Document:

Exhibit 10.2

 

Loan No. V  
59941

 

PROMISSORY
NOTE

	
  $67,125,000.00

  	
  October 30, 2006

  

 

FOR VALUE RECEIVED,
BEHRINGER HARVARD THREE PARKWAY, LLC, a
Delaware limited liability company, as maker, having its principal place of
business c/o Behringer Harvard Funds, 15601 Dallas Parkway, Suite 600, Addison,
Texas 75001 (“Borrower”), hereby unconditionally
promises to pay to the order of JPMORGAN
CHASE BANK, N.A., a banking
association chartered under the laws of the United States of America,
having an office at 270 Park Avenue, New York, New York 10017 (“Lender”), or at such other place as the holder hereof may
from time to time designate in writhing, the principal sum of Sixty-Seven
Million One Hundred Twenty-Five Thousand and No/100 Dollars ($67,125,000), in
lawful money of the United States of America with interest thereon to be
computed from the date of this Note at the Interest Rate, and to be paid in
accordance with the terms of this Note and that certain Loan Agreement, dated
the date hereof, between Borrower and Lender (as the same may hereafter be
amended, restated, replaced, supplemented, renewed, extended or otherwise
modified from time to time, the “Loan Agreement”).  All capitalized terms not defined herein
shall have the respective meanings set forth in the Loan Agreement.

ARTICLE 1

PAYMENT TERMS

Borrower agrees to pay
the principal sum of this Note and interest on the unpaid principal sum of this
Note from time to time outstanding at the rates and at the times specified in
Article 2 of the Loan Agreement and the outstanding balance of the principal
sum of this Note and all accrued and unpaid interest thereon shall be due and
payable on the Maturity Date.

ARTICLE 2

DEFAULT AND ACCELERATION

Except as otherwise
provided in the Loan Agreement, the Debt shall without notice become
immediately due and payable at the option of Lender if any payment required in
this Note is not paid on or prior to the date when due or if not paid on the
Maturity Date or on the happening of any other Event of Default.

ARTICLE 3

LOAN DOCUMENTS

This Note is secured by
the Mortgage and the other Loan Documents. 
All of the terms, covenants and conditions contained in the Loan
Agreement, the Mortgage and the other Loan Documents are hereby made part of
this Note to the same extent and with the same force as if they were fully set
forth herein.  In the event of a conflict
or inconsistency between the terms of this Note and the Loan Agreement, the
terms and provisions of the Loan Agreement shall govern.

 

ARTICLE 4

SAVINGS CLAUSE

Notwithstanding anything
to the contrary, (a) all agreements and communications between Borrower
and Lender are hereby and shall automatically be limited so that, after taking
into account all amounts deemed interest, the interest contracted for, charged
or received by Lender shall never exceed the Maximum Legal Rate, (b) in
calculating whether any interest exceeds the Maximum Legal Rate, all such
interest shall be amortized, prorated, allocated and spread over the full
amount and term of all principal indebtedness of Borrower to Lender and
(c) if through any contingency or event Lender receives or is deemed to
receive interest in excess of the Maximum Legal Rate, any such excess shall be
deemed to have been applied toward payment of the principal of any and all then
outstanding indebtedness of Borrower to Lender.

ARTICLE 5

NO ORAL CHANGE

This Note may not be
modified, amended, waived, extended, changed, discharged or terminated orally
or by any act or failure to act on the part of Borrower or Lender, but only by
an agreement in writing signed by the party against whom enforcement of any
modification, amendment, waiver, extension, change, discharge or termination is
sought.

ARTICLE 6

WAIVERS

Borrower and all others
who may become liable for the payment of all or any part of the Debt do hereby
severally waive presentment and demand for payment, notice of dishonor, notice
of intention to accelerate, notice of acceleration, protest and notice of
protest and non-payment and all other notices of any kind, except for such
notices as are expressly provided for in any Loan Document.  No release of any security for the Debt or
extension of time for payment of this Note or any installment hereof, and no
alteration, amendment or waiver of any provision of this Note, the Loan
Agreement or the other Loan Documents made by agreement between Lender or any
other Person shall release, modify, amend, waive, extend, change, discharge,
terminate or affect the liability of Borrower, and any other Person who may
become liable for the payment of all or any part of the Debt, under this Note,
the Loan Agreement or the other Loan Documents, except as may be expressly
provided in such release, alteration, amendment or waiver.  No notice to or demand on Borrower shall be
deemed to be a waiver of the obligation of Borrower or of the right of Lender
to take further action without further notice or demand as provided for in this
Note, the Loan Agreement or the other Loan Documents.  If Borrower is a partnership, the agreements
herein contained shall remain in force and be applicable, notwithstanding any
changes in the individuals or entities comprising the partnership, and the term
“Borrower,” as used herein, shall include any alternate or successor
partnership, but any predecessor partnership and their partners shall not
thereby be released from any liability. 
If Borrower is a corporation, the agreements contained herein shall
remain in full force and be applicable notwithstanding any changes in the
shareholders comprising, or the officers and directors relating to, the
corporation, and the term “Borrower” as used herein, shall include any
alternative or successor corporation, but any predecessor corporation shall not
be relieved of liability hereunder.  If
any Borrower is a limited liability company, the agreements herein 

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contained shall remain in
force and be applicable, notwithstanding any changes in the members comprising
the limited liability company, and the term “Borrower” as used herein, shall
include any alternate or successor limited liability company, but any
predecessor limited liability company shall not thereby be released from any
liability.  (Nothing in the foregoing
sentence shall be construed as a consent to, or a waiver of, any prohibition or
restriction on transfers of interests in such partnership, corporation or
limited liability company which may be set forth in the Loan Agreement, the
Mortgage or any other Loan Document.)

ARTICLE 7

TRANSFER

Upon the transfer of this
Note, Borrower hereby waiving prior notice of any such transfer, Lender may
deliver all the collateral mortgaged, granted, pledged or assigned pursuant to
the Loan Documents, or any part thereof, to the transferee who shall thereupon
become vested with all the rights herein or under applicable law given to
Lender with respect thereto, and Lender shall thereafter forever be relieved
and fully discharged from any liability or responsibility in the matter; but
Lender shall retain all rights hereby given to it with respect to any
liabilities and the collateral not so transferred.

ARTICLE 8

EXCULPATION

The provisions of
Section 9.3 of the Loan Agreement are hereby incorporated by reference
into this Note to the same extent and with the same force as if fully set forth
herein.

ARTICLE 9

GOVERNING LAW

This Note shall be
governed by and construed in accordance with the laws of the state in which the
Property is located (without regard to any conflict of laws or principles) and
the applicable laws of the United States of America.

ARTICLE 10

NOTICES

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

ARTICLE 11

JOINT AND SEVERAL

If more than one Person
has executed this Note as “Borrower”, the obligations of all such Persons
hereunder shall be joint and several except as set forth in the Loan Documents.

 3

 

IN WITNESS WHEREOF,
Borrower has duly executed this Note as of the day and year first above
written.

	
   

  	
  BEHRINGER HARVARD THREE PARKWAY,

  LLC, a Delaware limited liability company

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name: Gerald J. Reihsen, III

  
	
   

  	
  Title: SecretaryExhibit
10.3

PREPARED BY AND UPON

RECORDATION RETURN TO:

Kelley Drye & Warren LLP

101 Park Avenue

New York, New York  10178

Attention:  Paul A. Keenan, Esq.

