Document:

sbp8k42911la.htm

  

  

  

Loan No. [LOAN NUMBER]

 

 

LOAN AGREEMENT

 

THIS LOAN AGREEMENT ("Agreement") is executed as of ____________, 2011, by and between SB PARTNERS, a New York limited partnership ("Borrower"), and WELLS FARGO BANK, NATIONAL ASSOCIATION, successor-by-merger to Wachovia Bank, National Association ("Lender").

 

R E C I T A L S

 

	
A.

	
Lender has previously made a loan to Borrower in the principal sum of TWENTY-TWO MILLION AND NO/100 DOLLARS ($22,000,000) (the "Loan") as evidenced by that certain Promissory Note, dated September 17, 2007 (the "Original Note").

 

	
B.

	
Borrower is the sole member of EAGLE IV REALTY, LLC (the "Maple Grove Owner"), which owns certain real property located at 11400 73rd Avenue North, Maple Grove, MN and more fully described in Exhibit A hereto and all improvements (the "Improvements") now or hereafter situated thereon and all appurtenances thereto (the "Maple Grove Property").

 

	
C.

	
Borrower, Maple Grove Owner and Lender are parties to that certain Joinder and Assumption Agreement dated as of September 17, 2007 (the "Joinder Agreement").

 

	
D.

	
Borrower is the sole member of LINO LAKES REALTY, LLC (the "Lino Lakes Owner"), which owns certain real property located at 435 Park Court, Lino Lakes, MN and more fully described in Exhibit B hereto and all improvements now or hereafter situated thereon and all appurtenances thereto (the "Lino Lakes Property", and together with the Maple Grove Property, collectively, the "Properties").

 

	
E.

	
Borrower has made a principal payment of $11,930,430.08 to Lender to pay down a portion of the principal balance of the Loan (the "Curtailment") so that the Original Note is now in the reduced principal amount of $10,069,569.92.

 

	
F.

	
In consideration of the payment of the Curtailment, Lender has agreed to accept from Borrower simultaneously herewith two promissory notes which replace the Original Note (the "Replacement Notes"), and Lender and Borrower have agreed to extend the maturity date of the Loan, all subject to and on the terms and conditions set forth herein.

 

NOW, THEREFORE, in consideration of the foregoing and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged by each of the parties hereto, the parties hereto agree for themselves, their successors and assigns as follows effective as of the date of this Agreement (the "Effective Date"):

 

ARTICLE 1.   LOAN

 

	
1.1.  

	
LOAN.  Lender has previously lent to Borrower and Borrower has borrowed from Lender the Loan.  The Loan shall be evidenced by the Replacement Notes.  Certain obligations of Borrower under the Replacement Notes shall be secured by a Mortgage, Security Agreement, Assignment of Leases and Rents and Fixture Financing Statement on the Maple Grove Property executed by the Maple Grove Owner (the "Mortgage") and a Pledge Agreement executed by Borrower with respect to its membership interests in Maple Grove Owner (the "Pledge") each of which are being executed and delivered to Lender simultaneously herewith.

 

	
1.2.  

	
PRINCIPAL PREPAYMENT.  Borrower hereby represents that the Curtailment is the Net Naperville Proceeds, as hereinafter defined, from the December 3, 2010 sale of 175 Ambassador Drive, Naperville, IL (the "Naperville Property"), which was owned by 175 Ambassador Realty, LLC (the "Naperville Owner"), which in turn is solely owned by Borrower.  After the payment of the Curtailment, the balance of the Replacement Notes shall be as provided in Section 1.3 below.  "Net Naperville Proceeds" means an amount equal to:  (i) the gross consideration due and paid (the "Gross Naperville Consideration") by or on behalf of the purchaser to Borrower and/or Naperville Owner for the Naperville Property minus (ii) the sum of: (A) reasonable and customary credits and prorations and reasonable and customary real estate selling and closing costs due and paid by Borrower and/or Naperville Owner in connection with such closing (collectively, "Closing Costs"); and (B) without duplication of any cost included in clause (A) above, any release price or other repayment or prepayment of principal, interest or prepayment fees or premiums required pursuant to any applicable secured debt instruments to be paid by Naperville Owner to any lender of such secured debt secured by a lien on such Naperville Property in connection with such closing, and actual bona fide transaction costs due and paid by Naperville Owner and/or Borrower in connection with such release, repayment or prepayment transaction; and (C) $500,000 of the Gross Naperville Consideration, which shall be deposited in accordance with this Agreement on the date hereof into the Reserve Account, as defined in Article 2 herein. A calculation of the Net Naperville Proceeds is set forth on the attached Exhibit C.

 

	
1.3.  

	
ORIGINAL NOTE.  The Original Note is hereby split into the A-Note and the B-Note, which together constitute the Replacement Notes, in each case made by Borrower to the order of Lender, which shall amend, restate, supersede and replace the Original Note.  The A-Note is in the principal amount of FOUR MILLION SIXTY NINE THOUSAND FIVE HUNDRED SIXTY NINE AND 92/100 DOLLARS ($4,069,569.92) which gives effect to the reduction of the principal of the Loan by the Curtailment.  The B-Note is in the principal amount of SIX MILLION AND NO/100 DOLLARS ($6,000,000).

 

	
1.4.  

	
LOAN DOCUMENTS; EFFECTIVE DATE.  Borrower shall deliver to Lender concurrently with this Agreement the Replacement Notes, the Mortgage, the Pledge, the Manager Subordination Agreement and any other documents required by Lender and agreed to by Borrower, as hereafter amended, supplemented, replaced or modified, each properly executed and in recordable form, as applicable, described in Exhibit D ("Loan Documents").  The effective date ("Effective Date") of the Loan Documents shall be the date of this Agreement as set forth on page 1 above.

 

	
1.5.  

	
A-NOTE TERMS.

 

	
a.  

	
Original Maturity Date.  The initial maturity date of the A-Note shall be July 31, 2014 (the "A-Note OriginalMaturity Date"), at which time all sums due under the A-Note shall be repaid in full subject to two extension options as set forth herein.

 

	
b.  

	
First Option to Extend.  Borrower shall have the option to extend the A-Note Original Maturity Date to July 31, 2015 (the "A-Note First Extended Maturity Date"), upon satisfaction of each of the following conditions precedent:

 

(i) Borrower shall provide Lender with written notice of Borrower’s request to exercise the first option to extend the A-Note not more than ninety (90) days but not less than thirty (30) days prior to the A-Note Original Maturity Date;

 

(ii)  As of the date of Borrower’s delivery of notice of request to exercise the first option to extend the A-Note, and as of the A-Note Original Maturity Date, no Default shall have occurred and be continuing, and Borrower shall so certify in writing;

 

(iii)  As of the date of Borrower’s delivery of notice of request to exercise the first option to extend the A-Note, and as of the A-Note Original Maturity Date, the Properties (so long as they have not been sold as permitted by the Loan Documents) shall be one hundred (100%) percent leased (for purposes of this Article 1, such term shall require leases of all of the leasable space at the Properties which are in full force and effect) pursuant to the Existing Tenant Leases, as hereinafter defined, or pursuant to leases entered into after the Effective Date on market terms with Lender’s prior approval in accordance herewith; and

 

(iv)  Borrower shall execute or cause the execution of all documents reasonably required by Lender to exercise the first option to extend the A-Note and shall deliver to Lender, at Borrower’s sole cost and expense, such title insurance endorsements as may be reasonably required by Lender.

 

	
c.  

	
Second Option to Extend.  Borrower shall have the option to extend the A-Note First Extended Maturity Date to July 31, 2016 (the "A-Note Second Extended Maturity Date"), upon satisfaction of each of the following conditions precedent:

 

(i) Borrower shall provide Lender with written notice of Borrower’s request to exercise the second option to extend the A-Note not more than ninety (90) days but not less than thirty (30) days prior to the A-Note First Extended Maturity Date;

 

(ii)  As of the date of Borrower’s delivery of notice of request to exercise the second option to extend the A-Note, and as of the A-Note First Extended Maturity Date, no Default shall have occurred and be continuing, and Borrower shall so certify in writing;

 

(iii)  As of the date of Borrower’s delivery of notice of request to exercise the second option to extend the A-Note, and as of the A-Note First Extended Maturity Date, the Properties (so long as they have not been sold as permitted by the Loan Documents) shall be one hundred (100%) percent leased pursuant to the Existing Tenant Leases, as hereinafter defined, or pursuant to leases entered into after the Effective Date on market terms with Lender’s prior approval; and

 

(iv)  Borrower shall execute or cause the execution of all documents reasonably required by Lender to exercise the second option to extend the A-Note and shall deliver to Lender, at Borrower’s sole cost and expense, such title insurance endorsements as may be reasonably required by Lender.

 

	
d.  

	
Interest Rate.  The unpaid principal amount of the A-Note shall bear interest at a fixed rate of five (5%) percent per annum which shall accrue until the A-Note is repaid in full. Interest accrued on the A-Note shall be due and payable on the first (1st) Business Day of each month commencing with the first (1st) month after the Effective Date ("Due Date").  Interest shall be computed on the basis of the actual number of days elapsed in the period during which interest accrues and a year of three hundred sixty (360) days. In computing interest, the Effective Date shall be included and the date of repayment shall be excluded.  Notwithstanding any of the terms and conditions contained in this Section, interest in respect of any amount of the A-Note shall not exceed the maximum rate permitted by applicable law.  "Business Day" shall mean a day of the week (but not a Saturday, Sunday or holiday) on which the offices of Lender in New York, New York are open to the public for carrying on substantially all of Lender’s business functions. Unless specifically referenced in this Agreement as a Business Day, all references to "days" shall be to calendar days.

 

	
e.  

	
Fixed Amortization.  Borrower shall pay to Lender (in addition to all other payments to be made hereunder), on a monthly basis beginning on the first Business Day of the first month commencing after the date hereof and on the first (1st) Business Day of each month thereafter, until the A-Note has been paid in full, equal monthly payments of principal, in an amount per month equal to $30,000 (the "Monthly Amortization Amount") together with accrued interest thereon; provided, however, each of the first to accrue monthly installments of the Monthly Amortization Amount shall be credited with a portion of $1,430,430.08, which is the Net Naperville Proceeds in excess of $10,500,000, so that the first payment of the Monthly Amortization Amount after fully giving effect to such credit shall be payable on April 1, 2015 in the amount of $9,569.92, and thereafter monthly in the full amount of the Monthly Amortization Amount.  An amortization schedule is attached hereto as Exhibit E.

 

	
1.6.  

	
B-NOTE TERMS.

 

	
a.  

	
Original Maturity Date.  The initial maturity date of the B-Note shall be April 29, 2018 (the "B-Note OriginalMaturity Date"), at which time all sums due under the B-Note shall be repaid in full, subject to three extension options as set forth herein.

 

	
b.  

	
First Option to Extend.  Borrower shall have the option to extend the B-Note Original Maturity Date to a date which is twelve (12) months after the B-Note Original Maturity Date (the "B-Note First Extended Maturity Date"), upon satisfaction of each of the following conditions precedent:

 

(i) Borrower shall provide Lender with written notice of Borrower’s request to exercise the first option to extend the B-Note not more than ninety (90) days but not less than thirty (30) days prior to the B-Note Original Maturity Date;

 

(ii)  As of the date of Borrower’s delivery of notice of request to exercise the first option to extend the B-Note, and as of the B-Note Original Maturity Date, no Default shall have occurred and be continuing, and Borrower shall so certify in writing;

 

(iii)  As of the date of Borrower’s delivery of notice of request to exercise the first option to extend the B-Note, and as of the B-Note Original Maturity Date, the Properties (so long as they have not been sold as permitted by the Loan Documents) shall be one hundred (100%) percent leased pursuant to the Existing Tenant Leases, as hereinafter defined, or pursuant to leases entered into after the Effective Date on market terms with Lender’s prior approval in accordance herewith; and

 

(iv)  Borrower shall execute or cause the execution of all documents reasonably required by Lender to exercise the first option to extend the B-Note and shall deliver to Lender, at Borrower’s sole cost and expense, such title insurance endorsements as may be reasonably required by Lender.

 

	
c.  

	
Second Option to Extend.  Borrower shall have the option to extend the B-Note First Extended Maturity Date to a date which is twelve (12) months after the B-Note First Extended Maturity Date (the "B-Note Second Extended Maturity Date"), upon satisfaction of each of the following conditions precedent:

 

(i) Borrower shall provide Lender with written notice of Borrower’s request to exercise the second option to extend the B-Note not more than ninety (90) days but not less than thirty (30) days prior to the B-Note First Extended Maturity Date;

 

(ii)  As of the date of Borrower’s delivery of notice of request to exercise the second option to extend the B-Note, and as of the B-Note First Extended Maturity Date, no Default shall have occurred and be continuing, and Borrower shall so certify in writing;

 

(iii)  As of the date of Borrower’s delivery of notice of request to exercise the second option to extend the B-Note, and as of the B-Note First Extended Maturity Date, the Properties (so long as they have not been sold as permitted by the Loan Documents) shall be one hundred (100%) percent leased pursuant to the Existing Tenant Leases, as hereinafter defined, or pursuant to leases entered into after the Effective Date on market terms with Lender’s prior approval in accordance herewith; and

 

(iv)  Borrower shall execute or cause the execution of all documents reasonably required by Lender to exercise the second option to extend the B-Note and shall deliver to Lender, at Borrower’s sole cost and expense, such title insurance endorsements as may be reasonably required by Lender.

 

	
d.  

	
Third Option to Extend.  Borrower shall have the option to extend the B-Note Second Extended Maturity Date to a date which is twelve (12) months after the B-Note Second Extended Maturity Date (the "B-Note Third Extended Maturity Date"), upon satisfaction of each of the following conditions precedent:

 

(i) Borrower shall provide Lender with written notice of Borrower’s request to exercise the third option to extend the B-Note not more than ninety (90) days but not less than thirty (30) days prior to the B-Note Second Extended Maturity Date;

 

(ii)  As of the date of Borrower’s delivery of notice of request to exercise the third option to extend the B-Note, and as of the B-Note Second Extended Maturity Date, no Default shall have occurred and be continuing, and Borrower shall so certify in writing;

 

(iii)  As of the date of Borrower’s delivery of notice of request to exercise the third option to extend the B-Note, and as of the B-Note Second Extended Maturity Date, the Properties (so long as they have not been sold as permitted by the Loan Documents) shall be one hundred (100%) percent leased pursuant to the Existing Tenant Leases, as hereinafter defined, or pursuant to leases entered into after the Effective Date on market terms with Lender’s prior approval in accordance herewith; and

 

(iv)  Borrower shall execute or cause the execution of all documents reasonably required by Lender to exercise the third option to extend the B-Note and shall deliver to Lender, at Borrower’s sole cost and expense, such title insurance endorsements as may be reasonably required by Lender.

 

	
e.  

	
Interest Rate.  The unpaid principal amount of the B-Note shall bear interest at a fixed rate of five (5%) percent per annum and which shall accrue until, and only until, the principal of and interest on the A-Note is repaid in full. Interest accrued on the B-Note shall be due and payable on the B-Note Original Maturity Date, as may be extended, or at earlier date(s) as provided in Section 4.2(a)(iv) and 5.3(c) hereof, or upon the acceleration of the maturity of the B-Note pursuant hereto.  Interest shall be computed on the basis of the actual number of days elapsed in the period during which interest accrues and a year of three hundred sixty (360) days. In computing interest, the Effective Date shall be included and the date of repayment of the B-Note shall be excluded.  Notwithstanding any of the terms and conditions contained in this Section, interest in respect of any amount of the B-Note shall not exceed the maximum rate permitted by applicable law.

 

	
f.  

	
Purchase Option.  Borrower shall have the option to purchase the B-Note for One Dollar ($1.00) upon satisfaction of each of the following conditions precedent:

 

(i)  the Lino Lakes Property, the Maple Grove Property and Borrower’s interest in Sentinel Omaha, LLC ("Omaha") have all been sold or transferred as permitted herein and all proceeds realized therefrom have been applied in accordance with this Agreement;

 

(ii)  the principal of and interest on the A-Note has been repaid in full; and

 

(iii)  Lender shall have received all escrow, closing and recording costs, the costs of preparing and delivering such assignments and any sums then due and payable under the Loan Documents;

 

(iv)  Lender shall have received a written release satisfactory to Lender of any claims or liabilities to Borrower, under or in respect of the Loan Documents;

 

(v)  as of the date of Borrower’s exercise of such option, no Default shall have occurred and be continuing, and Borrower shall so certify in writing;

 

(vi)  Lender shall so transfer the B Note and all collateral security therefor with all faults, without recourse, representation or warranty of any kind or nature express or implied (except that Lender is authorized to do so) pursuant to assignment documents reasonably satisfactory to Lender and Borrower.

 

	
1.7.  

	
DEFAULT INTEREST. Notwithstanding the rates of interest and the payment dates specified in this Agreement, at Lender’s option, the principal balance of the Loan then outstanding and, to the extent permitted by applicable law, any interest payments not paid within fifteen (15) days after the same becomes due shall bear interest payable upon demand at a rate which is ten percent (10%) per annum (based on a 360-day year and charged on the basis of actual days elapsed) (the "Default Rate"). In addition, all other amounts due Lender (whether directly or for reimbursement) under this Agreement or any of the other Loan Documents, if not paid when due or, in the event no time period is expressed, if not paid within fifteen (15) days after written notice from Lender, shall thereafter bear interest at the Default Rate.

 

	
1.8.  

	
VOLUNTARY PREPAYMENT.  Borrower may prepay the Loan, whether voluntary, mandatory, upon acceleration, or otherwise, in its entirety (or in part) upon prior written notice to Lender as specified below; provided, however, Borrower shall in any event mandatorily prepay the Loan as provided in Articles 4 and 5 hereof.  Any voluntary prepayment of the Loan shall first be applied to the A-Note and after payment in full of the A-Note to the B-Note.  Any prepayment of the principal of the A-Note shall (except as otherwise expressly provided in this Loan Agreement) be applied to the next due payments of the Monthly Amortization Amount thereof and after payment in full of each Monthly Amortization Amount to the balloon payment then due on the Maturity Date thereof.  As a condition to any voluntary prepayment, Borrower must give prior written notice to Lender not less than five (5) days prior to the date upon which the prepayment shall be made.  Each prepayment shall be in addition to all other amounts otherwise due and owing under the Loan Documents.

 

ARTICLE 2.    RESERVE ACCOUNT

 

	
2.1.  

	
ESTABLISHMENT OF ACCOUNT.  On or prior to the Effective Date, Lender has established the Reserve Account in the name of Borrower for payment of certain Tenant Improvements and Leasing Commissions.  "Tenant Improvements" means, collectively, (a) tenant improvements to be undertaken for any tenant which are required to be completed by or on behalf of the Maple Grove Owner or Lino Lakes Owner pursuant to the terms of such tenant's New Lease entered into by the Maple Grove Owner or Lino Lakes Owner in accordance herewith and (b) tenant improvements paid or reimbursed through allowances to a tenant pursuant to such tenant's New Lease.  "New Lease" shall mean a lease entered into in accordance with Article 9 hereof upon the termination of an Existing Tenant Lease at the Properties as a result of the tenant's default thereunder, or natural expiration thereof, or voluntarily with the consent of Lender.  "Leasing Commissions" means leasing commissions required to be paid by Borrower or Maple Grove Owner or Lino Lakes Owner in connection with the leasing of space to tenants of the Properties pursuant to New Leases entered into by the Maple Grove Owner or Lino Lakes Owner in accordance herewith and payable in accordance with third-party, arm's-length brokerage agreements.  The Reserve Account shall be under the sole dominion and control of Lender and funds held therein shall not constitute trust funds.  Borrower hereby irrevocably directs and authorizes Lender to withdraw or cause the transfer of funds from the Reserve Account, all in accordance with this Loan Agreement and the other Loan Documents.  Borrower shall have no right of withdrawal in respect of the Reserve Account.  Borrower agrees to pay all standard costs, fees, and expenses incurred in connection with the establishment and maintenance of the Reserve Account, which amounts shall constitute part of the obligations under the Loan Documents and shall be payable within ten (10) days after demand therefor.

 

	
2.2.  

	
DISBURSEMENTS FROM ACCOUNT.  On the Effective Date, a portion of the Gross Naperville Consideration in the amount of $500,000 (the "Reserve") has been distributed by the Napervile Owner to Borrower and has been deposited into the Reserve Account.  Upon the request of the Borrower at any time (but not more than once during any calendar month), Lender shall disburse funds held in the Reserve Account to Borrower within ten (10) days after satisfaction of all conditions set forth in this subsection, which funds shall be used by Borrower to make capital contributions to the Maple Grove Owner or Lino Lakes Owner to pay, or to reimburse the Maple Grove Owner or Lino Lakes Owner for its payment of, Leasing Commissions and/or Tenant Improvements costs incurred by the Maple Grove Owner or Lino Lakes Owner in connection with a New Lease of all or part of the Properties entered into after the Effective Date in accordance with the Loan Documents; provided, however, that Lender's obligation to disburse such funds shall be subject to the following conditions: (i) Lender shall have approved the New Lease and brokerage agreement with respect thereto in respect of which the Leasing Commissions and/or Tenant Improvements costs arose; and (ii) Borrower shall have executed and delivered to Lender a certificate (A) attaching true, correct, and complete copies of invoices or requisitions (or other evidence) in respect of the Leasing Commissions and/or Tenant Improvements for which Borrower seeks payment, (B) confirming that the proceeds of the requested disbursement will be used by the Maple Grove Owner or Lino Lakes Owner to pay or reimburse the Maple Grove Owner or Lino Lakes Owner for Leasing Commissions and/or Tenant Improvements costs actually paid by the Maple Grove Owner or Lino Lakes Owner or due and payable by the Maple Grove Owner or Lino Lakes Owner within thirty (30) days and which were or will be paid in accordance with the provisions of the approved New Leases and brokerage agreements, and (C) setting forth in reasonable detail the Leasing Commissions and/or Tenant Improvements to which such funds shall be applied, together with evidence reasonably satisfactory to Lender that such sums were or will within thirty (30) days be due and payable in accordance with the provisions of the brokerage agreements and the New Leases; and (iii) Borrower shall have delivered to Lender any other material information or certificates reasonably requested by Lender in connection with such Leasing Commissions and/or Tenant Improvements, to the extent the same can be independently produced by Borrower.

