polychlorinated
biphenyls, lead, lead-based paints, radon, radioactive materials, flammables,
explosives and, to the extent subject to regulation by any Environmental Law,
any toxic fungus, including mold, mildew and any mycotoxins, spores, scents or
byproducts produced by fungi.

 

The term “Indemnified Parties” includes but is not limited to
Lender, any person or entity who is or will have been involved in originating
the Loan evidenced by the Note, any person or entity who is or will have been
involved in servicing the Loan, any person or entity in whose name the
encumbrance created by this Security Instrument is or will have been recorded,
persons and entities who may hold or acquire or will have held a full or
partial interest in the Loan (including but not limited to those who may acquire
any interest in 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 assign of any and all of the foregoing (including but not limited to any
other person or entity who holds or acquires or will have held a participation
or other full or partial interest in the Loan or the Property, whether during
the term of the Loan or as part of or following foreclosure pursuant to
the Loan) and including but not limited to any successors by merger,
consolidation or acquisition of all or a substantial part of Lender’s
assets and business.

 

The term “Losses”
includes but is not limited to any claims, suits, liabilities (including but
not limited to strict liabilities), administrative or judicial actions or
proceedings, obligations, debts, damages, losses, costs, expenses, diminutions
in value, fines, penalties, charges, fees, expenses, costs of Remediation
(whether or not performed voluntarily), judgments, award, amounts paid in
settlement, litigation costs, attorneys’ fees, engineer’s fees, environmental
consultants’ fees and investigation costs (including but not limited to costs
for sampling, testing and analysis of soil, water, air, building materials, and
other materials and substances whether solid, liquid or gas), of whatever kind
or nature, and whether or not incurred in connection with any judicial or
administrative proceedings.

 

The term “Release” with
respect to any Hazardous Substance includes but is not limited to any release,
deposit, discharge, emission, leaking, leaching, spilling, seeping, migrating,

 

40

 

injecting, pumping, pouring, emptying,
escaping, dumping, disposing or other movement of Hazardous Substances.

 

The term “Remediation” includes but is not limited to any
response, remedial, removal, or corrective action; any activity to cleanup,
detoxify, decontaminate, contain or otherwise remediate any Hazardous
Substance; any actions to prevent, cure or mitigate any Release of any
Hazardous Substance; any action to comply with any Environmental Laws or with
any permits issued pursuant thereto; any inspection, investigation, study,
monitoring, assessment, audit, sampling and testing, laboratory or other
analysis, or evaluation relating to any Hazardous Substances or to anything
referred to in this Article 11.

 

Section 11.3.               DUTY TO DEFEND AND ATTORNEYS AND
OTHER FEES AND EXPENSES.   Upon written request by any
Indemnified Party, Borrower shall defend 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, any Indemnified Parties may, in their sole and absolute
discretion, engage their own attorneys and other professionals to defend or
assist them, and, at the option of Indemnified Parties, their attorneys shall
control the resolution of claim or proceeding. Upon demand, Borrower shall pay
or, in the sole and absolute discretion of the Indemnified Parties, reimburse,
the Indemnified Parties for the payment of reasonable fees and disbursements of
attorneys, engineers, environmental consultants, laboratories and other
professionals in connection therewith.

 

Section 11.4.               SURVIVAL OF INDEMNITIES.   Notwithstanding
any provision of this Security Instrument or any other Loan Document to the
contrary, the provisions of Section 11.1 and Section 11.2,
and Borrower’s obligations thereunder, shall survive (a) the repayment of
the Note, (b) the foreclosure of this Security Instrument, and (c) the
release (or reconveyance, as applicable) of the lien of this Security
Instrument; provided, however, that the indemnities set forth in Section 11.2
shall be subject to termination as provided in Article 8 of the
Environmental Indemnity.

 

ARTICLE 12 - SECURITY AGREEMENT

 

Section 12.1.               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 Borrower in the Property. Borrower by executing and delivering this
Security Instrument has granted and hereby grants to Lender, as security for
the Obligations, a security interest in the Property to the full extent that
the Property may be subject to the Uniform Commercial Code (said
portion of the Property so subject to the Uniform Commercial Code being
called in this paragraph the “Collateral”). Borrower hereby agrees with Lender to
execute and deliver to Lender, in form and substance satisfactory to
Lender, such financing statements, continuation statements, other uniform commercial
code forms and shall pay all expenses and fees in connection with the filing
and recording thereof, and such further assurances as Lender may from time
to time, reasonably consider necessary to create, perfect, and preserve Lender’s
security interest herein granted. This Security Instrument shall also
constitute a “fixture filing” for the purposes of the Uniform Commercial
Code. All or part of the

 

41

 

