DEED OF TRUST, SECURITY AGREEMENT, ASSIGNMENT OF RENTS AND FIXTURE FILING
 
This Instrument Prepared By and When Recorded and Return to:

Winston & Strawn LLP
200 Park Avenue
New York, New York 10166
Attn: Corey A. Tessler, Esq.
Oakview Plaza
Loan No. 502858289
 
LVP OAKVIEW STRIP CENTER LLC,
as Trustor
 
to
 
ROBERT M. GONDERINGER, a member of
the Nebraska State Bar Association,
as Trustee
 
For the benefit of

 
WACHOVIA BANK, NATIONAL ASSOCIATION,
as Beneficiary

County: Douglas
State: Nebraska

--------------------------------------------------------------------------------

THIS DEED OF TRUST, SECURITY AGREEMENT, ASSIGNMENT OF RENTS AND FIXTURE FILING
(this “Security Instrument”) dated as of December 20, 2006, by LVP OAKVIEW STRIP
CENTER LLC, a Delaware limited liability company, as trustor (hereinafter,
“Borrower”), having its chief executive offices c/o The Lightstone Group, 326
Third Street, Lakewood, New Jersey 08701, ”), to Robert M. Gonderinger, a member
of the Nebraska State Bar Association, as Trustee (“Trustee”), whose address is
2120 South 72nd Street, Suite 1200, Omaha, Nebraska 68124, for the benefit of
WACHOVIA BANK, NATIONAL ASSOCIATION, a national banking association, as
beneficiary (“Lender”), whose address is Commercial Real Estate Services, 8739
Research Drive URP - 4, NC 1075, Charlotte, North Carolina 28262.
 
WITNESSETH:
 
WHEREAS, Lender has authorized a loan (hereinafter referred to as the “Loan”) to
Borrower in the maximum principal sum of TWENTY-SEVEN MILLION FIVE HUNDRED
THOUSAND AND 00/100 DOLLARS ($27,500,000.00) (hereinafter referred to as the
“Loan Amount”), which Loan is evidenced by that certain promissory note, dated
the date hereof (together with any supplements, amendments, modifications or
extensions thereof, hereinafter referred to as the “Note”) given by Borrower, as
maker, to Lender, as payee;
 
WHEREAS, in consideration of the Loan, the Borrower has agreed to make payments
in amounts sufficient to pay and redeem, and provide for the payment and
redemption of the principal of, premium, if any, and interest on the Note when
due;
 
WHEREAS, Borrower desires by this Security Instrument to provide for, among
other things, the issuance of the Note and for the deposit, deed and pledge by
Borrower with, and the creation of a security interest in favor of, Lender, as
security for Borrower’s obligations to Lender from time to time pursuant to the
Note and the other Loan Documents, but specifically excluding the Guaranty (as
hereinafter defined); and
 
WHEREAS, Borrower and Lender intend these recitals to be a material part of this
Security Instrument.
 
WHEREAS, all things necessary to make this Security Instrument the valid and
legally binding obligation of Borrower in accordance with its terms, for the
uses and purposes herein set forth, have been done and performed.
 
NOW THEREFORE, to secure the payment of the principal of, prepayment premium (if
any) and interest on the Note and all other obligations, liabilities or sums due
or to become due under, or advanced in accordance herewith to protect the
security of, this Security Instrument, the Note or any other Loan Document,
including, without limitation, interest on said obligations, liabilities or sums
(said principal, premium, interest and other sums being hereinafter referred to
as the “Debt”) (provided, however upon request of Borrower, Lender, at Lender's
option, prior to full reconveyance of the Property by Trustee to Borrower, may
make future advances to Borrower. Such future advances, with interest thereon,
shall be secured by this Security Instrument. At no time shall the principal
amount of the indebtedness secured by this Security Instrument, not including
sums advanced to protect the security, exceed the total sum of $27,075,000.00.
Advances of disbursements made by Lender to protect the security, under the
terms hereof, while discretionary, shall not be deemed to be optional advances),
and the performance of all other covenants, obligations and liabilities of the
Borrower pursuant to the Loan Documents but specifically excluding the Guaranty,
and any and all other indebtedness now owing or which may hereafter be owing by
Borrower to Lender, now existing or hereafter coming into existence, however and
whenever incurred or evidenced, whether express or implied, direct or indirect,
absolute or contingent, or due or to become due, and all renewals,
modifications, consolidations, replacements and extensions thereof, Borrower has
executed and delivered this Security Instrument; and Borrower has irrevocably
granted, and by these presents and by the execution and delivery hereof does
hereby irrevocably grant, bargain, sell, alien, demise, release, convey, assign,
transfer, deed, hypothecate, pledge, set over, warrant, mortgage, forever in
trust WITH POWER OF SALE, all right, title and interest of Borrower in and to
all of the following property, rights, interests and estates, whether now owned
or hereafter acquired, together with the rights, privileges and appurtenances
thereto belonging:
 
(a) the plot(s), piece(s) or parcel(s) of real property described in Exhibit A
attached hereto and made a part hereof (individually and collectively,
hereinafter referred to as the “Premises”);
 
-1-

--------------------------------------------------------------------------------

 
(b) (i) all buildings, foundations, structures, fixtures, additions,
enlargements, extensions, modifications, repairs, replacements and improvements
of every kind or nature now or hereafter located on the Premises (hereinafter
collectively referred to as the “Improvements”); and (ii) to the extent
permitted by law, the name or names, if any, as may now or hereafter be used for
each Improvement, and the goodwill associated therewith;
 
(c) all easements, servitudes, rights-of-way, strips and gores of land, streets,
ways, alleys, passages, sewer rights, water, water courses, water rights and
powers, ditches, ditch rights, reservoirs and reservoir rights, air rights and
development rights, lateral support, drainage, gas, oil and mineral rights,
tenements, hereditaments and appurtenances of any nature whatsoever, in any way
belonging, relating or pertaining to the Premises or the Improvements and the
reversion and reversions, remainder and remainders, whether existing or
hereafter acquired, and all land lying in the bed of any street, road or avenue,
opened or proposed, in front of or adjoining the Premises to the center line
thereof and any and all sidewalks, drives, curbs, passageways, streets, spaces
and alleys adjacent to or used in connection with the Premises and/or
Improvements and all the estates, rights, titles, interests, property,
possession, claim and demand whatsoever, both in law and in equity, of Borrower
of, in and to the Premises and Improvements and every part and parcel thereof,
with the appurtenances thereto;
 
(d) all machinery, equipment, fittings, apparatus, appliances, furniture,
furnishings, tools, fixtures (including, but not limited to, all heating, air
conditioning, ventilating, waste disposal, sprinkler and fire and theft
protection equipment, plumbing, lighting, communications and elevator fixtures)
and other property of every kind and nature whatsoever owned by Borrower, or in
which Borrower has or shall have an interest, now or hereafter located upon, or
in, and located on the Premises or the Improvements, or appurtenant thereto, and
all building equipment, materials and supplies of any nature whatsoever owned by
Borrower, or in which Borrower has or shall have an interest, now or hereafter
located upon, or in the Premises or the Improvements or appurtenant thereto
(hereinafter, all of the foregoing items described in this paragraph (d), along
with all replacement and additional items installed as contemplated in Section
8.01(e), are collectively called the “Equipment”), all of which, and any
replacements, modifications, alterations and additions thereto, to the extent
permitted by applicable law, shall be deemed to constitute fixtures (herein,
collectively, the “Fixtures”), and are part of the real estate and security for
the payment of the Debt and the performance of Borrower’s obligations. To the
extent any portion of the Equipment is not real property or Fixtures under
applicable law, it shall be deemed to be personal property, and this Security
Instrument shall constitute a security agreement creating a security interest
therein in favor of Lender under the UCC;
 
-2-

--------------------------------------------------------------------------------

 
(e) all awards or payments, including interest thereon, which may hereafter be
made with respect to the Premises, the Improvements, the Fixtures, or the
Equipment, whether from the exercise of the right of eminent domain (including
but not limited to any transfer made in lieu of or in anticipation of the
exercise of said right), or for a change of grade, or for any other injury to or
decrease in the value of the Premises, the Improvements or the Equipment or
refunds with respect to the payment of property taxes and assessments, and all
other proceeds of the conversion, voluntary or involuntary, of the Premises,
Improvements, Equipment, Fixtures or any other Property or part thereof into
cash or liquidated claims;
 
(f) all leases, tenancies, licenses and other agreements affecting the use,
enjoyment or occupancy of the Premises, the Improvements, the Fixtures, or the
Equipment or any portion thereof now or hereafter entered into, whether before
or after the filing by or against Borrower of any petition for relief under the
Bankruptcy Code and all reciprocal easement agreements, license agreements and
other agreements with Pad Owners (hereinafter collectively referred to as the
“Leases”), together with all cash or security deposits, lease termination
payments, advance rentals and payments of similar nature and guarantees or other
security held by, or issued in favor of, Borrower in connection therewith to the
extent of Borrower’s right or interest therein and all remainders, reversions
and other rights and estates appurtenant thereto, and all base, fixed,
percentage or additional rents, and other rents, oil and gas or other mineral
royalties, and bonuses, issues, profits and rebates and refunds or other
payments made by any Governmental Authority from or relating to the Premises,
the Improvements, the Fixtures or the Equipment plus all rents, common area
charges and other payments now existing or hereafter arising, whether paid or
accruing before or after the filing by or against Borrower of any petition for
relief under the Bankruptcy Code (herein, collectively, the “Rents”) and all
proceeds from the sale or other disposition of the Leases and the right to
receive and apply the Rents to the payment of the Debt;
 
(g) all proceeds of and any unearned premiums on any insurance policies covering
the Premises, the Improvements, the Fixtures, the Rents or the Equipment,
including, without limitation, the right to receive and apply the proceeds of
any insurance, judgments, or settlements made in lieu thereof, for damage to the
Premises, the Improvements, the Fixtures or the Equipment and all refunds or
rebates of Impositions, and interest paid or payable with respect thereto;
 
-3-

--------------------------------------------------------------------------------

 
(h) all deposit accounts, securities accounts, funds or other accounts
maintained or deposited with Lender, or its assigns, in connection herewith,
including, without limitation, the Security Deposit Account (to the extent
permitted by law), the Central Account, the Basic Carrying Costs Sub-Account,
the Basic Carrying Costs Escrow Account, the Debt Service Payment Sub-Account,
the Recurring Replacement Reserve Sub-Account, the Recurring Replacement Reserve
Escrow Account, the Reletting Reserve Sub-Account, the Reletting Reserve Escrow
Account, the Operation and Maintenance Expense Sub-Account, the Operation and
Maintenance Expense Escrow Account, the Curtailment Reserve Escrow Account, the
Curtailment Reserve Sub-Account, and all monies and investments deposited or to
be deposited in such accounts;
 
(i) all accounts receivable, contract rights, franchises, interests, estate or
other claims, both at law and in equity, now existing or hereafter arising, and
relating to the Premises, the Improvements, the Fixtures or the Equipment, not
included in Rents;
 
(j) all now existing or hereafter arising claims against any Person with respect
to any damage to the Premises, the Improvements, the Fixtures or the Equipment,
including, without limitation, damage arising from any defect in or with respect
to the design or construction of the Improvements, the Fixtures or the Equipment
and any damage resulting therefrom;
 
(k) all deposits or other security or advance payments, including rental
payments now or hereafter made by or on behalf of Borrower to others, with
respect to (i) insurance policies, (ii) utility services, (iii) cleaning,
maintenance, repair or similar services, (iv) refuse removal or sewer service,
(v) parking or similar services or rights and (vi) rental of Equipment, if any,
relating to or otherwise used in the operation of the Premises, the
Improvements, the Fixtures or the Equipment;
 
(l) all intangible property now or hereafter relating to the Premises, the
Improvements, the Fixtures or the Equipment or its operation, including, without
limitation, software, letter of credit rights, trade names, trademarks
(including, without limitation, any licenses of or agreements to license trade
names or trademarks now or hereafter entered into by Borrower), logos, building
names and goodwill;
 
(m) all now existing or hereafter arising advertising material, guaranties,
warranties, building permits, other permits, licenses, plans and specifications,
shop and working drawings, soil tests, appraisals and other documents, materials
and/or personal property of any kind now or hereafter existing in or relating to
the Premises, the Improvements, the Fixtures, and the Equipment;
 
(n) all now existing or hereafter arising drawings, designs, plans and
specifications prepared by architects, engineers, interior designers, landscape
designers and any other consultants or professionals for the design,
development, construction, repair and/or improvement of the Property, as amended
from time to time;
 
(o) the right, in the name of and on behalf of Borrower, to appear in and defend
any now existing or hereafter arising action or proceeding brought with respect
to the Premises, the Improvements, the Fixtures or the Equipment as set forth
herein and to commence any action or proceeding to protect the interest of
Lender in the Premises, the Improvements, the Fixtures or the Equipment as set
forth herein;
 
-4-

--------------------------------------------------------------------------------

 
(p) all agreements, grants of easements and/or rights-of-way, reciprocal
easement agreements, permits, declarations of covenants, conditions and
restrictions, disposition and development agreements, planned unit development
agreements, management or parking agreements, party wall agreements or other
instruments affecting the Property and all proceeds or income received with
respect thereto; and
 
(q) all proceeds, products, substitutions and accessions (including claims and
demands therefor) of each of the foregoing.

All of the foregoing items (a) through (q), together with all of the right,
title and interest of Borrower therein, are collectively referred to as the
“Property”.
 
TO HAVE AND TO HOLD the above granted and described Property unto Trustee, in
trust, for the proper use and benefit of Lender and the successors and assigns
of Lender and/or Trustee, as applicable, in fee simple, forever.
 
PROVIDED, ALWAYS, and these presents are upon this express condition, if
Borrower shall well and truly pay and discharge the Debt and perform and observe
the terms, covenants and conditions set forth in the Loan Documents, Lender
shall request Trustee to reconvey the Property without warranty to the persons
legally entitled thereto at the expense of Borrower.
 
AND Borrower covenants with and warrants to Lender that:
 
ARTICLE I: DEFINITIONS
 
Section 1.01. Certain Definitions. 
 
For all purposes of this Security Instrument, except as otherwise expressly
provided or unless the context clearly indicates a contrary intent:
 
(i) the capitalized terms defined in this Section have the meanings assigned to
them in this Section, and include the plural as well as the singular;
 
(ii) all accounting terms not otherwise defined herein have the meanings
assigned to them in accordance with GAAP; and
 
(iii) the words “herein”, “hereof”, and “hereunder” and other words of similar
import refer to this Security Instrument as a whole and not to any particular
Section or other subdivision.
 
“Adjusted Net Cash Flow” shall mean on any determination date, the Pro-Forma Net
Operating Income less (a) the Recurring Replacement Monthly Installment for the
Property multiplied by twelve (12), (b) the Reletting Reserve Monthly
Installment for the Property multiplied by twelve (12), and (c) Net Capital
Expenditures for the Property to be incurred (as estimated by Lender, in its
reasonable discretion) for the subsequent twelve (12) month period. The Adjusted
Net Cash Flow shall be calculated by Lender in accordance with the terms of this
Security Instrument.
 
-5-

--------------------------------------------------------------------------------

 
“Affiliate” of any specified Person shall mean any other Person directly or
indirectly Controlling or Controlled by or under direct or indirect common
Control with such specified Person.
 
“Annual Budget” shall mean an annual budget submitted by Borrower to Lender in
accordance with the terms of Section 2.09 hereof.
 
“Appraisal” shall mean the appraisal of the Property and all supplemental
reports or updates thereto previously delivered to Lender in connection with the
Loan.
 
“Appraiser” shall mean the Person who prepared the Appraisal.
 
“Approved Annual Budget” shall mean each Annual Budget approved or deemed
approved by Lender in accordance with terms hereof.
 
“Approved Manager Standard” shall mean the standard of business operations,
practices and procedures customarily employed by entities which possess the
Minimum Manager Credentials.
 
“Architect” shall have the meaning set forth in Section 3.04(b)(i) hereof.
 
“Assignment” shall mean the Assignment of Leases and Rents and Security Deposits
of even date herewith relating to the Property given by Borrower to Lender.
 
“Bank” shall mean the bank, trust company, savings and loan association or
savings bank designated by Lender, in its sole and absolute discretion, in which
the Central Account shall be located.
 
“Bankruptcy Code” shall mean 11 U.S.C. §101 et seq., as amended from time to
time.
 
“Basic Carrying Costs” shall mean the sum of the following costs associated with
the Property: (a) Real Estate Taxes and (b) insurance premiums.
 
“Basic Carrying Costs Escrow Account” shall mean the Escrow Account maintained
pursuant to Section 5.06 hereof.
 
“Basic Carrying Costs Monthly Installment” shall mean Lender’s reasonable
estimate of one-twelfth (1/12th) of the annual amount for Basic Carrying Costs.
“Basic Carrying Costs Monthly Installment” shall also include, if required by
Lender, a sum of money which, together with such monthly installments, will be
sufficient to make the payment of each such Basic Carrying Cost at least thirty
(30) days prior to the date initially due. Should such Basic Carrying Costs not
be ascertainable at the time any monthly deposit is required to be made, the
Basic Carrying Costs Monthly Installment shall be determined by Lender in its
reasonable discretion on the basis of the aggregate Basic Carrying Costs for the
prior Fiscal Year or month or the prior payment period for such cost. As soon as
the Basic Carrying Costs are fixed for the then current Fiscal Year, month or
period, the next ensuing Basic Carrying Costs Monthly Installment shall be
adjusted to reflect any deficiency or surplus in prior monthly payments. If at
any time during the term of the Loan Lender determines that there will be
insufficient funds in the Basic Carrying Costs Escrow Account to make payments
when they become due and payable, Lender shall have the right to adjust the
Basic Carrying Costs Monthly Installment such that there will be sufficient
funds to make such payments.
 
-6-

--------------------------------------------------------------------------------

 
“Basic Carrying Costs Sub-Account” shall mean the Sub-Account of the Central
Account established pursuant to Section 5.02 into which the Basic Carrying Costs
Monthly Installments shall be deposited.
 
“Borrower Account” shall mean an Eligible Account maintained in the name of
Borrower.
 
"Budget" shall have the meaning ascribed to such term in Section 5.07 hereof.
 
“Business Day” shall mean any day other than (a) a Saturday or Sunday, or (b) a
day on which banking and savings and loan institutions in the State of New York
or the State of North Carolina are authorized or obligated by law or executive
order to be closed, or at any time during which the Loan is an asset of a
Securitization, the cities, states and/or commonwealths used in the comparable
definition of “Business Day” in the Securitization documents.
 
“Capital Expenditures” shall mean for any period, the amount expended for items
capitalized under GAAP including expenditures for building improvements or major
repairs, leasing commissions and tenant improvements.
 
“Cash Expenses” shall mean for any period, the operating expenses for the
Property as set forth in an Approved Annual Budget to the extent that such
expenses are actually incurred by Borrower minus payments into the Basic
Carrying Costs Sub-Account, the Debt Service Payment Sub-Account, the Reletting
Reserve Sub-Account and the Recurring Replacement Reserve Sub-Account.
 
“Central Account” shall mean an Eligible Account, maintained at the Bank, in the
name of Lender or its successors or assigns (as secured party) as may be
designated by Lender.
 
“Closing Date” shall mean the date of the Note.
 
“Code” shall mean the Internal Revenue Code of 1986, as amended and as it may be
further amended from time to time, any successor statutes thereto, and
applicable U.S. Department of Treasury regulations issued pursuant thereto.
 
“Condemnation Proceeds” shall mean all of the proceeds in respect of any Taking
or purchase in lieu thereof.
 
“Contractual Obligation” shall mean, as to any Person, any provision of any
security issued by such Person or of any agreement, instrument or undertaking to
which such Person is a party or by which it or any of the property owned by it
is bound.
 
-7-

--------------------------------------------------------------------------------

 
“Control” means, when used with respect to any specific Person, the possession,
directly or indirectly, of the power to direct or cause the direction of the
management and policies of such Person whether through ownership of voting
securities, beneficial interests, by contract or otherwise. The definition is to
be construed to apply equally to variations of the word “Control” including
“Controlled,” “Controlling” or “Controlled by.”
 
“CPI” shall mean “The Consumer Price Index (New Series) (Base Period
1982-84=100) (all items for all urban consumers)” issued by the Bureau of Labor
Statistics of the United States Department of Labor (the “Bureau”). If the CPI
ceases to use the 1982-84 average equaling 100 as the basis of calculation, or
if a change is made in the term, components or number of items contained in said
index, or if the index is altered, modified, converted or revised in any other
way, then the index shall be adjusted to the figure that would have been arrived
at had the change in the manner of computing the index in effect at the date of
this Security Instrument not been altered. If at any time during the term of
this Security Instrument the CPI shall no longer be published by the Bureau,
then any comparable index issued by the Bureau or similar agency of the United
States issuing similar indices shall be used in lieu of the CPI.
 
“Current Month” shall mean the period from the eleventh (11th) day of each month
through and including the tenth (10th) day of the following month.
 
"Curtailment Reserve Escrow Account" shall mean the Escrow Account maintained
pursuant to Section 5.11 hereof into which sums shall be deposited during an O&M
Operative Period.
 
"Curtailment Reserve Sub-Account" shall mean the Sub-Account of the Central
Account established pursuant to Section 5.02 hereof.
 
“Debt” shall mean the principal of, prepayment premium (if any) and interest on
the Note and all other obligations, liabilities or sums due or to become due
under, or advanced in accordance herewith to protect the security of, the
Security Instrument, the Note or any other Loan Document, including, without
limitation, interest on said obligations, liabilities or sums.
 
“Debt Service Coverage” shall mean the quotient obtained by dividing Adjusted
Net Cash Flow for the Property for the specified period by the sum of the
aggregate payments of interest and principal due for such specified period under
the Note (determined as of the date the calculation of Debt Service Coverage is
required or requested hereunder).
 
“Debt Service Payment Sub-Account” shall mean the Sub-Account of the Central
Account established pursuant to Section 5.02 hereof into which the Required Debt
Service Payment shall be deposited.
 
“Default” shall mean any Event of Default or event which would constitute an
Event of Default if all requirements in connection therewith for the giving of
notice, the lapse of time, and the happening of any further condition, event or
act, had been satisfied.
 
"Default Collateral" shall have the meaning ascribed to such term in Section
18.32 hereof.
 
-8-

--------------------------------------------------------------------------------

 
“Default Rate” shall mean the lesser of (a) the highest rate allowable at law
and (b) five percent (5%) above the interest rate set forth in the Note.
 
“Default Rate Interest” shall mean, to the extent the Default Rate becomes
applicable, interest in excess of the interest which would have accrued on (a)
the Principal Amount and (b) any accrued but unpaid interest, if the Default
Rate was not applicable.
 
“Development Laws” shall mean all applicable subdivision, zoning, environmental
protection, wetlands protection, or land use laws or ordinances, and any and all
applicable rules and regulations of any Governmental Authority promulgated
thereunder or related thereto.
 
“Eligible Account” shall mean a segregated account which is either (a) an
account or accounts maintained with a federal or state chartered depository
institution or trust company the long term unsecured debt obligations of which
are rated by each of the Rating Agencies (or, if not rated by Fitch, Inc.
(“Fitch”), otherwise acceptable to Fitch, as confirmed in writing that such
account would not, in and of itself, result in a downgrade, qualification or
withdrawal of the then current ratings assigned to any certificates issued in
connection with a Securitization) in its second highest rating category at all
times (or, in the case of the Basic Carrying Costs Escrow Account, the long term
unsecured debt obligations of which are rated at least “AA” (or its equivalent))
by each of the Rating Agencies (or, if not rated by Fitch, otherwise acceptable
to Fitch, as confirmed in writing that such account would not, in and of itself,
result in a downgrade, qualification or withdrawal of the then current ratings
assigned to any certificates issued in connection with a Securitization) or, if
the funds in such account are to be held in such account for less than thirty
(30) days, the short term obligations of which are rated by each of the Rating
Agencies (or, if not rated by Fitch, otherwise acceptable to Fitch, as confirmed
in writing that such account would not, in and of itself, result in a downgrade,
qualification or withdrawal of the then current ratings assigned to any
certificates issued in connection with a Securitization) in its second highest
rating category at all times or (b) a segregated trust account or accounts
maintained with a federal or state chartered depository institution or trust
company acting in its fiduciary capacity which, in the case of a state chartered
depository institution is subject to regulations substantially similar to 12
C.F.R. § 9.10(b), having in either case a combined capital and surplus of at
least $100,000,000 and subject to supervision or examination by federal and
state authority, or otherwise acceptable (as evidenced by a written confirmation
from each Rating Agency that such account would not, in and of itself, cause a
downgrade, qualification or withdrawal of the then current ratings assigned to
any certificates issued in connection with a Securitization) to each Rating
Agency, which may be an account maintained by Lender or its agents. Eligible
Accounts may bear interest. The title of each Eligible Account shall indicate
that the funds held therein are held in trust for the uses and purposes set
forth herein.

“Engineer” shall have the meaning set forth in Section 3.04(b)(i) hereof.
 
“Engineering Report” shall mean the engineering report for the Property and any
supplements or updates thereto, previously delivered to Lender in connection
with the Loan.
 
-9-

--------------------------------------------------------------------------------

 
“Environmental Problem” shall mean any of the following:
 
(a) the presence of any Hazardous Material on, in, under, or above all or any
portion of the Property;
 
(b) the release or threatened release of any Hazardous Material from or onto the
Property;
 
(c) the violation or threatened violation of any Environmental Statute with
respect to the Property; or
 
(d) the failure to obtain or to abide by the terms or conditions of any permit
or approval required under any Environmental Statute with respect to the
Property.
 
A condition described above shall be an Environmental Problem regardless of
whether or not any Governmental Authority has taken any action in connection
with the condition and regardless of whether that condition was in existence on
or before the date hereof.
 
“Environmental Report” shall mean the environmental audit report for the
Property and any supplements or updates thereto, previously delivered to Lender
in connection with the Loan.
 
“Environmental Statute” shall mean any federal, state or local statute,
ordinance, rule or regulation, any judicial or administrative order (whether or
not on consent) or judgment applicable to Borrower or the Property including,
without limitation, any judgment or settlement based on common law theories, and
any provisions or condition of any permit, license or other authorization
binding on Borrower relating to (a) the protection of the environment or the
health of persons (including employees) from actual or potential exposure (or
effects of exposure) to any actual or potential release, discharge, disposal or
emission (whether past or present) of any Hazardous Materials or (b) the
manufacture, processing, distribution, use, treatment, storage, disposal,
transport or handling of any Hazardous Materials, including, but not limited to,
the Comprehensive Environmental Response, Compensation and Liability Act of 1980
(“CERCLA”), as amended by the Superfund Amendments and Reauthorization Act of
1986, 42 U.S.C. §9601 et seq., the Solid Waste Disposal Act, as amended by the
Resource Conservation and Recovery Act of 1976, as amended by the Solid and
Hazardous Waste Amendments of 1984, 42 U.S.C. §6901 et seq., the Federal Water
Pollution Control Act, as amended by the Clean Water Act of 1977, 33 U.S.C.
§1251 et seq., the Toxic Substances Control Act of 1976, 15 U.S.C. §2601
et seq., the Emergency Planning and Community Right-to-Know Act of 1986, 42
U.S.C. §1101 et seq., the Clean Air Act of 1966, as amended, 42 U.S.C. §7401
et seq., the National Environmental Policy Act of 1975, 42 U.S.C. §4321, the
Rivers and Harbors Act of 1899, 33 U.S.C. §401 et seq., the Endangered Species
Act of 1973, as amended, 16 U.S.C. §1531 et seq., the Occupational Safety and
Health Act of 1970, as amended, 29 U.S.C. §651 et seq., and the Safe Drinking
Water Act of 1974, as amended, 42 U.S.C. §300(f) et seq., and all rules,
regulations and guidance documents promulgated or published thereunder.
 
“Equipment” shall have the meaning set forth in granting clause (d) of this
Security Instrument.
 
“ERISA” shall mean the Employee Retirement Income Security Act of 1974, as
amended from time to time, and the regulations promulgated thereunder. Section
references to ERISA are to ERISA, as in effect at the date of this Security
Instrument and, as of the relevant date, any subsequent provisions of ERISA,
amendatory thereof, supplemental thereto or substituted therefor.
 
-10-

--------------------------------------------------------------------------------

“ERISA Affiliate” shall mean any corporation or trade or business that is a
member of any group of organizations (a) described in Section 414(b) or (c) of
the Code of which Borrower or Guarantor is a member and (b) solely for purposes
of potential liability under Section 302(c)(11) of ERISA and Section 412(c)(11)
of the Code and the lien created under Section 302(f) of ERISA and Section
412(n) of the Code, described in Section 414(m) or (o) of the Code of which
Borrower or Guarantor is a member.
 
“Escrow Account” shall mean each of the Basic Carrying Costs Escrow Account, the
Recurring Replacement Reserve Escrow Account, the Reletting Reserve Escrow
Account, the Operation and Maintenance Expense Escrow Account and the
Curtailment Reserve Escrow Account, each of which shall be an Eligible Account
or book entry sub-account of an Eligible Account.
 
“Event of Default” shall have the meaning set forth in Section 13.01 hereof.
 
“Extraordinary Expense” shall mean an extraordinary operating expense or capital
expense not set forth in the Approved Annual Budget or allotted for in the
Recurring Replacement Reserve Sub-Account or the Reletting Reserve Sub-Account.
 
“Fiscal Year” shall mean the twelve (12) month period commencing on January 1
and ending on December 31 during each year of the term of this Security
Instrument, or such other fiscal year of Borrower as Borrower may select from
time to time with the prior written consent of Lender.
 
“Fixtures” shall have the meaning set forth in granting clause (d) of this
Security Instrument.
 
“Force Majeure” shall mean strikes, lockouts, labor disputes, acts of God,
governmental restrictions, regulations or controls, enemy or hostile
governmental actions, terrorist acts, civil commotion, insurrection, revolution,
sabotage or fire or other casualty or other events beyond the reasonable control
of Borrower and/or its Affiliates, but Borrower’s and/or its Affiliates’ lack of
funds in and of itself shall not be deemed a cause beyond the control of
Borrower and/or its Affiliates.
 
“GAAP” shall mean generally accepted accounting principles in the United States
of America, as of the date of the applicable financial report, consistently
applied.
 
“General Partner” shall mean, if Borrower is a partnership, each general partner
of Borrower and, if Borrower is a limited liability company, each managing
member of Borrower and in each case, if applicable, each general partner or
member of such general partner or managing member.
 
“Governmental Authority” shall mean, with respect to any Person, any federal or
State government or other political subdivision thereof and any entity,
including any regulatory or administrative authority or court, exercising
executive, legislative, judicial, regulatory or administrative or
quasi-administrative functions of or pertaining to government, and any
arbitration board or tribunal, in each case having jurisdiction over such
applicable Person or such Person’s property and any stock exchange on which
shares of capital stock of such Person are listed or admitted for trading.
 
-11-

--------------------------------------------------------------------------------

 
“Guarantor” shall mean any Person guaranteeing, in whole or in part, the
obligations of Borrower under the Loan Documents.
 
“Guaranty” shall mean that certain Indemnity and Guaranty executed and delivered
by Lightstone Value Plus Real Estate Investment Trust, Inc., dated as of the
date hereof.
 
“Hazardous Material” shall mean any flammable, explosive or radioactive
materials, hazardous materials or wastes, hazardous or toxic substances,
pollutants, asbestos or any material containing asbestos, molds, spores and
fungus which may pose a risk to human health or the environment or any other
substance or material as defined in or regulated by any Environmental Statutes.
 
“Impositions” shall mean all taxes (including, without limitation, all real
estate, ad valorem, sales (including those imposed on lease rentals), use,
single business, gross receipts, value added, intangible, transaction, privilege
or license or similar taxes), assessments (including, without limitation, all
assessments for public improvements or benefits, whether or not commenced or
completed prior to the date hereof and whether or not commenced or completed
within the term of this Security Instrument), ground rents, water, sewer or
other rents and charges, excises, levies, fees (including, without limitation,
license, permit, inspection, authorization and similar fees), and all other
governmental charges, in each case whether general or special, ordinary or
extraordinary, or foreseen or unforeseen, of every character in respect of the
Property and/or any Rent (including all interest and penalties thereon), which
at any time prior to, during or in respect of the term hereof may be assessed or
imposed on or in respect of or be a lien upon (a) Borrower (including, without
limitation, all franchise, single business or other taxes imposed on Borrower
for the privilege of doing business in the jurisdiction in which the Property or
any other collateral delivered or pledged to Lender in connection with the Loan
is located) or Lender, (b) the Property or any part thereof or any Rents
therefrom or any estate, right, title or interest therein, or (c) any occupancy,
operation, use or possession of, or sales from, or activity conducted on, or in
connection with the Property, or any part thereof, or the leasing or use of the
Property, or any part thereof, or the acquisition or financing of the
acquisition of the Property, or any part thereof, by Borrower.
 
“Improvements” shall have the meaning set forth in granting clause (b) of this
Security Instrument.

“Indemnified Parties” shall have the meaning set forth in Section 12.01 hereof.
 
“Independent” shall mean, when used with respect to any Person, a Person who (a)
is in fact independent, (b) does not have any direct financial interest or any
material indirect financial interest in Borrower, or in any Affiliate of
Borrower or any constituent partner, shareholder, member or beneficiary of
Borrower, (c) is not connected with Borrower or any Affiliate of Borrower or any
constituent partner, shareholder, member or beneficiary of Borrower as an
officer, employee, promoter, underwriter, trustee, partner, director or person
performing similar functions and (d) is not a member of the immediate family of
a Person defined in (b) or (c) above.
 
-12-

--------------------------------------------------------------------------------

 
"Independent Director" shall have the meaning ascribed to such term in Section
2.02 hereof.
 
“Initial Recurring Reserve Deposit” shall equal the amount required to be
deposited by Borrower into the Recurring Replacement Reserve Escrow Account on
the Closing Date as set forth on Exhibit B.
 
“Initial Reletting Reserve Deposit” shall equal the amount set forth on Exhibit
B attached hereto and made a part hereof.
 
“Insolvency Opinion” shall have the meaning set forth in Section 2.02(g)(xix)
hereof.
 
“Institutional Lender” shall mean any of the following Persons: (a) any bank,
savings and loan association, savings institution, trust company or national
banking association, acting for its own account or in a fiduciary capacity,
(b) any charitable foundation, (c) any insurance company or pension and/or
annuity company, (d) any fraternal benefit society, (e) any pension, retirement
or profit sharing trust or fund within the meaning of Title I of ERISA or for
which any bank, trust company, national banking association or investment
adviser registered under the Investment Advisers Act of 1940, as amended, is
acting as trustee or agent, (f) any investment company or business development
company, as defined in the Investment Company Act of 1940, as amended, (g) any
small business investment company licensed under the Small Business Investment
Act of 1958, as amended, (h) any broker or dealer registered under the
Securities Exchange Act of 1934, as amended, or any investment adviser
registered under the Investment Adviser Act of 1940, as amended, (i) any
government, any public employees’ pension or retirement system, or any other
government agency supervising the investment of public funds, or (j) any other
entity all of the equity owners of which are Institutional Lenders; provided
that each of said Persons shall have net assets in excess of $1,000,000,000 and
a net worth in excess of $500,000,000, be in the business of making commercial
mortgage loans, secured by properties of like type, size and value as the
Property and have a long term credit rating which is not less than “BBB-” (or
its equivalent) from the Rating Agency.
 
“Insurance Proceeds” shall mean all of the proceeds received under the insurance
policies required to be maintained by Borrower pursuant to Article III hereof.
 
“Insurance Requirements” shall mean all terms of any insurance policy required
by this Security Instrument, all requirements of the issuer of any such policy,
and all regulations and then current standards applicable to or affecting the
Property or any use or condition thereof, which may, at any time, be recommended
by the Board of Fire Underwriters, if any, having jurisdiction over the
Property, or such other Person exercising similar functions.
 
“Interest Rate” shall have the meaning set forth in the Note.
 
“Late Charge” shall have the meaning set forth in Section 13.09 hereof.
 
-13-

--------------------------------------------------------------------------------

 
“Leases” shall have the meaning set forth in granting clause (f) of this
Security Instrument.
 
“Legal Requirement” shall mean as to any Person, the certificate of
incorporation, by-laws, certificate of limited partnership, agreement of limited
partnership or other organization or governing documents of such Person, and any
law, statute, order, code, ordinance, judgment, decree, injunction, treaty, rule
or regulation (including, without limitation, Environmental Statutes,
Development Laws and Use Requirements) or determination of an arbitrator or a
court or other Governmental Authority and all covenants, agreements,
restrictions and encumbrances contained in any instruments, in each case
applicable to or binding upon such Person or any of its property or to which
such Person or any of its property is subject.

“Lender” shall mean the Lender named herein and its successors or assigns.
 
“Loan” shall have the meaning set forth in the Recitals hereto.
 
“Loan Amount” shall have the meaning set forth in the Recitals hereto.
 
“Loan Documents” shall mean this Security Instrument, the Note, the Guaranty,
the Assignment, and any and all other agreements, instruments, certificates or
documents executed and delivered by Borrower, Borrower or any Affiliate of
Borrower in connection with the Loan.
 
“Loan Year” shall mean each 365 day period (or 366 day period if the month of
February in a leap year is included) commencing on the first day of the month
following the Closing Date (provided, however, that the first Loan Year shall
also include the period from the Closing Date to the end of the month in which
the Closing Date occurs).
 
“Loss Proceeds” shall mean, collectively, all Insurance Proceeds and all
Condemnation Proceeds.
 
“Major Space Lease” shall mean any Space Lease of a tenant or Affiliate of such
tenant where such tenant or such Affiliate leases, in the aggregate, five
percent (5%) or more of 177,075 square feet.
 
“Management Agreement” shall have the meaning set forth in Section 7.02 hereof.
 
“Manager” shall mean Borrower and any other Person, other than Borrower, which
manages the Property on behalf of Borrower.
 
“Manager Certification” shall have the meaning set forth in Section 2.09 hereof.
 
"Manager Control Notice" shall have the meaning ascribed to such term in Section
7.02 hereof.
 
“Material Adverse Effect” shall mean any event or condition that has a material
adverse effect on (a) the Property, (b) the business, profits, management,
operations or condition (financial or otherwise) of Borrower, (c) the
enforceability, validity, perfection or priority of the lien or security
interest of any Loan Document or (d) the ability of Borrower to perform any
material obligations under any Loan Document.
 
-14-

--------------------------------------------------------------------------------

 
“Maturity”, when used with respect to the Note, shall mean the Maturity Date set
forth in the Note, as same may be extended in accordance with the Note, or such
other date pursuant to the Note on which the final payment of principal, and
premium, if any, on the Note becomes due and payable as therein or herein
provided, whether at Stated Maturity or by declaration of acceleration, or
otherwise.
 
“Maturity Date” shall mean the Maturity Date set forth in the Note.
 
“Minimum Manager Credentials” shall mean (i) the employment of a senior
executive who has the responsibility for oversight of the Property and has at
least seven (7) years’ experience in the management of outlet shopping centers
and (ii) the management of not less than five (5) shopping center properties
(excluding the Property) having an aggregate leasable square footage of not less
than the lesser of (a) one million leasable square feet and (b) five (5) times
the leasable square feet of the Property.
 
“Multiemployer Plan” shall mean a multiemployer plan defined as such in Section
3(37) of ERISA to which contributions have been, or were required to have been,
made by Borrower, Guarantor or any ERISA Affiliate and which is covered by Title
IV of ERISA.
 
“Net Capital Expenditures” shall mean for any period the amount by which Capital
Expenditures during such period exceeds reimbursements for such items during
such period from any fund established pursuant to the Loan Documents.
 