 

	
2.3.  

	
PERMITTED INVESTMENTS.  All funds held in the Reserve Account shall be held in a money market interest-bearing account, which interest shall accrue for the benefit of Borrower.  All interest income in the Reserve Account shall be retained in the Reserve Account.  Borrower acknowledges and agrees that (i) Lender does not make any representation or warranty as to the rate of return for any funds held in the Reserve Account, (ii) Lender shall not have any liability for any loss of funds held in the Reserve Account except for Lender’s gross negligence or willful misconduct, and (iii) no such loss shall affect Borrower's obligations under this Loan Agreement or the other Loan Documents.  Borrower agrees that any income, gains, and losses from the investment of funds in the Reserve Account shall be reported as income or losses of Borrower for all federal, state, and local tax purposes.

 

	
2.4.  

	
AMOUNTS IN RESERVE ACCOUNT.  Borrower hereby agrees that the obligations of the Maple Grove Owner and/or Lino Lakes Owner to pay all Leasing Commissions and Tenant Improvement costs shall not be reduced or excused if the funds then available in the Reserve Account are insufficient to pay all such costs.

 

	
2.5.  

	
CHANGE OF ACCOUNTS.  Lender in its sole discretion may, from time to time, change the account number of the Reserve Account or the bank or other financial institution or location or branch at which the Reserve Account is held; provided, however, that if any such change is made, Lender will provide contemporaneous written notice to Borrower, including the name of the new bank or financial institution and the name and telephone number of the officer in charge of the account.  Borrower shall, within ten (10) Business Days' notice of any such change, execute and deliver to Lender such agreements or instruments, in form and substance reasonably acceptable to Lender, at Borrower's sole cost and expense, as Lender may reasonably request.

 

	
2.6.  

	
REMAINING FUNDS.  Upon the earlier to occur of (a) the maturity of the A-Note or (b) the maturity of the B-Note, or (c) the sale or other transfer of each of the Lino Lakes Property, the Maple Grove Property, and Borrower’s interest in Omaha in accordance with Section 5.2 hereof, Lender shall apply all funds remaining in the Reserve Account in accordance with Section 5, except upon the occurrence of a Default in which event Section 11.2 shall apply.

 

	
2.7.  

	
SECURITY INTEREST.  As security for the payment of all present and future liabilities and obligations of Borrower in respect of the Replacement Notes and under the other Loan Documents, Borrower hereby pledges and delivers to Lender, and grants a security interest, assigns, transfers and sets over to Lender, a continuing first priority security interest in and lien on (i) the Reserve Account, (ii) the NOI Account, as hereinafter defined and (iii) all cash from time to time deposited into the Reserve Account and/or the NOI Account, any interest earned thereon and all rights, privileges and options relating thereto or paid or payable, declared or granted in connection therewith, or "proceeds" (as defined in the Uniform Commercial Code as in effect in the State of New York (the "UCC")) of any or all of the foregoing, now existing or hereafter arising (collectively, the "Reserve Account Collateral").  This Agreement shall constitute a security agreement in respect of the Reserve Account Collateral within the meaning of the UCC, and Lender shall have all of the rights, remedies and powers of a secured party hereunder and thereunder. Borrower agrees to sign and deliver to Lender such financing statements and other notices as may from time to time be reasonably requested or as are necessary, in the opinion of Lender, to establish and maintain valid continuing security interests as established herein in the Reserve Account Collateral and to pay any filing or other fees relative thereto.  To the extent permitted by law, Borrower also authorizes Lender to file such financing statements without the signature of Borrower as debtor.  Notwithstanding any other provision hereof, upon the occurrence and during the continuance of a Default, any funds held in the Reserve Account or any interest thereon and any funds in the NOI Account shall be subject to the provisions of the Loan Documents and may be applied by Lender to the payment of the obligations of Borrower under the Loan Documents as Lender may determine in its sole discretion or as may otherwise be provided by the Loan Documents; provided, however, that no such application shall be deemed to have been made by operation of law or otherwise until actually made by Lender as provided herein.  Funds held in the Reserve Account and NOI Account may be commingled with other funds held by Lender provided that such funds may only be utilized in accordance with this Loan Agreement and the other Loan Documents.

 

ARTICLE 3.   DISBURSEMENT

 

	
3.1.  

	
DISBURSEMENT OF LOAN.  Borrower acknowledges, covenants, warrants, represents and agrees that the proceeds of the Loan have heretofore been fully disbursed to Borrower and there is currently outstanding under the Replacement Notes the principal sum of $10,069,569.92.  Lender shall have no obligation to make further disbursements or advances under the Loan.

 

ARTICLE 4.    APPLICATION OF NOI

 

	
4.1.  

	
DEFINITIONS.

 

	
a.  

	
"Capital Expenditures" shall mean for any period, the amount expended for items capitalized under generally accepted accounting principles including expenditures for building improvements or major repairs, but excluding leasing commissions and tenant improvements.

 

	
b.  

	
"Fund Management Fee" shall mean the fee payable to SB Partners Real Estate Corporation, formerly known as Smith, Barney Real Estate Corporation, (the "Manager"), Borrower’s investment manager, pursuant to that certain agreement dated as of December 4, 1970 by and between SB Partners and the Manager (the "Management Agreement").  Borrower represents that pursuant to the Management Agreement the Fund Management Fee is equal to (x) 2% of the sum of the average daily Aggregate Capital Investment Account and the average daily Amortization Account of Borrower and (y) 1⁄2 of 1% of the average daily Capital Cash Account of Borrower, as such capitalized terms are defined in the Management Agreement.  As of the Effective Date, the annual Fund Management Fee is $852,483, provided, however, so long as the Loan shall be outstanding such Fund Management Fee shall not exceed 50% of the lesser of (a) the Fund Management Fee as so calculated or (b) $852,483, during any 12 month period commencing on the Effective Date (the "Management Fee Cap").  The annual Fund Management Fee shall not be changed except with the consent of Lender, which consent Lender may withhold in its sole discretion.

 

	
c.  

	
"Impositions" shall mean all taxes (including, without limitation, all real estate, ad valorem, sales (including those imposed on lease rentals), use, single business, gross receipts, value added, intangible, transaction, privilege or license or similar taxes), assessments (including, without limitation, all assessments for public improvements or benefits, whether or not commenced or completed prior to the date hereof and whether or not commenced or completed within the term of this Agreement), ground rents, water, sewer or other rents and charges, excises, levies, fees (including, without limitation, license, permit, inspection, authorization and similar fees), and all other governmental charges, in each case whether general or special, ordinary or extraordinary, or foreseen or unforeseen, of every character in respect of the Properties and/or any Payments, as defined in the Mortgage, (including all interest and penalties thereon), which at any time prior to, during or in respect of the term hereof may be assessed or imposed on or in respect of or be a lien upon the Properties or any part thereof or any Payments, as defined in the Mortgage, therefrom or any estate, right, title or interest therein.

 

	
d.  

	
"Included Capital Expenditures" shall mean Capital Expenditures which do not exceed $300,000 annually, unless otherwise approved by Lender in advance in writing.

 

	
e.  

	
"NOI" shall mean as to each calendar month after the Effective Date, Operating Income received during such month less Operating Expenses incurred during such month, calculated as of the 15th day of the next succeeding calendar month.

 

	
f.  

	
"Operating Expenses" shall mean, for any period of determination, all expenses directly attributable to the ownership, operation, management, repair and/or maintenance of the Properties (to the extent not Reimbursed from the Reserve Account) including, without limitation (a) Impositions, (b) insurance premiums, (c) property management fees, whether or not actually paid, equal to the actual property management fees, (d) costs attributable to the operation, repair and maintenance of the systems for heating, ventilating and air conditioning the improvements located on the Properties, (e) interest and regularly scheduled principal (without any default interest or fees or sums payable by reason of acceleration) on the indebtedness secured by the first mortgage on the Lino Lakes Property and, in each case, actually paid for by Borrower and/or Maple Grove Owner and/or Lino Lakes Owner, (f) reasonable legal and accounting fees, (g) Included Capital Expenditures, and (h) those expenses set forth in Section 9.1.  Operating Expenses shall not include interest, principal and premium, if any, due under the Replacement Notes, income taxes, Capital Expenditures which are not Included Capital Expenditures, any non-cash charge or expense, such as depreciation or amortization, or any item of expense otherwise includable in Operating Expenses which is paid directly by any tenant except Impositions paid directly to any taxing authority by any tenant.

 

	
g.  

	
"Operating Income" shall mean, for any period of determination, all revenue, proceeds or earnings whether in cash or otherwise, derived by Borrower and/or Maple Grove Owner and/or Lino Lakes Owner arising from the Properties and/or Omaha including, without limitation distributions, rental revenues (whether denominated as basic rent, additional rent, escalation payments, electrical payments, air conditioning condenser charges, overtime, special service charges and similar charges or otherwise) and other fees and reimbursements and charges payable pursuant to Leases and Payments, as defined in the Mortgage, paid by or on behalf of any lessee under a Lease in whole or partial consideration for the termination of any Lease or otherwise in connection with the Properties and/or Omaha. Operating Income shall not include (a) any Net Proceeds (as defined in Section 5.1), (b) insurance proceeds and condemnation proceeds, (c) proceeds of any financing, (d) proceeds of any sale, exchange or transfer of the Properties and/or Omaha or any part thereof or interest therein, or (e) any item of income otherwise includable in Operating Income but paid directly by any tenant to a person or entity other than Borrower and/or Maple Grove Owner and/or Lino Lakes Owner, except for (i) real estate taxes paid directly to any taxing authority by any tenant and (ii) amounts paid in payment of expenses which would otherwise be payable by Borrower to the extent the item for which such payment was made was included in the calculation of Operating Expenses.

 

	
h.  

	
"Partnership Expenses" shall mean, with respect to Borrower, reasonable Audit and tax fees, SEC filing costs, SEC XBRI consulting Investor Services and record maintenance, legal, printing, Bookkeeping, IT, Corporate Taxes, Admin. Filing fees and Corporate Insurance based on Borrower's pro rata portion of group expense, as applicable, estimated in Exhibit G; however, SREIS Tax Service Fees and SREC Bank Fees shall be excluded from Partnership Expense.  Any additional items added to Partnership Expenses require Lender's prior written approval.

 

 

	
4.2.  

	
APPLICATION OF NOI.  (a) All NOI for any calendar month shall be deposited in Borrower’s operating account on or before the 15th day of each subsequent month.  Any NOI in such operating account as of the first (1st) Business Day of each month shall be applied in the following order and priority, as more fully illustrated on Exhibit F attached hereto:

 

(i) First, to monthly interest payments due on the A-Note;

 

(ii) Second, to the payment of the monthly installment of the Monthly Amortization Amount, if any.

 

(iii) Third, payment of the Partnership Expenses.

 

(iv) Fourth, to the payment of one twelfth (1/12) of the Fund Management Fee but limited to the Management Fee Cap.

 

(b)           To the extent any NOI is remaining after application as set forth in Section 4.2(a) above, such remaining NOI shall be deposited in a non-interest bearing account of Borrower at Wells Fargo Bank, N.A. (the "NOI Account") on or before the first (1st) Business Day of each month.  Any NOI in the NOI Account as of the last day of any twelve (12) month period commencing on the Effective Date or each such annual or annualized period thereafter shall be applied in the following order and priority, on or before the 15th day following the conclusion of each such twelve (12) month period, as more fully illustrated on Exhibit F attached hereto, the first $100,000 thereof to Lender, the next $66,666 to Borrower, and the next available NOI sixty (60%) percent to Lender and forty (40%) percent to Borrower, but in no event more than $250,000 shall be received by Borrower under this clause (b) during any twelve (12) month period commencing on the Effective Date or each such annual or annualized period thereafter ("Borrower's Share of NOI"), but then only to the extent that the sum of the amounts paid to Manager on account of the Management Fee Cap and Borrower's Share of NOI, as so limited and during such twelve (12) month period, does not exceed $700,000, and the remainder of the NOI, as well as any funds received by Lender pursuant to this subsection (b), shall be applied to the outstanding principal balance on the A-Note, and after repayment in full of the A-Note, first to then accrued and unpaid interest and then to principal on the B-Note, and Borrower’s share of the NOI as so limited may be withdrawn from the NOI Account by Borrower in accordance with the foregoing.

 

	
4.3.  

	
Interest and the Monthly Amortization Amount on the A-Note must be paid when due regardless of whether there are sufficient amounts in the NOI Account to pay in full the required payment.

 

ARTICLE 5.    DISPOSITION OF ASSETS AND OTHER PRINCIPAL PAYMENTS

 

	
5.1.  

	
DEFINITIONS.

 

	
a.  

	
"Affiliate" of any specified person or entity shall mean any other person or entity directly or indirectly Controlling or Controlled by or under direct or indirect common Control with such specified person or entity, or which directly or indirectly, beneficially owns or holds fifty percent (50%) or more of any class of stock or any other ownership interest in such person or fifty percent (50%) or more of the direct or indirect ownership of which is beneficially owned or held by such person or entity.

 

	
b.  

	
"Control" means, when used with respect to any specific person or entity, the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such person or entity whether through ownership of voting securities, beneficial interests, by contract or otherwise, and if such person or entity is a limited liability company, partnership,  corporation or other entity, such power to direct or cause the direction of major or significant decisions and transactions of such entity may be subject to obtaining the consent of one or more other members, partners, shareholders or equity holders of such entity. The definition is to be construed to apply equally to variations of the word "Control" including "Controlled," "Controlling" or "Controlled by."

 

	
c.  

	
"Lien" as applied to the property of any Person means: (a) any mortgage, deed to secure debt, deed of trust, pledge, lien, charge or lease constituting a capitalized lease obligation, conditional sale or other title retention agreement, or other security interest, security title or encumbrance of any kind in respect of any property of such Person, or upon the income or profits therefrom; (b) any arrangement, express or implied, under which any property of such Person is transferred, sequestered or otherwise identified for the purpose of subjecting the same to the payment of indebtedness or performance of any other obligation in priority to the payment of the general, unsecured creditors of such Person; and (c) the filing of, or any agreement to give, any financing statement under the Uniform Commercial Code or its equivalent in any jurisdiction.

 

	
d.  

	
"Lino Interests" means the membership interests in Lino Lakes Owner, of which Borrower owns 100%.

 

	
e.  

	
"Net Proceeds" means,

 

(I) with respect to any Transfer of any of the Properties, or Borrower's or its Affiliate’s direct or indirect interest therein, or Borrower’s or its Affiliate’s direct or indirect interest in Omaha, Lino Lakes Owner or Maple Grove Owner (it being understood that direct or indirect interests in Borrower are specifically excluded) (collectively, the "Assets") an amount equal to:  (i) the gross consideration due and paid (the "Gross Transaction Consideration") by or on behalf of the purchaser to Borrower and/or Lino Lakes Owner and/or Maple Grove Owner and/or such Affiliate for such Assets (or portion thereof or interest therein), or otherwise in connection with the closing of such Transfer minus (ii) the sum of: (A) reasonable and customary credits and prorations and reasonable and customary real estate selling and closing costs (e.g., rent and other revenue prorations, security deposit prorations, common area maintenance, utility and operating expense prorations, tenant improvement cost and leasing commission credits and prorations, real estate tax and assessment prorations, title premiums, survey costs, transfer taxes, recording fees, fees of outside counsel) due and paid by Borrower and/or Lino Lakes Owner and/or Maple Grove Owner and/or such Affiliate in connection with such closing (collectively, "Closing Costs"); and (B) without duplication of any cost included in clause (A) above, any release price or other repayment or prepayment of principal, interest or prepayment fees or premiums required pursuant to any applicable secured debt instruments to be paid by Borrower and/or Lino Lakes Owner and/or Maple Grove Owner and/or Omaha and/or such Affiliate to any lender of such secured debt secured by a lien on such Assets (or portion thereof or interest therein) in connection with such Transfer;

(II) with respect to any Refinancing an amount equal to: (i) the excess of the amount of any credit funded by the refinancing lender over any indebtedness so refinanced, which shall not include any portion of such excess credit that is required by the refinancing lender to be used exclusively for interest reserves, real estate tax, insurance premium, operating expense shortfall or other reserves, holdbacks or escrows, or for tenant improvements, leasing commissions or capital improvements in connection with the refinanced property, minus (ii) actual bona fide transaction costs due and paid by Borrower and/or Lino Lakes Owner and/or Maple Grove Owner and/or such Affiliate, in connection with such refinancing transaction.

	
f.  

	
"Permitted Transfer" is a Transfer which is part of an arms-length transaction with an unaffiliated third party on terms and conditions reasonably approved in writing in advance by Lender.

 

	
g.  

	
"Person" means an individual, a corporation, a partnership, a limited liability company, an association, a trust or any other entity or organization, including a government or political subdivision or an agency or instrumentality thereof.

 

	
h.  

	
"Refinancing" as to Borrower, the Maple Grove Owner or Lino Lakes Owner or its Affiliate or the Assets means the incurrence of indebtedness or creation of any lien or any refinancing or other transaction in connection with which there is a change in the amount secured by any mortgage, encumbrance, pledge, hypothecation, security interest or other Lien.

 

	
i.  

	
"Omaha Interests" means the membership interests which Borrower owns or may hereafter own in Omaha.

 

	
j.  

	
"Transfer", as to any Assets (real or personal), shall mean the conveyance, assignment, sale (including, without limitation, upon foreclosure of any Lien), mortgage, refinancing, encumbrance, pledge, hypothecation, granting of a security interest in, or creation of any other Lien in, granting of options with respect to, or other disposition of (directly or indirectly, voluntarily or involuntarily, by operation of law or otherwise, and whether or not for consideration or of record) all or any portion of any direct or indirect (including without limitation through one or more subsidiaries or other similar ownership structure) legal or beneficial interest in: (a) all or any portion of such Assets; or (b) any equity interest in any entity owning an interest in such Assets or in any obligor in respect of any indebtedness secured in whole or in part by such property, the merger, consolidation, or sale of assets of any such entity or obligor owning any Asset or any direct or indirect interest therein or any obligation in respect of any indebtedness secured in whole or part by such property or the issuance of any additional stock, partnership interests, membership interests, joint venture interests, or other ownership interests, an installment sales agreement wherein the property or any part thereof is to be sold for a price to be paid in installments, and any lease or other arrangement structured in such a manner that it has the practical effect of a sale or other disposition.

 

	
5.2.  

	
LIMITATION ON TRANSFERS.  Borrower shall not make or permit any Transfer which is not a Permitted Transfer; provided, however, an involuntary transfer in respect to the Omaha Interests shall not be included in the foregoing prohibition.  Additionally, but without limiting the foregoing, Borrower shall not (a) create, incur, assume or permit to exist any Lien on the Lino Interests, including, without limitation, to the extent assignable or transferable, all of its right, title and interest as a member to exercise rights with respect to the Lino Interests, or sell any of its income or revenues (including accounts receivable) or rights in respect thereof, or (b) create, incur, assume or permit to exist any voluntary Lien on the Omaha Interests, including, without limitation, to the extent assignable or transferable, all of its right, title and interest as a member to exercise rights with respect to the Omaha Interests, or voluntarily sell any of its income or revenues (including accounts receivable) or rights in respect thereof.  The Mortgage shall be released as to the Property (or as to that portion of the Property which is being transferred pursuant to a Permitted Transfer) upon satisfaction of all of the following conditions precedent: (i) the Replacement Notes shall have been repaid in full, including, without limitation, principal and interest and other sums due on the Loan, or, in the event of a Permitted Transfer, upon the occurrence of such Permitted Transfer and application of the Net Proceeds therefrom in accordance with Article 5 of the Loan Agreement; and (ii) all reasonable costs, fees, expenses and other sums paid or incurred by or on behalf of Lender in exercising any of its rights, powers, options, privileges and remedies hereunder or under the Loan Agreement, including reasonable attorneys' fees and disbursements, plus any accrued interest thereon as provided therein, shall have been fully paid in cash.   Borrower agrees to sign and deliver to Lender such financing statements and other notices as may from time to time be reasonably requested or as are necessary, in the opinion of Lender, in connection with the limitations set forth herein.  To the extent permitted by law, Borrower also authorizes Lender to file such financing statements without the signature of Borrower.

 

	
5.3.  

	
MANDATORY PAYMENTS.  In addition to interest and any other payment obligations hereunder, Borrower shall pay or cause to be paid the following (each, a "Prepayment"):

 

	
a.  

	
any proceeds or other earnings, whether in cash or otherwise, of or from the Assets, other than Operating Income; and

 

	
b.  

	
the Net Proceeds of any Transfer or Refinancing, contemporaneously with Borrower’s and/or Lino Lakes Owner’s and/or Maple Grove Owner’s and/or its or their Affiliate’s receipt of any such amounts (including when such proceeds are payable in multiple disbursements, each such disbursement or portion thereof).

 

Lender shall apply each such Prepayment as follows:

	
(i)  

	
First, to accrued and unpaid interest, next to unpaid fees, and then to the outstanding principal balance and any other amounts owing with respect to the A-Note (and whether or not then due and payable) until all such amounts are repaid in full;

	
(ii)  

	
Second, the next $3,000,000 of such Prepayment (less the amount of funds from the Reserve Account applied in accordance with Section 2.6 hereof), to accrued and unpaid interest, next to unpaid fees, and then to any outstanding principal balance and any other amounts due and owing with respect to the B-Note;

	
(iii)  

	
Third, forty (40%) of any remaining Prepayment to Borrower, and sixty (60%) of any such remaining Prepayment to accrued and unpaid interest, next to unpaid fees, and then to the outstanding principal balance and any other amounts due and owing with respect to the B-Note until the B-Note is repaid in full;

(iv)           Fourth, any excess as Borrower may determine in its sole discretion.

 

Notwithstanding anything to the contrary in the foregoing, any Prepayment received after the occurrence of a Default (but prior to cure of such Default, if applicable) will be applied in accordance with Section 11.2 hereof.

ARTICLE 6.   INSURANCE

 

Borrower shall, while any obligation of Borrower under any Loan Document remains outstanding, maintain at Borrower’s sole expense, with licensed insurers approved by Lender, the following policies of insurance in form and substance satisfactory to Lender:

 

	
6.1.  