Telephone:  212-808-7800

Space above this
line for recorder’s use

Loan No. V  
59941

BEHRINGER HARVARD THREE
PARKWAY, LLC, as borrower

(Borrower)

to

JPMORGAN CHASE BANK,
N.A., as lender

(Lender)

OPEN-END
MORTGAGE, ASSIGNMENT OF

LEASES AND RENTS, SECURITY

AGREEMENT AND FIXTURE FILING

Dated: October 30,
2006

This
is an Open-End Mortgage and Secures Future Advances

OPEN-END MORTGAGE,
ASSIGNMENT OF LEASES AND RENTS, 

SECURITY
AGREEMENT AND FIXTURE FILING

THIS OPEN-END MORTGAGE, ASSIGNMENT OF LEASES AND
RENTS, SECURITY AGREEMENT AND FIXTURE FILING (this “Security Instrument”)
is made as of this 30th day of October, 2006, by BEHRINGER
HARVARD THREE PARKWAY, LLC, a Delaware limited liability company,
having its principal place of business c/o Behringer Harvard Funds, 15601
Dallas Parkway, Suite 600, Addison, Texas 75001, as mortgagor (“Borrower”)
for the benefit of JPMORGAN
CHASE BANK, N.A., a banking
association chartered under the laws of the United States of America,
having its principal place of business at 270 Park Avenue, New York, New York
10017, as grantee (“Lender”).

W
I T N E S S E T H:

WHEREAS, this Security
Instrument is given to secure a loan (the “Loan”) in the principal sum of
Sixty-Seven Million One Hundred Twenty-Five Thousand and No/100 Dollars
($67,125,000) advanced pursuant to that certain Loan Agreement, dated as of the
date hereof, between Borrower and Lender (as the same may hereafter be amended,
restated, replaced, supplemented, renewed, extended or otherwise modified from
time to time, the “Loan
Agreement”) and evidenced by that certain Promissory Note, dated the
date hereof, made by Borrower in favor of Lender (as the same may hereafter be
amended, restated, replaced, supplemented, renewed, extended or otherwise
modified from time to time, the “Note”);

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

WHEREAS, this Security
Instrument is given pursuant to the Loan Agreement, and payment, fulfillment,
and performance by Borrower of its obligations thereunder and under the other
Loan Documents are secured hereby, and each and every term and provision of the
Loan Agreement, the Note, and that certain Assignment of Leases and Rents of
even date herewith made by Borrower in favor of Lender delivered in connection
with this Security Instrument (as the same may be amended, restated, replaced,
supplemented, renewed, extended or otherwise modified from time to time, the “Assignment of Leases”),
including the rights, remedies, obligations, covenants, conditions, agreements,
indemnities, representations and warranties of the parties therein, are hereby
incorporated by reference herein as though set forth in full and shall be
considered a part of this Security Instrument (the Loan Agreement, the Note,
this Security Instrument, the Assignment of Leases and Rents and all other
documents evidencing or securing the Debt (including all additional mortgages,
deeds to secure debt and assignments of leases and rents) or pursuant to which
any Person incurs, has incurred or assumes any obligation to or for the benefit
of Lender in connection therewith, are hereinafter referred to collectively as
the “Loan
Documents”).

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

 

ARTICLE I - GRANTS OF SECURITY

Section 1.1            Property Mortgaged.  Borrower does hereby irrevocably grant,
bargain, sell, convey, mortgage, pledge, assign, warrant and transfer to Lender
and its successors and assigns, all of Borrower’s right, title and interest in,
to and under the following property, rights, interests and estates now owned,
or hereafter acquired by Borrower (collectively, the “Property”):

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

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

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

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

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

(f)            Fixtures.  All Equipment now owned, or the ownership of
which is hereafter acquired, by Borrower which is so related to the Land and
Improvements forming part of the Property that it is deemed fixtures or real
property under the law of the particular state in which the Land is located,
including, without limitation, all building or construction materials intended
for construction, reconstruction, alteration or repair of or installation on
the Property, 

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

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

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

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

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

(k)           Tax Certiorari.  All refunds, rebates or credits in connection
with reduction in Taxes or Other Charges charged against the Property as a
result of tax certiorari or any applications or proceedings for reduction;

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

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

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

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

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

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

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

Section
1.2            Assignment of Rents.  Borrower hereby absolutely and
unconditionally assigns to Lender all of Borrower’s right, title and interest
in and to all current and future Leases and Rents; it being intended by
Borrower that this assignment constitutes a present, absolute assignment and
not an assignment for additional security only. 
Nevertheless, subject to the terms of the Assignment of Leases, the Cash
Management Agreement and Section 7.1(h)
of this Security Instrument, Lender grants to Borrower a revocable license to
collect, receive, use and enjoy the Rents and Borrower shall hold the Rents, or
a portion thereof sufficient to discharge all current sums due on the Debt, for
use in the payment of such sums.

Section
1.3            Security Agreement.  This Security Instrument is both a real
property mortgage and a “security agreement” within the meaning of the Uniform
Commercial Code.  The Property includes
both real and personal property and all other rights and interests, whether
tangible or intangible in nature, of Borrower in the Property.  By executing and delivering this Security
Instrument, Borrower hereby grants to Lender, as security for the Obligations
(hereinafter defined), a security interest in the Fixtures, the Equipment and
the Personal Property to the full extent that the Fixtures, the Equipment and
the Personal Property may be subject to the Uniform Commercial Code (said
portion of the Property so subject to the Uniform Commercial Code being called
the “Collateral”).  If an Event of Default shall occur and be
continuing, Lender, in addition to any other rights and remedies which it may
have, shall have and may exercise immediately and without demand, any and all
rights and remedies granted to a secured party upon default under the Uniform
Commercial Code, including, without limiting the generality of the foregoing,
the right to take possession of the Collateral or any part thereof, and to take
such other measures as Lender may deem necessary for the care, protection and
preservation of the Collateral.  Upon
request or demand of Lender after the occurrence and during the continuance of
an Event of Default, Borrower shall, at its expense, assemble the Collateral
and make it available to Lender at a convenient place (at the Land if tangible
property) reasonably acceptable to Lender. 
Borrower shall pay to Lender on demand any and all expenses, including
reasonable legal expenses and attorneys’ fees, incurred or paid by Lender in
protecting its interest in the Collateral and in enforcing its rights hereunder
with respect to the Collateral after the occurrence and during the continuance
of an Event of Default.  Any notice of
sale, disposition or other intended action by Lender with respect to the
Collateral sent to Borrower in accordance with the provisions hereof at least
ten (10) Business Days prior to such action, shall, except as otherwise
provided by applicable law, constitute reasonable notice to Borrower.  The proceeds of any disposition of the
Collateral, or any part thereof, may, except as otherwise required by
applicable law, be applied by Lender to the payment of the Debt in such
priority and proportions as Lender in its discretion shall deem proper.  Borrower’s (debtor’s) principal place 

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of business is as set forth on page one hereof and the
address of Lender (secured party) is as set forth on page one hereof.