“Net Operating Income” shall mean in each Fiscal Year or portion thereof during
the term hereof, Operating Income less Operating Expenses.
 
“Net Proceeds” shall mean the excess of (a)(i) the purchase price (at
foreclosure or otherwise) actually received by Lender with respect to the
Property as a result of the exercise by Lender of its rights, powers, privileges
and other remedies after the occurrence of an Event of Default, or (ii) in the
event that Lender (or Lender’s nominee) is the purchaser at foreclosure by
credit bid, then the amount of such credit bid, in either case, over (b) all
costs and expenses, including, without limitation, all attorneys’ fees and
disbursements and any brokerage fees, if applicable, incurred by Lender in
connection with the exercise of such remedies, including the sale of such
Property after a foreclosure against the Property.
 
“Note” shall have the meaning set forth in the Recitals hereto.
 
"O&M Operative Period" shall mean the period of time commencing upon the
determination by Lender that the Debt Service Coverage (tested quarterly except
during the continuance of an O&M Operative Period, in which event Debt Service
Coverage shall be tested monthly and shall be calculated based upon information
contained in the reports furnished to Lender pursuant to Section 2.09 hereof) is
less than 1.05:1.0 for the preceding fiscal quarter and terminating, in each
case, on the Payment Date next succeeding the date upon which Lender has
determined that the Debt Service Coverage has been 1.05:1 or greater for the
immediately preceding two fiscal quarters.
 
-15-

--------------------------------------------------------------------------------

 
“OFAC List” means the list of specially designated nationals and blocked persons
subject to financial sanctions that is maintained by the U.S. Treasury
Department, Office of Foreign Assets Control and accessible through the internet
website www.treas.gov/ofac/t11sdn.pdf.
 
“Officer’s Certificate” shall mean a certificate delivered to Lender by Borrower
which is signed on behalf of Borrower by an authorized representative of
Borrower which states that the items set forth in such certificate are true,
accurate and complete in all respects.
 
“Operating Expenses” shall mean, in each Fiscal Year or portion thereof during
the term hereof, all expenses directly attributable to the operation, repair
and/or maintenance of the Property including, without limitation, (a)
Impositions, (b) insurance premiums, (c) management fees, whether or not
actually paid, equal to the greater of the actual management fees or expenses
and four percent (4%) of annual “base” or “fixed” Rent due under the Leases and
(d) costs attributable to the operation, repair and maintenance of the systems
for heating, ventilating and air conditioning the Improvements and actually paid
for by Borrower. Operating Expenses shall not include interest, principal and
premium, if any, due under the Note or otherwise in connection with the Debt,
income taxes, Capital Expenditures, any non-cash charge or expense such as
depreciation, amortization or any item of expense otherwise includable in
Operating Expenses which is paid directly by any tenant except real estate taxes
paid directly to any taxing authority by any tenant or contributions by Borrower
to any reserve funds required under the Loan Documents.
 
“Operating Income” shall mean, in each Fiscal Year or portion thereof during the
term hereof, all revenue derived by Borrower arising from the Property
including, without limitation, rental revenues (whether denominated as basic
rent, additional rent, escalation payments, electrical payments or otherwise)
and other fees and charges payable pursuant to Leases or otherwise in connection
with the Property, and the proceeds of business interruption, rent or other
similar insurance. Operating Income shall not include (a) Insurance Proceeds
(other than proceeds of rent, business interruption or other similar insurance
allocable to the applicable period) and Condemnation Proceeds (other than
Condemnation Proceeds arising from a temporary taking or the use and occupancy
of all or part of the applicable Property allocable to the applicable period),
or interest accrued on such Condemnation Proceeds, (b) proceeds of any
financing, (c) proceeds of any sale, exchange or transfer of the Property or any
part thereof or interest therein, (d) capital contributions or loans to Borrower
or an Affiliate of Borrower, (e) any item of income otherwise includable in
Operating Income but paid directly by any tenant to a Person other than Borrower
except for real estate taxes paid directly to any taxing authority by any
tenant, (f) any other extraordinary, non-recurring revenues, (g) Rent paid by or
on behalf of any lessee under a Space Lease which is the subject of any
proceeding or action relating to its bankruptcy, reorganization or other
arrangement pursuant to the Bankruptcy Code or any similar federal or state law
or which has been adjudicated a bankrupt or insolvent unless such Space Lease
has been affirmed by the trustee in such proceeding or action, (h) Rent paid by
or on behalf of any lessee under a Space Lease the demised premises of which are
not occupied either by such lessee or by a sublessee thereof, (i) Rent paid by
or on behalf of any lessee under a Space Lease in whole or partial consideration
for the termination of any Space Lease, (j) rent paid by or on behalf of lessees
under month-to-month Space Leases for lessees which have been in occupancy for
less than six (6) months, (k) rent paid by or on behalf of any lessee under a
Space Lease that is more than thirty (30) days in arrears in its obligations
under such Space Lease, (l) Rents paid by or on behalf of lessees who have given
notice that they will be vacating the premises demised under their respective
Space Leases more than thirty (30) days prior to the stated expiration date set
forth in such Space Leases, or (l) sales tax rebates from any Governmental
Authority.
 
-16-

--------------------------------------------------------------------------------

 
“Operation and Maintenance Expense Escrow Account” shall mean the Escrow Account
maintained pursuant to Section 5.09 hereof relating to the payment of Operating
Expenses (exclusive of Basic Carrying Costs).

“Operation and Maintenance Expense Sub-Account” shall mean the Sub-Account of
the Central Account established pursuant to Section 5.02 hereof into which sums
allocated for the payment of Cash Expenses, Net Capital Expenditures and
approved Extraordinary Expenses shall be deposited.
 
“Pad Owners” shall mean any owner of any fee interest in property contiguous to
or surrounded by the Property who has entered into or is subject to a reciprocal
easement agreement or other agreement or agreements with Borrower either (a) in
connection with an existing or potential improvement on such property or (b)
relating to or affecting the Property.
 
“Payment Date” shall have the meaning set forth in the Note.
 
“PBGC” shall mean the Pension Benefit Guaranty Corporation established under
ERISA, or any successor thereto.
 
“Permitted Encumbrances” shall have the meaning set forth in Section 2.05(a)
hereof.
 
“Person” shall mean any individual, corporation, limited liability company,
partnership, joint venture, estate, trust, unincorporated association, any
federal, state, county or municipal government or any bureau, department or
agency thereof and any fiduciary acting in such capacity on behalf of any of the
foregoing.
 
“Plan” shall mean an employee benefit or other plan established or maintained by
Borrower, Guarantor or any ERISA Affiliate during the five-year period ended
prior to the date of this Security Instrument or to which Borrower, Guarantor or
any ERISA Affiliate makes, is obligated to make or has, within the five year
period ended prior to the date of this Security Instrument, been required to
make contributions (whether or not covered by Title IV of ERISA or Section 302
of ERISA or Section 401(a) or 412 of the Code), other than a Multiemployer Plan.
 
“Premises” shall have the meaning set forth in granting clause (a) of this
Security Instrument.
 
“Principal Amount” shall mean the Loan Amount as such amount may be reduced from
time to time pursuant to the terms of this Security Instrument, the Note or the
other Loan Documents.
 
“Pro-Forma Net Operating Income” shall mean Pro-Forma Operating Income less
Pro-Forma Operating Expenses.
 
-17-

--------------------------------------------------------------------------------

 
“Pro-Forma Operating Expenses” shall mean projected aggregate annualized
Operating Expenses for the Property based on a trailing twelve (12)-month period
as reasonably adjusted by Lender to take into account, among other things,
anticipated increases or decreases in Operating Expenses.
 
“Pro-Forma Operating Income” shall mean the lesser of (i) projected aggregate
Operating Income for the Property for the immediately subsequent 12-month period
and (ii) actual aggregate Operating Income for the Property for the immediately
preceding 12-month period, as increased by scheduled rent increases set forth in
the Space Leases and rent anticipated from tenants under Space Leases relating
to any portion of the Premises which was previously not occupied provided such
tenants are then in occupancy pursuant to Space Leases entered into in
accordance with the terms of this Security Instrument and have paid all rents
due under the Space Lease without abatement, suspension, deferment, diminution,
reduction or other allowances for at least one full calendar month, in each case
as determined by Lender based on the most recent rent roll and such other
information as is required to be delivered by Borrower pursuant to Section 2.09
hereof and as reasonably adjusted by Lender to take into account, among other
things, a vacancy factor equal to the greater of (x) anticipated vacancies for
the succeeding 12-month period and (b) actual vacancies during the immediately
preceding 12-month period.
 
“Prohibited Person” means any Person identified on the OFAC List or any other
Person with whom a U.S. Person may not conduct business or transactions by
prohibition of Federal law or Executive Order of the President of the United
States of America.
 
“Property” shall have the meaning set forth in the granting clauses of this
Security Instrument.
 
“Property Agreements” shall mean all agreements, grants of easements and/or
rights-of-way, reciprocal easement agreements, permits, declarations of
covenants, conditions and restrictions, disposition and development agreements,
planned unit development agreements, management or parking agreements, party
wall agreements or other instruments affecting the Property, including, without
limitation any agreements with Pad Owners, but not including any brokerage
agreements, management agreements, service contracts, Space Leases or the Loan
Documents.
 
“Rating Agency” shall mean Standard & Poor’s Ratings Services, Inc., a division
of The McGraw-Hill Company, Inc. (“Standard & Poor’s”), Fitch, Inc., and Moody’s
Investors Service, Inc. (“Moody’s”), collectively, and any successor to any of
them; provided, however, that at any time after a Securitization, “Rating
Agency” shall mean those of the foregoing rating agencies that from time to time
rate the securities issued in connection with such Securitization.
 
“Real Estate Taxes” shall mean all real estate taxes, assessments (including,
without limitation, all assessments for public improvements or benefits, whether
or not commenced or completed prior to the date hereof and whether or not
commenced or completed within the term of this Security Instrument), water,
sewer or other rents and charges, and all other governmental charges, in each
case whether general or special, ordinary or extraordinary, or foreseen or
unforeseen, of every character in respect of the Property (including all
interest and penalties thereon), which at any time prior to, during or in
respect of the term hereof may be assessed or imposed on or in respect of or be
a lien upon the Property or any part thereof or any estate, right, title or
interest therein.
 
-18-

--------------------------------------------------------------------------------

 
“Realty” shall have the meaning set forth in Section 2.05(b) hereof.
 
"Recourse Distributions " shall have the meaning ascribed to such term in
Section 18.32 hereof.
 
“Recurring Replacement Expenditures” shall mean expenditures related to capital
repairs, replacements and improvements performed at the Property from time to
time.
 
“Recurring Replacement Monthly Installment” shall mean the amount per month as
set forth on Exhibit B attached hereto and made a part hereof.
 
“Recurring Replacement Reserve Escrow Account” shall mean the Escrow Account
maintained pursuant to Section 5.08 hereof relating to the payment of Recurring
Replacement Expenditures.
 
“Recurring Replacement Reserve Sub-Account” shall mean the Sub-Account of the
Central Account established pursuant to Section 5.02 hereof into which the
Recurring Replacement Monthly Installment shall be deposited.
 
“Reletting Expenditures” shall mean reasonable and actual out-of-pocket
expenditures payable to bona-fide third parties incurred by Borrower relating to
reletting of space at the Property and in connection with any brokerage
commissions due and payable, or any improvements and replacements required to be
made by Borrower (or reasonable and actual out-of-pocket expenditures paid to
tenants in connection with any improvements and replacements made by tenants at
the Property) under the terms of any Lease to prepare the relevant space for
occupancy by the tenant thereunder.
 
“Reletting Reserve Escrow Account” shall mean the Escrow Account maintained
pursuant to Section 5.07 hereof relating to the payment of Reletting
Expenditures.
 
“Reletting Reserve Monthly Installment” shall mean (a) the amount set forth on
Exhibit B attached hereto and made a part hereof plus (b) all sums received by
Borrower in connection with any cancellation, termination or surrender of any
Lease, including, without limitation, any surrender or cancellation fees,
buy-out fees, or reimbursements for tenant improvements and leasing commissions.
 
“Reletting Reserve Sub-Account” shall mean the Sub-Account of the Central
Account established pursuant to Section 5.02 hereof into which the Reletting
Reserve Monthly Installment shall be deposited.
 
“Rents” shall have the meaning set forth in granting clause (f) of this Security
Instrument.
 
“Rent Account” shall mean an Eligible Account, maintained at the Bank, in the
joint names of Borrower and Lender or its successors or assigns (as secured
party) as may be designated by Lender.
 
-19-

--------------------------------------------------------------------------------

 
“Rent Roll” shall have the meaning set forth in Section 2.05 (o) hereof.
 
“Required Debt Service Coverage” shall mean a Debt Service Coverage of not less
than 1.15:1.0.
 
“Required Debt Service Payment” shall mean, as of any Payment Date, the amount
of interest and principal then due and payable pursuant to the Note, together
with any other sums due thereunder, including, without limitation, any
prepayments required to be made or for which notice has been given under this
Security Instrument, Default Rate Interest and premium, if any, paid in
accordance therewith.

“Retention Amount” shall have the meaning set forth in Section 3.04(b)(vii)
hereof.
 
“Securities Act” shall mean the Securities Act of 1933, as the same shall be
amended from time to time.
 
“Securitization” shall mean a public or private offering of securities by Lender
or any of its Affiliates or their respective successors and assigns which are
collateralized, in whole or in part, by this Security Instrument.
 
“Security Deposit Account” shall have the meaning set forth in Section 5.01
hereof.
 
“Security Instrument” shall mean this Security Instrument as originally executed
or as it may hereafter from time to time be supplemented, amended, modified or
extended by one or more indentures supplemental hereto.
 
"Servicer" shall have the meaning ascribed to such term in Section 5.04 hereof.
 
“Single Purpose Entity” shall mean a corporation, partnership, joint venture,
limited liability company, trust or unincorporated association, which is formed
or organized solely for the purpose of holding, directly, an ownership interest
in the Property or a general partner interest in a Person, does not engage in
any business unrelated to the Property, does not have any assets other than
those related to its interest in the Property or a general partner interest in
such Person, or any indebtedness, other than as permitted by this Security
Instrument or the other Loan Documents, has its own separate books and records
and has its own accounts, in each case which are separate and apart from the
books and records and accounts of any other Person, holds itself out as being a
Person separate and apart from any other Person and which otherwise satisfies
the criteria of the Rating Agency, as in effect on the Closing Date, for a
special-purpose bankruptcy-remote entity.
 
“SNDA” shall have the meaning set forth in Section 7.02 hereof.
 
“Solvent” shall mean, as to any Person, that (a) the sum of the assets of such
Person, at a fair valuation, exceeds its liabilities, including contingent
liabilities, (b) such Person has sufficient capital with which to conduct its
business as presently conducted and as proposed to be conducted and (c) such
Person has not incurred debts, and does not intend to incur debts, beyond its
ability to pay such debts as they mature. For purposes of this definition,
“debt” means any liability on a claim, and “claim” means (a) a right to payment,
whether or not such right is reduced to judgment, liquidated, unliquidated,
fixed, contingent, matured, unmatured, disputed, undisputed, legal, equitable,
secured or unsecured, or (b) a right to an equitable remedy for breach of
performance if such breach gives rise to a payment, whether or not such right to
an equitable remedy is reduced to judgment, fixed, contingent, matured,
unmatured, disputed, undisputed, secured, or unsecured. With respect to any such
contingent liabilities, such liabilities shall be computed in accordance with
GAAP at the amount which, in light of all the facts and circumstances existing
at the time, represents the amount which can reasonably be expected to become an
actual or matured liability.
 
-20-

--------------------------------------------------------------------------------

 
“Space Leases” shall mean any Lease or sublease thereunder (including, without
limitation, any Major Space Lease) or any other agreement providing for the use
and occupancy of a portion of the Property as the same may be amended, renewed
or supplemented.
 
“State” shall mean any of the states which are members of the United States of
America.
 
“Stated Maturity”, when used with respect to the Note or any installment of
interest and/or principal payment thereunder, shall mean the date specified in
the Note as the fixed date on which a payment of principal and/or interest is
due and payable.
 
“Sub-Accounts” shall have the meaning set forth in Section 5.02 hereof.
 
“Substantial Casualty” shall have the meaning set forth in Section 3.04(a)(iv)
hereof.
 
“Sweep Period” shall mean the period of time during which either an Event of
Default or an O&M Operative Period shall have occurred and is continuing.
 
“Taking” shall mean a condemnation or taking pursuant to the lawful exercise of
the power of eminent domain.
 
"Termination Payment" shall have the meaning ascribed to such term in Section
5.07(b) hereof.
 
“Transfer” shall mean the conveyance, assignment, sale, mortgaging, encumbrance,
pledging, hypothecation, granting of a security interest in, granting of options
with respect to, or other disposition of (directly or indirectly, voluntarily or
involuntarily, by operation of law or otherwise, and whether or not for
consideration or of record) all or any portion of any legal or beneficial
interest (a) in all or any portion of the Property; (b) if Borrower or, if
Borrower is a partnership, any General Partner, is a corporation, in the stock
of Borrower or any General Partner; (c) if Borrower is a limited or general
partnership, joint venture, limited liability company, trust, nominee trust,
tenancy in common or other unincorporated form of business association or form
of ownership interest, in any Person having a legal or beneficial ownership in
Borrower, excluding any legal or beneficial interest in any constituent limited
partner, if Borrower is a limited partnership, or in any non-managing member, if
Borrower is a limited liability company, unless such interest would, or together
with all other direct or indirect interests in Borrower which were previously
transferred, aggregate 49% or more of the partnership or membership, as
applicable, interests in Borrower or would result in any Person who, as of the
Closing Date, did not own, directly or indirectly, 49% or more of the
partnership or membership, as applicable, interests in Borrower, owning,
directly or indirectly, 49% or more of the partnership or membership, as
applicable, interests in Borrower and excluding any legal or beneficial interest
in any General Partner unless such interest would, or together with all other
direct or indirect interest in the General Partner which were previously
transferred, aggregate 49% or more of the partnership or membership, as
applicable, interests in the General Partner (or result in a change in control
of the management of the General Partner from the individuals exercising such
control immediately prior to the conveyance or other disposition of such legal
or beneficial interest) and shall also include, without limitation to the
foregoing, the following: an installment sales agreement wherein Borrower agrees
to sell the Property or any part thereof or any interest therein for a price to
be paid in installments; an agreement by Borrower leasing all or substantially
all of the Property to one or more Persons pursuant to a single or related
transactions, or a sale, assignment or other transfer of, or the grant of a
security interest in, Borrower’s right, title and interest in and to any Leases
or any Rent; any instrument subjecting the Property to a condominium regime or
transferring ownership to a cooperative corporation; and the dissolution or
termination of Borrower or the merger or consolidation of Borrower with any
other Person.
 
-21-

--------------------------------------------------------------------------------

“Trustee” shall mean the Person or Persons identified in this Security
Instrument as the Trustee hereunder and its or their successors and assigns.
 
“UCC” shall mean the Uniform Commercial Code as in effect from time to time in
the State in which the Property is located.
 
“Unscheduled Payments” shall mean (a) all Loss Proceeds that Borrower has
elected or is required to apply to the repayment of the Debt pursuant to this
Security Instrument, the Note or any other Loan Documents, (b) any funds
representing a voluntary or involuntary principal prepayment and (c) any Net
Proceeds.
 
“Use Requirements” shall mean any and all building codes, permits, certificates
of occupancy or compliance, laws, regulations, or ordinances (including, without
limitation, health, pollution, fire protection, medical and day-care facilities,
waste product and sewage disposal regulations), restrictions of record,
easements, reciprocal easements, declarations or other agreements affecting the
use of the Property or any part thereof.
 
“Welfare Plan” shall mean an employee welfare benefit plan as defined in Section
3(1) of ERISA established or maintained by Borrower, Guarantor or any ERISA
Affiliate or that covers any current or former employee of Borrower, Guarantor
or any ERISA Affiliate.
 
“Work” shall have the meaning set forth in Section 3.04(a)(i) hereof.
 
ARTICLE II: REPRESENTATIONS, WARRANTIES
AND COVENANTS OF BORROWER
 
Section 2.01. Payment of Debt. Borrower will pay the Debt at the time and in the
manner provided in the Note and the other Loan Documents, all in lawful money of
the United States of America in immediately available funds.
 
Section 2.02. Representations, Warranties and Covenants of Borrower. Borrower
represents, warrants and covenants to Lender:
 
(a) Organization and Authority. Borrower (i) is a limited liability company,
general partnership, limited partnership or corporation, as the case may be,
duly organized, validly existing and in good standing under the laws of the
jurisdiction of its formation, (ii) has all requisite power and authority and
all necessary licenses and permits to own and operate the Property and to carry
on its business as now conducted and as presently proposed to be conducted and
(iii) is duly qualified, authorized to do business and in good standing in the
jurisdiction where the Property is located and in each other jurisdiction where
the conduct of its business or the nature of its activities makes such
qualification necessary. If Borrower is a limited liability company, limited
partnership or general partnership, each general partner or managing member, as
applicable, of Borrower which is a corporation is duly organized, validly
existing, and in good standing under the laws of the jurisdiction of its
incorporation.
 
-22-

--------------------------------------------------------------------------------

 
(b) Power. Borrower and, if applicable, each General Partner has full power and
authority to execute, deliver and perform, as applicable, the Loan Documents to
which it is a party, to make the borrowings thereunder, to execute and deliver
the Note and to grant to Lender a first lien on and security interest in the
Property, subject only to the Permitted Encumbrances.
 
(c) Authorization of Borrowing. The execution, delivery and performance of the
Loan Documents to which Borrower and/or Borrower is a party, the making of the
borrowings thereunder, the execution and delivery of the Note, the grant of the
liens on the Property pursuant to the Loan Documents to which Borrower and/or
Borrower is a party and the consummation of the Loan are within the powers of
Borrower and/or Borrower and have been duly authorized by Borrower and/or
Borrower and, if applicable, the General Partners, by all requisite action (and
Borrower hereby represents that no approval or action of any member, limited
partner or shareholder, as applicable, of Borrower is required to authorize any
of the Loan Documents to which Borrower is a party other than such approval or
action that has already been granted or taken) and will constitute the legal,
valid and binding obligation of Borrower, enforceable against Borrower in
accordance with their terms, except as enforcement may be stayed or limited by
bankruptcy, insolvency or similar laws affecting the enforcement of creditors’
rights generally and by general principles of equity (whether considered in
proceedings at law or in equity) and will not (i) violate any provision of its
partnership agreement or partnership certificate or certificate of incorporation
or by-laws, or operating agreement, or articles of organization, as applicable,
or, to its knowledge, any law, judgment, order, rule or regulation of any court,
arbitration panel or other Governmental Authority, domestic or foreign, or other
Person affecting or binding upon Borrower or the Property, or (ii) violate any
provision of any indenture, agreement, mortgage, deed of trust, contract or
other instrument to which Borrower or, if applicable, any General Partner is a
party or by which any of their respective property, assets or revenues are
bound, or be in conflict with, result in an acceleration of any obligation or a
breach of or constitute (with notice or lapse of time or both) a default or
require any payment or prepayment under, any such indenture, agreement,
mortgage, deed of trust, contract or other instrument, or (iii) result in the
creation or imposition of any lien, except those in favor of Lender as provided
in the Loan Documents to which it is a party.
 
(d) Consent. Neither Borrower nor, if applicable, any General Partner, is
required to obtain any consent, approval or authorization from, or to file any
declaration or statement with, any Governmental Authority or other agency in
connection with or as a condition to the execution, delivery or performance of
this Security Instrument, the Note or the other Loan Documents which has not
been so obtained or filed.
 
-23-

--------------------------------------------------------------------------------

 
(e) Intentionally Deleted.
 
(f) Other Agreements. Borrower is not a party to nor is otherwise bound by any
agreements or instruments which, individually or in the aggregate, are
reasonably likely to have a Material Adverse Effect. Neither Borrower nor, if
applicable, any General Partner, is in violation of its organizational documents
or other restriction or any agreement or instrument by which it is bound, or any
judgment, decree, writ, injunction, order or award of any arbitrator, court or
Governmental Authority, or any Legal Requirement, in each case, applicable to
Borrower or the Property, except for such violations that would not,
individually or in the aggregate, have a Material Adverse Effect.
 
(g) Maintenance of Existence. Borrower and, if applicable, General Partner at
all times since their formation have been duly formed and existing and shall
preserve and keep in full force and effect their existence as a Single Purpose
Entity.
 
(ii) Borrower and, if applicable, General Partner, at all times since their
organization have complied, and will continue to comply, with the provisions of
its certificate and agreement of partnership or certificate of incorporation and
by-laws or articles of organization and operating agreement, as applicable, and
the laws of its jurisdiction of organization relating to partnerships,
corporations or limited liability companies, as applicable.
 
(iii) Borrower and, if applicable, General Partner have done or caused to be
done and will do all things necessary to observe organizational formalities and
preserve their existence and each Borrower and, if applicable, General Partner
will not amend, modify or otherwise change the certificate and agreement of
partnership or certificate of incorporation and by-laws or articles of
organization and operating agreement, as applicable, or other organizational
documents of Borrower and, if applicable, General Partner without the prior
written consent of Lender.
 
(iv) Borrower and, if applicable, General Partner, have at all times accurately
maintained, and will continue to accurately maintain, their respective financial
statements, accounting records and other partnership, company or corporate
documents separate from those of any other Person, and Borrower will file its
own tax returns or, if Borrower and/or, if applicable, General Partner is part
of a consolidated group for purposes of filing tax returns, Borrower and General
Partner, as applicable will be shown as separate members of such group. Borrower
and, if applicable, General Partner have not at any time since their formation
commingled, and will not commingle, their respective assets with those of any
other Person and will maintain their assets in such a manner such that it will
not be costly or difficult to segregate, ascertain or identify their individual
assets from those of any other Person. Borrower and, if applicable, General
Partner will not permit any Affiliate independent access to their bank accounts.
Borrower and, if applicable, General Partner have at all times since their
formation accurately maintained and utilized, and will continue to accurately
maintain and utilize, their own separate bank accounts, payroll and separate
books of account, stationery, invoices and checks.
 
-24-

--------------------------------------------------------------------------------

 
(v) Borrower and, if applicable, General Partner, have at all times paid, and
will continue to pay, their own liabilities from their own separate assets and
shall each allocate and charge fairly and reasonably any overhead which Borrower
and, if applicable, General Partner, shares with any other Person, including,
without limitation, for office space and services performed by any employee of
another Person.
 
(vi) Borrower and, if applicable, General Partner, have at all times identified
themselves, and will continue to identify themselves, in all dealings with the
public, under their own names and as separate and distinct entities and shall
correct any known misunderstanding regarding their status as separate and
distinct entities. Borrower and, if applicable, General Partner, have not at any
time identified themselves, and will not identify themselves, as being a
division of any other Person.
 
(vii) Borrower and, if applicable, General Partner, have been at all times, and
will continue to use commercially reasonable efforts to be, adequately
capitalized in light of the nature of their respective businesses; provided,
however, in no event shall any direct or indirect member, partner or principal
of Borrower be required to make additional capital contributions to any
Borrower.
 
(viii) Borrower and, if applicable, General Partner, (A) have not owned, do not
own and will not own any assets or property other than the Property and any
incidental personal property necessary for the ownership, management or
operation of the Property, (B) have not engaged and will not engage in any
business other than the ownership, management and operation of the Property, (C)
have not incurred and will not incur any debt, secured or unsecured, direct or
contingent (including guaranteeing any obligation), other than (X) the Loan, and
(Y) unsecured trade and operational debt which (1) is not evidenced by a note,
(2) is incurred in the ordinary course of the operation of the Property, (3)
does not exceed in the aggregate two percent (2%) of the Loan Amount for the
Property and (4) which is, unless being contested in accordance with the terms
of this Security Instrument, paid prior to the earlier to occur of the
forty-fifth (45th) day after the date incurred and the date when due, (D) have
not and will not pledge their assets for the benefit of any other Person, and
(E) have not made and will not make any loans or advances to any Person
(including any Affiliate).
 
(ix) Neither Borrower nor, if applicable, any General Partner will change its
name or principal place of business without giving Lender at least thirty (30)
days prior written notice thereof.
 
(x) Neither Borrower nor, if applicable, any General Partner have, and neither
of such Persons will have, any subsidiaries.
 
(xi) Borrower will preserve and maintain its existence as a general partnership,
limited partnership or limited liability company, as applicable as of the
Closing Date, which is organized and existing under the laws of the State in
which it is organized as of the Closing Date and all material rights,
privileges, tradenames and franchises.
 
-25-

--------------------------------------------------------------------------------

 
(xii) Neither Borrower, nor, if applicable, any General Partner, will merge or
consolidate with, or sell all or substantially all of its respective assets to
any Person, or liquidate, wind up or dissolve itself (or suffer any liquidation,
winding up or dissolution). Neither any Borrower, nor, if applicable, any
General Partner will acquire any business or assets from, or capital stock or
other ownership interest of, or be a party to any acquisition of, any Person.
 
(xiii) Borrower and, if applicable, General Partner, have not at any time since
their formation assumed, guaranteed or held themselves out to be responsible
for, and will not assume, guarantee or hold themselves out to be responsible for
the liabilities or the decisions or actions respecting the daily business
affairs of their partners, shareholders or members or any predecessor company,
corporation or partnership, each as applicable, any Affiliates, or any other
Persons. Borrower has not at any time since its formation acquired, and will not
acquire, obligations or securities of its partners or shareholders, members or
any predecessor company, corporation or partnership, each as applicable, or any
Affiliates. Borrower and, if applicable, General Partner, have not at any time
since their formation made, and will not make, loans to its partners, members or
shareholders or any predecessor company, corporation or partnership, each as
applicable, or any Affiliates of any of such Persons. Borrower and, if
applicable, General Partner, have no known contingent liabilities nor do they
have any material financial liabilities under any indenture, mortgage, deed of
trust, loan agreement or other agreement or instrument to which such Person is a
party or by which it is otherwise bound other than under the Loan Documents.
 
(xiv) Borrower has not at any time since its formation entered into and was not
a party to, and, will not enter into or be a party to, any transaction with its
Affiliates, members, partners or shareholders, as applicable, or any Affiliates
thereof except in the ordinary course of business of Borrower on terms which are
no less favorable to Borrower than would be obtained in a comparable arm’s
length transaction with an unrelated third party.
 
(xv) If Borrower is a limited partnership or a limited liability company, the
General Partner shall be a corporation or limited liability company whose sole
asset is its interest in Borrower and the General Partner will at all times
comply, and will cause Borrower to comply, with each of the representations,
warranties, and covenants contained in this Section 2.02(g) as if such
representation, warranty or covenant was made directly by such General Partner.
 
(xvi) Borrower shall at all times cause there to be at least two (2) duly
appointed members of the board of directors or board of managers or other
governing board or body, as applicable (an “Independent Director”), of, if
Borrower is a corporation or single member limited liability company formed in
the State of Delaware, Borrower, and, if Borrower is a limited partnership or
multi-member limited liability company, of the General Partner, reasonably
satisfactory to Lender who shall not have been at the time of such individual’s
appointment, and may not be or have been at any time (A) a shareholder, officer,
director, attorney, counsel, partner, member or employee of Borrower or any of
the foregoing Persons or Affiliates thereof, (B) a customer or creditor of, or
supplier or service provider to, Borrower or any of its shareholders, partners,
members or their Affiliates, (C) a member of the immediate family of any Person
referred to in (A) or (B) above, D) a Person Controlling, Controlled by or under
common Control with any Person referred to in (A) through (C) above. A natural
person who otherwise satisfies the foregoing definition except for being the
Independent Director of a Single Purpose Entity Affiliated with Borrower or
General Partner shall not be disqualified from serving as an Independent
Director if such individual is at the time of initial appointment, or at any
time while serving as the Independent Director, an Independent Director of a
Single Purpose Entity Affiliated with Borrower or General Partner if such
individual is an independent director provided by a nationally-recognized
company that provides professional independent directors.
 
-26-

--------------------------------------------------------------------------------

 
(xvii)  Borrower and, if applicable, General Partner, shall not cause or permit
the board of directors or board of managers or other governing board or body, as
applicable, of each Borrower or, if applicable, General Partner, to take any
action which, under the terms of any certificate of incorporation, by-laws or
articles of organization with respect to any common stock, requires a unanimous
vote of the board of directors of Borrower, or, if applicable, the General
Partner, unless at the time of such action there shall be at least two members
who are Independent Directors.
 
(xviii) Borrower and, if applicable, General Partner shall pay the salaries of
their own employees and maintain a sufficient number of employees in light of
their contemplated business operations.
 
(xix) Borrower shall, and shall cause its Affiliates to, conduct its business so
that the assumptions made with respect to Borrower in that certain opinion
letter relating to substantive non-consolidation dated the date hereof (the
“Insolvency Opinion”) delivered in connection with the Loan shall be true and
correct in all respects.
 
Notwithstanding anything to the contrary contained in this Section 2.02(g),
provided Borrower is a Delaware single member limited liability company which
satisfies the single purpose bankruptcy remote entity requirements of each
Rating Agency for a single member limited liability company, the foregoing
provisions of this Section 2.02(g) shall not apply to the General Partner.

(h) No Defaults. No Default or Event of Default has occurred and is continuing
or would occur as a result of the consummation of the transactions contemplated
by the Loan Documents. To the best of Borrower’s knowledge, Borrower is not in
default beyond any applicable notice and/or grace periods in the payment or
performance of any of its Contractual Obligations in any respect.
 
(i) Consents and Approvals. Borrower and, if applicable, each General Partner,
have obtained or made all necessary (i) consents, approvals and authorizations,
and registrations and filings of or with all Governmental Authorities and
(ii) consents, approvals, waivers and notifications of partners, stockholders,
creditors, lessors and other nongovernmental Persons, in each case, which are
required to be obtained or made by Borrower or, if applicable, the General
Partner, in connection with the execution and delivery of, and the performance
by Borrower of its obligations under, the Loan Documents.
 
-27-

--------------------------------------------------------------------------------

 
(j) Investment Company Act Status, etc. Borrower is not (i) an “investment
company,” or a company “controlled” by an “investment company,” as such terms
are defined in the Investment Company Act of 1940, as amended, (ii) a “holding
company” or a “subsidiary company” of a “holding company” or an “affiliate” of
either a “holding company” or a “subsidiary company” within the meaning of the
Public Utility Holding Company Act of 1935, as amended, or (iii) subject to any
other federal or state law or regulation which purports to restrict or regulate
its ability to borrow money.
 
(k) Compliance with Law. (i) Except as previously disclosed to Lender in
writing, Borrower has received no notice of violation of any Legal Requirements
and (ii) except for such violations which would not, individually or in the
aggregate, have a Material Adverse Effect, Borrower is in compliance in all
material respects with all Legal Requirements to which it or the Property is
subject, including, without limitation, all Environmental Statutes, the
Occupational Safety and Health Act of 1970, the Americans with Disabilities Act
and ERISA. No portion of the Property has been or will be purchased, improved,
fixtured, equipped or furnished with proceeds of any illegal activity and to the
best of Borrower’s knowledge, no illegal activities are being conducted at or
from the Property.
 
(l) Financial Information. To the best of Borrower’s knowledge, all financial
data that has been delivered by Borrower to Lender (i) is true, complete and
correct in all material respects, (ii) accurately represents the financial
condition and results of operations of the Persons covered thereby as of the
date on which the same shall have been furnished in all material respects, and
(iii) to the extent prepared by an independent certified public accounting firm,
has been prepared in accordance with GAAP (or such other accounting basis as is
reasonably acceptable to Lender) throughout the periods covered thereby except
as disclosed therein. As of the date hereof, neither Borrower nor, if
applicable, any General Partner, has any contingent liability, liability for
taxes or other unusual or forward commitment not reflected in such financial
statements delivered to Lender. Since the date of the last financial statements
delivered by Borrower to Lender except as otherwise disclosed in such financial
statements or notes thereto, there has been no change in the assets, liabilities
or financial position of Borrower nor, if applicable, any General Partner, or in
the results of operations of Borrower which would have a Material Adverse
Effect. Neither Borrower nor, if applicable, any General Partner, has incurred
any obligation or liability, contingent or otherwise not reflected in such
financial statements which would have a Material Adverse Effect.
 
(m) Transaction Brokerage Fees. Neither Borrower nor Lender have dealt with any
financial advisors, brokers, underwriters, placement agents, agents or finders
in connection with the transactions contemplated by this Security Instrument.
BORROWER HEREBY AGREES TO INDEMNIFY AND HOLD LENDER HARMLESS FOR, FROM AND
AGAINST ANY AND ALL CLAIMS, LIABILITIES, COSTS AND EXPENSES OF ANY KIND IN ANY
WAY RELATING TO OR ARISING FROM (I) A CLAIM BY ANY PERSON THAT SUCH PERSON ACTED
ON BEHALF OF BORROWER IN CONNECTION WITH THE TRANSACTIONS CONTEMPLATED HEREIN OR
(II) ANY BREACH OF THE FOREGOING REPRESENTATION. THE PROVISIONS OF THIS
SUBSECTION (M) SHALL SURVIVE THE REPAYMENT OF THE DEBT.
 
-28-

--------------------------------------------------------------------------------

 
(n) Federal Reserve Regulations. No part of the proceeds of the Loan will be
used for the purpose of purchasing or acquiring any “margin stock” within the
meaning of Regulations T, U or X of the Board of Governors of the Federal
Reserve System or for any other purpose which would be inconsistent with such
Regulations T, U or X or any other Regulations of such Board of Governors, or
for any purposes prohibited by Legal Requirements or by the terms and conditions
of the Loan Documents.
 
(o) Pending Litigation. Except as previously disclosed in writing to Lender,
there are no actions, suits or proceedings pending or, to the knowledge of
Borrower, threatened against or affecting Borrower or the Property in any court
or before any Governmental Authority which if adversely determined either
individually or collectively has or is reasonably likely to have a Material
Adverse Effect.
 
(p) Solvency; No Bankruptcy. Borrower and, if applicable, the General Partner,
(i) is and has at all times been Solvent and will remain Solvent immediately
upon the consummation of the transactions contemplated by the Loan Documents and
(ii) is free from bankruptcy, reorganization or arrangement proceedings or a
general assignment for the benefit of creditors and is not contemplating the
filing of a petition under any state or federal bankruptcy or insolvency laws or
the liquidation of all or a major portion of such Person’s assets or property
and Borrower has no knowledge of any Person contemplating the filing of any such
petition against it or, if applicable, the General Partner. None of the
transactions contemplated hereby will be or have been made with an intent to
hinder, delay or defraud any present or future creditors of Borrower and
Borrower has received reasonably equivalent value in exchange for its
obligations under the Loan Documents. Borrower’s assets do not, and immediately
upon consummation of the transaction contemplated in the Loan Documents will
not, constitute unreasonably small capital to carry out its business as
presently conducted or as proposed to be conducted. Borrower does not intend to,
nor believe that it will, incur debts and liabilities beyond its ability to pay
such debts as they may mature.
 
(q) Use of Proceeds. The proceeds of the Loan shall be applied by Borrower to,
inter alia, (i) satisfy certain secured loans presently encumbering all or a
part of the Property and (ii) pay certain transaction costs incurred by Borrower
in connection with the Loan. No portion of the proceeds of the Loan will be used
by Borrower for family, personal, agricultural or household use.
 
(r) Tax Filings. Borrower and, if applicable, each General Partner, have filed
all federal, state and local tax returns required to be filed and have paid or
made adequate provision for the payment of all federal, state and local taxes,
charges and assessments payable by Borrower and, if applicable, each General
Partner. Borrower and, if applicable, each General Partner, believe that their
respective tax returns properly reflect the income and taxes of Borrower and
said General Partner, if any, for the periods covered thereby, subject only to
reasonable adjustments required by the Internal Revenue Service or other
applicable tax authority upon audit.
 