Property are or are to become fixtures.
Information concerning the security interest herein granted may be
obtained from the parties at the addresses of the parties set forth in the
first paragraph of this Security Instrument. If an Event of Default shall
occur, Lender, in addition to any other rights and remedies which they 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, Borrower
shall at its expense assemble the Collateral and make it available to Lender at
a convenient place acceptable to Lender. Borrower shall pay to Lender on demand
any and all expenses, including legal expenses and attorneys’ fees, incurred or
paid by Lender in protecting the interest in the Collateral and in enforcing
the rights hereunder with respect to the Collateral. Any notice of sale,
disposition or other intended action by Lender with respect to the Collateral
sent to Borrower in accordance with the provisions hereof at least five (5) days
prior to such action, shall constitute commercially reasonable notice to
Borrower. The proceeds of any disposition of the Collateral, or any part thereof,
may be applied by Lender to the payment of the Obligations in such
priority and proportions as Lender in its discretion shall deem proper. In the
event of any change in name, identity or structure of any Borrower, such
Borrower shall notify Lender thereof, and promptly after request shall execute,
file and record such Uniform Commercial Code forms as are necessary to
maintain the priority of Lender’s lien upon and security interest in the
Collateral, and shall pay all expenses and fees in connection with the filing
and recording thereof. If Lender shall require the filing or recording of
additional Uniform Commercial Code forms or continuation statements,
Borrower shall, promptly after request, execute, file and record such Uniform Commercial
Code forms or continuation statements as Lender shall deem necessary, and shall
pay all expenses and fees in connection with the filing and recording thereof
it being understood and agreed, however, that no such additional documents
shall increase Borrower’s obligations under the Note, this Security Instrument
and the Other Loan Documents. Borrower hereby irrevocably appoints Lender as
its attorney-in-fact, coupled with an interest, to file with the appropriate
public office on its behalf any financing or other statements signed only by
Lender, as Borrower’s attorney-in-fact, in connection with the Collateral
covered by this Security Instrument. Notwithstanding the foregoing, Borrower
shall appear and defend in any action or proceeding which affects or purports
to affect the Property and any interest or right therein, whether such
proceeding effects title or any other rights in the Property (and in
conjunction therewith, Borrower shall fully cooperate with Lender in the event
Lender is a party to such action or proceeding).

 

ARTICLE 13 - WAIVERS

 

Section 13.1.               MARSHALLING AND OTHER MATTERS.   Borrower hereby waives, to the
extent permitted by law, 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, 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 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.

 

42

 

Section 13.2.               WAIVER OF NOTICE.   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 Borrower and
except with respect to matters for which Lender is required by applicable law
to give notice, and 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 Borrower.

 

Section 13.3.               SOLE DISCRETION OF LENDER.   Wherever
pursuant to this Security Instrument Lender exercises any right given to it to
approve or disapprove, or any arrangement or term is to be satisfactory to
Lender, the decision of Lender to approve or disapprove or to decide that
arrangements or terms are satisfactory or not satisfactory shall be in the sole
discretion of Lender and shall be final and conclusive, except as may be
otherwise expressly and specifically provided herein.

 

Section 13.4.               SURVIVAL.   Except as
otherwise set forth herein and in the Environmental Indemnity, the
indemnifications made pursuant to Article 11, shall continue
indefinitely in full force and effect and shall survive and shall in no way be
impaired by: 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 Note or any of the Other Loan Documents,
any transfer of all or any portion of the Property (whether by 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 Note or the
Other Loan Documents, and any act or omission that might otherwise be construed
as a release or discharge of Borrower from the obligations pursuant hereto.

 

Section 13.5.               WAIVER
OF TRIAL BY JURY.

 

BORROWER HEREBY AGREES NOT TO ELECT A
TRIAL BY JURY OF ANY ISSUE TRIABLE OF RIGHT BY JURY, AND WAIVES ANY RIGHT TO
TRIAL BY JURY FULLY TO THE EXTENT THAT ANY SUCH RIGHT SHALL NOW OR HEREAFTER
EXIST WITH REGARD TO THIS SECURITY INSTRUMENT, THE NOTE OR THE OTHER LOAN
DOCUMENTS, OR ANY CLAIM, COUNTERCLAIM OR OTHER ACTION ARISING IN CONNECTION
THEREWITH INCLUDING, BUT NOT LIMITED TO THOSE RELATING TO (A) ALLEGATIONS
THAT A PARTNERSHIP EXISTS BETWEEN LENDER AND BORROWER; (B) USURY OR
PENALTIES OR DAMAGES THEREFOR; (C) ALLEGATIONS OF UNCONSCIONABLE ACTS,
DECEPTIVE TRADE PRACTICE, LACK OF GOOD FAITH OR FAIR DEALING, LACK OF
COMMERCIAL REASONABLENESS, OR SPECIAL RELATIONSHIPS (SUCH AS FIDUCIARY, TRUST
OR CONFIDENTIAL RELATIONSHIP); (D) ALLEGATIONS OF DOMINION, CONTROL, ALTER
EGO, INSTRUMENTALITY, FRAUD, REAL ESTATE FRAUD, MISREPRESENTATION, DURESS,
COERCION, UNDUE INFLUENCE, INTERFERENCE OR NEGLIGENCE; (E) ALLEGATIONS OF
TORTIOUS INTERFERENCE WITH PRESENT OR