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

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

CONDITIONS TO GRANT

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

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

ARTICLE II - DEBT AND OBLIGATIONS
SECURED

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

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

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

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

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

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

ARTICLE III - BORROWER COVENANTS

Borrower covenants and agrees that:

Section
3.1            Payment of Debt.  Borrower will pay the Debt at the time and in
the manner provided in the Loan Agreement, the Note and this Security
Instrument.

Section
3.2            Incorporation by
Reference.  All the
covenants, conditions and agreements contained in (a) the Loan Agreement,
(b) the Note and (c) all and any of the other Loan Documents, are
hereby made a part of this Security Instrument to the same extent and with the
same force as if fully set forth herein.

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

Section
3.4            Maintenance of Property.  Borrower shall cause the Property to be
maintained in a good and safe condition and repair.  The Improvements, the Fixtures, the Equipment
and the Personal Property shall not be removed, demolished or materially altered
(except for normal replacement of the Fixtures, the Equipment or the Personal
Property, tenant finish and refurbishment of the Improvements and for the
disposal of Fixtures, Equipment or Personal Property not material to the use or
value of the Property as an office building) without the consent of
Lender.  Borrower shall promptly repair,
replace or rebuild any part of the Property which may be destroyed by any
Casualty or become damaged, worn or dilapidated or which may be affected by any
Condemnation, and shall complete and pay for any structure at any time in the
process of construction or repair on the Land.

Section
3.5            Waste.  Borrower shall not commit or suffer any waste
of the Property or make any change in the use of the Property which will in any
way materially increase the risk of fire or other hazard arising out of the
operation of the Property, or take any action that might invalidate or allow
the cancellation of any Policy, or do or permit to be done thereon anything
that may in any way materially impair the value of the Property or the security
of this Security Instrument.  Borrower
will not, without the prior written consent of Lender, permit any drilling or
exploration for or extraction, removal, or production of any minerals from the
surface or the subsurface of the Land, regardless of the depth thereof or the
method of mining or extraction thereof.

Section
3.6            Payment for Labor and
Materials. 
(a)  Subject to Section 3.6(b),
Borrower will promptly pay when due all bills and costs for labor, materials,
and specifically fabricated materials (“Labor and Material Costs”)
incurred in connection with the Property and 

 7
 

 

never permit to exist beyond the due date thereof in
respect of the Property or any part thereof any lien or security interest, even
though inferior to the liens and the security interests hereof, and in any
event never permit to be created or exist in respect of the Property or any
part thereof any other or additional lien or security interest other than the
liens or security interests hereof except for the Permitted Encumbrances and
other Liens permitted pursuant to the Loan Documents.

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

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

Section
3.8            Change of Name, Identity
or Structure. 
Borrower shall not change Borrower’s name, identity (including its trade
name or names) or, if not an individual, Borrower’s corporate, partnership or
other structure without notifying Lender of such change in writing at least
thirty (30) days prior to the effective date of such change and, in the
case of a change in Borrower’s structure, without first obtaining the prior
written consent of Lender.  Borrower
shall execute and deliver to Lender, prior to or contemporaneously with the
effective date of any such change, any financing statement or financing
statement change required by Lender to establish or maintain the validity,
perfection and priority of the security interest granted herein.  At the request of Lender, Borrower shall
execute a certificate in form satisfactory to Lender listing the trade names
under which Borrower intends to operate the Property, and representing and
warranting that Borrower does business under no other trade name with respect
to the Property.

Section
3.9            Title.  Borrower has good, marketable and insurable
fee simple title to the real property comprising part of the Property and good
title to the balance of such Property, free and clear of all Liens (as defined
in the Loan Agreement) whatsoever except the Permitted Encumbrances (as defined
in the Loan Agreement), such other Liens as are permitted 

 8
 

 

pursuant to the Loan Documents and the Liens created
by the Loan Documents.  The Permitted
Encumbrances in the aggregate do not materially and adversely affect the value,
operation or use of the Property or Borrower’s ability to repay the Loan.  This Security Instrument, when properly
recorded in the appropriate records, together with any Uniform Commercial Code
financing statements required to be filed in connection therewith, will create
(a) a valid, perfected first priority lien on that portion of the Property
constituting interests in real estate, subject only to Permitted Encumbrances
and the Liens created by the Loan Documents and (b) to the extent that a
security interest therein maybe perfected by the filing of financing statements
under the Uniform Commercial Code, perfected security interests in and to, and
perfected collateral assignments of, all personalty (including, to the extent
that they constitute personalty subject to the Uniform Commercial Code, the
Leases), all in accordance with the terms thereof, in each case subject only to
any applicable Permitted Encumbrances, such other Liens as are permitted
pursuant to the Loan Documents and the Liens created by the Loan
Documents.  There are no claims for payment
for work, labor or materials affecting the Property which are past due and are
or may become a lien prior to, or of equal priority with, the Liens created by
the Loan Documents unless such claims for payments are being contested in
accordance with the terms and conditions of this Security Instrument.

ARTICLE IV - OBLIGATIONS AND
RELIANCES

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

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

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

(b)           By accepting or approving anything
required to be observed, performed or fulfilled or to be given to Lender
pursuant to this Security Instrument, the Loan Agreement, the Note or the other
Loan Documents, including, without limitation, any Officer’s Certificate,
balance sheet, statement of profit and loss or other financial statement,
survey, appraisal, or Policy, Lender shall not be deemed to have warranted,
consented to, or affirmed the sufficiency, the legality or effectiveness of
same, and such acceptance or approval thereof shall not constitute any warranty
or affirmation with respect thereto by Lender.

 9
 

 

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

ARTICLE V - FURTHER ASSURANCES

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

Section
5.2            Further Acts, etc.  Borrower will, at the cost of Borrower, and
without expense to Lender, do, execute, acknowledge and deliver all and every
further acts, deeds, conveyances, deeds of trust, mortgages, assignments,
notices of assignments, transfers and assurances as Lender shall, from time to time,
reasonably require, for the better assuring, conveying, assigning,
transferring, and confirming unto Lender the property and rights hereby
mortgaged, deeded, granted, bargained, sold, conveyed, confirmed, pledged,
assigned, warranted and transferred or intended now or hereafter so to be, or
which Borrower may be or may hereafter become bound to convey or assign to
Lender, or for carrying out the intention or facilitating the performance of
the terms of this Security Instrument or for filing, registering or recording
this Security Instrument, or for complying with all Legal Requirements.  Borrower, on demand, will execute and
deliver, and in the event it shall fail to so execute and deliver, hereby
authorizes Lender to execute in the name of Borrower or without the signature
of Borrower to the extent Lender may lawfully do so, one or more financing
statements to evidence more effectively the security interest of Lender in the
Property.  Borrower grants to Lender an irrevocable
power of attorney coupled with an interest for the purpose of exercising and
perfecting any and all rights and remedies available to Lender at law and in
equity, including without limitation, such rights and remedies available to
Lender pursuant to this Section 5.2.

