Document:

Exhibit 10.119

 

Space above reserved for recording information

 

PREPARED BY
AND

AFTER
RECORDING MAIL TO:

TEACHERS
INSURANCE AND ANNUITY

ASSOCIATION OF
AMERICA

730 Third
Avenue

New York, New
York  10017

Attention:  Peter M. Jordan, Esq.

 

This
Assumption and Amendment of Mortgage is an “amendment” as defined in Minnesota
Statutes, Section 287.01, subdivision 2, and as such it does not secure a new
or an increased amount of debt; accordingly, no mortgage registry tax is due
upon recording.

 

ASSUMPTION AND AMENDMENT OF MORTGAGE

 

THIS
ASSUMPTION AND AMENDMENT OF MORTGAGE (this “Assumption of Mortgage”) is made as of this      
day of August, 2006, by and among 80 SOUTH EIGHTH L.L.C., a Delaware limited
liability company (“Seller”),
whose address is c/o Buck Management Group, LLC, 80 S. Eighth Street, Suite
3450, Minneapolis, Minnesota  55402; MB
MINNEAPOLIS 8TH STREET, L.L.C., a Delaware limited liability company
(“Buyer”), whose address is
2901 Butterfield Road, Oak Brook, Illinois 
60523, and TEACHERS INSURANCE AND ANNUITY ASSOCIATION OF AMERICA, a New
York corporation (“Lender”),
with its principal address of 730 Third Avenue, New York, New York 10017.

 

RECITALS:

 

1.             Seller is the Mortgagor/Borrower
and Lender is the Mortgagee/Lender under that certain Mortgage, Assignment of
Leases and Rents, Security Agreement and Fixture Filing Statement dated
December 15, 2004 recorded under Document No. 4057371 in the Office of the
Register of Titles, Hennepin County, Minnesota (the “Mortgage”), which encumbers that
certain

 

 

property more
particularly described on Exhibit A attached hereto (the “Property”). All capitalized terms
herein are defined in accordance with the definitions set forth in the
Mortgage.

 

2.             Seller desires to convey the
Property to Buyer and has requested Lender’s consent to such conveyance in
accordance with Section 12.2 of the Mortgage. In addition, Buyer has requested
that Lender agree to certain modifications to the Deed of Trust.

 

3.             Subject to the terms of that
certain Assumption Agreement of even date herewith (“Assumption Agreement”), executed by
Seller, Buyer and Lender, Lender has agreed to consent to such conveyance and
to the modifications to the Mortgage set forth herein.

 

NOW,
THEREFORE, in consideration of the foregoing, and for other good and valuable
consideration, Seller, Buyer and Lender hereby agree that the Mortgage is
modified and supplemented as follows:

 

A.            The foregoing recitals are hereby
incorporated by reference into this Assumption of Mortgage.

 

B.            Subject to the terms of the Assumption
Agreement, which is incorporated herein by this reference as if fully set forth
below, as of the date of recordation of this Assumption of Mortgage (the “Closing Date”), Buyer hereby accepts,
assumes and agrees to perform all obligations of Seller under the Mortgage,
which is incorporated herein by this reference as if fully set forth below.

 

C.            Lender hereby consents to the
transfer of Seller’s interest in the Property to Buyer; provided that, except
as otherwise provided in the Assumption Agreement, Lender does not waive its
rights under the Section 12 of the Deed of Trust to consent to future transfers
of the Property or interests therein, which shall apply to and be binding upon
Buyer. In addition, Buyer acknowledges and agrees that management of the
Property will initially be provided by Inland American Office Management,
L.L.C., a Delaware limited liability company, and that there shall be no change
in management without Lender’s prior written consent in accordance with Section
5.2 of the Deed of Trust.

 

D.            Buyer and Lender agree that the
Mortgage shall be modified as follows, effective as of the date of recording of
this Assumption of Mortgage:

 

1.             Section 10

 

a.             Section 10.1(a)(i) and Section
10.1(a)(ii) are deleted in their entirety and replaced with the following:

 

“(i)          prepared and certified by Borrower as
true and correct (except that from and after the occurrence of an Event of
Default, audited by a CPA satisfactory to Lender)’

 

(ii)           if required to be audited by a CPA,
accompanied by an opinion of the CPA that, in all material respects, the Annual
Financial Statement

 

2

 

fairly
presents the financial position and performance of the Property; and”

 

2.             Section 12.

 

a.             Section 12.1(b) is revised to read
as follows:

 

(b)           Borrower represents, warrants and
covenants that:

 

(i)            Borrower is a
Delaware limited liability company whose sole member is Minto Builders
(Florida), Inc., a Florida corporation (the “Existing Member”).

 

(ii)           If Borrower’s members
are in turn partnerships, corporations or limited liability companies, the
general partners, principals or members thereof are as follows:

 

Existing
Member is a qualified real estate investment trust, whose sole holders of
common and preferred stock are Inland American Real Estate Trust, Inc., Inland
Western Retail Real Estate Trust, Inc., Minto Holdings, inc. and one hundred
twenty (120) unrelated shareholders (collectively, the “Sole Shareholders”).

 

3.             Sections
12.2(b)(i)-(v) are deleted in their entirety and replaced with the following:

 

(i)  any issuance, sale or
transfer of interests in Existing Member among the Sole Shareholders provided
that subsequent thereto Inland American Real Estate Trust, Inc. and/or Inland
Western Retail Real Estate Trust, Inc., individually or collectively shall own
and retain, directly or indirectly, not less than 51% of the ownership and
voting interests in Existing Member, and

 

(ii)  Transfers of interests in
any of the Sole Shareholders, and

 

(iii)  the merger of Existing
Member or any of the Sole Shareholders with any of the following entities:  Inland Retail Real Estate Trust, Inc., a
Maryland corporation, Inland Real Estate Corporation, a Maryland corporation,
Inland Real Estate Investment corporation, a Delaware corporation, Inland
American Real Estate Trust, Inc., a Maryland corporation, Inland Western Retail
Estate Trust, Inc., a Maryland corporation, any other real estate investment
trust sponsored by Inland Real Estate Investment Corporation, or any other entity
composed entirely of any of the foregoing; provided that such successor
merger transferee entity shall be a publicly traded real estate investment
trust.

 

3

 

E.             For the purposes of Section 17.1 of
the Mortgage, Borrower’s notice address shall be as follows: 

 

	
   

  	
   

  	
  MB
  Minneapolis 8th Street, L.L.C.

  
	
   

  	
   

  	
  c/o The
  Inland Real Estate Group, Inc.

  
	
   

  	
   

  	
  2901
  Butterfield Road

  
	
   

  	
   

  	
  Oak Brook,
  Illinois 60523

  
	
   

  	
   

  	
  Attn: Lori
  Foust

  
	
  with a copy
  to:

  	
   

  	
   

  
	
   

  	
   

  	
  The Inland
  Real Estate Group, Inc.

  
	
   

  	
   

  	
  2901
  Butterfield Road

  
	
   

  	
   

  	
  Oak Brook,
  Illinois 60523

  
	
   

  	
   

  	
  Attn: Dennis
  Holland, Esq.

  
	
   

  	
   

  	
  Law
  Department

  

 

F.             The Mortgage, as amended by this
instrument, shall be deemed to secure the Note, as amended by the Assumption of
Note dated, for reference purposes only, as of the date hereof executed by
Seller, Buyer and Lender.

 

G.            Buyer represents and warrants that
the fixture financing statement included within the Mortgage remains in full
force and effect, provided that the name of the record owner shall be Buyer. Buyer
hereby authorizes Lender to file new financing statements or a renewal of same
as required during the Term of the Note to keep the above representation in
full force and effect.

 

H.            Seller and Buyer (to the best of
Buyer’s knowledge) represent and warrant to Lender that (a) the Mortgage is in
full force and effect, (b) no Event of Default has occurred under the Mortgage,
and (c) to the best of Seller and Buyer’s knowledge, after due inquiry, no
event has occurred which, but for the lapse of any notice period provided in
the Mortgage would constitute default under the Mortgage.

 

I.              Seller and Buyer (to the best of
Buyer’s knowledge) represent to Lender that all material representations and
warranties made by Borrower in the Mortgage are true and correct as of the date
hereof, except for those that were made as to then-current conditions or facts;
and Buyer represents to Lender that such warranties and representations shall
remain in full force and effect during the Term of the Note.

 

J.             In the event of any ambiguity in
the Mortgage as a result of the execution of this Instrument, the provisions of
this Instrument shall govern and control the interpretation of the Mortgage.

 

4

 

K.            This Assumption of Mortgage may be
executed in any numbers of counterparts, each of which shall be deemed to be an
original, but all of which shall constitute one instrument.

 

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

 

	
   

  	
  SELLER:

  
	
   

  	
   

  
	
   

  	
  80 SOUTH
  EIGHTH L.L.C.,

  
	
   

  	
  a Delaware
  limited liability company

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  JBC
  Opportunity Fund II, L.P.,

  
	
   

  	
   

  	
  a Delaware
  limited partnership,

  
	
   

  	
   

  	
  its Managing
  Member

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  Buck
  Investors II, L.L.C., a

  
	
   

  	
   

  	
   

  	
  Delaware
  limited liability

  
	
   

  	
   

  	
   

  	
  company, its
  General Partner

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Its:

  	
  A Member

  	
   

  
	
   

  	
   

  	
   

  
	
  [SIGNATURES CONTINUED ON NEXT PAGE]

  
							

 

5

 

	
  [SIGNATURES CONTINUED FROM PRIOR PAGE]

  
	
   

  	
   

  
	
   

  	
  BUYER:

  
	
   

  	
   

  
	
   

  	
  MB
  MINNEAPOLIS 8TH STREET, L.L.C., a

  
	
   

  	
  Delaware
  limited liability company

  
	
   

  	
   

  
	
   

  	
  By:

  	
  Minto
  Builders (Florida), Inc.,

  
	
   

  	
   

  	
  a Florida
  corporation, its sole Member

  
	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
   

  	
  Its:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  [SIGNATURES CONTINUED ON NEXT PAGE]

  
							

 

6

 

	
  [SIGNATURES CONTINUED FROM PREVIOUS PAGE]

  
	
   

  
	
   

  	
  LENDER:

  
	
   

  	
   

  
	
   

  	
  TEACHERS
  INSURANCE AND ANNUITY

  
	
   

  	
  ASSOCIATION
  OF AMERICA, a New York

  
	
   

  	
  corporation

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Its:

  	
   

  	
   

  
						

 

7

 

	
  STATE OF

  	
   

  	
  )

  
	
   

  	
   

  	
  ) ss.

  
	
  COUNTY OF

  	
   

  	
  )

  

 

 

I,               ,
a notary public in and for said County, in the Sate aforesaid, DO HEREBY
CERTIFY that                ,
a Member of Buck Investors II, L.L.C., a Delaware limited liability company,
which is the general partner of JBC Opportunity Fund II, L.P., a Delaware
limited partnership, which is the managing member of 80 South Eighth L.L.C., a
Delaware limited liability company, personally known to me to be the same
person whose name is subscribed to the foregoing instrument, appeared before me
this day in person and acknowledged that he/she signed, sealed and delivered
the said instrument in his/her capacity as set forth herein as his/her free and
voluntary act, for the uses and purposes therein set forth.

 

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

 

 

	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Notary
  Public

  
	
   

  	
   

  	
   

  
	
  (seal or
  stamp)

  	
   

  	
   

  

 

8

 

	
  STATE OF

  	
   

  	
  )

  
	
   

  	
   

  	
  ) ss.

  
	
  COUNTY OF

  	
   

  	
  )

  

 

 

I certify that
I know or have satisfactory evidence that             is
the person who appeared before me, and said person acknowledged that he/she
signed this instrument, on oath stated that he/she was authorized to executed
the instrument and acknowledged it as the             of
Minto Builders  (Florida), Inc., the sole
member of MB MINNEAPOLIS 8TH STREET, L.L.C. to be the free and
voluntary act of such party for the uses and purposes mentioned in the
instrument.

 

	
  Dated

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Notary
  Public

  
	
   

  	
   

  	
   

  
	
  (seal or
  stamp)

  	
   

  	
   

  

 

9

 

	
  STATE OF NEW
  YORK

  	
  )

  
	
   

  	
   

  	
  ) ss.

  
	
  COUNTY OF

  	
   

  	
  )

  

 

 

I certify that
I know or have satisfactory evidence that           is
the person who appeared before me, and said person acknowledged that he/she
signed this instrument, on oath stated that he/she was authorized to executed
the instrument and acknowledged it as the           of
Teachers Insurance and Annuity Association of America to be the free and
voluntary act of such party for the uses and purposes mentioned in the
instrument.

 

	
  Dated

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Notary
  Public

  
	
   

  	
   

  	
   

  
	
  (seal or
  stamp)

  	
   

  	
   

  

 

10

 

EXHIBIT “A”

 

LEGAL DESCRIPTION

 

PARCEL 1:
TRACT A, REGISTERED LAND SURVEY NO. 1592, HENNEPIN COUNTY, MINNESOTA

 

PARCEL 2:
TRACTS B, E, F, AND J, REGISTERED LAND SURVEY NO. 1593, HENNEPIN COUNTY,
MINNESOTA

 

PARCEL 3:
NON-EXCLUSIVE EASEMENTS FOR THE BENEFIT OF PARCELS 1 AND 2, CONTAINED IN THE
FOLLOWING DOCUMENTS:

 

(a)           SKYWAY AGREEMENT (NICOLLET MALL
SKYWAY) BETWEEN IDS PROPERTIES, INC. AND DAYTON HUDSON CORPORATION DATED
FEBRUARY 1, 1971 RECORDED AUGUST 2, 1973 AS DOCUMENT NO. 1079935.

 

(b)           SKYWAY AGREEMENT (7TH STREET SKYWAY)
AMONG SFA-ATLANTA, INC. 80 SOUTH EIGHTH STREET LIMITED PARTNERSHIP, AND 65 1
NICOLLET PARTNERSHIP DATED SEPTEMBER 12, 1989, RECORDED DECEMBER 12, 1990
AS  DOCUMENT NO. 2142430.

 

(c)           DECLARATION (8TH STREET SKYWAY) DATED
FEBRUARY 10, 1982 RECORDED FEBRUARY 22, 1982 AS DOCUMENT NO. 1458821.

 

(d)           DECLARATION (MARQUETTE AVENUE SKYWAY)
DATED JANUARY 22, 1970 RECORDED AUGUST 2, 1973 AS DOCUMENT NO. 1079937, AS
AMENDED BY SUPPLEMENT TO DECLARATION, DATED FEBRUARY 11, 1982, RECORDED
FEBRUARY 22, 1982 AS DOCUMENT NO. 1458829.

 

(e)           DECLARATION (MARQUETTE AVENUE TUNNEL)
DATED JUNE 30, 1970 RECORDED AUGUST 2, 1973 AS DOCUMENT NO. 1079938, AS AMENDED
BY SUPPLEMENT TO DECLARATION DATED FEBRUARY 11, 1982, RECORDED FEBRUARY 22,
1982 AS DOCUMENT NO. 1458828.

 

(f)            EASEMENTS AND COVENANTS AGREEMENT
DATED DECEMBER 4 1991, RECORDED DECEMBER 5, 1991 AS DOCUMENT NO. 2220574, AS
AMENDED BY AMENDED AND RESTATED AGREEMENT OF EASEMENTS AND COVENANTS DATED
DECEMBER 3 1, 2002, RECORDED JANUARY 23, 2003 AS DOCUMENT NO. 3670146. 

 

(g)           DECLARATION REGARDING CERTAIN
EASEMENTS (BAKER BLOCK AND IDS CENTER) DATED FEBRUARY 11, 1982, RECORDED
FEBRUARY 22, 1982 AS DOUCMETN NO. 1458830.Exhibit 10.120

 

MORTGAGE, ASSIGNMENT OF LEASES AND
RENTS,

SECURITY AGREEMENT AND FIXTURE FILING
STATEMENT

 

by

 

80 SOUTH EIGHTH L.L.C.,

as Borrower

 

for the benefit of

 

TEACHERS INSURANCE AND ANNUITY ASSOCIATION

OF AMERICA,

as Lender

 

Property Known As

IDS CENTER

80 South 8th Street

Minneapolis, Minnesota 55402

 

This Mortgage Was Prepared By 

And After Recordation This Mortgage Should Be Returned To:

 

Joshua P. Hanna, Esq.

MAYER, BROWN, ROWE & MAW
LLP

190 South LaSalle Street

Chicago, Illinois 60603

 

 

MORTGAGE, ASSIGNMENT OF LEASES AND RENTS,

SECURITY AGREEMENT AND FIXTURE FILING

 

THIS MORTGAGE,
ASSIGNMENT OF LEASES AND RENTS AND SECURITY AGREEMENT made this 15th
day of December, 2004, by 80 SOUTH EIGHTH L.L.C. (“Borrower”),
a Delaware limited liability company, having its principal place of business at
c/o Buck Management Group, LLC, 80 S. Eighth Street, Suite 3450,
Minneapolis, Minnesota 55402, for the benefit of TEACHERS INSURANCE AND ANNUITY
ASSOCIATION OF AMERICA (“Lender”), a
New York corporation, having an address at 730 Third Avenue, New York, New York
10017.

 

RECITALS:

 

A.            Lender
agreed to make and Borrower agreed to accept a loan (the “Loan”) in the maximum principal amount of
One Hundred Sixty One Million and no/100 Dollars ($161,000,000.00).

 

B.            To
evidence the Loan, Borrower executed and delivered to Lender a promissory note
(the “Note”), of even date herewith in
the principal amounts of One Hundred Sixty One Million and no/100 Dollars
($161,000,000.00) to order of Lender (those amounts or so much as is
outstanding from time to time are referred to collectively as the “Principal”), promising to pay the Principal with
interest thereon to the order of Lender as set forth in the Note and with the
balance, if any, of the Debt being due and payable on January 1, 2010 (the
“Maturity
Date”).

 

C.            To
secure the Note, this Mortgage encumbers, among other things, Borrower’s fee
interest in the real property located in the City of Minneapolis, County of
Hennepin, State of Minnesota, more particularly described in paragraph 1 of Exhibit A
(the “Land”).

 

ARTICLE I.

 

DEFINITIONS AND RULES OF
CONSTRUCTION

 

Section 1.1             Definitions.

