Exhibit 10.6

 

MORTGAGE, ASSIGNMENT OF LEASES AND RENTS AND SECURITY AGREEMENT

 

935 HQ ASSOCIATES, LLC,

BORROWER

 

IN FAVOR OF

 

CIBC INC.,

LENDER

 

DATED: AS OF JUNE 9, 2004

 

Property Address

 

       Street Address:   935 First Avenue, King of Prussia, Pennsylvania       
Condominium Unit Number:   Unit 1 of First Avenue Corporate Center       
County:   Montgomery        Commonwealth:   Pennsylvania

 

Record and Return to:

 

Winston & Strawn LLP

200 Park Avenue

New York, New York 10166

Attention: Emidio J. Scarfogliero

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THIS MORTGAGE, ASSIGNMENT OF LEASES AND RENTS AND SECURITY AGREEMENT (this
“Mortgage”) is made as of the 9th day of June, 2004, by 935 HQ ASSOCIATES, LLC,
a Delaware limited liability company, as mortgagor (“Borrower”), whose address
is 1075 First Avenue, King of Prussia, Pennsylvania 19406, in favor of CIBC
INC., a Delaware corporation, as mortgagee (“Lender”), whose address is Attn:
Real Estate Finance Group, 622 Third Avenue, 8th Floor, New York, New York
10017.

 

W I T N E S S E T H:

 

THAT FOR THE PURPOSES OF SECURING:

 

(1) A loan (the “Loan”) by Lender to Borrower in the original principal amount
of Thirteen Million and 00/100 Dollars ($13,000,000.00), together with interest
thereon evidenced by that certain promissory note (such promissory note,
together with any and all renewals, modifications, consolidations and extensions
thereof, is hereinafter referred to as the “Note”) of even date with this
Mortgage, made by Borrower to the order of Lender in like amount;

 

(2) The full and prompt payment and performance of all of the provisions,
agreements, covenants and obligations herein contained and contained in any
other agreements, documents or instruments now or hereafter evidencing,
guarantying, securing or otherwise relating to the indebtedness evidenced by the
Note, whether executed or delivered by Borrower or by any indemnitor or
guarantor with respect to any obligation of Borrower under the Loan Documents
(each, hereinafter, an “Indemnitor”), as defined herein, or jointly and
severally (the Note, this Mortgage, and such other agreements, documents and
instruments, together with any and all renewals, amendments, extensions and
modifications thereof, are hereinafter collectively referred to as the “Loan
Documents”) excluding only the obligations pursuant to that certain Hazardous
Substances Indemnity Agreement by Borrower and Indemnitor, jointly and
severally, for the benefit of Lender (the “Hazardous Substances Indemnity”), and
the payment of all other sums covenanted in the Loan Documents to be paid;

 

(3) Any and all additional advances made by Lender to protect or preserve the
Property or the lien or security interest created hereby on the Property, or for
Taxes and Other Charges (each as defined in Section 1.5) or Insurance Premiums
(each as defined in Section 1.6) as hereinafter provided or for performance of
any of Borrower’s obligations hereunder or under the other Loan Documents or for
any other purpose provided herein or in the other Loan Documents (whether or not
the original Borrower remains the owner of the Property at the time of such
advances), and any and all costs and expenses incurred by Lender hereunder in
performing the obligations required to be performed by Borrower or otherwise
incurred by Lender pursuant to the terms of this Mortgage, together with
interest on each such advance, cost or expense (which interest shall accrue at
the Default Interest Rate (as defined in the Note) from the date such amounts
are advanced or paid by Lender until the date repaid by Borrower); and

 

(4) Any and all other indebtedness now owing or which may hereafter be owing by
Borrower to Lender, including, without limitation, all prepayment fees, 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;

 

(All of the sums referred to in Paragraphs (1) through (4) above are herein
sometimes referred to as the “Obligations”)

 

and for and in consideration of the sum of Ten and no/100 Dollars ($10.00), and
other valuable consideration, the receipt and sufficiency of which are hereby
conclusively acknowledged, BORROWER

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HEREBY IRREVOCABLY MORTGAGES, GRANTS, BARGAINS, SELLS, CONVEYS, TRANSFERS,
PLEDGES, SETS OVER AND ASSIGNS, AND GRANTS A SECURITY INTEREST, TO LENDER, ITS
SUCCESSORS AND ASSIGNS, in all of Borrower’s estate, right, title and interest
in, to and under any and all of the following described property, whether now
owned or hereafter acquired (collectively, the “Property”):

 