 10
 

 

Section
5.3            Changes in Tax, Debt,
Credit and Documentary Stamp Laws.  (a)  If
any law is enacted or adopted or amended after the date of this Security
Instrument which deducts the Debt from the value of the Property for the
purpose of taxation or which imposes a tax, either directly or indirectly, on
the Debt or Lender’s interest in the Property (other than the inclusion of such
amounts as income for income tax purposes or taxes on Lender’s capital),
Borrower will pay the tax, with interest and penalties thereon, if any.  If Lender is advised by counsel chosen by it
that the payment of tax by Borrower would be unlawful or taxable to Lender or
unenforceable or provide the basis for a defense of usury, then Lender shall
have the option by written notice of not less than one hundred
twenty (120) days to declare the Debt immediately due and payable.  If so accelerated, Borrower shall repay the
Loan without premium or penalty.

(b)           Borrower will not claim or demand or
be entitled to any credit or credits on account of the Debt for any part of the
Taxes or Other Charges assessed against the Property, or any part thereof, and
no deduction shall otherwise be made or claimed from the assessed value of the
Property, or any part thereof, for real estate tax purposes by reason of this
Security Instrument or the Debt.  If such
claim, credit or deduction shall be required by law, Lender shall have the
option, by written notice of not less than one hundred twenty (120) days,
to declare the Debt immediately due and payable.  If so accelerated, Borrower shall repay the
Loan without premium or penalty.

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

Section
5.4            Severing of Security
Instrument.  This
Security Instrument and the Note shall, at any time until the same shall be
fully paid and satisfied, at the sole election of Lender, be severed into two
or more notes and two or more security instruments in such denominations as
Lender shall determine in its sole discretion, each of which shall cover all or
a portion of the Property to be more particularly described therein.  To that end, Borrower, upon written request
of Lender, shall execute, acknowledge and deliver, or cause to be executed,
acknowledged and delivered by the then owner of the Property, to Lender and/or
its designee or designees substitute notes and security instruments in such
principal amounts, aggregating not more than the then unpaid principal amount
of this Security Instrument, and containing terms, provisions and clauses
similar to, and no more onerous to Borrower than, those contained herein and in
the Note, and such other documents and instruments as may be required by
Lender; provided that Borrower’s obligations are not materially increased
thereby.

Section
5.5            Replacement Documents.  Upon receipt of an affidavit of an officer of
Lender as to the loss, theft, destruction or mutilation of the Note or any
other Loan Document which is not of public record, and, in the case of any such
mutilation, upon surrender and cancellation of such Note or other Loan
Document, Borrower will issue, in lieu thereof, a replacement Note or other
Loan Document, dated the date of such lost, stolen, destroyed or mutilated Note
or other Loan Document in the same principal amount thereof and otherwise of like
tenor.

 11

 

ARTICLE VI - DUE ON
SALE/ENCUMBRANCE

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

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

ARTICLE VII - RIGHTS AND REMEDIES
UPON DEFAULT

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

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

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

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

(d)           sell for cash or upon credit the
Property or any part thereof and all estate, claim, demand, right, title and
interest of Borrower therein and rights of redemption thereof, pursuant to
power of sale or otherwise, at one or more sales, as an entirety or in parcels,
at such time and place, upon such terms and after such notice thereof as may be
required or permitted by law;

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

 12
 

 

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

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

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

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

 13
 

 

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

(i)            Taxes and Other Charges;

(ii)           Insurance Premiums;

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

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

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

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

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

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

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

Section
7.3            Right to Cure Defaults.  Upon the occurrence and during the
continuance of any Event of Default, Lender may, but without any obligation to
do so and without notice to or demand on Borrower and without releasing
Borrower from any obligation hereunder, make any payment or do any act required
of Borrower hereunder in such manner and to such extent as Lender may deem
necessary to protect the security hereof. 
Lender is authorized to enter upon the Property for such purposes, or
appear in, defend, or bring any action or proceeding to protect its interest in
the Property or to foreclose this Security Instrument or collect the Debt, and
the cost and expense thereof (including reasonable attorneys’ fees to the
extent permitted by law), with interest as provided in this Section 7.3, shall constitute a portion
of the Debt and shall be due and payable to Lender upon demand.  All such costs and expenses incurred by
Lender in remedying such Event of Default or such failed payment or act or in
appearing in, defending, or bringing any such action or proceeding shall bear
interest at the Default Rate, for the period after notice from Lender that such
cost or expense was incurred to the date of payment to Lender.  All such costs and expenses incurred by
Lender together with interest thereon 

 14
 

 

calculated at the Default Rate shall be deemed to
constitute a portion of the Debt and be secured by this Security Instrument and
the other Loan Documents and shall be immediately due and payable upon demand
by Lender therefor.

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

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

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

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

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

 15
 

 

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

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

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

Section
7.10         Recourse and Choice of
Remedies.  The
provisions of Section 9.3 of the Loan Agreement are hereby incorporated by
reference into this Security Instrument to the same extent and with the same
force as if fully set forth herein.

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

ARTICLE VIII - ENVIRONMENTAL
HAZARDS

Section
8.1            Environmental
Representations and Warranties.  Except as otherwise disclosed by that certain
Phase I environmental report (or Phase II environmental report, if required)
delivered to Lender by Borrower in connection with the origination of the Loan
(such report is referred to below as the “Environmental Report”), to
Borrower’s Knowledge (a) there are no Hazardous Substances (defined below)
or underground storage tanks in, on, or under the Property, except those that
are (i) in compliance with Environmental Laws (defined below) and with
permits issued pursuant thereto (to the extent such permits are required under
Environmental Law), (ii) de-minimis amounts necessary to operate the
Property for the purposes set forth in the Loan Agreement which will not result
in an environmental condition in, on or under the Property and which are
otherwise permitted under and used in compliance with Environmental Law and
(iii) fully disclosed to Lender in writing pursuant the Environmental Report;
(b) there are no past, present or threatened Releases (defined below) of
Hazardous Substances in, on, under or from the Property which has not been fully
remediated in accordance with Environmental Law; (c) there is no threat of
any Release of Hazardous Substances 

 16
 

 

migrating to the Property; (d) there is no past
or present non-compliance with Environmental Laws, or with permits issued
pursuant thereto, in connection with the Property which has not been fully
remediated in accordance with Environmental Law; (e) Borrower does not know of,
and has not received, any written or oral notice or other communication from
any Person (including but not limited to a Governmental Authority) relating to
Hazardous Substances or Remediation (defined below) thereof, of possible
liability of any Person pursuant to any Environmental Law, other environmental
conditions in connection with the Property, or any actual or potential administrative
or judicial proceedings in connection with any of the foregoing; and
(f) Borrower has truthfully and fully disclosed to Lender, in writing, any
and all information relating to environmental conditions in, on, under or from
the Property that is known to Borrower and has provided to Lender all
information that is contained in Borrower’s files and records, including, but
not limited to, any reports relating to Hazardous Substances in, on, under or
from the Property and/or to the environmental condition of the Property.