-29-

--------------------------------------------------------------------------------

 
(s) Not Foreign Person. Borrower is not a “foreign person” within the meaning of
§1445(f)(3) of the Code.
 
(t) ERISA. (i) The assets of Borrower and Guarantor are not and will not become
treated as “plan assets”, whether by operation of law or under regulations
promulgated under ERISA. Each Plan and Welfare Plan, and, to the knowledge of
Borrower, each Multiemployer Plan, is in compliance in all material respects
with, and has been administered in all material respects in compliance with, its
terms and the applicable provisions of ERISA, the Code and any other applicable
Legal Requirement, and no event or condition has occurred and is continuing as
to which Borrower would be under an obligation to furnish a report to Lender
under clause (ii)(A) of this Section. Other than an application for a favorable
determination letter with respect to a Plan, there are no pending issues or
claims before the Internal Revenue Service, the United States Department of
Labor or any court of competent jurisdiction related to any Plan or Welfare Plan
under which Borrower, Guarantor or any ERISA Affiliate, directly or indirectly
(through an indemnification agreement or otherwise), could be subject to any
material risk of liability under Section 409 or 502(i) of ERISA or Section 4975
of the Code. No Welfare Plan provides or will provide benefits, including,
without limitation, death or medical benefits (whether or not insured) with
respect to any current or former employee of Borrower, Guarantor or any ERISA
Affiliate beyond his or her retirement or other termination of service other
than (A) coverage mandated by applicable law, (B) death or disability benefits
that have been fully provided for by fully paid up insurance or (C) severance
benefits.
 
(ii) Borrower will furnish to Lender as soon as possible, and in any event
within ten (10) days after Borrower knows or has reason to believe that any of
the events or conditions specified below with respect to any Plan, Welfare Plan
or Multiemployer Plan has occurred or exists, an Officer’s Certificate setting
forth details respecting such event or condition and the action, if any, that
Borrower or its ERISA Affiliate proposes to take with respect thereto (and a
copy of any report or notice required to be filed with or given to PBGC (or any
other relevant Governmental Authority)) by Borrower or an ERISA Affiliate with
respect to such event or condition, if such report or notice is required to be
filed with the PBGC or any other relevant Governmental Authority:
 
(A) any reportable event, as defined in Section 4043 of ERISA and the
regulations issued thereunder, with respect to a Plan, as to which PBGC has not
by regulation waived the requirement of Section 4043(a) of ERISA that it be
notified within thirty (30) days of the occurrence of such event (provided that
a failure to meet the minimum funding standard of Section 412 of the Code and of
Section 302 of ERISA, including, without limitation, the failure to make on or
before its due date a required installment under Section 412(m) of the Code and
of Section 302(e) of ERISA, shall be a reportable event regardless of the
issuance of any waivers in accordance with Section 412(d) of the Code), and any
request for a waiver under Section 412(d) of the Code for any Plan;
 
(B) the distribution under Section 4041 of ERISA of a notice of intent to
terminate any Plan or any action taken by Borrower or an ERISA Affiliate to
terminate any Plan;
 
-30-

--------------------------------------------------------------------------------

 
(C) the institution by PBGC of proceedings under Section 4042 of ERISA for the
termination of, or the appointment of a trustee to administer, any Plan, or the
receipt by Borrower or any ERISA Affiliate of a notice from a Multiemployer Plan
that such action has been taken by PBGC with respect to such Multiemployer Plan;
 
(D) the complete or partial withdrawal from a Multiemployer Plan by Borrower or
any ERISA Affiliate that results in liability under Section 4201 or 4204 of
ERISA (including the obligation to satisfy secondary liability as a result of a
purchaser default) or the receipt by Borrower or any ERISA Affiliate of notice
from a Multiemployer Plan that it is in reorganization or insolvency pursuant to
Section 4241 or 4245 of ERISA or that it intends to terminate or has terminated
under Section 4041A of ERISA;
 
(E) the institution of a proceeding by a fiduciary of any Multiemployer Plan
against Borrower or any ERISA Affiliate to enforce Section 515 of ERISA, which
proceeding is not dismissed within thirty (30) days;
 
(F) the adoption of an amendment to any Plan that, pursuant to Section
401(a)(29) of the Code or Section 307 of ERISA, would result in the loss of
tax-exempt status of the trust of which such Plan is a part if Borrower or an
ERISA Affiliate fails to timely provide security to the Plan in accordance with
the provisions of said Sections; or
 
(G) the imposition of a lien or a security interest in connection with a Plan.
 
(iii) Borrower shall not knowingly engage in or permit any transaction in
connection with which Borrower, Guarantor or any ERISA Affiliate could be
subject to either a civil penalty or tax assessed pursuant to Section 502(i) or
502(l) of ERISA or Section 4975 of the Code, permit any Welfare Plan to provide
benefits, including without limitation, medical benefits (whether or not
insured), with respect to any current or former employee of Borrower, Guarantor
or any ERISA Affiliate beyond his or her retirement or other termination of
service other than (A) coverage mandated by applicable law, (B) death or
disability benefits that have been fully provided for by paid up insurance or
otherwise or (C) severance benefits, permit the assets of Borrower or Guarantor
to become “plan assets”, whether by operation of law or under regulations
promulgated under ERISA or adopt, amend (except as may be required by applicable
law) or increase the amount of any benefit or amount payable under, or permit
any ERISA Affiliate to adopt, amend (except as may be required by applicable
law) or increase the amount of any benefit or amount payable under, any employee
benefit plan (including, without limitation, any employee welfare benefit plan)
or other plan, policy or arrangement, except for normal increases in the
ordinary course of business consistent with past practice that, in the
aggregate, do not result in a material increase in benefits expense to Borrower,
Guarantor or any ERISA Affiliate.
 
-31-

--------------------------------------------------------------------------------

 
(u) Labor Matters. No organized work stoppage or labor strike is pending or, to
Borrower’s best knowledge, threatened by employees or other laborers at the
Property and neither Borrower nor Manager (i) is involved in or, to the best of
their knowledge, threatened with any labor dispute, grievance or litigation
relating to labor matters involving any employees and other laborers at the
Property, including, without limitation, violation of any federal, state or
local labor, safety or employment laws (domestic or foreign) and/or charges of
unfair labor practices or discrimination complaints; (ii) has engaged in any
unfair labor practices within the meaning of the National Labor Relations Act or
the Railway Labor Act; or (iii) is a party to, or bound by, any collective
bargaining agreement or union contract with respect to employees and other
laborers at the Property and no such agreement or contract is currently being
negotiated by Borrower, Manager or any of their Affiliates.
 
(v) Borrower’s Legal Status. Borrower’s exact legal name that is indicated on
the signature page hereto, organizational identification number and place of
business or, if more than one, its chief executive office, as well as Borrower’s
mailing address, if different, which were identified by Borrower to Lender and
contained in this Security Instrument, are true, accurate and complete. Borrower
(i) will not change its name, its place of business or, if more than one place
of business, its chief executive office, or its mailing address or
organizational identification number if it has one without giving Lender at
least thirty (30) days prior written notice of such change, (ii) if Borrower
does not have an organizational identification number and later obtains one,
Borrower shall promptly notify Lender of such organizational identification
number and (iii) Borrower will not change its type of organization, jurisdiction
of organization or other legal structure.
 
(w) Compliance with Anti-Terrorism, Embargo and Anti-Money Laundering Laws. (i)
None of Borrower, General Partner, any Guarantor, or any Person who owns any
equity interest in or Controls Borrower, General Partner or any Guarantor
currently is identified on the OFAC List or otherwise qualifies as a Prohibited
Person, and Borrower has implemented procedures, approved by General Partner, to
ensure that no Person who now or hereafter owns an equity interest in Borrower
or General Partner is a Prohibited Person or Controlled by a Prohibited Person,
and (ii) none of Borrower, General Partner, or any Guarantor are in violation of
any Legal Requirements relating to anti-money laundering or anti-terrorism,
including, without limitation, Legal Requirements related to transacting
business with Prohibited Persons or the requirements of the Uniting and
Strengthening America by Providing Appropriate Tools Required to Intercept and
Obstruct Terrorism Act of 2001, U.S. Public Law 107-56, and the related
regulations issued thereunder, including temporary regulations, all as amended
from time to time. No tenant at the Property currently is identified on the OFAC
List or otherwise qualifies as a Prohibited Person, and, to the best of
Borrower’s knowledge, no tenant at the Property is owned or Controlled by a
Prohibited Person. Borrower has implemented procedures to ensure that no tenant
at the Property is a Prohibited Person or owned or Controlled by a Prohibited
Person.
 
Section 2.03. Further Acts, etc. Borrower will, at the cost of Borrower, and
without expense to Lender, do, execute, acknowledge and deliver all and every
such further acts, deeds, conveyances, mortgages, deeds of trust or deeds to
secure debt, as applicable, assignments, notices of assignments, transfers and
assurances as Lender or Trustee shall, from time to time, reasonably require for
the better assuring, conveying, assigning, transferring, and confirming unto
Lender and Trustee the property and rights hereby mortgaged, given, granted,
bargained, sold, alienated, enfeoffed, conveyed, confirmed, pledged, assigned
and hypothecated, or which Borrower may be or may hereafter become bound to
convey or assign to Lender, or for carrying out or facilitating the performance
of the terms of this Security Instrument or for filing, registering or recording
this Security Instrument and, on demand, will execute and deliver and hereby
authorizes Lender to execute in the name of Borrower or without the signature of
Borrower to the extent Lender may lawfully do so, one or more financing
statements, chattel mortgages or comparable security instruments to evidence
more effectively the lien hereof upon the Property. Borrower grants to Lender an
irrevocable power of attorney coupled with an interest for the purpose of
protecting, perfecting, preserving and realizing upon the interests granted
pursuant to this Security Instrument and to effect the intent hereof, all as
fully and effectually as Borrower might or could do; and Borrower hereby
ratifies all that Lender shall lawfully do or cause to be done by virtue hereof;
provided that Lender shall not exercise such power of attorney unless and until
Borrower fails to take the required action within five (5) Business Days of
demand unless the failure to so exercise it could, in Lender’s reasonable
judgment, result in a Material Adverse Effect. Upon receipt of an affidavit of
an officer of Lender as to the loss, theft, destruction or mutilation of the
Note or any other Loan Document which is not of public record, and, in the case
of any such mutilation, upon surrender and cancellation of such Note or other
applicable Loan Document, Borrower will issue, in lieu thereof, a replacement
Note or other applicable Loan Document, dated the date of such lost, stolen,
destroyed or mutilated Note or other Loan Document in the same principal amount
thereof and otherwise of like tenor.
 
-32-

--------------------------------------------------------------------------------

 
Section 2.04. Recording of Security Instrument, etc. Borrower forthwith upon the
execution and delivery of this Security Instrument and thereafter, at the
request of Lender, from time to time, will cause this Security Instrument, and
any security instrument creating a lien or security interest or evidencing the
lien hereof upon the Property and each instrument of further assurance to be
filed, registered or recorded in such manner and in such places as may be
required by any present or future law in order to publish notice of and fully
perfect and protect the lien or security interest hereof upon, and the interest
of Lender in, the Property. Borrower will pay all filing, registration or
recording fees, and all expenses incident to the preparation, execution and
acknowledgment of this Security Instrument, any mortgage, deed of trust or deed
to secure debt, as applicable, supplemental hereto, any security instrument with
respect to the Property and any instrument of further assurance, and all
federal, state, county and municipal taxes, duties, imposts, assessments and
charges imposed on, or arising out of or in connection with the execution,
delivery and recording of this Security Instrument, any mortgage, deed of trust
or deed to secure debt, as applicable, supplemental hereto, any security
instrument with respect to the Property or any instrument of further assurance,
except where prohibited by law to do so, in which event Lender may declare the
Debt to be immediately due and payable. Borrower shall hold harmless and
indemnify Lender, and its successors and assigns, against any liability incurred
as a result of the imposition of any tax on the making and recording of this
Security Instrument.
 
Section 2.05. Representations and Warranties as to the Property. Borrower
represents and warrants with respect to the Property as follows:

(a) Lien Priority and Perfection. This Security Instrument is a valid and
enforceable (and, upon recordation in the Official Records, will be a perfected)
first lien on the Property, free and clear of all encumbrances, security
interests, and liens having priority over the lien and security interest of this
Security Instrument, except for the items set forth as exceptions to or
subordinate matters in the title insurance policy insuring the lien of this
Security Instrument, none of which, individually or in the aggregate, materially
interfere with the benefits of the security intended to be provided by this
Security Instrument, materially affect the value or insurability of the
Property, impair the use or operation of the Property for the use currently
being made thereof or impair Borrower’s ability to pay its obligations in a
timely manner (such items being the “Permitted Encumbrances”).
 
-33-

--------------------------------------------------------------------------------

 
(b) Title. Borrower has, subject only to the Permitted Encumbrances, good,
insurable and marketable fee simple title to the Premises, Improvements and
Fixtures (collectively, the “Realty”) and to all easements and rights benefiting
the Realty and has the right, power and authority to mortgage, encumber, give,
grant, bargain, sell, alien, enfeoff, convey, confirm, pledge, assign, and
hypothecate the Property. Subject to Permitted Encumbrances, Borrower will
preserve its interest in and title to the Property and will forever warrant and
defend the same to Lender against any and all claims made by, through or under
Borrower and will forever warrant and defend the validity and priority of the
lien and security interest created herein against the claims of all Persons
whomsoever claiming by, through or under Borrower. The foregoing warranty of
title shall survive the foreclosure of this Security Instrument and shall inure
to the benefit of and be enforceable by Lender in the event Lender acquires
title to the Property pursuant to any foreclosure. In addition, there are no
outstanding options or rights of first refusal to purchase the Property or
Borrower’s ownership thereof.

(c) Taxes and Impositions. Other than those being contested in accordance
herewith, all taxes and other Impositions and governmental assessments due and
owing and not delinquent in respect of, and affecting, the Property have been
paid. Other than those being contested in accordance herewith, Borrower has paid
all Impositions which constitute special governmental assessments in full,
except for those assessments which are permitted by applicable Legal
Requirements to be paid in installments, in which case all installments which
are due and payable have been paid in full. There are no pending, or to
Borrower’s best knowledge, proposed special or other assessments for public
improvements or otherwise affecting the Property, nor are there any contemplated
improvements to the Property that may result in such special or other
assessments.
 
(d) Casualty; Flood Zone. Except as set forth in the Engineering Report and
Environmental Report, the Realty is in good repair and free and clear of any
damage, destruction or casualty (whether or not covered by insurance) that would
materially affect the value of the Realty or the use for which the Realty was
intended, there exists no structural or other material defects or damages in or
to the Property and Borrower has not received any written notice from any
insurance company or bonding company of any material defect or inadequacies in
the Property, or any part thereof, which would materially and adversely affect
the insurability of the same or cause the imposition of extraordinary premiums
or charges thereon or of any termination or threatened termination of any policy
of insurance or bond. No portion of the Premises is located in an “area of
special flood hazard,” as that term is defined in the regulations of the Federal
Insurance Administration, Department of Housing and Urban Development, under the
National Flood Insurance Act of 1968, as amended (24 CFR § 1909.1) or Borrower
has obtained the flood insurance required by Section 3.01(a)(vi) hereof. The
Premises either does not lie in a 100 year flood plain that has been identified
by the Secretary of Housing and Urban Development or any other Governmental
Authority or, if it does, Borrower has obtained the flood insurance required by
Section 3.01(a)(vi) hereof.
 
-34-

--------------------------------------------------------------------------------

(e) Completion; Encroachment. All Improvements necessary for the efficient use
and operation of the Premises, including, without limitation, all Improvements
which were included for purposes of determining the appraised value of the
Property in the Appraisal, have been completed and none of said Improvements lie
outside the boundaries and building restriction lines of the Premises. Except as
set forth in the title insurance policy insuring the lien of this Security
Instrument, no improvements on adjoining properties encroach upon the Premises.
 
(f) Separate Lot. The Premises are taxed separately without regard to any other
real estate and constitute a legally subdivided lot under all applicable Legal
Requirements (or, if not subdivided, no subdivision or platting of the Premises
is required under applicable Legal Requirements), and for all purposes may be
mortgaged, encumbered, conveyed or otherwise dealt with as an independent
parcel. Except as previously disclosed in writing to Lender, the Property does
not benefit from any tax abatement or exemption.
 
(g) Use. To the best of Borrower’s knowledge, the existence of all Improvements,
the present use and operation thereof and the access of the Premises and the
Improvements to all of the utilities and other items referred to in paragraph
(k) below are in compliance in all material respects with all Leases affecting
the Property and all applicable Legal Requirements, including, without
limitation, Environmental Statutes, Development Laws and Use Requirements.
Borrower has not received any notice from any Governmental Authority alleging
any uncured violation relating to the Property of any applicable Legal
Requirements.
 
(h) Licenses and Permits. Borrower currently holds and will continue to hold all
certificates of occupancy, licenses, registrations, permits, consents,
franchises and approvals of any Governmental Authority or any other Person which
are material for the lawful occupancy and operation of the Realty or which are
material to the ownership or operation of the Property or the conduct of
Borrower’s business. All such certificates of occupancy, licenses,
registrations, permits, consents, franchises and approvals are current and in
full force and effect.
 
(i) Environmental Matters. Borrower has received and reviewed the Environmental
Report and has no reason to believe that the Environmental Report contains any
untrue statement of a material fact or omits to state a material fact necessary
to make the statements contained therein or herein, in light of the
circumstances under which such statements were made, not misleading.
 
(j) Property Proceedings. Other than as previously disclosed in writing by
Borrower to Lender, there are no actions, suits or proceedings pending or, to
Borrower’s knowledge, threatened in any court or before any Governmental
Authority or arbitration board or tribunal (i) relating to (A) the zoning of the
Premises or any part thereof, (B) any certificates of occupancy, licenses,
registrations, permits, consents or approvals issued with respect to the
Property or any part thereof, (C) the condemnation of the Property or any part
thereof, or (D) the condemnation or relocation of any roadways abutting the
Premises required for access or the denial or limitation of access to the
Premises or any part thereof from any point of access to the Premises,
(ii) asserting that (A) any such zoning, certificates of occupancy, licenses,
registrations, permits, consents and/or approvals do not permit the operation of
any material portion of the Realty as presently being conducted, (B) any
material improvements located on the Property or any part thereof cannot be
located thereon or operated with their intended use or (C) the operation of the
Property or any part thereof is in violation in any material respect of any
Environmental Statutes, Development Laws or other Legal Requirements or Space
Leases or Property Agreements or (iii) which might (A) affect the validity or
priority of any Loan Document or (B) have a Material Adverse Effect.
 
-35-

--------------------------------------------------------------------------------

 
(k) Utilities. The Premises has rights of access to water, gas and/or electrical
supply, storm and sanitary sewerage facilities, other required public utilities
(with respect to each of the aforementioned items, by means of either a direct
connection to the source of such utilities or through connections available on
publicly dedicated roadways directly abutting the Premises or through permanent
insurable easements benefiting the Premises), fire and police protection,
parking, and means of direct access between the Premises and public highways
over recognized curb cuts (or such access to public highways is through private
roadways which may be used for ingress and egress pursuant to permanent
insurable easements).
 
(l) Construction Lien. The Property is free and clear of any mechanics’ liens or
liens in the nature thereof, and no rights are outstanding that under law could
give rise to any such liens, any of which liens are or may be prior to, or equal
with, the lien of this Security Instrument, except those which are insured
against by the title insurance policy insuring the lien of this Security
Instrument. No stop notices have been served with respect to any work, labor or
materials furnished to or for the benefit of the Property or any portion
thereof, and no disputes currently exist with respect to any of such matters.
 
(m) Title Insurance. Lender has received a lenders’ commitment to issue a title
insurance policy insuring this Security Instrument as a first lien on the Realty
subject only to Permitted Encumbrances.
 
(n) Insurance. The Property is insured in accordance with the requirements set
forth in Article III hereof.
 
(o) Space Leases.
 
(i) Borrower has delivered a true, correct and complete schedule of all Space
Leases as of the date hereof, which accurately and completely sets forth in all
material respects, for each such Space Lease, the following (collectively, the
“Rent Roll”): the name and address of the tenant with the lease expiration date,
extension and renewal options; the base rent and percentage rent payable; all
additional rent and pass through obligations; and the security deposit held
thereunder and the location of such deposit
 
(ii) Each Space Lease constitutes the legal, valid and binding obligation of
Borrower and, to the knowledge of Borrower, is enforceable against the tenant
thereof. Except as set forth on the Rent Roll or in any estoppel certificate
delivered to Lender, no default exists, or with the passing of time or the
giving of notice would exist, (A) under any Major Space Lease or (B) under any
other Space Leases which would, in the aggregate, have a Material Adverse
Effect.
 
-36-

--------------------------------------------------------------------------------

(iii) Except as disclosed to Lender and to Borrower's knowledge no tenant under
any Space Lease has, as of the date hereof, paid Rent more than thirty (30) days
in advance, and the Rents under such Space Leases have not been waived,
released, or otherwise discharged or compromised.
 
(iv) Except as set forth on the Rent Roll or previously disclosed in writing to
Lender, all material work to be performed by Borrower under the Space Leases has
been substantially performed, all contributions to be made by Borrower to the
tenants thereunder have been made except for any held-back amounts, and all
other conditions precedent to each such tenant’s obligations thereunder have
been satisfied.
 
(v) Except as previously disclosed to Lender in writing or in the Space Leases
provided to Lender, there are no options to terminate any Space Lease.
 
(vi) Except as previously disclosed in writing to Lender, each tenant under a
Major Space Lease has entered into occupancy of the demised premises to the
extent required under the terms of its Major Space Lease, and each such tenant
is open and conducting business with the public in the demised premises. Except
as previously disclosed in writing to Lender, to the best knowledge of Borrower,
each tenant under a Lease other than a Major Space Lease has entered into
occupancy of its demised premises under its Lease to the extent required under
the terms of its Lease and each such tenant is open and conducting business with
the public in the demised premises.
 
(vii) Borrower has delivered to Lender a true, correct and complete copies of
all Space Leases described in the Rent Roll.
 
(viii) Each Space Lease is in full force and effect and (except as disclosed on
the Rent Roll or in any estoppel certificate delivered to Lender) has not been
assigned, modified, supplemented or amended in any way.
 
(ix) Except as set forth on the Rent Roll, each tenant under each Space Lease is
free from bankruptcy, reorganization or arrangement proceedings or a general
assignment for the benefit of creditors.
 
(x) No Space Lease provides any party with the right to obtain a lien or
encumbrance upon the Property superior to the lien of this Security Instrument
or to subject to the Property to any mechanics lien.
 
(p) Property Agreements.
 
(i) Borrower has delivered to Lender true, correct and complete copies of all
Property Agreements.
 
-37-

--------------------------------------------------------------------------------

 
(ii) No Property Agreement provides any party with the right to obtain a lien or
encumbrance upon the Property superior to the lien of this Security Instrument.
 
(iii) To the best of Borrower’s knowledge, no default exists or with the passing
of time or the giving of notice or both would exist under any Property Agreement
which would, individually or in the aggregate, have a Material Adverse Effect.
 
(iv) Borrower has not received or given any written communication which alleges
that a default exists or, with the giving of notice or the lapse of time, or
both, would exist under the provisions of any Property Agreement.
 
(v) No condition exists whereby Borrower or any future owner of the Property may
be required to purchase any other parcel of land which is subject to any
Property Agreement or which gives any Person a right to purchase, or right of
first refusal with respect to, the Property.
 
(vi) To the best knowledge of Borrower, no offset or any right of offset exists
respecting continued contributions to be made by any party to any Property
Agreement except as expressly set forth therein. Except as previously disclosed
to Lender in writing, no material exclusions or restrictions on the utilization,
leasing or improvement of the Property (including non-compete agreements) exists
in any Property Agreement.
 
(vii) All “pre-opening” requirements contained in all Property Agreements
(including, but not limited to, all off-site and on-site construction
requirements), if any, have been fulfilled, and, to the best of Borrower’s
knowledge, no condition now exists whereby any party to any such Property
Agreement could refuse to honor its obligations thereunder.
 
(viii) Except as previously disclosed in writing to Lender, all work, if any, to
be performed by Borrower under each of the Property Agreements has been
substantially performed, all contributions to be made by Borrower to any party
to such Property Agreements have been made, and all other material conditions to
such party’s obligations thereunder have been satisfied.

(q) Personal Property. Borrower has delivered to Lender a true, correct and
complete schedule of all personal property, if any, owned by Borrower and
located upon the Realty or used in connection with the use or operation of the
Realty and Borrower represents that it has good and marketable title to all such
personal property, free and clear of any liens or security interests, except for
liens and security interests created under the Loan Documents, liens and
security interests otherwise disclosed to Lender in writing and disclosed in the
title insurance policy insuring the lien of this Security Instrument, and liens
and security interests which describe the equipment and other personal property
owned by tenants.
 
(r) Leasing Brokerage and Management Fees. Except as previously disclosed to
Lender in writing, there are no brokerage fees or commissions payable by
Borrower with respect to the leasing of space at the Property and there are no
management fees payable by Borrower with respect to the management of the
Property.
 
-38-

--------------------------------------------------------------------------------

 
(s) Security Deposits. All security deposits with respect to the Property on the
date hereof have been transferred to the Security Deposit Account on the date
hereof, and Borrower is in compliance with all Legal Requirements relating to
such security deposits as to which failure to comply might, individually or in
the aggregate, have a Material Adverse Effect.
 
(t) Appraisal. Borrower has no knowledge that any of the facts or assumptions on
which the Appraisal was based are false or incomplete in any material respect
and has no information that would reasonably suggest that the fair market value
determined in the Appraisal does not reflect the actual fair market value of the
Property.
 
(u) Representations Generally. No representation, warranty or statement of fact
made by or on behalf of Borrower in this Security Instrument or in any
certificate, document or schedule furnished to Lender pursuant hereto, contains
any untrue statement of a material fact or omits to state any material fact
necessary to make statements contained therein or herein not misleading (which
may be to Borrower’s best knowledge where so provided herein). There are no
facts presently known to Borrower which have not been disclosed to Lender which
would, individually or in the aggregate, have a Material Adverse Effect nor as
far as Borrower can foresee might, individually or in the aggregate, have a
Material Adverse Effect.
 
Section 2.06. Removal of Lien. (a) Borrower shall, at its expense, maintain this
Security Instrument as a first lien on the Property and shall keep the Property
free and clear of all liens and encumbrances of any kind and nature other than
the Permitted Encumbrances. Borrower shall, within thirty (30) days following
receipt of notice of the filing thereof, promptly discharge of record, by bond
or otherwise, any such liens and, promptly upon request by Lender, shall deliver
to Lender evidence reasonably satisfactory to Lender of the discharge thereof. 
 
(b) Without limitation to the provisions of Section 2.06(a) hereof, Borrower
shall (i) pay, from time to time when the same shall become due, all claims and
demands of mechanics, materialmen, laborers, and others which, if unpaid, might
result in, or permit the creation of, a lien on the Property or any part
thereof, (ii) cause to be removed of record (by payment or posting of bond or
settlement or otherwise) any mechanics’, materialmens’, laborers’ or other lien
on the Property, or any part thereof, or on the revenues, rents, issues, income
or profit arising therefrom, and (iii) in general, do or cause to be done,
without expense to Lender, everything reasonably necessary to preserve in full
the lien of this Security Instrument. If Borrower fails to comply with the
requirements of this Section 2.06(b), then, upon ten (10) Business Days’ prior
notice to Borrower, Lender may, but shall not be obligated to, pay any such
lien, and Borrower shall, within ten (10) Business Days after Lender’s demand
therefor, reimburse Lender for all sums so expended, together with interest
thereon at the Default Rate from the date advanced, all of which shall be deemed
part of the Debt. Nothing contained herein shall be deemed a consent or request
of Lender, express or implied, by inference or otherwise, to the performance of
any alteration, repair or other work by any contractor, subcontractor or laborer
or the furnishing of any materials by any materialmen in connection therewith.
 
(c) Notwithstanding the foregoing, Borrower may contest any lien (other than a
lien relating to non-payment of Impositions, the contest of which shall be
governed by Section 4.04 hereof) of the type set forth in subparagraph (b)(ii)
of this Section 2.06 provided that, following prior notice to Lender (i)
Borrower is contesting the validity of such lien with due diligence and in good
faith and by appropriate proceedings, without cost or expense to Lender or any
of its agents, employees, officers, or directors, (ii) Borrower shall preclude
the collection of, or other realization upon, any contested amount from the
Property or any revenues from or interest in the Property, (iii) neither the
Property nor any part thereof nor interest therein, shall be in any danger of
being sold, forfeited or lost by reason of such contest by Borrower, (iv) such
contest by Borrower shall not affect the ownership, use or occupancy of the
Property, (v) such contest by Borrower shall not subject Lender, Trustee or
Borrower to the risk of civil or criminal liability (other than the civil
liability of Borrower for the amount of the lien in question), (vi) such lien is
subordinate to the lien of this Security Instrument, (vii) Borrower has not
consented to such lien, (viii) Borrower has given Lender prompt notice of the
filing of such lien and, upon request by Lender from time to time, notice of the
status of such contest by Borrower and/or confirmation of the continuing
satisfaction of the conditions set forth in this Section 2.06(c), (ix) Borrower
shall promptly pay the obligation secured by such lien upon a final
determination of Borrower’s liability therefor, and (x) Borrower shall deliver
written notice of its intent to contest such lien at least thirty (30) days
before commencing such contest and also shall deliver to Lender, if requested by
Lender, cash, a bond or other security acceptable to Lender equal to 125% of the
contested amount pursuant to collateral arrangements reasonably satisfactory to
Lender.
 
-39-

--------------------------------------------------------------------------------

 
Section 2.07. Cost of Defending and Upholding this Security Instrument Lien. If
any action or proceeding is commenced to which Lender or Trustee is made a party
relating to the Loan Documents and/or the Property or Lender’s or Trustee’s
interest therein or in which it becomes necessary to defend or uphold the lien
of this Security Instrument or any other Loan Document, Borrower shall, on
demand, reimburse Lender and/or Trustee, as applicable, for all expenses
(including, without limitation, reasonable attorneys’ fees and disbursements)
incurred by Lender and/or Trustee, as applicable, in connection therewith, and
such sum, together with interest thereon at the Default Rate from and after such
demand until fully paid, shall constitute a part of the Debt.
 
Section 2.08. Use of the Property. Borrower will use, or cause to be used, the
Property for such use as is permitted pursuant to applicable Legal Requirements
including, without limitation, under the certificate of occupancy applicable to
the Property, and which is required by the Loan Documents. Borrower shall not
suffer or permit the Property or any portion thereof to be used by the public,
any tenant, or any Person not subject to a Lease, in a manner as is reasonably
likely to impair Borrower’s title to the Property, or in such manner as may give
rise to a claim or claims of adverse usage or adverse possession by the public,
or of implied dedication of the Property or any part thereof.
 
Section 2.09. Financial Reports. (a) Borrower will keep and maintain or will
cause to be kept and maintained on a Fiscal Year basis, in accordance with GAAP
(or such other accounting basis reasonably acceptable to Lender) consistently
applied, proper and accurate books, tax returns, records and accounts reflecting
(i) all of the financial affairs of Borrower and (ii) all items of income and
expense in connection with the operation of the Property or in connection with
any services, equipment or furnishings provided in connection with the operation
thereof, whether such income or expense may be realized by Borrower or by any
other Person whatsoever, excepting lessees unrelated to and unaffiliated with
Borrower who have leased from Borrower portions of the Premises for the purpose
of occupying the same. Lender shall have the right from time to time at all
times during normal business hours upon reasonable advance notice to examine
such books, tax returns, records and accounts at the office of Borrower or other
Person maintaining such books, tax returns, records and accounts and to make
such copies or extracts thereof as Lender shall desire. During the continuance
of an Event of Default, Borrower shall pay any costs and expenses incurred by
Lender to examine Borrower’s and Guarantor’s accounting records with respect to
the Property, as Lender shall determine to be necessary or appropriate in the
protection of Lender’s interest.
 
-40-

--------------------------------------------------------------------------------

(b) Borrower will furnish Lender (i) annually, within one hundred twenty (120)
days following the end of each Fiscal Year of Borrower and (ii) on a quarterly
basis, within thirty (30) days following the end of each fiscal quarter of
Borrower, with a complete copy of Borrower’s financial statement consistently
applied covering (A) all of the financial affairs of Borrower and (B) the
operation of the Property for such Fiscal Year or fiscal quarters, as
applicable, and containing a statement of revenues and expenses, a statement of
assets and liabilities and a statement of Borrower’s equity. Each annual
financial statement shall be prepared by an Independent certified public
accountant that is reasonably acceptable to Lender in accordance with GAAP (or
such other accounting basis reasonably acceptable to Lender). Upon request made
in connection with a Securitization of the Loan or after the occurrence of an
Event of Default, such annual financial statements shall be audited by an
Independent certified public accountant that is reasonably acceptable to Lender
in accordance with GAAP. Together with the financial statements required to be
furnished pursuant to this Section 2.09(b), Borrower shall furnish to Lender (A)
an Officer’s Certificate certifying as of the date thereof (1) that the
financial statements accurately represent the results of operations and
financial condition of Borrower and the Property all in accordance with GAAP (or
such other accounting basis reasonably acceptable to Lender) consistently
applied, and (2) whether, to the best of such officer’s knowledge, there exists
a Default under the Note or any other Loan Document executed and delivered by
Borrower, and if such event or circumstance exists, the nature thereof, the
period of time it has existed and the action then being taken to remedy such
event or circumstance and (B) together with the financial statements delivered
pursuant to Section 2.09(b)(ii) above, a statement showing (1) Pro-Forma Net
Operating Income at the end of the most recent fiscal quarter (subject to
verification by Lender in its reasonable discretion) and (2) the calculation of
Debt Service Coverage.
 
(c) Borrower will furnish Lender monthly, within twenty (20) days following the
end of each month, with (i) a true, complete and correct cash flow statement
with respect to the Property in the form attached hereto as Exhibit C and made a
part hereof, showing (A) all cash receipts of any kind whatsoever and all cash
payments and disbursements, (B) year-to-date summaries of such cash receipts,
payments and disbursements, and (C) during an O&M Operative Period, Pro Forma
Net Operating Income (subject to the verification by Lender) and a calculation
of Debt Service Coverage, (ii) a certification of Manager stating that such cash
flow statement is true, complete and correct and a list of all litigation and
proceedings affecting Borrower or the Property in which the amount involved is
$250,000 or more, if not covered by insurance (or $2,500,000 or more whether or
not covered by insurance), (iii) the sales per square foot for each lessee under
the Space Leases to the extent such information is required to be delivered by
such lessees and (iv) an occupancy report for the Property.
 
(d) Borrower will furnish Lender monthly, within twenty (20) days following the
end of each month, with a certification of Manager stating that all Operating
Expenses with respect to the Property which had accrued as of the last day of
the month preceding the delivery of the cash flow statement referred to in
clause (c) above have been fully paid or otherwise reserved for by Manager (any
such certification or any certification furnished by a Manager pursuant to
clause (c) above, a “Manager Certification”).
 
-41-

--------------------------------------------------------------------------------

 
(e) Borrower will furnish Lender annually, within twenty (20) days following the
end of each year and within twenty (20) days following receipt of such request
therefor, with a true, complete and correct rent roll for the Property,
including a list of which tenants are in default under their respective Leases,
dated as of the date of Lender’s request, identifying each tenant, the monthly
rent and additional rent, if any, payable by such tenant, the expiration date of
such tenant’s Lease, the security deposit, if any, held by Borrower under the
Lease, the space covered by the Lease, each tenant that has filed a bankruptcy,
insolvency, or reorganization proceeding since delivery of the last such rent
roll, the sales per square foot of each tenant, to the extent reported by
tenants under the terms of the Leases and the arrearages for such tenant, if
any, and such rent roll shall be accompanied by an Officer’s Certificate, dated
as of the date of the delivery of such rent roll, certifying that such rent roll
is true, correct and complete in all material respects as of its date.
 
(f) Borrower shall furnish to Lender, within thirty (30) days after Lender’s
request therefor, with such further detailed information with respect to the
operation of the Property and the financial affairs of Borrower as may be
reasonably requested by Lender.
 
(g) Borrower shall cause Manager to furnish to Lender, within twenty (20) days
following the end of each month, a schedule of tenant security deposits showing
any activity in the Security Deposit Account for such month, together with a
certification of Manager as to the balance in such Security Deposit Account and
that such tenant security deposits are being held in accordance with all Legal
Requirements.
 
(h) Borrower will furnish Lender annually, within ninety (90) days after the end
of each Fiscal Year, with a report setting forth (i) the Net Operating Income
for such Fiscal Year, (ii) the average occupancy rate of the Property during
such Fiscal Year, and (iii) the capital repairs, replacements and improvements
performed at the Property during such Fiscal Year and the aggregate Recurring
Replacement Expenditures made in connection therewith.
 
(i) Borrower shall furnish to Lender annually, within thirty (30) days of filing
its respective tax return, a copy of such tax return and either a copy of the
tax return of Guarantor within such thirty (30) day period or within ninety (90)
days after the end of each Fiscal Year, a certificate from an Independent
certified public accountant indicating the net worth of the Guarantor.
 
(j) Borrower shall submit to Lender for Lender’s written approval an Annual
Budget not later than sixty (60) days prior to the commencement of each Fiscal
Year or, with respect to the Fiscal Year in which the Closing Date occurs,
within sixty (60) days of the Closing Date, in form satisfactory to Lender
setting forth in reasonable detail budgeted monthly operating income and monthly
operating capital and other expenses for the Property. Each Annual Budget shall
contain, among other things, limitations on management fees, third party service
fees, and other expenses as Borrower may reasonably determine. Lender shall have
the right to approve such Annual Budget which approval shall not be unreasonably
withheld, and in the event that Lender objects to the proposed Annual Budget
submitted by Borrower, Lender shall advise Borrower of such objections within
ten (10) Business Days after receipt thereof (and deliver to Borrower a
reasonably detailed description of such objections) and Borrower shall, within
four (4) Business Days after receipt of notice of any such objections, revise
such Annual Budget and resubmit the same to Lender. Lender shall advise Borrower
of any objections to such revised Annual Budget within seven (7) Business Days
after receipt thereof (and deliver to Borrower a reasonably detailed description
of such objections) and Borrower shall revise the same in accordance with the
process described herein until Lender approves an Annual Budget, provided,
however, that if Lender shall not advise Borrower of its objections to any
proposed Annual Budget within the applicable time period set forth in this
Section, then such proposed Annual Budget shall be deemed approved by Lender.
Until such time that Lender approves a proposed Annual Budget, the most recently
Approved Annual Budget shall apply; provided that, such Approved Annual Budget
shall be adjusted to reflect actual increases in Basic Carrying Costs and
utilities expenses. In the event that Borrower must incur an Extraordinary
Expense, then Borrower shall promptly deliver to Lender a reasonably detailed
explanation of such proposed Extraordinary Expense for Lender’s approval, which
approval may be granted or denied in Lender’s reasonable discretion; provided,
however, so long as no O&M Operative Period is then in existence, no approval
from Lender shall be required if (i) a single Extraordinary Expense is equal to
or less than five percent (5%) of the amount set forth in the Approved Annual
Budget for expenses related to such Extraordinary Expense, or (ii) if no sum was
budgeted for such expense in the Approved Annual Budget, the Extraordinary
Expense is less than or equal to five percent (5%) of the Approved Annual
Budget, provided that all Extraordinary Expenses in any Fiscal Year do not
exceed five percent (5%) of the Approved Annual Budget.
 