 

Capitalized terms
used in this Mortgage are defined in Exhibit B or in the text with
a cross-reference in Exhibit B.

 

Section 1.2             Rules of
Construction.

 

This Mortgage will
be interpreted in accordance with the rules of construction set forth in Exhibit C.

 

 

ARTICLE II.

 

GRANTING CLAUSES

 

Section 2.1             Encumbered
Property.

 

Borrower
irrevocably grants, mortgages, warrants, conveys, assigns and pledges to
Lender, and grants to Lender a security interest in, the following property,
rights, interests and estates now or in the future owned or held by Borrower
(the “Property”) for the uses and
purposes set forth in this Mortgage forever:

 

(i)            the Land;

 

(ii)           all buildings and
improvements located on the Land (the “Improvements”);

 

(iii)          all easements; rights of
way or use, including any rights of ingress and egress and rights in and to the
pedestrian skyways and tunnel adjoining to the Improvements; streets, roads,
ways, sidewalks, alleys and passages; strips and gores; sewer rights; water,
water rights, water courses, riparian rights and drainage rights; air rights
and development rights; oil and mineral rights; and tenements, hereditaments
and appurtenances, in each instance adjoining or otherwise appurtenant to or
benefiting the Land or the Improvements including, but not limited to, those
more particularly described in paragraph 2 of Exhibit A;

 

(iv)          all materials intended
for construction, re-construction, alteration or repair of the Improvements,
such materials to be deemed included in the Land and the Improvements
immediately on delivery to the Land; all fixtures and personal property that
are attached to, contained in or used in connection with the Land or the
Improvements (excluding personal property owned by tenants), including:
furniture; furnishings; machinery; motors; elevators; fittings; microwave
ovens; refrigerators; office systems and equipment; plumbing, heating,
ventilating and air conditioning systems and equipment; maintenance and
landscaping equipment; lighting, cooking, laundry, dry cleaning, refrigerating,
incinerating and sprinkler systems and equipment; telecommunications systems
and equipment; computer or word processing systems and equipment; security
systems and equipment; and equipment leases for any of the property described
in this subsection (the “Fixtures and Personal
Property”);

 

(v)           all agreements, ground
leases, grants of easements or rights-of-way, skyway and tunnel agreements,
permits, declarations of covenants, conditions and restrictions, disposition
and development agreements, planned unit development agreements, cooperative,
condominium or similar ownership or conversion plans, management, leasing,
brokerage or parking agreements or other material documents

 

3

 

affecting Borrower
or the Land, the Improvements or the Fixtures and Personal Property, including
the documents described on Exhibit D but expressly excluding the
Leases (the “Property Documents”);

 

(vi)          all inventory (including
all goods, merchandise, raw materials, incidentals, office supplies and
packaging materials) held for sale, lease or resale or furnished or to be
furnished under contracts of service, or used or consumed in the ownership, use
or operation of the Land, the Improvements or the Fixtures and Personal
Property, all documents of title evidencing any part of any of the
foregoing and all returned or repossessed goods arising from or relating to any
sale or disposition of inventory;

 

(vii)         all intangible personal
property relating to the Land, the Improvements or the Fixtures and Personal
Property, including choses in action and causes of action (except those
personal to Borrower), corporate and other business records relating to
Borrower or any of the Property, inventions, designs, promotional materials,
blueprints, plans, specifications, patents, patent applications, trademarks,
trade names, trade secrets, goodwill, copyrights, registrations, licenses,
franchises, claims for refunds or rebates of taxes, insurance surpluses,
refunds or rebates of taxes and any letter of credit, guarantee, claim,
promissory note, security interest or other security held by or granted to
Borrower to secure payment by an account debtor or tenant of any of the
accounts of Borrower arising out of the ownership, use or operation of the
Land, the Improvements or the Fixtures and Personal Property, and documents
covering all of the foregoing; all accounts, accounts receivable, documents,
instruments, money, deposit accounts, funds deposited in accounts established
with a bank, savings and loan association, trust company or other financial
institution in which, pursuant to the terms of this Mortgage Borrower has
granted a security interest to Lender in connection with the ownership, use or
operation of the Land, the Improvements or the Fixtures and Personal Property,
including any reserve accounts or escrow accounts and all investments of the
funds and all other general intangibles;

 

(viii)        all awards and other
compensation paid after the date of this Mortgage for any Condemnation (the “Condemnation
Awards”);

 

(ix)           all proceeds of and all
unearned premiums on the Policies (the “Insurance Proceeds”);

 

(x)            all licenses, certificates of
occupancy, contracts, management agreements, operating agreements, operating
covenants, franchise agreements, permits and variances relating to the Land,
the Improvements or the Fixtures and Personal Property;

 

(xi)           all books, records and
other information, wherever located, which are in Borrower’s possession,
custody or control or to which Borrower is entitled at law or in

 

4

 

equity and which
are related to the Property, including all computer or other equipment used to
record, store, manage, manipulate or access the information;

 

(xii)          all deposits held from
time to time by the Accumulations Depositary to provide reserves for Taxes and
Assessments together with interest thereon, if any (the “Accumulations”);
and

 

(xiii)         all after-acquired title
to or remainder or reversion in any of the property described in this Section;
all additions, accessions and extensions to, improvements of and substitutions
or replacements for any of such property; all products and all cash and
non-cash proceeds, immediate or remote, of any sale or other disposition of any
of such property, excluding sales or other dispositions of inventory in the
ordinary course of the business of operating the Land and the Improvements; and
all additional lands, estates, interests, rights or other property acquired by
Borrower after the date of this Mortgage for use in connection with the Land or
the Improvements, all without the need for any additional mortgage, assignment,
pledge or conveyance to Lender but Borrower will execute and deliver to Lender,
upon Lender’s request, any documents reasonably requested by Lender to further
evidence the foregoing.

 

Section 2.2.            Habendum
Clause. The Property is conveyed to Lender to have and to hold forever.

 

Section 2.3.            Security
Agreement.

 

(a)           The
Property includes both real and personal property and this Mortgage is a real
property mortgage and also a “security agreement” and a “financing statement”
within the meaning of the Uniform Commercial Code. By executing and
delivering this Mortgage, Borrower grants to Lender, as security for the
Obligations, a security interest in the Property to the full extent that any of
the Property may be subject to the Uniform Commercial Code.

 

(b)           This
Mortgage constitutes a fixture financing statement under the Laws of the state
or commonwealth in which the Property is located and for this purpose, the
following information is set forth:

 

(i)            Name
and address of Debtor:

80 South Eighth
L.L.C., a Delaware limited liability company

c/o Buck
Management Group, LLC

80 S. Eighth
Street

Suite 3450

Minneapolis,
Minnesota 55402

Attn: General
Manager

 

(ii)           Name
and address of Secured Party:

 

5

 

Teachers Insurance
and Annuity Association of America

730 Third Avenue

New York, New York
10017

 

(iii)          Description
of the types (or items) of property covered by this Financing Statement:

 

All of the property described in sections ii-xiii of
the Section entitled “Encumbered Property” described or referred to
herein and included as part of the Premises.

 

(iv)          Description
of real estate to which collateral is attached or upon which it is located:

 

Described in Exhibit A.

 

Lender may file
this Mortgage, or a reproduction thereof, in the real estate records or other
appropriate index, as a financing statement for any of the items specified
above as part of the Property. Any reproduction of this Mortgage or of any
other security agreement or financing statement is sufficient as a financing
statement.

 

Section 2.4.            Conditions
to Grant. This Mortgage is made on the express condition that if Borrower
pays and performs the Obligations in full in accordance with the Loan
Documents, then, unless expressly provided otherwise in the Loan Documents, the
Loan Documents will be released at Borrower’s expense.

 

ARTICLE III

 

OBLIGATIONS SECURED

 

Section 3.1.            The
Obligations. This Mortgage secures the Principal, the Interest, the Late
Charges, the Prepayment Premiums, the Expenses, any additional advances made by
Lender in connection with the Property or the Loan in accordance with the terms
and provisions of the Loan Documents and all other amounts payable by Borrower
under the Loan Documents (the “Debt”) and also secures both the
timely payment of the Debt as and when required and the timely performance of
all other obligations and covenants to be performed by Borrower under the Loan
Documents (the “Obligations”).

 

6

 

ARTICLE IV

 

TITLE AND AUTHORITY

 

Section 4.1.            Title
to the Property.

 

(a)           Borrower
has and will continue to have good and marketable title in fee simple absolute
to the Land and the Improvements and good and marketable title to the Fixtures
and Personal Property, all free and clear of liens, encumbrances and charges
except the Permitted Exceptions. To Borrower’s knowledge, there are no facts or
circumstances that might give rise to a lien, encumbrance or charge on the
Property.

 

(b)           Borrower
owns and will continue to own all of the other Property free and clear of all
liens, encumbrances and charges except the Permitted Exceptions.

 

(c)           This
Mortgage is and will remain a valid and enforceable first lien on and security
interest in the Property, subject only to the Permitted Exceptions.

 

Section 4.2.            Authority.

 

(a)           Borrower
is and will continue to be (i) duly organized, validly existing and in
good standing under the Laws of the state or commonwealth in which it was
organized or incorporated and (ii) duly qualified to conduct business, in
good standing, in the state or commonwealth where the Property is located.

 

(b)           Borrower
has and will continue to have all approvals required by Law or otherwise and
full right, power and authority to (i) own and operate the Property and
carry on Borrower’s business as now conducted or as proposed to be conducted; (ii) execute
and deliver the Loan Documents; (iii) grant, mortgage, warrant the title
to, convey, assign and pledge the Property to Lender pursuant to the provisions
of this Mortgage; and (iv) perform the Obligations.

 

(c)           The
execution and delivery of the Loan Documents and the performance of the
Obligations do not and will not conflict with or result in a default under any
Laws or any Leases or Property Documents and do not and will not conflict with
or result in a default under any agreement binding upon any party to the Loan
Documents.

 

(d)           The
Loan Documents constitute and will continue to constitute legal, valid and
binding obligations of Borrower enforceable in accordance with their respective
terms.

 

Section 4.3.            No
Foreign Person. Borrower is not a “foreign person” within the meaning of Section 1445(f)(3) of
the Code.

 

Section 4.4.            Litigation.
There are no Proceedings or, to Borrower’s knowledge, investigations against or
affecting Borrower or the Property and, to Borrower’s knowledge, there are no
facts or circumstances that might give rise to a Proceeding or an investigation
against or

 

7

 

affecting Borrower or the
Property. Borrower will give Lender prompt notice of the commencement of any
Proceeding or investigation against or affecting the Property or Borrower which
could have a material adverse effect on the Property or on Lender’s interests
in the Property or Borrower’s ability to perform the Obligations under the
Loan Documents. Borrower also will deliver to Lender such additional
information relating to the Proceeding or investigation as Lender may request
from time to time.

 

ARTICLE V

 

PROPERTY STATUS, MAINTENANCE AND LEASES

 

Section 5.1.            Status
of the Property.

 

(a)           Borrower
has obtained and will maintain in full force and effect all certificates,
licenses, permits and approvals that are required by Law or by any entity
having jurisdiction over the Property or over Borrower or that are necessary
for the Permitted Use, for occupancy and operation of the Property, for the
granting of this Mortgage or for the conduct of Borrower’s business on the
Property in accordance with the Permitted Use, and any other certificates,
liens, permits and approvals that, to Borrower’s knowledge, are or have been
issued with respect to the Property.

 

(b)           The
Property is and will continue to be serviced by all public utilities required
for the Permitted Use of the Property.

 

(c)           All
roads and streets necessary for service of and access to the Property for the
current or contemplated use of the Property have been completed and are and
will, to Borrower’s knowledge, continue to be serviceable, physically open and
dedicated to and accepted by the Government for use by the public.

 

(d)           The
Property is free from damage caused by a Casualty.

 

(e)           All
costs and expenses of labor, materials, supplies and equipment used in the
construction of the Improvements have been paid in full, except for (i) ongoing
maintenance and repair, and (ii) expenses for tenant improvements pursuant
to the Leases.

 

Section 5.2.            Maintenance
of the Property. Borrower will maintain the Property in thorough repair and
good and safe condition, suitable for the Permitted Use, including, to the
extent necessary, replacing the Fixtures and Personal Property with property at
least equal in quality and condition to that being replaced and free of liens.
Borrower will not erect any new buildings, building additions or other
structures on the Land or otherwise materially alter the structural aspects of
the Improvements without Lender’s prior consent which may be withheld in
Lender’s sole discretion. Notwithstanding the foregoing, Borrower may perform non-structural

 

8

 

alterations, demolitions
or removals without Lender’s consent, provided that the total cost of such
alteration, demolition or removal is less than $1,000,000, and provided further
that in areas which are leased or which are available for lease, such
alteration, demolition or removal is required pursuant to a Lease which has
been approved by Lender or which is permitted under the Assignment. Any
exterior alterations to the Improvements performed pursuant to this paragraph
shall conform to and be compatible with the existing exterior of the
Improvements and shall utilize materials of equal or better quality than those
materials utilized in the existing Improvements.

 

The Property will
be managed by a property manager satisfactory to Lender pursuant to a
management agreement satisfactory to Lender. The initial property manager shall
be Buck Management Group, LLC, which Lender hereby acknowledges to be
satisfactory.

 

Section 5.3.            Change
in Use. Borrower will use and permit the use of the Property for the
Permitted Use and for no other purpose.

 

Section 5.4.            Waste.
Borrower will not commit or permit any waste (including economic and
non-physical waste), impairment or deterioration of the Property. Borrower will
not perform any material structural alteration, demolition or removal of
any of the Property without Lender’s prior consent which may be withheld
in Lender’s reasonable discretion. Nothing herein contained shall abrogate any
rights of Borrower to make certain non-structural alterations, demolition or
removals pursuant to Section 5.2 above.

 

Section 5.5.            Inspection
of the Property. Subject to the rights of tenants under the Leases, Lender
has the right to enter and inspect the Property on reasonable prior notice,
except during the existence of an Event of Default, when no prior notice is
necessary. As long as there has not been an Event of Default, and as long as no
one inspection requires additional inspections, such right shall be exercised
no more often than once per year. Lender has the right to engage an independent
expert to review and report on Borrower’s compliance with Borrower’s
obligations under this Mortgage to maintain the Property, comply with Law and
refrain from waste, impairment or deterioration of the Property and the
alteration, demolition or removal of any of the Property except as may be
permitted by the provisions of this Mortgage. If the independent expert’s
report discloses material failure to comply with such obligations or if Lender
engages the independent expert after the occurrence of an Event of Default,
then the reasonable cost associated with the performance of such independent
expert’s review and report will be at Borrower’s expense, payable promptly
following receipt of written demand therefor.

 

Section 5.6.            Leases
and Rents.

 

(a)           Borrower
assigns the Leases and the Rents to Lender absolutely and unconditionally and
not merely as additional collateral or security for the payment and performance
of the Obligations, but subject to a license back to Borrower of the right to
collect the Rents unless and until an Event of Default occurs at which time the
license will terminate

 

9

 

automatically, all as
more particularly set forth in the Assignment, the provisions of which are
incorporated in this Mortgage by reference; provided, however, that upon the
cure of the Event of Default, Borrower’s license shall be automatically
reinstated.

 

(b)           Borrower
appoints Lender as Borrower’s attorney-in-fact to execute unilaterally and
record, at Lender’s election, a document subordinating this Mortgage to the
Leases, provided that the subordination will not affect (i) the
priority of Lender’s entitlement to Insurance Proceeds or Condemnation Awards
or (ii) the priority of this Mortgage over intervening liens or liens
arising under or with respect to the Leases.

 

Section 5.7.            Parking.
Borrower will provide, maintain, police and light parking areas within the
Property, including any sidewalks, aisles, streets, driveways, sidewalk cuts
and rights-of-way to and from the adjacent public streets, in a manner
consistent with the Permitted Use and that certain Easements and Covenants
Agreement dated December 4,1991, recorded December 5, 1991, a
Document No. 2220574, as amended by Amended and Restated Agreement of
Easements and Covenants dated December 31, 2002, recorded January 23,
2003, as Document No. 3670146 and sufficient to accommodate the greatest
of: (i) the number of parking spaces required by Law; (ii) the number
of parking spaces required by the Leases and the Property Documents; or (iii) six
hundred fifty-five (655) parking spaces, as such number may be reduced to
cause the parking area to comply with Laws. The parking areas will be reserved
and used for ingress, egress and parking for Borrower and the tenants under the
Leases and their respective employees, customers and invitees and in accordance
with the Leases and the Property Documents.

 

Section 5.8.            Separate
Tax Lot. The Land and Improvements are and will remain assessed for real
estate tax purposes as one or more wholly independent tax lots, separate from
any property that is not part of the Property.

 

Section 5.9.            Changes
in Zoning or Restrictive Covenants. Borrower will not (i) initiate,
join in or consent to any change in any Laws pertaining to zoning, any restrictive
covenant or other restriction which would restrict the Permitted Uses for the
Property; (ii) permit the Property to be used to fulfil any requirements
of Law for the construction or maintenance of any improvements on property that
is not part of the Property; (iii) permit the Property to be used for
any purpose not included in the Permitted Use; or (iv) impair the
integrity of the Property as a single, legally subdivided zoning lot separate
from all other property.

 

Section 5.10.          Lender’s
Right to Appear, Lender has the right to appear in and defend any
Proceeding brought regarding the Property and to bring any Proceeding, in the
name and on behalf of Borrower, only following Borrower’s failure to do so on
its own behalf, or at any time in Lender’s name, which Lender, in its sole
discretion, determines should be brought to protect Lender’s interest in the
Property.

 

10

 

ARTICLE VI

 

IMPOSITIONS AND
ACCUMULATIONS

 

Section 6.1.            Impositions.

 

(a)           Borrower
will pay each Imposition at least 3 Business Days before the date (the “Imposition Penalty Date”) that is
the earlier of (i) the date on which the Imposition becomes delinquent and
(ii) the date on which any penalty, interest or charge for non-payment of the
Imposition accrues.

 

(b)           Promptly
following its payment of Taxes, Assessments or insurance premiums, Borrower
will deliver to Lender a receipted bill or other evidence of payment.