“Environmental Law” means any present and future federal,
state and local laws, statutes, ordinances, rules, regulations and the like, as
well as common law, relating to protection of human health or the environment
with respect to exposure to Hazardous Substances, relating to Hazardous
Substances, relating to liability for or costs of Remediation or prevention of
Releases of Hazardous Substances or relating to liability for or costs of other
actual or threatened danger to human health or the environment with respect to
exposure to Hazardous Substances. 
Environmental Law includes, but is not limited to, the following
statutes, as amended, any successor thereto, and any regulations promulgated pursuant
thereto, and any state or local statutes, ordinances, rules, regulations and
the like addressing similar issues:  the
Comprehensive Environmental Response, Compensation and Liability Act; the
Emergency Planning and Community Right-to-Know Act; the Hazardous Substances
Transportation Act; the Resource Conservation and Recovery Act (including but
not limited to Subtitle I relating to underground storage tanks); the Solid
Waste Disposal Act; the Clean Water Act; the Clean Air Act; the Toxic
Substances Control Act; the Safe Drinking Water Act; the Occupational Safety
and Health Act; the Federal Water Pollution Control Act; the Federal
Insecticide, Fungicide and Rodenticide Act; the Endangered Species Act; the
National Environmental Policy Act; the River and Harbors Appropriation Act; the
Pennsylvania Clean Streams Law; the Pennsylvania Hazardous Site Clean-Up Act
and the Pennsylvania Solid Waste Management Act.  Environmental Law also includes, but is not
limited to, any present and future federal, state and local laws, statutes,
ordinances, rules, regulations and the like, as well as common law:  conditioning transfer of property upon a
negative declaration or other approval of a governmental authority of the
environmental condition of the Property; requiring notification or disclosure
of Releases of Hazardous Substances or other environmental condition of the
Property to any governmental authority or other Person, whether or not in
connection with transfer of title to or interest in property; imposing
conditions or requirements relating to Hazardous Substances in connection with
permits or other authorization for lawful activity; relating to nuisance,
trespass or other causes of action in respect of Hazardous Substances related
to the Property; or, to the extent arising out of the presence of Hazardous
Substances, relating to wrongful death, personal injury, or property or other
damage in connection with any physical condition or use of the Property.

“Hazardous Substances” include but are not limited to any and
all substances (whether solid, liquid or gas) defined, listed, or otherwise
classified as pollutants, hazardous 

 17
 

 

wastes, hazardous substances, hazardous materials,
extremely hazardous wastes, or words of similar meaning or regulatory effect
under any present or future Environmental Laws or that may have a negative
impact on human health or the environment by reason of exposure thereto,
including but not limited to petroleum and petroleum products, asbestos and
asbestos-containing materials, polychlorinated biphenyls, lead, radon, radioactive
materials, flammables and explosives, including molds or other fungi, bacteria
or other microorganisms, or any etiologic agents or materials, but excluding
substances of kinds and in amounts ordinarily and customarily used or stored in
similar properties for the purpose of cleaning or other maintenance or
operations and otherwise in compliance with all Environmental Laws.

“Release” of any Hazardous Substance includes but is not
limited to any release, deposit, discharge, emission, leaking, spilling, seeping,
migrating, injecting, pumping, pouring, emptying, escaping, dumping, disposing
or other movement of Hazardous Substances.

“Remediation” includes but is not limited to any response,
remedial, removal, or corrective action, any activity to clean-up, detoxify,
decontaminate, contain or otherwise remediate any Hazardous Substance, any
actions to prevent, cure or mitigate any Release of any Hazardous Substance,
any action to comply with any Environmental Laws or with any permits issued
pursuant thereto, any inspection, investigation, study, monitoring, assessment,
audit, sampling and testing, laboratory or other analysis, or evaluation
relating to any Hazardous Substances or to anything referred to in Article 8.

Section
8.2            Environmental Covenants.  Borrower covenants and agrees that:  (a) Borrower shall use commercially
reasonable efforts to ensure that all uses and operations on or of the Property
shall be in compliance with all Environmental Laws and permits issued pursuant
thereto; (b) Borrower shall use commercially reasonable efforts to prevent
any Releases of Hazardous Substances in, on, under or from the Property;
(c) Borrower shall not permit any Hazardous Substances in, on, or under
the Property, except those that are (i) in compliance with all Environmental
Laws and with permits issued pursuant thereto (to the extent such permits are
required by Environmental Law), (ii) de-minimis amounts necessary to operate
the Property for the purposes set forth in the Loan Agreement which will not
result in an environmental condition in, on or under the Property and which are
otherwise permitted under and used in compliance with Environmental Law and
(iii) fully disclosed to Lender in writing; (d) Borrower shall keep the
Property free and clear of all liens and other encumbrances imposed pursuant to
any Environmental Law, whether due to any act or omission of Borrower or any
other Person (the “Environmental
Liens”); (e) Borrower shall, at its sole cost and expense,
fully and expeditiously cooperate in all activities pursuant to Section 8.3 below, including but not
limited to providing all relevant information and making knowledgeable persons
available for interviews; (f) Borrower shall, at its sole cost and
expense, perform any environmental site assessment or other investigation of
environmental conditions in connection with the Property, pursuant to any
reasonable written request of Lender made in the event that Lender has reason
to believe that an environmental hazard exists on the Property (including but
not limited to sampling, testing and analysis of soil, water, air, building
materials and other materials and substances whether solid, liquid or gas), and
share with Lender the reports and other results thereof, and Lender and other
Indemnified Parties shall be entitled to rely on such reports and other results
thereof; (g) Borrower shall, at its sole cost and expense, comply with all
reasonable written requests of Lender made in the event that Lender has reason
to believe that an 

 18
 

 

environmental hazard exists on the Property to
(i) reasonably effectuate Remediation of any condition (including but not
limited to a Release of a Hazardous Substance) in, on, under or from the
Property; (ii) comply with any Environmental Law; (iii) comply with
any directive from any Governmental Authority; and (iv) take any other
reasonable action necessary or appropriate for protection of human health or
the environment; (h) Borrower shall not do or allow any tenant or other
user of the Property to do any act with respect to Hazardous Substances that
materially increases the dangers to human health or the environment, poses an
unreasonable risk of harm to any Person (whether on or off the Property),
impairs or may impair the value of the Property, is contrary to any requirement
of any insurer, constitutes a public or private nuisance, constitutes waste, or
violates any covenant, condition, agreement or easement applicable to the
Property; (i) Borrower shall immediately notify Lender in writing of
(A) any presence or Releases or threatened Releases of Hazardous
Substances in, on, under, from or migrating towards the Property; (B) any
non-compliance with any Environmental Laws related in any way to the Property;
(C) any actual or potential Environmental Lien; (D) any required or
proposed Remediation of environmental conditions relating to the Property; and
(E) any written notice or other written communication of which Borrower
becomes aware from any source whatsoever (including but not limited to a
governmental entity) relating in any way to Hazardous Substances or Remediation
thereof, possible liability of any Person pursuant to any Environmental Law,
other environmental conditions in connection with the Property, or any actual
or potential administrative or judicial proceedings in connection with anything
referred to in this Article 8;
and (j) to the extent possible using commercially reasonable efforts, the
Property shall be maintained in such a manner as to prevent excess humidity or
accumulation of moisture that may promote the growth of molds or other fungi
and other microorganisms.