	
TITLE INSURANCE.  An  extended coverage ALTA Lender’s Policy of Title Insurance ("Title Policy"), together with any endorsements which Lender may require, insuring Lender, in the principal amount of the Loan, of the validity and the priority of the lien of the Mortgage upon the Maple Grove Property, subject only to matters approved by Lender in writing.

 

	
6.2.  

	
PROPERTY INSURANCE.  An All Risk/Special Form Property Insurance policy, including without limitation, theft coverage and such other coverages and endorsements as Lender may reasonably require, insuring against damage to the Properties in an amount not less than 100% of the full replacement cost of the Properties (exclusive of the costs of excavations, foundations and footings).  Such coverage shall adequately insure any and all Loan collateral, whether such collateral is onsite, stored offsite or otherwise.  Lender shall be named on the policy as to the Maple Grove Property as Mortgagee and named under a Lender’s Loss Payable Endorsement or Standard Mortgagee Clause Endorsement (in form reasonably acceptable to Lender).

 

	
6.3.  

	
FLOOD HAZARD INSURANCE.  A policy of flood insurance, as required by applicable governmental regulations, or as deemed necessary by Lender, in an amount required by Lender, but in no event less than the amount sufficient to meet the requirements of applicable law and governmental regulation.

 

	
6.4.  

	
LIABILITY INSURANCE.  A policy of Commercial General Liability insurance on an occurrence basis, with coverages and limits as reasonably required by Lender, insuring against liability for injury and/or death to any person and/or damage to any property occurring on the Properties and as to the Maple Grove Property naming Lender as an additional insured.

 

	
6.5.  

	
OTHER COVERAGE.  Borrower shall provide to Lender evidence of such other reasonable insurance in such reasonable amounts as Lender may from time to time reasonably request against such other insurable hazards which at the time are commonly insured against for properties similar to the Properties located in or around the region in which the Properties are located.  Such coverage requirements may include but are not limited to coverage for earthquake, acts of terrorism, mold, business income, delayed business income, rental loss, sink hole, soft costs, tenant improvement or environmental.

 

	
6.6.  

	
GENERAL.  Borrower shall provide to Lender insurance certificates or other evidence of coverage in form reasonably acceptable to Lender, with coverage amounts, deductibles, limits and retentions as reasonably required by Lender.  All insurance policies shall provide that the coverage shall not be cancelable or materially changed without 10 days prior written notice to Lender of any cancellation for nonpayment of premiums, and not less than 30 days prior written notice to Lender of any other cancellation or any modification (including a reduction in coverage).  Lender shall be named under a Lender’s Loss Payable Endorsement or a Standard Mortgagee Clause Endorsement (in form reasonably acceptable to Lender) on all insurance policies which Borrower actually maintains with respect to the Maple Grove Property.  All insurance policies shall be issued and maintained by insurers approved to do business in the state in which the Maple Grove Property is located and must have an A.M. Best Company financial rating and policyholder surplus reasonably acceptable to Lender.

 

ARTICLE 7.    REPRESENTATIONS AND WARRANTIES

 

As a material inducement to Lender’s entry into this Agreement, Borrower represents and warrants to Lender as of the Effective Date and continuing thereafter that:

 

	
7.1.  

	
AUTHORITY/ENFORCEABILITY.  Borrower is in compliance with all laws and regulations applicable to its organization, existence and transaction of business.

 

	
7.2.  

	
BINDING OBLIGATIONS. Borrower is authorized to execute, deliver and perform its obligations under the Loan Documents, and such obligations are the valid and binding obligations of Borrower.

 

	
7.3.  

	
COMPLIANCE WITH LAWS; USE.  Maple Grove Owner and Lino Lakes Owner each has, and at all times shall have, all permits, licenses, exemptions, and approvals necessary to construct, occupy, operate and market the Properties and Improvements, and shall maintain compliance with all governmental requirements applicable to the Properties and Improvements and all other applicable statutes, laws, regulations and ordinances necessary for the transaction of its business, and shall require its lessees or licensees to do the same.  The Properties are each a legal parcel lawfully created in full compliance with all subdivision laws and ordinances, and is properly zoned for the stated use of the Property as disclosed to Lender at the time of execution hereof.  Borrower shall not initiate or acquiesce to a zoning change of the Properties without prior notice to, and prior written consent from, Lender.  Furthermore, Borrower shall not allow changes in the stated use of the Property from that disclosed to Lender at the time of execution hereof without prior notice to, and prior written consent from, Lender

 

	
7.4.  

	
FORMATION AND ORGANIZATIONAL DOCUMENTS.  Borrower has delivered to Lender all formation and organizational documents of Borrower, of the partners, joint venturers or members of Borrower, if any, and of Lino Lakes Owner, Maple Grove Owner and Omaha, and all such formation and organizational documents remain in full force and effect and have not been amended or modified since they were delivered to Lender.  Borrower shall immediately provide Lender with copies of any amendments or modifications of the formation or organizational documents.

 

	
7.5.  

	
BANK OF AMERICA LOAN.  Borrower represents that it has no personal liability, contingent or otherwise, under that certain loan made by Bank of America to Omaha on or about September 18, 2007 (the "Bank of America Loan").

 

	
7.6.  

	
NO VIOLATION.  Borrower's, Maple Grove Owner's and Lino Lakes Owner's execution, delivery, and performance under the Loan Documents do not: (a) require any consent or approval not heretofore obtained under any partnership agreement, operating agreement, articles of incorporation, bylaws or other document; (b) violate any governmental requirement applicable to the Properties or any other statute, law, regulation or ordinance or any order or ruling of any court or governmental entity; (c) conflict with, or constitute a breach or default or permit the acceleration of obligations under any agreement, contract, lease, or other document by which the Borrower, Maple Grove Owner or Lino Lakes Owner is or the Properties is bound or regulated; or (d) violate any statute, law, regulation or ordinance, or any order of any court or governmental entity.

 

	
7.7.  

	
LITIGATION.  Except as disclosed to Lender in writing, there are no claims, actions, suits, or proceedings pending, or to Borrower’s knowledge threatened, against Borrower or Lino Lakes Owner, Maple Grove Owner and Omaha or affecting the Properties.

 

	
7.8.  

	
FINANCIAL CONDITION.  All financial statements and information heretofore and hereafter delivered to Lender by Borrower, including, without limitation, information relating to the financial condition of Borrower, the Properties, the partners, joint venturers or members of Borrower, and/or Lino Lakes Owner, Maple Grove Owner and Omaha, fairly and accurately represent in all material respects the financial condition of the subject thereof and have been prepared (except as noted therein) in accordance with generally accepted accounting principles consistently applied.  Borrower acknowledges and agrees that Lender may request and obtain additional information from third parties regarding any of the above, including, without limitation, credit reports.

 

	
7.9.  

	
NO MATERIAL ADVERSE CHANGE.  There has been no material adverse change in the financial condition of Borrower and/or Lino Lakes Owner, Maple Grove Owner and Omaha since the dates of the latest financial statements furnished to Lender and, except as provided in the Loan Documents or as otherwise disclosed to Lender in writing, neither Borrower, Maple Gove Owner or Lino Lakes Owner has entered into any material transaction which is not disclosed in such financial statements.

 

	
7.10.  

	
ACCURACY.  To Borrower's knowledge, all reports, documents, instruments, information and forms of evidence delivered to Lender concerning the Loan or security for the Loan or required by the Loan Documents are accurate, correct and sufficiently complete in all material respects to give Lender true and accurate knowledge of their subject matter, and do not contain any misrepresentation or omission.

 

	
7.11.  

	
TAX LIABILITY.  Borrower, Maple Grove Owner and Lino Lakes Owner each has filed all required federal, state, county and municipal tax returns and has paid all taxes and assessments owed and payable, and Borrower has no knowledge of any basis for any additional payment with respect to any such taxes and assessments.

 

	
7.12.  

	
UTILITIES.  All utility services, including, without limitation, gas, water, sewage, electrical and telephone, necessary for the occupancy of the Properties are available at or within the boundaries of the Properties.

 

	
7.13.  

	
BUSINESS LOAN.  The Loan is a business loan transaction in the stated amount solely for the purpose of carrying on the business of Borrower and none of the proceeds of the Loan have been or will be used for the personal, family or agricultural purposes of Borrower.  No portion of the Properties is used or will be used as a dwelling.

 

	
7.14.  

	
LEASES.  With respect to the Properties, Borrower represents and warrants (a) that the Leases are in full force and effect; (b) that the Rents and the Leases have not been heretofore sold, assigned, transferred, or set over by Borrower, Lino Lakes Owner or Maple Grove Owner or by any person or persons whatsoever (other than in connection with the existing mortgage on the Lino Lakes Property held by The Prudential Insurance Company of America); (c) that no material default exists on the part of the lessees thereunder, or the Lino Lakes Owner and/or Maple Grove Owner as lessor, (d) that no Rents have been paid by any of the lessees for more than one month in advance; (e) that the payment of none of the Rents have been or are promised to be waived, released, reduced, discounted or otherwise discharged or compromised by Borrower, Lino Lakes Owner or Maple Grove Owner directly or indirectly by assuming any lessee’s obligations with respect to other premises; and (f) Borrower, Lino Lakes Owner and/or Maple Grove Owner has good right to sell, assign, transfer, and set over the same and to grant to and confer upon Lender the rights, interests, powers, and authorities herein granted and conferred and those granted and conferred in that certain Assignment of Rents and Leases dated simultaneously herewith relating to the Properties (other than any assignment of the Leases and Rent made in connection with the existing mortgage on the Lino Lakes Property held by The Prudential Insurance Company of America).  The terms "Leases" and "Rents" herein shall have the definitions given to them in the Mortgage.

 

ARTICLE 8.    HAZARDOUS MATERIALS

 

	
8.1.  

	
DEFINITIONS. "Hazardous Materials Claims" as used herein shall mean any claims, actions, proceedings or investigations known to, pending or threatened against Borrower or the Properties by any governmental entity or agency or by any other person or entity relating to Hazardous Materials or pursuant to the Hazardous Materials Laws.  "Hazardous Materials" as used herein shall mean collectively any oil, flammable explosives, asbestos, urea formaldehyde insulation, radioactive materials, hazardous wastes, toxic or contaminated substances or similar materials, including, without limitation, any substances which are  "hazardous substances," "hazardous wastes," "hazardous materials," "toxic substances," "wastes," "regulated substances," "industrial solid wastes," or "pollutants or contaminants" under the Hazardous Materials Laws, as described below, and/or any other applicable environmental laws, ordinances and regulations.  "Hazardous Materials" shall not include commercially reasonable amounts of such materials used in the ordinary course of operation of the Properties which are used and stored in accordance with all applicable environmental laws, ordinances and regulations.  "Hazardous Materials Laws" as used herein shall mean all laws, ordinances and regulations relating to Hazardous Materials, including, without limitation: any and all applicable federal, state or local directive, statute, law, rule, regulation, ordinance or rule of common law in effect and any judicial or administrative decision, including any judicial or administrative order, consent decree or judgment, relating to the control of any pollutant or hazardous material, the protection of the environment or the effect of the environment on human health, including the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended, 42 U.S.C. Section 9601 et seq.; the Resource Conservation and Recovery Act, as amended, 42 U.S.C. Section 6901 et seq.; the Federal Water Pollution Control Act, as amended, 33 U.S.C. Section 1252 et seq.; the Toxic Substances Control Act, as amended, 15 U.S.C. Section 2601 et seq.; the Clean Air Act, as amended, 42 U.S.C. Section 7401 et seq.; the Safe Drinking Water Act, as amended, 42 U.S.C. Section 300f et seq.; the Hazardous Materials Transportation Act, as amended 49 U.S.C. Section 1801 et seq.; the Atomic Energy Act, as amended, 42 U.S.C. Section 2011 et seq.; the Federal Insecticide, Fungicide and Rodenticide Act, as amended, 7 U.S.C. Section 136 et seq.; the Occupational Safety and Health Act, as amended, 20 U.S.C. Section 651 et seq.; the Emergency Planning and Community Right to Know Act, as amended, 42 U.S.C. Section 11001 et seq.; and the Minnesota Environmental Response and Liability Act, Minn. Stat. Section 115B.02 et seq.; each as now and hereafter amended, and the regulations thereunder, and any other local, state and/or federal laws or regulations that govern (i) the existence, cleanup and/or remedy of contamination on the Properties; (ii) the protection of the environment from released, spilled, deposited or otherwise emplaced contamination; (iii) the control of hazardous wastes; or (iv) the use, generation, transport, treatment, removal or recovery of Hazardous Materials, including any and all building materials.

 

	
8.2.  

	
HAZARDOUS MATERIALS COVENANTS.  Borrower agrees as follows:

 

	
a.  

	
No Hazardous Activities.  Borrower shall not cause or (subject to the provisions of the tenant Leases at the Maple Grove Property) permit the Properties to be used as a site for the use, generation, manufacture, storage, treatment, release, discharge, disposal, transportation or presence of any Hazardous Materials.

 

	
b.  

	
Compliance.  Borrower shall, subject to the provisions of the Leases, comply and cause the Properties and the Properties’ tenants to comply with all Hazardous Materials Laws.

 

	
c.  

	
Notices.  Borrower shall immediately notify Lender in writing of: (i) the discovery of any Hazardous Materials on, under or about the Properties of which Borrower has knowledge (except so long as any such Hazardous Materials are used, stored and handled in accordance with all Hazardous Materials Laws); (ii) any knowledge by Borrower that the Properties do not comply with any Hazardous Materials Laws; (iii) any Hazardous Materials Claims of which Borrower has knowledge; and (iv) the discovery of any occurrence or condition on any real property adjoining or in the vicinity of the Properties of which Borrower has knowledge that could cause the Properties or any part thereof to become contaminated with Hazardous Materials.

 

	
d.  

	
Removal and/or Remedial Action.  In response to the presence of any Hazardous Materials on, under or about the Properties, Borrower shall immediately take or cause to be taken, at Borrower’s sole expense, all actions required by any Hazardous Materials Laws or any regulatory agency, governing body, judgment, consent decree, settlement or compromise with respect to any Hazardous Materials Claims.

 

	
8.3.  

	
INSPECTION BY LENDER.  Upon reasonable prior notice to Borrower, Lender, its employees and agents, may from time to time (whether before or after the commencement of a nonjudicial or judicial foreclosure proceeding) but no more than once in any twelve month period (unless Lender has reason to believe a release of any Hazardous Materials into, onto, beneath or from the Properties has occurred or is likely to occur), enter and inspect the Properties for the purpose of determining the existence, location, nature and magnitude of any past or present release or threatened release of any Hazardous Materials into, onto, beneath or from the Properties, subject to the rights of tenants under the Leases.  Borrower shall deliver to Lender, within thirty (30) days after the Effective Date, a Phase I environmental report for the Maple Grove Property.  In the event that such report indicates that further testing is required or recommended, such testing shall be arranged for by Borrower at Borrower’s sole cost and expense, which shall include obtaining a Phase II environmental report within sixty (60) days after receipt of a Phase I indicating that such Phase II is required or recommended, and Borrower shall otherwise comply with Section 8.2(d) of this Agreement in the event that such report or further testing indicate that any necessary action must be taken.

 

	
8.4.  

	
HAZARDOUS MATERIALS INDEMNITY.  Borrower hereby agrees to defend, indemnify and hold harmless Lender, Lender’s parents, subsidiaries and affiliates, any holder of or participant in the Loan, and all directors, officers, employees, agents, successors and assigns of any of the foregoing ("Indemnitees") for, from and against any and all losses, damages, liabilities, claims, actions, judgments, court costs and legal or other expenses (including, without limitation, attorneys’ fees and expenses) which any Indemnitee may incur as a direct or indirect consequence of the use, generation, release, manufacture, storage, disposal, threatened disposal, transportation or presence of Hazardous Materials in, on, under or about the Properties, any violation or claim of violation of any Hazardous Materials Laws with respect to the Properties, or any indemnity claim by a third party against one or more Indemnitees in connection with any of the foregoing.  Notwithstanding the foregoing provisions of this Section 8.4 to the contrary, Borrower shall have no obligation to indemnify any of the Indemnitees pursuant to this Section 8.4 for losses, damages, liabilities, claims, actions, judgments, court costs and legal or other expenses to the extent resulting from any Indemnitee, and its successors’ or assigns’, willful misconduct or gross negligence or resulting from any Hazardous Material initially placed in, on, under or about the Property or Properties during possession of the Property or Properties, as applicable, by Indemnitee, or its successors’ or assigns’.  Each Indemnitee shall have the right at its own expense at any time to appear in, and to participate in as a party if it so elects, and be represented by counsel of its own choice in, any action or proceeding initiated in connection with any Hazardous Materials Laws that affect the Properties.  Borrower shall immediately pay to the applicable Indemnitee(s) upon demand any amounts owing under this indemnity, together with interest from the date the indebtedness arises until paid at the rate of interest applicable to the principal balance of the Note.

 

	
8.5.  

	
LEGAL EFFECT OF SECTION.  Borrower and Lender agree that Borrower’s duty to defend and indemnify the Indemnitees hereunder shall survive: (i) any judicial or non-judicial foreclosure under the Mortgage or the Pledge, or transfer of the collateral thereunder in lieu thereof; (ii) the discharge of the Mortgage or the Pledge; and (iii) the satisfaction of all of Borrower’s obligations under the Loan Documents.

 

ARTICLE 9.   COVENANTS

 

	
9.1.  

	
EXPENSES.  Borrower shall immediately pay to Lender upon demand all reasonable costs and expenses incurred by Lender in connection with: (a) the administration of this Agreement, the other Loan Documents and any other documents required by Lender during the term of the Loan; and (b) the enforcement or satisfaction by Lender of any of the obligations of Borrower, Lino Lakes Owner, and/or Maple Grove Owner under this Agreement and the other Loan Documents.  For all purposes of this Agreement, Lender’s costs and expenses shall include, without limitation, all appraisal and appraisal review fees, cost engineering and inspection fees, legal fees and expenses, accounting fees, environmental consultant fees, auditor fees, recording and filing fees, title examination and lien search fees, escrow fees, and the cost to Lender of any title insurance premiums, title surveys, recording fees, mortgage registration tax, tax service contracts and notary fees.  If any of the services described above are provided by an employee of Lender, Lender’s costs and expenses for such services shall be calculated in accordance with Lender’s standard charge for such services.

 

	
9.2.  

	
LEASING.  Borrower covenants to cause Lino Lakes Owner and Maple Grove Owner, and Borrower covenants: (a) not to collect any of the Rents for more than one (1) month in advance of the time when the same become due under the terms thereof; (b) not to discount any future accruing Rents; (c) not to execute any other assignments of Leases or any interest therein or any of the Rents thereunder (other than in connection with the existing mortgage on the Lino Lakes Property held by The Prudential Insurance Company of America), (d) not to terminate, modify or amend the Leases or any of the terms thereof, or grant any concessions in connection therewith, either orally or in writing, or to accept a surrender thereof without the written consent of Lender and that any attempted termination, modification, or amendment of the Leases without such written consent shall be null and void; (e) to perform all of their respective covenants and agreements as lessor under the Leases and not to suffer or permit to occur any release of liability of the lessees, or any rights to withhold payment of Rent; and to give prompt notices to Lender of any notice of default on their part with respect to the Leases received from the lessees thereunder, and to furnish Lender with complete copies of said notices; (f) not to alter, modify or change the terms of any guarantees of any of the Leases or cancel or terminate such guarantees without the prior written consent of Lender; (g) not to consent to any assignments of the Leases, or any subletting thereunder whether or not in accordance with their terms, without the prior written consent of Lender; (h) not to exercise any right of election, whether specifically set forth in any such Lease or otherwise, which would in any way diminish the tenant’s liability or have the effect of shortening the stated term of the Lease.  The terms "Leases" and "Rents" herein shall have the definitions given to them in the Mortgage.

 

	
9.3.  

	
APPROVAL OF NEW LEASES AND BROKERAGE AGREEMENTS. All New Leases of all or any part of the Properties, and all brokerage agreements relating thereto, shall: (a) be upon terms and, in the case of New Leases, with tenants approved by Lender prior to Borrower’s execution of any such New Lease or brokerage agreement; and (b) include estoppel, subordination, attornment and mortgagee protection provisions satisfactory to Lender.

 

	
9.4.  

	
INCOME TO BE APPLIED TO DEBT SERVICE.  In no event shall any Operating Income or Gross Transaction Consideration be distributed to any partners, venturer, member or equity investor of Borrower except as permitted by this Agreement.

 

	
9.5.  

	
OPINION OF LEGAL COUNSEL.  Borrower shall provide, at Borrower's expense, an opinion of legal counsel in form and content satisfactory to Lender in connection with the execution, delivery and enforceability of the Loan Documents (other than as to the enforceability of the Mortgage or Assignment of Rents and Leases) as contemplated herein.

 

	
9.6.  

	
FURTHER ASSURANCES.  Upon Lender’s request and at Borrower’s sole cost and expense, Borrower shall, and shall cause any person or entity affiliated with Borrower to, execute, acknowledge and deliver any other instruments, including replacement promissory notes, guaranties or other loan documents, and perform any other acts necessary, desirable or proper, as determined by Lender, to correct clerical errors or omissions in any loan closing documentation, to replace any lost or destroyed loan closing documentation, or to carry out the purposes of this Agreement and the other Loan Documents or to perfect and preserve any liens created by the Loan Documents.  This obligation shall survive any foreclosure or deed in lieu of foreclosure of the Maple Grove Property or the Pledge.

 

	
9.7.  

	
ASSIGNMENT.  Without the prior written consent of Lender, Borrower shall not assign Borrower’s interest under any of the Loan Documents, or in any monies due or to become due thereunder, and any assignment without such consent shall be void.  In this regard, Borrower acknowledges that Lender would not make this Loan except in reliance on Borrower’s expertise, reputation, prior experience in owning and managing commercial real property, Lender’s knowledge of Borrower, and Lender’s understanding that this Agreement is more in the nature of an agreement involving personal services than a standard loan where Lender would rely on security which already exists.

 

	
9.8.  