A. That certain unit of the condominium regime set forth in Exhibit A hereto
(the “Unit”) of First Avenue Corporate Center, a Condominium in the Township of
Upper Merion, Commonwealth of Pennsylvania (the “Condominium”), according to the
Declaration of Condominium, recorded immediately prior to the recordation of
this Mortgage in the Records of the City of Merion, Pennsylvania (the
“Declaration”) together with appurtenant parking spaces and undivided percentage
interests in and to the Common Elements (as defined in the Declaration), and all
other rights, titles and hereditaments attributable to the Unit, all as more
particularly described on Exhibit A attached hereto and incorporated herein by
this reference collectively, (the “Real Estate”);

 

B. All structures, buildings and improvements of every kind and description now
or at any time hereafter located or placed on the Real Estate, including,
without limitation, any such structures, buildings and improvements constituting
the Unit (collectively, the “Improvements”);

 

C. All furniture, furnishings, fixtures, goods, equipment, inventory or personal
property owned by Borrower and now or hereafter located on, attached to or used
in and about the Improvements, including, but not limited to, all machines,
engines, boilers, dynamos, elevators, stokers, tanks, cabinets, awnings,
screens, shades, blinds, carpets, draperies, lawn mowers, and all appliances,
plumbing, heating, air conditioning, lighting, ventilating, refrigerating,
disposal and incinerating equipment, and all fixtures and appurtenances thereto,
and such other goods and chattels and personal property owned by Borrower as are
now or hereafter used or furnished in operating the Improvements, or the
activities conducted therein, and all building materials and equipment hereafter
situated on or about the Real Estate or Improvements, and all warranties and
guaranties relating thereto, and all additions thereto and substitutions and
replacements therefor (exclusive of any of the foregoing owned or leased by
tenants of space in the Improvements);

 

D. All easements, rights-of-way, strips and gores of land, vaults, streets,
ways, alleys, passages, sewer rights, air rights and other development rights
now or hereafter located on the Real Estate or under or above the same or any
part or parcel thereof, and all estates, rights, titles, interests, tenements,
hereditaments and appurtenances, reversions and remainders whatsoever, in any
way belonging, relating or appertaining to the Real Estate and/or Improvements
or any part thereof, or which hereafter shall in any way belong, relate or be
appurtenant thereto, whether now owned or hereafter acquired by Borrower;

 

E. All water, ditches, wells, reservoirs and drains and all water, ditch, well,
reservoir and drainage rights which are appurtenant to, located on, under or
above or used in connection with the Real Estate or the Improvements, or any
part thereof, whether now existing or hereafter created or acquired;

 

F. All minerals, crops, timber, trees, shrubs, flowers and landscaping features
now or hereafter located on, under or above the Real Estate;

 

G. All cash funds, deposit accounts and other rights and evidence of rights to
cash, now or hereafter created or held by Lender pursuant to this Mortgage or
any other of the Loan Documents, including, without limitation, all funds now or
hereafter on deposit in the Impound Account, as defined in Section 1.6, and in
the reserves required pursuant to Section 1.28 and in the Letter of Credit
Reserve (as defined in that certain Letter of Credit Agreement dated as of the
date hereof between Borrower and Lender) (collectively, the “Reserves”);

 

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H. All leases (including, without limitation, (x) that certain Lease Agreement
dated on or about June 9, 2004 between Borrower, as landlord, and GSI Commerce
Solutions, Inc. (the “Primary Tenant”), as tenant, and guaranteed by GSI
Commerce, Inc. (“GSI” or the “Primary Lease Guarantor”) pursuant to a Lease
Guaranty dated as of the same date (the lease and guaranty, collectively, the
“Primary Lease”) and (y) oil, gas and mineral leases), licenses, concessions and
occupancy agreements of all or any part of the Real Estate or the Improvements
now or hereafter entered into (each, a “Lease” and collectively, the “Leases”)
and all rents, royalties, issues, profits, revenue, income and other benefits
(collectively, the “Rents and Profits”) of the Real Estate or the Improvements,
now or hereafter arising from the use or enjoyment of all or any portion thereof
or from any present or future Lease or other agreement pertaining thereto or
arising from any of the Contracts (as hereinafter defined) or any of the General
Intangibles (as hereinafter defined) and all cash or securities deposited to
secure performance by the tenants, lessees or licensees, as applicable (each, a
“Tenant” and collectively, the “Tenants”), of their obligations under any such
Leases, whether said cash or securities are to be held until the expiration of
the terms of said Leases or applied to one or more of the installments of rent
coming due prior to the expiration of said terms, subject to, however, the
provisions contained in Section 1.9 hereinbelow;