Section
8.3            Lender’s Rights.  In the event that Lender has reason to
believe that an environmental hazard exists on the Property that does not, in
Lender’s sole discretion, endanger any tenants or other occupants of the
Property or their guests or the general public or materially and adversely
affect the value of the Property, upon reasonable notice from Lender, Borrower
shall, at Borrower’s expense, promptly cause an engineer or consultant
satisfactory to Lender to conduct an environmental assessment or audit (the
scope of which shall be determined in Lender’s sole and absolute discretion)
and take any samples of soil, groundwater or other water, air, or building
materials or any other invasive testing requested by Lender and promptly
deliver the results of any such assessment, audit, sampling or other testing;
provided, however, if such results are not delivered to Lender within a
reasonable period or if Lender has reason to believe that an environmental hazard
exists on the Property that, in Lender’s sole judgment, endangers any tenant or
other occupant of the Property or their guests or the general public or may
materially and adversely affect the value of the Property, upon reasonable
notice to Borrower, Lender and any other Person designated by Lender, including
but not limited to any receiver, any representative of a governmental entity,
and any environmental consultant, shall have the right, but not the obligation,
to enter upon the Property at all reasonable times to assess any and all
aspects of the environmental condition of the Property and its use, including
but not limited to conducting any environmental assessment or audit (the scope
of which shall be determined in Lender’s sole and absolute discretion) and
taking samples of soil, groundwater or other water, air, or building materials,
and reasonably conducting other invasive testing.  Borrower shall cooperate with and provide
Lender and any such Person designated by Lender with access to the Property.

 19
 

 

ARTICLE IX - INDEMNIFICATION

Section
9.1            General Indemnification.  Borrower shall, at its sole cost and expense,
protect, defend, indemnify, release and hold harmless the Indemnified Parties
from and against any and all claims, suits, liabilities (including, without
limitation, strict liabilities), actions, proceedings, obligations, debts,
damages, losses, costs, expenses, diminutions in value, fines, penalties,
charges, fees, expenses, judgments, awards, amounts paid in settlement,
punitive damages, foreseeable and unforeseeable consequential damages, of
whatever kind or nature (including but not limited to reasonable attorneys’
fees and other costs of defense) (collectively, the “Losses”) imposed upon or
incurred by or asserted against any Indemnified Parties and directly or
indirectly arising out of or in any way relating to any one or more of the
following, except, in each case, to the extent arising out of any Indemnified
Party’s gross negligence or willful misconduct: 
(a) ownership of this Security Instrument, the Property or any
interest therein or receipt of any Rents; (b) any amendment to, or
restructuring of, the Debt, the Note, the Loan Agreement, this Security
Instrument, or any other Loan Documents; (c) any and all lawful action that
may be taken by Lender in connection with the enforcement of the provisions of
this Security Instrument, the Loan Agreement, the Note or any of the other Loan
Documents, whether or not suit is filed in connection with same, or in
connection with Borrower, any Guarantor or Indemnifying Person and/or any
partner, joint venturer or shareholder thereof becoming a party to a voluntary
or involuntary federal or state bankruptcy, insolvency or similar proceeding;
(d) any accident, injury to or death of persons or loss of or damage to
property occurring in, on or about the Property or any part thereof or on the
adjoining sidewalks, curbs, adjacent property or adjacent parking areas,
streets or ways; (e) any use, nonuse or condition in, on or about the
Property or any part thereof or on the adjoining sidewalks, curbs, adjacent
property or adjacent parking areas, streets or ways; (f) any failure on
the part of Borrower to perform or be in compliance with any of the terms of
this Security Instrument, the Note, the Loan Agreement or any of the other Loan
Documents; (g) performance of any labor or services or the furnishing of
any materials or other property in respect of the Property or any part thereof;
(h) the failure of any person to file timely with the Internal Revenue
Service an accurate Form 1099-B, Statement for Recipients of Proceeds from Real
Estate, Broker and Barter Exchange Transactions, which may be required in
connection with this Security Instrument, or to supply a copy thereof in a
timely fashion to the recipient of the proceeds of the transaction in
connection with which this Security Instrument is made; (i) any failure of
the Property to be in compliance with any Legal Requirements; (j) the
enforcement by any Indemnified Party of the provisions of this Article 9; (k) any and all claims
and demands whatsoever which may be asserted against Lender by reason of any
alleged obligations or undertakings on its part to perform or discharge any of
the terms, covenants, or agreements contained in any Lease; (l) the
payment of any commission, charge or brokerage fee to anyone claiming through
Borrower which may be payable in connection with the funding of the Loan; or
(m) any misrepresentation made by Borrower in this Security Instrument or
any other Loan Document.  Any amounts
payable to Lender by reason of the application of this Section 9.1 shall become immediately
due and payable and shall bear interest at the Default Rate from the date loss
or damage is sustained by Lender until paid. 
For purposes of this Article 9,
the term “Indemnified
Parties” means Lender and any Person who is or will have been
involved in the origination of the Loan, any Person who is or will have been
involved in the servicing of the Loan secured hereby, any Person in whose name
the encumbrance created by this Security Instrument is or will have been
recorded, any Person who may hold or acquire or will have held a full or
partial interest in the Loan secured 

 20
 

 

hereby (including, but not limited to, investors or
prospective investors in the Securities, as well as custodians, trustees and
other fiduciaries who hold or have held a full or partial interest in the Loan
secured hereby for the benefit of third parties) as well as the respective
directors, officers, shareholders, partners, employees, agents, servants,
representatives, contractors, subcontractors, affiliates, subsidiaries,
participants, successors and assigns of any and all of the foregoing
(including, but not limited to, any other Person who holds or acquires or will
have held a participation or other full or partial interest in the Loan,
whether during the term of the Loan or as a part of or following a foreclosure
of the Loan and any successors by merger, consolidation or acquisition of all
or a substantial portion of Lender’s assets and business).

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

Section
9.3            ERISA Indemnification.  Borrower shall, at its sole cost and expense,
protect, defend, indemnify, release and hold harmless the Indemnified Parties
from and against any and all Losses (including, without limitation, reasonable
attorneys’ fees and costs incurred in the investigation, defense, and
settlement of Losses incurred in correcting any prohibited transaction or in
the sale of a prohibited loan, and in obtaining any individual prohibited
transaction exemption under ERISA that may be required, in Lender’s sole
discretion) that Lender may incur, directly or indirectly, as a result of a
default under Sections 4.1.9 or 5.2.12 of the Loan Agreement.

Section
9.4            Environmental
Indemnification. 
Borrower shall, at its sole cost and expense, protect, defend,
indemnify, release and hold harmless the Indemnified Parties from and against
any and all Losses and costs of Remediation (whether or not performed
voluntarily), engineers’ fees, environmental consultants’ fees, and costs of
investigation (including but not limited to sampling, testing, and analysis of
soil, water, air, building materials and other materials and substances whether
solid, liquid or gas) imposed upon or incurred by or asserted against any
Indemnified Parties, and arising out of or in any way relating to any one or
more of the following:  (a) any
presence of any Hazardous Substances in, on, above, or under the Property;
(b) any past, present or threatened Release of Hazardous Substances in,
on, above, under or from the Property; (c) any activity by Borrower, any
Person affiliated with Borrower or any tenant or other user of the Property in
connection with any actual, proposed or threatened use, treatment, storage,
holding, existence, disposition or other Release, generation, production,
manufacturing, processing, refining, control, management, abatement, removal,
handling, transfer or transportation to or from the Property of any Hazardous
Substances at any time located in, under, on or above the Property; (d) any
activity by Borrower, any Person affiliated with Borrower or any tenant or
other user of the Property in connection with any actual or proposed
Remediation of any Hazardous Substances at any time located in, under, on or
above the Property, whether or not such Remediation is voluntary or pursuant to
court or administrative order, including but not limited to any removal,
remedial or corrective action; (e) any past or present non-compliance or
violations of any Environmental Laws (or permits issued pursuant to any
Environmental Law) in connection with the Property or operations thereon,
including but not 