	
INDEMNITY.  BORROWER HEREBY AGREES TO DEFEND, INDEMNIFY AND HOLD HARMLESS LENDER, ITS DIRECTORS, OFFICERS, EMPLOYEES, AGENTS, SUCCESSORS AND ASSIGNS FOR, FROM AND AGAINST ANY AND ALL LOSSES, DAMAGES, LIABILITIES, CLAIMS, ACTIONS, JUDGMENTS, COURT COSTS AND LEGAL OR OTHER EXPENSES (INCLUDING, WITHOUT LIMITATION, ATTORNEYS’ FEES AND EXPENSES) WHICH LENDER MAY INCUR AS A CONSEQUENCE OF: (A) THE FAILURE OF BORROWER TO PERFORM ANY OBLIGATIONS AS AND WHEN REQUIRED BY THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS; OR (B) ANY FAILURE AT ANY TIME OF ANY OF BORROWER’S REPRESENTATIONS OR WARRANTIES TO BE TRUE AND CORRECT;  THE FOREGOING INDEMNITEES SHALL BE ENTITLED TO APPEAR IN ANY ACTION OR PROCEEDING WITH COUNSEL OF THEIR OWN CHOICE, AND/OR TO SETTLE OR COMPROMISE ANY CLAIM ASSERTED AGAINST THEM.  BORROWER SHALL IMMEDIATELY PAY TO ANY INDEMNITEE UPON DEMAND ANY AMOUNTS OWING UNDER THIS INDEMNITY, TOGETHER WITH INTEREST FROM THE DATE THE INDEBTEDNESS ARISES UNTIL PAID AT THE RATE OF INTEREST APPLICABLE TO THE PRINCIPAL BALANCE OF THE REPLACEMENT NOTES.  BORROWER’S DUTY AND OBLIGATIONS TO DEFEND, INDEMNIFY AND HOLD HARMLESS THE INDEMNITEES DESCRIBED HEREIN SHALL SURVIVE CANCELLATION OF THE REPLACEMENT NOTES AND THE RELEASE OR DISCHARGE OF THE MORTGAGE.  NOTWITHSTANDING THE FOREGOING, BORROWER WILL HAVE NO OBLIGATION TO INDEMNIFY ANY PARTY FOR ANY LOSSES, DAMAGES, LIABILITIES, CLAIMS, ACTIONS, JUDGMENTS, COURT COSTS AND LEGAL OR OTHER EXPENSES (INCLUDING, WITHOUT LIMITATION, ATTORNEYS' FEES AND EXPENSES) ARISING OUT OF OR RESULTING FROM SUCH PARTY'S GROSS NEGLIGENCE OR WILLFUL MISCONDUCT.

 

	
9.9.  

	
NO PARTNERSHIP CHANGES.                                                                  Borrower shall not, without Lender’s prior written consent, to the extent of its ability to do so, make or permit to be made any amendments to the operating agreement or other formation documents of Borrower, Omaha, Lino Lakes Owner, and/or Maple Grove Owner which would have an adverse effect on the ability of Borrower to own and operate its properties or to perform its obligations and/or covenants under this Loan.

 

	
9.10.  

	
SUBORDINATION OF AFFILIATE DEBT. Borrower shall cause all debt payable by Borrower to (a) any person or entity having an equity interest in Borrower, or (b) any entity in which an equity interest is held by Borrower or any person or entity having equity interest in the Borrower, to be subordinated to this Loan, and no such debt shall be secured in whole or in part by the property which is the subject of the Mortgage.

 

ARTICLE 10.    REPORTING COVENANTS

 

	
10.1.  

	
FINANCIAL INFORMATION.   Borrower shall deliver to Lender as soon as available, but in no event later than 90 days after Borrower’s fiscal year end, Borrower’s current financial statements (including without limitation, an income and expense statement, balance sheet and a statement of NOI, together with supporting property and mortgage debt schedules for the Borrower and Lino Lakes Owner, Maple Grove Owner and Omaha) and Borrower’s current tax return signed by Borrower together with any other financial information including, without limitation, quarterly financial statements, annual financial statements, cash flow projections, and quarterly NOI statements reasonably requested by Lender but which shall include, in any event, monthly statements, delivered no later than 15 days after each calendar month showing in reasonable detail NOI and Net Proceeds during such month.  Borrower shall also deliver to Lender, as soon as available, but in no event later than 90 days after the fiscal year end, for each of Lino Lakes Owner, Maple Grove Owner and Omaha current financial statements (including, without limitation a balance sheet), insurance statement, statement of NOI, with supporting principal and mortgage debt schedules in form and substance reasonably acceptable to Lender, signed by each of Lino Lakes Owner, Maple Grove Owner and Omaha, as applicable, and certified to be true, correct and complete in all materials respects.  Borrower shall also deliver to Lender, within 30 days of filing, tax returns, certified by each of Lino Lakes Owner, Maple Grove Owner and Omaha, as applicable, to be true and complete copies of such returns, for each of Lino Lakes Owner, Maple Grove Owner and Omaha.

 

Within 15 days of Lender’s request, Borrower shall also deliver to Lender such quarterly and other financial information regarding any persons or entities in any way obligated on the Loan as Lender may specify.  If audited financial information is prepared, Borrower shall deliver to Lender copies of that information within 15 days of Borrower's receipt of such audited financial information.  Except as otherwise agreed to by Lender, all such financial information shall be prepared in accordance with generally accepted accounting principles consistently applied.  Notwithstanding anything to the contrary in this Section 10.1, in no event shall Lender require that K-1 Schedules of individual investors be provided.

 

	
10.2.  

	
LEASING REPORTS AND OPERATING STATEMENTS.  Borrower shall deliver to Lender monthly, at the time of Borrower’s monthly Loan payments pursuant to this Agreement, rent rolls, leasing schedules and reports, and/or such other leasing information as Lender shall request with respect to the Properties, each in form and substance satisfactory to Lender.

 

ARTICLE 11.    DEFAULTS AND REMEDIES

 

	
11.1.  

	
DEFAULT.  The occurrence of any one or more of the following shall constitute an event of default ("Default") under this Agreement and the other Loan Documents:

 

	
a.  

	
Monetary.  Borrower’s failure to pay within fifteen (15) days of when the same is due any sums payable under the Replacement Notes or any of the other Loan Documents or Borrower’s failure to deposit any funds ("Borrower’s Funds") as and when required under this Agreement, or the failure to make the required payment due on a Maturity Date (as same may have been extended), for which no notice to Borrower from Lender is required; or

 

	
b.  

	
Performance of Obligations.  The failure of Borrower, Lino Lakes Owner and/or Maple Grove Owner, as applicable, to perform any obligation, covenant or condition under any of the Replacement Notes or any of the other Loan Documents; provided, however, that if a cure period is provided for the remedy of such failure, failure to perform will not constitute a Default until such date as the specified cure period expires; or

 

	
c.  

	
Lien; Attachment; Condemnation. (i) The recording of any notice of unpaid balance or claim of lien against the Properties (except for the existing mortgage on the Lino Lakes Property) and the continuance of such notice of unpaid balance or claim of lien for forty-five (45) days after Borrower obtains notice of such recording or forty-five (45) calendar days after Lender’s demand, whichever occurs first, without discharge, satisfaction or provision for payment being made by Borrower in a manner reasonably satisfactory to Lender; or (ii) the occurrence of a material uninsured casualty loss (except to the extent that funds have been deposited with Lender pursuant to the terms of the Mortgage specifically for the payment of such premiums and not applied by Lender to pay such premiums as required thereby) with respect to, any material portion of the Properties; or (iii) the sequestration or attachment of, or any levy or execution upon, any of the Property or any other collateral provided by Borrower or any other party under any of the Loan Documents which is not released, expunged or dismissed within sixty (60) days; or

 

	
d.  

	
Representations and Warranties.  (i) The failure of any representation or warranty of Borrower in any of the Loan Documents or by any of Lino Lakes Owner and/or Maple Grove Owner in any of the Loan Documents and the continuation of such failure for more than 10 days after written notice to Borrower from Lender requesting that Borrower cure such failure; or

 

	
e.  

	
Bankruptcy; Insolvency; Dissolution. (i) The filing by Borrower, any of Lino Lakes Owner, and/or Maple Grove Owner, or the general partner of Borrower of a petition for relief under the Bankruptcy Reform Act of 1978 (11 U.S.C. Sections 101-1330) as now or hereafter amended or recodified ("Bankruptcy Code"), or under any other present or future state or federal law regarding bankruptcy, reorganization or other debtor relief law; (ii) the filing against Borrower, Lino Lakes Owner, and/or Maple Grove Owner, or the general partner of Borrower of an involuntary proceeding under the Bankruptcy Code or other debtor relief law and the failure of such entity to effect a full dismissal of such proceeding within 90 days after the date of filing such proceeding; (iii) a general assignment by Borrower, any of Lino Lakes Owner, Maple Grove Owner and/or Omaha, or the general partner of Borrower for the benefit of creditors; or (iv) Borrower, any of Lino Lakes Owner, Maple Grove Owner and/or Omaha or the general partner of Borrower applying for, or the appointment of, a receiver, trustee, custodian or liquidator of Borrower or any of its property; or

 

	
f.  

	
Intentionally Omitted.

 

	
g.  

	
Transfer of Assets.  The sale, assignment, pledge, hypothecation, mortgage or transfer of all or a substantial portion of the assets of Borrower except as permitted by this Loan Agreement and in accordance with the provisions of Article 5 hereof; or

 

	
h.  

	
Derivative Default.  The occurrence and continuance beyond any applicable grace, notice and cure periods of a default by Borrower or a termination event with respect to Borrower under any swap, derivative, foreign exchange or hedge transaction or arrangement (or other similar transaction or arrangement howsoever described or defined) at any time entered into between Borrower and Lender in connection with the Loan; or

 

	
  

	
i.

	
Pledge or Mortgage.  The occurrence of a default under the Pledge or Mortgage including, without limitation, any failure to perform any covenant, condition, or obligation thereunder, provided, however, that if a cure period is provided for the remedy of such failure, failure to perform will not constitute a Default until such date as the specified cure period expires; or

	
j.  

	
Termination of Existing Tenant Lease.  With respect to all leases, licenses and agreements for occupancy of the Properties or any portion thereof that are now existing (the "Existing Tenant Leases"), the surrender, abandonment, termination or rescission of any such Existing Tenant Lease for space at any of the Properties, which space is not re-leased within one hundred eighty (180) days on market terms and conditions as approved by Lender; or

 

	
k.  

	
First Mortgage.  The occurrence of a default under that certain first mortgage lien on the Lino Lakes Property beyond any applicable notice and/or cure period thereunder.

 

	
l.  

	
Other Transfer of Assets.  The sale, assignment, pledge, hypothecation, mortgage or transfer of all or a substantial portion of assets of Lino Lakes Owner or Maple Grove Owner other than in the ordinary course of business of said entity or as permitted by this Loan Agreement, the Pledge and the Mortgage, and in accordance with the provisions of Article 5 hereof; or

 

	
m.  

	
Intentionally Omitted.

 

	
n.  

	
Other Obligations.  Borrower or any of Lino Lakes Owner, and/or Maple Grove Owner shall default in any obligation to Lender, whether direct or indirect, absolute or contingent, which default is not cured within any applicable notice and/or cure period.

 

	
11.2.  

	
ACCELERATION UPON DEFAULT; REMEDIES.  Upon the occurrence of any Default specified herein, Lender may, at its sole option, declare all sums owing to Lender under the Replacement Notes, this Agreement and the other Loan Documents immediately due and payable, after which time such sums shall, at Lender’s option, bear interest at the Default Rate.  Upon such acceleration, Lender may, in addition to all other remedies permitted under the Replacement Notes and this Agreement and the other Loan Documents and at law or equity, apply the Reserve, NOI Reserve, NOI and/or Net Proceeds, if any, to the sums owing under the Loan Documents in such order and priority as Lender shall determine in its sole discretion and notwithstanding any other provision of this Loan Agreement relating to application or priority thereof.

 

	
11.3.  

	
DISBURSEMENTS TO THIRD PARTIES.  Upon the occurrence of a Default occasioned by Borrower’s failure to pay money to a third party as required by this Agreement, Lender may but shall not be obligated to make such payment from the funds of Lender, or from any amounts in deposit accounts maintained by Borrower with Lender.  If such payment is made from funds of Lender, Borrower shall immediately repay such funds upon written demand of Lender.  In such case, the Default with respect to which any such payment has been made by Lender shall not be deemed cured until such repayment has been made by Borrower to Lender.  As additional security for Borrower’s performance under the Loan Documents, Borrower hereby irrevocably pledges and assigns to Lender all monies at any time deposited with Lender pursuant to the Loan Documents.

 

	
11.4.  

	
SET OFF.  Upon the occurrence of a Default, Lender may set off any and all amounts due by Borrower against any indebtedness or obligation of Lender to Borrower.

 

	
11.5.  

	
RIGHTS CUMULATIVE; NO WAIVER.  All of Lender’s rights and remedies provided in this Agreement and the other Loan Documents, together with those granted by law or at equity, are cumulative and may be exercised by Lender at any time.  Lender’s exercise of any right or remedy shall not constitute a cure of any Default unless all sums then due and payable to Lender under the Loan Documents are repaid and Borrower has cured all other Defaults.  No waiver shall be implied from any failure of Lender to take, or any delay by Lender in taking, action concerning any Default or failure of condition under the Loan Documents, or from any previous waiver of any similar or unrelated Default or failure of condition.  Any waiver or approval under any of the Loan Documents must be in writing and shall be limited to its specific terms.  Any funds expended by Lender in the exercise of its rights or remedies under this Agreement and the other Loan Documents shall be payable to Lender upon demand, together with interest at the rate applicable to the principal balance of the Note from the date the funds were expended.

 

ARTICLE 12.    MISCELLANEOUS PROVISIONS

 

	
12.1.  

	
NOTICES.  All notices, demands or other communications required or permitted to be given pursuant to the provisions of this Agreement shall be in writing and shall be considered as properly given if delivered personally or sent by first class United States Postal Service mail, postage prepaid, except that notice of Default may be sent by certified mail, return receipt requested, or by Overnight Express Mail or by overnight commercial courier service, charges prepaid.  Notices so sent shall be effective 3 days after mailing, if mailed by first class mail, and otherwise upon receipt at the address set forth below; provided, however, that non-receipt of any communication as the result of any change of address of which the sending party was not notified or as the result of a refusal to accept delivery shall be deemed receipt of such communication.  For purposes of notice, the address of the parties shall be:

 

Borrower:                                SB Partners

c/o Sentinel Real Estate Corporation

1251 Avenue of the Americas

New York, New York 10020

Attn: George N. Tietjen, III

Lino Lakes Owner:                                Lino Lakes Realty, LLC

c/o Sentinel Real Estate Corporation

1251 Avenue of the Americas

New York, New York 10020

Attn: George N. Tietjen, III

Maple Grove Owner:                                           Eagle IV Realty, LLC

c/o Sentinel Real Estate Corporation

1251 Avenue of the Americas

New York, New York 10020

Attn: George N. Tietjen, III

	
  

	
Lender:

	
WELLS FARGO BANK, NATIONAL ASSOCIATION

Special Situations Group

375 Park Avenue, 5th Floor

New York, NY 10152

Attn: Michael Cook

	
12.2.  

	
RELATIONSHIP OF PARTIES.  The relationship of Borrower and Lender under the Loan Documents is, and shall at all times remain, solely that of borrower and lender, and Lender neither undertakes nor assumes any responsibility or duty to Borrower or to any third party with respect to the Property, except as expressly provided in this Agreement and the other Loan Documents.

 

	
12.3.  

	
ATTORNEYS’ FEES AND EXPENSES; ENFORCEMENT.  If any attorney is engaged by Lender to enforce or defend any provision of this Agreement, any of the other Loan Documents or as a consequence of any Default under the Loan Documents, with or without the filing of any legal action or proceeding, and including, without limitation, any fees and expenses incurred in any bankruptcy proceeding or in connection with any appeal of a lower court decision, then Borrower shall immediately pay to Lender, upon demand, the amount of all attorneys’ fees and expenses and all reasonable costs incurred by Lender in connection therewith.  In the event of legal proceedings, court costs and attorneys’ fees shall be set by the court and not by jury and shall be included in any judgment obtained by Lender.

 

	
12.4.  

	
IMMEDIATELY AVAILABLE FUNDS.  All amounts payable by Borrower to Lender shall be payable only in United States currency in immediately available funds, at such places as may be designated in writing by Lender, no later than 11 AM Eastern Standard Time or Eastern Daylight Time, as applicable.  Any amounts received after such time shall be credited the next Business Day.

 

	
12.5.  

	
LOAN SALES AND PARTICIPATIONS; DISCLOSURE OF INFORMATION.  Borrower agrees that Lender may elect, at any time, to sell, assign or grant participations in all or any portion of its rights and obligations under the Loan Documents, and that any such sale, assignment or participation may be to one or more financial institutions, private investors, and/or other entities, at Lender’s sole discretion.  Borrower further agrees that Lender may disseminate to any such actual or potential purchaser(s), assignee(s) or participant(s) all documents and information (including, without limitation, all financial information) which has been or is hereafter provided to or known to Lender with respect to: (a) the Property and its operation; (b) any party connected with the Loan (including, without limitation, Borrower, any constituent partner, shareholder, member or manager of Borrower, any Guarantor, any indemnitor and any non-borrower mortgagor); and/or (c) any lending relationship other than the Loan which Lender may have with any party connected with the Loan.  The indemnity obligations of Borrower under the Loan Documents shall also apply with respect to any purchaser, assignee or participant.

 

	
12.6.  

	
LENDER’S AGENTS.  Lender may designate an agent or independent contractor to exercise any of Lender’s rights under this Agreement and any of the other Loan Documents.  Any reference to Lender in any of the Loan Documents shall include Lender’s agents, employees or independent contractors.  Borrower shall pay the reasonable costs of such agent or independent contractor either directly to such person or to Lender in reimbursement of such costs, as applicable.

 

	
12.7.  

	
WAIVER OF RIGHT TO TRIAL BY JURY.  EACH PARTY TO THIS AGREEMENT HEREBY EXPRESSLY WAIVES ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION (a) ARISING UNDER THE LOAN DOCUMENTS, INCLUDING, WITHOUT LIMITATION, ANY PRESENT OR FUTURE MODIFICATION THEREOF OR (b) IN ANY WAY CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE PARTIES HERETO OR ANY OF THEM WITH RESPECT TO THE LOAN DOCUMENTS (AS NOW OR HEREAFTER MODIFIED) OR ANY OTHER INSTRUMENT, DOCUMENT OR AGREEMENT EXECUTED OR DELIVERED IN CONNECTION HEREWITH, OR THE TRANSACTIONS RELATED HERETO OR THERETO, IN EACH CASE WHETHER SUCH CLAIM, DEMAND, ACTION OR CAUSE OF ACTION IS NOW EXISTING OR HEREAFTER ARISING, AND WHETHER SOUNDING IN CONTRACT OR TORT OR OTHERWISE; AND EACH PARTY HEREBY AGREES AND CONSENTS THAT ANY PARTY TO THIS AGREEMENT MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS SECTION WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE PARTIES HERETO TO THE WAIVER OF ANY RIGHT THEY MIGHT OTHERWISE HAVE TO TRIAL BY JURY.

 

	
12.8.  

	
SEVERABILITY.  If any provision or obligation under this Agreement and the other Loan Documents shall be determined by a court of competent jurisdiction to be invalid, illegal or unenforceable, that provision shall be deemed severed from the Loan Documents and the validity, legality and enforceability of the remaining provisions or obligations shall remain in full force as though the invalid, illegal, or unenforceable provision had never been a part of the Loan Documents, provided, however, that if the rate of interest or any other amount payable under the Note or this Agreement or any other Loan Document, or the right of collectability therefor, are declared to be or become invalid, illegal or unenforceable, Lender’s obligations to make advances under the Loan Documents shall not be enforceable by Borrower.

 

	
12.9.  

	
HEIRS, SUCCESSORS AND ASSIGNS.  Except as otherwise expressly provided under the terms and conditions of this Agreement, the terms of the Loan Documents shall bind and inure to the benefit of the heirs, successors and assigns of the parties.

 

	
12.10.  

	
ATTORNEY IN FACT.  Borrower hereby irrevocably appoints and authorizes Lender, as Borrower’s attorney in fact, which agency is coupled with an interest, to execute and/or record in Lender’s or Borrower’s name any notices, instruments or documents that Lender deems appropriate to correct patent mistakes in the Loan Documents, provided that no such action shall (i) change the economic terms of the Loan Documents, or (ii) increase the liability under the Loan Documents.

 

	
12.11.  

	
TAX SERVICE.  Lender is authorized, at Borrower’s expense, to obtain a tax service contract with a third party vendor which shall provide tax information on the Property satisfactory to Lender.

 

	
12.12.  

	
TIME.  Time is of the essence of each and every term of this Agreement.

 

	
12.13.  

	
GOVERNING LAW.  This Agreement shall be governed by, and construed and enforced in accordance with the laws of the state of New York except that the law of the State where the Maple Grove Property shall govern in connection with the Mortgage and the enforcement thereof by Lender, except to the extent preempted by federal laws.

 

	
12.14.  

	
JURISDICTION; VENUE.  Borrower and all persons and entities in any manner obligated to Lender under the Loan Documents irrevocably submits to the jurisdiction of: (a) any state or federal court sitting in the State of New York over any suit, action, or proceeding, brought by Borrower against Lender, arising out of or relating to the Loan Documents or the Loan; (b) any state or federal court sitting in the state where the Property is located or the state in which Borrower’s principal place of business is located over any suit, action or proceeding, brought by Lender against Borrower, arising out of or relating to any of the Loan Documents or the Loan; (c) any state court sitting in the county of the state where the Property is located over any suit, action, or proceeding, brought by Lender to exercise its power to foreclose the Property or any action brought by Lender to enforce its rights with respect to any other collateral under the Loan Documents, and (d) consents to service of process by any means authorized by the law of the state where the Property is located or federal law.  Borrower irrevocably waives, to the fullest extent permitted by law, any objection that Borrower may now or hereafter have to the laying of venue of any such suit, action, or proceeding brought in any such court and any claim that any such suit, action, or proceeding brought in any such court has been brought in an inconvenient forum.