 

(c)           Borrower,
at its own expense, may contest any Taxes or Assessments, provided that
the following conditions are met:

 

(i)            not less than 30 days
prior to the Imposition Penalty Date, Borrower delivers to Lender notice of the
proposed contest;

 

(ii)           the contest is by a
Proceeding promptly initiated and conducted diligently and in good faith;

 

(iii)          there is no monetary
Event of Default;

 

(iv)          the Proceeding is
permitted under and is conducted in accordance with the Leases and the Property
Documents;

 

(v)           the Proceeding
precludes imposition of criminal or civil penalties and sale or forfeiture of
the Property and Lender will not be subject to any civil suit; and

 

(vi)          Borrower pays all of the
contested Taxes or Assessments under protest in any event in accordance with
the Laws of Minnesota.

 

(d)           Installment
Payments. If any Assessment is payable in installments in accordance with
its terms, Borrower may pay such Assessment in installments. If the
Assessment is only payable in installments following Borrower or a
representative of Borrower successfully petitioning to pay the Assessments in
installments, then notwithstanding such right, Borrower will nevertheless pay
the Assessment in its entirety on the day the first installment becomes due and
payable or a lien, unless Lender, in its sole discretion, approves payment of
the Assessment in installments.

 

11

 

Section 6.2.            Accumulations.

 

(a)           Borrower
made an initial deposit with Lender or a mortgage servicer or financial
institution designated or approved by Lender from time to time to receive, hold
and disburse the Accumulations in accordance with this Section (the “Accumulations
Depositary”). On the first day of each calendar month during the Term
Borrower will deposit with the Accumulations Depositary an amount equal to
one-eleventh (1/11) of the annual Taxes and Assessments as determined by Lender
or its designee based upon the last ascertainable tax bill, unless otherwise
provided in an agreement among Borrower, Lender and Accumulations Depository.
At least 20 days before each Imposition Penalty Date, Borrower will deliver to
the Accumulations Depositary any bills and other documents that are necessary
to pay the Taxes and Assessments.

 

(b)           The
Accumulations will be applied to the payment of Taxes and Assessments. Any
excess Accumulations after payment of Taxes and Assessments will be returned to
Borrower or credited against future payments of the Accumulations, at Lender’s
election or as required by Law. If the Accumulations are not sufficient to pay
Taxes and Assessments, Borrower will pay the deficiency to the Accumulations
Depositary within 5 days of demand. At any time after an Event of Default
occurs, Lender may apply the Accumulations as a credit against any portion
of the Debt selected by Lender in its sole discretion.

 

(c)           The
Accumulations Depositary will hold the Accumulations as security for the
Obligations until applied in accordance with the provisions of this Mortgage.
If Lender is not the Accumulations Depositary, the Accumulations Depositary
will deliver the Accumulations to Lender upon Lender’s demand at any time after
an Event of Default.

 

(d)           If
the Property is sold or conveyed other than by foreclosure or transfer in lieu
of foreclosure, all right, title and interest of Borrower to the Accumulations
will automatically, and without necessity of further assignment, be held for
the account of the new owner, subject to the provisions of this Section and
Borrower will have no further interest in the Accumulations.

 

(e)           The
Accumulations Depositary has deposited the initial deposit and will deposit the
monthly deposits into a separate interest bearing account with Lender
denominated as secured party, all in accordance with an agreement among
Borrower, Lender and the Accumulations Depositary dated the date of this
Mortgage.

 

(f)            Lender
has the right to pay, or to direct the Accumulations Depositary to pay, any
Taxes or Assessments unless Borrower is contesting the Taxes or Assessments in
accordance with the provisions of this Mortgage, in which event any payment of
the contested Taxes or Assessments will be made under protest in the manner
prescribed by Law or, at Lender’s election, will be withheld.

 

(g)           If
Lender assigns this Mortgage, Lender will pay, or cause the Accumulations
Depositary to pay, the unapplied balance of the Accumulations to or at the
direction of the assignee. Simultaneously with the payment, Lender and the
Accumulations Depositary will be released from all liability with respect to
the Accumulations and Borrower will look solely to the

 

12

 

assignee with respect to
the Accumulations. When the Obligations have been fully satisfied, any
unapplied balance of the Accumulations will be returned to Borrower.

 

Section 6.3.            Changes
in Tax Laws. If a Law requires the deduction of the Debt from the value of
the Property for the purpose of taxation or imposes a tax, either directly or
indirectly, on the Debt, any Loan Document or Lender’s interest in the
Property, Borrower will pay the tax with interest and penalties, if any. If
Lender determines that Borrower’s payment of the tax may be unlawful,
unenforceable, usurious or taxable to Lender, the Debt will become immediately
due and payable, without any Prepayment Premium or Evasion Premium, on 60 days’
prior notice unless the tax must be paid within the 60-day period, in which
case, the Debt will be due and payable, without any Prepayment Premium or
Evasion Premium within the lesser period.

 

ARTICLE VII

 

INSURANCE, CASUALTY, CONDEMNATION

AND RESTORATION

 

Section 7.1.            Insurance
Coverages.

 

(a)           Lender
hereby approves coverages currently maintained by Borrower. Borrower will
continue to maintain such insurance coverages and endorsements in form and
substance and in amounts as Lender may require in its sole discretion,
from time to time and in the future Lender will not require any changes in
coverages that are greater than industry standards for Class A downtown
office properties. Until Lender notifies Borrower of changes in Lender’s
requirements, Borrower will maintain not less than the insurance coverages and
endorsements Lender required for closing of the Loan. Notwithstanding the
foregoing, Lender will not require coverages that are greater than Lender’s
standard requirements for similarly situated Class A downtown office properties
in its mortgage portfolio.

 

(b)           The
insurance, including renewals, required under this Section will be issued
on valid and enforceable policies and endorsements satisfactory to Lender (the “Policies”).
Each Policy will contain a standard waiver of subrogation and a
replacement cost endorsement and will provide that Lender will receive not less
than 30 days’ prior written notice of any cancellation, termination or
non-renewal of a Policy or any material change other than an increase in
coverage and that Lender will be named under a standard mortgage endorsement as
loss payee.

 

(c)           The
insurance companies issuing the Policies (the “Insurers”) must be authorized to do business
in the State or Commonwealth where the Property is located, must have been in business
for at least 5 years, must carry an A.M. Best Company, Inc. policy
holder rating of A or better and an A.M. Best Company, Inc. financial
category rating of Class X or better and must be otherwise satisfactory to
Lender. Lender may select an alternative credit rating agency and may

 

13

 

impose different credit
rating standards for the Insurers. Notwithstanding Lender’s right to approve
the Insurers and to establish credit rating standards for the Insurers, Lender
will not be responsible for the solvency of any Insurer.

 

(d)           Notwithstanding
Lender’s rights under this Article, Lender will not be liable for any loss,
damage or injury resulting from the inadequacy or lack of any insurance
coverage.

 

(e)           Borrower
will comply with the provisions of the Policies and with the requirements,
notices and demands imposed by the Insurers and applicable to Borrower or the
Property.

 

(f)            Borrower
will pay the Insurance Premiums for each Policy no later than the expiration
date of the Policy being replaced or renewed and will deliver to Lender an
original or, if a blanket policy, a certified copy of each Policy marked “Paid”
no later than 30 days following the inception date of the new Policy.

 

(g)           Borrower
will not carry separate insurance concurrent in kind or form or
contributing in the event of loss with any other insurance carried by Borrower.

 

(h)           Borrower
will not carry any of the insurance required under this Section on a
blanket or umbrella policy without in each instance Lender’s prior approval
which may be withheld in Lender’s reasonable discretion. If Lender
approves, Borrower will deliver to Lender a certified copy of the blanket
policy which will allocate to the Property the amount of coverage required
under this Section and otherwise will provide the same coverage and
protection as would a separate policy insuring only the Property.

 

(i)            Borrower
will give the Insurers prompt notice of any change in ownership or occupancy of
the Property. This subsection does not abrogate the prohibitions on
transfers set forth in this Mortgage.

 

Section 7.2.            Casualty
and Condemnation.

 

(a)           Borrower
will give Lender notice of any Casualty immediately after it occurs and will
give Lender notice of any Condemnation Proceeding immediately after Borrower
receives notice of commencement or notice that such a Condemnation Proceeding
will be commencing. Borrower immediately will deliver to Lender copies of all
documents Borrower delivers or receives relating to the Casualty or the Condemnation
Proceeding, as the case may be.

 

(b)           Borrower
authorizes Lender, at Lender’s option, to act on Borrower’s behalf to collect,
adjust and compromise any claims for loss, damage or destruction under the
Policies on such terms as Lender determines in Lender’s sole discretion.
Borrower authorizes Lender to act, at Lender’s option, on Borrower’s behalf in
connection with any Condemnation Proceeding. Borrower will execute and deliver
to Lender all documents requested by Lender and all

 

14

 

documents as may be
required by Law to confirm such authorizations. Nothing in this Section will
be construed to limit or prevent Lender from joining with Borrower either as a
co-defendant or as a co-plaintiff in any Condemnation Proceeding.

 

(c)           If
Lender elects not to act on Borrower’s behalf as provided in this Section, then
Borrower promptly will file and prosecute all claims (including Lender’s
claims) relating to the Casualty and will prosecute or defend (including defense
of Lender’s interest) any Condemnation Proceeding. Borrower will have the
authority to settle or compromise the claims or Condemnation Proceeding, as the
case may be, provided that Lender has approved in Lender’s sole
discretion any compromise or settlement that exceeds $1,000,000. Any check for
Insurance Proceeds or Condemnation Awards, as the case may be (the “Proceeds”) will be made payable to
Lender and Borrower. Borrower will endorse the check to Lender immediately upon
Lender presenting the check to Borrower for endorsement or if Borrower receives
the check first, will endorse the check immediately upon receipt and forward it
to Lender. If any Proceeds are paid to Borrower, Borrower immediately will
deposit the Proceeds with Lender, to be applied or disbursed in accordance with
the provisions of this Mortgage. Lender will be responsible for only the
Proceeds actually received by Lender.

 

Section 7.3.            Application
of Proceeds. After deducting the third party costs incurred by Lender in
collecting the Proceeds, Lender may, in its sole discretion, (i) apply the
Proceeds as a credit against any portion of the Debt selected by Lender in its
sole discretion which shall be applied without obligation by Borrower to pay
any prepayment premium; (ii) apply the Proceeds to restore the
Improvements, provided that Lender will not be obligated to see to the
proper application of the Proceeds and provided further that any amounts
released for Restoration will not be deemed a payment on the Debt; or (iii) deliver
the Proceeds to Borrower.

 

Section 7.4.            Conditions
to Availability of Proceeds for Restoration. Notwithstanding the preceding
Section, after a Casualty or a Condemnation (a “Destruction Event”). Lender will make the
Proceeds (less any third party costs incurred by Lender in collecting the
Proceeds) available for Restoration in accordance with the conditions for
disbursements set forth in the Section entitled “Restoration”, provided
that the following conditions are met:

 

(i)            Borrower or the
transferee under a Permitted Transfer, if any, continues to be Borrower at the
time of the Destruction Event and at all times thereafter until the Proceeds
have been fully disbursed;

 

(ii)           No default under the
Loan Documents exists at the time of the Destruction Event;

 

(iii)          a “material number” of
the Leases in effect immediately prior to the Destruction Event and all
Property Documents in effect immediately prior to the Destruction Event that
are essential to the use and operation of the Property continue in full force
and effect notwithstanding the Destruction Event. A “material number” shall

 

15

 

mean leases which,
in the aggregate, include more than 10% of the Property, based on rentable
area;

 

(iv)          if the Destruction Event
is a Condemnation, Borrower delivers to Lender evidence satisfactory to Lender
that the Improvements can be restored to an economically and architecturally
viable unit;

 

(v)           Borrower delivers to
Lender evidence satisfactory to Lender that the Proceeds are sufficient to
complete Restoration or if the Proceeds are insufficient to complete
Restoration, Borrower first deposits with Lender funds (“Additional Funds”) that
when added to the Proceeds will be sufficient to complete Restoration;

 

(vi)          if the Destruction Event
is a Casualty, Borrower delivers to Lender evidence satisfactory to Lender that
the Insurer under each affected Policy has not denied liability under the
Policy as to Borrower or the insured under the Policy;

 

(vii)         Lender is satisfied that
the proceeds of any business interruption insurance in effect together with
other available gross revenues from the Property are sufficient to pay Debt
Service Payments after paying the Impositions, Insurance Premiums, reasonable
and customary operating expenses and capital expenditures until Restoration is
complete;

 

(viii)        Lender is satisfied that
Restoration will be completed on or before the date (the “Restoration
Completion Date”) that is the earliest of: (A) 12 months prior to the
Maturity Date; (B) 12 months after the Destruction Event; (C) the
earliest date required for completion of Restoration under any Lease or any
Property Document; or (D) any date required by Law; and

 

(ix)           the annual Rents
(excluding security deposits) under Leases in effect on the date of the
Destruction Event are providing debt service coverage for the annual Debt
Service Payments of 1.15 after payment of annual Insurance Premiums,
Impositions and other operating expenses of the Property (including ground
rent, if any), provided that, if the Rents do not provide such debt
service coverage, then Borrower expressly authorizes and directs Lender to
apply an amount from the Proceeds to reduction of Principal in order to reduce
the annual Debt Service Payments sufficiently for such debt service coverage to
be achieved. The reduced debt service payments will be calculated using the
Fixed Interest Rate and an amortization schedule that will achieve the
same proportionate amortization of the reduced Principal over the then
remaining Term as would have been achieved if the Principal and the originally
scheduled Debt Service Payments had not been reduced. Borrower will execute any
documentation that Lender deems reasonably necessary to evidence the reduced
Principal and debt service payments.

 

16

 

Section 7.5.            Restoration.

 

(a)           If
the total Proceeds for any Destruction Event are $1,000,000.00 or less and
Lender elects or is obligated by Law or under this Article to make the
Proceeds available for Restoration, Lender will disburse to Borrower the entire
amount received by Lender and Borrower will commence Restoration promptly after
the Destruction Event and complete Restoration not later than the Restoration
Completion Date.

 

(b)           If
the Proceeds for any Destruction Event exceed $1,000,000.00 and Lender elects
or is obligated by Law or under this Article to make the Proceeds
available for Restoration, Lender will disburse the Proceeds and any Additional
Funds (the “Restoration Funds”)
upon Borrower’s request as Restoration progresses, generally in accordance with
normal construction lending practices for disbursing funds for construction
costs, provided that the following conditions are met:

 

(i)            Borrower commences
Restoration promptly after the Destruction Event and completes Restoration on
or before the Restoration Completion Date;

 

(ii)           if Lender requests,
Borrower delivers to Lender prior to commencing Restoration, for Lender’s
approval, plans and specifications and a detailed budget for the Restoration;

 

(iii)          Borrower delivers to
Lender satisfactory evidence of the costs of Restoration incurred prior to the
date of the request, and such other documents as Lender may request
including mechanics’ lien waivers and title insurance endorsements;

 

(iv)          Borrower pays all costs
of Restoration whether or not the Restoration Funds are sufficient and, if at
any time during Restoration, Lender determines that the undisbursed balance of
the Restoration Funds is insufficient to complete Restoration, Borrower deposits
with Lender, as part of the Restoration Funds, an amount equal to the
deficiency within 30 days of receiving notice of the deficiency from Lender;
and

 

(v)           there is no default
under the Loan Documents at the time Borrower requests funds or at the time Lender
disburses funds.

 

(c)           If
an Event of Default occurs at any time after the Destruction Event, then Lender
will have no further obligation to make any remaining Proceeds available for
Restoration and may apply any remaining Proceeds without any prepayment
premium as a credit against any portion of the Debt selected by Lender in its
sole discretion.

 

(d)           Lender
may elect at any time prior to commencement of Restoration or while work
is in progress to retain, at Borrower’s expense, an independent engineer or
other consultant to review the plans and specifications, to inspect the work as
it progresses and to provide reports. If any matter included in a report by the
engineer or consultant is unsatisfactory to Lender, Lender may suspend
disbursement of the Restoration Funds until the unsatisfactory matters
contained in the report are resolved to Lender’s satisfaction.

 

17

 

(e)           If
Borrower fails to commence and complete Restoration in accordance with the
terms of this Article, then in addition to the Remedies, Lender may elect
to restore the Improvements on Borrower’s behalf and reimburse itself out of
the Restoration Funds for costs and expenses incurred by Lender in restoring
the Improvements, or Lender may apply the Restoration Funds as a credit
against any portion of the Debt selected by Lender in its sole discretion.

 

(f)            Lender
will not hold any Restoration Funds in trust. Lender will deposit the
Restoration Funds in an interest bearing account with a depositary satisfactory
to Lender under a disbursement and security agreement satisfactory to Lender.
All interest earned on such Restoration Funds shall be applied and distributed
in the same manner as the Restoration Funds hereunder.

 

(g)           Borrower
will pay all of Lender’s reasonable, out-of-pocket expenses incurred in
connection with a Destruction Event or Restoration. If Borrower fails to do so,
then in addition to the Remedies, Lender may from time to time reimburse
itself out of the Restoration Funds.

 

(h)           If
any excess Proceeds remains after Restoration, Lender shall deliver the excess
to Borrower unless a monetary Event of Default has occurred, in which event
Lender may elect, in its sole discretion either to apply the excess as a
credit against any portion of the Debt as selected by Lender in its sole
discretion or to deliver the excess to Borrower.

 

ARTICLE VIII

 

COMPLIANCE WITH LAW AND AGREEMENTS

 

Section 8.1.            Compliance
with Law. Borrower, the Property and the use of the Property comply in all
material respects and will continue to comply in all material respects with Law
and with all agreements and conditions necessary to preserve and extend all
rights, licenses, permits, privileges, franchises and concessions (including
zoning variances, special exceptions and non-conforming uses) relating to the
Property or Borrower. Borrower will notify Lender of the commencement of any
investigation or Proceeding relating to a possible violation of Law immediately
after Borrower receives notice thereof and will deliver promptly to Lender
copies of all documents Borrower receives or delivers in connection with the
investigation or Proceeding. Borrower will not alter the Property in any manner
that would materially increase Borrower’s responsibilities for compliance with
Law except to the extent necessary to so comply with Law.