 

I. All contracts and agreements now or hereafter entered into covering any part
of the Real Estate or the Improvements (collectively, the “Contracts”) and all
revenue, income and other benefits thereof, including, without limitation,
management agreements, franchise agreements, service contracts, maintenance
contracts, equipment leases, personal property leases and any contracts or
documents relating to construction on any part of the Real Estate or the
Improvements (including plans, drawings, surveys, tests, reports, bonds and
governmental approvals) or to the management or operation of any part of the
Real Estate or the Improvements and any and all warranties and guaranties
relating to the Real Estate or the Improvements or any fixtures, equipment or
personal property owned by Borrower and located on and/or used in connection
with the Property;

 

J. All present and future monetary deposits given to any public or private
utility with respect to utility services furnished to any part of the Real
Estate or the Improvements;

 

K. All present and future funds, accounts, instruments, accounts receivable,
documents, causes of action, claims, general intangibles (including without
limitation, trademarks, trade names, servicemarks and symbols now or hereafter
used in connection with any part of the Real Estate or the Improvements, all
names by which the Real Estate or the Improvements may be operated or known, all
rights to carry on business under such names, and all rights, interest and
privileges which Borrower has or may have as developer or declarant under any
covenants, restrictions or declarations now or hereafter relating to the Real
Estate or the Improvements) and all notes or chattel paper now or hereafter
arising from or by virtue of any transactions related to the Real Estate or the
Improvements (collectively, the “General Intangibles”);

 

L. All water taps, sewer taps, certificates of occupancy, permits, licenses,
franchises, certificates, consents, approvals and other rights and privileges
now or hereafter obtained in connection with the Real Estate or the Improvements
and all present and future warranties and guaranties relating to the
Improvements or to any equipment, fixtures, furniture, furnishings, personal
property or components of any of the foregoing now or hereafter located or
installed on the Real Estate or the Improvements;

 

M. All building materials, supplies and equipment now or hereafter placed on the
Real Estate or in the Improvements and all architectural renderings, models,
drawings, plans, specifications, studies and data now or hereafter relating to
the Real Estate or the Improvements;

 

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N. All right, title and interest of Borrower in any insurance policies or
binders now or hereafter relating to the Property including any unearned
premiums thereon;

 

O. All proceeds, products, substitutions and accessions (including claims and
demands therefor) of the conversion, voluntary or involuntary, of any of the
foregoing into cash or liquidated claims, including, without limitation,
proceeds of insurance and condemnation awards and proceeds of refunds of any
Taxes or Other Charges with respect to any period in which this Mortgage
encumbers the Property; and

 

P. All other or greater rights and interests of every nature in the Real Estate
or the Improvements and in the possession or use thereof and income therefrom,
whether now owned or hereafter acquired by Borrower.

 

TO HAVE AND TO HOLD the Property unto Lender, its successors and assigns
forever, for the purposes and uses herein set forth, PROVIDED ALWAYS, and this
instrument is upon the express condition that, if Borrower pays to Lender the
principal sum mentioned in the Note, the interest thereon and all other sums
payable by Borrower to Lender as are secured hereby, in accordance with the
provisions of the Note and this Mortgage, at the times and in the manner
specified, without deduction, fraud or delay, and Borrower complies with all the
terms and conditions contained herein and in the Note, then this Mortgage and
the estate hereby granted shall cease and become void.

 

ARTICLE I

COVENANTS OF BORROWER

 

For the purpose of further securing the Obligations and for the protection of
the security of this Mortgage, for so long as the Obligations or any part
thereof remains unpaid, Borrower covenants and agrees as follows:

 

1.1 Warranties of Borrower. Borrower, for itself and its successors and assigns,
does hereby represent, warrant and covenant to and with Lender, its successors
and assigns, that:

 

(a) Organization and Existence. Borrower is duly organized and validly existing
as a limited liability company in good standing under the laws of Delaware and
is qualified to do business in the state of Pennsylvania and in all other
jurisdictions in which Borrower is transacting business.

 

(b) Authorization. Borrower has the power and authority to execute, deliver and
perform the obligations imposed on it under the Loan Documents and to consummate
the transactions contemplated by the Loan Documents and has taken all necessary
actions in furtherance thereof including, without limitation, that those
partners or members of Borrower whose approval is required by the terms of
Borrower’s organizational documents have duly approved the transactions
contemplated by the Loan Documents and have authorized execution and delivery
thereof by the respective signatories. To the best of Borrower’s knowledge, no
other consent by any local, state or federal agency is required in connection
with the execution and delivery of the Loan Documents.