 

	
12.15.  

	
INTEGRATION; INTERPRETATION; INCONSISTENCIES.  The Joinder Agreement is hereby terminated and shall be of no further force and effect.  The Loan Documents contain or expressly incorporate by reference the entire agreement of the parties with respect to the matters contemplated therein and supersede all prior negotiations or agreements, written or oral. The Loan Documents shall not be modified except by written instrument executed by all parties. Any reference to the Loan Documents includes any amendments, renewals or extensions now or hereafter approved by Lender in writing.  In the event of any inconsistencies between the terms of this Loan Agreement and the terms of any other Loan Document, the terms of this Loan Agreement shall prevail.

 

	
12.16.  

	
Intentionally Omitted.

 

	
12.17.  

	
FORM OF DOCUMENTS.  The form and substance of all documents, instruments, and forms of evidence to be delivered to Lender under the terms of this Agreement and any of the other Loan Documents shall be subject to Lender’s approval and shall not be modified, superseded or terminated in any respect without Lender’s prior written approval.

 

	
12.18.  

	
NO THIRD PARTIES BENEFITED.  No person other than Lender, Borrower, Omaha, Maple Grove Owner and Lino Lakes Owner and their permitted successors and assigns shall have any right of action under any of the Loan Documents.

 

	
12.19.  

	
ACTIONS.  Borrower agrees that Lender, in exercising the rights, duties or liabilities of Lender or Borrower under the Loan Documents, may commence, appear in or defend any action or proceeding purporting to affect the Property or the Loan Documents and Borrower shall immediately reimburse Lender upon demand for all such expenses so incurred or paid by Lender, including, without limitation, reasonable attorneys’ fees and expenses and court costs.

 

	
12.20.  

	
LENDER’S CONSENT.  Wherever in this Agreement or the other Loan Documents there is a requirement for Lender’s approval or consent and/or a document to be provided or an action taken "to the satisfaction of Lender", it is understood by such phrase that, except as expressly modified herein or therein, Lender shall exercise its approval, consent, right or judgment in a reasonable manner given the specific facts and circumstances applicable at the time.  Lender shall have no liability for damages to Borrower for its refusal or failure to give such determination, consent or approval.

 

	
12.21.  

	
EFFECT OF BANKRUPTCY.  In the event that, pursuant to any insolvency, bankruptcy, reorganization, receivership or other debtor relief law, or any judgment, order or decision thereunder, Lender must refund or restore any payment, or any part thereof, received by Lender in satisfaction of the Loan, including the Curtailment, any prior release or discharge from the terms of the Loan given by Lender shall be without effect, and such amount shall be added to the then principal of the A-Note or B-Note to which it was applied as if such payment had not been made, and all other Loan Documents shall remain in effect.

 

	
12.22.  

	
HEADINGS.  All article, section or other headings appearing in this Agreement and any of the other Loan Documents are for convenience of reference only and shall be disregarded in construing this Agreement and any of the other Loan Documents.

 

	
12.23.  

	
ELECTRONIC TRANSMISSION OF DATA:  Lender and Borrower agree that certain data related to the Loan (including confidential information, documents, applications and reports) may be transmitted electronically, including transmission over the Internet.  This data may be transmitted to, received from or circulated among agents and representatives of Borrower and/or Lender and their affiliates and other persons involved with the subject matter of this Agreement.  Borrower acknowledges and agrees that (a) there are risks associated with the use of electronic transmission and that Lender does not control the method of transmittal or service providers, (b) Lender has no obligation or responsibility whatsoever and assumes no duty or obligation for the security, receipt or third party interception of any such transmission, and (c) Borrower will release, hold harmless and indemnify Lender for, from and against any claim, damage or loss, including that arising in whole or part from Lender’s strict liability or sole, comparative or contributory negligence, which is related to the electronic transmission of data.

 

	
12.24.  

	
WAIVERS.  Borrower hereby waives and releases all claims or demands of any nature whatsoever that it has against Lender, whether arising under the Loan Documents, by reason of any discussions heretofore had with Lender about the Loan, the entry into and consummation of this Agreement or by any acts or omissions of Lender or its directors, officers, employees, affiliates, attorneys or agents, or otherwise, and any claim that Lender is a mortgagee-in-possession, whether known or unknown, existing as of the effective date of this Agreement, and further waive and release any and all defenses or offsets of any nature whatsoever existing as of the effective date of this Agreement to the payment of the Loan or the performance of their obligations under the Loan Documents.  Borrower hereby waives any claim for monetary damages against Lender which Borrower may have as of the effective date of this Agreement based on any assertion that Lender has unreasonably withheld or unreasonably delayed any determination, consent or approval, and Borrower agrees that its sole remedy therefor shall be an action or proceeding to enforce any such provision or for specific performance, injunction or declaratory judgment with respect thereto.  The agreements contained in this Section shall survive any termination of this Agreement.

 

	
12.25.  

	
COUNTERPARTS.  To facilitate execution, this document may be executed in as many counterparts as may be convenient or required.  It shall not be necessary that the signature of, or on behalf of, each party, or that the signature of all persons required to bind any party, appear on each counterpart.  All counterparts shall collectively constitute a single document.  It shall not be necessary in making proof of this document to produce or account for more than a single counterpart containing the respective signatures of, or on behalf of, each of the parties hereto.  Any signature page to any counterpart may be detached from such counterpart without impairing the legal effect of the signatures thereon and thereafter attached to another counterpart identical thereto except having attached to it additional signature pages.

 

	
12.26.  

	
EXHIBITS INCORPORATED.  Exhibits A, B, C, D, E, F and G attached hereto, are incorporated into this Agreement.

 

                                                                           [signatures follow]

 

853313v13   012381.0100

  

  

  

Loan No. [LOAN NUMBER]

               IN WITNESS WHEREOF, Borrower and Lender have executed this Agreement as of the date first set forth above.

 

LENDER:

WELLS FARGO BANK, NATIONAL ASSOCIATION

By: /s/ Michael Cook

Name: Michael Cook

Title: Vice President

BORROWER:

SB PARTNERS, a New York limited partnership

	
  

	
By:  SB Partners Real Estate Corporation, a New York corporation, its sole general partner

       By: /s/ George N. Tietjen III

Name: George N. Tietjen III

Title: Vice President

 

 

 

 

 

 

 

 

853313v13   012381.0100

  

  

  

Loan No. [LOAN NUMBER]

EXHIBIT A - DESCRIPTION OF MAPLE GROVE PROPERTY

 

Exhibit A to LOAN AGREEMENT between SB PARTNERS, as "Borrower", and WELLS FARGO BANK, NATIONAL ASSOCIATION, as "Lender", dated as of __________________.

 

All that certain real property located at 11400 73rd Avenue North, Maple Grove, MN, described as follows:

 

PARCEL 1:

 

Lot 1, Block 1, C.E.D. Plaza, Hennepin County, Minnesota.

 

PARCEL 2:

 

That part of vacated 73rd Avenue North as dedicated in the plat of C.E.D. Plaza which lies westerly of the southerly extension of the East line of Lot 1, Block 1, C.E.D. Plaza, and which lies northerly and easterly of Line "A" described below; and

 

That part of vacated 73rd Avenue North as dedicated in the plat of Deerwood Homes 4th Addition which lies westerly of the southerly extension of the East line of Lot 1, Block 1, C.E.D. Plaza, and which lies northerly and easterly of Line "A" described below.

 

Line "A": Beginning at the most westerly corner of Outlot E in Deerwood Homes 4th Addition; thence North 71 degrees 20 minutes 15 seconds West, assumed bearing, along the northwesterly extension of the southwesterly line of said Outlot E a distance of 77.01 feet; thence northwesterly a distance of 323.22 feet, along a tangential curve concave to the Southwest having a radius of 1,045.40 feet and a central angle of 17 degrees 42 minutes 54 seconds and said line there terminating.

 

PARCEL 3:

 

That part of vacated County Road No. 130, now known as 73rd Avenue North, as donated and dedicated in the plat of C.E.D. Plaza, according to the recorded plat, Hennepin County, Minnesota, which lies West of the southerly extension of the East line of Lot 1, Block 1 C.E.D. Plaza and which lies northerly of a line 40.00 feet Northeasterly and Northerly of and parallel with the following-described line: Commencing at the northeast corner of the Southeast Quarter of Section 26, Township 119, Range 22; thence South 0 degrees 56 minutes 42 seconds East, assumed bearing, along the East line of said Southeast Quarter 26837 feet to the point of beginning of said line to be herein described; thence North 71 degrees 20 minutes 15 seconds West 724.84 feet; thence Northwesterly 310.86 feet along a tangential curve, concave to the Southwest, having a radius of 1005.40 feet and a central angle of 17 degrees 42 minutes 54 seconds and said line there terminating.

 

PARCEL 4:

 

That part of vacated 73rd Avenue North as dedicated in the plat of TROUT PONDS which lies northeasterly of the following-described line: Beginning at the most westerly comer of Outlot E in Deerwood Homes 4th Addition; thence North 71 degrees 20 minutes 15 seconds West, assumed bearing, along the northwesterly extension of the southwesterly line of said Outlot E a distance of 77.01 feet; thence northwesterly a distance of 323.22 feet, along a tangible curve concave to the Southwest having a radius of 1,045.40 feet and a central angle of 17 degrees 42 minutes 54 seconds and said line there terminating.

 

Assessor’s Parcel Number or PIN:  26-119-22-14-0002.

 

853313v13   012381.0100

  

  

  

Loan No. [LOAN NUMBER]

EXHIBIT B - DESCRIPTION OF LINO LAKES PROPERTY

 

Exhibit B to LOAN AGREEMENT between SB PARTNERS, as "Borrower", and WELLS FARGO BANK, NATIONAL ASSOCIATION, as "Lender", dated as of __________________.

 

All that certain real property located at 435 Park Court, Lino Lakes, MN, described as follows:

 

Lot 2, Block 1, Marshan Lake Industrial park, Anoka County, Minnesota.

 

Assessor’s Parcel Number or PIN:  17-31-22-23-0022.

 

 

 

853313v13   012381.0100

  

  

  

Loan No. [LOAN NUMBER]

EXHIBIT C – NET NAPERVILLE PROCEEDS

 

Exhibit C to LOAN AGREEMENT between SB PARTNERS, as "Borrower, and WELLS FARGO BANK, NATIONAL ASSOCIATION, as "Lender", dated as of ______________________.

 

	
SB Partners

	  
	
Sale of 175 Ambassador Drive, Naperville, IL

	  
	
  to Duke Realty LP

	  
	
December 3, 2010

	  
	  	  
	
Gross Naperville Consideration

	
 $           19,500,000.00

	  	  
	
Payoff First Mortgage Loan secured by Prudential

	
             (6,477,000.51)

	
Approved Closing Costs:

	  
	
 Broker commission - CB Richard Ellis

	
                (358,750.00)

	
 Moses & Singer LLP, less $25,000 credit paid to Wachovia,

	  
	
 for Wells Fargo legal expenses incurred in Loan Agreement

	  
	
 modification with SB Partners

	
                  (84,714.41)

	
  SB Partners Appraisal Costs (Loan Agreement modification)

	
                  (24,840.00)

	
  Survey update (paid outside of closing)

	
                    (2,240.00)

	
  Seller legal fees - Ingram Yuzek Gainen Carroll and Bertolotti

	
                  (28,000.00)

	
  Owners's Title Policy Premium

	
                    (5,450.00)

	
  First American Title closing fee - 50%

	
                       (375.00)

	
  Transfer tax - county

	
                    (9,750.00)

	
  Transfer tax - state

	
                  (19,500.00)

	
  Transfer tax - city

	
                  (58,500.00)

	
  First American Title MGR Service fees

	
                       (350.00)

	
  First American Title recording fee

	
                       (100.00)

	
Gross Proceeds from Naperville Property Sale

	
        12,430,430.08

	
"Reserve" for tenant improvements and leasing commissions

	
            500,000.00

	
Net Naperville Proceeds and Curtailment

	
 $          11,930,430.08

	  	  
	
Disposition of Gross Proceeds from Naperville Property Sale:

	  
	
"Reserve" for tenant improvements and leasing commissions

	
                   500,000.00

	
Mandatory paydown  to Wachovia Bank, N.A.

	
              10,500,000.00

	
Prepayment of mandatory monthly amortization of

	  
	
  $30,000 per month for 47 months.  If closing

	  
	
  occurs effective May 1, 2011, amortization is paid

	  
	
  through and including payment due March 1, 2015

	
                1,410,000.00

	
Prepayment of a portion of mandatory monthly amortization of

	  
	
  $30,000 per month for the 48th month following closing of

	  
	
  extension - partial prepayment for payment due April 1, 2015

	
                     20,430.08

	  	  
	  	
 $           12,430,430.08

C-

 

 

853313v13   012381.0100

  

  

  

Loan No. [LOAN NUMBER]

EXHIBIT D - DOCUMENTS

 

Exhibit D to LOAN AGREEMENT between SB PARTNERS, as "Borrower, and WELLS FARGO BANK, NATIONAL ASSOCIATION, as "Lender", dated as of ______________________.

 

	
1.  

	
LOAN DOCUMENTS.  The documents listed below, numbered 1.1 through 1.13, inclusive, of even date herewith (unless otherwise specified), and amendments, modifications and supplements thereto which have received the prior written consent of Lender, together with any documents executed in the future that are approved by Lender and that recite that they are "Loan Documents" for purposes of this Agreement are collectively referred to herein as the Loan Documents.

 

	
1.1.  

	
This Agreement.

 

	
1.2.  

	
A-Note.

 

	
1.3.  

	
B-Note

 

	
1.4.  

	
Mortgage.

 

	
1.5.  

	
Pledge Agreement executed by Borrower in favor of Lender [Re Maple Grove Owner].

 

	
1.6.  

	
Manager Subordination Agreement executed by Manager.

 

	
1.7.  

	
Assignment of Rents and Leases.

 

	
1.8.  

	
Certificate as to Property Matters [Re the Lino Lakes Property].

 

	
1.9.  

	
Certificate as to Property Matters [Re the Maple Grove Property].

 

	
1.10.  

	
UCC-1 Financing Statement Re Mortgage, to be filed with DE SOS.

 

	
1.11.  

	
UCC-1 Financing Statement Re Mortgage, to be filed with MN SOS.

 

	
1.12.  

	
UCC-1 Financing Statement Re Pledge Agreement, to be filed with NY SOS.

 

	
1.13.  

	
UCC-1 Financing Statement Re Loan Agreement negative pledge, to be filed with NY SOS.

 

 

D-1

 

 

853313v13   012381.0100

  

  

  

Loan No. [LOAN NUMBER]

EXHIBIT E – AMORTIZATION SCHEDULE

 

Exhibit E to LOAN AGREEMENT between SB PARTNERS, as "Borrower, and WELLS FARGO BANK, NATIONAL ASSOCIATION, as "Lender", dated as of ______________________.

 

	  	
SB Partners

	  	  
	  	
A-Note Fixed (Minimum) Amortization

	  	  	  	  
	  	
A-Note Fixed Annual Amortization

	
 $          360,000.00

	  	
Net Naperville Proceeds

	  	
 $      11,930,430.08

	  	  	  	  
	  	
Payment Date

	
Period

	
Minimum Fixed Amortization

	  	  	  	  
	  	
1-May-2011

	
              1

	
$0.00

	  	
1-Jun-2011

	
              2

	
$0.00

	  	
1-Jul-2011

	
              3

	
$0.00

	  	
1-Aug-2011

	
              4

	
$0.00

	  	
1-Sep-2011

	
              5

	
$0.00

	  	
1-Oct-2011

	
              6

	
$0.00

	  	
1-Nov-2011

	
              7

	
$0.00

	  	
1-Dec-2011

	
              8

	
$0.00

	  	
1-Jan-2012

	
              9

	
$0.00

	  	
1-Feb-2012

	
            10

	
$0.00

	  	
1-Mar-2012

	
            11

	
$0.00

	  	
1-Apr-2012

	
            12

	
$0.00

	  	
1-May-2012

	
            13

	
$0.00

	  	
1-Jun-2012

	
            14

	
$0.00

	  	
1-Jul-2012

	
            15

	
$0.00

	  	
1-Aug-2012

	
            16

	
$0.00

	  	
1-Sep-2012

	
            17

	
$0.00

	  	
1-Oct-2012

	
            18

	
$0.00

	  	
1-Nov-2012

	
            19

	
$0.00

	  	
1-Dec-2012

	
            20

	
$0.00

	  	
1-Jan-2013

	
            21

	
$0.00

	  	
1-Feb-2013

	
            22

	
$0.00

	  	
1-Mar-2013

	
            23

	
$0.00

	  	
1-Apr-2013

	
            24

	
$0.00

	  	
1-May-2013

	
            25

	
$0.00

	  	
1-Jun-2013

	
            26

	
$0.00

	  	
1-Jul-2013

	
            27

	
$0.00

	  	
1-Aug-2013

	
            28

	
$0.00

	  	
1-Sep-2013

	
            29

	
$0.00

	  	
1-Oct-2013

	
            30

	
$0.00

	  	
1-Nov-2013

	
            31

	
$0.00

	  	
1-Dec-2013

	
            32

	
$0.00

	  	
1-Jan-2014

	
            33

	
$0.00

	  	
1-Feb-2014

	
            34

	
$0.00

	  	
1-Mar-2014

	
            35

	
$0.00

	  	
1-Apr-2014

	
            36

	
$0.00

	  	
1-May-2014

	
            37

	
$0.00

	  	
1-Jun-2014

	
            38

	
$0.00

	  	
1-Jul-2014

	
            39

	
$0.00

	  	
1-Aug-2014

	
            40

	
$0.00

	  	
1-Sep-2014

	
            41

	
$0.00

	  	
1-Oct-2014

	
            42

	
$0.00

	  	
1-Nov-2014

	
            43

	
$0.00

	  	
1-Dec-2014

	
            44

	
$0.00

	  	
1-Jan-2015

	
            45

	
$0.00

	  	
1-Feb-2015

	
            46

	
$0.00

	  	
1-Mar-2015

	
            47

	
$0.00

	  	
 

1-Apr-2015

	
            48

	
 

$9,569.92

	  	
1-May-2015

	
            49

	
$30,000.00

	  	
1-Jun-2015

	
            50

	
$30,000.00

	  	
1-Jul-2015

	
            51

	
$30,000.00

	  	
1-Aug-2015

	
            52

	
$30,000.00

	  	
1-Sep-2015

	
            53

	
$30,000.00

	  	
1-Oct-2015

	
            54

	
$30,000.00

	  	
1-Nov-2015

	
            55

	
$30,000.00

	  	
1-Dec-2015

	
            56

	
$30,000.00

	  	
1-Jan-2016

	
            57

	
$30,000.00

	  	
1-Feb-2016

	
            58

	
$30,000.00

	  	
1-Mar-2016

	
            59

	
$30,000.00

	  	
1-Apr-2016

	
            60

	
$30,000.00

	  	
1-May-2016

	
            61

	
$30,000.00

	  	
1-Jun-2016

	
            62

	
$30,000.00

	  	
1-Jul-2016

	
            63

	
$30,000.00

	  	  	  	  

 

853313v13   012381.0100

  

  

  

Loan No. [LOAN NUMBER]

EXHIBIT F – ILLUSTRATION OF NOI APPLICATION

 

	  	  	  	  	
Notes / Assumptions

	
Loan outstanding (prior to restructure closing)

	  	
22,000,000.00

	  	  
	  	  	  	  	  
	
Gross Naperville Consideration

	  	
12,430,430.08

	  	
 

	
Reserve Account

	  	
500,000.00

	  	
 

	
Net Naperville Proceeds

	  	
11,930,430.08

	  	  
	  	  	  	  	  
	
New loan amounts:

	  	  	  	  
	
A-Note prior to Curtailment

	  	
16,000,000.00

	  	  
	
Curtailment (Net Naperville Proceeds)

	  	
11,930,430.08

	  	  
	
A-Note

	  	
4,069,569.92

	  	  
	
B-Note

	  	
6,000,000.00

	  	  
	  	  	  	  	  
	
Year 1 cash flow:

	  	  	  	  
	
Property NOI

	  	
1,672,777.00

	  	
Net Operating Income from Maple Grove Property and Lino Lakes Property. Assumes no Operating Income from Omaha.

	
Included Capital Expenditures

	  	
0.00

	  	
Capped at $300,000 annually

	
Property debt service

	  	
580,000.00

	  	
Lino Lakes Realty LLC $10.0 million first mortgage at 5.80% interest only

	
Subtotal: Operating Expenses

	  	
580,000.00

	  	  
	  	  	  	  	  
	
NOI

	  	
1,092,777.00

	  	  
	
A-Note Interest

	
5.00%

	
206,000.00

	  	  
	
A-Note fixed amortization

	  	
0.00

	  	
Net Naperville Proceeds in excess of $10.5 million shall be applied as an offset to the A-Note fixed amortization of $30,000 per month. Amortization commences April 1, 2015 based on Net Naperville Proceeds.

	
Partnership Expenses

	  	
350,400.00

	  	  
	
Excluded Partnership Expenses

	  	  	  	  
	
SREIS Tax Service Fees

	  	
-44,000.00

	  	  
	
SREC Bank Fees

	  	
-6,200.00

	  	  
	
Fund Management Fee

	
50.00%

	
425,000.00

	  	
Assumed based on 50% of $852,483 Fund Management Fee as of the Effective Date.

	  	  	  	  	  
	
Net cash flow after A-Note interest and fixed amortization & Fund Management Fee

	  	
161,577.00

	  	  
	  	  	  	  	  
	
Excess NOI

	
60.0%

	
100,000.00

	  	
60% Excess NOI to Lender with a minimum $100,000, to the extent available. Applied per loan agreement to A-Note principal until the A-Note is paid in full and then to B-Note interest followed by B-Note principal.