 

43

 

PROSPECTIVE BUSINESS RELATIONSHIPS OR
OF ANTITRUST; OR (F) SLANDER, LIBEL OR DAMAGE TO REPUTATION. THIS WAIVER
OF RIGHT TO TRIAL BY JURY IS GIVEN KNOWINGLY AND VOLUNTARILY BY BORROWER, AND
IS INTENDED TO ENCOMPASS INDIVIDUALLY EACH INSTANCE AND EACH ISSUE AS TO WHICH
THE RIGHT TO A TRIAL BY JURY WOULD OTHERWISE ACCRUE. LENDER IS HEREBY
AUTHORIZED TO FILE A COPY OF THIS PARAGRAPH IN ANY PROCEEDING AS CONCLUSIVE
EVIDENCE OF THIS WAIVER BY BORROWER.

 

Section 13.6.               WAIVER OF AUTOMATIC OR SUPPLEMENTAL
STAY.   In the event of the filing of any voluntary or
involuntary petition under the Bankruptcy Code by or against Borrower (other
than an involuntary petition filed by or joined in by Lender), the Borrower
shall not assert, or request any other party to assert, that the automatic stay
under § 362 of the Bankruptcy Code shall operate or be interpreted
to stay, interdict, condition, reduce or inhibit the ability of Lender to
enforce any rights it has by virtue of this Security Instrument, or any other
rights that Lender has, whether now or hereafter acquired, against any
guarantor of the Debt. Further, Borrower shall not seek a supplemental stay or
any other relief, whether injunctive or otherwise, pursuant to § 105
of the Bankruptcy Code or any other provision therein to stay, interdict,
condition, reduce or inhibit the ability of Lender to enforce any rights it has
by virtue of this Security Instrument against any guarantor of the Debt. The
waivers contained in this paragraph are a material inducement to Lender’s
willingness to enter into this Security Instrument and Borrower acknowledges
and agrees that no grounds exist for equitable relief which would bar, delay or
impede the exercise by Lender of Lender’s rights and remedies against Borrower
or any guarantor of the Debt.

 

ARTICLE 14 - NOTICES

 

Section 14.1.               NOTICES.   All notices
or other written communications hereunder shall be deemed to have been properly
given (i) upon delivery, if delivered in person or by facsimile
transmission with receipt acknowledged, (ii) one (1) Business Day
after having been deposited for overnight delivery with any reputable overnight
courier service, or (iii) three (3) Business Days after having been
deposited in any post office or mail depository regularly maintained by the
U.S. Postal Service and sent by registered or certified mail, postage prepaid, addressed
as follows:

 

	
  If to Borrower:

  	
   

  	
  A-K-S 75 NEC Spring
  Town Center, L.P.

  c/o NewQuest Properties

  8807 W. Sam Houston
  Parkway N., Suite 200

  Houston, Texas 77040

  Attention: Steven D.
  Alvis

  Facsimile No.: (281) 477-4399

  

 

44

 

	
  With a copy to:

  	
   

  	
  Nathan Sommers Jacobs +
  Gorman

  2800 Post Oak
  Boulevard, 61st Floor

  Houston, Texas 77056

  Attn: Louis B. Sullivan
  III, Esq.

  Facsimile No.: (713) 892-4840

  
	
   

  	
   

  	
   

  
	
  If to Lender:

  	
   

  	
  ARCap Servicing, Inc.

  5605 N. MacArthur
  Blvd., Suite 950

  Irving, Texas 75038

  Attention:  Clyde
  Greenhouse

  
	
   

  	
   

  	
   

  	
  Director of
  Administration

  	
   

  
	
   

  	
   

  	
  Facsimile No.:
  (972) 580-3888

  
	
   

  	
   

  	
   

  
	
  With a copy to:

  	
   

  	
  Kelley Drye &
  Warren LLP

  200 Kimball Drive

  Parsippany, New Jersey
  07054

  Attention:  Paul
  A. Keenan, Esq.

  Facsimile No.:
  (973) 503-5950

  

 

or addressed as such party may from time to time designate by
written notice to the other parties. For purposes of this subsection, the term “Business
Day” shall mean a day on which commercial banks are not
authorized or required by law to close in New York, New York.

 

Any party by notice to the other parties may designate
additional or different addresses for subsequent notices or communications.

 

ARTICLE 15 - APPLICABLE LAW

 

Section 15.1.               GOVERNING LAW; JURISDICTION.   This
Security Instrument shall be governed by and construed in accordance with
applicable federal law and the laws of the state where the Property is located,
without reference or giving effect to any choice of law doctrine. Borrower
hereby irrevocably submits to the jurisdiction of any court of competent
jurisdiction located in the state in which the Property is located in
connection with any proceeding arising out of or relating to this Security
Instrument.