-42-

--------------------------------------------------------------------------------

 
(k) In the event that Borrower fails to deliver any of the financial statements,
reports or other information required to be delivered to Lender pursuant to this
Section 2.09 on or prior to their due dates, if any such failure shall continue
for fifteen (15) days following notice thereof from Lender, without waiving any
default arising out of such failure, Borrower shall pay to Lender on each
Payment Date for each month or portion thereof that any such financial
statement, report or other information remains undelivered, an administrative
fee in the amount of Two Thousand Five Hundred Dollars ($2,500) and (ii) if
Borrower has not delivered any such reports within five (5) Business Days of
Lender’s giving an additional notice to Borrower requesting the missing
financial statement, report or other information, an O&M Operative Period shall
be deemed to have commenced. Borrower agrees that such administrative fee (i) is
a fair and reasonable fee necessary to compensate Lender for its additional
administrative costs and increased costs relating to Borrower’s failure to
deliver the aforementioned statements, reports or other items as and when
required hereunder and (ii) is not a penalty.
 
Section 2.10. Litigation. Borrower will give prompt written notice to Lender of
any litigation or governmental proceedings pending or threatened (in writing)
against Borrower which might have a Material Adverse Effect.
 
Section 2.11. Updates of Representations. Borrower shall deliver to Lender
within ten (10) Business Days of the request of Lender an Officer’s Certificate
updating all of the representations and warranties contained in this Security
Instrument and the other Loan Documents and certifying that all of the
representations and warranties contained in this Security Instrument and the
other Loan Documents, as updated pursuant to such Officer’s Certificate, are
true, accurate and complete as of the date of such Officer’s Certificate or
shall set forth the exceptions to representations and/or warranties in
reasonable detail, as applicable, and, upon Lender’s request for further
information with respect to such exceptions, shall provide Lender such
additional information as Lender may reasonably request. Notwithstanding the
foregoing, provided that no Event of Default has occurred and is continuing,
Borrower shall not be required to deliver the foregoing Officer’s Certificate
more than two (2) times in any Loan Year. 
 
-43-

--------------------------------------------------------------------------------

 
ARTICLE III: INSURANCE AND CASUALTY RESTORATION
 
Section 3.01. Insurance Coverage. Borrower shall, at its expense, maintain the
following insurance coverages with respect to the Property during the term of
this Security Instrument:
 
(a) (i) Insurance against loss or damage by fire, casualty and other hazards
included in an “all-risk” coverage endorsement or its equivalent, with such
endorsements as Lender may from time to time reasonably require and which are
customarily required by Institutional Lenders of similar properties similarly
situated, including, without limitation, if the Property constitutes a legal
non-conforming use, an ordinance of law coverage endorsement which contains
“Demolition Cost”, “Loss Due to Operation of Law” and “Increased Cost of
Construction” coverages, covering the Property in an amount not less than the
greater of (A) 100% of the insurable replacement value of the Property
(exclusive of the Premises and footings and foundations) and (B) such other
amount as is necessary to prevent any reduction in such policy by reason of and
to prevent Borrower, Lender or any other insured thereunder from being deemed to
be a co-insurer. Not less frequently than once every three (3) years, Borrower,
at its option, shall either (A) have the Appraisal updated or obtain a new
appraisal of the Property, (B) have a valuation of the Property made by or for
its insurance carrier conducted by an appraiser experienced in valuing
properties of similar type to that of the Property which are in the geographical
area in which the Property is located or (C) provide such other evidence as
will, in Lender’s sole judgment, enable Lender to determine whether there shall
have been an increase in the insurable value of the Property and Borrower shall
deliver such updated Appraisal, new appraisal, insurance valuation or other
evidence acceptable to Lender, as the case may be, and, if such updated
Appraisal, new appraisal, insurance valuation, or other evidence acceptable to
Lender reflects an increase in the insurable value of the Property, the amount
of insurance required hereunder shall be increased accordingly and Borrower
shall deliver evidence satisfactory to Lender that such policy has been so
increased.
 
(ii) Commercial general liability insurance against claims for personal and
bodily injury and/or death to one or more persons or property damage, occurring
on, in or about the Property (including the adjoining streets, sidewalks and
passageways therein) in such amounts as Lender may from time to time reasonably
require (but in no event shall Lender’s requirements be increased more
frequently than once during each twelve (12) month period) and which are
customarily required by Institutional Lenders for similar properties similarly
situated, but not less than $1,000,000 per occurrence and $2,000,000 general
aggregate on a per location basis and, in addition thereto, not less than
$25,000,000 excess and/or umbrella liability insurance shall be maintained for
any and all claims.
 
-44-

--------------------------------------------------------------------------------

 
(iii) Business interruption, rent loss or other similar insurance (A) with loss
payable to Lender, (B) covering all risks required to be covered by the
insurance provided for in Section 3.01(a)(i) hereof and (C) in an amount not
less than 90% of the projected fixed or base rent plus percentage rent for the
succeeding eighteen (18) month period based on an occupancy rate of 100%. Such
insurance coverage shall provide a six (6) month extended period of indemnity.
The amount of such insurance shall be determined upon the execution of this
Security Instrument, and not more frequently than once each calendar year
thereafter based on Borrower’s reasonable estimate of projected fixed or base
rent plus percentage rent, from the Property for the next succeeding eighteen
(18) months. In the event the Property shall be damaged or destroyed, Borrower
shall and hereby does assign to Lender all payment of claims under the policies
of such insurance, and all amounts payable thereunder, and all net amounts,
shall be collected by Lender under such policies and shall be applied in
accordance with this Security Instrument; provided, however, that nothing herein
contained shall be deemed to relieve Borrower of its obligations to timely pay
all amounts due under the Loan Documents.
 
(iv) Intentionally Deleted.
 
(v) Insurance against loss or damages from (A) leakage of sprinkler systems and
(B) explosion of steam boilers, air conditioning equipment, pressure vessels or
similar apparatus now or hereafter installed at the Property, in such amounts as
Lender may from time to time reasonably require and which are then customarily
required by Institutional Lenders of similar properties similarly situated.
 
(vi) Flood insurance in an amount equal to the full insurable value of the
Property or the maximum amount available, whichever is less, if the Improvements
are located in an area designated by the Secretary of Housing and Urban
Development as being “an area of special flood hazard” under the National Flood
Insurance Program (i.e., having a one percent or greater chance of flooding),
and if flood insurance is available under the National Flood Insurance Act.
 
(vii) Worker’s compensation insurance or other similar insurance which may be
required by Governmental Authorities or Legal Requirements.
 
(viii) Intentionally Deleted.
 
(ix) Insurance against damage resulting from acts of terrorism, or an insurance
policy without an exclusion for damages resulting from terrorism, on terms
consistent with the commercial property insurance policy required under
subsections (i), (ii) and (iii) above.
 
(x) Such other insurance as may from time to time be required by Lender and
which is then customarily required by Institutional Lenders for similar
properties similarly situated, against other insurable hazards, including, but
not limited to, malicious mischief, vandalism, mold, spores or fungus, sinkhole
and mine subsidence, acts of terrorism, windstorm and/or earthquake, due regard
to be given to the size and type of the Premises, Improvements, Fixtures and
Equipment and their location, construction and use. Additionally, Borrower shall
carry such insurance coverage as Lender may from time to time require if the
failure to carry such insurance may result in a downgrade, qualification or
withdrawal of any class of securities issued in connection with a Securitization
or, if the Loan is not yet part of a Securitization, would result in an increase
in the subordination levels of any class of securities anticipated to be issued
in connection with a proposed Securitization.
 
-45-

--------------------------------------------------------------------------------

 
(b) Borrower shall cause any Manager of the Property to maintain fidelity
insurance in an amount equal to $5,000,000 or such lesser amount as Lender shall
approve.
 

Section 3.02. Policy Terms. (a) All insurance required by this Article III shall
be in the form (other than with respect to Sections 3.01(a)(vi) and (vii) above
when insurance in those two sub-sections is placed with a governmental agency or
instrumentality on such agency’s forms) and amount and with deductibles as, from
time to time, shall be reasonably acceptable to Lender, under valid and
enforceable policies issued by financially responsible insurers authorized to do
business in the State where the Property is located, with a general
policyholder’s service rating of not less than A- and a financial rating of not
less than X as rated in the most currently available Best’s Insurance Reports
(or the equivalent, if such rating system shall hereafter be altered or
replaced) and shall have a claims paying ability rating and/or financial
strength rating, as applicable, of not less than “AA” (or its equivalent), or
such lower claims paying ability rating and/or financial strength rating, as
applicable, as Lender shall, in its sole and absolute discretion, consent to,
from a Rating Agency (one of which after a Securitization in which Standard &
Poor’s rates any securities issued in connection with such Securitization, shall
be Standard & Poor’s). Originals or certified copies of all insurance policies
shall be delivered to and held by Lender. All such policies (except policies for
worker’s compensation) shall name Lender, its successors and/or assigns as an
additional named insured, shall provide for loss payable to Lender, its
successors and/or assigns and shall contain (or have attached): (i) standard
“non-contributory mortgagee” endorsement or its equivalent relating, inter alia,
to recovery by Lender notwithstanding the negligent or willful acts or omissions
of Borrower; (ii) a waiver of subrogation endorsement as to Lender; (iii) an
endorsement indicating that neither Lender nor Borrower shall be or be deemed to
be a co-insurer with respect to any casualty risk insured by such policies and
shall provide for a deductible per loss of an amount not more than the lesser of
(x) that which is customarily maintained by owners of similar properties
similarly situated and (y) five percent (5%) of the Adjusted Net Cash Flow, and
(iv) a provision that such policies shall not be canceled, terminated, denied
renewal or amended, including, without limitation, any amendment reducing the
scope or limits of coverage, without at least thirty (30) days’ prior written
notice to Lender in each instance. Not less than thirty (30) days prior to the
expiration dates of the insurance policies obtained pursuant to this Security
Instrument, originals or certified copies of renewals of such policies (or
certificates evidencing such renewals) bearing notations evidencing the payment
of premiums or accompanied by other reasonable evidence of such payment (which
premiums shall not be paid by Borrower through or by any financing arrangement
which would entitle an insurer to terminate a policy) shall be delivered by
Borrower to Lender. Borrower shall not carry separate insurance, concurrent in
kind or form or contributing in the event of loss, with any insurance required
under this Article III.
 
-46-

--------------------------------------------------------------------------------

 
(b) If Borrower fails to maintain and deliver to Lender the original policies or
certificates of insurance required by this Security Instrument, or if there are
insufficient funds in the Basic Carrying Costs Escrow Account to pay the
premiums for same, Lender may, at its option, procure such insurance, and
Borrower shall pay, or as the case may be, reimburse Lender for, all premiums
thereon promptly, upon demand by Lender, with interest thereon at the Default
Rate from the date paid by Lender to the date of repayment and such sum shall
constitute a part of the Debt.
 
(c) Borrower shall notify Lender of the renewal premium of each insurance policy
and Lender shall be entitled to pay such amount on behalf of Borrower from the
Basic Carrying Costs Escrow Account. With respect to insurance policies which
require periodic payments (i.e., monthly or quarterly) of premiums, Lender shall
be entitled to pay such amounts fifteen (15) days (or such lesser number of days
as Lender shall determine) prior to the respective due dates of such
installments.
 
(d) The insurance required by this Security Instrument may, at the option of
Borrower, be effected by blanket and/or umbrella policies issued to Borrower
covering the Property provided that, in each case, the policies otherwise comply
with the provisions of this Security Instrument and allocate to the Property,
from time to time (but in no event less than once a year), the coverage
specified by this Security Instrument, without possibility of reduction or
coinsurance by reason of, or damage to, any other property (real or personal)
named therein. If the insurance required by this Security Instrument shall be
effected by any such blanket or umbrella policies, Borrower shall furnish to
Lender (i) original policies or certified copies thereof, or an original
certificate of insurance together with reasonable access to the original of such
policy to review such policy’s coverage of the Property, with schedules attached
thereto showing the amount of the insurance provided under such policies
applicable to the Property and (ii) an Officer’s Certificate setting forth (A)
the number of properties covered by such policy, (B) the location by city (if
available, otherwise, county) and state of the properties, (C) the average
square footage of the properties, (D) a brief description of the typical
construction type included in the blanket policy and (E) such other information
as Lender may reasonably request.
 
Section 3.03. Assignment of Policies. (a) Borrower hereby assigns to Lender the
proceeds of all insurance (other than worker’s compensation and liability
insurance) obtained pursuant to this Security Instrument, all of which proceeds
shall be payable to Lender as collateral and further security for the payment of
the Debt and the performance of the Borrowers’ obligations hereunder and under
the other Loan Documents, and Borrower hereby authorizes and directs the issuer
of any such insurance to make payment of such proceeds directly to Lender.
Except as otherwise expressly provided in Section 3.04 or elsewhere in this
Article III, Lender shall have the option, in its discretion, and without regard
to the adequacy of its security, to apply all or any part of the proceeds it may
receive pursuant to this Article in such manner as Lender may elect to any one
or more of the following: (i) the payment of the Debt, whether or not then due,
in any proportion or priority as Lender, in its discretion, may elect, (ii) the
repair or restoration of the Property, (iii) the cure of any Event of Default or
(iv) the reimbursement of the costs and expenses of Lender incurred pursuant to
the terms hereof in connection with the recovery of the Insurance Proceeds.
Nothing herein contained shall be deemed to excuse Borrower from repairing or
maintaining the Property as provided in this Security Instrument or restoring
all damage or destruction to the Property, regardless of the sufficiency of the
Insurance Proceeds, and the application or release by Lender of any Insurance
Proceeds shall not cure or waive any Default or notice of Default.
 
-47-

--------------------------------------------------------------------------------

 
(b) In the event of the foreclosure of this Security Instrument or any other
transfer of title or assignment of all or any part of the Property in
extinguishment, in whole or in part, of the Debt, all right, title and interest
of Borrower in and to all policies of insurance required by this Security
Instrument shall inure to the benefit of the successor in interest to Borrower
or the purchaser of the Property to the extent that such policies are assignable
or transferable. If, prior to the receipt by Lender of any proceeds, the
Property or any portion thereof shall have been sold on foreclosure of this
Security Instrument or by deed in lieu thereof or otherwise, or any claim under
such insurance policy arising during the term of this Security Instrument is not
paid until after the extinguishment of the Debt, and Lender shall not have
received the entire amount of the Debt outstanding at the time of such
extinguishment, whether or not a deficiency judgment on this Security Instrument
shall have been sought or recovered or denied, then, the proceeds of any such
insurance to the extent of the amount of the Debt not so received, shall be paid
to and be the property of Lender, together with interest thereon at the Default
Rate, and the reasonable attorney’s fees, costs and disbursements incurred by
Lender in connection with the collection of the proceeds which shall be paid to
Lender and Borrower hereby assigns, transfers and sets over to Lender all of
Borrower’s right, title and interest in and to such proceeds. Notwithstanding
any provisions of this Security Instrument to the contrary, Lender shall not be
deemed to be a trustee or other fiduciary with respect to its receipt of any
such proceeds, which may be commingled with any other monies of Lender;
provided, however, that Lender shall use such proceeds for the purposes and in
the manner permitted by this Security Instrument. Any proceeds deposited with
Lender shall be held by Lender in an interest-bearing account, but Lender makes
no representation or warranty as to the rate or amount of interest, if any,
which may accrue on such deposit and shall have no liability in connection
therewith. Interest accrued, if any, on the proceeds shall be deemed to
constitute a part of the proceeds for purposes of this Security Instrument. The
provisions of this Section 3.03(b) shall survive the termination of this
Security Instrument by foreclosure, deed in lieu thereof or otherwise as a
consequence of the exercise of the rights and remedies of Lender hereunder after
a Default.

Section 3.04. Casualty Restoration. (a) (i) In the event of any damage to or
destruction of the Property, Borrower shall give prompt written notice to Lender
(which notice shall set forth Borrower’s good faith estimate of the cost of
repairing or restoring such damage or destruction, or if Borrower cannot
reasonably estimate the anticipated cost of restoration, Borrower shall
nonetheless give Lender prompt notice of the occurrence of such damage or
destruction, and will diligently proceed to obtain estimates to enable Borrower
to quantify the anticipated cost and time required for such restoration,
whereupon Borrower shall promptly notify Lender of such good faith estimate)
and, provided that restoration does not violate any Legal Requirements, Borrower
shall promptly commence and diligently prosecute to completion the repair,
restoration or rebuilding of the Property so damaged or destroyed to a condition
such that the Property shall be at least equal in value to that immediately
prior to the damage to the extent practicable, in full compliance with all Legal
Requirements and the provisions of all Leases, and in accordance with Section
3.04(b) below. Such repair, restoration or rebuilding of the Property are
sometimes hereinafter collectively referred to as the “Work”.
 
-48-

--------------------------------------------------------------------------------

 
(ii) Notwithstanding the foregoing provisions of this Section 3.04, upon the
occurrence of any damage to or destruction of the Property, provided that such
damage or destruction is not a Substantial Casualty, if in Lender’s reasonable
judgment the cost of repair of or restoration to the Property required as a
result of any damage or destruction is less than $1,000,000 in the aggregate and
the Work can be completed in less than one hundred eighty (180) days (but in no
event beyond the date which is six (6) months prior to the Maturity Date), then
Lender, shall permit Borrower to apply for and receive the Insurance Proceeds
directly from the insurer (and Lender shall advise the insurer to pay over such
Insurance Proceeds directly to Borrower), to the extent required to pay for any
such Work, with any excess thereof to be retained by Borrower.
 
(iii) Subject to Section 3.04(a)(iv), Lender shall apply any Insurance Proceeds
which it may receive towards the Work in accordance with Section 3.04(b) and the
other applicable sections of this Article III.
 
(iv) If (A) an Event of Default shall have occurred and is continuing, (B)
Lender is not reasonably satisfied that the Debt Service Coverage, after
substantial completion of the Work, will be at least equal to the Required Debt
Service Coverage, (C) more than thirty percent (30%) of the reasonably estimated
fair market value of the Property is damaged or destroyed, (D) Lender is not
reasonably satisfied that the Work can be completed six (6) months prior to
Maturity or (E) Lender is not reasonably satisfied that Leases covering at least
75% of the rentable square footage for the applicable Property (immediately
prior to such damage or destruction) will not be terminated due to the casualty
during and following the restoration, or (F) Lender is not reasonably satisfied
that the Work can be completed within twelve (12) months of the damage to or
destruction of the Property (each, a “Substantial Casualty”), Lender shall have
the option, in its sole discretion to apply any Insurance Proceeds it may
receive pursuant to this Security Instrument (less any reasonable cost to Lender
of recovering and paying out such proceeds incurred pursuant to the terms hereof
and not otherwise reimbursed to Lender, including, without limitation,
reasonable attorneys’ fees and expenses) to the payment of the Debt, without any
prepayment fee or charge of any kind, or to allow such proceeds to be used for
the Work pursuant to the terms and subject to the conditions of Section 3.04(b)
hereof and the other applicable sections of this Article III.
 
(v) In the event that Lender elects or is obligated hereunder to allow Insurance
Proceeds to be used for the Work, any excess proceeds remaining after completion
of such Work shall be applied to the payment of the Debt without any prepayment
fee or charge of any kind.
 
-49-

--------------------------------------------------------------------------------

 
(b) If any Condemnation Proceeds in accordance with Section 6.01(a), or any
Insurance Proceeds in accordance with Section 3.04(a), are to be applied to the
repair, restoration or rebuilding of the Property, then such proceeds shall be
deposited into a segregated interest-bearing bank account at the Bank, which
shall be an Eligible Account, held by Lender and shall be paid out from time to
time to Borrower as the Work progresses (less any reasonable cost to Lender of
recovering and paying out such proceeds, including, without limitation,
reasonable attorneys’ fees and costs allocable to inspecting the Work and the
plans and specifications therefor), subject to Section 5.13 hereof and to all of
the following conditions:
 
(i) An Independent architect or engineer selected by Borrower and reasonably
acceptable to Lender (an “Architect” or “Engineer”) or a Person otherwise
reasonably acceptable to Lender, shall have delivered to Lender a certificate
estimating the cost of completing the Work, and, if the amount set forth therein
is more than the sum of the amount of Insurance Proceeds then being held by
Lender in connection with a casualty and amounts agreed to be paid as part of a
final settlement under the insurance policy upon or before completion of the
Work, Borrower shall have delivered to Lender (A) cash collateral in an amount
equal to such excess, or (B) an unconditional, irrevocable, clean sight draft
letter of credit, in form, substance and issued by a bank reasonably acceptable
to Lender, in the amount of such excess and draws on such letter of credit shall
be made by Lender to make payments pursuant to this Article III following
exhaustion of the Insurance Proceeds therefor or (C) a completion bond in form,
substance and issued by a surety company reasonably acceptable to Lender.
 
(ii) If the cost of the Work is reasonably estimated by an Architect or Engineer
in a certification reasonably acceptable to Lender to be equal to or exceed five
percent (5%) of the Loan Amount for the Property, such Work shall be performed
under the supervision of an Architect or Engineer, it being understood that the
plans and specifications with respect thereto shall provide for Work so that,
upon completion thereof, the Property shall be at least equal in replacement
value and general utility to the Property prior to the damage or destruction.
 
(iii) Each request for payment shall be made on not less than ten (10) days’
prior notice to Lender and shall be accompanied by a certificate of an Architect
or Engineer, or, if the Work is not required to be supervised by an Architect or
Engineer, by an Officer’s Certificate stating (A) that payment is for Work
completed or materials delivered in compliance with the plans and
specifications, if required under clause (ii) above, (B) that the sum requested
is required to reimburse Borrower for payments by Borrower to date, or is due to
the contractors, subcontractors, materialmen, laborers, engineers, architects or
other Persons rendering services or materials for the Work (giving a brief
description of such services and materials), and that when added to all sums
previously paid out by Lender does not exceed the value of the Work done to the
date of such certificate, (C) if the sum requested is to cover payment relating
to repair and restoration of personal property required or relating to the
Property, that title to the personal property items covered by the request for
payment is vested in Borrower (unless Borrower is lessee of such personal
property), and (D) that the Insurance Proceeds and other amounts deposited by
Borrower held by Lender after such payment is equal to or more than the
estimated remaining cost to complete such Work; provided, however, that if such
certificate is given by an Architect or Engineer, such Architect or Engineer
shall certify as to clause (A) above, and such Officer’s Certificate shall
certify as to the remaining clauses above, and provided, further, that Lender
shall not be obligated to disburse such funds if Lender determines, in Lender’s
reasonable discretion, that Borrower shall not be in compliance with this
Section 3.04(b). Additionally, each request for payment shall contain a
statement signed by Borrower stating that the requested payment is for Work
satisfactorily done to date or for materials for the Work.
 
-50-

--------------------------------------------------------------------------------

 
(iv) Each request for payment shall be accompanied by waivers of lien, in
customary form and substance, covering that part of the Work for which payment
or reimbursement is being requested and, if required by Lender, a search
prepared by a title company or licensed abstractor, or by other evidence
satisfactory to Lender that there has not been filed with respect to the
Property any mechanic’s or other lien or instrument for retention of title
relating to any part of the Work not discharged of record. Additionally, as to
any personal property covered by the request for payment, Lender shall be
furnished with evidence of having incurred a payment obligation therefor and
such further evidence reasonably satisfactory to assure Lender that UCC filings
therefor provide a valid first lien on the personal property.
 
(v) Lender shall have the right to inspect the Work at all reasonable times upon
reasonable prior notice and may condition any disbursement of Insurance Proceeds
upon satisfactory compliance by Borrower with the provisions hereof. Neither the
approval by Lender of any required plans and specifications for the Work nor the
inspection by Lender of the Work shall make Lender responsible for the
preparation of such plans and specifications, or the compliance of such plans
and specifications of the Work, with any applicable law, regulation, ordinance,
covenant or agreement.
 
(vi) Insurance Proceeds shall not be disbursed more frequently than once every
thirty (30) days.

(vii) Until such time as the Work has been substantially completed, Lender shall
not be obligated to disburse up to ten percent (10%) of the cost of the Work
(the “Retention Amount”) to Borrower. Upon substantial completion of the Work,
Borrower shall send notice thereof to Lender and, subject to the conditions of
Section 3.04(b)(i)-(iv), Lender shall disburse one-half of the Retention Amount
to Borrower; provided, however, that the remaining one-half of the Retention
Amount shall be disbursed to Borrower when Lender shall have received copies of
any and all final certificates of occupancy or other certificates, licenses and
permits required for the ownership, occupancy and operation of the Property in
accordance with all Legal Requirements. Borrower hereby covenants to diligently
seek to obtain any such certificates, licenses and permits. Notwithstanding the
foregoing, Lender will release the portion of the Retention Amount being held
with respect to any contractor, subcontractor or materialman engaged in the Work
as of the date upon which the Architect or Engineer certifies to Lender that the
contractor, subcontractor or materialman has satisfactorily completed all work
and has supplied all materials in accordance with the provisions of the
contractor’s, subcontractor’s or materialman’s contract, provided, (A) the
contractor, subcontractor or materialman delivers the lien waivers and evidence
of payment in full of all sums due to the contractor, subcontractor or
materialman as may be reasonably requested by Lender or by the title company
issuing the Lender’s title policy and (B) if required by Lender, the release of
any such portion of the Retention Amount shall be approved by the surety
company, if any, which has issued a payment or performance bond with respect to
the contractor, subcontractor or materialman.
 
-51-

--------------------------------------------------------------------------------

 
(viii) Upon failure on the part of Borrower promptly to commence the Work as
provided for herein or to proceed diligently and continuously to completion of
the Work, subject to Force Majeure, not to exceed sixty (60) days, which failure
shall continue after notice for thirty (30) days, Lender may apply any Insurance
Proceeds or Condemnation Proceeds it then or thereafter holds to the payment of
the Debt in accordance with the provisions of the Note; provided, however, that
Lender shall be entitled to apply at any time all or any portion of the
Insurance Proceeds or Condemnation Proceeds it then holds to the extent
necessary to cure any Event of Default.
 
(c) If Borrower (i) within ninety (90) days after the occurrence of any damage
to the Property or any portion thereof (or such shorter period as may be
required under any Major Space Lease) shall fail to submit to Lender for
approval plans and specifications for the Work (approved by the Architect and by
all Governmental Authorities whose approval is required), (ii) after any such
plans and specifications are approved by all Governmental Authorities, the
Architect and Lender, shall fail to promptly commence such Work as provided for
herein or (iii) shall fail to diligently prosecute such Work to completion,
then, in addition to all other rights available hereunder, at law or in equity,
Lender, or any receiver of the Property or any portion thereof, upon five (5)
days’ prior notice to Borrower (except in the event of emergency in which case
no notice shall be required), may (but shall have no obligation to) perform or
cause to be performed such Work, and may take such other steps as it reasonably
deems advisable. Borrower hereby waives, for Borrower, any claim, other than for
gross negligence or willful misconduct, against Lender and any receiver arising
out of any act or omission of Lender or such receiver pursuant hereto, and
Lender may apply all or any portion of the Insurance Proceeds (without the need
to fulfill any other requirements of this Section 3.04) to reimburse Lender and
such receiver, for all reasonable costs not reimbursed to Lender or such
receiver upon demand together with interest thereon at the Default Rate from the
date such amounts are advanced until the same are paid to Lender or the
receiver.
 
(d) Subject to Section 3.04(a)(ii) above, Borrower hereby irrevocably appoints
Lender as its attorney-in-fact, coupled with an interest, to collect and receive
any Insurance Proceeds paid with respect to any portion of the Property or the
insurance policies required to be maintained hereunder, and to endorse any
checks, drafts or other instruments representing any Insurance Proceeds whether
payable by reason of loss thereunder or otherwise.
 
Section 3.05. Compliance with Insurance Requirements. Borrower promptly shall
comply with, and shall cause the Property to comply with, all Insurance
Requirements, even if such compliance requires structural changes or
improvements or would result in interference with the use or enjoyment of the
Property or any portion thereof provided Borrower shall have a right to contest
in good faith and with diligence such Insurance Requirements provided (a) no
Event of Default shall be continuing during such contest and such contest shall
not subject the Property or any portion thereof to any lien or affect the
priority of the lien of this Security Instrument, (b) failure to comply with
such Insurance Requirements will not subject Lender or any of its agents,
employees, officers or directors to any civil or criminal liability, (c) such
contest will not cause any reduction in insurance coverage, (d) such contest
shall not affect the ownership, use or occupancy of the Property, (e) the
Property or any part thereof or any interest therein shall not be in any danger
of being sold, forfeited or lost by reason of such contest by Borrower, (f)
Borrower has given Lender prompt notice of such contest and, upon request by
Lender from time to time, notice of the status of such contest by Borrower
and/or information of the continuing satisfaction of the conditions set forth in
clauses (a) through (e) of this Section 3.05, (g) upon a final determination of
such contest, Borrower shall promptly comply with the requirements thereof, and
(h) prior to and during such contest, Borrower shall furnish to Lender security
satisfactory to Lender, in its reasonable discretion, against loss or injury by
reason of such contest or the non-compliance with such Insurance Requirement
(and if such security is cash, Lender shall deposit the same in an
interest-bearing account and interest accrued thereon, if any, shall be deemed
to constitute a part of such security for purposes of this Security Instrument,
but Lender (i) makes no representation or warranty as to the rate or amount of
interest, if any, which may accrue thereon and shall have no liability in
connection therewith and (ii) shall not be deemed to be a trustee or fiduciary
with respect to its receipt of any such security and any such security may be
commingled with other monies of Lender). Upon completion of any contest, Lender
shall return the security , if any, deposited with Lender pursuant to clause (h)
of this Section 3.05. If Borrower shall use the Property or any portion thereof
in any manner which could permit the insurer to cancel any insurance required to
be provided hereunder, Borrower immediately shall obtain a substitute policy
which shall satisfy the requirements of this Security Instrument and which shall
be effective on or prior to the date on which any such other insurance policy
shall be canceled. Borrower shall not by any action or omission invalidate any
insurance policy required to be carried hereunder unless such policy is replaced
as aforesaid, or materially increase the premiums on any such policy above the
normal premium charged for such policy. Borrower shall cooperate with Lender in
obtaining for Lender the benefits of any Insurance Proceeds lawfully or
equitably payable to Lender in connection with the transaction contemplated
hereby.
 
-52-

--------------------------------------------------------------------------------

 
Section 3.06. Event of Default During Restoration. Notwithstanding anything to
the contrary contained in this Security Instrument including, without
limitation, the provisions of this Article III, if, at the time of any casualty
affecting the Property or any part thereof, or at any time during any Work, or
at any time that Lender is holding or is entitled to receive any Insurance
Proceeds pursuant to this Security Instrument, a Default exists and is
continuing (whether or not it constitutes an Event of Default), Lender shall
then have no obligation to make such proceeds available for Work and Lender
shall have the right and option, to be exercised in its sole and absolute
discretion and election, with respect to the Insurance Proceeds, either to
retain and apply such proceeds in reimbursement for the actual costs, fees and
expenses incurred by Lender in accordance with the terms hereof in connection
with the adjustment of the loss and any balance toward payment of the Debt in
such priority and proportions as Lender, in its sole discretion, shall deem
proper, or towards the Work, upon such terms and conditions as Lender shall
determine, or to cure such Default, or to any one or more of the foregoing as
Lender, in its sole and absolute discretion, may determine. If Lender shall
receive and retain such Insurance Proceeds, the lien of this Security Instrument
shall be reduced only by the amount thereof received, after reimbursement to
Lender of expenses of collection, and actually applied by Lender in reduction of
the principal sum payable under the Note in accordance with the Note.
 
Section 3.07. Application of Proceeds to Debt Reduction. (a) No damage to the
Property, or any part thereof, by fire or other casualty whatsoever, whether
such damage be partial or total, shall relieve Borrower from its liability to
pay in full the Debt and to perform its obligations under this Security
Instrument and the other Loan Documents.
 
(b) If any Insurance Proceeds are applied to reduce the Debt, Lender shall apply
the same in accordance with the provisions of the Note.
 
-53-

--------------------------------------------------------------------------------

 
ARTICLE IV: IMPOSITIONS
 
Section 4.01. Payment of Impositions, Utilities and Taxes, etc. (a) Borrower
shall pay or cause to be paid all Impositions prior to the date upon which any
fine, penalty, interest or cost for nonpayment is imposed, and furnish to
Lender, upon request, receipted bills of the appropriate taxing authority or
other documentation reasonably satisfactory to Lender evidencing the payment
thereof. If Borrower shall fail to pay any Imposition in accordance with this
Section and is not contesting or causing a contesting of such Imposition in
accordance with Section 4.04 hereof, or if there are insufficient funds in the
Basic Carrying Costs Escrow Account to pay any Imposition, Lender shall have the
right, but shall not be obligated, to pay that Imposition, and Borrower shall
repay to Lender, on demand, any amount paid by Lender, with interest thereon at
the Default Rate from the date of the advance thereof to the date of repayment,
and such amount shall constitute a portion of the Debt secured by this Security
Instrument.
 
(b) Borrower shall, prior to the date upon which any fine, penalty, interest or
cost for the nonpayment is imposed, pay or cause to be paid all charges for
electricity, power, gas, water and other services and utilities in connection
with the Property, and shall, upon request, deliver to Lender receipts or other
documentation reasonably satisfactory to Lender evidencing payment thereof. If
Borrower shall fail to pay any amount required to be paid by Borrower pursuant
to this Section 4.01 and is not contesting such charges in accordance with
Section 4.04 hereof, Lender shall have the right, but shall not be obligated, to
pay that amount, and Borrower will repay to Lender, on demand, any amount paid
by Lender with interest thereon at the Default Rate from the date of the advance
thereof to the date of repayment, and such amount shall constitute a portion of
the Debt secured by this Security Instrument.
 
(c) Borrower shall pay all taxes, charges, filing, registration and recording
fees, excises and levies imposed upon Lender by reason of or in connection with
its ownership of any Loan Document or any other instrument related thereto, or
resulting from the execution, delivery and recording of, or the lien created by,
or the obligation evidenced by, any of them, other than income, franchise and
other similar taxes imposed on Lender and shall pay all corporate stamp taxes,
if any, and other taxes, required to be paid on the Loan Documents. If Borrower
shall fail to make any such payment within ten (10) days after written notice
thereof from Lender, Lender shall have the right, but shall not be obligated, to
pay the amount due, and Borrower shall reimburse Lender therefor, on demand,
with interest thereon at the Default Rate from the date of the advance thereof
to the date of repayment, and such amount shall constitute a portion of the Debt
secured by this Security Instrument.
 
Section 4.02. Deduction from Value. In the event of the passage after the date
of this Security Instrument of any Legal Requirement deducting from the value of
the Property for the purpose of taxation, any lien thereon or changing in any
way the Legal Requirements now in force for the taxation of this Security
Instrument and/or the Debt for federal, state or local purposes, or the manner
of the operation of any such taxes so as to adversely affect the interest of
Lender, or impose any tax or other charge on any Loan Document, then Borrower
will pay such tax, with interest and penalties thereon, if any, within the
statutory period; provided, however, such tax payments shall not include such
taxes incurred more than ninety (90) days prior to the date Borrower receives
Lender’s notice of payment. In the event the payment of such tax or interest and
penalties by Borrower would be unlawful, or taxable to Lender or unenforceable
or provide the basis for a defense of usury, then in any such event, Lender
shall have the option, by written notice of not less than ninety (90) days, to
declare the Debt immediately due and payable, with no prepayment fee or charge
of any kind.
 
-54-

--------------------------------------------------------------------------------

 
Section 4.03. No Joint Assessment. Borrower shall not consent to or initiate the
joint assessment of the Premises or the Improvements (a) with any other real
property constituting a separate tax lot and Borrower represents and covenants
that the Premises and the Improvements are and shall remain a separate tax lot
or (b) with any portion of the Property which may be deemed to constitute
personal property, or any other procedure whereby the lien of any taxes which
may be levied against such personal property shall be assessed or levied or
charged to the Property as a single lien.
 
Section 4.04. Right to Contest. Borrower shall have the right, after prior
notice to Lender, at its sole expense, to contest by appropriate legal
proceedings diligently conducted in good faith, without cost or expense to
Lender or any of its agents, employees, officers or directors, the validity,
amount or application of any Imposition or any charge described in Section
4.01(b), provided that (a) no Default or Event of Default shall exist during
such proceedings and such contest shall not (unless Borrower shall comply with
clause (d) of this Section 4.04) subject the Property or any portion thereof to
any lien or affect the priority of the lien of this Security Instrument, (b)
failure to pay such Imposition or charge will not subject Lender, Trustee or any
of their agents, employees, officers or directors to any civil or criminal
liability, (c) the contest suspends enforcement of the Imposition or charge
(unless Borrower first pays the Imposition or charge), (d) prior to and during
such contest, Borrower shall furnish to Lender security satisfactory to Lender,
in its reasonable discretion, against loss or injury by reason of such contest
or the non-payment of such Imposition or charge (and if such security is cash,
Lender may deposit the same in an interest-bearing account and interest accrued
thereon, if any, shall be deemed to constitute a part of such security for
purposes of this Security Instrument, but Lender (i) makes no representation or
warranty as to the rate or amount of interest, if any, which may accrue thereon
and shall have no liability in connection therewith and (ii) shall not be deemed
to be a trustee or fiduciary with respect to its receipt of any such security
and any such security may be commingled with other monies of Lender), (e) such
contest shall not affect the ownership, use or occupancy of the Property, (f)
the Property or any part thereof or any interest therein shall not be in any
danger of being sold, forfeited or lost by reason of such contest by Borrower,
(g) Borrower has given Lender notice of the commencement of such contest and
upon request by Lender, from time to time, notice of the status of such contest
by Borrower and/or confirmation of the continuing satisfaction of clauses (a)
through (f) of this Section 4.04, and (h) upon a final determination of such
contest, Borrower shall promptly comply with the requirements thereof. Upon
completion of any contest, Borrower shall immediately pay the amount due, if
any, and deliver to Lender proof of the completion of the contest and payment of
the amount due, if any, following which Lender shall return the security, if
any, deposited with Lender pursuant to clause (d) of this Section 4.04. Borrower
shall not pay any Imposition in installments unless permitted by applicable
Legal Requirements, and shall, upon the request of Lender, deliver copies of all
notices and bills relating to any Imposition or other charge covered by this
Article IV to Lender.
 
Section 4.05. No Credits on Account of the Debt. Borrower will not claim or
demand or be entitled to any credit or credits on account of the Debt for any
part of the Impositions assessed against the Property or any part thereof and no
deduction shall otherwise be made or claimed from the taxable value of the
Property, or any part thereof, by reason of this Security Instrument or the
Debt. In the event such claim, credit or deduction shall be required by Legal
Requirements, Lender shall have the option, by written notice of not less than
forty-five (45) days, to declare the Debt immediately due and payable, and
Borrower hereby agrees to pay such amounts not later than forty-five (45) days
after such notice.
 
-55-

--------------------------------------------------------------------------------

 
Section 4.06. Documentary Stamps. If, at any time, the United States of America,
any State or Commonwealth thereof or any subdivision of any such State shall
require revenue or other stamps to be affixed to the Note, this Security
Instrument or any other Loan Document, or impose any other tax or charges on the
same, Borrower will pay the same, with interest and penalties thereon, if any.
 