 

Section 8.2.            Compliance
with Agreements. There are no defaults, events of defaults or events which,
with the passage of time or the giving of notice, would constitute an event of
default under the Property Documents. Borrower will pay and perform all of
its obligations under the Property Documents as and when required by the
Property Documents. Borrower will

 

18

 

cause all other parties to the Property Documents to pay and perform their
obligations under the Property Documents as and when required by the Property
Documents. Borrower will not amend or waive any provisions of the Property
Documents; exercise any options under the Property Documents; give any approval
required or permitted under the Property Documents that would adversely affect
the Property or Lender’s rights and interests under the Loan Documents; cancel
or surrender any of the Property Documents; or release or discharge or permit
the release or discharge of any party to or entity bound by any of the Property
Documents, without, in each instance, Lender’s prior approval (excepting
therefrom all service contracts or other agreements entered into in the normal
course of business that are cancelable upon not more than 30 days notice). In
the event that Borrower wishes to enter into a service contract or other
agreement (a) which is not in the normal course of business or (b) that
is not cancelable upon 30 days or less notice, such service contract or other
agreement shall be submitted to Lender for its consent. In making the
determination whether to grant such consent, Lender shall use its best efforts
to review such document within ten (10) Business Days from the date of
receipt of such document by Lender. If Lender can not review such document
within that ten (10) Business Day period, Lender will notify Borrower,
within such time period, that an additional ten (10) Business Day period
is required in order to review such document. No later than the final day of
such extended period, Lender shall notify Borrower whether it approves or
rejects said document.

 

Borrower promptly will deliver to Lender copies of any
notices of default or of termination that Borrower receives or delivers
relating to any Property Document.

 

Section 8.3.            ERISA
Compliance.

 

(a)           Neither
Borrower nor any member of Borrower is or will be an “employee benefit plan” as
defined in Section 3(3) of the Employee Retirement Income Security
Act of 1974 (“ERISA”) that is subject to Title I of ERISA or a “plan” as defined in Section 4975(e)(1)
of the Code that is subject to Section 4975 of the Code, and neither the
assets of Borrower or of Borrower’s members are or will constitute “plan assets”
of one or more such plans for purposes of Title I of ERISA or Section 4975
of the Code.

 

(b)           Borrower
is not and will continue not to be a “governmental plan” within the meaning of Section 3(32)
of ERISA and transactions by Borrower are not and will not be, to Borrower’s
knowledge, in violation of any Laws regulating investments of and fiduciary
obligations with respect to governmental plans.

 

(c)           Borrower
will not engage in any transaction which would cause any obligation or any
action under the Loan Documents, including Lender’s exercise of the Remedies,
to be a non-exempt prohibited transaction under ERISA or Section 4975 of
the Code.

 

Section 8.4.            Section 6045(e) Filing.
Borrower will supply or cause to be supplied to Lender either (i) a copy
of a completed Form 1099-B, Statement for Recipients of Proceeds from Real
Estate, Broker and Barter Exchange Proceeds prepared by Borrower’s attorney or
other

 

19

 

person responsible for the preparation of the form, together with a
certificate from the person who prepared the form to the effect that the form has,
to the best of the preparer’s knowledge, been accurately prepared and that the
preparer will timely file the form; or (ii) a certification from Borrower
that the Loan is a refinancing of the Property or is otherwise not required to
be reported to the Internal Revenue Service pursuant to Section 6045(e) of
the Code. Under no circumstances will Lender or Lender’s counsel be obligated
to file the reports or returns.

 

Section 8.5.            Anti-Terrorism
Law Compliance.

 

(a)           Neither
Borrower nor any of its partners, members, principal stockholders or any other
constituent entity either in control of the operation or management of the
Subject Property or having a controlling financial interest in the Subject
Property has been or will be designated as “specifically designated national
and blocked person” on the most current list published by the U.S. Treasury
Department Office of Foreign Assets Control at its official website,
http://www.treas.gov/ofac/t11sdn.pdf or at any replacement website or other
replacement official publication of such list (the “OFAC List”).

 

(b)           The loan proceeds will not be used for
any illegal purposes and no portion of the Subject Property has been acquired
with funds derived from illegal activities.

 

(c)           Borrower
represents that the following are true and correct and makes the following
warranties:

 

(1)           None of
the Borrower, Indemnitor, any guarantor or their respective constituents or
affiliates are in violation of any Laws relating to terrorism or money
laundering, including Executive Order No. 13224 on Terrorist Financing,
effective September 24, 2001 and relating to Blocking Property and
Prohibiting Transactions With Persons Who Commit, Threaten to Commit, or
Support Terrorism (the “Executive Order”) and
the Uniting and Strengthening America by Providing Appropriate Tools Required
to Intercept and Obstruct Terrorism Act of 2001 (Public Law 107-56, the “Patriot Act”).

 

(2)           None of
Borrower, Indemnitor, any of their respective constituents or affiliates, any
of their respective brokers or other agents acting or benefiting in any
capacity in connection with the Loan is a “Prohibited Person” which is
defined as follows:

 

(i)            a person or entity
that is listed in the Annex to, or is otherwise subject to the provisions of,
the Executive Order No. 13224 on Terrorist Financing, effective September 24,
2001 (the “Executive Order”);

 

20

 

(ii)           a person or entity
owned or controlled by, or acting for or on behalf of, any person or entity
that is listed in the Annex to, or is otherwise subject to the provisions of,
the Executive Order;

 

(iii)          a person or entity with
whom Lender is prohibited from dealing or otherwise engaging in any transaction
by any terrorism or money laundering Law, including the Executive Order and the
Patriot Act;

 

(iv)          a person or entity who
commits, threatens or conspires to commit or support “terrorism” as defined in
the Executive Order;

 

(v)           a person or entity that
is named as a “specifically designated national and blocked person” on the most
current list published by the U.S. Treasury Department Office of Foreign Assets
Control at its official website, http://www.treas.gov/ofac/tllsdn.pdf or at any
replacement website or other replacement official publication of such list; and

 

(vi)          a person or entity who
is affiliated with a person or entity listed above.

 

(3)           None of
Borrower, Indemnitor, any guarantor any of their respective affiliates or
constituents, any of their respective brokers or other agents acting in any
capacity in connection with the Loan, is or will (i) conduct any business
or engage in any transaction or dealing with any Prohibited Person, including
the making or receiving any contribution of funds, goods or services to or for
the benefit of any Prohibited Services, (ii) deal in, or otherwise engage
in any transaction relating to, any property or interests in property blocked
pursuant to the Executive Order; or (iii) engage in or conspire to engage
in any transaction that evades or avoids, or has the purpose of evading or
avoiding, or attempts to violate, any of the prohibitions set froth in the
Executive Order or the Patriot Act.

 

(d)           Borrower
covenants and agrees to deliver to Lender any certification or other evidence requested
from time to time by Lender in its sole discretion, confirming Borrower’s
compliance with this section.

 

ARTICLE IX

 

ENVIRONMENTAL

 

Section 9.1.            Environmental
Representations and Warranties.

 

Except as disclosed in the Environmental Report and the
Asbestos and Sprinkler Plan and to Borrower’s knowledge as of the date of this
Mortgage:

 

21

 

(i)            no
Environmental Activity has occurred or is occurring on the Property other than
the use, storage, and disposal of Hazardous Materials which (A) is in the
ordinary course of business consistent with the Permitted Use; (B) is in
compliance with all Environmental Laws and (C) has not resulted in
Material Environmental Contamination of the Property; and

 

(ii)           no Environmental
Activity has occurred or is occurring on any property in the vicinity of the
Property which has resulted in Material Environmental Contamination of the
Property.

 

Section 9.2.            Environmental
Covenants.

 

(a)           Borrower
will not cause or permit any Material Environmental Contamination of the
Property.

 

(b)           No
Environmental Activity will occur on the Property other than the use, storage
and disposal of Hazardous Materials which (A) is in the ordinary course of
business consistent with the Permitted Use; (B) is in compliance with all
Environmental Laws; and (C) does not create a risk of Material
Environmental Contamination of the Property. Lender acknowledges that
Environmental Activity may occur pursuant to the terms and conditions of
the Asbestos and Sprinkler Plan, which shall be conducted in accordance with
all Environmental Laws.

 

(c)           Borrower
will notify Lender immediately upon Borrower becoming aware of (i) any
Material Environmental Contamination of the Property or (ii) any
Environmental Activity with respect to the Property that is not in accordance
with the preceding subsection (b). Borrower promptly will deliver to
Lender copies of all documents delivered to or received by Borrower regarding
the matters set forth in this subsection, including notices of Proceedings or
investigations concerning any Material Environmental Contamination of the
Property or Environmental Activity or concerning Borrower’s status as a
potentially responsible party (as defined in the Environmental Laws). Borrower’s
notification of Lender in accordance with the provisions of this subsection will
not be deemed to excuse any default under the Loan Documents resulting from the
violation of Environmental Laws or the Material Environmental Contamination of
the Property or Environmental Activity that is the subject of the notice. If
Borrower receives notice of a suspected violation of Environmental Laws in the
vicinity of the Property that poses a risk of Material Environmental
Contamination of the Property, Borrower will give Lender notice and copies of
any documents received relating to such suspected violation.

 

(d)           From time
to time at Lender’s request, Borrower will deliver to Lender any information
known and documents available to Borrower relating to the environmental condition
of the Property.

 

(e)           Lender may perform or
engage an independent consultant to perform an assessment of the
environmental condition of the Property and of Borrower’s compliance with

 

22

 

this Section on an annual basis or at any time for reasonable
cause or after an Event of Default. In connection with the assessment: (i) Lender
or consultant may enter and inspect the Property and perform tests of
the air, soil, ground water and building materials; provided that Lender shall
not conduct any physically invasive testing at the Property unless Lender
notifies Borrower that Lender has a reasonable, good faith belief that Material
Environmental Contamination exists at the Property or that any Environmental Activity
has occurred which is not permitted under this Article IX; (ii) Borrower
will cooperate and use diligent, good faith efforts to cause tenants and other
occupants of the Property to cooperate with Lender or consultant; (iii) Borrower
will receive a copy of any final report prepared after the assessment, to be
delivered to Borrower not more than 10 days after Borrower requests a copy and
executes Lender’s standard confidentiality and waiver of liability letter; (iv) Borrower
will accept custody of and arrange for lawful disposal of any Hazardous
Materials required to be disposed of as a result of the tests; (v) Lender
will not have liability to Borrower with respect to the results of the
assessment; and (vi) Lender will not be responsible for any damage to the
Property resulting from the tests described in this subsection and
Borrower will look solely to the consultants to reimburse Borrower for any such
damage. The consultant’s assessment and reports will be at Borrower’s expense (i) if
the reports disclose any material adverse change in the environmental condition
of the Property from that disclosed in the Environmental Report; (ii) if
Lender engaged the consultant when Lender had reasonable cause to believe
Borrower was not in compliance with the terms of this Article and, after
written notice from Lender, Borrower failed to provide promptly reasonable
evidence that Borrower is in compliance; or (iii) if Lender engaged the
consultant after the occurrence of an Event of Default. Lender will make
diligent, good faith efforts to cause the consultant to retain (and not be
released from) any liability related to the property, but in no event shall
failure to achieve such result result in liability for the Lender.

 

(f)            If Lender
has reasonable cause to believe that there is Environmental Activity at the
Property, Lender may elect in its sole discretion to release from the lien
of this Mortgage any portion of the Property affected by the Environmental
Activity and Borrower will accept the release.

 

(g)           Borrower
shall comply with the terms and conditions of the Asbestos and Sprinkler Plan
and shall take all measures necessary to ensure that said Asbestos and
Sprinkler Plan is conducted and carried out in accordance with all
Environmental Laws.

 

ARTICLE X

 

FINANCIAL
REPORTING

 

Section 10.1.          Financial
Reporting.

 

(a)           Borrower
will deliver to Lender within 120 days after the close of each Fiscal Year an
annual financial statement (the “Annual Financial Statement”) for the Property for the

 

23

 

Fiscal Year, which will include a comparative balance sheet, a cash
flow statement, an income and expense statement and the notes thereto. The
Annual Financial Statement will be:

 

(i)            audited
by a CPA;

 

(ii)           accompanied
by an opinion of the CPA that, in all material respects, the Annual Financial
Statement fairly presents the financial position of the Property; and

 

(iii)          separate
and distinct from any consolidated statement or report for Borrower or any
other entity or any other property.

 

(b)           Borrower
will keep full and accurate Financial Books and Records for each Fiscal Year.
Borrower will permit Lender or Lender’s accountants or auditors to inspect or
audit the Financial Books and Records from time to time during regular business
hours upon no less than twenty-four (24) hours notice. Borrower will maintain
the Financial Books and Records for each Fiscal Year for not less than 3 years
after the date Borrower delivers to Lender the Annual Financial Statement and
the other financial certificates, statements and information to be delivered to
Lender for the Fiscal Year. Financial Books and Records will be maintained at
Borrower’s address set forth in the section entitled “Notices”, at
the building office located at the Property or at any other location as may be
approved by Lender.

 

Section 10.2.          Annual
Budget. Not less than 45 days prior to the end of each Fiscal Year,
Borrower will deliver to Lender a detailed comparative budget (the “Budget”)
for the Property for the next succeeding Fiscal Year showing anticipated
operating expenses, Insurance Premiums, Impositions, leasing commissions,
capital improvement costs, tenant improvement costs and any other information
Lender requests. Unless Lender notifies Borrower within 45 days after Lender
receives the Budget that Lender disputes information in the Budget, the Budget
as submitted will constitute the Budget for the next succeeding Fiscal Year. If
Borrower concludes in good faith that a Budget needs revision, Borrower will
submit a revised Budget to Lender, together with a detailed explanation of the
revisions. Unless Lender notifies Borrower within 45 days after Lender receives
the revised Budget that Lender disputes information in the revised Budget, the
revised Budget as submitted will constitute the Budget for the remainder of the
then Fiscal Year. Borrower and Lender will use reasonable efforts to resolve
promptly any differences over a Budget or revised Budget. If Borrower and
Lender fail to agree on a Budget or revised Budget, Borrower will continue to
manage and operate the Property under the last undisputed Budget approved by
Lender, allowing for line item increases of up to 5% as compared to the last
Budget. Borrower waives any defense or right of offset to the Obligations, and any
claim or counterclaim against Lender, arising out of any discussions between
Borrower and Lender regarding any Budget or revised Budget delivered to Lender
or the resolution of any disagreements relating to a Budget or revised Budget,
including any defense, right of offset, claim or counterclaim alleging in
substance, that by virtue of such delivery, discussions or resolution, Lender
has interfered with, influenced or controlled Borrower or the operations at the
Property.

 

24

 

ARTICLE XI

 

EXPENSES AND
DUTY TO DEFEND

 

Section 11.1.          Payment
of Expenses.

 

(a)           Subject to
any other provision of this Agreement to the contrary, Borrower is obligated to
pay all reasonable out of pocket fees and expenses (the “Expenses”)
incurred by Lender or that are otherwise payable in connection with the Loan,
the Property or Borrower, including attorneys’ fees and expenses and any fees
and expenses relating to (i) the preparation, execution, acknowledgement,
delivery and recording or filing of the Loan Documents; (ii) any
Proceeding or other claim asserted against Lender; (iii) any inspection,
assessment, survey and test permitted under the Loan Documents; (iv) any
Destruction Event; (v) the preservation of Lender’s security and the
exercise of any rights or remedies available at Law, in equity or otherwise,
following the occurrence of an Event of Default and (vi) the Leases and
the Property Documents.

 

(b)           Borrower
will pay the Expenses promptly following receipt of written demand, together
with any applicable interest, premiums or penalties provided herein. If Lender
pays any of the Expenses, Borrower will reimburse Lender the amount paid by
Lender immediately upon demand, together with interest on such amount at the
Default Interest Rate from the date Lender makes such demand to Borrower
through and including the date Borrower reimburses Lender. The Expenses
together with any applicable interest, premiums or penalties constitute a
portion of the Debt secured by this Mortgage.

 

Section 11.2.          Duty
to Defend. If Lender or any of its trustees, officers, participants,
employees or affiliates is a party in any Proceeding relating to the Property,
Borrower or the Loan, Borrower will indemnify and hold harmless the party and
will defend the party with attorneys and other professionals retained by
Borrower and approved by Lender. Lender may elect to engage its own
attorneys and other professionals, at Borrower’s expense, to defend or to assist
in the defense of the party. In all events, case strategy will be determined by
Lender if Lender so elects and no Proceeding will be settled without Lender’s
prior approval which may be withheld in its sole discretion.

 

25

 

ARTICLE XII

 

TRANSFERS, LIENS
AND ENCUMBRANCES

 

Section 12.1.          Prohibitions
on Transfers, Liens and Encumbrances.

 

(a)           Borrower
acknowledges that in making the Loan, Lender is relying to a material extent on
the business expertise and net worth of Borrower and Borrower’s members and on
the continuing interest that each of them has, directly or indirectly, in the
Property. Accordingly, except as specifically set forth in this Mortgage,
Borrower (i) will not, and will not permit its members to, effect a
Transfer without Lender’s prior approval, which may be withheld in Lender’s
sole discretion and (ii) will keep the Property free from all liens and
encumbrances other than the lien of this Mortgage and the Permitted Exceptions.
A “Transfer” is defined as any sale, grant,
lease (other than bona fide third-party space leases with tenants), conveyance,
assignment or other transfer of, or any encumbrance or pledge against, the
Property, any interest in the Property, any interest of Borrower’s members in
the Property, or any change in Borrower’s composition, in each instance whether
voluntary or involuntary, direct or indirect, by operation of law or otherwise
and including the grant of an option or the execution of an agreement relating
to any of the foregoing matters.

 

(b)           Borrower
represents, warrants and covenants that:

 

(i)            Borrower
is a Delaware limited liability company whose managing member is JBC
Opportunity Fund II, L.P., a Delaware limited partnership, owning 33.34% of the
interests in Borrower and whose remaining members own 66.6% of the interests in
Borrower as follows:

 

McMorgan Institutional Real Estate Fund I, LLC, a
Delaware limited liability company - 33.33% and

 

JBCM Operating, LP, a Delaware limited partnership -
33.33%

 

The managing member and the other members are referred
to as the “Existing Members”.

 

(ii)           If
Borrower’s members are in turn partnerships, corporations or limited liability
companies, the general partners, principals or members thereof are as follows:

 

(x)    JBC Opportunity
Fund II, L.P., a Delaware limited partnership whose general partner is Buck
Investors II, L.L.C., a Delaware limited liability company whose day to day
operations are directly controlled and managed by John A. Buck II and John Q. O’Donnell
as managers; and

 

(y)   McMorgan
Institutional Real Estate Fund I, LLC, a Delaware limited liability company
whose day to day operations are directly controlled and managed by McMorgan &
Company LLC, a Delaware limited liability company, as manager; and

 

(z)    JBCM Operating,
LP, a Delaware limited partnership, whose general partner is JBCM Investors,
LLC, a Delaware limited liability.