 

Section 15.2.               USURY LAWS.   This
Security Instrument and the Note are subject to the express condition that at
no time shall Borrower be obligated or required to pay interest on the Debt at
a rate which could subject the holder of the Note to either civil or criminal
liability as a result of being in excess of the maximum interest rate which
Borrower is permitted by applicable law to contract or agree to pay. If by the
terms of this Security Instrument or the Note, Borrower is at any time required
or obligated to pay interest on the Debt at a rate in excess of such maximum
rate, the rate of interest under the Security Instrument and the Note shall be
deemed to be immediately reduced to such maximum rate and the interest payable
shall be computed at such maximum rate and all prior interest payments in
excess of such maximum rate shall be applied and shall be deemed to have been
payments in reduction of the principal balance of the Note. All sums paid or
agreed to be paid to Lender for the use, forbearance, or detention of the Debt
shall, to the extent permitted by applicable law, be amortized, prorated,
allocated, and

 

45

 

spread throughout the full stated term of the Note until payment in
full so that the rate or amount of interest on account of the Debt does not
exceed the maximum lawful rate of interest from time to time in effect and
applicable to the Debt for so long as the Debt is outstanding.

 

Section 15.3.               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 16 - SECONDARY MARKET

 

Section 16.1.               TRANSFER OF LOAN.   Lender
may, at any time, sell, transfer or assign the Note, this Security Instrument
and the Other Loan Documents, and any or all servicing rights with respect
thereto, or grant participations therein or issue mortgage pass-through
certificates or other securities evidencing a beneficial interest in a rated or
unrated public offering or private placement (the “Securities”). Lender
may forward to each purchaser, transferee, assignee, servicer,
participant, investor in such Securities or any Rating Agency rating such
Securities (collectively, the “Investor”) and each prospective
Investor, all documents and information which Lender now has or may hereafter
acquire relating to the Debt and to Borrower, any Guarantor, any Indemnitor and
the Property, whether furnished by Borrower, any Guarantor, any Indemnitor or
otherwise, as Lender determines necessary or desirable. The term “Rating
Agency” shall mean each
statistical rating agency that has assigned a rating to the Securities.

 

ARTICLE 17 - COSTS

 

Section 17.1.               PERFORMANCE AT BORROWER’S EXPENSE.
    Borrower acknowledges and confirms that Lender shall
impose certain administrative processing and/or commitment fees in connection
with (a) the extension, renewal, modification, amendment and termination
(excluding the scheduled maturity of the Note) of its loans, (b) the
release or substitution of collateral therefor, or (c) obtaining certain
consents, waivers and approvals with respect to the Property (the occurrence of
any of the above shall be called an “Event”). Borrower hereby
acknowledges and agrees to pay, immediately, upon demand, all such fees (as the
same may be increased or decreased from time to time), and any additional
fees of a similar type or nature which may be imposed by Lender from time
to time, upon the occurrence of any Event.

 

Section 17.2.               ATTORNEY’S FEES FOR ENFORCEMENT.   (a) Borrower
shall pay all reasonable legal fees incurred by Lender in connection with (i) the
preparation of the Note, this Security Instrument and the Other Loan Documents
and (ii) the items set forth in Section 17.1 above, and (b) Borrower
shall pay to Lender on demand any and all expenses, including reasonable legal
expenses and attorneys’ fees, incurred or paid by Lender in protecting its
interest in the Property or Personal Property and/or collecting any amount
payable or in enforcing its rights hereunder with respect to the Property or
Personal Property, whether or not

 

46

 

any legal proceeding is commenced hereunder or thereunder and whether
or not any default or Event of Default shall have occurred and is continuing,
together with interest thereon at the Default Rate from the date of payment or
incurring by Lender until paid by Borrower.

 

ARTICLE 18 - DEFINITIONS

 

Section 18.1.               GENERAL DEFINITIONS.   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 word “Borrower”
shall mean “each Borrower and any subsequent owner or owners of the Property or
any part thereof or any interest therein,” 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 “person” shall include an individual,
corporation, partnership, trust, unincorporated association, government,
governmental authority, and any other entity, 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 19 - MISCELLANEOUS PROVISIONS

 

Section 19.1.               NO ORAL CHANGE.   This
Security Instrument, the Note, and the Other Loan Documents and any provisions
hereof or thereof, may not be modified, amended, waived, extended, changed,
discharged or terminated orally or by any act or failure to act on the part of
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 19.2.               LIABILITY.   If
Borrower consists of more than one person, the obligations and liabilities of
each such person hereunder shall be joint and several. This Security Instrument
shall be binding upon and inure to the benefit of Borrower and Lender and their
respective successors and assigns forever.

 

Section 19.3.               INAPPLICABLE PROVISIONS.   If
any term, covenant or condition of the Note or this Security Instrument is held
to be invalid, illegal or unenforceable in any respect, the Note and this
Security Instrument shall be construed without such provision.