ARTICLE V: CENTRAL CASH MANAGEMENT
 
Section 5.01. Cash Flow. Borrower hereby acknowledges and agrees that (i) the
Rents (which for the purposes of this Section 5.01 shall not include security
deposits from tenants under Leases held by Borrower and not applied towards
Rent) derived from the Property and (ii) Loss Proceeds (other than Loss Proceeds
that Lender has elected to apply to reduce the Debt in accordance with the terms
of Article III hereof) shall be utilized (a) to fund the Basic Carrying Costs
Sub-Account, (b) to pay all amounts to become due and payable under the Note by
funding the Debt Service Payment Sub-Account, (c) to fund the Recurring
Replacement Reserve Sub-Account, (d) to fund the Reletting Reserve Sub-Account,
(e) to fund the Operation and Maintenance Expense Sub-Account and (e) to fund
the Curtailment Reserve Sub-Account, all to the extent provided for herein.
Borrower shall collect all security deposits from tenants under valid Leases,
which shall be held by Borrower, in accordance with applicable law and in a
segregated demand deposit bank account at such commercial or savings bank or
banks as may be reasonably satisfactory to Lender (the “Security Deposit
Account”). Borrower shall notify Lender of any security deposits held as letters
of credit and, upon Lender’s request, such letters of credit shall be promptly
delivered to Lender. Borrower shall have no right to withdraw funds from the
Security Deposit Account; provided that, prior to the occurrence of an Event of
Default, Borrower may withdraw funds from the Security Deposit Account to refund
or apply security deposits as required by the Leases or by applicable Legal
Requirements. During the continuance of an Event of Default, all withdrawals
from the Security Deposit Account must be approved by Lender. Borrower has
established a Rent Account at Wachovia Bank, National Association (together with
its successors and assigns, the "Rent Account Bank"). Borrower shall deposit (or
cause the Manager to deposit) all Rent relating to tenants under Space Leases to
be deposited into the Rent Account at the bank in which the Rent Account is
located. Absent the then existence of a Sweep Period, the Rent Account Bank
shall transfer on a daily basis funds received into the Rent Account to
Borrower's operating account located at the Rent Account Bank (the "Operating
Account"). Borrower shall not change the Rent Account or the Operating Account
or the depository institution holding the Rent Account or the Operating Account
without obtaining the prior written consent of Lender. Borrower hereby agrees
that if the bank, bank location or account number of the Rent Account or
Operating Account is changed prior to a Sweep Period, Borrower shall, within
five (5) Business Days after such change, execute a replacement Rent Account
Agreement to cover the new bank, bank location and/or account, which replacement
Rent Account Agreement shall be in a form acceptable to Lender. Upon the
occurrence and during the continuance of a Sweep Period, all funds in the Rent
Account shall be transferred on a daily basis by the Rent Account Bank through
ACH or by Federal wire to the Central Account prior to 2:00 p.m. (New York City
Time) on each Business Day. Borrower hereby acknowledges that Lender may deliver
a notice to Rent Account Bank that a Sweep Period has occurred and that all
funds be transferred on a daily basis from the Rent Account to the Central
Account. Alternatively, at the election of the Lender, upon the occurrence and
continuance of a Sweep Period, Borrower shall cause all Rent relating to tenants
under Space Leases which is due and payable to Borrower to be paid through ACH,
a check drawn on account in a bank located in the continental United States, or
by Federal wire directly to the Central Account or the Rent Account, as
determined by Lender. Following the occurrence and continuance of an Event of
Default, at the election of Lender, Borrower shall, give each tenant under any
Lease an irrevocable direction in the form of Exhibit E attached hereto and made
a part hereof to deliver all rent payments made by tenants and other payments
constituting Rent directly to the Central Account or to the Rent Account, as
determined by Lender, or at the option of Lender, Lender shall deliver such
letters to each tenant and Borrower shall cooperate with Lender in effectuating
the foregoing. Notwithstanding the foregoing, if any Rent is received by
Borrower or Manager, then (a) such amounts shall be held in trust for the
benefit, and as the property, of Lender, (b) such amounts shall not be
commingled with any other funds or property of Borrower or Manager and (c)
Borrower or Manager shall deposit such amounts in the Rent Account within two
(2) Business Days of receipt, or after the occurrence of a Sweep Period and at
the election of Lender, into the Central Account within two (2) Business Days of
receipt. Lender may elect to change the financial institution in which the
Central Account or the Rent Account shall be maintained; however, Lender shall
give Borrower and the bank in which the Rent Account is located not fewer than
ten (10) Business Days’ prior notice of such change. Neither Borrower nor
Manager shall change the bank in which the Rent Account is located or the Rent
Account without the prior written consent of Lender. All fees and charges of the
bank in which the Rent Account and the Central Account is located shall be paid
by Borrower.
 
-56-

--------------------------------------------------------------------------------

 
Section 5.02. Establishment of Accounts. Lender has established the Escrow
Accounts and the Central Account in the name of Lender as secured party and
Borrower has established the Central Account in the joint names of Lender, as
secured party, and Borrower. The Central Account, the Rent Account and the
Escrow Accounts shall be under the sole dominion and control of Lender and funds
held therein shall not constitute trust funds. Borrower hereby irrevocably
directs and authorizes Lender to withdraw funds from the Central Account, the
Rent Account and the Escrow Accounts, all in accordance with the terms and
conditions of this Security Instrument. Borrower shall have no right of
withdrawal in respect of the Central Account, the Rent Account or the Escrow
Accounts. Each transfer of funds to be made hereunder shall be made only to the
extent that funds are on deposit in the Central Account, the Rent Account or the
affected Sub-Account or Escrow Account, and Lender shall have no responsibility
to make additional funds available in the event that funds on deposit are
insufficient. The Central Account shall contain the Basic Carrying Costs
Sub-Account, the Debt Service Payment Sub-Account, the Recurring Replacement
Reserve Sub-Account, the Reletting Reserve Sub-Account, the Operation and
Maintenance Expense Sub-Account and the Curtailment Reserve Sub-Account, each of
which accounts shall be Eligible Accounts or book entry sub-accounts of an
Eligible Account (each a “Sub-Account” and collectively, the “Sub-Accounts”) to
which certain funds shall be allocated and from which disbursements shall be
made pursuant to the terms of this Security Instrument.
 
-57-

--------------------------------------------------------------------------------

 
Section 5.03. Permitted Investments. All sums deposited into the Curtailment
Reserve Escrow Account, Recurring Replacement Reserve Sub-Account, the Reletting
Reserve Sub-Account and the Operation and Maintenance Expense Escrow Account
shall be held in an interest bearing account but Borrower acknowledges that
Lender makes no representation or warranty as to the rate of return. Lender
shall not have any liability for any loss in investments of funds in the
Curtailment Reserve Escrow Account, Recurring Replacement Reserve Sub-Account
and the Operation and Maintenance Expense Escrow Account and no such loss shall
affect Borrower’s obligation to fund, or liability for funding, the Central
Account and each Sub-Account and Escrow Account, as the case may be. Borrower
agrees that Lender shall include all such earnings on the Curtailment Reserve
Escrow Account, Recurring Replacement Reserve Sub-Account, the Reletting Reserve
Escrow Account and the Operation and Maintenance Expense Escrow Account as
income of Borrower (and, if Borrower is a partnership, limited liability company
or other pass-through entity, the partners, members or beneficiaries of
Borrower, as the case may be) for federal and applicable state and local tax
purposes. All interest paid or other earnings on funds deposited into the
Recurring Replacement Reserve Sub-Account, the Reletting Reserve Escrow Account
and the Operation and Maintenance Expense Escrow Account made hereunder shall be
deposited into the Central Account and shall be allocated to the Curtailment
Reserve Escrow Account, Recurring Replacement Reserve Sub-Account, the Reletting
Reserve Escrow Account and the Operation and Maintenance Expense Escrow Account.
Borrower shall pay all costs, fees and expenses incurred in connection with the
establishment and maintenance of, or the disbursement from the Curtailment
Reserve Escrow Account, the Recurring Replacement Reserve Sub-Account, the
Reletting Reserve Escrow Account and the Operation and Maintenance Expense
Escrow Account, which sums shall be due and payable by Borrower upon demand and
may be deducted by Lender from amounts on deposit in the Central Account or the
Escrow Accounts.
 
Section 5.04. Servicing Fees. At the option of Lender, the Loan may be serviced
by a servicer (the “Servicer”) selected by Lender and Lender may delegate all or
any portion of its responsibilities under this Security Instrument to the
Servicer. Provided that no Default has occurred and is continuing, Borrower
shall have no obligation to reimburse Lender for servicing fees incurred in
connection with the ordinary, routine servicing of the Loan; provided, however,
that Borrower shall reimburse Lender for (a) any and all costs and expenses
incurred after the occurrence of a Default and (b) as otherwise provided for in
this Security Instrument. Additionally, Borrower shall pay all reasonable
servicing fees of Servicer, if any, not to exceed $500.00 per month, charged in
connection with any disbursement of funds from the Escrow Accounts pursuant to
the Servicer’s then standard conditions and rates.
 
Section 5.05. Monthly Funding of Sub-Accounts and Escrow Accounts. (a) On or
before each Payment Date during the term of the Loan, commencing on the first
(1st) Payment Date occurring after the month in which the Loan is initially
funded, Borrower shall pay or cause to be paid to Lender, the Basic Carrying
Costs Monthly Installment, the Required Debt Service Payment, the Recurring
Replacement Monthly Installment, the Reletting Reserve Monthly Installment and
any other sums due and payable under the Loan Documents. Commencing on the first
(1st) Payment Date occurring after the month in which a Sweep Period begins and
during the continuance of such Sweep Period, Borrower shall pay, or cause to be
paid to the Central Account, the Basic Carrying Costs Monthly Installment, the
Required Debt Service Payment, the Recurring Replacement Reserve Monthly
Installment, and all sums required to be deposited in the Operation and
Maintenance Expense Sub-Account and the Curtailment Reserve Sub-Account, if any,
pursuant to this Section 5.05(a) and all funds transferred or deposited into the
Central Account shall be allocated among the Sub-Accounts as follows and in the
following priority:
 
(i) first, to the Basic Carrying Costs Sub-Account, until an amount equal to the
Basic Carrying Costs Monthly Installment for such Current Month has been
allocated to the Basic Carrying Costs Sub-Account;
 
-58-

--------------------------------------------------------------------------------

 
(ii) second, to the Debt Service Payment Sub-Account, until an amount equal to
the Required Debt Service Payment for the Payment Date occurring in such Current
Month has been allocated to the Debt Service Payment Sub-Account;
 
(iii) third, to the Recurring Replacement Reserve Sub-Account, until an amount
equal to the Recurring Replacement Monthly Installment for such Current Month
has been allocated to the Recurring Replacement Reserve Sub-Account;
 
(iv) fourth, to the Reletting Reserve Sub-Account, until an amount equal to the
Reletting Reserve Monthly Installment for such Current Month has been allocated
to the Reletting Reserve Sub-Account
 
(v) fifth, but only during an O&M Operative Period, to the Operation and
Maintenance Expense Sub-Account in an amount equal to the Cash Expenses, other
than management fees payable to Affiliates of Borrower, for such Current Month
pursuant to the related Approved Annual Budget;
 
(vi) sixth, but only during an O&M Operative Period, to the Operation and
Maintenance Expense Sub-Account in an amount equal to the amount, if any, of the
Net Capital Expenditures for such Current Month pursuant to the related Approved
Annual Budget;
 
(vii) seventh, but only during an O&M Operative Period, to the Operation and
Maintenance Expense Sub-Account in an amount equal to the amount, if any, of the
Extraordinary Expenses approved by Lender for such Current Month;
 
(viii) eighth, but only during an O&M Operative Period, the balance, if any, to
the Curtailment Reserve Sub-Account.
 
Provided that (I) no Event of Default has occurred and is continuing and (II)
Lender has received the Manager Certification referred to in Section 2.09(d)
hereof for the most recent period for which the same is due, Lender agrees that
in each Current Month any amounts deposited into or remaining in the Central
Account after the Sub-Accounts have been funded in accordance with of this
Section 5.05(a) with respect to the Current Month and any periods prior thereto,
shall be disbursed by Lender to Borrower on the Payment Date and, to the extent
that funds are available for such purpose, on the fifteenth and twenty-fifth day
of each Current Month or, if such days are not Business Days, on the next
succeeding Business Day in accordance with Borrower’s irrevocable written
instruction delivered to Lender on the Closing Date. During the existence of an
Event of Default, no funds held in the Central Account shall be distributed to
Borrower and Lender shall have the right to apply all or any portion of the
funds held in the Central Account or any Sub-Account or any Escrow Account to
the Debt in Lender’s sole discretion.
 
-59-

--------------------------------------------------------------------------------

 
(b) On each Payment Date, (i) sums held in the Basic Carrying Costs Sub-Account
shall be transferred to the Basic Carrying Costs Escrow Account, (ii) sums held
in the Debt Service Payment Sub-Account, together with any amounts deposited
into the Central Account that are either (x) Loss Proceeds that Lender has
elected to apply to reduce the Debt in accordance with the terms of Article III
hereof or (y) excess Loss Proceeds remaining after the completion of any
restoration required hereunder, shall be transferred to Lender to be applied
towards the Required Debt Service Payment, (iii) sums held in the Recurring
Replacement Reserve Sub-Account shall be transferred to the Recurring
Replacement Reserve Escrow Account, (iv) sums held in the Reletting Reserve
Sub-Account shall be transferred to the Reletting Reserve Escrow Account, (v)
sums held in the Operation and Maintenance Expense Sub-Account shall be
transferred to the Operation and Maintenance Expense Escrow Account; and (vi)
sums held in the Curtailment Reserve Sub-Account shall be transferred to the
Curtailment Reserve Escrow Account.
 
Section 5.06. Payment of Basic Carrying Costs. Borrower hereby agrees to pay all
Basic Carrying Costs (without regard to the amount of money in the Basic
Carrying Costs Sub-Account or the Basic Carrying Costs Escrow Account). At least
ten (10) Business Days prior to the due date of any Basic Carrying Costs, and
not more frequently than once each month, Borrower may notify Lender in writing
and request that Lender pay such Basic Carrying Costs on behalf of Borrower on
or prior to the due date thereof, and, provided that no Event of Default has
occurred and that there are sufficient funds available in the Basic Carrying
Costs Escrow Account, Lender shall make such payments out of the Basic Carrying
Costs Escrow Account before same shall be delinquent. Together with each such
request, Borrower shall furnish Lender with bills and all other documents
necessary, as reasonably determined by Lender, for the payment of the Basic
Carrying Costs which are the subject of such request. Borrower’s obligation to
pay (or cause Lender to pay) Basic Carrying Costs pursuant to this Security
Instrument shall include, to the extent permitted by applicable law, Impositions
resulting from future changes in law which impose upon Lender an obligation to
pay any property taxes or other Impositions or which otherwise adversely affect
Lender’s interests as provided for in this Security Instrument.
 
Provided that no Event of Default shall have occurred, all funds deposited into
the Basic Carrying Costs Escrow Account shall be held by Lender pursuant to the
provisions of this Security Instrument and shall be applied in payment of Basic
Carrying Costs in accordance with the terms hereof. Should an Event of Default
occur, the sums on deposit in the Basic Carrying Costs Sub-Account and the Basic
Carrying Costs Escrow Account may be applied by Lender in payment of any Basic
Carrying Costs or may be applied to the payment of the Debt or any other charges
affecting all or any portion of the Property as Lender in its sole discretion
may determine; provided, however, that no such application shall be deemed to
have been made by operation of law or otherwise until actually made by Lender as
herein provided.
 
-60-

--------------------------------------------------------------------------------

 
Section 5.07. Reletting Reserve Escrow Account. (a) Borrower hereby agrees to
pay all Reletting Expenditures (without regard to the amount of money then
available in the Reletting Reserve Sub-Account or the Reletting Reserve Escrow
Account). Upon the execution of any Space Lease with respect to which Borrower
is obligated to undertake or pay for any Reletting Expenditures, Borrower shall
submit to Lender (i) an itemized line item budget (a “Budget”) reasonably
acceptable to Lender outlining all of the Reletting Expenditures, (ii) a copy of
the signed Lease for which said Reletting Expenditures relate, in each case
which has an expiration date at least three (3) years after the commencement
thereof and which is otherwise in compliance with the provisions of this
Security Instrument, (iii) a copy of the plans and specifications, if any, for
the proposed Reletting Expenditures and (iv) an Officer’s Certificate with
respect to the items referred to in clauses (i) through (iii) and setting forth
an anticipated completion date for the Reletting Expenditures. Thereafter,
provided that no Event of Default has occurred and is continuing and that Lender
has received a written request from Borrower for payment or reimbursement of any
costs incurred in connection with any Reletting Expenditures, together with (i)
unconditional lien waivers (subject only to payment), (ii) a statement from an
Architect or Engineer, indicating that such portion of the Reletting
Expenditures for which payment or reimbursement is sought has been substantially
completed in compliance with all Legal Requirements, (iii) unless Borrower
requests disbursement by means of check payable jointly to Borrower and the
applicable vendor, copies of bills for such Reletting Expenditures marked “paid
in full” (or such other documentation reasonably satisfactory to Lender to
establish the payment of the Reletting Expenditures) for the portion due and for
which payment or reimbursement is sought, (iv) upon final completion of such
Reletting Expenditures, tenant estoppel certificates from the tenant leasing
space in the Premises for whom the Reletting Expenditures are being made which
indicate, among other things, that the tenant under such Space Lease has been in
occupancy and open for business for at least one full calendar month and paid
all rents due under the Space Lease without abatement, suspension, deferment,
diminution, reduction or other allowances for at least one full calendar month,
and (v) such other documentation as may be reasonably requested by Lender to
establish that the Reletting Expenditures or portion thereof which are the
subject of such request have been completed, all of which are reasonably
acceptable in form and substance to Lender, Lender shall disburse to Borrower,
to the extent of funds remaining in the Reletting Reserve Escrow Account, any
actual expenses incurred in connection with such Reletting Expenditures which
were set forth in the approved Budget provided that Borrower may make a request
for disbursement of sums from the Reletting Reserve Escrow Account no more than
once during any month and any request (other than the final request) shall be in
a minimum amount of $5,000. With respect to any Reletting Expenditures which
relate to brokerage commissions, upon the receipt of (i) copies of bills for
such Reletting Expenditures marked “paid in full”, (ii) tenant estoppel
certificates from the tenant leasing space in the Premises for which Lease the
brokerage commissions are due which indicate, among other things, that the
tenant under such Space Lease has been in occupancy and open for business for at
least one full calendar month and paid all rents due under the Space Lease
without abatement, suspension, deferment, diminution, reduction or other
allowances for at least one full calendar month and (iii) a copy of the signed
Lease for which said Reletting Expenditures relate, in each case which has an
expiration date at least three (3) years, all of which are reasonably acceptable
to Lender, Lender shall disburse to Borrower any actual expenses incurred in
connection with such Reletting Expenditures out of the Reletting Reserve Escrow
Account. Lender shall not be required to make any disbursements out of the
Reletting Reserve Escrow Account if an Event of Default shall have occurred and
is continuing, if more than one such request is made in any month or if
sufficient funds are not available in the Reletting Reserve Escrow Account.
 
-61-

--------------------------------------------------------------------------------

 
(b) In addition, Borrower shall pay to Lender for deposit with Lender all funds
received by Borrower in excess of $50,000 in connection with any cancellation,
termination or surrender of any Lease, including, but not limited to, any
surrender or cancellation fees, buyout fees, or reimbursements for tenant
improvements and leasing commissions ("Termination Payments"); provided, as long
as no Event of Default exists, when the applicable space is re-leased pursuant
to a Space Lease entered into in accordance with the terms of this Security
Instrument, any such Termination Payments on deposit with Lender and remaining
after payment of all tenant improvements and leasing commissions in connection
with such new Space Lease pursuant to 5.07(a) above shall be paid to Borrower
upon the occupancy and the payment of rents due under the new Space Lease for at
least one full calendar month.
 
(c) Provided that no Event of Default shall have occurred, all funds deposited
into the Reletting Reserve Escrow Account relating to Reletting Expenditures
shall be held by Lender pursuant to the provisions of this Security Instrument
and shall be applied in payment of Reletting Expenditures. Should an Event of
Default occur, the sums on deposit in the Reletting Reserve Sub-Account and the
Reletting Reserve Escrow Account may be applied by Lender in payment of any
Reletting Expenditures or may be applied to the payment of the Debt or any other
charges affecting all or any portion of the Property, as Lender, in its sole
discretion, may determine; provided, however, that no such application shall be
deemed to have been made by operation of law or otherwise until actually made by
Lender as herein provided.

(d) In the event that Borrower holds any letters of credit as security for
obligations under Leases, within thirty (30) days (or if any letters of credit
may expire within such thirty (30) day period, prior to the expiration of such
letter of credit) of the occurrence of a monetary event of default or a material
non-monetary event of default under the related Lease, Borrower shall present
for draw and use all commercially reasonable efforts to draw the full amount
which it is entitled to draw under such letter of credit; provided, however,
Borrower shall not be obliged to draw on such letter of credit if (i) Borrower
has submitted to Lender a plan of action to resolve any event of default which
gave rise to Borrower’s right to draw on the applicable letter of credit and
Lender shall, in its reasonable discretion, have consented to such plan or
Borrower is precluded from making a draw on the applicable letter of credit by
applicable law, and (ii) the term of such letter of credit will not expire prior
to the implementation of such submitted plan. Borrower shall deliver to Lender
all security deposits which are applied against sums due to Borrower under
Leases (including, without limitation, all sums drawn on letters of credits held
as security for obligations of tenants under Leases) and Rent paid by or on
behalf of any lessee under a Space Lease in whole or partial consideration for
the termination, cancellation or surrender of any Space Lease including, without
limitation, surrender or cancellation fees, buy-out fees or reimbursements for
tenant improvements or leasing commissions, within five (5) Business Days of
receipt thereof and all such sums shall be held in the Reletting Reserve Escrow
Account and shall be disbursed therefrom as set forth above.
 
-62-

--------------------------------------------------------------------------------

 
Section 5.08. Recurring Replacement Reserve Escrow Account. Borrower hereby
agrees to pay all Recurring Replacement Expenditures with respect to the
Property (without regard to the amount of money then available in the Recurring
Replacement Reserve Sub-Account or the Recurring Replacement Reserve Escrow
Account). Provided that Lender has received written notice from Borrower at
least five (5) Business Days prior to the due date of any payment relating to
Recurring Replacement Expenditures and not more frequently than once each month,
and further provided that no Event of Default has occurred and is continuing,
that there are sufficient funds available in the Recurring Replacement Reserve
Escrow Account and that Borrower shall have theretofore furnished Lender with
lien waivers, copies of bills, invoices and other reasonable documentation as
may be required by Lender to establish that the Recurring Replacement
Expenditures which are the subject of such request represent amounts due for
completed or partially completed capital work and improvements performed at the
Property, Lender shall make such payments out of the Recurring Replacement
Reserve Escrow Account. 
 
Provided that no Event of Default shall have occurred, all funds deposited into
the Recurring Replacement Reserve Escrow Account shall be held by Lender
pursuant to the provisions of this Security Instrument and shall be applied in
payment of Recurring Replacement Expenditures. Should an Event of Default occur,
the sums on deposit in the Recurring Replacement Reserve Sub-Account and the
Recurring Replacement Reserve Escrow Account may be applied by Lender in payment
of any Recurring Replacement Expenditures or may be applied to the payment of
the Debt or any other charges affecting all or any portion of the Property as
Lender in its sole discretion may determine; provided, however, that no such
application shall be deemed to have been made by operation of law or otherwise
until actually made by Lender as herein provided.
 
Section 5.09. Operation and Maintenance Expense Escrow Account. Borrower hereby
agrees to pay all Operating Expenses with respect to the Property (without
regard to the amount of money then available in the Operation and Maintenance
Expense Sub-Account or the Operation and Maintenance Expense Escrow Account).
All funds allocated to the Operation and Maintenance Expense Escrow Account
shall be held by Lender pursuant to the provisions of this Security Instrument.
Any sums held in the Operation and Maintenance Expense Escrow Account shall be
disbursed to Borrower within five (5) Business Days of receipt by Lender from
Borrower of (a) a written request for such disbursement which shall indicate the
Operating Expenses (exclusive of Basic Carrying Costs and any management fees
payable to Borrower or to Affiliates of Borrower) for which the requested
disbursement is to pay and (b) an Officer’s Certificate stating that no
Operating Expenses with respect to the Property are more than sixty (60) days
past due; provided, however, in the event that Borrower legitimately disputes
any invoice for an Operating Expense, and (i) no Event of Default has occurred
and is continuing hereunder, (ii) Borrower shall have set aside adequate
reserves for the payment of such disputed sums together with all interest and
late fees thereon, (iii) Borrower has complied with all the requirements of this
Security Instrument relating thereto, and (iv) the contesting of such sums shall
not constitute a default under any other instrument, agreement, or document to
which Borrower is a party, then Borrower may, after certifying to Lender as to
items (i) through (iv) hereof, contest such invoice. Together with each such
request, Borrower shall furnish Lender with bills and all other documents
necessary for the payment of the Operating Expenses which are the subject of
such request. Borrower may request a disbursement from the Operation and
Maintenance Expense Escrow Account no more than one (1) time per calendar month.
Should an Event of Default occur and be continuing, the sums on deposit in the
Operation and Maintenance Expense Sub-Account or the Operation and Maintenance
Expense Escrow Account may be applied by Lender in payment of any Operating
Expenses for the Property or may be applied to the payment of the Debt or any
other charges affecting all or any portion of the Property as Lender, in its
sole discretion, may determine; provided, however, that no such application
shall be deemed to have been made by operation of law or otherwise until
actually made by Lender as herein provided.
 
-63-

--------------------------------------------------------------------------------

 
Section 5.10. Intentionally Deleted
 
Section 5.11. Curtailment Reserve Escrow Account. Funds deposited into the
Curtailment Reserve Escrow Account during an O&M Operative Period shall be held
by Lender in the Curtailment Reserve Escrow Account as additional security for
the Loan until the Loan has been paid in full. Notwithstanding anything herein
to the contrary, provided that no Event of Default and no O&M Operative Period
has occurred and is continuing, Lender shall, upon written request from
Borrower, disburse all sums contained in the Curtailment Reserve Escrow Account
to Borrower. Should an Event of Default occur, the sums on deposit in the
Curtailment Reserve Sub-Account and the Curtailment Reserve Escrow Account may
be applied by Lender to the payment of the Debt or other charges affecting all
or any portion of the Property, as Lender, in its sole discretion, may
determine; provided, however, that no such application shall be deemed to have
been made by operation of law or otherwise until actually made by Lender as
herein provided. Lender shall calculate the Debt Service Coverage as of the end
of each fiscal quarter. Such calculation shall be completed within ten (10)
Business Days of Lender’s receipt of the quarterly financial statements required
under Section 2.09(b) with respect to such fiscal quarter.
 
Section 5.12. Intentionally Omitted.
 
Section 5.13. Loss Proceeds. In the event of a casualty to the Property, unless
Lender elects or is required pursuant to Article III hereof to make all of the
Insurance Proceeds available to Borrower for restoration, Lender and Borrower
shall cause all such Insurance Proceeds to be paid by the insurer directly to
the Central Account, whereupon Lender shall, after deducting Lender’s reasonable
costs of recovering and paying out such Insurance Proceeds, including without
limitation, reasonable attorneys’ fees, apply the same to reduce the Debt in
accordance with the terms of the Note; provided, however, that if Lender elects,
or is deemed to have elected, or is required to make the Insurance Proceeds
available for restoration, all Insurance Proceeds in respect of rent loss,
business interruption or similar coverage shall be maintained in the Central
Account, to be applied by Lender in the manner as Rent received with respect to
the operation of the Property; provided, further, however, that in the event
that the Insurance Proceeds with respect to rent loss, business interruption or
similar insurance policy are paid in a lump sum in advance, Lender shall hold
such Insurance Proceeds in a segregated interest-bearing escrow account, which
shall be an Eligible Account, shall estimate, in Lender’s reasonable discretion,
the number of months required for Borrower to restore the damage caused by the
casualty, shall divide the aggregate rent loss, business interruption or similar
Insurance Proceeds by such number of months, and shall disburse from such bank
account into the Central Account each month during the performance of such
restoration such monthly installment of said Insurance Proceeds. In the event
that Insurance Proceeds are to be applied toward restoration, Lender shall hold
such funds in a segregated bank account at the Bank, which shall be an Eligible
Account, and shall disburse same in accordance with the provisions of Section
3.04 hereof. Unless Lender elects, or is required pursuant to Section 6.01
hereof to make all of the Condemnation Proceeds available to Borrower for
restoration, Lender and Borrower shall cause all such Condemnation Proceeds to
be paid to the Central Account, whereupon Lender shall, after deducting Lender’s
reasonable costs of recovering and paying out such Condemnation Proceeds,
including without limitation, reasonable attorneys’ fees, apply same to reduce
the Debt in accordance with the terms of the Note; provided, however, that any
Condemnation Proceeds received in connection with a temporary Taking shall be
maintained in the Central Account, to be applied by Lender in the same manner as
Rent received with respect to the operation of the Property; provided, further,
however, that in the event that the Condemnation Proceeds of any temporary
Taking are paid in a lump sum in advance, Lender shall hold such Condemnation
Proceeds in a segregated interest-bearing bank account, which shall be an
Eligible Account, shall estimate, in Lender’s reasonable discretion, the number
of months that the Property shall be affected by such temporary Taking, shall
divide the aggregate Condemnation Proceeds in connection with such temporary
Taking by such number of months, and shall disburse from such bank account into
the Central Account each month during the pendency of such temporary Taking such
monthly installment of said Condemnation Proceeds. In the event that
Condemnation Proceeds are to be applied toward restoration, Lender shall hold
such funds in a segregated bank account at the Bank, which shall be an Eligible
Account, and shall disburse same in accordance with the provisions of Section
3.04 hereof. If any Loss Proceeds are received by Borrower, such Loss Proceeds
shall be received in trust for Lender, shall be segregated from other funds of
Borrower, and shall be forthwith paid into the Central Account, or paid to
Lender to hold in a segregated bank account at the Bank, in each case to be
applied or disbursed in accordance with the foregoing. Any Loss Proceeds made
available to Borrower for restoration in accordance herewith, to the extent not
used by Borrower in connection with, or to the extent they exceed the cost of,
such restoration, shall be paid to Borrower promptly following the completion of
the Work.
 
-64-

--------------------------------------------------------------------------------

ARTICLE VI: CONDEMNATION
 
Section 6.01. Condemnation. (a) Borrower shall notify Lender promptly of the
commencement or threat of any Taking of the Property or any portion thereof.
Lender is hereby irrevocably appointed as Borrower’s attorney-in-fact, coupled
with an interest, with exclusive power to collect, receive and retain the
proceeds of any such Taking and to make any compromise or settlement in
connection with such proceedings (subject to Borrower’s reasonable approval,
except after the occurrence of an Event of Default, in which event Borrower’s
approval shall not be required), subject to the provisions of this Security
Instrument; provided, however, that Borrower may participate in any such
proceedings and shall be authorized and entitled to compromise or settle any
such proceeding with respect to Condemnation Proceeds in an amount less than
five percent (5%) of the Loan Amount. Borrower shall execute and deliver to
Lender any and all instruments reasonably required in connection with any such
proceeding promptly after request therefor by Lender. Except as set forth above,
Borrower shall not adjust, compromise, settle or enter into any agreement with
respect to such proceedings without the prior consent of Lender. All
Condemnation Proceeds are hereby assigned to and shall be paid to Lender. With
respect to Condemnation Proceeds in an amount in excess of five percent (5%) of
the Loan Amount, Borrower hereby authorizes Lender to compromise, settle,
collect and receive such Condemnation Proceeds, and to give proper receipts and
acquittance therefor. Subject to the provisions of this Article VI, Lender may
apply such Condemnation Proceeds (less any cost to Lender of recovering and
paying out such proceeds, including, without limitation, reasonable attorneys’
fees and disbursements and costs allocable to inspecting any repair, restoration
or rebuilding work and the plans and specifications therefor) toward the payment
of the Debt or to allow such proceeds to be used for the Work.
 
-65-

--------------------------------------------------------------------------------

 
(b) “Substantial Taking” shall mean (i) a Taking of such portion of the Property
that would, in Lender’s reasonable discretion, leave remaining a balance of the
Property which would not under then current economic conditions, applicable
Development Laws and other applicable Legal Requirements, permit the restoration
of the Property so as to constitute a complete, rentable facility of the same
type as existed prior to the Taking, having adequate ingress and egress to the
Property, the Leases of which covering 75% of the square footage of the Property
immediately prior to such Taking will not be terminated due to the Taking during
and following the restoration of such Property and being capable of producing a
projected Net Operating Income (as reasonably determined by Lender) yielding a
projected Debt Service Coverage therefrom for the next two (2) years of not less
than the Required Debt Service Coverage or (ii) a Taking which occurs less than
two (2) years prior to the Maturity Date or (iii) a Taking which Lender is not
reasonably satisfied could be repaired within twelve (12) months and at least
six (6) months prior to the Maturity Date or (iv) a Taking of fifteen percent
(15%) or more of the Property.
 
(c) In the case of a Substantial Taking, Condemnation Proceeds shall be payable
to Lender in reduction of the Debt but without any prepayment fee or charge of
any kind and, if Borrower elects to apply any Condemnation Proceeds it may
receive pursuant to this Security Instrument to the payment of the Debt,
Borrower may prepay the balance of the Debt without any prepayment fee or charge
of any kind.
 
(d) In the event of a Taking which is less than a Substantial Taking, Borrower
at its sole cost and expense (whether or not the award shall have been received
or shall be sufficient for restoration) shall proceed diligently to restore, or
cause the restoration of, the remaining Improvements not so taken, to maintain a
complete, rentable, self-contained fully operational facility of the same sort
as existed prior to the Taking in as good a condition as is reasonably possible.
In the event of such a Taking, Lender shall receive the Condemnation Proceeds
and shall pay over the same:
 
(i) first, provided no Default shall have occurred and be continuing, to
Borrower to the extent of any portion of the award as may be necessary to pay
the reasonable cost of restoration of the Improvements remaining, and
 
(ii) second, to Lender, in reduction of the Debt without any prepayment premium
or charge of any kind.
 
If one or more Takings in the aggregate create a Substantial Taking, then, in
such event, the sections of this Article VI above applicable to Substantial
Takings shall apply.
 
-66-

--------------------------------------------------------------------------------

 
(e) In the event Lender is obligated to or elects to make Condemnation Proceeds
available for the restoration or rebuilding of the Property, such proceeds shall
be disbursed in the manner and subject to the conditions set forth in Section
3.04(b) hereof. If, in accordance with this Article VI, any Condemnation
Proceeds are used to reduce the Debt, they shall be applied in accordance with
the provisions of the Note and, with no prepayment fee or charge of any kind.
Borrower shall promptly execute and deliver all instruments requested by Lender
for the purpose of confirming the assignment of the Condemnation Proceeds to
Lender. Application of all or any part of the Condemnation Proceeds to the Debt
shall be made in accordance with the provisions of Sections 3.06 and 3.07
hereof. No application of the Condemnation Proceeds to the reduction of the Debt
shall have the effect of releasing the lien of this Security Instrument until
the remainder of the Debt has been paid in full. In the case of any Taking,
Lender, to the extent that Lender has not been reimbursed by Borrower, shall be
entitled, as a first priority out of any Condemnation Proceeds, to reimbursement
for all costs, fees and expenses reasonably incurred in the determination and
collection of any Condemnation Proceeds. All Condemnation Proceeds deposited
with Lender pursuant to this Section, until expended or applied as provided
herein, shall be held in accordance with Section 3.04(b) hereof and shall
constitute additional security for the payment of the Debt and the payment and
performance of Borrower’s obligations, but Lender shall not be deemed a trustee
or other fiduciary with respect to its receipt of such Condemnation Proceeds or
any part thereof. All awards so deposited with Lender shall be held by Lender in
an Eligible Account, but Lender makes no representation or warranty as to the
rate or amount of interest, if any, which may accrue on any such deposit and
shall have no liability in connection therewith. For purposes hereof, any
reference to the award shall be deemed to include interest, if any, which has
accrued thereon.
 
ARTICLE VII: LEASES AND RENTS
 
Section 7.01. Assignment. b) Borrower does hereby bargain, sell, assign and set
over unto Lender, all of Borrower’s interest in the Leases and Rents. The
assignment of Leases and Rents in this Section 7.01 is an absolute,
unconditional and present assignment from Borrower to Lender and not an
assignment for security and the existence or exercise of Borrower’s license
(revocable by Lender only during the continuance of an Event of Default) to
collect Rent shall not operate to subordinate this assignment to any subsequent
assignment. The exercise by Lender of any of its rights or remedies pursuant to
this Section 7.01 shall not be deemed to make Lender a mortgagee-in-possession.
In addition to the provisions of this Article VII, Borrower shall comply with
all terms, provisions and conditions of the Assignment.
 
(b) So long as there shall exist and be continuing no Event of Default, Borrower
shall have a revocable license to take all actions with respect to all Leases
and Rents, present and future, including the right to collect and use the Rents,
subject to the terms of this Security Instrument and the Assignment.
 

(c) In a separate instrument Borrower shall, as requested from time to time by
Lender, assign to Lender or its nominee by specific or general assignment, any
and all Leases, such assignments to be in form and content reasonably acceptable
to Lender, but subject to the provisions of Section 7.01(b) hereof. Borrower
agrees to deliver to Lender, within thirty (30) days after Lender’s request, a
true and complete copy of every Lease and, within ten (10) Business Days after
Lender’s request, a complete list of the Leases, certified by Borrower to be
true, accurate and complete and stating the demised premises, the names of the
lessees, the Rent payable under the Leases, the date to which such Rents have
been paid, the material terms of the Leases, including, without limitation, the
dates of occupancy, the dates of expiration, any Rent concessions, work
obligations or other inducements granted to the lessees thereunder, and any
renewal options.
 
-67-

--------------------------------------------------------------------------------

 
(d) The rights of Lender contained in this Article VII, the Assignment or any
other assignment of any Lease shall not result in any obligation or liability of
Lender to Borrower or any lessee under a Lease or any party claiming through any
such lessee or constitute an assumption by Lender of any such liability or
obligation.
 
(e) At any time during the continuance of an Event of Default, the license
granted hereinabove may be revoked by Lender, and Lender or a receiver appointed
in accordance with this Security Instrument may enter upon the Property, and
collect, retain and apply the Rents toward payment of the Debt in such priority
and proportions as Lender in its sole discretion shall deem proper.
 
(f) In addition to the rights which Lender may have herein, upon the occurrence
and during the continuance of any Event of Default, Lender, at its option, may
require Borrower to pay monthly in advance to Lender, or any receiver appointed
to collect the Rents, the fair and reasonable rental value for the use and
occupation of such part of the Property as may be used and occupied by Borrower
and may require Borrower to vacate and surrender possession of the Property to
Lender or to such receiver and, in default thereof, Borrower may be evicted by
summary proceedings or otherwise.
 
Section 7.02. Management of Property. 
 