 

26

 

company, whose day to day operations are directly controlled and
managed by JBC/SAM, LLC, a Delaware limited liability company, as manager.

 

Section 12.2.          Permitted Transfers.

 

(a)           Notwithstanding the prohibitions regarding
Transfers, a Permitted Transfer may occur without Lender’s prior consent, provided
that the following conditions are met:

 

(i)            at least 20 days prior to the proposed Permitted
Transfer, Borrower delivers to Lender a notice that is sufficiently detailed to
enable Lender to determine that the proposed Permitted Transfer complies with
the terms of this Section;

 

(ii)           there is no default under the Loan Documents
either when Lender receives the notice or when the proposed Permitted Transfer
occurs;

 

(iii)          the proposed Permitted Transfer will not
result in a violation of any of the covenants contained in the Section entitled,
“ERISA Compliance” and Borrower will deliver to Lender such
documentation of compliance as Lender requests.

 

(iv)          when Lender receives the notice and when the
proposed Permitted Transfer occurs, the transferee has never been an adverse
party to Lender in any litigation to which Lender was a party; the transferee
has never had a monetary default in excess of $1,000,000 on a loan from Lender
or on any contract or other agreement with Lender; the transferee has never
threatened litigation against Lender; the transferee is domiciled in the United
States and/or is a citizen of the United States, is not a “specifically
designated national and blocked person” on the OFAC List and otherwise is not
in violation of any laws relating to terrorism or money laundering; the
transferee has not been found guilty of criminal charges, and is free from
bankruptcy (for purposes of this subsection, “transferee”
includes the transferee’s constituent entities at all levels and “Lender”
includes Lender’s subsidiaries);

 

(v)           Borrower pays all of Lender’s third party
expenses relating to the Transfer, including Lender’s attorneys’ fees;

 

(vi)          Lender is satisfied that the Property will
continue to be managed by a property manager satisfactory to Lender; and

 

(vii)         prior to the occurrence of the Permitted
Transfer, Borrower provides Lender with a certification that each of the
conditions set forth in this Section 12.2(a) executed by an entity
satisfactory to Lender.

 

(b)           Upon compliance with the conditions set forth
in the preceding subsection, the following Transfers (the “Permitted Transfers”) may occur
without Lender’s prior consent:

 

27

 

(i)            Transfer of membership interests in Borrower
during the first 12 months of the Term by JBC Opportunity Fund II, L.P. in an
amount not to exceed 2/3 of its membership interest in the Borrower to one or
more Institutional Investors, provided the conditions of Section 12.2(b)(v)(A),
(B) and (D) are also satisfied and further provided that JBC
Opportunity Fund II, L.P. shall remain the managing member of Borrower and that
Buck Investors II, LLC shall remain the general partner of JBC Opportunity Fund
II, L.P. No such transferee shall be required to deliver to Lender an
environmental indemnity or a guaranty of non-recourse carve-outs; however, the
Non-Recourse Carve-Out Guaranty and the Environmental Indemnity shall remain in
full force and effect. No transfer fee shall be due in the event of such a
Transfer,

 

(ii)           Transfers of limited partnership interests in
JBC Opportunity Fund II, L.P., provided that such Transfers shall not exceed
10% of such partnership interests during the Term and further provided that JBC
Opportunity Fund II, L.P. shall remain the managing member of Borrower and that
Buck Investors II, LLC shall remain the general partner of JBC Opportunity Fund
II, L.P. No transfer fee shall be due Lender in the event of such a Transfer;

 

(iii)          (A)          Transfers of membership interests in Buck
Investors II, L.L.C., as general partner of JBC Opportunity Fund II, L.P. to
employees of The John Buck Company, provided that such Transfers do not exceed
25% of such membership interests during the Term. No transfer fee shall be due
Lender in the event of such Transfer;

 

(B)           Transfers of membership interests in McMorgan
Institutional Real Estate Fund I, LLC. No transfer fee shall be due Lender in
the event of such a Transfer.

 

(iv)          Transfers of membership interests in Borrower
pursuant to the terms of Borrower’s operating agreement by and between JBC
Opportunity Fund II, L.P., McMorgan Institutional Real Estate Fund I, LLC and
JBCM Operating, LP (including, but not limited to, forfeitures of membership
interests and transfers of membership interests pursuant to buy/sell provisions
in Borrower’s operating agreement); provided that, unless JBC Opportunity Fund
II, L.P. transfers 100% of its membership interest in the Borrower as a result
of such transfer, JBC Opportunity Fund II, L.P. shall remain the managing
member of the Borrower and Buck Investors II, L.L.C. shall remain the general
partner of JBC Opportunity Fund II, L.P. In the event JBC Opportunity Fund II,
L.P. no longer has a membership interest in Borrower, the conditions of Section 12.2(b)(v)(D) and
(E) shall also be satisfied and JBC Opportunity Fund II, L.P. shall
be released from its obligations as provided in Section 12.2(b)(v)(E).
No transfer fee shall be due Lender in the event of such Transfer. Any
transfers to entities, other than McMorgan Institutional Real Estate Fund I,
LLC or JBCM Operating, L.P., shall be subject to Lender’s approval; and

 

(v)           Except as otherwise permitted hereunder, a
one-time Transfer of more than 50% of the membership interests in Borrower or
sale of the Property on or after July 1, 2005 and before January 1,
2009 to an unaffiliated bona fide purchaser, provided that the following
conditions are met:

 

28

 

(A)          Prior to
the Transfer the transferee and its affiliates have a net worth of at least
$100,000,000 and own at least $750,000,000 in real estate assets;

 

(B)           the
transferee is an Institutional Investor having a first class reputation in
the industry;

 

(C)           the
transferee has expressly assumed the obligations of Borrower under the Property
Documents and under the Loan Documents;

 

(D)          Borrower
delivers to Lender evidence satisfactory to Lender that subsequent to the
Transfer, the Property will be managed by a property manager of first class commercial
office real estate, for not less than 10 years and otherwise satisfactory to
Lender;

 

(E)           Borrower
delivers to Lender a substitute for the Environmental Indemnity and
Non-Recourse Carve-Out Guaranty delivered to Lender in connection with the Loan
and, if applicable, a substitute guaranty or surety instrument, satisfactory to
Lender, executed by a substitute indemnitor, guarantor or surety, as the case may be,
satisfactory to Lender in its reasonable discretion, which indemnity and
guaranties shall cover obligations which first accrue or arise from and after
the date of the Transfer. The substituted indemnitor and guarantor shall at all
times maintain a net worth of $75,000,000 until the Loan is repaid in full; and

 

(F)           Borrower
pays to Lender a transfer fee of one percent (1.0%) of the then-outstanding
Principal, such payment in addition to Lender’s third party costs, including
legal fees and expenses incurred in connection with the Transfer.

 

Upon the occurrence of each of (A) through (F),
Borrower shall be released from any obligations under the Loan Documents
arising after such occurrence and JBC Opportunity Fund II, L.P. shall be
released from its obligations under the Environmental Indemnity and
Non-Recourse Carve-Out Guaranty arising after such occurrence.

 

Section 12.3.          Right
to Contest Liens. Borrower, at its own expense, may contest the
amount, validity or application, in whole or in part, of any mechanic’s,
materialmen’s or environmental liens in which event Lender will refrain from
exercising any of the Remedies, provided that the following conditions
are met:

 

(i)            Borrower
delivers to Lender notice of the proposed contest not more than 30 days after
the lien is filed;

 

(ii)           the
contest is by a Proceeding promptly initiated and conducted in good faith and
with due diligence;

 

29

 

(iii)          there
is no Event of Default other than the Event of Default arising from the filing
of the lien;

 

(iv)          the
Proceeding suspends enforcement of collection of the lien, imposition of
criminal or civil penalties and sale or forfeiture of the Property and Lender
will not be subject to any civil suit;

 

(v)           the
Proceeding does not violate the terms and provisions of any of the Leases or
the Property Documents;

 

(vi)          Borrower
sets aside reserves or furnishes a bond or other security satisfactory to
Lender, in either case in an amount sufficient to pay the claim giving rise to
the lien, together with all interest and penalties, or Borrower pays the
contested lien under protest; and

 

(vii)         with
respect to an environmental lien, Borrower is using diligent, good faith
efforts to mitigate or prevent any deterioration of the Property resulting from
the alleged violation of any Environmental Laws or the alleged Environmental
Activity.

 

ARTICLE XIII

 

ADDITIONAL
REPRESENTATIONS, WARRANTIES AND COVENANTS

 

Section 13.1.          Further
Assurances.

 

(a)           Borrower
will execute, acknowledge and deliver to Lender, or to any other entity Lender
designates, any additional or replacement documents and perform any
additional actions that Lender determines are reasonably necessary to evidence,
perfect or protect Lender’s first lien on and prior security interest in the
Property or to carry out the intent or facilitate the performance of the
provisions of the Loan Documents.

 

(b)           Borrower
appoints Lender as Borrower’s attorney-in-fact to perform, at Lender’s
election, any actions and to execute and record any of the additional or
replacement documents referred to in this Section, in each instance only at
Lender’s election and only to the extent Borrower has failed to comply with the
terms of this Section.

 

Section 13.2.          Estoppel
Certificates.

 

(a)           Within 10
days of Lender’s request, Borrower will deliver to Lender, or to any entity
Lender designates, a certificate certifying (i) the original principal
amount of the Note; (ii) the unpaid principal amount of the Note; (iii) the
Fixed Interest Rate; (iv) the amount of the then

 

30

 

current Debt Service Payments; (v) the Maturity Date; (vi) the
date a Debt Service Payment was last made; (vii) that, except as may be
disclosed in the statement, to Borrower’s knowledge, there are no defaults or
events which, with the passage of time or the giving of notice, would
constitute an Event of Default; and (viii) there are no offsets or
defenses against any portion of the Obligations except as may be disclosed
in the statement.

 

(b)           If Lender
requests, Borrower will use diligent, good faith efforts to promptly deliver to
Lender or to any entity Lender designates a certificate from each party to any
Property Document, certifying that to such party’s knowledge the Property
Document is in full force and effect with no defaults or events which, with the
passage of time or the giving of notice, would constitute an event of default
under the Property Document and that there are no defenses or offsets against
the performance of its obligations under the Property Document.

 

(c)           If Lender
requests, Borrower promptly will use good faith efforts to obtain and deliver
to Lender, or to any entity Lender designates, a certificate from each tenant
under a Lease then affecting the Property, certifying to any facts regarding
the Lease as Lender may require, including that to such tenant’s knowledge
the Lease is in full force and effect with no defaults or events which, with
the passage of time or the giving of notice, would constitute an event of
default under the Lease by any party, that the rent has not been paid more than
one month in advance and that the tenant claims no defense or offset against
the performance of its obligations under the Lease.

 

ARTICLE XIV

 

DEFAULTS AND REMEDIES

 

Section 14.1.          Events
of Default. The term “Event of Default” means the occurrence of any of the
following events:

 

(i)            if
Borrower fails to pay any amount due, as and when required, under any Loan
Document and the failure continues for a period of 5 days;

 

(ii)           if
Borrower makes a general assignment for the benefit of creditors or generally
is not paying, or is unable to pay, or admits in writing its inability to pay,
its debts as they become due; or if Borrower or any other party commences any
Proceeding (A) relating to bankruptcy, insolvency, reorganization,
conservatorship or relief of debtors, in each instance with respect to
Borrower; (B) seeking to have an order for relief entered with respect to
Borrower; (C) seeking attachment, distraint or execution of a judgment
with respect to Borrower; (D) seeking to adjudicate Borrower as bankrupt
or insolvent; (E) seeking reorganization, arrangement, adjustment,
winding-up, liquidation, dissolution, composition or other relief with respect
to Borrower or Borrower’s debts; or (F) seeking appointment of a Receiver,
trustee, custodian, conservator or other similar

 

31

 

official for Borrower or for all or any substantial part of
Borrower’s assets, provided that if the Proceeding is commenced by a
party other than Borrower or any of Borrower’s general partners or members,
Borrower will have 120
days to have the Proceeding dismissed or discharged before an Event of Default
occurs;

 

(iii)          if
Borrower is in default beyond any applicable grace and cure period under any
other mortgage, deed of trust, deed to secure debt or other security agreement
encumbering the Property whether junior or senior to the lien of this mortgage;

 

(iv)          if there is
a default beyond any applicable grace and cure period under any indemnity or
guaranty in favor of Lender delivered to Lender in connection with the Loan;

 

(v)           if a
Transfer occurs except in accordance with the provisions of this Mortgage;

 

(vi)          if Borrower
abandons the Property or ceases to conduct its business at the Property;

 

(vii)         if
there is a default in the performance of any other provision of any Loan
Document or if there is any inaccuracy or falsehood in any representation or
warranty contained in any Loan Document which is not remedied within 30 days
after Borrower receives notice thereof, provided that if the default,
inaccuracy or falsehood is of a nature that it cannot be cured within the
30-day period but is, in fact, susceptible to cure, and during that period
Borrower commences to cure, and thereafter diligently continues to cure, the
default, inaccuracy or falsehood, then the 30-day period will be extended for a
reasonable period not to exceed 120 days after the notice to Borrower;

 

(viii)        if
there is a default under any of the provisions of this Mortgage relating to
ERISA, including the prohibition on any Transfer that results in a violation of
ERISA; or

 

(ix)           if there
is a default under any of the provisions of this Mortgage relating to the USA
Patriot Act, the Executive Order or other anti-terrorism or money laundering
provisions.

 

Section 14.2.          Remedies.

 

(a)           If an
Event of Default occurs, Lender may take any of the following actions (the
“Remedies”)
without notice to Borrower:

 

(i)            declare
all or any portion of the Debt immediately due and payable “Acceleration”);

 

(ii)           pay or perform any
Obligation;

 

32

 

(iii)          institute
a Proceeding for the specific performance of any Obligation;

 

(iv)          apply for
and obtain the appointment of a Receiver to be vested with the fullest powers
permitted by Law, without bond being required, which appointment may be
made ex  parte, as a matter of right and without regard to the
value of the Property, the amount of the Debt or the solvency of Borrower or
any other person liable for the payment or performance of any portion of the
Obligations;

 

(v)           directly,
by its agents or representatives or through a Receiver appointed by a court of
competent jurisdiction, enter on the Land and Improvements, take possession of
the Property, dispossess Borrower and exercise Borrower’s rights with respect
to the Property, either in Borrower’s name or otherwise;

 

(vi)          institute a
Proceeding for the foreclosure of this Mortgage or, if applicable, sell by
power of sale, all or any portion of the Property;

 

(vii)         institute
proceedings for the partial foreclosure of this Mortgage for the portion of the
Debt then due and payable, subject to the continuing lien of this Mortgage for
the balance of the Debt not then due;

 

(viii)        exercise
any and all rights and remedies granted to a secured party under the Uniform Commercial
Code; and

 

(ix)           pursue any
other right or remedy available to Lender at Law, in equity or otherwise.

 

(b)           If an
Event of Default occurs, the license granted to Borrower in the Loan Documents
to collect Rents will terminate automatically without any action required of
Lender.

 

Section 14.3.          General
Provisions Pertaining to Remedies.

 

(a)           The
Remedies are cumulative and may be pursued concurrently or otherwise, at
such time and in such order as Lender may determine in its sole discretion
and without presentment, demand, protest or further notice of any kind, all of
which are expressly waived by Borrower.

 

(b)           The
enumeration in the Loan Documents of specific rights or powers will not be
construed to limit any general rights or powers or impair Lender’s rights with
respect to the Remedies.

 

(c)           If Lender
exercises any of the Remedies, Lender will not be deemed a
mortgagee-in-possession unless Lender has elected affirmatively to be a
mortgagee-in-possession.

 

33

 

(d)           Lender
will not be liable for any act or omission of Lender in connection with the
exercise of the Remedies.

 

(e)           Lender’s
right to exercise any Remedy will not be impaired by any delay in exercising or
failure to exercise the Remedy and the delay or failure will not be construed
as extending any cure period or constitute a waiver of the default or Event of
Default.

 

(f)            If an
Event of Default occurs, Lender’s payment or performance or acceptance of
payment or performance will not be deemed a waiver or cure of the Event of
Default.

 

(g)           Lender’s
acceptance of partial payment or receipt of Rents will not extend or affect any
grace period, constitute a waiver of a default or Event of Default or
constitute a recision of Acceleration.

 

Section 14.4.          Foreclosure
by Power of Sale. If an Event of Default occurs, Borrower hereby authorizes
and empowers Lender forthwith to foreclose this Mortgage by sale of the
Property or any part thereof at public auction according to the applicable
statute, and to apply the proceeds of the sale to pay the Debt, including
Principal, Interest and the amount of any Taxes, Assessments and Insurance
Premiums and any other sum which may then be due to Lender, including the
Evasion Premium, Late Charges and interest at the Default Interest Rate, and
also to pay all costs and expenses of such foreclosure sale, including maximum
statutory attorneys’ fees, cost of continuation of abstract, examination of
title and title insurance, all of which costs, expenses and fees Borrower
agrees to pay.

 

Section 14.5.          General
Provisions Pertaining to Receiver and other Remedies.