 

Section 19.4.               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 19.5.               DUPLICATE ORIGINALS; COUNTERPARTS.
    This Security Instrument may be executed in any
number of duplicate originals and each duplicate original shall be deemed to be
an original. This Security Instrument may be executed in several
counterparts, each of which counterparts shall be deemed an original instrument
and all of which together shall constitute a single Security Instrument. The
failure of any party hereto to execute

 

47

 

this Security Instrument, or any counterpart hereof, shall not
relieve the other signatories from their obligations hereunder.

 

Section 19.6.               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 19.7.               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 Borrower’s obligations
hereunder, under the Note and the Other Loan Documents and the performance and
discharge of the Other Obligations.

 

Section 19.8.               ENTIRE AGREEMENT.   The
Note, this Security Instrument and the Other Loan Documents constitute the
entire understanding and agreement between Borrower and Lender with respect to
the transactions arising in connection with the Debt and supersede all prior
written or oral understandings and agreements between Borrower and Lender with
respect thereto. Borrower hereby acknowledges that, except as incorporated in
writing in the Note, 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, this Security Instrument and the Other Loan Documents.

 

ARTICLE 20 - TRUSTEE

 

Trustee may resign by the giving of notice of
such resignation in writing or verbally to Lender. If Trustee shall die,
resign, or become disqualified from acting in the execution of this trust, or
if, for any reason, Lender shall prefer to appoint a substitute trustee or
multiple substitute trustees, or successive substitute trustees or successive
multiple substitute trustees, to act instead of the aforenamed Trustee, Lender
shall have full power to appoint a substitute trustee (or, if preferred,
multiple substitute trustees) in succession who shall succeed (and if multiple
substitute trustees are appointed, each of such multiple substitute trustees
shall succeed) to all the estates, rights, powers, and duties of the aforenamed
Trustee. Such appointment may be executed by any authorized agent of
Lender, and if such Lender be a corporation and such appointment be executed in
its behalf by any officer of such corporation, such appointment shall be
conclusively presumed to be executed with authority and shall be valid and
sufficient without proof of any action by the board of directors or any
superior officer of the corporation. Borrower hereby ratifies and confirms any
and all acts which the aforenamed Trustee, or his successor or successors in
this trust, shall do lawfully by virtue hereof. If multiple substitute Trustees
are appointed, each of such multiple substitute Trustees shall be empowered and
authorized to act alone without the necessity of the joinder of the other
multiple substitute trustees, whenever any action or undertaking of such
substitute trustees is requested or required under or pursuant to this Security
Instrument or applicable law. Any substitute Trustee appointed pursuant to any
of the

 

48

 

provisions hereof shall, without any further act, deed, or conveyance,
become vested with all the estates, properties, rights, powers, and trusts of
its or his predecessor in the rights hereunder with like effect as if
originally named as Trustee herein; but nevertheless, upon the written request
of Lender or of the substitute Trustee, the Trustee ceasing to act shall
execute and deliver any instrument transferring to such substitute Trustee,
upon the trusts herein expressed, all the estates, properties, rights, powers,
and trusts of the Trustee so ceasing to act, and shall duly assign, transfer
and deliver any of the property and moneys held by such Trustee to the
substitute Trustee so appointed in the Trustee’s place. No fees or expenses
shall be payable to Trustee, except in connection with a foreclosure of the
Property or any part thereof or in connection with the release of the
Property following payment in full of the Debt.

 

ARTICLE 21 - SPECIAL STATE OF TEXAS PROVISIONS

 

Section 21.1.               Principles Of Construction.   In
the event of any inconsistencies between the terms and provisions of this Article 21
and the rest of this Security Instrument, the terms and provisions of this Article 21
shall govern and control.

 

Section 21.2.               Assignment Of Leases And Rents
Amended.   The following shall be inserted at the end of Section 1.2:

 

“The assignments set forth in this Section 1.2
are not intended to constitute payment to Lender or Trustee unless Borrower’s
license to collect Rents is terminated, and then only to the extent that the
Rents are actually received by Lender (as opposed to constituting a portion of
the voluntary payments of principal and interest on the Note) and are not used
for the operation or maintenance of the Property or for the payment of costs
and expenses in connection therewith, taxes, assessments, water charges, sewer
rents, and other charges levied, assessed or imposed against the Property,
insurance premiums, costs and expenses with respect to any litigation affecting
the Property, the leases, the concessions, and the rent, any wages and salaries
of employees, commissions of agents and reasonable attorneys’ fees, all in
accordance with the terms of the Loan Documents. It is further the intent of
Borrower and Lender that the Rents hereby absolutely assigned are no longer,
during the term of this Security Instrument, property of Borrower or property
of any estate of Borrower as defined in 11 U.S.C. § 541 and shall not
constitute collateral, cash or otherwise, of Borrower. The term “Rents” as used
herein shall mean the gross rents without deduction or offsets of any kind.”