 21
 

 

limited to any failure by Borrower, any Affiliate of
Borrower or any tenant or other user of the Property to comply with any order
of any Governmental Authority in connection with any Environmental Laws;
(f) the imposition, recording or filing of any Environmental Lien
encumbering the Property; (g) any administrative processes or proceedings
or judicial proceedings in any way connected with any matter addressed in Article 8 and this Section 9.4; (h) any past,
present or threatened injury to, destruction of or loss of natural resources in
any way connected with the Property, including but not limited to costs to
investigate and assess such injury, destruction or loss; (i) any acts of
Borrower or other users of the Property in arranging for disposal or treatment,
or arranging with a transporter for transport for disposal or treatment, of
Hazardous Substances owned or possessed by such Borrower or other users, at any
facility or incineration vessel owned or operated by another Person and
containing such or any similar Hazardous Substance; (j) any acts of
Borrower or other users of the Property, in accepting any Hazardous Substance
for transport to disposal or treatment facilities, incineration vessels or
sites selected by Borrower or such other users, from which there is a Release,
or a threatened Release of any Hazardous Substance which causes the incurrence
of costs for Remediation; (k) any personal injury, wrongful death, or
property damage arising under any statutory or common law or tort law theory,
including but not limited to damages assessed for the maintenance of a private
or public nuisance or for the conducting of an abnormally dangerous activity on
or near the Property, in each case, to the extent arising out of the presence
of Hazardous Substances; and (1) any misrepresentation or inaccuracy in
any representation or warranty or material breach or failure to perform any
covenants or other obligations pursuant to Article 8.  This indemnity shall survive any termination,
satisfaction or foreclosure of this Security Instrument, subject to the
provisions of Section 10.5.  Notwithstanding the foregoing, Borrower shall
have no liability for any Losses imposed upon or incurred by or asserted
against any Indemnified Parties and described in this Section 9.4
to the extent that such Losses arose solely by actions, conditions or events
relating to the Hazardous Substances placed in, on, above or under the Property
after the date that Lender or any Affiliate or nominee of Lender (or any
purchaser at a foreclosure sale) actually acquired title to the Property and
were not caused by the direct or indirect actions of Borrower or any officer or
director of Borrower or any employee, agent, contractor or Affiliate of
Borrower.

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

 22
 

 

ARTICLE X - WAIVERS

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

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

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

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

Section
10.5         Survival.  The indemnifications made pursuant to Sections 9.3 and 9.4 herein and the representations and
warranties, covenants, and other obligations arising under Article 8, shall continue indefinitely
in full force and effect and shall survive and shall in no way be impaired by
any of the following:  any satisfaction
or other termination of this Security Instrument, any assignment or other
transfer of all or any portion of this Security Instrument or Lender’s interest
in the Property (but, in such case, shall benefit both Indemnified Parties and
any assignee or transferee), any exercise of Lender’s rights and remedies
pursuant hereto including, but not limited to, foreclosure or acceptance of a
deed in lieu of foreclosure, any exercise of any rights and remedies pursuant
to the Loan Agreement, the Note or any of the other Loan Documents, any
transfer of all or any portion of the Property (whether by Borrower or by
Lender following foreclosure or acceptance of a deed in lieu of foreclosure or
at any other time), any amendment to this Security Instrument, the Loan
Agreement, the Note or the other Loan Documents, and any act or omission that
might otherwise be construed as a release or discharge of Borrower from the
obligations pursuant hereto.

 23
 

 

ARTICLE XI - EXCULPATION

The provisions of Section 9.3 of the Loan
Agreement are hereby incorporated by reference into this Security Instrument to
the same extent and with the same force as if fully set forth herein.

ARTICLE XII - NOTICES

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

ARTICLE XIII - APPLICABLE LAW

Section
13.1         Governing Law.  This Security Instrument shall be governed by
and construed in accordance with the laws of the state in which the Property is
located (without regard to any conflict of laws or principles) and the
applicable laws of the United States of America.

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

Section 13.3         Provisions Subject to Applicable Law.  All rights, powers and remedies provided in
this Security Instrument may be exercised only to the extent that the exercise
thereof does not violate any applicable provisions of law and are intended to
be limited to the extent necessary so that they will not render this Security
Instrument invalid, unenforceable or not entitled to be recorded, registered or
filed under the provisions of any applicable law.  If any term of this Security Instrument or
any application thereof shall be invalid or unenforceable, the remainder of
this Security Instrument and any other application of the term shall not be
affected thereby.

ARTICLE XIV - DEFINITIONS

All capitalized terms not defined herein shall have
the respective meanings set forth in the Loan Agreement.  Unless the context clearly indicates a
contrary intent or unless otherwise specifically provided herein, words used in
this Security Instrument may be used interchangeably in singular or plural form
and the word “Borrower”
shall mean “each Borrower and any subsequent owner or owners of a fee interest
in the Property or any part thereof, the word “Lender” shall mean “Lender and
any subsequent holder of the Note,” the word “Note” shall mean “the Note and
any other evidence of indebtedness secured by this Security 

 24
 

 

Instrument,” the word “Property” shall include any
portion of the Property and any interest therein, and the phrases “attorneys’ fees”,
“legal fees”
and “counsel
fees” shall include any and all attorneys’, paralegal and law clerk
fees and disbursements, including, but not limited to, fees and disbursements
at the pre-trial, trial and appellate levels incurred or paid by Lender in
protecting its interest in the Property, the Leases and the Rents and enforcing
its rights hereunder.

ARTICLE XV - MISCELLANEOUS
PROVISIONS

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

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

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

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

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

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

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

 25
 

 

writing in the Note, the Loan Agreement, this Security
Instrument and the other Loan Documents, there are not, and were not, and no
persons are or were authorized by Lender to make, any representations,
understandings, stipulations, agreements or promises, oral or written, with
respect to the transaction which is the subject of the Note, the Loan
Agreement, this Security Instrument and the other Loan Documents.

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

ARTICLE XVI - LOCAL LAW PROVISIONS

Section
16.1         Principles of Construction.  In the event of any inconsistencies between
the terms and conditions of this Article 16 and the terms and
conditions of this Security Instrument, the terms and conditions of this Article 16
shall control and be binding.

Section
16.2         42 Pa. C.S. §§ 8143 and
8144.  This
Security Instrument secures future advances made pursuant to this Security
Instrument or pursuant to the Loan Agreement. 
Without limiting the foregoing, this Security Instrument secures, in
addition to any other indebtedness secured hereby, advances made by Lender of
any kind or nature described in 42 Pa. C.S.A. § 8144, including, but not
limited to unpaid balances of advances made with respect to the Property for
the payment of taxes, assessments, maintenance charges, insurance premiums or
costs incurred for the protection of the Property or the lien of this Security
Instrument, expenses incurred by the Lender by reason of default by Borrower
under this Security Instrument or advances made under a construction loan to
enable completion of the improvements for which the construction loan was
originally made. This Security Instrument shall be a lien on the Property from
the time the Security Instrument is left for record, or the time of delivery to
the Lender of a purchase money mortgage which is recorded within ten days after
its date, for the full amount of the unpaid balances of such advances that are
made under this Security Instrument, plus interest thereon, regardless of the
time when such advances are or maybe made.