 

(a)           Borrower
agrees that upon or any time (i) after an Event of Default occurs, or (ii) after
the first publication of notice of sale for the foreclosure of the lien of this
Mortgage pursuant to Minnesota Statutes Chapter 580, or (iii) after the
commencement of an action to foreclose this Mortgage pursuant to Minnesota
Statutes, Chapter 581, or (iv) during the period of redemption after
foreclosure of this Mortgage, then in any such event, Lender will, upon
application to the district court where the Property or any part thereof
is located by an action separate from the foreclosure under Chapter 580 or in
the foreclosure action under Chapter 581 (it being understood and agreed that
the existence of a foreclosure under Chapter 580 or a foreclosure action under
Chapter 581 is not a prerequisite to any action for a Receiver under this
Mortgage, be entitled to the appointment of a Receiver for the Rents which
accrue and are owing for the use or occupation of the Property. Lender will be
entitled to the appointment of a Receiver without regard to waste, adequacy of
the security or solvency of Borrower. The court will determine the amount of
bond to be posted by the Receiver. The Receiver, who will be an experienced
property manager, will collect (until the Debt is paid in full and, in the case
of a foreclosure sale, during the entire redemption period) the Rents manage
the Property so to prevent waste, execute Leases within or beyond the period of
the receivership if approved by the court and apply all Rents collected by the
Receiver in the following order:

 

34

 

(i)            to the payment of all
reasonable fees of the Receiver approved by the court;

 

(ii)           to the repayment of all
tenant security deposits, with interest thereon, as required by Minnesota
Statutes, Section 504B.178;

 

(iii)          to the payment when due
of delinquent or current Taxes or Assessments and interest and penalties
thereon, or the periodic deposits for the payment of Taxes and Assessments if
required by the Loan Documents;

 

(iv)          to the payment when due
of Insurance Premiums or the periodic deposits for payment of Insurance
Premiums if deposits are required by the Loan Documents;

 

(v)           to the payment of
expenses for normal operations and maintenance of the Property;

 

(vi)          if received prior to any
foreclosure sale of the Property to Lender for payment of the Debt, but no such
payment made after Acceleration will affect the Acceleration; and

 

(vii)         if received during or
with respect to the period of redemption after a foreclosure sale of the
Property:

 

(A)          if the
purchaser at the foreclosure sale is not Lender, first to Lender to the extent
of any deficient of the sale proceeds to repay the Debt, second to the
purchaser as a credit to the redemption price, but if the Property is not
redeemed, then to the purchaser of the Property;

 

(B)           if
purchaser at the foreclosure sale is Lender, to Lender to the extent of any
deficiency of the sale proceeds to repay the Debt and the balance to be
retained by Lender as a credit to the redemption price, but if the Property is
not redeemed, then to Lender, whether or not any deficiency exists.

 

As provided in Minnesota Statutes, Section 582.03,
Lender will have the right at any time and without limitation to advance money
to the Receiver to pay any part of or all of the items which the Receiver
should otherwise pay if cash were available from the Property and sums so
advanced with interest at the rate provided in the Note, will be secured by
this Mortgage, or if advanced during the period of redemption, will be a part of
the sum required to be paid to redeem the Property from the sale.

 

Borrower for itself and any subsequent owner of the
Property hereby waives any and all defenses to the application for a Receiver
and specifically consents to the appointment of the Receiver, ex parte without
notice but nothing contained in this Mortgage is to be construed to deprive
Lender of any other right, remedy or privilege it may have under the Law
to have a

 

35

 

Receiver appointed. The provision for the appointment of a Receiver and
the assignment of the Rents, is an express condition upon which the Loan is
made. The rights and remedies provided for in this Mortgage will be deemed to
be cumulative and in addition to, and not in limitation of, those provided by
Law, and if no Receiver is appointed, Lender may proceed to collect the
Rents.

 

(b)           In
addition to the Remedies and all other available rights, Lender or the Receiver
may take any of the following actions:

 

(i)            take exclusive
possession, custody and control of the Property and manage the Property so as
to prevent waste;

 

(ii)           require
Borrower to deliver to Lender or the Receiver all keys, security deposits,
operating accounts, prepaid Rents, past due Rents, the Books and Records and
all original counterparts of the Leases and the Property Documents;

 

(iii)          subject
to the provisions of this Section, collect, sue for and give receipts for the
Rents and, after paying all expenses of collection, including reasonable
receiver’s, broker’s and attorney’s fees, apply the net collections as provided
in this Section;

 

(iv)          enter into,
modify, enforce, terminate, renew or accept surrender of Leases and evict
tenants;

 

(v)           appear in
and defend any Proceeding brought in connection with the Property and bring any
Proceeding, in the name and on behalf of Borrower, that Lender, in its sole
discretion, determines should be brought to protect the Property as well as
Borrower’s and Lender’s respective interests in the Property; and

 

(vii)         perform any
act in the place of Borrower that Lender or the Receiver deems necessary (A) to
preserve the value, marketability or rentability of the Property; (B) to
increase the gross receipts from the Property; or (C) otherwise to protect
Borrower’s and Lender’s respective interests in the Property.

 

(c)           Borrower
appoints Lender as Borrower’s attorney-in-fact, at Lender’s election, to perform any
actions and to execute and record any instruments necessary to effectuate the
actions described in this Section, in each instance only at Lender’s election
and only to the extent Borrower has failed to comply with the provisions of
this Section.

 

Section 14.6.          General
Provisions Pertaining to Foreclosures and the Power of Sale. The following
provisions will apply to any Proceeding to foreclose and to any sale of the
Property by power of sale or pursuant to a judgment of foreclosure and sale:

 

36

 

(i)            Lender’s
right to institute a Proceeding to foreclose or to sell by power of sale will
not be exhausted by a Proceeding or a sale that is defective or not completed;

 

(ii)           any sale
by power of sale or pursuant to a judgment of foreclosure may be postponed
or adjourned by Lender by public announcement at the time and place appointed
for the sale without further notice;

 

(iii)          with
respect to sale pursuant to a judgment of foreclosure and sale or by power of
sale, the Property may be sold as an entirety or in parcels, at one or
more sales, at the time and place, on terms and in the order that Lender deems
expedient in its sole discretion;

 

(iv)          if a
portion of the Property is sold pursuant to this Article, the Loan Documents
will remain in full force and effect with respect to any unmatured portion of
the Debt and this Mortgage will continue as a valid and enforceable first lien
on and security interest in the remaining portion of the Property, subject only
to the Permitted Exceptions, without loss of priority and without impairment of
any of Lender’s rights and remedies with respect to the unmatured portion of
the Debt;

 

(v)           Lender may bid
for and acquire the Property at a sale and, in lieu of paying cash, may credit
the amount of Lender’s bid against any portion of the Debt selected by Lender
in its sole discretion after deducting from the amount of Lender’s bid the
expenses of the sale, costs of enforcement and other amounts that Lender is
authorized to deduct at Law, in equity or otherwise; and

 

(vi)          Lender’s
receipt of the proceeds of a sale will be sufficient consideration for the
portion of the Property sold and Lender will apply the proceeds as set forth in
this Mortgage.

 

Section 14.7.          Application
of Proceeds. Lender may apply the proceeds of any sale of the Property
by power of sale or pursuant to a judgment of foreclosure and sale and any
other amounts collected by Lender in connection with the exercise of the
Remedies to payment of the Debt in such priority and proportions as Lender may determine
in its sole discretion or in such priority and proportions as required by Law.

 

Section 14.8.          Intentionally
Deleted.

 

Section 14.9.          Tenant
at Sufferance. If Lender or a Receiver enters the Property in the exercise
of the Remedies and Borrower is allowed to remain in occupancy of the Property,
Borrower will pay to Lender or the Receiver, as the case may be, in
advance, a reasonable rent for the Property occupied by Borrower. If Borrower
fails to pay the rent, Borrower may be dispossessed by the usual
Proceedings available against defaulting tenants.

 

37

 

ARTICLE XV

 

LIMITATION OF LIABILITY

 

Section 15.1.          Limitation
of Liability.

 

(a)           Notwithstanding
any provision in the Loan Documents to the contrary, except as set forth in
subsections (b) and (c), if Lender seeks to enforce the collection of the
Debt, Lender will foreclose this Mortgage instead of instituting an independent
suit against the Borrower to collect the Debt. If a lesser sum is realized from
a foreclosure of this Mortgage and sale of the Property than the then
outstanding Debt, Lender will not institute any Proceeding against Borrower,
for or on account of the deficiency, except as set forth in subsections (b) and
(c).

 

(b)           The
limitation of liability in subsection (a) will not affect or impair (i) the
lien of this Mortgage or Lender’s other rights under the Loan Documents,
including Lender’s right as mortgagee or secured party to commence an action to
foreclose any lien or security interest Lender has under the Loan Documents; (ii) the
validity of the Loan Documents or the Obligations; (iii) Lender’s rights
under any Loan Document that are not expressly non-recourse; or (iv) Lender’s
right to present and collect on any letter of credit or other credit
enhancement document held by Lender in connection with the Obligations.

 

(c)           The
following are excluded and excepted from the limitation of liability in subsection (a) and
Lender may recover personally against Borrower for the following:

 

(i)            all
losses suffered and liabilities and expenses incurred by Lender relating to any
fraud or intentional and material misrepresentation or omission by Borrower or
any of Borrower’s members, officers, or principals in connection with (A) the
performance of any of the conditions to Lender making the Loan; (B) any
inducements to Lender to make the Loan; (C) the execution and delivery of
the Loan Documents; (D) any certificates, representations or warranties
given in connection with the Loan; or (E) Borrower’s performance of the
Obligations;

 

(ii)           all Rents
derived from the Property after an Event of Default under the Loan Documents
which default is a basis of a Proceeding by Lender to enforce collection of
both the Debt and all moneys that, on the date such a default occurs, are on
deposit in one or more accounts used by or on behalf of Borrower relating to
the operation of the Property, except to the extent properly applied to payment
of Debt Service Payments, Impositions, Insurance Premiums and any reasonable
and customary expenses incurred by Borrower in the operation, maintenance and
leasing of the Property or delivered to Lender;

 

(iii)          the
cost of remediation of any Environmental Activity affecting the Property, any
diminution in the value of the Property arising from any Environmental

 

38

 

Activity affecting the Property and any other losses
suffered and liabilities and expenses incurred by Lender relating to a default
under the Article entitled “Environmental”;

 

(iv)          all
security deposits collected by Borrower or any of Borrower’s predecessors and not
refunded to Tenants in accordance with their respective Leases, applied in
accordance with the Leases or Law or delivered to Lender, and all advance rents
collected by Borrower or any of Borrower’s predecessors and not applied in
accordance with the Leases or delivered to Lender;

 

(v)           the
replacement cost of any Fixtures or Personal Property removed from the Property
after a default occurs;

 

(vi)          all losses
suffered and liabilities and expenses incurred by Lender relating to any acts
or omissions by Borrower that result in physical waste on the Property;

 

(vii)         all
protective advances and other payments made by Lender pursuant to express
provisions of the Loan Documents to protect Lender’s security interest in the
Property or to protect the assignment of the property described in and effected
by the Assignment, but only to the extent that the Rents would have been
sufficient to permit Borrower to make the payment prior to Lender making such
protective advance or other payment and Borrower failed to make such payment
after request from Lender;

 

(viii)        all
mechanics’ or similar liens relating to work performed on or materials
delivered to the Property prior to Lender exercising its Remedies, but only to
the extent Lender had advanced funds to pay for the work or materials after
Borrower either has failed to pay for such work or materials or has failed to
provide adequate security to Lender in accordance with the provisions of this
Mortgage;

 

(ix)           all
Proceeds that are not applied in accordance with this Mortgage or not paid to
Lender as required under this Mortgage;

 

(x)            all
losses suffered and liabilities and expenses incurred by Lender relating to a
Transfer that is not permitted under the Section entitled “Permitted
Transfers”.

 

(xi)           all losses
suffered and liabilities and expenses incurred by Lender relating to forfeiture
or threatened forfeiture of the Property to the Government;

 

(xii)          all
losses suffered and liabilities and expenses incurred by Lender relating to any
default by Borrower under any of the provisions of this Mortgage relating to
ERISA, including the prohibition on any Transfer that results in a violation of
ERISA;

 

(xiii)         all
losses suffered and liabilities and expenses incurred by Lender relating to any
default by Borrower under any of the provisions of this Mortgage relating to
the

 

39

 

USA Patriot Act, the Executive Order or other
anti-terrorism or money laundering provisions; and

 

(xiv)        all
losses suffered and liabilities and expenses (1) incurred by Lender
relating to Borrower’s failure to comply with the terms and conditions of the
Asbestos and Sprinkler Plan at all times during the term of this Mortgage or (2) in
the event of a foreclosure and acquisition of title by Lender or a wholly-owned
subsidiary of Lender (the “Lender Acquiror”), incurred by Lender (if Lender is
not the Lender Acquiror) or Lender Acquiror in order to comply with the terms
and conditions of the Asbestos and Sprinkler Plan for a period extending from
the date of acquisition of title by the Lender Acquiror to the later of (a) two
(2) years thereafter, or (b) the Maturity Date, provided that
Borrower will be discharged of such obligation in any case where the vacant
floor resulting from a departing tenant was caused by the Lender’s (if Lender
is not the Lender Acquiror) or Lender Acquiror’s initiating the termination or
relocation of such tenant at a time other than the expiration of such tenant’s
lease by its terms or the termination of such tenant’s lease at the initial request
of tenant or otherwise in accordance with the terms of such lease; and

 

(xv)         all losses
suffered and liabilities and expenses incurred by Lender relating to all or any
portion of the rent payable under any Lease being deemed to be unrelated
business income within the meaning of the Code or regulations thereunder.

 

(d)           Nothing
under subparagraph (a) above will be deemed to be a waiver of any right
which Lender may have under Section 506(a), 506(b), 1111(b) or
any other provisions of the Bankruptcy Code or under any other Law relating to
bankruptcy or insolvency to file a claim for the full amount of the Debt or to
require that all collateral will continue to secure all of the Obligations in
accordance with the Loan Documents.

 

ARTICLE XVI

 

WAIVERS

 

SECTION 16.1.    WAIVER OF STATUTE OF LIMITATIONS.  BORROWER
WAIVES THE RIGHT TO CLAIM ANY STATUTE OF LIMITATIONS AS A DEFENSE TO BORROWER’S
PAYMENT AND PERFORMANCE OF THE OBLIGATIONS.

 

SECTION 16.2.    WAIVER OF NOTICE. BORROWER WAIVES THE RIGHT
TO RECEIVE ANY NOTICE FROM LENDER WITH RESPECT TO THE LOAN DOCUMENTS EXCEPT FOR
THOSE NOTICES THAT LENDER IS EXPRESSLY REQUIRED TO DELIVER PURSUANT TO THE LOAN
DOCUMENTS.

 

40

 

SECTION 16.3.    WAIVER OF MARSHALLING AND OTHER MATTERS. BORROWER
WAIVES THE BENEFIT OF ANY RIGHTS OF MARSHALLING OR ANY OTHER RIGHT TO DIRECT
THE ORDER IN WHICH ANY OF THE PROPERTY WILL BE (i) SOLD; OR (ii) MADE
AVAILABLE TO ANY ENTITY IF THE PROPERTY IS SOLD BY POWER OF SALE OR PURSUANT TO
A JUDGMENT OF FORECLOSURE AND SALE. BORROWER ALSO WAIVES THE BENEFIT OF ANY
LAWS RELATING TO APPRAISEMENT, VALUATION, STAY, EXTENSION, REINSTATEMENT,
MORATORIUM, HOMESTEAD AND EXEMPTION RIGHTS OR A SALE IN INVERSE ORDER OF
ALIENATION.

 

SECTION 16.4.    WAIVER OF TRIAL BY JURY. BORROWER AND LENDER
WAIVE TRIAL BY JURY IN ANY PROCEEDING BROUGHT BY OR AGAINST, OR COUNTERCLAIM OR
CROSS-COMPLAINT ASSERTED BY OR AGAINST, LENDER OR BORROWER RELATING TO THE
LOAN, THE PROPERTY DOCUMENTS OR THE LEASES.

 

SECTION 16.5.    WAIVER OF COUNTERCLAIM. BORROWER WAIVES THE
RIGHT TO ASSERT A COUNTERCLAIM OR CROSS-COMPLAINT, OTHER THAN COMPULSORY OR
MANDATORY COUNTERCLAIMS OR CROSS-COMPLAINTS, IN ANY PROCEEDING LENDER BRINGS
AGAINST BORROWER RELATING TO THE LOAN, INCLUDING ANY PROCEEDING TO ENFORCE REMEDIES.

 

SECTION 16.6.    WAIVER OF JUDICIAL NOTICE AND HEARING. BORROWER
WAIVES ANY RIGHT BORROWER MAY HAVE UNDER LAW TO NOTICE OR TO A JUDICIAL
HEARING PRIOR TO THE EXERCISE OF ANY RIGHT OR REMEDY PROVIDED BY THE LOAN
DOCUMENTS TO LENDER AND BORROWER WAIVES THE RIGHTS, IF ANY, TO SET ASIDE OR
INVALIDATE ANY SALE DULY CONSUMMATED IN ACCORDANCE WITH THE PROVISIONS OF THE
LOAN DOCUMENTS ON THE GROUND (IF SUCH BE THE CASE) THAT THE SALE WAS
CONSUMMATED WITHOUT A PRIOR JUDICIAL HEARING.

 

SECTION 16.7.    WAIVER OF SUBROGATION. BORROWER WAIVES ALL
RIGHTS OF SUBROGATION TO LENDER’S RIGHTS OR CLAIMS RELATED TO OR AFFECTING THE
PROPERTY OR ANY OTHER SECURITY FOR THE LOAN UNTIL THE LOAN IS PAID IN FULL AND
ALL FUNDING OBLIGATIONS UNDER THE LOAN DOCUMENTS HAVE BEEN TERMINATED.

 

SECTION 16.8.    GENERAL WAIVER. BORROWER ACKNOWLEDGES THAT (A) BORROWER
AND BORROWER’S PARTNERS, MEMBERS OR PRINCIPALS, AS THE CASE MAY BE, ARE
KNOWLEDGEABLE BORROWERS OF COMMERCIAL FUNDS AND EXPERIENCED REAL ESTATE
DEVELOPERS OR INVESTORS WHO UNDERSTAND FULLY THE EFFECT OF THE ABOVE
PROVISIONS; (B) LENDER WOULD NOT MAKE THE LOAN WITHOUT THE PROVISIONS OF
THIS ARTICLE;

 

41

 

(C) THE LOAN IS A COMMERCIAL OR BUSINESS LOAN
UNDER THE LAWS OF THE STATE OR COMMONWEALTH WHERE THE PROPERTY IS LOCATED,
NEGOTIATED BY LENDER AND BORROWER AND THEIR RESPECTIVE ATTORNEYS AT ARMS
LENGTH; AND (D) ALL WAIVERS BY BORROWER IN THIS ARTICLE HAVE BEEN
MADE VOLUNTARILY, INTELLIGENTLY AND KNOWINGLY, AFTER BORROWER FIRST HAS BEEN INFORMED
BY COUNSEL OF BORROWER’S OWN CHOOSING AS TO POSSIBLE ALTERNATIVE RIGHTS, AND
HAVE BEEN MADE AS AN INTENTIONAL RELINQUISHMENT AND ABANDONMENT OF A KNOWN
RIGHT AND PRIVILEGE. THE FOREGOING ACKNOWLEDGEMENT IS MADE WITH THE INTENT THAT
LENDER AND ANY SUBSEQUENT HOLDER OF THE NOTE WILL RELY ON THE ACKNOWLEDGEMENT.