 

Section 21.3.               Remedies Continued.   The
following Sections are hereby added to the end of Article 10:

 

“Section 10.3 Delivery
upon Sale.   Upon the completion of
any sale or sales pursuant hereto, Trustee shall execute and deliver to the
accepted purchaser or purchasers a good and sufficient instrument, or good and
sufficient instruments, conveying, assigning and transferring all estate,
right, title and interest in and to the property and rights sold by special
warranty of title. Trustee is hereby irrevocably appointed the true and lawful
attorney of Borrower, in its name and stead, to make all necessary conveyances,
assignments, transfers and deliveries of the Property and rights so sold and
for that purpose Trustee may execute all necessary instruments of conveyance,

 

49

 

assignment and transfer, and may substitute one
or more persons with like power, Borrower hereby ratifying and confirming all
that its said attorney or such substitute or substitutes shall lawfully do by
virtue hereof. Any sale or sales made under or by virtue of this Section,
whether made under the power of sale herein granted or under or by virtue of
judicial proceedings or of a judgment or decree of foreclosure and sale, shall
operate to divest all the estate, right, title, interest, claim and demand
whatsoever, whether at law or in equity, of Borrower in and to the properties
and rights so sold, and shall be a perpetual bar both at law and in equity
against Borrower and against any and all persons claiming or who may claim
the same, or any part thereof from, through or under Borrower.

 

Section 10.4 Option to Bid.   Upon
any sale made under or by virtue of this Article 10, whether made under
the power of sale herein granted or under or by virtue of judicial proceedings
or of a judgment or decree of foreclosure and sale, Lender may bid for and
acquire the Property or any part thereof and in lieu of paying cash
therefor may make settlement for the purchase price by crediting upon the
Debt the net sales price after deducting therefrom the reasonable out-of-pocket
expenses of the sale and costs of the action and any other sums which Lender is
authorized to deduct under this Security Instrument.

 

Section 10.5 Remaining Liens.   No
recovery of any judgment by Lender and no levy of an execution under any
judgment upon the Property or upon any other property of Borrower shall affect
in any manner or to any extent the lien of this Security Instrument upon the
Property or any part thereof, or any liens, rights, powers or remedies of
Lender hereunder, but such liens, rights, powers and remedies of Lender shall
continue unimpaired as before.

 

Section 10.6 No Waiver of Remedies.   Lender
may resort to any remedies and the security given by the Note, this
Security Instrument or the Loan Documents in whole or in part, and in such
portions and in such order as determined by Lender’s sole discretion. No such
action shall in any way be considered a waiver of any rights, benefits or
remedies evidenced or provided by the Note, this Security Instrument or any of
the other Loan Documents. The failure of Lender to exercise any right, remedy
or option provided in the Note, this Security Instrument or any of the other
Loan Documents shall not be deemed a waiver of such right, remedy or option or
of any covenant or obligation secured by the Note, this Security Instrument or
the other Loan Documents. No acceptance by Lender of any payment after the
occurrence of any Event of Default and no payment by Lender of any obligation
for which Borrower is liable hereunder shall be deemed to waive or cure any
Event of Default with respect to Borrower, or Borrower’s liability to pay such
obligation, unless simultaneously with such acceptance or payment by Lender,
Lender waives in writing the Event of Default cured thereby. No sale of all or
any portion of the Property, no forbearance on the part of Lender, and no
extension of time for the payment of the whole or any portion of the Debt or
any other indulgence given by Lender to Borrower, shall operate to release or
in any manner affect the interest of Lender in the remaining Property or the liability
of Borrower to pay the Debt. No waiver by Lender shall be effective unless it
is in writing and then only to the extent specifically stated. All reasonable
out-of-pocket costs and expenses of Lender in

 

50

 

exercising its rights and remedies under this Article (including
reasonable attorneys’ fees and disbursements to the extent permitted by law),
shall be paid by Borrower within five (5) business days after notice from
Lender, and such costs and expenses shall constitute a portion of the Debt and
shall be secured by this Security Instrument.

 

Section 10.7 No Waiver Continued.   The
interests and rights of Lender under the Note, this Security Instrument or in
any of the other Loan Documents shall not be impaired by any indulgence,
including (i) any renewal, extension or modification which Lender may grant
with respect to any of the Debt, (ii) any surrender, compromise, release,
renewal, extension, exchange or substitution which Lender may grant with
respect to the Property or any portion thereof; or (iii) any release or
indulgence granted to any maker, endorser, guarantor or surety of any of the
Debt.