(a) Borrower shall manage the Property or cause the Property to be managed in a
manner which is consistent with the Approved Manager Standard. The Manager
(other than Borrower) shall at all times meet the Minimum Manager Credentials.
All Space Leases shall provide for rental rates comparable to then existing
local market rates and terms and conditions which constitute good and prudent
business practice and are consistent with prevailing market terms and
conditions, and shall be arm’s length transactions. All Space Leases shall be on
a form previously approved by Lender with such commercially reasonable changes
as are consistent with the standards of other similarly situated owners when
compared with terms and conditions of leases in similarly situated shopping
centers in similar context at the time in question, taking into account,
inter alia, the type, creditworthiness and bargaining power of the prospective
tenant and the location and size of the space covered by the proposed Lease, and
shall provide that they are subordinate to this Security Instrument and that the
lessees thereunder attorn to Lender. Borrower shall deliver copies of all
Leases, amendments, modifications and renewals thereof to Lender. All proposed
Space Leases for the Property shall be subject to the prior written approval of
Lender, not to be unreasonably withheld or delayed, provided, however that
Borrower may enter into new Space Leases with unrelated third parties without
obtaining the prior consent of Lender provided that: (i) the leases conform with
the requirements of this Section 7.02; (ii) the space to be leased pursuant to
such proposed Lease, together with any other space which is leased to the
proposed tenant or an Affiliate thereof, does not exceed 7,500 square feet; and
(iii) the term of the proposed lease does not exceed five (5) years and,
inclusive of all extensions and renewals, does not exceed ten (10) years.
Lender’s consent to any Lease shall be deemed given, if the first correspondence
from Borrower to Lender requesting such approval is in an envelope marked
“PRIORITY” and contains a bold-faced, conspicuous legend at the top of the first
page thereof stating that “IF YOU FAIL TO RESPOND TO OR TO EXPRESSLY DENY THIS
REQUEST FOR APPROVAL IN WRITING WITHIN TEN (10) BUSINESS DAYS, YOUR APPROVAL MAY
BE DEEMED GIVEN”, and is accompanied by the information and documents required
above and any other information reasonably requested by Lender in writing prior
to the expiration of such ten (10) Business Day period in order to adequately
review the same has been delivered and, if Lender fails to respond or to
expressly deny such request for approval in writing within the ten (10) Business
Day period a second notice is delivered to Lender from Borrower in an envelope
marked “PRIORITY” requesting approval containing a bold-faced, conspicuous
legend at the top of the first page thereof stating that “IF YOU FAIL TO RESPOND
TO OR EXPRESSLY DENY THIS REQUEST FOR APPROVAL IN WRITING WITHIN FIVE (5)
BUSINESS DAYS, YOUR APPROVAL SHALL BE DEEMED GIVEN” and Lender fails to respond
or to expressly deny each request for approval within the five (5) Business Day
period.
 
-68-

--------------------------------------------------------------------------------

 
(b) Borrower (i) shall observe and perform all of its material obligations under
the Leases pursuant to applicable Legal Requirements and shall not do or permit
to be done anything to impair the value of the Leases as security for the Debt;
(ii) shall promptly send copies to Lender of all notices of default which
Borrower shall receive under the Leases; (iii) shall, consistent with the
Approved Manager Standard, enforce all of the terms, covenants and conditions
contained in the Leases to be observed or performed; (iv) shall not collect any
of the Rents under the Leases more than one (1) month in advance (except that
Borrower may collect in advance (A) such security deposits as are permitted
pursuant to applicable Legal Requirements and are commercially reasonable in the
prevailing market and (B) all rent deemed “additional rent” under the Leases);
(v) shall not execute any other assignment of lessor’s interest in the Leases or
the Rents except as otherwise expressly permitted pursuant to this Security
Instrument; (vi) shall not cancel or terminate any of the Space Leases or accept
a surrender thereof in any manner inconsistent with the Approved Manager
Standard; (vii) shall not convey, transfer or suffer or permit a conveyance or
transfer of all or any part of the Premises or the Improvements or of any
interest therein so as to effect a merger of the estates and rights of, or a
termination or diminution of the obligations of, lessees thereunder;
(viii) shall not alter, modify or change the terms of any guaranty of any Major
Space Lease or cancel or terminate any such guaranty in any manner inconsistent
with the Approved Manager Standard; (ix) shall, in accordance with the Approved
Manager Standard, make all reasonable efforts to seek lessees for space as it
becomes vacant and enter into Leases in accordance with the terms hereof; (x)
shall not materially modify, alter or amend any Major Space Lease or Property
Agreement without Lender’s consent, which consent will not be unreasonably
withheld or delayed; (xi) shall notify Lender promptly if any Pad Owner shall
cease business operations or of the occurrence of any event of which it becomes
aware affecting a Pad Owner or its property which might have any material effect
on the Property; and (xii) shall, without limitation to any other provision
hereof, execute and deliver at the reasonable request of Lender all such further
assurances, confirmations and assignments in connection with the Property as are
required herein and as Lender shall from time to time reasonably require.
 
-69-

--------------------------------------------------------------------------------

(c) All security deposits of lessees, whether held in cash or any other form,
shall be treated by Borrower as trust funds, shall not be commingled with any
other funds of Borrower and, if cash, shall be deposited by Borrower in the
Security Deposit Account. Any bond or other instrument which Borrower is
permitted to hold in lieu of cash security deposits under applicable Legal
Requirements shall be maintained in full force and effect unless replaced by
cash deposits as hereinabove described shall, if permitted pursuant to Legal
Requirements, at Lender’s option, name Lender as payee or mortgagee thereunder
or be fully assignable to Lender and shall, in all respects, comply with
applicable Legal Requirements and otherwise be reasonably satisfactory to
Lender. Borrower shall, upon request, provide Lender with evidence reasonably
satisfactory to Lender of Borrower’s compliance with the foregoing. During the
continuance of any Event of Default, Borrower shall, upon Lender’s request, if
permitted by applicable Legal Requirements, turn over the security deposits (and
any interest thereon) to Lender to be held by Lender in accordance with the
terms of the Leases and all Legal Requirements.
 
(d) Lender shall, upon request of Borrower, enter into a subordination,
nondisturbance and attornment agreement (“SNDA”) with respect to each proposed
tenant entering into a Lease in compliance with the requirements of this
Security Instrument provided that such Lease is (i) with a tenant occupying at
least 7,500 square feet of the Premises or is with an existing tenant pursuant
to a Lease dated prior to the Closing Date which provides that the tenant
thereunder is entitled to an SNDA or with any tenant which is renting space on a
national basis which leases at least 2,000 square feet of the Premises, (ii)
with a tenant reasonably approved by Lender in writing prior to Borrower’s
execution of any such Lease and (iii) on the standard form of Lease previously
approved in writing by Lender with such commercially reasonable changes as are
consistent with the Approved Manager Standard. Any SNDA executed by Lender shall
be in Lender’s then standard form with such changes as Lender shall agree to and
provide that in the event Lender or any purchaser at foreclosure shall succeed
to Borrower’s interest in the Property, the Leases of such tenants will remain
in full force and effect and be binding upon Lender or such purchaser and such
tenant as though each were original parties thereto
 
(e) Borrower covenants and agrees with Lender that (i) the Property will be
managed at all times by Borrower in accordance with Borrower’s organizational
documents or by a Manager pursuant to a management agreement approved by Lender
(the “Management Agreement”), (ii) after Borrower has knowledge of a fifty
percent (50%) or more change in control of the ownership of Manager, Borrower
will promptly give Lender notice thereof (a “Manager Control Notice”) and (iii)
the Management Agreement (or in the case Borrower is acting as Manager,
Borrower’s right to manage the Property) may be terminated by Lender at any time
for cause (including, but not limited to, Manager’s gross negligence,
misappropriation of funds, willful misconduct or fraud) or at any time following
(A) the occurrence of an Event of Default, or (B) the receipt of a Manager
Control Notice, or (C) the date upon which the Debt Service Coverage is 1.05:1.0
or less. In the event of any such termination, a substitute managing agent shall
be appointed by Borrower, subject to Lender’s prior written approval, which may
be given or withheld in Lender’s sole discretion and which may be conditioned
on, inter alia, a letter from each Rating Agency confirming that any rating
issued by the Rating Agency in connection with a Securitization will not, as a
result of the proposed change of Manager, be downgraded from the then current
ratings thereof, qualified or withdrawn. Borrower may from time to time appoint
a successor manager to manage the Property with Lender’s prior written consent
which consent shall not be unreasonably withheld or delayed, provided that any
such successor manager shall be a reputable management company which meets the
Minimum Manager Credentials and each Rating Agency shall have confirmed in
writing that any rating issued by the Rating Agency in connection with a
Securitization will not, as a result of the proposed change of Manager, be
downgraded from the then current ratings thereof, qualified or withdrawn.
Borrower further covenants and agrees that Borrower shall require Manager (or
any successor managers) to maintain at all times during the term of the Loan
worker’s compensation insurance as required by Governmental Authorities.
 
-70-

--------------------------------------------------------------------------------

 
ARTICLE VIII: MAINTENANCE AND REPAIR
 
Section 8.01. Maintenance and Repair of the Property; Alterations; Replacement
of Equipment. Borrower hereby covenants and agrees:
 
(a) Borrower shall not (i) desert or abandon the Property, (ii) change the use
of the Property or cause or permit the use or occupancy of any part of the
Property to be discontinued if such discontinuance or use change would violate
any zoning or other law, ordinance or regulation; (iii) consent to or seek any
lowering of the zoning classification, or greater zoning restriction affecting
the Property; or (iv) take any steps whatsoever to convert the Property, or any
portion thereof, to a condominium or cooperative form of ownership.
 
(b) Borrower shall, at its expense, (i) take good care of the Property including
grounds generally, and utility systems and sidewalks, roads, alleys, and curbs
therein, and shall keep the same in good, safe and insurable condition and in
compliance with all applicable Legal Requirements, (ii) promptly make or cause
to be made all repairs to the Property, above grade and below grade, interior
and exterior, structural and nonstructural, ordinary and extraordinary,
unforeseen and foreseen, and maintain the Property in a manner appropriate for
the facility and (iii) not commit or suffer to be committed any waste of the
Property or do or suffer to be done anything which will increase the risk of
fire or other hazard to the Property or impair the value thereof. Borrower shall
keep the sidewalks, vaults, gutters and curbs comprising, or adjacent to, the
Property, clean and free from dirt, snow, ice, rubbish and obstructions. All
repairs made by Borrower shall be made with first-class materials, in a good and
workmanlike manner, shall be equal or better in quality and class to the
original work and shall comply with all applicable Legal Requirements and
Insurance Requirements. To the extent any of the above obligations are
obligations of tenants under Space Leases or Pad Owners or other Persons under
Property Agreements, Borrower may fulfill its obligations hereunder by causing
such tenants, Pad Owners or other Persons, as the case may be, to perform their
obligations thereunder. As used herein, the terms “repair” and “repairs” shall
be deemed to include all necessary replacements.
 
(c) Borrower shall, except in connection with tenant improvement work under
Space Leases entered into in accordance with the terms of this Security
Instrument, not demolish, remove, construct, or, except as otherwise expressly
provided herein, restore, or alter the Property or any portion thereof which
could diminish the value of the Property nor consent to or permit any such
demolition, removal, construction, restoration, addition or alteration which
would diminish the value of the Property without Lender’s prior written consent
in each instance, which consent shall not be unreasonably withheld or delayed.
 
-71-

--------------------------------------------------------------------------------

 
(d) Borrower represents and warrants to Lender that (i) there are no fixtures,
machinery, apparatus, tools, equipment or articles of personal property attached
or appurtenant to, or located on the Property, except for the Equipment and
equipment leased by Borrower for the management, operation or maintenance of the
Property in accordance with the Loan Documents; (ii) the Equipment and the
leased equipment constitute all of the fixtures, machinery, apparatus, tools,
equipment and articles of personal property necessary to the proper operation
and maintenance of the Property; and (iii) all of the Equipment is free and
clear of all liens, except for the lien of this Security Instrument and the
Permitted Encumbrances. All right, title and interest of Borrower in and to all
extensions, improvements, betterments, renewals and appurtenances to the
Property hereafter acquired by, or released to, Borrower or constructed,
assembled or placed by Borrower in the Property, and all changes and
substitutions of the security constituted thereby, shall be and, in each such
case, without any further mortgage, encumbrance, conveyance, assignment or other
act by Lender or Borrower, shall become subject to the lien and security
interest of this Security Instrument as fully and completely, and with the same
effect, as though now owned by Borrower and specifically described in this
Security Instrument, but at any and all times Borrower shall execute and deliver
to Lender any documents Lender may reasonably deem necessary or appropriate for
the purpose of specifically subjecting the same to the lien and security
interest of this Security Instrument.

(e) Notwithstanding the provisions of this Security Instrument to the contrary,
Borrower shall have the right, at any time and from time to time, to remove and
dispose of Equipment which may have become obsolete or unfit for use or which is
no longer useful in the management, operation or maintenance of the Property.
Borrower shall promptly replace any such Equipment so disposed of or removed
with other Equipment of equal value and utility, free of any security interest
or superior title, liens or claims; except that, if replacement of the Equipment
so removed or disposed of is not necessary or desirable for the proper
management, operation or maintenance of the Property, Borrower shall not be
required to replace the same. All such replacements or additional equipment
shall be deemed to constitute “Equipment” and shall be covered by the security
interest herein granted.
 
ARTICLE IX: TRANSFER OR ENCUMBRANCE OF THE PROPERTY
 
Section 9.01. Other Encumbrances. Borrower shall not further encumber or permit
the further encumbrance in any manner (whether by grant of a pledge, security
interest or otherwise) of the Property or any part thereof or interest therein,
including, without limitation, of the Rents therefrom. In addition, Borrower
shall not further encumber and shall not permit the further encumbrance in any
manner (whether by grant of a pledge, security interest or otherwise) of
Borrower or any direct or indirect interest in Borrower except as expressly
permitted pursuant to this Security Instrument. 
 
Section 9.02. No Transfer. (a) Borrower acknowledges that Lender has examined
and relied on the expertise of Borrower and, if applicable, each General
Partner, in owning and operating properties such as the Property in agreeing to
make the Loan and will continue to rely on Borrower’s ownership of the Property
as a means of maintaining the value of the Property as security for repayment of
the Debt and Borrower acknowledges that Lender has a valid interest in
maintaining the value of the Property. Borrower shall not Transfer, nor permit
any Transfer, without the prior written consent of Lender, which consent Lender
may withhold in its sole and absolute discretion other than pursuant to Space
Leases as provided herein. Lender shall not be required to demonstrate any
actual impairment of its security or any increased risk of default hereunder in
order to declare the Debt immediately due and payable upon a Transfer without
Lender’s consent. This provision shall apply to every Transfer regardless of
whether voluntary or not, or whether or not Lender has consented to any previous
Transfer.
 
-72-

--------------------------------------------------------------------------------

 
(b) Notwithstanding any provision of this Security Instrument to the contrary,
no person or entity may, after the date hereof, become an owner of a direct or
indirect interest in any entity comprising Borrower, which interest exceeds
forty-nine percent (49%), without Lender’s written consent in each instance and
receipt by Lender of (x) written confirmation that any rating issued by such
Rating Agency in connection with the Securitization will not, as a result of the
proposed Transfer, be downgraded from the then current ratings thereof,
qualified or withdrawn, and (y) a substantive non-consolidation opinion in form
and substance acceptable to Lender.
 
Section 9.03. Due on Sale. Lender may declare the Debt immediately due and
payable upon any Transfer or further encumbrance without Lender’s consent
without regard to whether any impairment of its security or any increased risk
of default hereunder can be demonstrated. This provision shall apply to every
Transfer or further encumbrance of the Property or any part thereof or interest
in the Property or in Borrower regardless of whether voluntary or not, or
whether or not Lender has consented to any previous Transfer or further
encumbrance of the Property or interest in Borrower.

Section 9.04. Permitted Transfer. Notwithstanding the foregoing provisions of
this Article IX, the sale, conveyance or transfer of the Property in its
entirety, (hereinafter, “Sale”) shall be permitted hereunder provided that each
of the following terms and conditions are satisfied:
 
(a) no Event of Default is then continuing hereunder or under any of the other
Loan Documents and no O&M Operative Period shall have commenced and be
continuing;
 
(b) Lender shall have consented to the Sale, provided, however, in the event
that such sale is being made to a nationally recognized operator of retail
outlet shopping centers, Lender's consent shall not be unreasonably withheld
and, if the proposed Sale is to occur at any time after a Securitization, each
Rating Agency shall have delivered written confirmation that any rating issued
by such Rating Agency in connection with the Securitization will not, as a
result of the proposed Sale, be downgraded from the then current ratings
thereof, qualified or withdrawn; provided, however, that no request for consent
to the Sale will be entertained by Lender if the proposed Sale is to occur
within sixty (60) days of any contemplated sale of the Loan by Lender, whether
in connection with a Securitization or otherwise;
 
(c) Borrower gives Lender written notice of the terms of the proposed Sale not
less than forty-five (45) days before the date on which such Sale is scheduled
to close and, concurrently therewith, gives Lender (i) all such information
concerning the proposed transferee of the Property (hereinafter, “Buyer”) as
Lender would require in evaluating an initial extension of credit to a borrower
and Lender determines, in its reasonable discretion that the Buyer is acceptable
to Lender in all respects and (ii) a non-refundable application fee equal to
$5,000;
 
-73-

--------------------------------------------------------------------------------

 
(d) Borrower pays Lender, concurrently with the closing of such Sale, a
non-refundable assumption fee in an amount equal to one percent (1.0%) of the
then outstanding Loan Amount together with all reasonable out-of-pocket costs
and expenses, including, without limitation, reasonable attorneys’ fees,
incurred by Lender in connection with the Sale;
 
(e) Buyer assumes all of the obligations under the Loan Documents and, prior to
or concurrently with the closing of such Sale, Buyer executes, without any cost
or expense to Lender, such documents and agreements as Lender shall reasonably
require to evidence and effectuate said assumption and delivers such legal
opinions as Lender may require;
 
(f) Borrower and Buyer execute, without any cost or expense to Lender, new
financing statements or financing statement amendments and any additional
documents reasonably requested by Lender;
 
(g) Borrower delivers to Lender, without any cost or expense to Lender, such
endorsements to Lender’s title insurance policy, hazard insurance policy
endorsements or certificates and other similar materials as Lender may deem
necessary at the time of the Sale, all in form and substance reasonably
satisfactory to Lender, including, without limitation, an endorsement or
endorsements to Lender’s title insurance policy insuring the lien of this
Security Instrument, extending the effective date of such policy to the date of
execution and delivery (or, if later, of recording) of the assumption agreement
referenced above in subparagraph (e) of this Section, with no additional
exceptions added to such policy, and insuring that fee simple title to the
Property is vested in Buyer;
 
(h) Borrower executes and delivers to Lender, without any cost or expense to
Lender, a release of Lender, its officers, directors, employees and agents, from
all claims and liability relating to the transactions evidenced by the Loan
Documents, through and including the date of the closing of the Sale, which
agreement shall be in form and substance reasonably satisfactory to Lender and
shall be binding upon Buyer;
 
(i) subject to the provisions of Section 18.32 hereof, such Sale is not
construed so as to relieve Borrower of any personal liability under the Note or
any of the other Loan Documents for any acts or events occurring or obligations
arising prior to or simultaneously with the closing of such Sale, and Borrower
executes, without any cost or expense to Lender, such documents and agreements
as Lender shall reasonably require to evidence and effectuate the ratification
of said personal liability; provided that, upon the closing of such Sale, if
Borrower and Buyer have satisfied each of the terms of this Section 9.04, as
reasonably determined by Lender, Lender shall release Borrower from all
obligations arising after the closing of such Sale. Additionally, if a
replacement guarantor acceptable to Lender in its reasonable discretion executes
a guaranty identical in substance to the Indemnity and Guaranty, Lender shall
release the existing Guarantor from any liabilities under the Indemnity and
Guaranty arising after the closing of such Sale;
 
(j) such Sale is not construed so as to relieve any Guarantor of its obligations
under any guaranty or indemnity agreement executed in connection with the Loan
and each such Guarantor executes, without any cost or expense to Lender, such
documents and agreements as Lender shall reasonably require to evidence and
effectuate the ratification of each such guaranty agreement, provided that if
Buyer or a party associated with Buyer approved by Lender in its sole discretion
assumes the obligations of the current Guarantor under its guaranty and Buyer or
such party associated with Buyer, as applicable, executes, without any cost or
expense to Lender, a new guaranty in similar form and substance to the existing
guaranty and otherwise satisfactory to Lender, then Lender shall release the
current Guarantor from all obligations arising under its guaranty after the
closing of such Sale; and
 
-74-

--------------------------------------------------------------------------------

(k) Buyer is a Single Purpose Entity and Lender receives a non-consolidation
opinion relating to Buyer from Buyer’s counsel, which opinion is in form and
substance acceptable to Lender.
 
ARTICLE X: CERTIFICATES
 
Section 10.01. Estoppel Certificates. a) After request by Lender, Borrower,
within fifteen (15) days and at its expense, will furnish Lender with a
statement, duly acknowledged and certified, setting forth (i) the amount of the
original principal amount of the Note, and the unpaid principal amount of the
Note, (ii) the rate of interest of the Note, (iii) the date payments of interest
and/or principal were last paid, (iv) any offsets or defenses to the payment of
the Debt, and if any are alleged, the nature thereof, (v) that the Note and this
Security Instrument have not been modified or if modified, giving particulars of
such modification and (vi) to the best of Borrower’s knowledge, that there has
occurred and is then continuing no Default or if such Default exists, the nature
thereof, the period of time it has existed, and the action being taken to remedy
such Default.
 
(b) Within fifteen (15) days after written request by Borrower, Lender shall
furnish to Borrower a written statement confirming the amount of the Debt, the
maturity date of the Note and the date to which interest has been paid.
 
(c) Borrower shall use all commercially reasonable efforts to obtain estoppel
certificates from tenants in form and substance reasonably acceptable to Lender
or in form and substance as provided in the applicable Leases, but, provided no
Event of Default has occurred and is continuing, in no event shall Borrower be
required to deliver estoppel certificates more than twice during any Loan Year.
 
ARTICLE XI: NOTICES
 
Section 11.01. Notices. Any notice, demand, statement, request or consent made
hereunder shall be in writing and delivered personally or sent to the party to
whom the notice, demand or request is being made by Federal Express or other
nationally recognized overnight delivery service, as follows and shall be deemed
given when delivered personally or one (1) Business Day after being deposited
with Federal Express or such other nationally recognized delivery service:
 
If to Lender: To Lender, at the address first written above,
 

 
with a copy to:
Winston & Strawn LLP

   
200 Park Avenue

   
New York, New York 10166

   
Attention: Corey A. Tessler, Esq.

 

 
If to Borrower:
To Borrower, at the address first written above,

 

 
with a copy to:
Hirschler Fleischer

    2100 E. Cary Street

    Richmond, Virginia 23223

    Attention:, David F. Belkowitz, Esq.

     

  If to Trustee: To Trustee at the address first written above

 
or such other address as either Borrower, Trustee or Lender shall hereafter
specify by not less than ten (10) days prior written notice as provided herein;
provided, however, that notwithstanding any provision of this Article to the
contrary, such notice of change of address shall be deemed given only upon
actual receipt thereof. Rejection or other refusal to accept or the inability to
deliver because of changed addresses of which no notice was given as herein
required shall be deemed to be receipt of the notice, demand, statement, request
or consent.
 
-75-

--------------------------------------------------------------------------------

 
ARTICLE XII: INDEMNIFICATION
 
Section 12.01. Indemnification Covering Property. In addition, and without
limitation, to any other provision of this Security Instrument or any other Loan
Document, Borrower shall protect, indemnify and save harmless Lender, Trustee
and their successors and assigns, and each of their agents, employees, officers,
directors, stockholders, partners and members (collectively, “Indemnified
Parties”) for, from and against any claims, demands, penalties, fines, actual
liabilities, settlements, actual damages, actual costs and expenses of whatever
kind or nature, known or unknown, contingent or otherwise, whether incurred or
imposed within or outside the judicial process, including, without limitation,
reasonable attorneys’ fees and disbursements imposed upon or incurred by or
asserted against any of the Indemnified Parties by reason of (a) ownership of
this Security Instrument, the Assignment, the Property or any part thereof or
any interest therein or receipt of any Rents; (b) any accident, injury to or
death of any person or loss of or damage to property occurring in, on or about
the Property or any part thereof or on the adjoining sidewalks, curbs, parking
areas, streets or ways; (c) any use, nonuse or condition in, on or about, or
possession, alteration, repair, operation, maintenance or management of, the
Property or any part thereof or on the adjoining sidewalks, curbs, parking
areas, streets or ways; (d) any failure on the part of Borrower to perform or
comply with any of the terms of this Security Instrument or the Assignment; (e)
performance of any labor or services or the furnishing of any materials or other
property in respect of the Property or any part thereof; (f) any claim by
brokers, finders or similar Persons claiming to be entitled to a commission in
connection with any Lease or other transaction involving the Property or any
part thereof; (g) any Imposition including, without limitation, any Imposition
attributable to the execution, delivery, filing, or recording of any Loan
Document, Lease or memorandum thereof; (h) any lien, security interest, or claim
arising on or against the Property or any part thereof under any Legal
Requirement or any liability asserted against any of the Indemnified Parties
with respect thereto; (i) any claim arising out of or in any way relating to any
tax or other imposition on the making and/or recording of this Security
Instrument, the Note or any of the other Loan Documents unless otherwise set
forth herein; (j) a Default under Sections 2.02(f) or 2.02(g) hereof, (k) the
failure of any Person to file timely with the Internal Revenue Service an
accurate Form 1099-B, Statement for Recipients of Proceeds from Real Estate,
Broker and Barter Exchange Transactions, which may be required in connection
with the Loan, or to supply a copy thereof in a timely fashion to the recipient
of the proceeds of the Loan; or (l) the claims of any lessee or any Person
acting through or under any lessee or otherwise arising under or as a
consequence of any Lease prior to the time Lender may have taken possession of
the Property. Notwithstanding the foregoing provisions of this Section 12.01 to
the contrary, Borrower shall have no obligation to indemnify the Indemnified
Parties pursuant to this Section 12.01 for liabilities, obligations, claims,
damages, penalties, causes of action, costs and expenses relative to the
foregoing which result from Lender’s, and its successors’ or assigns’, willful
misconduct or gross negligence. Any amounts payable to Lender by reason of the
application of this Section 12.01 shall constitute a part of the Debt secured by
this Security Instrument and the other Loan Documents and shall become
immediately due and payable and shall bear interest at the Default Rate from the
date the liability, obligation, claim, cost or expense is sustained by Lender,
as applicable, until paid. The provisions of this Section 12.01 shall survive
the termination of this Security Instrument whether by repayment of the Debt,
foreclosure or delivery of a deed in lieu thereof, assignment or otherwise. In
case any action, suit or proceeding is brought against any of the Indemnified
Parties by reason of any occurrence of the type set forth in (a) through (l)
above, Borrower shall, at Borrower’s expense, resist and defend such action,
suit or proceeding or will cause the same to be resisted and defended by counsel
at Borrower’s expense for the insurer of the liability or by counsel designated
by Borrower (unless reasonably disapproved by Lender promptly after Lender has
been notified of such counsel); provided, however, that nothing herein shall
compromise the right of Lender (or any other Indemnified Party) to appoint its
own counsel at Borrower’s expense for its defense with respect to any action
which, in the reasonable opinion of Lender or such other Indemnified Party, as
applicable, presents a conflict or potential conflict between Lender or such
other Indemnified Party that would make such separate representation advisable.
Any Indemnified Party will give Borrower prompt notice after such Indemnified
Party obtains actual knowledge of any potential claim by such Indemnified Party
for indemnification hereunder. The Indemnified Parties shall not settle or
compromise any action, proceeding or claim as to which it is indemnified
hereunder without notice to, and provided that no Event of Default has occurred
and is continuing, consultation with, Borrower.
 
-76-

--------------------------------------------------------------------------------

 
ARTICLE XIII: DEFAULTS
 
Section 13.01. Events of Default. The Debt shall become immediately due at the
option of Lender upon any one or more of the following events (“Event of
Default”):
 
(a) if the final payment or prepayment premium, if any, due under the Note shall
not be paid on Maturity;
 
(b) if any monthly payment of interest and/or principal due under the Note
(other than the sums described in (a) above) shall not be fully paid on the date
upon which the same is due and payable thereunder;
 
-77-

--------------------------------------------------------------------------------

 
(c) if payment of any sum (other than the sums described in (a) above or (b)
above) required to be paid pursuant to the Note, this Security Instrument or any
other Loan Document shall not be paid within seven (7) Business Days after
Lender delivers written notice to Borrower that same is due and payable
thereunder or hereunder;
 
(d) if Borrower, Guarantor or, if Borrower or Guarantor is a partnership, any
general partner of Borrower or Guarantor, or, if Borrower or Guarantor is a
limited liability company, any member of Borrower or Guarantor, shall institute
or cause to be instituted any proceeding for the termination or dissolution of
Borrower, Guarantor or any such general partner or member;

(e) if the insurance policies required hereunder are not kept in full force and
effect, or if the insurance policies are not assigned and delivered to Lender as
herein provided;
 
(f) if Borrower or Guarantor attempts to assign its rights under this Security
Instrument or any other Loan Document or any interest herein or therein, or if
any Transfer occurs other than in accordance with the provisions hereof;
 
(g) if any representation or warranty of Borrower or Guarantor made herein or in
any other Loan Document or in any certificate, report, financial statement or
other instrument or agreement furnished to Lender shall prove false or
misleading in any material respect as of the date the representation or warranty
was made;
 
(h) if Borrower, Guarantor or any general partner of Borrower or Guarantor shall
make an assignment for the benefit of creditors or shall admit in writing its
inability to pay its debts generally as they become due;
 
(i) if a receiver, liquidator or trustee of Borrower, Guarantor or any general
partner of Borrower or Guarantor shall be appointed or if Borrower, Guarantor or
their respective general partners shall be adjudicated a bankrupt or insolvent,
or if any petition for bankruptcy, reorganization or arrangement pursuant to
federal bankruptcy law, or any similar federal or state law, shall be filed by
or against, consented to by, or acquiesced in by, Borrower, Guarantor or their
respective general partners or if any proceeding for the dissolution or
liquidation of Borrower, Guarantor or their respective general partners shall be
instituted; however, if such appointment, adjudication, petition or proceeding
was involuntary and not consented to by Borrower, Guarantor or their respective
general partners, as applicable, upon the same not being discharged, stayed or
dismissed within sixty (60) days or if Borrower, Guarantor or their respective
general partners shall generally not be paying its debts as they become due;
 
(j) if Borrower shall be in default beyond any notice or grace period, if any,
under any other mortgage or deed of trust or deed to secure debt or security
agreement covering any part of the Property without regard to its priority
relative to this Security Instrument; provided, however, this provision shall
not be deemed a waiver of the provisions of Article IX prohibiting further
encumbrances affecting the Property or any other provision of this Security
Instrument;
 
(k) if the Property becomes subject (i) to any lien or security interest which
is superior to the lien of this Security Instrument, other than a lien for real
estate taxes and assessments not due and payable, or (ii) to any mechanic’s,
materialman’s or other lien which is or is asserted to be superior to the lien
of this Security Instrument, and such lien shall remain undischarged (by
payment, bonding, or otherwise) for ten (10) days unless contested in accordance
with the terms hereof;
 
-78-

--------------------------------------------------------------------------------

 
(l) if Borrower discontinues the operation of the Property or any part thereof
for reasons other than repair or restoration arising from a casualty or
condemnation for ten (10) days or more;
 
(m) except as permitted in this Security Instrument, any material alteration,
demolition or removal by, on behalf or with the consent of Borrower of any of
the Improvements without the prior consent of Lender;
 
(n) if Borrower consummates a transaction which would cause this Security
Instrument or Lender’s rights under this Security Instrument, the Note or any
other Loan Document to constitute a non-exempt prohibited transaction under
ERISA or result in a violation of a state statute regulating government plans
subjecting Lender to liability for a violation of ERISA or a state statute;
 
(o) if Borrower breaches any provision of Article IX or Section 2.02(g) of this
Security Instrument; or
 
(p) if a default shall occur under any of the other terms, covenants or
conditions of the Note, this Security Instrument or any other Loan Document,
other than as set forth in (a) through (p) above, for ten (10) days after notice
from Lender in the case of any default which can be cured by the payment of a
sum of money, or for thirty (30) days after notice from Lender in the case of
any other default or an additional ninety (90) days if Borrower is diligently
and continuously effectuating a cure of a curable non-monetary default, other
than as set forth in (a) through (p) above.
 
-79-

--------------------------------------------------------------------------------

 
Section 13.02. Remedies. (a) Upon the occurrence and during the continuance of
any Event of Default, Lender may, in addition to any other rights or remedies
available to it hereunder or under any other Loan Document, at law or in equity,
take such action, without notice or demand, as it reasonably deems advisable to
protect and enforce its rights against Borrower and in and to any Property
including, but not limited to, the following actions, each of which may be
pursued singly, concurrently or otherwise, at such time and in such order as
Lender may determine, in its sole discretion, without impairing or otherwise
affecting any other rights and remedies of Lender hereunder, at law or in
equity: (i) declare all or any portion of the unpaid Debt to be immediately due
and payable; provided, however, that upon the occurrence of any of the events
specified in Section 13.01(i), the entire Debt will be immediately due and
payable without notice or demand or any other declaration of the amounts due and
payable; or (ii) bring, or instruct Trustee to bring, an action to foreclose
this Security Instrument and without applying for a receiver for the Rents, but
subject to the rights of the tenants under the Leases, enter into or upon the
Property or any part thereof, either personally or by its agents, nominees or
attorneys, and dispossess Borrower and its agents and servants therefrom, and
thereupon Lender may (A) use, operate, manage, control, insure, maintain,
repair, restore and otherwise deal with all and every part of the Property and
conduct the business thereat, (B) make alterations, additions, renewals,
replacements and improvements to or on the Property or any part thereof, (C)
exercise all rights and powers of Borrower with respect to the Property or any
part thereof, whether in the name of Borrower or otherwise, including, without
limitation, the right to make, cancel, enforce or modify Leases, obtain and
evict tenants, and demand, sue for, collect and receive all earnings, revenues,
rents, issues, profits and other income of the Property and every part thereof,
and (D) apply the receipts from the Property or any part thereof to the payment
of the Debt, after deducting therefrom all expenses (including, without
limitation, reasonable attorneys’ fees and disbursements) reasonably incurred in
connection with the aforesaid operations and all amounts necessary to pay the
Impositions, insurance and other charges in connection with the Property or any
part thereof, as well as just and reasonable compensation for the services of
Lender’s third-party agents; or (iii) have an appraisal or other valuation of
the Property or any part thereof performed by an Appraiser (and Borrower
covenants and agrees it shall cooperate in causing any such valuation or
appraisal to be performed) and any cost or expense incurred by Lender in
connection therewith shall constitute a portion of the Debt and be secured by
this Security Instrument and shall be immediately due and payable to Lender with
interest, at the Default Rate, until the date of receipt by Lender; or (iv),
sell, or instruct Trustee to sell, the Property pursuant to the Nebraska Trust
Deeds Act in effect from time to time or as otherwise permitted by law, or
institute, or instruct Trustee to institute, proceedings for the complete
foreclosure of this Security Instrument, or take such other action as may be
allowed pursuant to Legal Requirements, at law or in equity, for the enforcement
of this Security Instrument in which case the Property or any part thereof may
be sold for cash or credit in one or more parcels; or (v) with or without entry,
and to the extent permitted and pursuant to the procedures provided by
applicable Legal Requirements, institute proceedings for the partial foreclosure
of this Security Instrument, or take such other action as may be allowed
pursuant to Legal Requirements, at law or in equity, for the enforcement of this
Security Instrument for the portion of the Debt then due and payable, subject to
the lien of this Security Instrument continuing unimpaired and without loss of
priority so as to secure the balance of the Debt not then due; or (vi) sell, or
instruct Trustee to sell, the Property or any part thereof and any or all
estate, claim, demand, right, title and interest of Borrower therein and rights
of redemption thereof, pursuant to power of sale or otherwise, at one or more
sales, in whole or in parcels, in any order or manner, at such time and place,
upon such terms and after such notice thereof as may be required or permitted by
the Nebraska Trust Deeds Act in effect from time to time or as otherwise
permitted by law, at the discretion of Lender, and in the event of a sale, by
power of sale, foreclosure or otherwise, of less than all of the Property, this
Security Instrument shall continue as a lien on the remaining portion of the
Property; or (vii) institute an action, suit or proceeding in equity for the
specific performance of any covenant, condition or agreement contained in the
Loan Documents, or any of them; or (viii) recover judgment on the Note or any
guaranty either before, during or after (or in lieu of) any proceedings for the
enforcement of this Security Instrument; or (ix) apply as a matter of strict
right, or direct Trustee to apply, ex parte, for the appointment of a custodian,
trustee, receiver, keeper, liquidator or conservator of the Property or any part
thereof, irrespective of the adequacy of the security for the Debt and without
regard to the solvency of Borrower or of any Person liable for the payment of
the Debt, to which appointment Borrower does hereby consent and such receiver or
other official shall have all rights and powers permitted by applicable law and
such other rights and powers as the court making such appointment may confer,
but the appointment of such receiver or other official shall not impair or in
any manner prejudice the rights of Lender to receive the Rent with respect to
any of the Property pursuant to this Security Instrument or the Assignment; or
(x) require, at Lender’s option, Borrower to pay monthly in advance to Lender,
or any receiver appointed to collect the Rents, the fair and reasonable rental
value for the use and occupation of any portion of the Property occupied by
Borrower and may require Borrower to vacate and surrender possession to Lender
of the Property or to such receiver and Borrower may be evicted by summary
proceedings or otherwise; or (xi) without notice to Borrower (A) apply all or
any portion of the cash collateral in any Sub-Account and Escrow Account,
including any interest and/or earnings therein, to carry out the obligations of
Borrower under this Security Instrument and the other Loan Documents, to protect
and preserve the Property and for any other purpose permitted under this
Security Instrument and the other Loan Documents and/or (B) have all or any
portion of such cash collateral immediately paid to Lender to be applied against
the Debt in the order and priority set forth in the Note; or (xii) pursue any or
all such other rights or remedies as Lender may have under the Nebraska Trust
Deeds Act in effect from time to time or as otherwise permitted by applicable
law or in equity; provided, however, that the provisions of this Section
13.02(a) shall not be construed to extend or modify any of the notice
requirements or grace periods provided for hereunder or under any of the other
Loan Documents. Borrower hereby waives, to the fullest extent permitted by Legal
Requirements, any defense Borrower might otherwise raise or have by the failure
to make any tenants parties defendant to a foreclosure proceeding and to
foreclose their rights in any proceeding instituted by Lender.
 
-80-

--------------------------------------------------------------------------------

 
(b) Any time after an Event of Default Lender (or the Trustee, at the request of
Lender), shall have the power, to the extent permitted by the Nebraska Trust
Deeds Act in effect from time to time or other applicable law, to sell the
Property or any part thereof at public auction, in such manner, at such time and
place, upon such terms and conditions, and upon such public notice as Lender may
deem best for the interest of Lender, or as may be required or permitted by the
Nebraska Trust Deeds Act or other applicable law, consisting of advertisement
(if required by law) in a newspaper of general circulation in the jurisdiction
and for such period as applicable law may require and at such other times and
under the power of sale herein granted or by such other methods, if any, as may
be required or permitted by law to convey the Property or portions thereof in
one or more sales in fee simple by Trustee’s deed to and at the cost of the
purchaser, who shall not be liable to see to the application of the purchase
money. The proceeds or avails of any sale made under or by virtue of this
Section 13.02, together with any other sums which then may be held by Lender (or
the Trustee) under this Security Instrument, whether under the provisions of
this Section 13.02 or otherwise, shall, to the extent permitted by applicable
law, be applied as follows:
 
First: To the payment of the third-party costs and expenses reasonably incurred
in connection with any such sale and to advances, fees and expenses, including,
without limitation, Trustee's fees actually incurred title service guaranty
fees, reasonable fees and expenses of Lender’s and Trustee’s legal counsel as
applicable, and of any judicial proceedings wherein the same may be made, and of
all expenses, liabilities and advances reasonably made or incurred by Lender
under this Security Instrument, together with interest as provided herein on all
such advances made by Lender, and all Impositions, except any Impositions or
other charges subject to which the Property shall have been sold;
 
-81-

--------------------------------------------------------------------------------

 
Second: To the payment of the whole amount then due, owing and unpaid under the
Note for principal and interest thereon, with interest on such unpaid principal
at the Default Rate from the date of the occurrence of the earliest Event of
Default that formed a basis for such sale until the same is paid;
 
Third: To the payment of any other portion of the Debt required to be paid by
Borrower pursuant to any provision of this Security Instrument, the Note, or any
of the other Loan Documents; and
 
Fourth: To the payment of junior trust deeds, mortgages, or other lienholders;
and
 
Fifth: The surplus, if any, to Borrower or such other Persons as may be legally
entitled thereto, unless otherwise required by Legal Requirements.
 