	  	  	  	  	  
	
Borrower's Share of NOI

	  	
61,577.00

	  	
Capped at $250,000 annually.  The Fund Management Fee plus Borrower's Share of NOI is capped at $700,000 annually

	  	  	  	  	  

 

853313v13   012381.0100

  

  

  

Loan No. [LOAN NUMBER]

EXHIBIT G – PARTNERSHIP EXPENSES

 

Estimated 2011 Proforma Partnership Expenses

 

Audit and Tax Fees                                                                                                        $129,400

 

SEC Filing Costs                                                                                                              2,400

 

SEC XBRL Consulting                                                                                                            15,000

 

Investor Services and Record Maintenance                                                                                                            83,000

 

Legal                                                                                                            10,500

 

Printing                                                                                                            20,500

 

Bookkeeping                                                                                                            13,000

 

IT                                                                                                              5,000

 

Corporate Taxes                                                                                                              2,000

 

Admin.                                                                                                              1,200

 

Filing Fees                                                                                                              5,200

 

Corporate Insurance                                                                                                            13,000

 

Total 2011 Proforma Partnership Expenses                                                                                                        $300,200

 

853313v13   012381.0100sbp8k42911msa.htm

  

  

  

Loan No. [LOAN NUMBER]

(Space Above For Recording Use)

 

NOTWITHSTANDING ANYTHING TO THE CONTRARY CONTAINED HEREIN, THE MAXIMUM PRINCIPAL AMOUNT OF THE INDEBTEDNESS SECURED BY THIS MORTGAGE IS $5,000,000, TOGETHER WITH SUCH ADDITIONAL AMOUNTS AS MAY BE ADVANCED BY MORTGAGEE AND FOR WHICH NO MORTGAGE REGISTRATION TAX IS PAYABLE PURSUANT TO MINNESOTA STATUTES ANNOTATED SECTION 287.05, SUBD. 4. THE SECURED PRINCIPAL AMOUNT SHALL BE REDUCED ONLY BY THE LAST AND FINAL SUMS THAT THE BORROWER REPAYS WITH RESPECT TO THE LOAN EVIDENCED BY THE LOAN AGREEMENT AND REPLACEMENT NOTES AND SHALL NOT BE REDUCED BY ANY INTERVENING REPAYMENTS OF THE LOAN BY BORROWER SUCH THAT SO LONG AS THE PRINCIPAL BALANCE OF THE LOAN EXCEEDS SUCH MAXIMUM AMOUNT ANY SUCH REPAYMENT SHALL NOT BE DEEMED APPLIED AGAINST, OR TO REDUCE, THE PRINCIPAL PORTION OF THE LOAN SECURED BY THIS MORTGAGE.

 

MORTGAGE, SECURITY AGREEMENT, ASSIGNMENT OF LEASES AND RENTS AND FIXTURE FINANCING STATEMENT

 

NAME OF

MORTGAGOR(S):                                           EAGLE IV REALTY, LLC

NAME OF

MORTGAGEE:                                  WELLS FARGO BANK, NATIONAL ASSOCIATION

 

853664v9   012381.0100

  

  

  

Loan No. [LOAN NUMBER]

 

 

MORTGAGE, SECURITY AGREEMENT, ASSIGNMENT OF LEASES AND RENTS

 

AND FIXTURE FINANCING STATEMENT

 

THE PARTIES TO THIS MORTGAGE, SECURITY AGREEMENT, ASSIGNMENT OF LEASES AND RENTS AND FIXTURE FINANCING STATEMENT (“Mortgage”), made as of _________________, 2011, are EAGLE IV REALTY, LLC, (“Mortgagor”) and WELLS FARGO BANK, NATIONAL ASSOCIATION (“Mortgagee”).

 

ARTICLE 1.   GRANT

 

	
1.1.  

	
GRANT.  For the purposes of and upon the terms and conditions in this Mortgage, Mortgagor irrevocably grants, conveys, bargains, mortgages, encumbers, assigns, transfers, hypothecates, pledges, sets over, and grants a security interest and assigns to Mortgagee, with power of sale and right of entry and possession, all of that real property located in the City of Maple Grove, County of Hennepin, State of Minnesota, described on Exhibit A attached hereto, together with all buildings and other improvements, fixtures and equipment now or hereafter located on the real property, all right, title, interest, and privileges of Mortgagor, if any, in and to all streets, roads, and alleys used in connection with or pertaining to such real property, all water and water rights,  minerals, oil and gas, and other hydrocarbon substances in, on or under the real property, all appurtenances, easements, rights and rights of way appurtenant or related thereto, and all air rights, development rights and credits, licenses and permits related to the real property.  All interest or estate which Mortgagor may hereafter acquire in the property described above, and all additions and accretions thereto, and the proceeds of any of the foregoing are collectively referred to herein as the “Property”.  The listing of specific rights or property shall not be interpreted as a limit of general terms.

 

	
1.2.  

	
WARRANTY OF TITLE; USE OF PROPERTY.  Mortgagor warrants that it is the sole owner of good and marketable unencumbered fee simple title to the Property, subject only to those exceptions approved by Mortgagee in writing as set forth in the loan title policy issued to Mortgagee.  Mortgagor warrants that the Property is not used principally for agricultural or farming purposes, and that the Property is not homestead property.

 

ARTICLE 2.    OBLIGATIONS SECURED

 

	
2.1.  

	
OBLIGATIONS SECURED.  Mortgagor makes this Mortgage for the purpose of securing:  (a) the performance of the obligations contained herein and in that certain Loan Agreement dated of even date herewith to which SB PARTNERS  (“Borrower”) and Mortgagee are parties (“Loan Agreement”); (b) the payment of the Loan; provided, however, that the maximum principal amount that is, or under any contingency may be, secured by the Mortgage shall be FIVE MILLION AND NO/100 DOLLARS ($5,000,000), together with such additional amounts as may be payable pursuant to Minnesota Statutes Annotated Section 287.05, Subd. 4, with interest thereon, according to the terms of the Loan Agreement and those certain Replacement Notes, as defined in the Loan Agreement, of even date herewith, executed by Borrower, and payable to Mortgagee, as lender; (c) payment to Mortgagee of all liability, whether liquidated or unliquidated, defined, contingent, conditional or of any other nature whatsoever, and performance of all other obligations, arising under any swap, derivative, foreign exchange or hedge transaction or arrangement (or similar transaction or arrangement howsoever described or defined) at any time entered into between Borrower and Mortgagee in connection with the Replacement Notes; (d) any and all extensions, renewals, or modifications of the Replacement Notes and Loan Agreement, whether the same be in greater or lesser amounts; and (e) payment and performance of any future advances and other obligations that the then record owner of all or part of the Property may agree to pay and/or perform (whether as principal, surety or guarantor) for the benefit of Borrower, when such future advance or obligation is evidenced by a writing which recites that it is secured by this Mortgage (collectively, the “Secured Obligations”).

 

	
2.2.  

	
INCORPORATION.  The term “obligations” is used herein in its broadest and most comprehensive sense and shall be deemed to include, without limitation, all interest and charges, prepayment charges (if any), late charges and loan fees at any time accruing or assessed on any of the Secured Obligations, together with all costs of collecting the Secured Obligations.  All terms of the Secured Obligations and the documents evidencing such obligations are incorporated herein by this reference.  All persons who may have or acquire an interest in the Property shall be deemed to have notice of the terms of the Secured Obligations and the rate of interest on one or more Secured Obligations may vary from time to time.

 

ARTICLE 3.    ASSIGNMENT OF LEASES AND RENTS

 

	
3.1.  

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

 

	
3.2.  

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

 

	
3.3.  

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

 

ARTICLE 4.    SECURITY AGREEMENT AND FIXTURE FILING

 

	
4.1.  

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

 

All goods, building and other materials, supplies, inventory, work in process, equipment, machinery, fixtures, furniture, furnishings, signs and other personal property and embedded software included therein and supporting information, wherever situated, which are or are to be incorporated into, used in connection with, or appropriated for use on the Property; together with all Rents and other rents and security deposits derived from the Property; all inventory, accounts, cash receipts, deposit accounts, accounts receivable, contract rights, licenses, agreements, general intangibles, payment intangibles, software, chattel paper (whether electronic or tangible), instruments, documents, promissory notes, drafts, letters of credit, letter of credit rights, supporting obligations, insurance policies, insurance and condemnation awards and proceeds, proceeds of the sale of promissory notes, any other rights to the payment of money, trade names, trademarks and service marks arising from or related to the ownership, management, leasing, operation, sale or disposition of the Property or any business now or hereafter conducted thereon by Mortgagor; all development rights and credits,  and any and all permits, consents, approvals, licenses, authorizations and other rights granted by, given by or obtained from, any governmental entity with respect to the Property; all water and water rights, wells and well rights, canals and canal rights, ditches and ditch rights, springs and spring rights, and reservoirs and reservoir rights appurtenant to or associated with the Property, whether decreed or undecreed, tributary, non-tributary or not non-tributary, surface or underground or appropriated or unappropriated, and all shares of stock in water, ditch, lateral and canal companies, well permits and all other evidences of any of such rights, all deposits or other security now or hereafter made with or given to utility companies by Mortgagor with respect to the Property; all advance payments of insurance premiums made by Mortgagor with respect to the Property; all plans, drawings and specifications relating to the Property; all loan funds held by Mortgagee, whether or not disbursed; all funds deposited with Mortgagee pursuant to any loan agreement; all reserves, deferred payments, deposits, accounts, refunds, cost savings and payments of any kind related to the Property or any portion thereof; all of Mortgagor’s right, title and interest, now or hereafter acquired, to the payment of money from Mortgagee to Mortgagor under any swap, derivative, foreign exchange or hedge transaction or arrangement (or similar transaction or arrangement howsoever described or defined) at any time entered into between Mortgagor and Mortgagee in connection with the Replacement Notes; together with all replacements and proceeds of, and additions and accessions to, any of the foregoing; together with all books, records and files relating to any of the foregoing.

As to all of the above described personal property which is or which hereafter becomes a “fixture” under applicable law, this Mortgage is intended to constitute a fixture filing within the Minnesota Uniform Commercial Code, as amended or recodified from time to time, for the state wherein the Property is located (“UCC”).

	
4.2.  

	
RIGHTS OF MORTGAGEE.  Upon the occurrence of a Default (as hereinafter defined) Mortgagee shall have all the rights of a “Secured Party” under the UCC.  In addition to such rights, Mortgagee may, but shall not be obligated to, at any time without notice and at the expense of Mortgagor: (a) give notice to any person of Mortgagee’s rights hereunder and enforce such rights at law or in equity; (b) insure, protect, defend and preserve the Collateral or any rights or interests of Mortgagee therein; (c) inspect the Collateral; and (d) endorse, collect and receive any right to payment of money owing to Mortgagor under or from the Collateral.  Mortgagee may: (i) upon written notice, require Mortgagor to assemble any or all of the Collateral and make it available to Mortgagee at a place designated by Mortgagee; (ii) without prior notice, enter upon the Property or other place where any of the Collateral may be located and take possession of, collect, sell, and dispose of any or all of the Collateral, and store the same at locations acceptable to Mortgagee at Mortgagor’s expense; and/or (iii) sell, assign and deliver at any place or in any lawful manner all or any part of the Collateral and bid and become the purchaser at any such sales.  Notwithstanding the above, in no event shall Mortgagee be deemed to have accepted any property other than cash in satisfaction of any obligation of Mortgagor to Mortgagee unless Mortgagee shall make an express written election of said remedy under the UCC or other applicable law.

 

Mortgagor acknowledges and agrees that a disposition of the Collateral in accordance with Mortgagee’s rights and remedies as heretofore provided is a disposition thereof in a commercially reasonable manner and that 10 days prior notice of such disposition is commercially reasonable notice.  Mortgagor further agrees that any sale or other disposition of all or any portion of the Collateral may be applied by Mortgagee first to the reasonable expenses in connection therewith, including reasonable attorneys’ fees and disbursements, and then to the payment of the Secured Obligations.

 

	
4.3.  

	
FIXTURE FILING.  This instrument shall be deemed to be a Fixture Filing within the meaning of the Minnesota Uniform Commercial Code, and for such purpose, the following information is given:

 

	
(a)  

	
Name and address of Debtor:                                                      Eagle IV Realty, LLC

c/o Sentinel Real Estate Corporation

                      1251 Avenue of the Americas

New York, New York 10020

Attn: George N. Tietjen, III

Organizational I.D. No. 3529764

	
(b)  

	
Name and address of

	
Secured Party:

	
Wells Fargo Bank, National Association

Special Situations Group

375 Park Avenue, 5th Floor

New York, NY 10152

Attn: Michael Cook

	
(c)  

	
Description of the types                                                      The Property and Collateral described above

(or items) of property covered

by this Fixture Filing:

	
(d)  

	
Description of real estate                                                      See Exhibit A hereto

to which the collateral is

attached or upon which it

is or will be located:

 

Some of the above described collateral is or is to become fixtures upon the above described real estate, and this Fixture Filing is to be filed for record in the public real estate records.

 

	
4.4.  

	
REPRESENTATIONS, WARRANTIES AND COVENANTS.  Mortgagor represents and warrants that: (a) Mortgagor’s principal place of business is located at the address shown in Section 7.8 below; and (b) Mortgagor’s legal name is exactly as set forth on the first page of this Mortgage and all of Mortgagor’s organizational documents or agreements delivered to Mortgagee are complete and accurate in every respect.  Mortgagor agrees: (a) not to change its name, and as applicable, its chief executive office, its principal residence or the jurisdiction in which it is organized and/or registered without giving Mortgagee 30 days prior written notice thereof; (b) to cooperate with Mortgagee in perfecting all security interests granted herein and in obtaining such agreements from third parties as Mortgagee deems necessary, proper or convenient in connection with the creation, preservation, perfection, priority or enforcement of any of its rights hereunder; and (c) that Mortgagee is authorized to file financing statements in the name of Mortgagor to perfect Mortgagee’s security interest in the Collateral.

 

ARTICLE 5.    RIGHTS AND DUTIES OF THE PARTIES

 

	
5.1.  

	
PERFORMANCE OF SECURED OBLIGATIONS.  If Borrower fails to timely pay or perform any portion of the Secured Obligations (including taxes, assessments and insurance premiums), or if a legal proceeding is commenced that may significantly affect Mortgagee’s rights in the Property, then Mortgagee may (but is not obligated to), at Borrower’s and/or Mortgagor’s expense, take such action as it considers to be necessary to protect the value of the Property and Mortgagee’s rights in the Property, including the retaining of counsel, and any reasonable amount so expended by Mortgagee will be added to the Secured Obligations and will be payable by Mortgagor to Mortgagee on demand, together with interest thereon from the date of advance until paid at the default rate provided in the Loan Agreement.

 

	
5.2.  

	
TAXES AND ASSESSMENTS.  Mortgagor shall also pay prior to delinquency all taxes, assessments, levies and charges imposed upon the Property by any public authority or upon Mortgagee by reason of its interest in any Secured Obligation or in the Property, or by reason of any payment made to Mortgagee pursuant to any Secured Obligation; provided, however, Mortgagor shall have no obligation to pay taxes which may be imposed from time to time upon Mortgagee and which are measured by and imposed upon Mortgagee’s net income.

 

	
5.3.  

	
LIENS, ENCUMBRANCES AND CHARGES.  Mortgagor shall immediately discharge any lien not approved by Mortgagee in writing that has or may attain priority over this Mortgage (except the lien for real estate taxes provided such taxes are timely paid).

 

	
5.4.  

	
DUE ON SALE OR ENCUMBRANCE.  Mortgagor shall not make or permit any “Transfer” of the Property or portion thereof which is not a “Permitted Transfer”. If a “Transfer” of the Property or any portion thereof is made which is not a “Permitted Transfer”, THEN Mortgagee, in its sole discretion, may at anytime thereafter declare all Secured Obligations immediately due and payable.  The Mortgage shall be released as to the Property (or as to that portion of the Property which is being transferred pursuant to a “Permitted Transfer”, as defined in the Loan Agreement) upon satisfaction of all of the following conditions precedent: (i) the Replacement Notes shall have been repaid in full, including, without limitation, principal and interest and other sums due on the Loan, or, in the event of a “Permitted Transfer”, upon the occurrence of such “Permitted Transfer” and application of the “Net Proceeds” therefrom in accordance with Article 5 of the Loan Agreement; and (ii) all reasonable costs, fees, expenses and other sums paid or incurred by or on behalf of Lender in exercising any of its rights, powers, options, privileges and remedies hereunder or under the Loan Agreement, including reasonable attorneys' fees and disbursements, plus any accrued interest thereon as provided therein, shall have been fully paid in cash. Quoted terms used in this Section shall have the meanings given thereto in the Loan Agreement.

 

	
5.5.  

	
DAMAGES; INSURANCE AND CONDEMNATION PROCEEDS.

 

	
a.  

	
The following (whether now existing or hereafter arising) are all absolutely and irrevocably assigned by Mortgagor to Mortgagee and, at the request of Mortgagee, shall be paid directly to Mortgagee: (i) all awards of damages and all other compensation payable directly or indirectly by reason of a condemnation or proposed condemnation for public or private use affecting all or any part of, or any interest in, the Property or Collateral; (ii) all other claims and awards for damages to, or decrease in value of, all or any part of, or any interest in, the Property or Collateral; (iii) all proceeds of any insurance policies payable by reason of loss sustained to all or any part of the Property or Collateral; and (iv) all interest which may accrue on any of the foregoing.  Subject to applicable law, and without regard to any requirement contained in this Mortgage, Mortgagee may at its discretion apply all or any of the proceeds it receives to its expenses in settling, prosecuting or defending any claim and may apply the balance to the Secured Obligations in any order acceptable to Mortgagee, and/or Mortgagee may release all or any part of the proceeds to Mortgagor upon any conditions Mortgagee may impose.  Mortgagee may commence, appear in, defend or prosecute any assigned claim or action and may adjust, compromise, settle and collect all claims and awards assigned to Mortgagee; provided, however, in no event shall Mortgagee be responsible for any failure to collect any claim or award, regardless of the cause of the failure, including, without limitation, any malfeasance or nonfeasance by Mortgagee or its employees or agents.

 

	
b.  

	
Mortgagee shall permit insurance or condemnation proceeds held by Mortgagee to be used for repair or restoration but shall condition such application upon reasonable conditions, including, without limitation:  (i) the deposit with Mortgagee of such additional funds which Mortgagee determines are needed to pay all costs of the repair or restoration, (including, without limitation, taxes, financing charges, insurance and rent during the repair period); (ii) the establishment of an arrangement for lien releases and disbursement of funds acceptable to Mortgagee (the arrangement contained in the Loan Agreement for obtaining lien releases and disbursing loan funds shall be deemed reasonable with respect to disbursement of insurance or condemnation proceeds); (iii) the delivery to Mortgagee of plans and specifications for the work, a contract for the work signed by a contractor acceptable to Mortgagee, a cost breakdown for the work and a payment and performance bond for the work, all of which shall be acceptable to Mortgagee; and (iv) the delivery to Mortgagee of evidence acceptable to Mortgagee (aa) that after completion of the work the income from the Property will be sufficient to pay all expenses and debt service for the Property; (bb) of the continuation of Leases acceptable to and required by Mortgagee; (cc) that upon completion of the work, the size, capacity and total value of the Property will be at least as great as it was before the damage or condemnation occurred; (dd) that there has been no material adverse change in the financial condition or credit of Mortgagor and Borrower and any guarantor of the Note since the date of this Mortgage; and (ee) of the satisfaction of any additional conditions that Mortgagee may reasonably establish to protect its security.  Mortgagor hereby acknowledges that the conditions described above are reasonable, and, if such conditions have not been satisfied within 90 days of receipt by Mortgagee of such insurance or condemnation proceeds, then Mortgagee may apply such insurance or condemnation proceeds to pay the Secured Obligations in such order and amounts as Mortgagee in its sole discretion may choose.  Notwithstanding the foregoing, if (A) a Default shall have occurred and be continuing beyond any applicable notice and cure periods, (B) more than the greater of fifty percent (50%) or such percentage set forth in a Lease of the reasonably estimated fair market value of the Property is damaged or destroyed, (C) Mortgagee is not reasonably satisfied that the work can be completed six (6) months prior to the Maturity Date of the A-Note, (or if paid in full, then of the B-Note) or (D) Mortgagee is not reasonably satisfied that the work can be completed within nine (9) months of the damage to or destruction of the Property, Mortgagee shall have the option, in its sole discretion to apply any insurance proceeds it may receive pursuant to this Mortgage (less any reasonable cost to Mortgagee of recovering and paying out such proceeds incurred pursuant to the terms hereof and not otherwise reimbursed to Mortgagee, including, without limitation, reasonable attorneys’ fees and expenses) to the payment of the Secured Obligations, without any prepayment fee or charge of any kind, or to allow such proceeds to be used for the work pursuant to the terms and subject to the conditions hereof.

 

	
5.6.  

	
DEFENSE AND NOTICE OF LOSSES, CLAIMS AND ACTIONS.  At Mortgagor’s sole expense, Mortgagor shall protect, preserve and defend the Property and Collateral and title to and right of possession of the Property and Collateral, the security hereof and the rights and powers of Mortgagee hereunder against all adverse claims.  Mortgagor shall give Mortgagee prompt notice in writing of the assertion of any claim, of the filing of any action or proceeding, of any material damage to the Property or Collateral and of any condemnation offer or action.

 

	
5.7.  

	
[Intentionally omitted.]

 

	
5.8.  

	
RELEASES, EXTENSIONS, MODIFICATIONS AND ADDITIONAL SECURITY.  Without notice to or the consent, approval or agreement of any persons or entities having any interest at any time in the Property or in any manner obligated under this Mortgage (“Interested Parties”), Mortgagee may, from time to time, release any person or entity from liability for the payment or performance of any Secured Obligation, take any action or make any agreement extending the maturity or otherwise altering the terms or increasing the amount of any Secured Obligation, or accept additional security or release all or a portion of the Property and other security for the Secured Obligations.  None of the foregoing actions shall release or reduce the personal liability of any of said Interested Parties, or release or impair the priority of the lien of and security interests created by this Mortgage upon the Property and Collateral.

 

	
5.9.  

	
SUBROGATION.  Mortgagee shall be subrogated to the lien of all encumbrances, whether released of record or not, paid in whole or in part by Mortgagee pursuant to the Loan Documents or by the proceeds of any loan secured by this Mortgage.

 

	
5.10.  

	
RIGHT OF INSPECTION.  Subject to the rights of tenants, Mortgagee, its agents and employees, may enter the Property at any reasonable time for the purpose of inspecting the Property and Collateral and ascertaining Mortgagor’s compliance with the terms hereof.