 

ARTICLE XVII

 

NOTICES; RELIANCE
ON LENDER

 

Section 17.1.          Notices.
All acceptances, approvals, consents, demands, notices, requests, waivers and
other communications (the “Notices”)
required or permitted to be given under the Loan Documents must be in writing
and (a) delivered personally by a process server providing a sworn
declaration evidencing the date of service, the individual serviced, and the
address where the service was made; (b) sent by certified mail, return
receipt requested or (c) delivered by nationally recognized overnight
delivery service that provides evidence of the date of delivery, with all
charges prepaid (for next morning delivery if sent by overnight delivery
service), addressed to the appropriate party at its address listed below:

 

	
  If to Lender:

  	
   

  	
  Teachers Insurance and
  Annuity 

  Association of America 

  730 Third Avenue 

  New York, New York 10017 

  
	
   

  	
   

  	
  Attention:

  	
  Director Portfolio Management 

  For Mortgage and Real Estate Division 

  
	
   

  	
   

  	
  Region: Midwest/Southwest 

  TIAA Investment ID #AAA4527 

  Mortgage #0005970

  
	
   

  	
   

  	
   

  
	
  with a courtesy

  copy to:

  	
   

  	
  Teachers Insurance and Annuity Association of
  America 

  730 Third Avenue 

  New York, New York 10017 

  
	
   

  	
   

  	
  Attention:

  	
  Managing Counsel — New York

  

 

42

 

	
   

  	
   

  	
   

  	
  Investment Management Law

  
	
   

  	
   

  	
   TIAA
  Investment ID #AAA4527 

  Mortgage #0005970

  
	
   

  	
   

  	
   

  
	
  and:

  	
   

  	
  Mayer, Brown, Rowe & Maw LLP 

  190 South LaSalle Street 

  Chicago, Illinois 60603 

  Attn:   John J. Gearen, Esq. and
  Joshua P. Hanna, Esq.

  
	
   

  	
   

  	
   

  
	
  If to Borrower:

  	
   

  	
  80 South Eighth L.L.C. 

  c/o Buck Management Group, LLC 

  80 S. Eighth Street 

  Suite 3450 

  Minneapolis, Minnesota 55402 

  Attn:  General Manager

  
	
   

  	
   

  	
   

  
	
  With a courtesy 

  copy to:

  	
   

  	
  80 South Eighth L.L.C. 

  c/o The John Buck Company 

  One North Wacker Drive 

  Chicago, Illinois 60606 

  Attn:   Kent A. Swanson and Paul Heinen

  
	
   

  	
   

  	
   

  
	
  and:

  	
   

  	
  McMorgan Institutional Real Estate Fund I, LLC 

  c/o McMorgan & Company 

  80 One Bush Street 

  Suite 800 

  San Francisco, California 94104-4441 

  Attn:   Chris McEldowney and Pat Murray

  
	
   

  	
   

  	
   

  
	
  and::

  	
   

  	
  Pedersen & Houpt, P.C. 

  161 North Clark Street 

  Suite 3100 

  Chicago, Illinois 60601 

  Attn:   Thomas J. Kelly, Esq.

  

 

Lender and Borrower each may change from time to time the address
to which Notices must be sent, by notice given in accordance with the
provisions of this Section. All Notices given in accordance with the provisions
of this Section will be deemed to have been received on the earliest of (i) actual
receipt; (ii) Borrower’s rejection of delivery, or (iii) 3 Business
Days after having been deposited in any mail depository regularly maintained by
the United States postal service, if sent by certified mail, or 1 Business Day
after having been deposited with a nationally recognized overnight delivery
service, if sent by overnight delivery or on the date of personal service, if
served by a process server.

 

43

 

Section 17.2.          Change
in Borrower’s Name or Place of Business. Borrower will immediately notify Lender
in writing of any change in Borrower’s name or the place of business set forth
in the beginning of this Mortgage.

 

ARTICLE XVIII

 

MISCELLANEOUS

 

Section 18.1.          Applicable
Law. This Mortgage is governed by and will be construed in accordance with
the Laws of the State or Commonwealth where the Property is located, except to
the extent that the Uniform Commercial Code requires otherwise.

 

Section 18.2.          Usury
Limitations. Borrower and Lender intend to comply with all Laws with
respect to the charging and receiving of interest. Any amounts charged or
received by Lender for the use or forbearance of the Principal to the extent
permitted by Law, will be amortized and spread throughout the Term until
payment in full so that the rate or amount of interest charged or received by
Lender on account of the Principal does not exceed the Maximum Interest Rate.
If any amount charged or received under the Loan Documents that is deemed to be
interest is determined to be in excess of the amount permitted to be charged or
received at the Maximum Interest Rate, the excess will be deemed to be a
prepayment of Principal when paid, without premium, and any portion of the
excess not capable of being so applied will be refunded to Borrower. If during
the Term the Maximum Interest Rate, if any, is eliminated, then for the
purposes of the Loan, there will be no Maximum Interest Rate.

 

Section 18.3.          Lender’s
Discretion. Wherever under the Loan Documents any matter is required to be
satisfactory to Lender, Lender has the right to approve or determine any matter
or Lender has an election, Lender’s approval, determination or election will be
made in Lender’s reasonable discretion unless expressly provided to the
contrary.

 

Section 18.4.          Unenforceable
Provisions. If any provision in the Loan Documents is found to be illegal
or unenforceable or would operate to invalidate any of the Loan Documents, then
the provision will be deemed expunged and the Loan Documents will be construed
as though the provision was not contained in the Loan Documents and the
remainder of the Loan Documents will remain in full force and effect.

 

Section 18.5.          Survival
of Borrower’s Obligations. Borrower’s representations, warranties and
covenants contained in the Loan Documents, including the obligations set forth
in Section 15.1(c)(xiv) herein, will continue in full force and effect and
survive (i) satisfaction of the Obligations; (ii) release of the lien
of this Mortgage; (iii) assignment or other transfer of all or any portion
of Lender’s interest in the Loan Documents or the Property; (iv) Lender’s
exercise of any of the Remedies or any of Lender’s other rights under the Loan
Documents; (v) a

 

44

 

Transfer; (vi) amendments to the Loan Documents; and (vii) any
other act or omission that might otherwise be construed as a release or
discharge of Borrower; provided that in the case of (i) or (ii) above,
such representations, warranties and covenants shall not survive longer than 18
months after such satisfaction or release.

 

Section 18.6.          Relationship
Between Borrower and Lender; No Third Party Beneficiaries.

 

(a)           Lender is
not a partner of or joint venturer with Borrower or any other entity as a
result of the Loan or Lender’s rights under the Loan Documents; the relationship
between Lender and Borrower is strictly that of creditor and debtor. Each Loan
Document is an agreement between the parties to that Loan Document for the
mutual benefit of the parties and no entities other than the parties to that
Loan Document will be a third party beneficiary or will have any claim against
Lender or Borrower by virtue of the Loan Document. As between Lender and
Borrower, any actions taken by Lender under the Loan Documents will be taken
for Lender’s protection only, and Lender has not and will not be deemed to have
assumed any responsibility to Borrower or to any other entity by virtue of
Lender’s actions.

 

(b)           All
conditions to Lender’s performance of its obligations under the Loan Documents
are imposed solely for the benefit of Lender. No entity other than Lender will
have standing to require satisfaction of the conditions in accordance with
their provisions or will be entitled to assume that Lender will refuse to perform its
obligations in the absence of strict compliance with any of the conditions.

 

Section 18.7.          Partial
Releases: Extensions: Waivers. Lender may: (i) release any part of
the Property or any entity obligated for any of the Obligations; (ii) extend
the time for payment or performance of any of the Obligations or otherwise
amend the provisions for payment or performance by agreement with any entity
that is obligated for the Obligations or that has an interest in the Property; (iii) accept
additional security for the payment and performance of the Obligations; and (iv) waive
any entity’s performance of an Obligation, release any entity or individual now
or in the future liable for the performance of the Obligation or waive the
exercise of any Remedy or option. Lender may exercise any of the foregoing
rights without notice, without regard to the amount of any consideration given,
without affecting the priority of the Loan Documents, without releasing any
entity not specifically released from its obligations under the Loan Documents,
without releasing any guarantor(s) or surety(ies) of any of the Obligations,
without effecting a novation of the Loan Documents and, with respect to a
waiver, without waiving future performance of the Obligation or exercise of the
Remedy waived.

 

Section 18.8.          Service
of Process. Borrower irrevocably consents to service of process by
registered or certified mail, postage prepaid, return receipt requested, to
Borrower at its address set forth in the Article entitled “Notices”.

 

Section 18.9.          Entire
Agreement. Oral agreements or commitments between Borrower and Lender to
lend money, to extend credit or to forbear from enforcing repayment of a debt,

 

45

 

including promises to extend or renew the debt, are not enforceable.
Any agreements between Borrower and Lender relating to the Loan are contained
in the Loan Documents, which contain the complete and exclusive statement of
the agreements between Borrower and Lender, except as Borrower and Lender may later
agree in writing to amend the Loan Documents. The language of each Loan
Document will be construed as a whole according to its fair meaning and will
not be construed against the draftsman.

 

Section 18.10.        No
Oral Amendment. The Loan Documents may not be amended, waived or
terminated orally or by any act or omission made individually by Borrower or
Lender but may be amended, waived or terminated only by a written document
signed by the party against which enforcement of the amendment, waiver or
termination is sought.

 

Section 18.11.        Severability.
The invalidity, illegality or unenforceability of any provision of any of the
Loan Documents will not affect any other provisions of the Loan Documents,
which will be construed as if the invalid, illegal or unenforceable provision
never had been included.

 

Section 18.12.        Covenants
Run with the Land. Subject to the restrictions on transfer contained in the
Article entitled “TRANSFERS, LIENS AND ENCUMBRANCES”, all of the
covenants of this Mortgage and the Assignment run with the Land, will bind all
parties hereto and all tenants and subtenants of the Land or the Improvements
and their respective heirs, executors, administrators, successors and assigns,
and all occupants and subsequent owners of the Property, and will inure to the
benefit of Lender and all subsequent holders of the Note and this Mortgage.

 

Section 18.13.        Time
of the Essence. Time is of the essence with respect to Borrower’s payment
and performance of the Obligations.

 

Section 18.14.        Subrogation.
If the Principal or any other amount advanced by Lender is used directly or
indirectly to pay off, discharge or satisfy all or any part of an
encumbrance affecting the Property, then Lender is subrogated to the
encumbrance and to any security held by the holder of the encumbrance, all of
which will continue in full force and effect in favor of Lender as additional
security for the Obligations.

 

Section 18.15.        Joint
and Several Liability. If Borrower consists of more than one person or
entity, the obligations and liabilities of each such person or entity under
this Mortgage are joint and several.

 

Section 18.16.        Successors
and Assigns. The Loan Documents bind the parties to the Loan Documents and
their respective successors, assigns, heirs, administrators, executors, agents
and representatives and inure to the benefit of Lender and its successors,
assigns, heirs, administrators, executors, agents and representatives.

 

46

 

Section 18.17.        Duplicates and Counterparts. Duplicate counterparts of any Loan Documents, other than the Note, may be
executed and together will constitute a single original document.

 

SIGNATURE PAGE TO
FOLLOW.

 

47

 

IN WITNESS WHEREOF, Borrower has executed and
delivered this Mortgage as of the date first set forth above.

 

	
   

  	
   

  	
  80 SOUTH EIGHTH L.L.C., 

  a Delaware limited liability company

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  JBC Opportunity Fund II, L.P.,

  a Delaware limited partnership, 

  its Managing Member

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  By:

  	
  Buck Investors II, L.L.C., 

  a Delaware limited liability 

  company, its General Partner

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  By:

  	
  /s/
  Kent A. Swanson

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Name:

  	
  Kent
  A. Swanson

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Title:

  	
  Authorized
  Person

  	
   

  
								

 

 

	
  STATE OF Illinois

  	
  )

  
	
   

  	
   

  	
  ) ss

  
	
  COUNTY OF Cook

  	
  )

  
			

 

I, Michelle Pontarelli, a notary public in and for
said County, in the State aforesaid, DO HEREBY CERTIFY that Kent A. Swanson,
the Authorized Person of Buck Investors II, L.L.C., a Delaware limited
liability company, which is the general partner of JBC Opportunity Fund II,
L.P., a Delaware limited partnership, which is the managing member of 80 South
Eighth L.L.C., a Delaware limited liability company, personally known to me to
be the same person whose name is subscribed to the foregoing instrument,
appeared before me this day in person and acknowledged that he/she signed,
sealed and delivered the said instrument in his/her capacity as set forth
herein as his/her free and voluntary act, for the uses and purposes therein set
forth.

 

GIVEN under my hand and official seal, this 13th day of
December, 2004.

 

	
  “OFFICIAL SEAL”

  	
   

  
	
  MICHELLE PONTARELLI

  	
   

  
	
  Notary Public State of
  Illinois

  	
  /s/
  Michelle Pontarelli

  	
   

  
	
  My commission Expires April 28,
  2006

  	
  Notary Public

  

 

My commission expires:      

 

 

Exhibit A

 

LEGAL DESCRIPTION

 

PARCEL 1: TRACT A, REGISTERED LAND SURVEY NO. 1592, HENNEPIN
COUNTY, MINNESOTA

 

PARCEL 2: TRACTS B, E, F, AND J, REGISTERED LAND SURVEY NO. 1593,
HENNEPIN COUNTY, MINNESOTA

 

PARCEL 3: NON-EXCLUSIVE EASEMENTS FOR THE BENEFIT OF PARCELS 1 AND 2,
CONTAINED IN THE FOLLOWING DOCUMENTS:

 

(a)           SKYWAY AGREEMENT
(NICOLLET MALL SKYWAY) BETWEEN IDS PROPERTIES, INC. AND DAYTON HUDSON
CORPORATION DATED FEBRUARY 1, 1971 RECORDED AUGUST 2, 1973 AS
DOCUMENT NO. 1079935.

 

(b)           SKYWAY AGREEMENT (7TH
STREET SKYWAY) AMONG SFA-ATLANTA, INC., 80 SOUTH EIGHTH STREET LIMITED
PARTNERSHIP, AND 651 NICOLLET PARTNERSHIP DATED SEPTEMBER 12, 1989,
RECORDED DECEMBER 12, 1990 AS DOCUMENT NO. 2142430.

 

(c)           DECLARATION (8TH STREET
SKYWAY) DATED FEBRUARY 10, 1982 RECORDED FEBRUARY 22, 1982 AS
DOCUMENT NO. 1458821.

 

(d)           DECLARATION (MARQUETTE
AVENUE SKYWAY) DATED JANUARY 22, 1970 RECORDED AUGUST 2, 1973 AS
DOCUMENT NO. 1079937, AS AMENDED BY SUPPLEMENT TO DECLARATION, DATED FEBRUARY 11,
1982, RECORDED FEBRUARY 22, 1982 AS DOCUMENT NO. 1458829.

 

(e)           DECLARATION (MARQUETTE
AVENUE TUNNEL) DATED JUNE 30, 1970 RECORDED AUGUST 2, 1973 AS
DOCUMENT NO. 1079938, AS AMENDED BY SUPPLEMENT TO DECLARATION DATED FEBRUARY 11,
1982, RECORDED FEBRUARY 22, 1982 AS DOCUMENT NO. 1458828.

 

(f)            EASEMENTS AND
COVENANTS AGREEMENT DATED DECEMBER 4, 1991, RECORDED DECEMBER 5, 1991
AS DOCUMENT NO. 2220574, AS AMENDED BY AMENDED AND RESTATED AGREEMENT OF
EASEMENTS AND COVENANTS DATED DECEMBER 31, 2002, RECORDED JANUARY 23,
2003 AS DOCUMENT NO. 3670146.

 

(g)           DECLARATION REGARDING
CERTAIN EASEMENTS (BAKER BLOCK AND IDS CENTER) DATED FEBRUARY 11, 1982, RECORDED
FEBRUARY 22, 1982 AS DOCUMENT NO. 1458830.

 

A-1

 

Exhibit B

 

DEFINITIONS

 

“Acceleration” is defined in Section 14.2(a)(i).

 

“Accumulations” is defined in Section 2.1(xii).

 

“Accumulations Depositary” is defined in Section 6.2(a).

 

“Act” is defined in Section 14.10(1)(b).

 

“Additional Funds” is defined in Section 7.4(v).

 

“Asbestos and Sprinkler Plan” is defined as the Asbestos
Abatement and Sprinkler Installation Plan attached hereto as Exhibit E
and made a part hereof.

 

“Annual Financial Statement” is defined in Section 10.1(a).

 

“Assessments” is defined as all assessments now or hereafter
levied, assessed or imposed against the Property.

 

“Assignment” is defined as the Assignment of Leases and Rents dated
of even date with this Mortgage made by Borrower for the benefit of Lender.

 

“Bankruptcy Code” means Title 11 of the United States Code.

 

“Borrower” is defined in the introductory paragraph.

 

“Budget” is defined in Section 10.2.

 

“Business Days” is defined as any day on which commercial banks
are not authorized or required by Law to close in New York, New York.

 

“Casualty” is defined as damage to or destruction of the
Property by fire or other casualty.

 

“Code” is defined as the Internal Revenue Code of 1986 and the
regulations promulgated thereunder.

 

“Condemnation” is defined as the permanent or temporary taking
of all or any portion of the Property, or any interest therein or right
accruing thereto, by the exercise of the right of eminent domain (including any
transfer in lieu of or in anticipation of the exercise of the right), inverse
condemnation or any similar injury or damage to or decrease in the value of the
Property, including severance and change in the grade of any streets

 

B-1

 

“Condemnation Awards” is defined in Section 2.1(viii).

 

“Condemnation Proceeding” is defined as a Proceeding that could
result in a Condemnation.

 

“CPA” is defined as an independent certified public accountant
satisfactory to Lender.

 

“Debt” is defined in Section 3.1.