 

Section 10.8 Foreclosure.   Upon
the occurrence and during the continuance of any Event of Default, Lender may request
Trustee to proceed with foreclosure under the power of sale which is hereby
conferred, such foreclosure to be accomplished in accordance with the following
provisions:

 

(a) Public Sale.   Trustee is
hereby authorized and empowered, and it shall be Trustee’s special duty, upon
such request of Lender, to sell the Property, or any part thereof, at
public auction to the highest bidder for cash, with or without having taken
possession of same. Any such sale (including notice thereof) shall comply with
the applicable requirements, at the time of the sale, of Section 51.002 of
the Texas Property Code or, if and to the extent such statute is not then in
force, with the applicable requirements, at the time of the sale, of the
successor statute or statutes, if any, governing sales of Texas real property
under powers of sale conferred by deeds of trust. If there is no statute in
force at the time of the sale governing sales of Texas real property under
powers of sale conferred by deeds of trust, such sale shall comply with
applicable law, at the time of the sale, governing sales of Texas real property
under powers of sale conferred by deeds of trust. Trustee or his successor or
substitute may appoint or delegate any one or more persons as agent to perform any
act or acts necessary or incident to any sale held by Trustee, including the
posting of notices, and the conduct of sale, but in the name and on behalf of
Trustee, his successor or substitute.

 

(b) Intentionally Deleted.

 

(c) Sale Subject to Unmatured Debt.   In
addition to the rights and powers of sale granted under the preceding
provisions of this subsection, if default is made in the payment of any
installment of the Debt and is not cured within applicable cure periods, Lender
may, at Lender’s option, at once or at any time thereafter while any matured
installment remains unpaid, without declaring the entire Debt to be due and
payable, orally or in writing direct Trustee to enforce this Security
Instrument and to sell the Property subject to such unmatured Debt and to the
rights, powers, liens, security interests, and assignments securing or
providing recourse for payment of such unmatured Debt, in the same manner, all
as provided in the preceding provisions of this subsection. Sales made without
maturing the Debt may be made hereunder whenever there is a default in the
payment of any installment of the Debt, without exhausting the power of

 

51

 

sale granted hereby, and without affecting in any way
the power of sale granted under this subsection, the unmatured balance of the
Debt or the rights, powers, liens, security interests, and assignments securing
or providing recourse for payment of the Debt.

 

(d) Partial Foreclosure.   Sale
of a part of the Property shall not exhaust the power of sale, but sales may be
made from time to time until the Debt is paid in full. It is intended by each
of the foregoing provisions of this subsection that Trustee may, after any
request or direction by Lender, sell not only the Land and the Improvements,
but also the equipment and other interests constituting a part of the
Property or any part thereof, along with the Land and the Improvements or
any part thereof, as a unit and as a part of a single sale, or may sell
at any time or from time to time any part or parts of the Property
separately from the remainder of the Property. It shall not be necessary to
have present or to exhibit at any sale any of the Property. Any sale of
personal property made hereunder shall be deemed to have been a public sale
conducted in a commercially reasonable manner if held contemporaneously with,
or as part of, and upon the same notice as required for the sale of real
property under the power of sale granted herein.

 

(e) Trustee’s Deeds.   After any
sale under this subsection, Trustee shall make good and sufficient deeds,
assignments, and other conveyances to the purchaser or purchasers thereunder in
the name of Borrower, conveying the Property or any part thereof so sold
to the purchaser or purchasers with special warranty of title by Borrower. It
is agreed that in any deeds, assignments or other conveyances given by Trustee,
absent fraud, willful misconduct or gross negligence, any and all statements of
fact or other recitals therein made as to the identity of Lender, the
occurrence or existence of any Event of Default, the notice of intention to
accelerate, or acceleration of, the maturity of the Debt, the request to sell,
notice of sale, time, place, terms and manner of sale, and receipt, distribution,
and application of the money realized therefrom, the due and proper appointment
of a substitute trustee, and without being limited by the foregoing, any other
act or thing having been duly done by or on behalf of Lender or by or on behalf
of Trustee, shall be taken by all courts of law and equity as prima  facie
evidence that such statements or recitals state true, correct, and complete
facts and are without further question to be so accepted, and Borrower does
hereby ratify and confirm any and all acts that Trustee may lawfully do in
the premises by virtue hereof.”

 

Section 21.4.               Inapplicability of Credit Code.   In
no event shall the provisions of Chapter 346 of the Texas Finance Code (which
regulates certain revolving credit loan accounts and revolving tri-party
accounts) apply to the loan evidenced by the Loan Documents and/or secured
hereby.

 

Section 21.5.               Entire Agreement.     THIS
SECURITY INSTRUMENT AND THE OTHER LOAN DOCUMENTS EMBODY THE FINAL, ENTIRE
AGREEMENT AMONG THE PARTIES HERETO WITH RESPECT TO THE SUBJECT MATTER HEREOF
AND THEREOF AND SUPERSEDE ANY AND ALL PRIOR COMMITMENTS, AGREEMENTS,
REPRESENTATIONS AND UNDERSTANDINGS, WHETHER WRITTEN OR ORAL, RELATING TO THE
SUBJECT MATTER HEREOF AND THEREOF AND MAY NOT BE CONTRADICTED OR VARIED BY
EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OR
DISCUSSIONS OF THE PARTIES HERETO.

 

52

 

THERE ARE NO ORAL AGREEMENTS AMONG THE PARTIES HERETO WITH RESPECT TO
THE SUBJECT MATTER HEREOF.