 

ARTICLE 6.    DEFAULT PROVISIONS

 

	
6.1.  

	
DEFAULT.  For all purposes hereof, the term “Default” shall mean any default under any of the Replacement Notes, the Loan Agreement, or any of the other Loan Documents, including this Mortgage.

 

	
6.2.  

	
RIGHTS AND REMEDIES.  At any time after Default, Mortgagee shall have all the following rights and remedies:

 

	
a.  

	
With or without notice, to declare all Secured Obligations immediately due and payable;

 

	
b.  

	
With or without notice, and without releasing Mortgagor or Borrower from any Secured Obligation, and without becoming a mortgagee in possession, to cure any breach or Default of Mortgagor or Borrower and, in connection therewith, to enter upon the Property and do such acts and things as Mortgagee deems necessary or desirable to protect the security hereof, including, without limitation: (i) to appear in and defend any action or proceeding purporting to affect the security of this Mortgage or the rights or powers of Mortgagee under this Mortgage; (ii) to pay, purchase, contest or compromise any encumbrance, charge, lien or claim of lien which, in the sole judgment of Mortgagee, is or may be senior in priority to this Mortgage, the judgment of Mortgagee being conclusive as between the parties hereto; (iii) to obtain insurance and  to pay any premiums or charges with respect to insurance required to be carried under this Mortgage; or (iv) to employ counsel, accountants, contractors and other appropriate persons;

 

	
c.  

	
To foreclose this Mortgage by action or advertisement, pursuant to the statutes of the State of Minnesota in such case made and provided, power being expressly granted to sell the Property at public auction and convey the same to the purchaser in fee simple and, out of the proceeds arising from such sale, to pay the Secured Obligations secured hereby with interest, and all legal costs and charges of such foreclosure and the maximum attorneys’ fees permitted by law, which costs, charges and fees Mortgagor agrees to pay;

 

	
d.  

	
To apply to a court of competent jurisdiction for and to obtain appointment of a receiver of the Property under the terms set forth herein as a matter of strict right and without regard to the adequacy of the security for the repayment of the Secured Obligations, the existence of a declaration that the Secured Obligations are immediately due and payable, or the filing of a notice of default, and Mortgagor hereby consents to such appointment;

 

	
e.  

	
To enter upon, possess, manage and operate the Property or any part thereof; and

 

	
f.  

	
To resort to and realize upon the security hereunder and any other security now or later held by Mortgagee concurrently or successively and in one or several consolidated or independent judicial actions or lawfully taken non judicial proceedings, or both;

 

Upon sale of the Property at any judicial or non-judicial foreclosure, Mortgagee may credit bid (as determined by Mortgagee in its sole and absolute discretion) all or any portion of the Secured Obligations.  In determining such credit bid, Mortgagee may, but is not obligated to, take into account all or any of the following: (i) appraisals of the Property as such appraisals may be discounted or adjusted by Mortgagee in its sole and absolute underwriting discretion; (ii) expenses and costs incurred by Mortgagee with respect to the Property prior to foreclosure; (iii) expenses and costs which Mortgagee anticipates will be incurred with respect to the Property after foreclosure, but prior to resale, including, without limitation, the costs of any structural reports, hazardous waste reports or any remediation costs related thereto; (iv) anticipated discounts upon resale of the Property as a distressed or foreclosed property; and (v) such other factors or matters that Mortgagee deems appropriate.  In regard to the above, Mortgagor acknowledges and agrees that: (w) Mortgagee is not required to use any or all of the foregoing factors to determine the amount of its credit bid; (x) this Section does not impose upon Mortgagee any additional obligations that are not imposed by law at the time the credit bid is made; and (y) Mortgagee’s credit bid may be higher or lower than any appraised value of the Property.

 

	
6.3.  

	
APPLICATION OF FORECLOSURE SALE PROCEEDS.  Except as may be otherwise required by applicable law, after deducting all costs, fees and expenses of Mortgagee, including, without limitation, cost of evidence of title and attorneys’ fees in connection with sale and costs and expenses of sale and of any judicial proceeding wherein such sale may be made, Mortgagee shall apply all proceeds of any foreclosure sale, notwithstanding any other provision for the application or priority thereof in the other Loan Documents: (a) to payment of all sums expended by Mortgagee under the terms hereof and not then repaid, with accrued interest at the rate of interest specified in the Loan Agreement to be applicable on or after maturity or acceleration of any of the Replacement Notes; (b) to payment of all other Secured Obligations; and (c) the remainder, if any, to the person or persons legally entitled thereto.

 

	
6.4.  

	
APPLICATION OF OTHER SUMS.  All sums received by Mortgagee under this Mortgage, other than those described in Section 6.3, less all costs and expenses incurred by Mortgagee or any receiver, including, without limitation, attorneys’ fees, shall be applied in payment of the Secured Obligations as provided in the Loan Agreement; provided, however, after the occurrence of a Default such sums may instead be applied in such order as Mortgagee shall determine in its sole discretion; provided, however, Mortgagee shall have no liability for funds not actually received by Mortgagee.

 

	
6.5.  

	
NO CURE OR WAIVER.  Neither Mortgagee’s nor any receiver’s entry upon and taking possession of all or any part of the Property and Collateral, nor any collection of rents, issues, profits, insurance proceeds, condemnation proceeds or damages, other security or proceeds of other security, or other sums, nor the application of any collected sum to any Secured Obligation, nor the exercise or failure to exercise of any other right or remedy by Mortgagee or any receiver shall cure or waive any breach, Default or notice of Default under this Mortgage, or nullify the effect of any notice of Default or sale (unless all Secured Obligations then due have been paid and performed and Mortgagor has cured all other Defaults), or impair the status of the security, or prejudice Mortgagee in the exercise of any right or remedy, or be construed as an affirmation by Mortgagee of any tenancy, lease or option or a subordination of the lien of, or security interests created by, this Mortgage.

 

	
6.6.  

	
PAYMENT OF COSTS, EXPENSES AND ATTORNEYS’ FEES.   Mortgagor agrees to pay to Mortgagee immediately and without demand all costs and expenses incurred by Mortgagee pursuant to this Article 6 (including, without limitation, court costs and reasonable attorneys’ fees, whether incurred in litigation, including, without limitation, at trial, on appeal or in any bankruptcy or other proceeding, or not and the costs of any appraisals obtained in connection with a determination of the fair value of the Property).  In addition, Mortgagor will pay a reasonable fee for title searches, sale guarantees, publication costs, appraisal reports or environmental assessments made in preparation for and in the conduct of any such proceedings or suit.  All of the foregoing amounts must be paid to Mortgagee as part of any reinstatement tendered hereunder.  In the event of any legal proceedings, court costs and attorneys’ fees shall be set by the court and not by jury and shall be included in any judgment obtained by Mortgagee.

 

	
6.7.  

	
POWER TO FILE NOTICES AND CURE DEFAULTS.  Mortgagor hereby irrevocably appoints Mortgagee and its successors and assigns, as its attorney in-fact, which agency is coupled with an interest, to prepare, execute and file or record any document necessary to create, perfect or preserve Mortgagee’s security interests and rights in or to any of the Property and Collateral, and upon the occurrence of an event, act or omission which, with notice or passage of time or both, would constitute a Default, Mortgagee may perform any obligation of Mortgagor hereunder.

 

	
6.8.  

	
RECEIVERSHIP.  Mortgagor agrees that upon or at any time (i) after the occurrence of a Default, (ii) after the first publication of notice of sale for the foreclosure of this Mortgage under Minnesota Statutes, Chapter 580, (iii) with the commencement of an action to foreclose this Mortgage under Minnesota Statutes, Chapter 581, or (iv) during any period of redemption, Mortgagee, by application to the district court where the Property is located, by an action separate from any foreclosure under Chapter 580 or in the foreclosure action under 581 (it being understood and agreed that the existence of a foreclosure under Chapter 580 or a foreclosure action under Chapter 581 is not a prerequisite to any action for a receiver hereunder), will be entitled to appointment of a receiver for the Property.  Mortgagee’s right to appointment of a receiver will be without regard to waste, adequacy of the security or solvency of Mortgagor.  The court will determine the amount of any bond to be posted by the receiver.  The receiver, who will be an experienced property manager, will (until the Secured Obligations are paid in full and, in the case of a foreclosure sale, during the entire redemption period) collect the rents, manage the Property so as to prevent waste, execute leases within or beyond the period of the receivership if approved by the court, and apply the rents, profits and income in the following order:

 

	
(A)  

	
payment of all reasonable fees of the receiver, if any, approved by the court;

 

	
(B)  

	
repayment of tenant security deposits as required by Minnesota Statutes, Section 504B.178;

 

	
(C)  

	
payment of real estate taxes and special assessments on the Property, or of any periodic escrow payments therefor required by the terms of this Mortgage or any prior encumbrance;

 

	
(D)  

	
payment of insurance premiums, or of any periodic escrow payments therefor required by the terms of this Mortgage or any prior encumbrance;

 

	
(E)  

	
payment for keeping the covenants of a lessor or licensor under Minnesota Statutes, Section 504B.161; and

 

	
(F)  

	
payment of expenses for normal maintenance of the Property.

 

Payment of the balance of the rents, profits and income, if any, to Mortgagee is to be credited, prior to commencement of foreclosure, against the Secured Obligations secured hereby, in such order as Mortgagee may elect, or to be credited, after commencement of foreclosure, to the amount required to be paid to effect a reinstatement prior to foreclosure sale, or to be credited, after a foreclosure sale, to any deficiency and then to the amount required to be paid to effect a redemption, pursuant to Minnesota Statutes, Sections 580.30, 580.23 and 581.10, or their successors, as the case may be, with any excess to be paid to Mortgagor; provided, however that if this Mortgage is not reinstated nor the Property redeemed, as and during the times provided by said Sections 580.30, 580.23 or 581.10, or their successors, the entire amount received pursuant hereto, after deducting therefrom the amounts applied by Mortgagee to any deficiency, shall be the property of the purchaser of the Property acquired through foreclosure.  The receiver shall file periodic accountings as the court determines are necessary and a final accounting at the time of his discharge.  Mortgagee shall have the right, at any time and without limitation, as provided in Minnesota Statutes, Section 582.03, to advance money to the receiver to pay any part or all of the expenses which the receiver should otherwise pay, if cash were available from the Property, and all sums so advanced, with interest at the Default Rate (as such rate is set forth in the Note), shall be a part of the sum required to be paid to redeem from any foreclosure sale.  Said sums shall be proved by the affidavit of Mortgagee, its agent or attorney, describing the expenses for which the same were advanced and describing the Property, which must be filed for record in the office where this Mortgage is recorded, and a copy thereof shall be furnished to the sheriff and the receiver at least ten (10) days before the expiration of any period of redemption.

 

Upon the happening of any of the events set forth above, or during any period of redemption after foreclosure sale, and prior to the appointment of a receiver as hereinabove provided, Mortgagee shall have the right to collect the rents, issues, profits and other income of every kind from the Property and apply the same in the manner hereinbefore provided for the application thereof by a receiver.  The rights set forth in this Section shall be binding upon the occupiers of the Property from the date of filing by Mortgagee in the office where this Mortgage is recorded, in the county in which the Property is located, of a notice of default in the terms and conditions of this Mortgage and service of a copy of the notice upon the occupiers of the Property.  Enforcement hereof shall not cause Mortgagee to be deemed a mortgagee in possession, unless it elects in writing to be so deemed.  For the purpose aforesaid, Mortgagee may enter and take possession of the Property, manage and operate the same and take any action which, in Mortgagee’s judgment, is necessary or proper to conserve the value of the Property.  Mortgagee may also take possession of, and for these purposes use, any and all of the Collateral (as defined in this Mortgage) contained in the Property.

 

The costs and expenses (including any receiver’s fees and attorneys’ fees) incurred by Mortgagee pursuant to the powers herein contained shall be immediately reimbursed by Mortgagor to Mortgagee on demand, shall be secured hereby and shall bear interest from the date incurred at the Default Rate.  Mortgagee shall not be liable to account to Mortgagor for any action taken pursuant hereto, other than to account for any rents, profits and income actually received by Mortgagee.

 

	
6.9.  

	
REMEDIES CUMULATIVE. All rights and remedies of Mortgagee provided hereunder are cumulative and are in addition to all rights and remedies provided by applicable law or in any other agreements between Borrower and Mortgagee.  No failure on the part of Mortgagee to exercise any of its rights hereunder arising upon any Default shall be construed to prejudice its rights upon the occurrence of any other or subsequent Default.  No delay on the part of Mortgagee in exercising any such rights shall be construed to preclude it from the exercise thereof at any time while that Default is continuing. Mortgagee may enforce any one or more remedies or rights hereunder successively or concurrently.  By accepting payment or performance of any of the Secured Obligations after its due date, Mortgagee shall not waive the agreement contained herein that time is of the essence, nor shall Mortgagee waive either its right to require prompt payment or performance when due of the remainder of the Secured Obligations or its right to consider the failure to so pay or perform a Default.

 

ARTICLE 7.    MISCELLANEOUS PROVISIONS

 

	
7.1.  

	
ADDITIONAL PROVISIONS.  The Loan Documents contain or incorporate by reference the entire agreement of the parties with respect to matters contemplated herein and supersede all prior negotiations.  The Loan Documents grant further rights to Mortgagee and contain further agreements and affirmative and negative covenants by Borrower which apply to this Mortgage and to the Property and Collateral and such further rights and agreements are incorporated herein by this reference.  Where Mortgagor and Borrower are not the same, “Mortgagor” means the owner of the Property in any provision dealing with the Property, “Borrower” means the obligor in any provision dealing with the Secured Obligations, and both where the context so requires.

 

	
7.2.  

	
ATTORNEYS’ FEES.  If the Note is placed with an attorney for collection or if an attorney is engaged by Mortgagee to exercise rights or remedies or otherwise take actions to collect thereunder or under any other Loan Document, as defined in the Loan Agreement, or if suit be instituted for collection, enforcement of rights and remedies, then in all events, Mortgagor agree(s) to pay all reasonable costs of collection, exercise of remedies or rights or other assertion of claims, including, but not limited to, reasonable attorneys’ fees, whether or not court proceedings are instituted, and, where instituted, whether in district court, appellate court, or bankruptcy court.

 

	
7.3.  

	
NO WAIVER.  No previous waiver and no failure or delay by Mortgagee in acting with respect to the terms of the Replacement Notes or the Mortgage shall constitute a waiver of any breach, default, or failure of condition under the Replacement Notes, the Mortgage or the obligations secured thereby.  A waiver of any term of the Replacement Notes, the Mortgage or of any of the obligations secured thereby must be made in writing and shall be limited to the express written terms of such waiver.  In the event of any inconsistencies between the terms of the Replacement Notes and the terms of any other document related to the loan evidenced by the Replacement Notes, the terms of the Loan Agreement shall prevail.

 

	
7.4.  

	
MERGER.  No merger shall occur as a result of Mortgagee’s acquiring any other estate in, or any other lien on, the Property unless Mortgagee consents to a merger in writing.

 

	
7.5.  

	
SUCCESSORS IN INTEREST.  The terms, covenants, and conditions herein contained shall be binding upon and inure to the benefit of the heirs, successors and assigns of the parties hereto; provided, however, that this Section does not waive or modify the provisions of the Section above titled “Due on Sale or Encumbrance”.

 

	
7.6.  

	
GOVERNING LAW.  This Mortgage shall be construed in accordance with the laws of the state where the Property is located without giving effect to the choice of law provisions thereof, except to the extent that federal laws preempt the laws of such state.

 

	
7.7.  

	
EXHIBITS INCORPORATED.  All exhibits, schedules or other items attached hereto are incorporated into this Mortgage by such attachment for all purposes.

 

	
7.8.  

	
NOTICES.  All notices, demands or other communications required or permitted to be given pursuant to the provisions of this Mortgage shall be in writing and shall be considered as properly given if delivered personally or sent by first class United States Postal Service mail, postage prepaid, except that notice of Default shall be sent by certified mail, return receipt requested, or by Overnight Express Mail or by overnight commercial courier service, charges prepaid.  Notices so sent shall be effective 3 days after mailing, if mailed by first class mail, and otherwise upon receipt at the address set forth below; provided, however, that non-receipt of any communication as the result of any change of address of which the sending party was not notified or as the result of a refusal to accept delivery shall be deemed receipt of such communication.  For purposes of notice, the address of the parties shall be:

 

Mortgagor:                                Eagle IV Realty, LLC

c/o Sentinel Real Estate Corporation

1251 Avenue of the Americas

New York, New York 10020

Attn: George N. Tietjen, III

With a copy to:                                           Ingram Yuzek Gainen Carroll & Bertolotti, LLP

250 Park Avenue

New York, New York 10177

Attn: David J. Zinberg, Esq.

	
  

	
Mortgagee:

	
WELLS FARGO BANK, NATIONAL ASSOCIATION

Special Situations Group

375 Park Avenue, 5th Floor

New York, NY 10152

Attn: Michael Cook

 

Any party shall have the right to change its address for notice hereunder to any other location within the continental United States by the giving of 30 days notice to the other party in the manner set forth hereinabove.  Mortgagor shall forward to Mortgagee, without delay, any notices, letters or other communications delivered to the Property or to Mortgagor naming Mortgagee, “Lender” or the “Construction Mortgagee” or any similar designation as addressee, or which could reasonably be deemed to affect the construction of the Improvements or the ability of Mortgagor to perform its obligations to Mortgagee under the Replacement Notes or the Loan Agreement.

 

Mortgagor requests a copy of any statutory notice of default and a copy of any statutory notice of sale be mailed to Mortgagor at the address set forth above.

 

	
7.9.  

	
ADVERTISING.  In connection with the Loan, Mortgagor hereby agrees that Wells Fargo & Company and its subsidiaries (“Wells Fargo”) may publicly identify details of the Loan in Wells Fargo advertising and public communications of all kinds, including, but not limited to, press releases, direct mail, newspapers, magazines, journals, e-mail, or internet advertising or communications.  Such details may include the name of the Property, the address of the Property, the amount of the Loan, the date of the closing and a description of the size/location of the Property.

 

	
7.10.  

	
WAIVER OF MARSHALING RIGHTS.  Mortgagor, for itself and for all parties claiming through or under Mortgagor, and for all parties who may acquire a lien on or interest in the Property hereby waives all rights to have the Property and/or any other property marshaled upon any foreclosure of the lien of this Mortgage or on a foreclosure of any other lien securing the Secured Obligations.  Mortgagee shall have the right to sell the Property and any or all of said other property as a whole or in separate parcels, in any order that Mortgagee may designate.

 

	
7.11.  

	
POWER OF SALE; WAIVER OF HEARING ON FORECLOSURE.  THIS MORTGAGE CONTAINS A POWER OF SALE AND UPON THE OCCURRENCE OF A DEFAULT MAY BE FORECLOSED BY ADVERTISEMENT.  MORTGAGOR HEREBY WAIVES ALL RIGHTS UNDER THE CONSTITUTION AND LAWS OF THE UNITED STATES AND THE STATE OF MINNESOTA TO A HEARING PRIOR TO SALE IN CONNECTION WITH FORECLOSURE OF THIS MORTGAGE BY ADVERTISEMENT AND ALL NOTICE REQUIREMENTS EXCEPT AS SET FORTH IN THE MINNESOTA STATUTE PROVIDING FOR FORECLOSURE BY ADVERTISEMENT.

 

	
7.12.  

	
FUTURE ADVANCE MORTGAGE.  All future advances under the Replacement Notes, this Mortgage and the other Loan Documents shall have the same priority as if the future advance was made on the date that this Mortgage was recorded.  Notice is hereby given that the Loan secured hereby may increase as a result of defaults hereunder by Mortgagor, which may include (but are not limited to) unpaid interest or late charges, unpaid taxes, assessments or insurance premiums, or other costs which Mortgagee elects to advance, defaults under Leases that Mortgagee elects to cure, attorney fees or costs incurred in enforcing the Loan Documents, or other expenses incurred by Mortgagee in protecting the Property, the security of this Mortgage or Mortgagee’s rights and interests.  The unpaid Loan (inclusive of all such future advances), together with all accrued but unpaid interest thereon as provided in the Replacement Notes and this Mortgage, will be paid on the respective Maturity Date of each of the Replacement Notes (if not required to be paid prior to that time by any other provisions of the Replacement Notes, this Mortgage and/or the other Loan Documents).

 

	
7.13.  

	
WAIVER OF HOMESTEAD.  Mortgagor hereby waives any and all homestead rights in the Property.

 

                                                                            [signature follows]

 

853664v9   012381.0100

  

  

  

Loan No. [LOAN NUMBER]

            IN WITNESS WHEREOF, Mortgagor has executed this Mortgage as of the day and year set forth above.

 

“Mortgagor”

EAGLE IV REALTY, LLC,

a Delaware limited liability company

By:           SB Partners Real Estate Corporation

a New York corporation, its manager

By:           /s/ George N. Tietjen III

Name:           George N. Tietjen III

Title:           Vice President

STATE OF _______________                                                      )

) ss.

COUNTY OF                                           )

 

The foregoing instrument was acknowledged before me this ____ day of ____________ 200_, by ____________________ , the ____________________ of ____________________ , a ____________________  for and on behalf of said ____________________ .

 

Notary Public

 

This instrument was drafted by:

 

Moses & Singer LLP

405 Lexington Avenue

New York, NY 10174

 

 

853664v9   012381.0100

  

  

  

Loan No. [LOAN NUMBER]

EXHIBIT A

 

DESCRIPTION OF PROPERTY

 

Exhibit A to Mortgage, Security Agreement, Assignment of Leases and Rents and Fixture Financing Statement executed by EAGLE IV REALTY, LLC, as Mortgagor, to WELLS FARGO BANK, NATIONAL ASSOCIATION, as Mortgagee, dated as of _________________.

 

All the certain real property located in the County of Hennepin, State of Minnesota, described as follows:

 

PARCEL 1:

 

Lot 1, Block 1, C.E.D. Plaza, Hennepin County, Minnesota.