Lender (or the Trustee, as applicable) and any receiver or custodian of the
Property or any part thereof shall be liable to account for only those rents,
issues, proceeds and profits actually received by it.
 
(c) Trustee may adjourn from time to time any sale by it to be made under or by
virtue of this in accordance with the Nebraska Trust Deeds Act or other
applicable law, except as otherwise provided by any applicable provision of the
Nebraska Trust Deeds Act or other Legal Requirements, Trustee, without further
notice or publication, may make such sale at the time and place to which the
same shall be so adjourned.
 
(d) Upon the completion of any sale or sales made by Lender (or the Trustee)
under or by virtue of this Section 13.02, Lender or Trustee, as applicable, or
any officer of any court empowered to do so, shall execute and deliver to the
accepted purchaser or purchasers a good and sufficient instrument, or good and
sufficient instruments, granting, conveying, assigning and transferring all
estate, right, title and interest in and to the property and rights sold. Lender
(or Trustee, as applicable) is hereby irrevocably appointed the true and lawful
attorney-in-fact of Borrower (coupled with an interest), in its name and stead,
to make all necessary conveyances, assignments, transfers and deliveries of the
property and rights so sold pursuant to this Section 13.02 and for that purpose
Lender (or the Trustee) may execute all necessary instruments of conveyance,
assignment, transfer and delivery, and may substitute one or more Persons with
like power, Borrower hereby ratifying and confirming all that its said
attorney-in-fact or such substitute or substitutes shall lawfully do by virtue
hereof. Nevertheless, Borrower, if so requested by Lender, shall ratify and
confirm any such sale or sales by executing and delivering to Lender, or to such
purchaser or purchasers all such instruments as may be advisable, in the sole
judgment of Lender, for such purpose, and as may be designated in such request.
Any such sale or sales made under or by virtue of this Section 13.02, whether
made under the power of sale herein granted or under or by virtue of judicial
proceedings or a judgment or decree of foreclosure and sale, shall operate to
divest all the estate, right, title, interest, claim and demand whatsoever,
whether at law or in equity, of Borrower in and to the property and rights so
sold, and shall, to the fullest extent permitted under Legal Requirements, be a
perpetual bar, both at law and in equity against Borrower and against any and
all Persons claiming or who may claim the same, or any part thereof, from,
through or under Borrower.
 
-82-

--------------------------------------------------------------------------------

 
(e) In the event of any sale made under or by virtue of this Section 13.02
(whether made under the power of sale herein granted or under or by virtue of
judicial proceedings or a judgment or decree of foreclosure and sale), the
entire Debt immediately thereupon shall, anything in the Loan Documents to the
contrary notwithstanding, become due and payable.
 
(f) Upon any sale made under or by virtue of this Section 13.02 (whether made
under the power of sale herein granted or under or by virtue of judicial
proceedings or a judgment or decree of foreclosure and sale), Lender may bid for
and acquire the Property or any part thereof and in lieu of paying cash therefor
may make settlement for the purchase price by crediting upon the Debt the net
sales price after deducting therefrom the expenses of the sale and the costs of
the action.
 
(g) No recovery of any judgment by Lender and no levy of an execution under any
judgment upon the Property or any part thereof or upon any other property of
Borrower shall release the lien of this Security Instrument upon the Property or
any part thereof, or any liens, rights, powers or remedies of Lender hereunder,
but such liens, rights, powers and remedies of Lender shall continue unimpaired
until all amounts due under the Note, this Security Instrument and the other
Loan Documents are paid in full.
 
(h) Upon the exercise by Lender (or the Trustee at the request of Lender) of any
power, right, privilege, or remedy pursuant to this Security Instrument which
requires any consent, approval, registration, qualification, or authorization of
any Governmental Authority, Borrower agrees to execute and deliver, or will
cause the execution and delivery of, all applications, certificates,
instruments, assignments and other documents and papers that Lender or any
purchaser of the Property may be required to obtain for such governmental
consent, approval, registration, qualification, or authorization and Lender is
hereby irrevocably appointed the true and lawful attorney-in-fact of Borrower
(coupled with an interest), in its name and stead, to execute all such
applications, certificates, instruments, assignments and other documents and
papers.
 
Section 13.03. Payment of Debt After Default. Except as otherwise required by
the Nebraska Trust Deeds Act or other applicable law, if, following the
occurrence of any Event of Default, Borrower shall tender payment of an amount
sufficient to satisfy the Debt in whole or in part at any time prior to a
foreclosure sale or trustee's sale of the Property, and if at the time of such
tender prepayment of the principal balance of the Note is not permitted by the
Note or this Security Instrument, Borrower shall, in addition to the entire
Debt, also pay to Lender all amounts due Lender under Section 1.5(b) of the
Note. If at the time of such tender, prepayment of the principal balance of the
Note is permitted, such tender by Borrower shall be deemed to be a voluntary
prepayment of the principal balance of the Note and Borrower shall, in addition
to the entire Debt, also pay to Lender the applicable prepayment consideration
specified in the Note and this Security Instrument.
 
Section 13.04. Possession of the Property. Upon the occurrence of any Event of
Default hereunder and the acceleration of the Debt or any portion thereof,
Borrower, if an occupant of the Property or any part thereof, upon demand of
Lender, shall immediately surrender possession of the Property (or the portion
thereof so occupied) to Lender, and if Borrower is permitted to remain in
possession, the possession shall be as a month-to-month tenant of Lender and, on
demand, Borrower shall pay to Lender monthly, in advance, a reasonable rental
for the space so occupied and in default thereof Borrower may be dispossessed.
The covenants herein contained may be enforced by a receiver of the Property or
any part thereof. Nothing in this Section 13.04 shall be deemed to be a waiver
of the provisions of this Security Instrument making the Transfer of the
Property or any part thereof without Lender’s prior written consent an Event of
Default.
 
-83-

--------------------------------------------------------------------------------

Section 13.05. Interest After Default. If any amount due under the Note, this
Security Instrument or any of the other Loan Documents is not paid within any
applicable notice and grace period after same is due, whether such date is the
stated due date, any accelerated due date or any other date or at any other time
specified under any of the terms hereof or thereof, then, in such event,
Borrower shall pay interest on the amount not so paid from and after the date on
which such amount first becomes due at the Default Rate; and such interest shall
be due and payable at such rate until the earlier of the cure of all Events of
Default or the payment of the entire amount due to Lender, whether or not any
action shall have been taken or proceeding commenced to recover the same or to
foreclose this Security Instrument. All unpaid and accrued interest shall be
secured by this Security Instrument as part of the Debt. Nothing in this Section
13.05 or in any other provision of this Security Instrument shall constitute an
extension of the time for payment of the Debt.
 
Section 13.06. Borrower’s Actions After Default. After the happening of any
Event of Default and immediately upon the commencement of any action, suit or
other legal proceedings by Lender to obtain judgment for the Debt, or of any
other nature in aid of the enforcement of the Loan Documents, Borrower will (a)
after receipt of notice of the institution of any such action, waive the
issuance and service of process and enter its voluntary appearance in such
action, suit or proceeding, and (b) if required by Lender, consent to the
appointment of a receiver or receivers of the Property or any part thereof and
of all the earnings, revenues, rents, issues, profits and income thereof. 
 
Section 13.07. Control by Lender After Default. Notwithstanding the appointment
of any custodian, receiver, liquidator or trustee of Borrower, or of any of its
property, or of the Property or any part thereof, to the extent permitted by
Legal Requirements, Lender shall be entitled to obtain possession and control of
all property now and hereafter covered by this Security Instrument and the
Assignment following the occurrence of an Event of Default in accordance with
the terms hereof.
 
Section 13.08. Right to Cure Defaults. (a) Upon the occurrence of any Event of
Default, Lender or its agents may, but without any obligation to do so and
without notice to or demand on Borrower and without releasing Borrower from any
obligation hereunder, make or do the same in such manner and to such extent as
Lender may deem necessary to protect the security hereof. Lender and its agents
are authorized to enter upon the Property or any part thereof for such purposes,
or appear in, defend, or bring any action or proceedings to protect Lender’s
interest in the Property or any part thereof or to foreclose this Security
Instrument or collect the Debt, and the cost and expense thereof (including
reasonable attorneys’ fees to the extent permitted by law), with interest as
provided in this Section 13.08, shall constitute a portion of the Debt and shall
be immediately due and payable to Lender upon demand. All such costs and
expenses incurred by Lender or its agents in remedying such Event of Default or
in appearing in, defending, or bringing any such action or proceeding shall bear
interest at the Default Rate, for the period from the date so demanded to the
date of payment to Lender. All such costs and expenses incurred by Lender or its
agents together with interest thereon calculated at the above rate shall be
deemed to constitute a portion of the Debt and be secured by this Security
Instrument.
 
-84-

--------------------------------------------------------------------------------

 
(b) If Lender makes any payment or advance that Lender is authorized by this
Security Instrument to make in the place and stead of Borrower (i) relating to
the Impositions or tax liens asserted against the Property, Lender may do so
according to any bill, statement or estimate procured from the appropriate
public office without inquiry into the accuracy of the bill, statement or
estimate or into the validity of any of the Impositions or the tax liens or
claims thereof; (ii) relating to any apparent or threatened adverse title, lien,
claim of lien, encumbrance, claim or charge, Lender will be the sole judge of
the legality or validity of same; or (iii) relating to any other purpose
authorized by this Security Instrument but not enumerated in this Section 13.08,
Lender may do so whenever, in its judgment and discretion, the payment or
advance seems necessary or desirable to protect the Property and the full
security interest intended to be created by this Security Instrument. In
connection with any payment or advance made pursuant to this Section 13.08,
Lender has the option and is authorized, but in no event shall be obligated, to
obtain a continuation report of title prepared by a title insurance company. The
payments and the advances made by Lender pursuant to this Section 13.08 and the
cost and expenses of said title report will be due and payable by Borrower on
demand, together with interest at the Default Rate, and will be secured by this
Security Instrument.
 
Section 13.09. Late Payment Charge. If any portion of the Debt is not paid in
full on or before the day on which it is due and payable hereunder Borrower
shall pay to Lender an amount equal to five percent (5%) of such unpaid portion
of the Debt (“Late Charge”) to defray the expense incurred by Lender in handling
and processing such delinquent payment, and such amount shall constitute a part
of the Debt; provided, that no late charge shall be due and payable if Borrower
fails to repay the Loan evidenced hereby upon the Maturity Date (whether by
acceleration or otherwise). 
 
Section 13.10. Recovery of Sums Required to Be Paid. Lender shall have the right
from time to time to take action to recover any sum or sums which constitute a
part of the Debt as the same become due and payable hereunder (after the
expiration of any grace period or the giving of any notice herein provided, if
any), without regard to whether or not the balance of the Debt shall be due, and
without prejudice to the right of Lender thereafter to bring an action of
foreclosure, or any other action, for a default or defaults by Borrower existing
at the time such earlier action was commenced.
 
Section 13.11. Marshalling and Other Matters. Borrower hereby waives, to the
fullest extent permitted by law, the benefit of all appraisement, valuation,
stay, extension, reinstatement, redemption (both equitable and statutory) and
homestead laws now or hereafter in force and all rights of marshalling in the
event of any sale hereunder of the Property or any part thereof or any interest
therein. Further, Borrower hereby expressly waives any and all rights of
redemption from sale under any order or decree of foreclosure of this Security
Instrument on behalf of Borrower, whether equitable or statutory and on behalf
of each and every Person acquiring any interest in or title to the Property or
any part thereof subsequent to the date of this Security Instrument and on
behalf of all Persons to the fullest extent permitted by applicable law.
 
-85-

--------------------------------------------------------------------------------

 
Section 13.12. Tax Reduction Proceedings. After an Event of Default, Borrower
shall be deemed to have appointed Lender as its attorney-in-fact to seek a
reduction or reductions in the assessed valuation of the Property for real
property tax purposes or for any other purpose and to prosecute any action or
proceeding in connection therewith. This power, being coupled with an interest,
shall be irrevocable for so long as any part of the Debt remains unpaid and any
Event of Default shall be continuing.
 
Section 13.13. General Provisions Regarding Remedies.
 
(a) Right to Terminate Proceedings. Lender or Trustee may terminate or rescind
any proceeding or other action brought in connection with its exercise of the
remedies provided in Section 13.02 at any time before the conclusion thereof, as
determined in Lender’s sole discretion and without prejudice to Lender or
Trustee.
 
(b) No Waiver or Release. The failure of Lender or Trustee to exercise any
right, remedy or option provided in the Loan Documents shall not be deemed a
waiver of such right, remedy or option or of any covenant or obligation
contained in the Loan Documents. No acceptance by Lender of any payment after
the occurrence of an Event of Default and no payment by Lender of any payment or
obligation for which Borrower is liable hereunder shall be deemed to waive or
cure any Event of Default except as otherwise required by the Nebraska Trust
Deeds Act or other applicable law. No sale of all or any portion of the
Property, no forbearance on the part of Lender, and no extension of time for the
payment of the whole or any portion of the Debt or any other indulgence given by
Lender to Borrower or any other Person, shall operate to release or in any
manner affect the interest of Lender in the Property or the liability of
Borrower to pay the Debt. No waiver by Lender shall be effective unless it is in
writing and then only to the extent specifically stated.
 
(c) No Impairment; No Releases. The interests and rights of Lender under the
Loan Documents shall not be impaired by any indulgence, including (i) any
renewal, extension or modification which Lender may grant with respect to any of
the Debt; (ii) any surrender, compromise, release, renewal, extension, exchange
or substitution which Lender may grant with respect to the Property or any
portion thereof; or (iii) any release or indulgence granted to any maker,
endorser, guarantor or surety of any of the Debt.
 
(d) Effect on Judgment. No recovery of any judgment by Lender and no levy of an
execution under any judgment upon the Property or any portion thereof shall
affect in any rights, powers or remedies of Lender hereunder or thereunder. Such
lien, rights, powers and remedies of Lender shall continue unimpaired as before.
 
ARTICLE XIV: COMPLIANCE WITH REQUIREMENTS
 
Section 14.01. Compliance with Legal Requirements. (a) Borrower shall promptly
comply with all present and future Legal Requirements, foreseen and unforeseen,
ordinary and extraordinary, whether requiring structural or nonstructural
repairs or alterations including, without limitation, all zoning, subdivision,
building, safety and environmental protection, land use and development Legal
Requirements, all Legal Requirements which may be applicable to the curbs
adjoining the Property or to the use or manner of use thereof, and all rent
control, rent stabilization and all other similar Legal Requirements relating to
rents charged and/or collected in connection with the Leases. Borrower
represents and warrants that the Property to the best of Borrower’s knowledge is
in compliance in all material respects with all Legal Requirements as of the
date hereof, no notes or notices of violations of any Legal Requirements have
been entered or received by Borrower and there is no basis for the entering of
such notes or notices.
 
-86-

--------------------------------------------------------------------------------

(b) Borrower shall have the right to contest by appropriate legal proceedings
diligently conducted in good faith, without cost or expense to Lender, the
validity or application of any Legal Requirement and to suspend compliance
therewith if permitted under applicable Legal Requirements, provided (i) failure
to comply therewith may not subject Lender to any civil or criminal liability,
(ii) prior to and during such contest, Borrower shall furnish to Lender security
reasonably satisfactory to Lender, in its discretion, against loss or injury by
reason of such contest or non-compliance with such Legal Requirement, (iii) no
Default or Event of Default shall exist during such proceedings and such contest
shall not otherwise violate any of the provisions of any of the Loan Documents,
(iv) such contest shall not (unless Borrower shall comply with the provisions of
clause (ii) of this Section 14.01(b)) subject the Property to any lien or
encumbrance the enforcement of which is not suspended or otherwise affect the
priority of the lien of this Security Instrument; (v) such contest shall not
affect the ownership, use or occupancy of the Property; (vi) the Property or any
part thereof or any interest therein shall not be in any danger of being sold,
forfeited or lost by reason of such contest by Borrower; (vii) Borrower shall
give Lender prompt notice of the commencement of such proceedings and, upon
request by Lender, notice of the status of such proceedings and/or confirmation
of the continuing satisfaction of the conditions set forth in clauses (i) - (vi)
of this Section 14.01(b); and (viii) upon a final determination of such
proceeding, Borrower shall take all steps necessary to comply with any
requirements arising therefrom.
 
(c) Borrower shall at all times comply with all applicable Legal Requirements
with respect to the construction, use and maintenance of any vaults adjacent to
the Property. If by reason of the failure to pay taxes, assessments, charges,
permit fees, franchise taxes or levies of any kind or nature, the continued use
of the vaults adjacent to Property or any part thereof is discontinued, Borrower
nevertheless shall, with respect to any vaults which may be necessary for the
continued use of the Property, take such steps (including the making of any
payment) to ensure the continued use of vaults or replacements.
 
Section 14.02. Compliance with Recorded Documents; No Future Grants. Borrower
shall promptly perform and observe or cause to be performed and observed, all of
the terms, covenants and conditions of all Property Agreements and all things
necessary to preserve intact and unimpaired any and all appurtenances or other
interests or rights affecting the Property.
 
ARTICLE XV: PREPAYMENT
 
Section 15.01. Prepayment.  Except as set forth in Section 1.5 of the Note, no
prepayment of the Debt may be made in whole or in part.
 
-87-

--------------------------------------------------------------------------------

 
ARTICLE XVI: ENVIRONMENTAL COMPLIANCE
 
Section 16.01. Covenants, Representations and Warranties.  (a) Borrower has not,
at any time, and, to Borrower’s best knowledge, except as set forth in the
Environmental Report, no other Person has at any time, handled, buried, stored,
retained, refined, transported, processed, manufactured, generated, produced,
spilled, allowed to seep, leak, escape or leach, or pumped, poured, emitted,
emptied, discharged, injected, dumped, transferred or otherwise disposed of or
dealt with Hazardous Materials on, to or from the Premises or any other real
property owned and/or occupied by Borrower (other than in compliance with all
Legal Requirements), and Borrower does not intend to and shall not use the
Property or any part thereof or any such other real property for the purpose of
handling, burying, storing, retaining, refining, transporting, processing,
manufacturing, generating, producing, spilling, seeping, leaking, escaping,
leaching, pumping, pouring, emitting, emptying, discharging, injecting, dumping,
transferring or otherwise disposing of or dealing with Hazardous Materials,
except for use and storage for use of heating oil, cleaning fluids, pesticides
and other substances customarily used in the operation of properties that are
being used for the same purposes as the Property is presently being used,
provided such use and/or storage for use is in compliance with the requirements
hereof and the other Loan Documents and does not give rise to liability under
applicable Legal Requirements or Environmental Statutes or be the basis for a
lien against the Property or any part thereof. In addition, without limitation
to the foregoing provisions, Borrower represents and warrants that, to the best
of its knowledge, except as previously disclosed in writing to Lender or in the
Environmental Report or Engineering Report, there is no asbestos in, on, over,
or under all or any portion of the fire-proofing or any other portion of the
Property.
 
(b) Borrower knows of no seepage, leak, escape, leach, discharge, injection,
release, emission, spill, pumping, pouring, emptying or dumping of Hazardous
Materials into waters on, under or adjacent to the Property or any part thereof
or any other real property owned and/or occupied by Borrower, or onto lands from
which such Hazardous Materials might seep, flow or drain into such waters,
except as disclosed in the Environmental Report.
 
(c) Borrower shall not permit any Hazardous Materials to be handled, buried,
stored, retained, refined, transported, processed, manufactured, generated,
produced, spilled, allowed to seep, leak, escape or leach, or to be pumped,
poured, emitted, emptied, discharged, injected, dumped, transferred or otherwise
disposed of or dealt with on, under, to or from the Property or any portion
thereof at any time, except for use and storage for use of heating oil, ordinary
cleaning fluids, pesticides and other substances customarily used in the
operation of properties that are being used for the same purposes as the
Property is presently being used, provided such use and/or storage for use is in
compliance with the requirements hereof and the other Loan Documents and does
not give rise to liability under applicable Legal Requirements or be the basis
for a lien against the Property or any part thereof.
 
(d) Borrower represents and warrants that no actions, suits, or proceedings have
been commenced, or are pending, or to the best knowledge of Borrower, are
threatened with respect to any Legal Requirement governing the use, manufacture,
storage, treatment, transportation, or processing of Hazardous Materials with
respect to the Property or any part thereof. Borrower has received no notice of,
and, except as disclosed in the Environmental Report, after due inquiry, has no
knowledge of any fact, condition, occurrence or circumstance which with notice
or passage of time or both would give rise to a claim under or pursuant to any
Environmental Statute pertaining to Hazardous Materials on, in, under or
originating from the Property or any part thereof or any other real property
owned or occupied by Borrower or arising out of the conduct of Borrower,
including, without limitation, pursuant to any Environmental Statute.
 
-88-

--------------------------------------------------------------------------------

 
(e) Borrower has not waived any Person’s liability with regard to Hazardous
Materials in, on, under or around the Property, nor has Borrower retained or
assumed, contractually or by operation of law, any other Person’s liability
relative to Hazardous Materials or any claim, action or proceeding relating
thereto.

(f) In the event that there shall be filed a lien against the Property or any
part thereof pursuant to any Environmental Statute pertaining to Hazardous
Materials, Borrower shall, within sixty (60) days or, in the event that the
applicable Governmental Authority has commenced steps to cause the Premises or
any part thereof to be sold pursuant to the lien, within fifteen (15) days, from
the date that Borrower receives notice of such lien, either (i) pay the claim
and remove the lien from the Property, or (ii) furnish (A) a bond satisfactory
to Lender in the amount of the claim out of which the lien arises, (B) a cash
deposit in the amount of the claim out of which the lien arises, or (C) other
security reasonably satisfactory to Lender in an amount sufficient to discharge
the claim out of which the lien arises.
 
(g) Borrower represents and warrants that (i) except as disclosed in the
Environmental Report, Borrower has no knowledge of any violation of any
Environmental Statute or any Environmental Problem in connection with the
Property, nor has Borrower been requested or required by any Governmental
Authority to perform any remedial activity or other responsive action in
connection with any Environmental Problem and (ii) neither the Property nor any
other property owned by Borrower is included or, to Borrower’s best knowledge,
proposed for inclusion on the National Priorities List issued pursuant to CERCLA
by the United States Environmental Protection Agency (the “EPA”) or on the
inventory of other potential “Problem” sites issued by the EPA and has not
otherwise been identified by the EPA as a potential CERCLA site or included or,
to Borrower’s knowledge, after due inquiry and investigation, proposed for
inclusion on any list or inventory issued pursuant to any other Environmental
Statute, if any, or issued by any other Governmental Authority. Borrower
covenants that Borrower will comply with all Environmental Statutes affecting or
imposed upon Borrower or the Property.
 
(h) Borrower covenants that it shall promptly notify Lender of the presence
and/or release of any Hazardous Materials and of any request for information or
any inspection of the Property or any part thereof by any Governmental Authority
with respect to any Hazardous Materials and provide Lender with copies of such
request and any response to any such request or inspection. Borrower covenants
that it shall, in compliance with applicable Legal Requirements, conduct and
complete all investigations, studies, sampling and testing (and promptly shall
provide Lender with copies of any such studies and the results of any such test)
and all remedial, removal and other actions necessary to clean up and remove all
Hazardous Materials in, on, over, under, from or affecting the Property or any
part thereof in accordance with all such Legal Requirements applicable to the
Property or any part thereof to the satisfaction of Lender.
 
-89-

--------------------------------------------------------------------------------

 
(i) Following the occurrence of an Event of Default that is continuing
hereunder, and without regard to whether Lender shall have taken possession of
the Property or a receiver has been requested or appointed or any other right or
remedy of Lender has or may be exercised hereunder or under any other Loan
Document, Lender shall have the right (but no obligation) to conduct such
investigations, studies, sampling and/or testing of the Property or any part
thereof as Lender may, in its discretion, determine to conduct, relative to
Hazardous Materials. All costs and expenses incurred in connection therewith
including, without limitation, consultants’ fees and disbursements and
laboratory fees, shall constitute a part of the Debt and shall, upon demand by
Lender, be immediately due and payable and shall bear interest at the Default
Rate from the date so demanded by Lender until reimbursed. Borrower shall, at
its sole cost and expense, fully and expeditiously cooperate in all such
investigations, studies, samplings and/or testings including, without
limitation, providing all relevant information and making knowledgeable people
available for interviews.
 
(j) Borrower represents and warrants that, except as disclosed in the
Environmental Report, all paint and painted surfaces existing within the
interior or on the exterior of the Improvements are not flaking, peeling,
cracking, blistering, or chipping, and do not contain lead or are maintained in
a condition that prevents exposure of young children to lead-based paint, as of
the date hereof, and that the current inspections, operation, and maintenance
program at the Property with respect to lead-based paint is consistent with FNMA
guidelines and sufficient to ensure that all painted surfaces within the
Property shall be maintained in a condition that prevents exposure of tenants to
lead-based paint. To Borrower’s knowledge, there have been no claims for adverse
health effects from exposure on the Property to lead-based paint or requests for
the investigation, assessment or removal of lead-based paint at the Property.
 
(k) Borrower represents and warrants that except in accordance with all
applicable Environmental Statutes and as disclosed in the Environmental Report,
(i) no underground treatment or storage tanks or pumps or water, gas, or oil
wells are or have been located about the Property, (ii) no PCBs or transformers,
capacitors, ballasts or other equipment that contain dielectric fluid containing
PCBs are located about the Property, (iii) no insulating material containing
urea formaldehyde is located about the Property and (iv) no asbestos-containing
material is located about the Property.
 
Section 16.02. Environmental Indemnification. Borrower shall defend, indemnify
and hold harmless the Indemnified Parties for, from and against any claims,
demands, penalties, fines, liabilities, settlements, damages, costs and expenses
of whatever kind or nature, known or unknown, contingent or otherwise, whether
incurred or imposed within or outside the judicial process, including, without
limitation, reasonable attorneys’ and consultants’ fees and disbursements and
investigations and laboratory fees arising out of, or in any way related to any
Environmental Problem, including without limitation:
 
(a) the presence, disposal, escape, seepage, leakage, spillage, discharge,
emission, release or threat of release of any Hazardous Materials in, on, over,
under, from or affecting the Property or any part thereof whether or not
disclosed by the Environmental Report;
 
-90-

--------------------------------------------------------------------------------

 
(b) any personal injury (including wrongful death, disease or other health
condition related to or caused by, in whole or in part, any Hazardous Materials)
or property damage (real or personal) arising out of or related to any Hazardous
Materials in, on, over, under, from or affecting the Property or any part
thereof whether or not disclosed by the Environmental Report;
 
(c) any action, suit or proceeding brought or threatened, settlement reached, or
order of any Governmental Authority relating to such Hazardous Material whether
or not disclosed by the Environmental Report; and/or
 
(d) any violation of the provisions, covenants, representations or warranties of
Section 16.01 hereof or of any Legal Requirement which is based on or in any way
related to any Hazardous Materials in, on, over, under, from or affecting the
Property or any part thereof including, without limitation, the cost of any work
performed and materials furnished in order to comply therewith whether or not
disclosed by the Environmental Report.
 
Notwithstanding the foregoing provisions of this Section 16.02 to the contrary,
Borrower shall have no obligation to indemnify Lender for liabilities, claims,
damages, penalties, causes of action, costs and expenses relative to the
foregoing which result directly from Lender’s willful misconduct or gross
negligence. Any amounts payable to Lender by reason of the application of this
Section 16.02 shall be secured by this Security Instrument and shall, upon
demand by Lender, become immediately due and payable and shall bear interest at
the Default Rate from the date so demanded by Lender until paid.
 
This indemnification shall survive the termination of this Security Instrument
whether by repayment of the Debt, foreclosure or deed in lieu thereof,
assignment, or otherwise. The indemnity provided for in this Section 16.02 shall
not be included in any exculpation of Borrower or its principals from personal
liability provided for in this Security Instrument or in any of the other Loan
Documents. Nothing in this Section 16.02 shall be deemed to deprive Lender of
any rights or remedies otherwise available to Lender, including, without
limitation, those rights and remedies provided elsewhere in this Security
Instrument or the other Loan Documents. The foregoing indemnity shall
specifically not include any such costs relating to Hazardous Materials which
are initially placed on, in or under any of the Properties after foreclosure or
other taking of title of such Properties by Lender or its successors or assigns.
 
ARTICLE XVII: ASSIGNMENTS
 
Section 17.01. Participations and Assignments. Lender shall have the right to
assign this Security Instrument and/or any of the Loan Documents, and to
transfer, assign or sell participations and subparticipations (including blind
or undisclosed participations and subparticipations) in the Loan Documents and
the obligations hereunder to any Person; provided, however, that no such
participation shall increase, decrease or otherwise affect either Borrower’s or
Lender’s obligations under this Security Instrument or the other Loan Documents
or increase the Debt.
 
-91-

--------------------------------------------------------------------------------

ARTICLE XVIII: MISCELLANEOUS
 
Section 18.01. Right of Entry. Lender and its agents shall have the right to
enter and inspect the Property or any part thereof at all reasonable times, and,
except in the event of an emergency, upon reasonable notice and to inspect
Borrower’s books and records and to make abstracts and reproductions thereof.
 
Section 18.02. Cumulative Rights. The rights of Lender under this Security
Instrument shall be separate, distinct and cumulative and none shall be given
effect to the exclusion of the others. No act of Lender shall be construed as an
election to proceed under any one provision herein to the exclusion of any other
provision. Lender shall not be limited exclusively to the rights and remedies
herein stated but shall be entitled, subject to the terms of this Security
Instrument, to every right and remedy now or hereafter afforded by law,
including but not limited to those rights and remedies provided by the Nebraska
Trust Deeds Act in effect from time to time.
 
Section 18.03. Liability. If Borrower consists of more than one Person, the
obligations and liabilities of each such Person hereunder shall be joint and
several.
 
Section 18.04. Exhibits Incorporated. The information set forth on the cover
hereof, and the Exhibits annexed hereto, are hereby incorporated herein as a
part of this Security Instrument with the same effect as if set forth in the
body hereof.
 
Section 18.05. Severable Provisions. If any term, covenant or condition of the
Loan Documents including, without limitation, the Note or this Security
Instrument, is held to be invalid, illegal or unenforceable in any respect, such
Loan Document shall be construed without such provision.
 
Section 18.06. Duplicate Originals. This Security Instrument may be executed in
any number of duplicate originals and each such duplicate original shall be
deemed to constitute but one and the same instrument.
 
Section 18.07. No Oral Change. The terms of this Security Instrument, together
with the terms of the Note and the other Loan Documents, constitute the entire
understanding and agreement of the parties hereto and supersede all prior
agreements, understandings and negotiations between Borrower and Lender with
respect to the Loan. This Security Instrument, and any provisions hereof, may
not be modified, amended, waived, extended, changed, discharged or terminated
orally or by any act on the part of Borrower or Lender, but only by an agreement
in writing signed by the party against whom enforcement of any modification,
amendment, waiver, extension, change, discharge or termination is sought.
 
Section 18.08. Waiver of Counterclaim, Etc. BORROWER HEREBY WAIVES THE RIGHT TO
ASSERT A COUNTERCLAIM, OTHER THAN A COMPULSORY COUNTERCLAIM, IN ANY ACTION OR
PROCEEDING BROUGHT AGAINST IT BY LENDER OR ITS AGENTS, AND WAIVES TRIAL BY JURY
IN ANY ACTION OR PROCEEDING BROUGHT BY EITHER PARTY HERETO AGAINST THE OTHER OR
IN ANY COUNTERCLAIM BORROWER MAY BE PERMITTED TO ASSERT HEREUNDER OR WHICH MAY
BE ASSERTED BY LENDER OR ITS AGENTS, AGAINST BORROWER, OR IN ANY MATTERS
WHATSOEVER ARISING OUT OF OR IN ANY WAY CONNECTED WITH THIS SECURITY INSTRUMENT
OR THE DEBT.
 
-92-

--------------------------------------------------------------------------------

 
Section 18.09. Headings; Construction of Documents; etc. The table of contents,
headings and captions of various paragraphs of this Security Instrument are for
convenience of reference only and are not to be construed as defining or
limiting, in any way, the scope or intent of the provisions hereof. Borrower
acknowledges that it was represented by competent counsel in connection with the
negotiation and drafting of this Security Instrument and the other Loan
Documents and that neither this Security Instrument nor the other Loan Documents
shall be subject to the principle of construing the meaning against the Person
who drafted same.
 
Section 18.10. Sole Discretion of Lender. Whenever Lender exercises any right
given to it to approve or disapprove, or any arrangement or term is to be
satisfactory to Lender, the decision of Lender to approve or disapprove or to
decide that arrangements or terms are satisfactory or not satisfactory shall be
in the sole discretion of Lender and shall be final and conclusive, except as
may be otherwise specifically provided herein.
 
Section 18.11. Waiver of Notice. Except as otherwise provided herein or as
required by applicable law, Borrower shall not be entitled to any notices of any
nature whatsoever from Lender except with respect to matters for which this
Security Instrument specifically and expressly provides for the giving of notice
by Lender to Borrower and except with respect to matters for which Borrower is
not, pursuant to applicable Legal Requirements, permitted to waive the giving of
notice.
 
Section 18.12. Covenants Run with the Land. All of the grants, covenants, terms,
provisions and conditions herein shall run with the Premises, shall be binding
upon Borrower and shall inure to the benefit of Lender, subsequent holders of
this Security Instrument and their successors and assigns. Without limitation to
any provision hereof, the term “Borrower” shall include and refer to the
borrower named herein, any subsequent owner of the Property, and its respective
heirs, executors, legal representatives, successors and assigns. The
representations, warranties and agreements contained in this Security Instrument
and the other Loan Documents are intended solely for the benefit of the parties
hereto, shall confer no rights hereunder, whether legal or equitable, in any
other Person and no other Person shall be entitled to rely thereon.
 
Section 18.13. Applicable Law. THIS SECURITY INSTRUMENT AND THE OBLIGATIONS
ARISING HEREUNDER SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE
LAWS OF THE STATE OF NEBRASKA APPLICABLE TO CONTRACTS MADE AND PERFORMED IN SUCH
STATE AND ANY APPLICABLE LAW OF THE UNITED STATES OF AMERICA.
 
Section 18.14. Security Agreement. (a) (i) This Security Instrument is both a
real property mortgage, deed to secure debt or deed of trust, as applicable, and
a “security agreement” within the meaning of the UCC. The Property includes both
real and personal property and all other rights and interests, whether tangible
or intangible in nature, of Borrower in the Property, and Borrower hereby grants
to Lender a security interest in all portions of the Property constituting
personal property or fixtures under the UCC. This Security Instrument is filed
as a fixture filing and covers goods which are or are to become fixtures on the
Property. Borrower by executing and delivering this Security Instrument has
granted to Lender, as security for the Debt, a security interest in the Property
to the full extent that the Property may be subject to the UCC (said portion of
the Property so subject to the UCC being called in this Section 18.14 the
“Collateral”). If an Event of Default shall occur, Lender, in addition to any
other rights and remedies which it may have, shall have and may exercise
immediately and without demand, any and all rights and remedies granted to a
secured party upon default under the UCC, including, without limiting the
generality of the foregoing, the right to take possession of the Collateral or
any part thereof, and to take such other measures as Lender may deem necessary
for the care, protection and preservation of the Collateral. Upon request or
demand of Lender following an Event of Default, Borrower shall, at its expense,
assemble the Collateral and make it available to Lender at a convenient place
acceptable to Lender. Borrower shall pay to Lender on demand any and all
expenses, including reasonable legal expenses and attorneys’ fees, incurred or
paid by Lender in protecting its interest in the Collateral and in enforcing its
rights hereunder with respect to the Collateral. Any disposition pursuant to the
UCC of so much of the Collateral as may constitute personal property shall be
considered commercially reasonable if made pursuant to a public sale which is
advertised at least twice in a newspaper in which sheriff’s sales are advertised
in the county where the Premises is located. Any notice of sale, disposition or
other intended action by Lender with respect to the Collateral given to Borrower
in accordance with the provisions hereof at least ten (10) days prior to such
action, shall constitute reasonable notice to Borrower. The proceeds of any
disposition of the Collateral, or any part thereof, may be applied by Lender to
the payment of the Debt in such priority and proportions as Lender in its
discretion shall deem proper. It is not necessary that the Collateral be present
at any disposition thereof. Lender shall have no obligation to clean-up or
otherwise prepare the Collateral for disposition.
 
-93-

--------------------------------------------------------------------------------

 
(ii) The mention in a financing statement filed in the records normally
pertaining to personal property of any portion of the Property shall not
derogate from or impair in any manner the intention of this Security Instrument.
Lender hereby declares that all items of Collateral are part of the real
property encumbered hereby to the fullest extent permitted by law, regardless of
whether any such item is physically attached to the Improvements or whether
serial numbers are used for the better identification of certain items.
Specifically, the mention in any such financing statement of any items included
in the Property shall not be construed to alter, impair or impugn any rights of
Lender as determined by this Security Instrument or the priority of Lender’s
lien upon and security interest in the Property in the event that notice of
Lender’s priority of interest as to any portion of the Property is required to
be filed in accordance with the UCC to be effective against or take priority
over the interest of any particular class of persons, including the federal
government or any subdivision or instrumentality thereof. No portion of the
Collateral constitutes or is the proceeds of “Farm Products”, as defined in the
UCC.
 
(iii) If Borrower is at any time a beneficiary under a letter of credit now or
hereafter issued in favor of Borrower, Borrower shall promptly notify Lender
thereof and, at the request and option of Lender, Borrower shall, pursuant to an
agreement in form and substance satisfactory to Lender, either (A) arrange for
the issuer and any confirmer of such letter of credit to consent to an
assignment to Lender of the proceeds of any drawing under the letter of credit
or (B) arrange for Lender to become the transferee beneficiary of the letter of
credit, with Lender agreeing, in each case, that the proceeds of any drawing
under the letter to credit are to be applied as provided in this Security
Instrument.
 
-94-

--------------------------------------------------------------------------------

 
(iv) Borrower and Lender acknowledge that for the purposes of Article 9 of the
UCC, the law of the State of New York shall be the law of the jurisdiction of
the bank in which the Central Account is located.
 
(v) Lender may comply with any applicable Legal Requirements in connection with
the disposition of the Collateral, and Lender’s compliance therewith will not be
considered to adversely affect the commercial reasonableness of any sale of the
Collateral.
 
(vi) Lender may sell the Collateral without giving any warranties as to the
Collateral. Lender may specifically disclaim any warranties of title,
possession, quiet enjoyment or the like. This procedure will not be considered
to adversely affect the commercial reasonableness of any sale of the Collateral.
 
(vii) If Lender sells any of the Collateral upon credit, Borrower will be
credited only with payments actually made by the purchaser, received by Lender
and applied to the indebtedness of Borrower. In the event the purchaser of the
Collateral fails to fully pay for the Collateral, Lender may resell the
Collateral and Borrower will be credited with the proceeds of such sale.
 
(b) Borrower hereby irrevocably appoints Lender as its attorney-in-fact, coupled
with an interest, to file with the appropriate public office on its behalf any
financing or other statements signed only by Lender, as secured party, or, to
the extent permitted under the UCC, unsigned, in connection with the Collateral
covered by this Security Instrument.
 