 

Section 21.6.               Notice of Indemnification.   BORROWER
ACKNOWLEDGES THAT THIS SECURITY INSTRUMENT PROVIDES FOR INDEMNIFICATION OF
LENDER AND TRUSTEE BY BORROWER PURSUANT TO ARTICLE 11. SUBJECT TO THE
TERMS THEREOF, IT IS SPECIFICALLY INTENDED BY BORROWER, LENDER, AND TRUSTEE
THAT ALL INDEMNITY OBLIGATIONS AND LIABILITIES ASSUMED BY BORROWER HEREUNDER BE
WITHOUT LIMIT AND WITHOUT REGARD TO THE CAUSE OR CAUSES THEREOF (INCLUDING
PREEXISTING CONDITIONS), STRICT LIABILITY, OR THE NEGLIGENCE OF ANY PARTY OR
PARTIES (INCLUDING LENDER AND TRUSTEE) WHETHER SUCH NEGLIGENCE BE SOLE, JOINT
OR CONCURRENT, OR PASSIVE. THE PARTIES SPECIFICALLY INTEND THAT LENDER AND
TRUSTEE ARE TO BE INDEMNIFIED AGAINST THEIR OWN NEGLIGENCE; PROVIDED, HOWEVER,
THAT NOTHING HEREIN SHALL BE CONSTRUED TO OBLIGATE BORROWER TO INDEMNIFY,
DEFEND AND HOLD HARMLESS LENDER OR TRUSTEE FROM AND AGAINST ANY OR ALL
LIABILITIES, OBLIGATIONS, LOSSES, DAMAGES, PENALTIES, CLAIMS, ACTIONS, SUITS,
COSTS AND EXPENSES ENACTED AGAINST, IMPOSED ON OR INCURRED BY LENDER OR TRUSTEE
BY THEIR OWN WILLFUL MISCONDUCT OR GROSS NEGLIGENCE.

 

Section 21.7.               Receipt of Security Instrument.     THE
BORROWER HEREBY DECLARES AND ACKNOWLEDGES THAT THE BORROWER HAS RECEIVED,
WITHOUT CHARGE, A TRUE COPY OF THIS SECURITY INSTRUMENT.

 

Section 21.8.               Duties of Trustee.   It
shall be no part of the duty of the Trustee to see to any recording,
filing or registration of this Security Instrument or any other instrument in
addition or supplemental thereto, or to give any notice thereof, or to see to
the payment of or be under any duty in respect of any tax or assessment or
other governmental charge which may be levied or assessed on the Property,
or any part thereof, or against the Borrower, or to see to the performance
or observance by the Borrower of any of the covenants and agreements contained
herein. The Trustee shall not be responsible for the execution, acknowledgment
or validity of this Security Instrument or of any instrument in addition or
supplemental hereto or for the sufficiency of the security purported to be
created hereby, and makes no representation in respect thereof or in respect of
the rights of the Lender. The Trustee shall have the right to advise with
counsel upon any matters arising hereunder and shall be fully protected in relying
as to legal matters on the advice of counsel. The Trustee shall not incur any
personal liability hereunder except for his own gross negligence or willful
misconduct; and the Trustee shall have the right to rely on any instrument,
document or signature authorizing or supporting any action taken or proposed to
be taken by him hereunder, believed by him in good faith to be genuine.

 

Section 21.9.               Substitution of Trustee.   In
case of the death, inability, refusal or incapacity of the Trustee to act, or
at the option of the Lender at any time and without cause or notice, a
successor or substitute trustee may be named, constituted and appointed.
Successor or substitute trustees may be named, constituted and appointed
without procuring the resignation of the former trustee and without other
formality than the execution and acknowledgment by Lender of a written
instrument (which instrument, if Lender is a corporation, shall be executed

 

53

 

by the President or any Vice President and attested by the Secretary or
any Assistant Secretary and without the necessity of any action by the Board of
Directors authorizing such appointment) appointing and designating such
successor or substitute trustee, whereupon such successor or substitute trustee
shall become vested with and succeed to all of the rights, titles, privileges,
powers and duties of the Trustee named herein. Such right of appointment of a
substitute or successor trustee shall exist as often and whenever for any of
said causes the original or successor or substitute trustee cannot or will not
act or has been removed as herein provided.

 

[SIGNATURES APPEAR ON FOLLOWING PAGE]

 

54

 

IN WITNESS WHEREOF, THIS SECURITY INSTRUMENT has been
executed by Borrower the day and year first above written.

 

 

	
   

  	
  BORROWER:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  A-K-S
  75 NEC SPRING TOWN CENTER, L.P., a Texas

  
	
   

  	
  limited
  partnership

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  A-K-S
  75, L.C., a Texas limited liability company,

  
	
   

  	
   

  	
  its
  General Partner

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/
  Steven D. Alvis

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Steven
  D. Alvis

  
	
   

  	
   

  	
  Title:

  	
  Member-Manager

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