 

PARCEL 2:

 

That part of vacated 73rd Avenue North as dedicated in the plat of C.E.D. Plaza which lies westerly of the southerly extension of the East line of Lot 1, Block 1, C.E.D. Plaza, and which lies northerly and easterly of Line "A" described below; and

 

That part of vacated 73rd Avenue North as dedicated in the plat of Deerwood Homes 4th Addition which lies westerly of the southerly extension of the East line of Lot 1, Block 1, C.E.D. Plaza, and which lies northerly and easterly of Line "A" described below.

 

Line "A": Beginning at the most westerly corner of Outlot E in Deerwood Homes 4th Addition; thence North 71 degrees 20 minutes 15 seconds West, assumed bearing, along the northwesterly extension of the southwesterly line of said Outlot E a distance of 77.01 feet; thence northwesterly a distance of 323.22 feet, along a tangential curve concave to the Southwest having a radius of 1,045.40 feet and a central angle of 17 degrees 42 minutes 54 seconds and said line there terminating.

 

PARCEL 3:

 

That part of vacated County Road No. 130, now known as 73rd Avenue North, as donated and dedicated in the plat of C.E.D. Plaza, according to the recorded plat, Hennepin County, Minnesota, which lies West of the southerly extension of the East line of Lot 1, Block 1 C.E.D. Plaza and which lies northerly of a line 40.00 feet Northeasterly and Northerly of and parallel with the following-described line: Commencing at the northeast corner of the Southeast Quarter of Section 26, Township 119, Range 22; thence South 0 degrees 56 minutes 42 seconds East, assumed bearing, along the East line of said Southeast Quarter 26837 feet to the point of beginning of said line to be herein described; thence North 71 degrees 20 minutes 15 seconds West 724.84 feet; thence Northwesterly 310.86 feet along a tangential curve, concave to the Southwest, having a radius of 1005.40 feet and a central angle of 17 degrees 42 minutes 54 seconds and said line there terminating.

 

PARCEL 4:

 

That part of vacated 73rd Avenue North as dedicated in the plat of TROUT PONDS which lies northeasterly of the following-described line: Beginning at the most westerly comer of Outlot E in Deerwood Homes 4th Addition; thence North 71 degrees 20 minutes 15 seconds West, assumed bearing, along the northwesterly extension of the southwesterly line of said Outlot E a distance of 77.01 feet; thence northwesterly a distance of 323.22 feet, along a tangible curve concave to the Southwest having a radius of 1,045.40 feet and a central angle of 17 degrees 42 minutes 54 seconds and said line there terminating.

 

Assessor’s Parcel Number or PIN:  26-119-22-14-0002.

 

Property Address:  11400 73rd Avenue North, Maple Grove, MN

 

 

853664v9   012381.0100

  

  

  

Loan No. [LOAN NUMBER]

EXHIBIT B

 

NON-BORROWER MORTGAGOR RIDER

 

Exhibit B to Mortgage, Security Agreement, Assignment of Leases and Rents and Fixture Financing Statement executed by EAGLE IV REALTY, LLC, as Mortgagor, in favor of WELLS FARGO BANK, NATIONAL ASSOCIATION, as Mortgagee, dated as of ___________________.

 

To the extent this Mortgage secures a promissory note and other loan documents (“Loan Documents”) made by a party or parties (“Borrower”) not identical to the party or parties constituting Mortgagor, the party or parties constituting Mortgagor agree as follows:

 

	
1.  

	
CONDITIONS TO EXERCISE OF RIGHTS.  Mortgagor hereby waives any right it may now or hereafter have to require Mortgagee, as a condition to the exercise of any remedy or other right against Mortgagor hereunder or under any other document executed by Mortgagor in connection with any Secured Obligation: (a) to proceed against any Borrower or other person, or against any other collateral assigned to Mortgagee by Mortgagor or any Borrower or other person; (b) to pursue any other right or remedy in Mortgagee’s power; (c) to give notice of the time, place or terms of any public or private sale of real or personal property collateral assigned to Mortgagee by any Borrower or other person (other than Mortgagor), or otherwise to comply with the Minnesota Uniform Commercial Code (as modified or recodified from time to time) with respect to any such personal property collateral; or (d) to make or give (except as otherwise expressly provided in the Loan Documents) any presentment, demand, protest, notice of dishonor, notice of protest or other demand or notice of any kind in connection with any Secured Obligation or any collateral (other than the Property) for any Secured Obligation.

 

	
2.  

	
WAIVERS.  Mortgagor waives:  (a) any defense based upon any legal disability or other defense of any Borrower, guarantor of the Loan Documents or other person, or by reason of the cessation or limitation of the liability of any Borrower from any cause other than full payment of all sums payable under the Loan Documents; (b) any defense based upon any lack of authority of the officers, directors, partners or agents acting or purporting to act on behalf of a Borrower or any principal of a Borrower or any defect in the formation of any Borrower or any principal of any Borrower; (c) any defense based upon the application by any Borrower of the proceeds of the loan evidenced by the Loan Documents for purposes other than the purposes represented by any Borrower to Mortgagee or intended or understood by Mortgagee or Mortgagor; (d) any and all rights and defenses arising out of an election of remedies by Mortgagee with respect to any Borrower and the Loan Documents; (e) any defense based upon Mortgagee’s failure to disclose to Mortgagor any information concerning any Borrower’s financial condition or any other circumstances bearing on any Borrower’s ability to pay all sums payable under the Loan Documents; (f) any defense based upon any statute or rule of law which provides that the obligation of a surety must be neither larger in amount nor in any other respects more burdensome than that of a principal; (g) any defense based upon Mortgagee’s election, in any proceeding instituted under the Federal Bankruptcy Code, of the application of Section 1111(b)(2) of the Federal Bankruptcy Code or any successor statute with respect to any Borrower and the Loan Documents; (h) any defense based upon any borrowing or any grant of a security interest under Section 364 of the Federal Bankruptcy Code; (i) any right of subrogation, any right to enforce any remedy which Mortgagee may have against Borrower and any right to participate in, or benefit from, any security for the obligations evidenced by the Loan Documents now or hereafter held by Mortgagee; (j) presentment, demand, protest and notice of any kind; and (k) the benefit of any statute of limitations affecting the liability of Mortgagor hereunder or the enforcement hereof.  Mortgagor further waives any and all rights and defenses that Mortgagor may have because Borrower’s debt is secured by real property; this means, among other things, that: (1) Mortgagee may collect from Mortgagor without first foreclosing on any real or personal property collateral pledged by Borrower; (2) if Mortgagee forecloses on any real property collateral pledged by Borrower, then (A) the amount of the debt may be reduced only by the price for which that collateral is sold at the foreclosure sale, even if the collateral is worth more than the sale price, and (B) Mortgagee may collect from Mortgagor even if Mortgagee, by foreclosing on the real property collateral, has destroyed any right Mortgagor may have to collect from Borrower.  The foregoing sentence is an unconditional and irrevocable waiver of any rights and defenses Mortgagor may have because Borrower’s debt is secured by real property.  Without limiting the generality of the foregoing or any other provision hereof, Mortgagor further expressly waives to the extent permitted by law any and all rights and defenses, including without limitation any rights of subrogation, reimbursement, indemnification and contribution.  Finally, Mortgagor agrees that the performance of any act or any payment which tolls any statute of limitations applicable to the Loan Documents shall similarly operate to toll the statute of limitations applicable to Mortgagor’s liability hereunder.

 

	
3.  

	
SUBROGATION.  Mortgagor hereby waives, until such time as all Secured Obligations are fully performed: (a) any right of subrogation against any Borrower that relates to any Secured Obligation; (b) any right to enforce any remedy Mortgagor may now or hereafter have against any Borrower that relates to any Secured Obligation; and (c) any right to participate in any collateral now or hereafter assigned to Mortgagee with respect to any Secured Obligation.

 

	
4.  

	
BORROWER INFORMATION.  Mortgagor warrants and agrees: (a) that Mortgagee would not make the Loan but for this Mortgage; (b) that Mortgagor has not relied, and will not rely, on any representations or warranties by Mortgagee to Mortgagor with respect to the credit worthiness of any Borrower or the prospects of repayment of any Secured Obligation from sources other than the Property; (c) that Mortgagor has established and/or will establish adequate means of obtaining from each Borrower on a continuing basis financial and other information pertaining to the business operations, if any, and financial condition of each Borrower; (d) that Mortgagor assumes full responsibility for keeping informed with respect to each Borrower’s business operations, if any, and financial condition; (e) that Mortgagee shall have no duty to disclose or report to Mortgagor any information now or hereafter known to Mortgagee with respect to any Borrower, including, without limitation, any information relating to any of Borrower’s business operations or financial condition; and (f) that Mortgagor is familiar with the terms and conditions of the Loan Documents and consents to all provisions thereof.

 

	
5.  

	
REINSTATEMENT OF LIEN.  Mortgagee’s rights hereunder shall be reinstated and revived, and the enforceability of this Mortgage shall continue, with respect to any amount at any time paid on account of any Secured Obligation which Mortgagee is thereafter required to restore or return in connection with a bankruptcy, insolvency, reorganization or similar proceeding with respect to any Borrower.

 

	
6.  

	
SUBORDINATION.  Until all of the Secured Obligations have been fully paid and performed: (a) Mortgagor hereby agrees that all existing and future indebtedness and other obligations of each Borrower to Mortgagor (collectively, the “Subordinated Debt”) shall be and are hereby subordinated to all Secured Obligations which constitute obligations of the applicable Borrower, and the payment thereof is hereby deferred in right of payment to the prior payment and performance of all such Secured Obligations; (b) Mortgagor shall not collect or receive any cash or non-cash payments on any Subordinated Debt or transfer all or any portion of the Subordinated Debt; and (c) in the event that, notwithstanding the foregoing, any payment by, or distribution of assets of, any Borrower with respect to any Subordinated Debt is received by Mortgagor, such payment or distribution shall be held in trust and immediately paid over to Mortgagee, is hereby assigned to Mortgagee as security for the Secured Obligations, and shall be held by Mortgagee in an interest bearing account until all Secured Obligations have been fully paid and performed.

 

	
7.  

	
HAZARDOUS MATERIALS.

 

	
a.  

	
Definitions. "Hazardous Materials Claims" as used herein shall mean any claims, actions, proceedings or investigations known to, pending or threatened against Borrower or the Properties by any governmental entity or agency or by any other person or entity relating to Hazardous Materials or pursuant to the Hazardous Materials Laws.  "Hazardous Materials" as used herein shall mean collectively any oil, flammable explosives, asbestos, urea formaldehyde insulation, radioactive materials, hazardous wastes, toxic or contaminated substances or similar materials, including, without limitation, any substances which are  "hazardous substances," "hazardous wastes," "hazardous materials," "toxic substances," "wastes," "regulated substances," "industrial solid wastes," or "pollutants or contaminants" under the Hazardous Materials Laws, as described below, and/or any other applicable environmental laws, ordinances and regulations.  "Hazardous Materials" shall not include commercially reasonable amounts of such materials used in the ordinary course of operation of the Properties which are used and stored in accordance with all applicable environmental laws, ordinances and regulations.  "Hazardous Materials Laws" as used herein shall mean all laws, ordinances and regulations relating to Hazardous Materials, including, without limitation: any and all applicable federal, state or local directive, statute, law, rule, regulation, ordinance or rule of common law in effect and any judicial or administrative decision, including any judicial or administrative order, consent decree or judgment, relating to the control of any pollutant or hazardous material, the protection of the environment or the effect of the environment on human health, including the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended, 42 U.S.C. Section 9601 et seq.; the Resource Conservation and Recovery Act, as amended, 42 U.S.C. Section 6901 et seq.; the Federal Water Pollution Control Act, as amended, 33 U.S.C. Section 1252 et seq.; the Toxic Substances Control Act, as amended, 15 U.S.C. Section 2601 et seq.; the Clean Air Act, as amended, 42 U.S.C. Section 7401 et seq.; the Safe Drinking Water Act, as amended, 42 U.S.C. Section 300f et seq.; the Hazardous Materials Transportation Act, as amended 49 U.S.C. Section 1801 et seq.; the Atomic Energy Act, as amended, 42 U.S.C. Section 2011 et seq.; the Federal Insecticide, Fungicide and Rodenticide Act, as amended, 7 U.S.C. Section 136 et seq.; the Occupational Safety and Health Act, as amended, 20 U.S.C. Section 651 et seq.; the Emergency Planning and Community Right to Know Act, as amended, 42 U.S.C. Section 11001 et seq.; and the Minnesota Environmental Response and Liability Act, Minn. Stat. Section 115B.02 et seq.; each as now and hereafter amended, and the regulations thereunder, and any other local, state and/or federal laws or regulations that govern (i) the existence, cleanup and/or remedy of contamination on the Properties; (ii) the protection of the environment from released, spilled, deposited or otherwise emplaced contamination; (iii) the control of hazardous wastes; or (iv) the use, generation, transport, treatment, removal or recovery of Hazardous Materials, including any and all building materials.

 

	
b.  

	
Hazardous Materials Covenants.  Mortgagor agrees as follows:

 

	
(i)  

	
No Hazardous Activities.  Mortgagor shall not cause or, subject to the provisions of Leases, permit the Property to be used as a site for the use, generation, manufacture, storage, treatment, release, discharge, disposal, transportation or presence of any Hazardous Materials, except for any such Hazardous Materials that are used, stored and handled in accordance with all Hazardous Materials Laws.

 

	
(ii)  

	
Compliance.  Mortgagor shall comply and, subject to the provisions of Leases, cause the Property and Collateral to comply with all Hazardous Materials Laws.

 

	
(iii)  

	
Notices.  Mortgagor shall immediately notify Mortgagee in writing of: (A) the discovery of any Hazardous Materials on, under or about the Property and Collateral of which Mortgagor has knowledge (unless such Hazardous Materials are used, stored and handled in accordance with Hazardous Materials Laws); (B) any knowledge by Mortgagor that the Property and Collateral does not comply with any Hazardous Materials Laws; (C) any Hazardous Materials Claims of which Mortgagor has knowledge; and (D) the discovery of any occurrence or condition on any real property adjoining or in the vicinity of the Property and Collateral of which Mortgagor has knowledge that could cause the Property and Collateral or any part thereof to become contaminated through the migration of Hazardous Materials onto, above or under the Property.

 

	
(iv)  

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

 

	
c.  

	
Inspection By Mortgagee.  Upon reasonable prior notice to Mortgagor and subject to rights of tenants, Mortgagee, its employees and agents may from time to time (whether before or after the commencement of a foreclosure proceeding) enter and inspect the Property and Collateral for the purpose of determining the existence, location, nature and magnitude of any past or present release or threatened release of any Hazardous Materials into, onto, beneath or from the Property and Collateral.  Mortgagor shall deliver to Mortgagee, within thirty (30) days after the date hereof, a Phase I environmental report for the Property.  In the event that such report indicates that further testing is required or recommended, such testing shall be arranged for by Mortgagor at Mortgagor’s sole cost and expense, which shall include obtaining a Phase II environmental report within sixty (60) days after receipt of a Phase I indicating that such Phase II is required or recommended, and Mortgagor shall otherwise comply with Section 7.b(iv) above in the event that such report or further testing indicate that any necessary action must be taken.

 

	
d.  

	
Hazardous Materials Indemnity. MORTGAGOR HEREBY AGREES TO DEFEND, INDEMNIFY AND HOLD HARMLESS MORTGAGEE, ITS DIRECTORS, OFFICERS, EMPLOYEES, AGENTS, SUCCESSORS AND ASSIGNS (COLLECTIVELY, “INDEMNITEES”) FOR, FROM AND AGAINST ANY AND ALL LOSSES, DAMAGES, LIABILITIES, CLAIMS, ACTIONS, JUDGMENTS, COURT COSTS AND LEGAL OR OTHER EXPENSES (INCLUDING, WITHOUT LIMITATION, ATTORNEYS’ FEES AND EXPENSES) WHICH MORTGAGEE MAY INCUR AS A DIRECT OR INDIRECT CONSEQUENCE OF THE USE, GENERATION, MANUFACTURE, STORAGE, DISPOSAL, THREATENED DISPOSAL, TRANSPORTATION OR PRESENCE OF HAZARDOUS MATERIALS IN, ON, UNDER OR ABOUT THE PROPERTY AND COLLATERAL.  NOTWITHSTANDING THE FOREGOING PROVISIONS OF THIS SECTION 7.d TO THE CONTRARY, MORTGAGOR SHALL HAVE NO OBLIGATION TO INDEMNIFY ANY OF THE INDEMNITEES PURSUANT TO THIS SECTION 7.d FOR LOSSES, DAMAGES, LIABILITIES, CLAIMS, ACTIONS, JUDGMENTS, COURT COSTS AND LEGAL OR OTHER EXPENSES RELATIVE TO THE FOREGOING TO THE EXTENT RESULTING FROM ANY INDEMNITEE, AND ITS SUCCESSORS’ OR ASSIGNS’, WILLFUL MISCONDUCT OR GROSS NEGLIGENCE OR RESULTING FROM ANY HAZARDOUS MATERIAL INITIALLY PLACED IN, ON, UNDER OR ABOUT THE PROPERTY DURING POSSESSION OF THE PROPERTY OR PROPERTIES, AS APPLICABLE, BY INDEMNITEE, OR ITS SUCCESSORS’ OR ASSIGNS’. MORTGAGOR SHALL IMMEDIATELY PAY TO MORTGAGEE UPON DEMAND ANY AMOUNTS OWING UNDER THIS INDEMNITY, TOGETHER WITH INTEREST FROM THE DATE THE INDEBTEDNESS ARISES UNTIL PAID AT THE RATE OF INTEREST APPLICABLE TO THE PRINCIPAL BALANCE OF THE NOTE.  MORTGAGOR’S DUTY AND OBLIGATIONS TO DEFEND, INDEMNIFY AND HOLD HARMLESS MORTGAGEE SHALL SURVIVE THE CANCELLATION OF THE NOTE AND THE RELEASE, RECONVEYANCE OR PARTIAL RECONVEYANCE OF THE MORTGAGE.

 

	
8.  

	
LAWFULNESS AND REASONABLENESS.  Mortgagor warrants that all of the waivers in this Mortgage are made with full knowledge of their significance, and of the fact that events giving rise to any defense or other benefit waived by Mortgagor may destroy or impair rights which Mortgagor would otherwise have against Mortgagee, Borrower and other persons, or against collateral.  Mortgagor agrees that all such waivers are reasonable under the circumstances and further agrees that, if any such waiver is determined (by a court of competent jurisdiction) to be contrary to any law or public policy, the other waivers herein shall nonetheless remain in full force and effect.

 

	
9.  

	
ENFORCEABILITY.  Mortgagor hereby acknowledges that: (a) the obligations undertaken by Mortgagor in this Mortgage are complex in nature, and (b) numerous possible defenses to the enforceability of these obligations may presently exist and/or may arise hereafter, and (c) as part of Mortgagee’s consideration for entering into this transaction, Mortgagee has specifically bargained for the waiver and relinquishment by Mortgagor of all such defenses, and (d) Mortgagor has had the opportunity to seek and receive legal advice from skilled legal counsel in the area of financial transactions of the type contemplated herein.  Given all of the above, Mortgagor does hereby represent and confirm to Mortgagee that Mortgagor is fully informed regarding, and that Mortgagor does thoroughly understand: (i) the nature of all such possible defenses, and (ii) the circumstances under which such defenses may arise, and (iii) the benefits which such defenses might confer upon Mortgagor, and (iv) the legal consequences to Mortgagor of waiving such defenses.  Mortgagor acknowledges that Mortgagor makes this Mortgage with the intent that this Mortgage and all of the informed waivers herein shall each and all be fully enforceable by Mortgagee, and that Mortgagee is induced to enter into this transaction in material reliance upon the presumed full enforceability thereof.

 

	
10.  

	
DISCLOSURE OF INFORMATION; PARTICIPATIONS.  Mortgagor understands and agrees that Mortgagee may elect, at any time, to sell, assign, or participate all or any part of Mortgagee’s interest in the Loan, and that any such sale, assignment or participation may be to one or more financial institutions, private investors, and/or other entities, at Mortgagee’s sole discretion.  Mortgagor further agrees that Mortgagee may disseminate to any such potential purchaser(s), assignee(s) or participant(s) all documents and information (including, without limitation, all financial information) which has been or is hereafter provided to or known to Mortgagee with respect to: (a) the Property and Collateral and its operation; (b) any party connected with the Loan (including, without limitation, the Mortgagor, Borrower, any partner of Borrower and any guarantor); and/or (c) any lending relationship other than the Loan which Mortgagee may have with any party connected with the Loan.

 

	
11.  

	
WAIVER OF RIGHT TO TRIAL BY JURY.  EACH PARTY TO THIS MORTGAGE, AND BY ITS ACCEPTANCE HEREOF, MORTGAGEE, HEREBY EXPRESSLY WAIVES ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION (a) ARISING UNDER THE LOAN DOCUMENTS, INCLUDING, WITHOUT LIMITATION, ANY PRESENT OR FUTURE MODIFICATION THEREOF OR (b) IN ANY WAY CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE PARTIES HERETO OR ANY OF THEM WITH RESPECT TO THE LOAN DOCUMENTS (AS NOW OR HEREAFTER MODIFIED) OR ANY OTHER INSTRUMENT, DOCUMENT OR AGREEMENT EXECUTED OR DELIVERED IN CONNECTION HEREWITH, OR THE TRANSACTIONS RELATED HERETO OR THERETO, IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER SOUNDING IN CONTRACT OR TORT OR OTHERWISE; AND EACH PARTY AND MORTGAGEE HEREBY AGREES AND CONSENTS THAT ANY PARTY TO THIS MORTGAGE AND MORTGAGEE MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS SECTION WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE PARTIES HERETO AND MORTGAGEE TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY.

 

	
12.  

	
INTEGRATION; INTERPRETATION. This Mortgage and the other Loan Documents contain or expressly incorporate by reference the entire agreement of the parties with respect to the matters contemplated therein and supersede all prior negotiations or agreements, written or oral. This Mortgage and the other Loan Documents shall not be modified except by written instrument executed by all parties. Any reference to the Loan Documents includes any amendments, renewals or extensions now or hereafter approved by Mortgagee in writing.

 

 

853664v9  012381.0100

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00189-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00189-of-00352.parquet"}]]