Section 18.15. Actions and Proceedings. Lender has the right to appear in and
defend any action or proceeding brought with respect to the Property in its own
name or, if required by Legal Requirements or, if in Lender’s reasonable
judgment, it is necessary, in the name and on behalf of Borrower, which Lender
believes will adversely affect the Property or this Security Instrument and to
bring any action or proceedings, in its name or in the name and on behalf of
Borrower, which Lender, in its reasonable discretion, decides should be brought
to protect its interest in the Property.
 
Section 18.16. Usury Laws. This Security Instrument and the Note are subject to
the express condition, and it is the expressed intent of the parties, that at no
time shall Borrower be obligated or required to pay interest on the principal
balance due under the Note at a rate which could subject the holder of the Note
to either civil or criminal liability as a result of being in excess of the
maximum interest rate which Borrower is permitted by law to contract or agree to
pay. If by the terms of this Security Instrument or the Note, Borrower is at any
time required or obligated to pay interest on the principal balance due under
the Note at a rate in excess of such maximum rate, such rate of interest shall
be deemed to be immediately reduced to such maximum rate and the interest
payable shall be computed at such maximum rate and all prior interest payments
in excess of such maximum rate shall be applied and shall be deemed to have been
payments in reduction of the principal balance of the Note. No application to
the principal balance of the Note pursuant to this Section 18.16 shall give rise
to any requirement to pay any prepayment fee or charge of any kind due
hereunder, if any.
 
-95-

--------------------------------------------------------------------------------

 
Section 18.17. Remedies of Borrower. In the event that a claim or adjudication
is made that Lender has acted unreasonably or unreasonably delayed acting in any
case where by law or under the Note, this Security Instrument or the Loan
Documents, it has an obligation to act reasonably or promptly, Lender shall not
be liable for any monetary damages, and Borrower’s remedies shall be limited to
injunctive relief or declaratory judgment.
 
Section 18.18. Offsets, Counterclaims and Defenses. Any assignee of this
Security Instrument, the Assignment and the Note shall take the same free and
clear of all offsets, counterclaims or defenses which are unrelated to the Note,
the Assignment or this Security Instrument which Borrower may otherwise have
against any assignor of this Security Instrument, the Assignment and the Note
and no such unrelated counterclaim or defense shall be interposed or asserted by
Borrower in any action or proceeding brought by any such assignee upon this
Security Instrument, the Assignment or the Note and any such right to interpose
or assert any such unrelated offset, counterclaim or defense in any such action
or proceeding is hereby expressly waived by Borrower.
 
Section 18.19. No Merger. If Borrower’s and Lender’s estates become the same
including, without limitation, upon the delivery of a deed by Borrower in lieu
of a foreclosure sale, or upon a purchase of the Property by Lender in a
foreclosure sale, this Security Instrument and the lien created hereby shall not
be destroyed or terminated by the application of the doctrine of merger and in
such event Lender shall continue to have and enjoy all of the rights and
privileges of Lender as to the separate estates; and, as a consequence thereof,
upon the foreclosure of the lien created by this Security Instrument, any Leases
or subleases then existing and created by Borrower shall not be destroyed or
terminated by application of the law of merger or as a result of such
foreclosure unless Lender or any purchaser at any such foreclosure sale shall so
elect. No act by or on behalf of Lender or any such purchaser shall constitute a
termination of any Lease or sublease unless Lender or such purchaser shall give
written notice thereof to such lessee or sublessee.
 
Section 18.20. Restoration of Rights. In case Lender shall have proceeded to
enforce any right under this Security Instrument by foreclosure sale, entry or
otherwise, and such proceedings shall have been discontinued or abandoned for
any reason or shall have been determined adversely, then, in every such case,
Borrower and Lender shall be restored to their former positions and rights
hereunder with respect to the Property subject to the lien hereof.
 
Section 18.21. Waiver of Statute of Limitations. The pleadings of any statute of
limitations as a defense to any and all obligations secured by this Security
Instrument are hereby waived to the full extent permitted by Legal Requirements.
 
Section 18.22. Advances. This Security Instrument shall cover any and all
advances made pursuant to the Loan Documents, rearrangements and renewals of the
Debt and all extensions in the time of payment thereof, even though such
advances, extensions or renewals be evidenced by new promissory notes or other
instruments hereafter executed and irrespective of whether filed or recorded.
Likewise, the execution of this Security Instrument shall not impair or affect
any other security which may be given to secure the payment of the Debt, and all
such additional security shall be considered as cumulative. The taking of
additional security, execution of partial releases of the security, or any
extension of time of payment of the Debt shall not diminish the force, effect or
lien of this Security Instrument and shall not affect or impair the liability of
Borrower and shall not affect or impair the liability of any maker, surety, or
endorser for the payment of the Debt.
 
-96-

--------------------------------------------------------------------------------

 
Section 18.23. Application of Default Rate Not a Waiver. Application of the
Default Rate shall not be deemed to constitute a waiver of any Default or Event
of Default or any rights or remedies of Lender under this Security Instrument,
any other Loan Document or applicable Legal Requirements, or a consent to any
extension of time for the payment or performance of any obligation with respect
to which the Default Rate may be invoked.
 
Section 18.24. Intervening Lien. To the fullest extent permitted by law, any
agreement hereafter made pursuant to this Security Instrument shall be superior
to the rights of the holder of any intervening lien or security interest.
 
Section 18.25. No Joint Venture or Partnership. Borrower and Lender intend that
the relationship created hereunder be solely that of Borrower and mortgagee or
grantor and beneficiary or borrower and lender, as the case may be. Nothing
herein is intended to create a joint venture, partnership, tenancy-in-common, or
joint tenancy relationship between Borrower and Lender nor to grant Lender any
interest in the Property other than that of mortgagee, beneficiary or lender.
 
Section 18.26. Time of the Essence. Time shall be of the essence in the
performance of all obligations of Borrower hereunder.
 
Section 18.27. Borrower’s Obligations Absolute. Borrower acknowledges that
Lender and/or certain Affiliates of Lender are engaged in the business of
financing, owning, operating, leasing, managing, and brokering real estate and
in other business ventures which may be viewed as adverse to or competitive with
the business, prospect, profits, operations or condition (financial or
otherwise) of Borrower. Except as set forth to the contrary in the Loan
Documents, all sums payable by Borrower hereunder shall be paid without notice
or demand, counterclaim, set-off, deduction or defense and without abatement,
suspension, deferment, diminution or reduction, and the obligations and
liabilities of Borrower hereunder shall in no way be released, discharged, or
otherwise affected (except as expressly provided herein) by reason of: (a) any
damage to or destruction of or any Taking of the Property; (b) any restriction
or prevention of or interference with any use of the Property or any portion
thereof; (c) any title defect or encumbrance or any eviction from the Premises
or any portion thereof by title paramount or otherwise; (d) any bankruptcy
proceeding relating to Borrower, any General Partner, or any guarantor or
indemnitor, or any action taken with respect to this Security Instrument or any
other Loan Document by any trustee or receiver of Borrower or any such General
Partner, guarantor or indemnitor, or by any court, in any such proceeding; (e)
any claim which Borrower has or might have against Lender; (f) any default or
failure on the part of Lender to perform or comply with any of the terms hereof
or of any other agreement with Borrower; or (g) any other occurrence whatsoever,
whether similar or dissimilar to the foregoing, whether or not Borrower shall
have notice or knowledge of any of the foregoing. 
 
Section 18.28. Publicity. All promotional news releases, publicity or
advertising by Manager, Borrower or their respective Affiliates through any
media intended to reach the general public shall not refer to the Loan Documents
or the financing evidenced by the Loan Documents, or to Lender or to any of its
Affiliates without the prior written approval of Lender or such Affiliate, as
applicable, in each instance, such approval not to be unreasonably withheld or
delayed. Lender shall be authorized to provide information relating to the
Property, the Loan and matters relating thereto to rating agencies,
underwriters, potential securities investors, auditors, regulatory authorities
and to any Persons which may be entitled to such information by operation of
law. 
 
-97-

--------------------------------------------------------------------------------

 
Section 18.29. Securitization Opinions. In the event the Loan is included as an
asset of a Securitization by Lender or any of its Affiliates, Borrower shall,
within fifteen (15) Business Days after Lender’s written request therefor, at
Lender’s sole cost and expense, deliver opinions in form and substance and
delivered by counsel reasonably acceptable to Lender and each Rating Agency, as
may be reasonably required by Lender and/or each Rating Agency in connection
with such securitization. Borrower’s failure to deliver the opinions required
hereby within such ten (10) Business Day period shall constitute an “Event of
Default” hereunder.
 
Section 18.30. Intentionally Deleted. 
 
Section 18.31. Securitization Financials. Borrower covenants and agrees that,
upon Lender’s written request therefor in connection with a Securitization,
Borrower shall, at Lender’s sole cost and expense, promptly deliver audited
financial statements and related documentation prepared by an Independent
certified public accountant that satisfy securities laws and requirements for
use in a public registration statement (which may include up to three (3) years
of historical audited financial statements).
 
-98-

--------------------------------------------------------------------------------

 
Section 18.32. Exculpation. Notwithstanding anything herein or in any other Loan
Document to the contrary, except as otherwise set forth in this Section 18.32 to
the contrary, Lender shall not enforce the liability and obligation of Borrower
or (a) if Borrower is a partnership, its constituent partners or any of their
respective partners, (b) if Borrower is a trust, its beneficiaries or any of
their respective Partners (as hereinafter defined), (c) if Borrower is a
corporation, any of its shareholders, directors, principals, officers or
employees, or (d) if Borrower is a limited liability company, any of its
members, managers, officers or directors (the Persons described in the foregoing
clauses (a) - (d), as the case may be, are hereinafter referred to as the
“Partners”) to perform and observe the obligations contained in this Security
Instrument or any of the other Loan Documents by any action or proceeding
wherein a money judgment shall be sought against Borrower or the Partners,
except that Lender may bring a foreclosure action, action for specific
performance, or other appropriate action or proceeding (including, without
limitation, an action to obtain a deficiency judgment) solely for the purpose of
enabling Lender to realize upon (i) Borrower’s interest in the Property, (ii)
the Rent to the extent received by Borrower (or received by its Partners) after
the occurrence of an Event of Default and not either delivered to Lender (or
Lender’s agent) or applied to ordinary and necessary expenses of owning and
operating the Property (the “Recourse Distributions”) and (iii) any other
collateral given to Lender under the Loan Documents (the collateral described in
the foregoing clauses (i) - (iii) is hereinafter referred to as the “Default
Collateral”); provided, however, that any judgment in any such action or
proceeding shall be enforceable against Borrower or the Partners, as the case
may be, only to the extent of any such Default Collateral. The provisions of
this Section shall not, however, (a) impair the validity of the Debt evidenced
by the Note or in any way affect or impair the lien of this Security Instrument
or any of the other Loan Documents or the right of Lender to foreclose this
Security Instrument following the occurrence of an Event of Default; (b) impair
the right of Lender to name Borrower as a party defendant in any action or suit
for judicial foreclosure and sale under this Security Instrument; (c) affect the
validity or enforceability of the Note, this Security Instrument, or any of the
other Loan Documents, or impair the right of Lender to seek a personal judgment
against the Guarantor; (d) impair the right of Lender to obtain the appointment
of a receiver; (e) impair the enforcement of the Assignment; (f) impair the
right of Lender to bring suit for a monetary judgment against Borrower with
respect to any losses resulting from fraud, material misrepresentation, or
failure to disclose a material fact, any untrue statement of a material fact or
omission to state a material fact in the written materials and/or information
provided to Lender or any of its affiliates by or on behalf of Borrower,
Guarantor or any of their Affiliates in connection with this Security
Instrument, the Note or the other Loan Documents, and the foregoing provisions
shall not modify, diminish or discharge the liability of Borrower, Guarantor or
any of their Affiliates with respect to same; (g) impair the right of Lender to
bring suit for a monetary judgment against Borrower to obtain the Recourse
Distributions received by Borrower including, without limitation, the right to
bring suit for a monetary judgment to proceed against Guarantor to the extent of
Guarantor’s liability under any guaranty delivered by Guarantor and the
foregoing provisions shall not modify, diminish or discharge the liability of
Borrower or Guarantor with respect to same; (h) impair the right of Lender to
bring suit for a monetary judgment against Borrower with respect to any losses
resulting from Borrower’s misappropriation of tenant security deposits or Rent
(other than rent deemed “additional rent” under the Leases) collected more than
one (1) month in advance, and the foregoing provisions shall not modify,
diminish or discharge the liability of Borrower with respect to same; (i) impair
the right of Lender to obtain Loss Proceeds due to Lender pursuant to this
Security Instrument to the extent actually paid by the insurer; (j) impair the
right of Lender to enforce the provisions of Sections 2.02(g), 16.01 or 16.02,
inclusive of this Security Instrument, even after repayment in full by Borrower
of the Debt or to bring suit for a monetary judgment against Borrower with
respect to any losses resulting from any obligation set forth in said Sections;
(k) prevent or in any way hinder Lender from exercising, or constitute a
defense, or counterclaim, or other basis for relief in respect of the exercise
of, any other remedy against any or all of the collateral securing the Note as
provided in the Loan Documents; (l) impair the right of Lender to bring suit for
a monetary judgment against Borrower with respect to any losses resulting from
any misappropriation or conversion of Loss Proceeds, and the foregoing
provisions shall not modify, diminish or discharge the liability of Borrower
with respect to same; (m) impair the right of Lender to sue for, seek or demand
a deficiency judgment against Borrower solely for the purpose of foreclosing the
Property or any part thereof, or realizing upon the Default Collateral;
provided, however, that any such deficiency judgment referred to in this clause
(m) shall be enforceable against Borrower and Guarantor only to the extent of
any of the Default Collateral; (n) impair the ability of Lender to bring suit
for a monetary judgment against Borrower with respect to any losses resulting
from arson or physical waste to or of the Property or damage to the Property in
each case resulting from the intentional acts or intentional omissions of
Borrower, Guarantor or any of their Affiliates; (o) impair the right of Lender
to bring a suit for a monetary judgment against Borrower in the event of the
exercise of any right or remedy under any federal, state or local forfeiture
laws resulting in the loss of the lien of this Security Instrument, or the
priority thereof, against the Property; (p) be deemed a waiver of any right
which Lender may have under Sections 506(a), 506(b), 1111(b) or any other
provision of the Bankruptcy Code to file a claim for the full amount of the Debt
or to require that all collateral shall continue to secure all of the Debt; (q)
impair the right of Lender to bring suit for monetary judgment against Borrower
with respect to any losses resulting from any claims, actions or proceedings
initiated by Borrower (or any Affiliate of Borrower) alleging that the
relationship of Borrower and Lender is that of joint venturers, partners,
tenants in common, joint tenants or any relationship other than that of debtor
and creditor; (r) impair the right of Lender to bring suit for a monetary
judgment with respect to any losses resulting from a Transfer in violation of
the provisions of Article IX hereof; (s) impair the right of Lender to bring
suit against Borrower for Borrower’s failure to pay any valid taxes,
assessments, mechanic’s liens, materialmen’s liens or other liens which could
create liens on any portion of the Property superior to the lien or security
title of this Security Instrument or the other Loan Documents, except, (1) with
respect to any such taxes or assessments, to the extent that funds have been
deposited with Lender pursuant to the terms of this Security Instrument
specifically for the applicable taxes or assessments and not applied by Lender
to pay such taxes and assessments, and (2) to the extent that there is
insufficient available cash flow at any time to enable Borrower to pay all
operating expenses (including taxes and assessments) then due and payable,
necessary property improvement expenditures and amounts due and payable under
the Loan Documents (as demonstrated to the reasonable satisfaction of Lender)
and Borrower applies all available cash flow to the payment of any one or more
of the foregoing item or (t) impair the right of Lender to bring a suit for a
monetary judgment against Borrower in that any recordation taxes are due in
connection with the recording of this Security Instrument or any penalty payable
in connection therewith. The provisions of this Section 18.32 shall be
inapplicable to Borrower if (a) any proceeding, action, petition or filing under
the Bankruptcy Code, or any similar state or federal law now or hereafter in
effect relating to bankruptcy, reorganization or insolvency, or the arrangement
or adjustment of debts, shall be filed by, consented to or acquiesced in by or
with respect to Borrower, or if Borrower shall institute any proceeding for its
dissolution or liquidation, or shall make an assignment for the benefit of
creditors or (b) Borrower or any Affiliate contests or interferes with Lender’s
enforcement of its rights and remedies hereunder or under the Loan Documents by
asserting any defense (x) as to the validity of the obligations under the Loan
Documents or in any way relating to the structure of the Borrower or the
enforceability of Lender’s rights and remedies under the Loan Documents, or (y)
for the purpose of delaying, hindering or impairing Lender’s rights and remedies
under the Loan Documents (collectively, a “Contest”) (provided that if any such
Person obtains a non-appealable order successfully asserting a Contest, Borrower
shall have no liability under this clause (b)), in which event Lender shall have
recourse against all of the assets of Borrower including, without limitation,
any right, title and interest of Borrower in and to the Property.
 
-99-

--------------------------------------------------------------------------------

 
Section 18.33. Intentionally Deleted
 
Section 18.34. Intentionally Deleted
 
Section 18.35. Intentionally Deleted.
 
Section 18.36. Cooperation. (a) Borrower covenants and agrees that in the event
the Loan is to be included as an asset of a Securitization, Borrower shall (a)
gather any information reasonably required by the Rating Agencies in connection
with such a Securitization, (b) at Lender’s request, meet with representatives
of the Rating Agency to discuss the business and operations of the Property, and
(c) cooperate with the reasonable requests of each Rating Agency and Lender in
connection with all of the foregoing as well as in connection with all other
matters and the preparation of any offering documents with respect thereof,
including, without limitation, entering into any amendments or modifications to
this Security Instrument or to any other Loan Document which may be requested by
Lender to conform to Rating Agency or market standards for a Securitization
provided that no such modification shall modify (a) the interest rate payable
under the Note, (b) the stated maturity of the Note, (c) the amortization of
principal under the Note, (d) Section 18.32 hereof, (e) any other material
economic term of the Loan or (f) any provision, the effect of which would
materially increase Borrower’s obligations or materially decrease Borrower’s
rights under the Loan Documents. Borrower acknowledges that the information
provided by Borrower to Lender may be incorporated into the offering documents
for a Securitization. Lender and each Rating Agency shall be entitled to rely on
the information supplied by, or on behalf of, Borrower and Borrower indemnifies
and holds harmless the Indemnified Parties, their Affiliates and each Person who
controls such Persons within the meaning of Section 15 of the Securities Act or
Section 20 of the Securities Exchange Act of 1934, as same may be amended from
time to time, for, from and against any claims, demands, penalties, fines,
liabilities, settlements, damages, costs and expenses of whatever kind or
nature, known or unknown, contingent or otherwise, whether incurred or imposed
within or outside the judicial process, including, without limitation,
reasonable attorneys’ fees and disbursements (including, without limitation,
reasonable attorney’s fees and expenses, whether incurred within or outside the
judicial process) that arise out of or are based upon any untrue statement or
alleged untrue statement of any material fact contained in such information or
arise out of or are based upon the omission or alleged omission to state therein
a material fact required to be stated in such information or necessary in order
to make the statements in such information, or in light of the circumstances
under which they were made, not misleading.
 
-100-

--------------------------------------------------------------------------------

 
(b) Further, Borrower shall cooperate at no cost to Borrower or Guarantor, with
Lender and its affiliates in connection with any such sale of the Loan by
mortgage backed pass through certificates, participations, securities or pari
passu notes evidencing whole or component interests therein through one of more
public or private offerings, including, but not limited to:
 
(i) separating the Loan into two or more separate notes (or components that
correspond to one or more tranches of the certificates/securities created in a
Securitization) or participation interests. Such notes or components or
participation interests may be assigned different interest rates, so long as the
weighted average of such interest rates equals the interest rate on the Note.
Additionally, Lender may split the Loan into a senior/subordinated participation
structure;
 
(ii) obtaining ratings from two or more Rating Agencies;
 
(iii) making or causing to be made reasonable changes or modifications to the
loan documentation, organizational documentation, opinion letters and other
documentation;
 
-101-

--------------------------------------------------------------------------------

 
(iv) reviewing prepared offering materials relating to the Property, Borrower,
Guarantor and the Loan;
 
(v) delivering updated information on the Borrower, Guarantor and the Property;
 
(vi) participating in investor or Rating Agency meetings if requested by Lender;
 
(vii) permitting adjustment of Lender’s security interest to permit a
senior/subordinate or other structure to enhance a Securitization, participation
interest or a distribution of the Loan; and
 
(viii) restructuring of the Loan and/or a reduction of the Loan Amount with the
imposition of a mezzanine loan in the corresponding amount to be reduced, which
mezzanine loan shall be secured by a pledge of ownership interests in the
Borrower or the members of Borrower. Such notes or components may be assigned
different interest rates, so long as the weighted average of such interest rates
equals the interest rate on the Note.
 
Section 18.37. Regulation A/B. (a) If requested by Lender, Borrower shall
furnish, or shall cause the applicable tenant to furnish, to Lender financial
data and/or financial statements in accordance with Regulation AB (as defined
herein) for any tenant of any Property if, in connection with a securitization,
Lender expects there to be, with respect to such tenant or group of affiliated
tenants, a concentration within all of the mortgage loans included or expected
to be included, as applicable, in such securitization such that such tenant or
group of affiliated tenants would constitute a Significant Obligor (as defined
herein); provided, however, that in the event the related lease does not require
the related tenant to provide the foregoing information, Borrower shall use
commercially reasonable efforts to cause the applicable tenant to furnish such
information.
 
(b) If, at the time one or more Disclosure Documents are being prepared for a
securitization, Lender expects that Borrower alone or Borrower and one or more
affiliates of Borrower collectively, or the Property alone or the Property and
any other parcel(s) of real property, together with improvements thereon and
personal property related thereto, that is “related”, within the meaning of the
definition of Significant Obligor, to the Property (a “Related Property”)
collectively, will be a Significant Obligor, Borrower shall furnish to Lender
upon request (i) the selected financial data or, if applicable, net operating
income, required under Item 1112(b)(1) of Regulation AB and meeting the
requirements thereof, if Lender expects that the principal amount of the Loan,
together with any loans made to an affiliate of Borrower or secured by a Related
Property that is included in a securitization with the Loan (a “Related Loan”),
as of the cut-off date for such securitization may, or if the principal amount
of the Loan together with any Related Loans as of the cut-off date for such
securitization and at any time during which the Loan and any Related Loans are
included in a securitization does, equal or exceed ten percent (10%) (but less
than twenty percent (20%)) of the aggregate principal amount of all mortgage
loans included or expected to be included, as applicable, in the securitization
or (ii) the financial statements required under Item 1112(b)(2) of Regulation AB
and meeting the requirements thereof, if Lender expects that the principal
amount of the Loan together with any Related Loans as of the cut-off date for
such securitization may, or if the principal amount of the Loan together with
any Related Loans as of the cut-off date for such securitization and at any time
during which the Loan and any Related Loans are included in a securitization
does, equal or exceed twenty percent (20%) of the aggregate principal amount of
all mortgage loans included or expected to be included, as applicable, in the
securitization. Such financial data or financial statements shall be furnished
to Lender (A) within ten (10) Business Days after notice from Lender in
connection with the preparation of Disclosure Documents for the securitization,
(B) not later than thirty (30) days after the end of each fiscal quarter of
Borrower and (C) not later than seventy-five (75) days after the end of each
fiscal year of Borrower; provided, however, that Borrower shall not be obligated
to furnish financial data or financial statements pursuant to clauses (B) or (C)
of this sentence with respect to any period for which a filing pursuant to the
Securities Exchange Act of 1934 in connection with or relating to the
securitization (an “Exchange Act Filing”) is not required. As used herein,
“Regulation AB” shall mean Regulation AB under the Securities Act of 1933 and
the Securities Exchange Act of 1934 (as amended). As used herein, “Disclosure
Document” shall mean a prospectus, prospectus supplement, private placement
memorandum, or similar offering memorandum or offering circular, in each case in
preliminary or final form, used to offer securities in connection with a
securitization. As used herein, “Significant Obligor” shall have the meaning set
forth in Item 1101(k) of Regulation AB.
 
-102-

--------------------------------------------------------------------------------

 
Section 18.38. Borrower hereby requests that a copy of any notice of default and
notice of sale made or executed by Trustee pursuant to the provisions hereof be
sent to Borrower at its mailing address set forth hereinabove.
 
ARTICLE XIX: CONCERNING THE TRUSTEE.
 
Section 19.01. Certain Rights. With the approval of Lender, Trustee shall have
the right to take any and all of the following actions: (i) to select, employ
and consult with counsel (who may be, but need not be, counsel for Lender) upon
any matters arising hereunder, including the preparation, execution and
interpretation of the Loan Documents, and shall be fully protected in relying as
to legal matters on the advice of counsel, (ii) to execute any of the trusts and
powers hereof and to perform any duty hereunder either directly or through his
or her agents or attorneys, (iii) to select and employ, in and about the
execution of his or her duties hereunder, suitable accountants, engineers and
other experts, agents and attorneys-in-fact, either corporate or individual, not
regularly in the employ of Trustee (and Trustee shall not be answerable for any
act, default, negligence, or misconduct of any such accountant, engineer or
other expert, agent or attorney-in-fact, if selected with reasonable care, or
for any error of judgment or act done by Trustee in good faith, or be otherwise
responsible or accountable under any circumstances whatsoever, except for
Trustee’s gross negligence or bad faith), and (iv) any and all other lawful
action that Lender may instruct Trustee to take to protect or enforce Lender’s
rights hereunder. Trustee shall not be personally liable in case of entry by
Trustee, or anyone entering by virtue of the powers herein granted to Trustee,
upon the Property for debts contracted for or liability or damages incurred in
the management or operation of the Property. Trustee shall have the right to
rely on any instrument, document, or signature authorizing or supporting any
action taken or proposed to be taken by Trustee hereunder, believed by Trustee
in good faith to be genuine. Trustee shall be entitled to reimbursement for
expenses incurred by Trustee in the performance of Trustee’s duties hereunder
and to reasonable compensation for such of Trustee’s services hereunder as shall
be rendered. Borrower will, from time to time, pay the compensation due to
Trustee hereunder and reimburse Trustee for, and save and hold Trustee harmless
against, any and all liability and expenses which may be incurred by Trustee in
the performance of Trustee’s duties.
 
-103-

--------------------------------------------------------------------------------

 
Section 19.02. Retention of Money. All moneys received by Trustee shall, until
used or applied as herein provided, be held in trust for the purposes for which
they were received, and shall be segregated from any other moneys of Trustee.

Section 19.03. Successor Trustees. Trustee may resign by the giving of notice of
such resignation in writing to Lender. If Trustee shall die, resign or become
disqualified from acting in the execution of this trust, or if, for any reason,
Lender, in Lender's sole discretion and with or without cause, shall prefer to
appoint in accordance with the Nebraska Trust Deeds Act a substitute trustee or
successive substitute trustees to act instead of the aforenamed Trustee, Lender
shall have full power to appoint a substitute trustee in succession who shall
succeed to all the estates, rights, powers and duties of the aforenamed Trustee.
Such appointment may be executed by any authorized agent of Lender, and if such
Lender be a corporation and such appointment be executed on its behalf by any
officer of such corporation, such appointment shall be conclusively presumed to
be executed with authority and shall be valid and sufficient without proof of
any action by the board of directors or any superior officer of the corporation.
Borrower hereby ratifies and confirms any and all acts which the aforenamed
Trustee, or his or her successor or successors in this trust, shall do lawfully
by virtue hereof.

Section 19.04. Perfection of Appointment. Should any deed, conveyance, or
instrument of any nature be required from Borrower by any Trustee or substitute
Trustee to more fully and certainly vest in and confirm to Trustee or substitute
Trustee such estates, rights, powers, and duties, then, upon request by Trustee
or substitute trustee, any and all such deeds, conveyances and instruments shall
be made, executed, acknowledged, and delivered and shall be caused to be
recorded and/or filed by Borrower.

Section 19.05. Succession Instruments. Any substitute trustee appointed pursuant
to any of the provisions hereof shall, without any further act, deed or
conveyance, become vested with all the estates, properties, rights, powers, and
trusts of its, his or her predecessor in the rights hereunder with like effect
as if originally named as Trustee herein; but nevertheless, upon the written
request of Lender or of the substitute trustee, the Trustee ceasing to act shall
execute and deliver any instrument transferring to such substitute trustee, upon
the trusts herein expressed, all the estates, properties, rights, powers, and
trusts of the Trustee so ceasing to act, and shall duly assign, transfer and
deliver any of the property and moneys held by such Trustee to the substitute
trustee so appointed in such Trustee’s place.

Section 19.06. No Representation by Trustee or Lender. By accepting or approving
anything required to be observed, performed, or fulfilled or to be given to
Trustee or Lender pursuant to the Loan Documents, including, without limitation,
any officer’s certificate, balance sheet, statement of profit and loss or other
financial statement, survey, appraisal or insurance policy, neither Trustee nor
Lender shall be deemed to have warranted, consented to, or affirmed the
sufficiency, legality, effectiveness or legal effect of the same, or of any
term, provision, or condition thereof, and such acceptance or approval thereof
shall not be or constitute any warranty or affirmation with respect thereto by
Trustee or Lender.
 
-104-

--------------------------------------------------------------------------------

 
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
 
-105-

--------------------------------------------------------------------------------

 
IN WITNESS WHEREOF, Borrower has executed under Seal this Security Instrument on
the day and year first hereinabove set forth.

       
LVP OAKVIEW STRIP CENTER LLC,
a Delaware limited liability company
 
   
   
  By:   David Lichtenstein   

--------------------------------------------------------------------------------

Name: David Lichtenstein
Title: President
 

 

--------------------------------------------------------------------------------

 

STATE OF NEBRASKA )   ) ss. COUNTY OF _______________ )

 
The foregoing instrument was acknowledged before me this ______ day of December,
2006 by David Lichtenstein as President of LVP OAKVIEW STRIP CENTER LLC, a
Delaware limited liability company, on behalf of the limited liability company.

     
 
 
 

--------------------------------------------------------------------------------

Signature of Notary Public
 

--------------------------------------------------------------------------------

EXHIBIT A
 
(Legal Description)
 
Attached to and forming a part of file number: CRS22144
 
Parcel 1:
 
Lots 1, 2, 13 and 14, Oak View Plaza 3rd Platting, an Addition to the City of
Omaha, as surveyed, platted and recorded in Douglas County, Nebraska, EXCEPT
that part of said Lot 13 dedicated for street widening as filed within Book 1280
at Page 429 of the Miscellaneous Records of Douglas County, Nebraska.
 
Together with Reciprocal Access, Parking and Utility rights as set forth in
Declaration of Protective Covenants recorded in Book 815 at Page 326 and
Amendment to Declaration of Protective Covenants recorded in Book 1019 at Page
142 and in Declaration of Covenants, Easements and Restrictions recorded in Book
1030 at Page 603 and First Amendment to Declaration of Covenants, Easements and
Restrictions recorded in Book 1049 at Page 336, and Second Amendment to
Declaration of Covenants recorded May 17, 2006 as Instrument No.2005056364;
 
And also together with rights of ingress and egress as set forth upon the Plat
of Oak View Plaza (3rd Platting), filed September 19,1996 in Book 2043 at Page
318 of the Deed Records; And also together with Beneficial RIGHT-OF-WAY
EASEMENT, recorded June 25,1987 in Book 818 at Page 626 of the Miscellaneous
Records
 
And together with SANITARY, STORM SEWER AND UTILITY EASEMENT recorded September
11, 1992 in Book 1030 at Page 645 of the Miscellaneous Records;
 
And also Together with SANITARY, STORM SEWER AND UTILITY EASEMENT and recorded
November 23, 1992 in Book 1043 at Page 701 of the Miscellaneous Records; And
also together with Permanent Building Encroachment Easement set forth by
instrument filed August 22, 2000 in Book 1348 at Page 702
 
all of the Records of Douglas County, Nebraska; subject to all liens and
encumbrances affecting the same.
 
Parcel 2:
 
Lot 1, Oak View Plaza (3rd Platting) Replat Three, an Addition to the City of
Omaha, as surveyed, platted and recorded in Douglas County, Nebraska.
 
Together with Reciprocal Access, Parking and Utility rights as set forth In
Declaration of Protective Covenants recorded in Book 815 at Page 326 and
Amendment to Declaration of Protective Covenants recorded in Book 1019 at Page
142 and in Declaration of Covenants, Easements and Restrictions recorded In Book
1030 at Page 603 and First Amendment to Declaration of Covenants, Easements and
Restrictions recorded in Book 1049 at Page 336, and Second Amendment to
Declaration of Covenants recorded May 17, 2006 as Instrument No.2005056364;
 

--------------------------------------------------------------------------------

 
And together with rights of ingress and egress as set forth upon the Plat of Oak
View Plaza (3rd Platting), filed September 19, 1996 in Book 2043 at Page 318 of
the Deed Records; and also together with Reciprocal Access, Parking and rights
of ingress/egress as set forth within the Reciprocal Easement Agreement recorded
September 19,1997 in Book 1222 at Page 699;
 
and also together with Beneficial RIGHT-OF-WAY EASEMENT recorded June 25,1987 in
Book 818 at Page 626 of the Miscellaneous Records;
 
and also together with SANITARY, STORM SEWER AND UTILITY EASEMENT recorded
September 11, 1992 in Book 1030 at Page 645 of the Miscellaneous Records; and
also Together with SANITARY, STORM SEWER AND UTILITY EASEMENT recorded November
23, 1992 in Book 1043 at Page 701 of the Miscellaneous Records;
 
and also together with non-exclusive easement rights set forth within Deed of
Easement for Subsurface Construction Elements set forth within the instrument
filed September 14, 2004 as instrument number 2004122176 all of the Records of
Douglas County, Nebraska; subject to all liens and encumbrances affecting the
same.
 
Parcel 3:
 
Lot 1, Oak View Plaza (3rd Platting) Replat Four, an Addition to the City of
Omaha, as surveyed, platted and recorded in Douglas County, Nebraska.
 
Together with Reciprocal Access, Parking and Utility rights as set forth in
Declaration of Protective Covenants recorded in Book 815 at Page 326 and
Amendment to Declaration of Protective Covenants recorded in Book 1019 at Page
142 and in Declaration of Covenants, Easements and Restrictions recorded in Book
1030 at Page 603 and First Amendment to Declaration of Covenants, Easements and
Restrictions recorded in Book 1049 at Page 336,
 
and Second Amendment to Declaration of Covenants recorded May 17, 2006 as
Instrument No.2005056364;
 
and also together with rights of ingress and egress as set forth upon the Plat
of Oak View Plaza (3rd Platting), filed September 19,1996 in Book 2043 at Page
318 of the Deed Records;
 
and also together with Reciprocal Access, Parking and rights of ingress/egress
as set forth within the Reciprocal Easement Agreement recorded September 19,
1997 in Book 1222 at Page 699;
 
and also together with Beneficial RIGHT-OF-WAY EASEMENT, recorded June 25,1987
in Book 818 at Page 626 of the Miscellaneous Records;
 
and also together with SANITARY, STORM SEWER AND UTILITY EASEMENT recorded
September 11, 1992 in Book 1030 at rage 645 of the Miscellaneous Records;
 

--------------------------------------------------------------------------------

 
and also Together with SANITARY, STORM SEWER AND UTILITY EASEMENT recorded
November 23, 1992 in Book 1043 at Page 701 of the Miscellaneous Records;
 
and also together with non-exclusive easement rights set forth within Deed of
Easement for Subsurface Construction Elements set forth within the instrument
filed May 17, 2005 as instrument number 2005056363, as further amended pursuant
to the Amended Deed of Easement for Subsurface Construction Elements filed July
1, 2005 as instrument number 2005076870, all of the Records of Douglas County,
Nebraska; subject to all liens and encumbrances affecting the same.
 

--------------------------------------------------------------------------------

 
EXHIBIT B
 
SUMMARY OF RESERVES
 
Reserve Items
 
Initial Deposit Amount
 
Monthly Installment Amount
Basic Carrying Costs
 
· Taxes
 
· Insurance Premiums
 
 
 
· Taxes -- $134,974.56
 
· Insurance Premium - $33,054.20
 
 
 
· Taxes -- $33,743.64
 
· Insurance Premiums - $3,305.42
         
Initial Engineering/Environmental Deposits
 
· Immediate Repairs
 
· Environmental Remediation
 
· N/A
 
N/A
         
Recurring Monthly Replacement Reserve Deposit
 
N/A
 
$1,475.63
         
Recurring Monthly Reletting Reserve Deposit
 
N/A
 
$7,378.13

--------------------------------------------------------------------------------

 
EXHIBIT C
 
CASH FLOW STATEMENT

 

     
Property:____________________________
     
Location:____________________________
Cash Flow Statement for Month of:____________ 
    Year:

 

   
Current Month
 
Year to Date
         
REVENUE
Net Rental Revenue
Other Revenue
 
 
 
________
 
 
 
________
Effective Gross Income
                 
OPERATING EXPENSES
Common Area Maintenance
Payroll
Administration
Leasing
Service
Clean & Decorate
Utilities
Repairs & Maintenance
Taxes
Insurance
Management Fees
Other
Total Operating Expenses
Net Operating Income
 
 
 
 
 
 
 
 
 
 
 
________
________
 
 
 
 
 
 
 
 
 
 
 
________
________
         
RECURRING EXPENSES
To Include Expenses for: Carpet Replacement, Appliance Replacement,
HVAC/Water Heater Replacement;
Miniblinds/Drapes/Ceiling Fans:
 
 
 
 
 
________
 
 
 
 
 
________
         
NON-RECURRING EXPENSES
To Include Capital Expenses for: Playground, Major Signage,
Lawns/Trees/Shrubs, Paving/Parking, Roof Replacement,
Carpentry/Siding/Balconies, Exterior Paint,
Major Concrete/Sidewalks, Foundations, Major Exterior,
Boiler Replacement, Major HVAC Replacement, Plumbing Replace,
Electrical Replace, Other Major, Fire & Storm, Ins.
Loss Recovery:
Net Cash Flow
 
 
 
 
 
 
 
 
________
 
 
 
 
 
 
 
 
________

 

   
Certified By:
___________________________________    
Name:
___________________________________    
Title:
___________________________________
Management Company: _____________________
 

   

--------------------------------------------------------------------------------

 
EXHIBIT D

Intentionally Deleted
 

--------------------------------------------------------------------------------

EXHIBIT E
 
Form of Direction Letter
 
[Letterhead of Landlord]
 
[Name and Address of tenant]
 
Re: [Address of Premises]
 
Dear tenant:
 
You are hereby directed to make all future payments of rent and other sums due
to Landlord under the Lease payable as follows:
 

Payable To:  [____________] and Wachovia Bank, National Association        
If by federal wire transfer:
        Bank: Wachovia Bank, NA   ABA #: 053-000-219   Acct Name: [__________]  
Acct #:     Ref Loan #: ___________________         If by US Mail:          
_________________
   
PO Box _____
   
Charlotte, NC 28260-1443
         
If by Overnight Courier:
         
Wachovia Bank, NA
 
1525 West WT Harris Blvd
 
Bldg 2C2 (Ref # ______)
 
Charlotte, NC 28262
 
Ref Loan #:_____________________

 
Please take particular care in making the check payable only to the
above-mentioned names because only checks made payable to the referenced names
will be credited against sums due by you to landlord. Until otherwise advised in
writing by Landlord and the above-mentioned bank (or its successor), you should
continue to make your payments for rent and other sums as directed by the terms
of this letter.
 

--------------------------------------------------------------------------------

 
Thank you in advance for your cooperation with this change in payment
procedures.

        By:    

--------------------------------------------------------------------------------

 

--------------------------------------------------------------------------------

 

 

--------------------------------------------------------------------------------