 

“Debt Service Payments” is defined as the monthly installments
of principal and interest payable by Borrower to Lender as set forth in the
Note.

 

“Default Interest Rate” is defined as the lower of 10% per annum
or the Maximum Interest Rate, if any.

 

“Destruction Event” is defined in Section 7.4.

 

“Environmental Activity” is defined as any actual, suspected or
threatened abatement, cleanup, disposal, generation, handling, manufacture,
possession, release, remediation, removal, storage, transportation, treatment
or use of any Hazardous Material. The actual, suspected or threatened presence
of any Hazardous Material or the actual, suspected or threatened noncompliance
with any Environmental Laws, will be deemed Environmental Activity.

 

“Environmental Indemnity” is defined as the Environmental
Indemnity Agreement dated of event date with this Mortgage made by JBC Fund II
and Borrower for the benefit of Lender.

 

“Environmental Laws” is defined as all Laws pertaining to
health, safety, protection of the environment, natural resources, conservation,
wildlife, waste management, Environmental Activities and pollution.

 

“Environmental Report” is defined as the Phase I Environmental
Site Assessment prepared by Tetra Tech EM Inc. dated December 9, 2004.

 

“ERISA” is defined in Section 8.3(a).

 

“Evasion Premium” is defined in the Note.

 

“Event of Default” is defined in Section 14.1.

 

“Existing Members” is defined in Section 12.1(b).

 

“Expenses” is defined in Section 11.1(a).

 

“Financial Books and Records” is defined as detailed accounts of
the income and expenses of the Property and of Borrower and all other data,
records and information that either are specifically referred to in the Article entitled
“FINANCIAL REPORTING” or are necessary to the preparation of any of the
statements, reports or certificates required under such Article and

 

 

includes all supporting schedules prepared or used by the CPA in
auditing the Annual Financial Statement or in issuing its opinion.

 

“Fiscal Year” is defined as any calendar year or partial
calendar year during the Term.

 

“Fixed Interest Rate” is defined as 5% per annum.

 

“Fixtures and Personal Property” is defined in Section 2.1(iv).

 

“Government” is defined as any federal, state or municipal
governmental or quasi-governmental authority including any executive,
legislative or judicial branch and any division, subdivision or agency of any
of them and any entity to which any of them has delegated authority.

 

“Hazardous Materials” is defined as any by-product, chemical,
compound, contaminant, pollutant, product, substance, waste or other material (i) that
is hazardous or toxic or (ii) the abatement, cleanup, discharge, disposal,
emission, exposure to, generation, handling, manufacture, possession, presence,
release, removal, remediation, storage, transportation, treatment or use of
which is controlled, prohibited or regulated by any Environmental Laws,
including asbestos, petroleum and petroleum products and polychlorinated
biphenyls.

 

“Imposition Penalty Date” is defined in Section 6.1(a).

 

“Impositions” is defined as all Taxes, Assessments, ground rent,
if any, water and sewer rents, fees and charges, levies, permit, inspection and
license fees and other dues, charges or impositions, including all charges and
license fees for the use of vaults, chutes and similar areas adjoining the
Land, maintenance and similar charges and charges for utility services, in each
instance whether now or in the future, directly or indirectly, levied, assessed
or imposed on the Property or Borrower and whether levied, assessed or imposed
as excise, privilege or property taxes.

 

“Improvements” is defined in Section 2.1(ii).

 

“Insurance Premiums” is defined as all present and future
premiums and other charges due and payable on policies of fire, rental value
and other insurance covering the Property and required pursuant to the
provisions of this Mortgage.

 

“Insurance Proceeds” is defined in Section 2.1(ix).

 

“Insurers” is defined in Section 7.1(c).

 

“Institutional Investor” is defined as any bank, savings
institution, charitable foundation, insurance company, real estate investment
trust, pension fund or investment advisor registered under the Investment
Advisors Act of 1940, as amended, and acting as trustee or agent.

 

“Interest” is defined as the fixed interest payable under the
Note at the Fixed Interest Rate and any other sums which are deemed to be
interest under Law.

 

“JBC Fund II” is defined as JBC Opportunity Fund II, L.P., a
Delaware limited partnership.

 

 

“Land” is defined in the Recitals.

 

“Late Charge” is defined in the Note.

 

“Law” is defined as all present and future codes, constitutions,
cases, opinions, rules, manuals, regulations, determinations, laws, orders,
ordinances, requirements and statutes, as amended, of any Government that
affect the Property, Borrower or the Loan, including amendments and all
guidance documents and publications promulgated thereunder.

 

“Leases” is defined as all present and future leases, subleases,
licenses, and other agreements for the use and occupancy of the Land and
Improvement, any related guarantees and any use and occupancy arrangements
created pursuant to Section 365(h) of the Bankruptcy Code or
otherwise in connection with the commencement or continuation of any bankruptcy,
reorganization, arrangement, insolvency, dissolution, receivership or similar
Proceedings, or any assignment for the benefit of creditors, in respect of any
tenant or other occupant of the Land and Improvements.

 

“Lender” is defined in the introductory paragraph.

 

“Loan” is defined in the Recitals.

 

“Loan Documents” is defined as the Note, this Mortgage, the
Assignment and all documents now or hereafter executed by Borrower and held by
Lender relating to the Loan, including all amendments thereto.

 

“Material Environmental Contamination” is defined as
contamination of the Property with Hazardous Materials (i) that
constitutes a violation of one or more Environmental Laws; (ii) for which
there is a significant possibility that remediation will be required under
Environmental Laws; (iii) that results in a material risk of liability or
expense to Lender; or (iv) that diminishes the value of the Property.

 

“Maturity Date” is defined in the Recitals.

 

“Maximum Interest Rate” is defined as the maximum rate of
interest, if any, permitted by Law as of the date of this Mortgage to be
charged with respect to the Loan.

 

“Mortgage” is defined as this Mortgage, Assignment of Leases and
Rents, Security Agreement and Fixture Filing Statement.

 

“Non-Recourse Carve-Out Guaranty” is defined as the Guaranty of
Borrower’s Recourse Liabilities dated of even date with this Mortgage made by
JBC Fund II for the benefit of Lender.

 

“Note” is defined in the Recitals.

 

“Note Payments” is defined in the Note.

 

“Notices” is defined in Section 17.1.

 

 

“Obligations” is defined in Section 3.1.

 

“Permitted Exceptions” is defined as the matters shown in Schedule B,
Part 1 and 2 of the title insurance policy insuring the lien of this
Mortgage.

 

“Permitted Transfers” is defined in Section 12.2(b).

 

“Permitted Use” is defined as use as a first-class commercial
office and retail building and uses incidentally and directly related to such
use.

 

“Policies” is defined in Section 7.1(b).

 

“Prior Encumbrances” is defined in Section 14.10(3).

 

“Prepayment Premium” is defined in the Note.

 

“Principal” is defined in the Recitals.

 

“Proceeding” is defined as a pending or threatened action, claim
or litigation before a legal, equitable or administrative tribunal having
proper jurisdiction.

 

“Proceeds” is defined in Section 7.2(c).

 

“Property” is defined in Section 2.1.

 

“Property Documents” is defined in Section 2.1(v).

 

“Protective Advance” is defined in Section 14.10(1).

 

“Receiver” is defined as a receiver, custodian, trustee,
liquidator or conservator of the Property.

 

“Remedies” is defined in Section 14.2(a).

 

“Rents” is defined as all rents, prepaid rents, percentage,
participation or contingent rents, issues, profits, proceeds, revenues and
other consideration accruing under the Leases or otherwise derived from the use
and occupancy of the Land or the Improvements, including tenant contributions
to expenses, security deposits, royalties and contingent rent, if any, all
other fees or payments paid to or for the benefit of Borrower and any payments
received pursuant to Section 502(b) of the Bankruptcy Code or
otherwise in connection with the commencement or continuance of any bankruptcy,
reorganization, arrangement, insolvency, dissolution, receivership or similar
proceedings, or any assignment for the benefit of creditors, in respect of any
tenant or other occupant of the Land or the Improvements and all claims as a
creditor in connection with any of the foregoing.

 

“Restoration” is defined as the restoration of the Property
after a Destruction Event as nearly as possible to its condition immediately
prior to the Destruction Event, in accordance with the plans and
specifications, in a first-class workmanlike manner using materials
substantially equivalent in quality and character to those used for the
original improvements, in accordance with Law and

 

 

free and clear of all liens, encumbrances or other charges other than
this Mortgage and the Permitted Exceptions.

 

“Restoration Completion Date” is defined in Section 7.4(viii).

 

“Restoration Funds” is defined in Section 7.5(b).

 

“Taxes” is defined as all present and future real estate taxes
levied, assessed or imposed against the Property.

 

“Term” is defined as the scheduled term of this Mortgage
commencing on the date Lender makes the first disbursement of the Loan and
terminating on the Maturity Date.

 

“Transfer” is defined in Section 12.1(a).

 

“Uniform Commercial Code” is defined as the Uniform Commercial
Code in effect in the jurisdiction where the Land is located.

 

 

Exhibit C

 

RULES OF CONSTRUCTION

 

(a) References in any Loan Document to numbered
Articles or Sections are references to the Articles and Sections of that Loan
Document. References in any Loan Document to lettered Exhibits are references
to the Exhibits attached to that Loan Document, all of which are incorporated
in and constitute a part of that Loan Document. Article, Section and Exhibit captions
used in any Loan Document are for reference only and do not describe or limit
the substance, scope or intent of that Loan Document or the individual
Articles, Sections or Exhibits of that Loan Document.

 

(b) The terms “include”, “including” and similar
terms are construed as if followed by the phrase “without limitation”.

 

(c) The terms “Land”, “Improvements”, “Fixtures
and Personal Property”, “Condemnation Awards”, “Insurance Proceeds” and “Property”
are construed as if followed by the phrase “or any part thereof”.

 

(d) Any agreement by or duty imposed on Borrower
in any Loan Document to perform any obligation or to refrain from any act
or omission constitutes a covenant running with the ownership or occupancy of
the Land and the Improvements, which will bind all parties hereto and their
respective successors and assigns, and all lessees, subtenants and assigns of
same, and all occupants and subsequent owners of the Property, and will inure
to the benefit of Lender and all subsequent holders of the Note and this
Mortgage and includes a covenant by Borrower to cause its partners, members,
principals, agents, representatives and employees to perform the
obligation or to refrain from the act or omission in accordance with the Loan
Documents. Any statement or disclosure contained in any Loan Document about
facts or circumstances relating to the Property, Borrower or the Loan
constitutes a representation and warranty by Borrower made as of the date of
the Loan Document in which the statement or disclosure is contained.

 

(e) The term “to Borrower’s knowledge” is
construed as meaning to the best of Borrower’s knowledge after diligent
inquiry.

 

(f) The singular of any word includes the plural
and the plural includes the singular. The use of any gender includes all
genders.

 

(g) The terms “person”, “party” and “entity”
include natural persons, firms, partnerships, limited liability companies and
partnerships, corporations and any other public or private legal entity.

 

(h) The term “provisions” includes terms,
covenants, conditions, agreements and requirements.

 

C-1

 

(i) The term “amend” includes modify, supplement,
renew, extend, replace or substitute and the term “amendment” includes
modification, supplement, renewal, extension, replacement and substitution.

 

(j) Reference to any specific Law or to any document
or agreement, including the Note, this Mortgage, any of the other Loan
Documents, the Leases, and the Property Documents includes any future
amendments to the Law, document or agreement, as the case may be.

 

(k) No inference in favor of or against a party with
respect to any provision in any Loan Document may be drawn from the fact
that the party drafted the Loan Document.

 

(l) The term “certificate” means the sworn, notarized
statement of the entity giving the certificate, made by a duly authorized
person satisfactory to Lender affirming the truth and accuracy of every
statement in the certificate. Any document that is “certified” means the
document has been appended to a certificate of the entity certifying the
document that affirms that such document is a true, correct and complete copy
of such document, without modification or amendment. In all instances the
entity issuing a certificate must be satisfactory to Lender.

 

(m) Any appointment of Lender as Borrower’s
attorney-in-fact is irrevocable and coupled with an interest. Lender may appoint
a substitute attorney-in-fact. Borrower ratifies all actions taken by the
attorney-in-fact but, nevertheless, if Lender requests, Borrower will
specifically ratify any action taken by the attorney-in-fact by executing and
delivering to the attorney-in-fact or to any entity designated by the
attorney-in-fact all documents necessary to effect the ratification.

 

(n) Any document, instrument or agreement to be
delivered by Borrower pursuant to this Agreement will be in form and
content satisfactory to Lender.

 

(o) All obligations, rights, remedies and waivers
contained in the Loan Documents will be construed as being limited only to the
extent required to be enforceable under the Law.

 

(p) The unmodified word “days” means calendar days.

 

 

Exhibit D

 

Exhibit D

 

PROPERTY DOCUMENTS

 

1.             ALL OF THE EASEMENTS
AND DECLARATIONS REFERENCED IN SCHEDULE B AND C OF FIRST AMERICAN TITLE
INSURANCE COMPANY’S LENDER’S POLICY NO. NCS-121427-MPLS.

 

2.             PERMITS

 

(a)           MARQUETTE AVENUE
SKYWAY:

 

(i) SPECIAL COUNCIL PERMIT NO. 52117, DATED MARCH 28,
1969

 

(ii) SPECIAL COUNCIL PERMIT NO. 53189, DATED JANUARY 29,
1971

 

(b)           7TH STREET SKYWAY:

 

(i) SPECIAL COUNCIL PERMIT NO. 52120, DATED MARCH 28,
1969

 

(ii) SPECIAL COUNCIL PERMIT NO. 53191, DATED JANUARY 29,
1971

 

(iii) SPECIAL COUNCIL PERMIT NO. 53267, DATED MARCH 26,
1971

 

(c)           8TH STREET SKYWAY:

 

(i) SPECIAL COUNCIL PERMIT NO. 52119, DATED MARCH 28,
1969

 

(ii) SPECIAL COUNCIL PERMIT NO. 53190, DATED JANUARY 29,
1971

 

(iii) SPECIAL COUNCIL PERMIT NO. 53052, DATED OCTOBER 19,
1970 (8TH STREET CANOPY)

 

(d)           NICOLLET MALL SKYWAY:

 

(i) SPECIAL COUNCIL PERMIT NO. 52118, DATED MARCH 28,
1969

 

(ii) SPECIAL COUNCIL PERMIT NO. 53192, DATED JANUARY 29,
1971

 

(iii) SPECIAL COUNCIL PERMIT NO. 53447, DATED JULY 30,
1971

 

(iv) SPECIAL COUNCIL PERMIT NO. 54100, DATED OCTOBER 17,
1972

 

(v) SPECIAL COUNCIL PERMIT NO. 54361, DATED FEBRUARY 23,
1973

 

D-1

 

(e)           MARQUETTE AVENUE
TUNNEL:

 

(i) SPECIAL COUNCIL PERMIT NO. 52589, DATED DECEMBER 12,
1969

 

(ii) SPECIAL COUNCIL PERMIT NO. 52901, DATED JUNE 26,
1970

 

(f)            UNDERGROUND AREAWAY:

 

(i) SPECIAL COUNCIL PERMIT NO. 52370, DATED AUGUST 28,
1969

 

(g)           CANOPY:

 

(i)            SPECIAL COUNCIL PERMIT
NO. 53052, DATED OCTOBER 19, 1970

 

(h)           STREET
LIGHTS:

 

(i)            SPECIAL COUNCIL PERMIT
NO. 53084, DATED OCTOBER 30, 1970

 

(i)            SIDEWALKS:

 

(i)            SPECIAL COUNCIL PERMIT
NO. 53104, DATED NOVEMBER 13, 1970

 

(ii)           SPECIAL COUNCIL PERMIT NO. 53575,
DATED OCTOBER 29, 1971

 

3.             PROPERTY AGREEMENTS
BETWEEN 80 SOUTH EIGHTH L.L.C. AND BUCK MANAGEMENT GROUP (MINNESOTA) LLC:

 

(a)           OFFICE LEASING
AGREEMENT

 

(b)           DEVELOPMENT CONSULTING
AGREEMENT

 

(c)           MANAGEMENT AGREEMENT

 

4.             TOWER BUILDING
PARKING FACILITY LEASE, DATED JANUARY 1, 2004, ENTERED INTO BETWEEN
CENTRAL PARKING SYSTEM, INC. AND EIGHTH STREET TOWER CORPORATION

 

5.             LEASE DATED JANUARY 1,
2003, ENTERED INTO BETWEEN BROADCAST SERVICES, INC. AND EIGHTH STREET
TOWER CORPORATION, REGARDING ROOFTOP FACILITIES

 

 

Exhibit E

 

ASBESTOS ABATEMENT AND SPRINKLER INSTALLATION PLAN

 

Borrower covenants and agrees to abate existing asbestos located at the
Property, as identified in the Environmental Report, and to install sprinklers
at the Property, in accordance with the following terms and conditions:

 

•          If
a full floor within the Improvements is or becomes vacant at any time during
the term of the Mortgage, Borrower shall promptly notify Lender of such vacancy
and shall diligently cause all asbestos located on or within such floor to be
abated in strict compliance with all applicable Environmental Laws, and shall
cause sprinkler based fire suppression systems to be installed in strict
compliance with all applicable Laws, prior to occupancy of such floor by any
new or existing tenant.

•          It
is agreed and acknowledged that Borrower does not intend to abate asbestos on
any floors located within the Improvements that are used predominantly for
mechanical equipment.

•          It
is agreed and acknowledged that Borrower shall not be required to abate
asbestos from vacant space on partially occupied floors so long as any portion
of such floors remains occupied.

•          Borrower
covenants and agrees to strictly comply with and abide by the Letter Agreement
re: IDS Center/Alternate Method Proposal Regarding Sprinkler System
Installation when Undertaking Remodeling, dated April 20, 2004 executed by
the Minneapolis Director of Inspections (the “Inspection Director”) and each of the letters to the
Inspection Director that are referenced therein (collectively, the “Sprinkler Agreement”) as long as the
Sprinkler Agreement remains in effect and, thereafter, with the requirements of
the State Building Code (as referenced in the Sprinkler Agreement), the
Guideline for the Rehabilitation of Existing Buildings (as referenced in the
Sprinkler Agreement) or any other Laws governing asbestos abatement and/or
installation of sprinklers of the Property that may apply in the absence
of the Sprinkler Agreement.

 

E-1

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