Section
16.3         Interest After Event of
Default.  If any
Event of Default exists, Borrower shall pay interest on the Loan at the Default
Rate until all amounts due are paid to the Lender, whether or not any action
shall have been taken or proceeding commenced to recover the same or to
foreclose this Security Instrument. 
Nothing in this Section 16.3 or in any other provision of this
Security Instrument shall constitute an extension of the time of payment of the
Debt.  After entry of a judgment on any
of the Note, the Loan Agreement, this Security Instrument or the other Loan
Documents or a judgment in foreclosure hereunder, interest shall continue to
accrue under the Loan Agreement, the Note and this Security Instrument at the
rate set forth in the Loan Agreement. 
This Security Instrument shall not, solely for purposes of determining
interest payable under the Loan Agreement, merge with any judgment on the Loan 

 26
 

 

Agreement, the Note or any other Loan Document or a
judgment in foreclosure under this Security Instrument.

Section
16.4         Additional Advances and
Disbursements; Costs of Enforcement.  If any Event of Default exists, Lender shall
have the right, but not the obligation, to cure such Event of Default in the
name and on behalf of Borrower.  All sums
advanced and expenses incurred at any time by Lender under this Section 16.4,
or otherwise under this Security Instrument or any of the Loan Agreement, the
Note or the other Loan Documents or applicable law, shall bear interest from
the date that such sum is advanced or expense incurred, to and including the
date of reimbursement, computed at the Default Rate (as defined in the Loan
Agreement), and all such sums, together with interest thereon, shall be secured
by this Security Instrument.

Section
16.5         Acceleration Remedy.  If any Event of Default exists, Lender, in
its sole judgment and discretion, may declare all of the sums secured by this
Security Instrument to be immediately due and payable without further demand
and may foreclose this Security Instrument by judicial proceedings and may
invoke any other remedies permitted by applicable law or provided herein.
Lender shall be entitled to collect all reasonable out-of-pocket costs and
expenses incurred in pursuing such remedies.

Section
16.6         Release or Reconveyance.  Upon payment in full of the Debt and
performance in full of Borrower’s Obligations under this Security Instrument,
the Loan Agreement, the Note and the other Loan Documents or a defeasance of
the Loan in accordance with the provisions of the Loan Agreement, Lender, at
Borrower’s expense, shall release Liens created by this Security Instrument or
reconvey the Property to Borrower.

[NO FURTHER TEXT ON THIS PAGE]

 27

 

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

	
   

  	
  BORROWER:

  
	
   

  	
   

  
	
   

  	
  BEHRINGER HARVARD THREE PARKWAY,

  LLC, a Delaware limited liability company

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name: Gerald J. Reihsen, III

  
	
   

  	
  Title: Secretary

  

 

 

I hereby certify that the
address of the Lender is 270 Park Avenue, New York, New York 10017.

 

	
  

  	
  JPMORGAN CHASE BANK, N.A., a banking

  association chartered under the laws of the United

  States of America

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  

 

 

ACKNOWLEDGMENT

	
  STATE OF TEXAS

  	
  )

  
	
   

  	
  :

  
	
   

  	
  COUNTY

  	
  )

  
			

 

I,
the undersigned, a notary public in and for said county in said state, hereby
certify that GERALD J. REIHSEN, III, whose name as Secretary of BEHRINGER
HARVARD THREE PARKWAY, LLC, a Delaware limited liability company, is signed to
the foregoing instrument, and who is known to me, acknowledged before me on
this day that, being informed of the contents of said instrument, he, as such
officer and with full authority, executed the same voluntarily for and as the
act of said limited liability company.

Given
under my hand and official seal this             
day of                                     ,
2006.

	
   

  	
   

  
	
  

  	
  Notary Public

  
	
   

  	
   

  
	
  [NOTARIAL SEAL]

  	
  My commission expires:

  	
   

  

 

 

ACKNOWLEDGMENT

	
  STATE OF NEW YORK

  	
  )

  
	
   

  	
  :

  
	
  COUNTY OF NEW YORK

  	
  )

  

 

On                           ,
2006, before me,                                         ,
the undersigned officer, personally appeared                                   
who acknowledged himself to be the                                   
of JPMORGAN CHASE BANK, N.A., a banking association chartered under the laws of
the United States of America, and that as such                             ,
being authorized to do so, executed the foregoing instrument for the purposes
therein contained by signing the name of such entity by himself/herself as                          .

IN WITNESS
WHEREOF, I have hereunto set my hand and official seal.

[S E A L]

	
   

  	
  Notary Public

  
	
   

  	
  My Commission Expires:

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Printed Name of Notary Public

  

 

 

EXHIBIT
A

LEGAL
DESCRIPTION

ALL THAT CERTAIN tract or parcel of land, together with all buildings
and other improvements now or hereafter erected thereon.

SITUATE in the Eighth Ward of the City of Philadelphia, Commonwealth of
Pennsylvania and described in accordance with an ALTA/ACSM Survey of Three
Parkway #1601-1645 Cherry Street, made by William E. Barton, Barton &
Martin Engineers, dated May 31, 2001 and last revised December 10, 2001, as
follows:

BEGINNING at the intersection of the Westerly side of Sixteenth Street
(50 feet wide) and the Northerly side of Cherry Street (40 feet wide); thence
extending Westwardly, along the said side of Cherry Street, 357 feet, 2-1/8
inches to the point of intersection thereof with the Northeasterly side of The
Benjamin Franklin Parkway (140 feet wide); thence extending Northwestwardly,
along the said side of said Parkway, 47 feet, 0-1/8 inches to the point of
intersection thereof with the Easterly side of Seventeenth Street (50 feet
wide); thence extending Northwardly along the said side of Seventeenth Street,
83 feet, 3-1/4 inches to a point; thence extending Eastwardly, along a line
parallel to and 110 feet North of the Northerly side of Cherry Street, 396 feet
to a point on the Westerly side of Sixteenth Street; and thence extending
Southwardly, along the said side of Sixteenth Street, 110 feet to the point of
intersection thereof with the Northerly side of Cherry Street, being the point
and place of beginning.

CONTAINING 43,040.4 square feet (0.98807 acres), more or less.

BEING Nos. 1601-1645 Cherry Street, a/k/a Three Benjamin Franklin
Parkway.

TOGETHER with the rights and benefits created and/or referred to in the
Reciprocal Easement and Restriction Agreement, dated February 13, 1996, by and
between Friends Select School and Garnet Company, recorded in Deed Book VCS
1083 page 267, as amended by the First Amendment thereto, dated October 30,
1998 and recorded March 14, 2000 as Instrument No. 50049344 and as amended by
Second Amendment thereto, dated as of June 28, 2001 and effective as of July 3,
2001, by and between AGL Investments No.2 Limited Partnership and Friends
Select School and joined in by Fiduciary Corporation of Philadelphia Yearly
Meeting of Friends, Trustee, and recorded July 11, 2001, as Instrument No. 50290260.

 A-1

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