 

(c) Valid Execution and Delivery. All of the Loan Documents requiring execution
by Borrower have been duly and validly executed and delivered by Borrower.

 

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(d) Enforceability. All of the Loan Documents constitute valid, legal and
binding obligations of Borrower and are fully enforceable against Borrower in
accordance with their terms, subject only to bankruptcy laws and general
principles of equity.

 

(e) No Defenses. The Note, this Mortgage and the other Loan Documents are not
subject to any right of rescission, set-off, counterclaim or defense, nor would
the operation of any of the terms of the Note, this Mortgage or any of the other
Loan Documents, or the exercise of any right thereunder, render this Mortgage
unenforceable, in whole or in part, or subject to any right of rescission,
set-off, counterclaim or defense, including the defense of usury.

 

(f) Defense of Usury. Borrower knows of no facts that would support a claim of
usury to defeat or avoid its obligation to repay the principal of, interest on,
and other sums or amounts due and payable under, the Loan Documents.

 

(g) No Conflict/Violation of Law. The execution, delivery and performance of the
Loan Documents by the Borrower will not cause or constitute a default under or
conflict with the organizational documents of Borrower, any Indemnitor or any
Constituent Entity (as defined in Section 1.27) of either of them. The
execution, delivery and performance of the obligations imposed on Borrower under
the Loan Documents will not cause Borrower to be in default, including after due
notice or lapse of time or both, under the provisions of any agreement, judgment
or order to which Borrower is a party or by which Borrower is bound.

 

(h) Compliance with Applicable Laws and Regulations. All of the Improvements and
the use of the Property by the Borrower comply with, and shall remain in
compliance with, all applicable statutes, rules, regulations and private
covenants now or hereafter relating to the ownership, construction, use or
operation of the Property, including all applicable health, fire and building
codes, and all applicable statutes, rules and regulations pertaining to
requirements for equal opportunity, anti-discrimination, fair housing,
environmental protection, zoning and land use (collectively, “Applicable Laws”).
To Borrower’s knowledge, there is no evidence of any illegal activities relating
to controlled substances on the Property. All certifications, permits, licenses
and approvals, including, without limitation, certificates of completion and
occupancy permits required for the legal use, occupancy and operation of the
Property for the use currently being made thereof have been obtained and are in
full force and effect. All of the Improvements comply with all material
requirements of any applicable zoning and subdivision laws and ordinances.

 

(i) Consents Obtained. All consents, approvals, authorizations, orders or
filings with any court or governmental agency or body, if any, required for the
execution, delivery and performance of the Loan Documents by Borrower have been
obtained or made.

 

(j) No Litigation. There are no pending actions, suits or proceedings,
arbitrations or governmental investigations against the Property, Borrower, any
Indemnitor or any managing member or sole member of Borrower, whether pursuant
to the Loan Documents or otherwise, an adverse outcome of which would materially
affect the Borrower’s performance under the Note, the Mortgage or the other Loan
Documents.

 

(k) Title. The Borrower has good and marketable fee simple title to the
Property, subject only to those matters expressly listed as exceptions to title
or subordinate matters in the title insurance policy accepted by Lender in
connection with this Mortgage, excepting therefrom all preprinted and/or
standard exceptions (the “Permitted Exceptions”). The possession of the Property
has been peaceful and undisturbed and title thereto has not been disputed or
questioned to the best of Borrower’s

 

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knowledge. Further, Borrower has full power and lawful authority to grant,
bargain, sell, convey, assign, transfer and mortgage its interest in the
Property in the manner and form hereby done or intended. 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 whatsoever and will forever
warrant and defend the validity and priority of the lien and security interest
created herein against the claims of all persons and parties whomsoever, subject
to the Permitted Exceptions. The foregoing warranty of title shall survive the
foreclosure of this Mortgage 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.

 

(l) Permitted Exceptions. The Permitted Exceptions do not and will not
materially and adversely affect (1) the ability of the Borrower to pay in full
the principal and interest on the Note in a timely manner or (2) the use of the
Property for the use currently being made thereof, the operation of the Property
as currently being operated or the value of the Property.

 

(m) First Lien. Upon the execution by the Borrower and the recording of this
Mortgage in the records of Montgomery County, and upon the execution and filing
of UCC-1 financing statements or amendments thereto in the records of Montgomery
County and the office of the Secretary of State of Delaware, the Lender will
have a valid first lien on the Property and a valid security interest in all
personal property encumbered hereby, subject to no liens, charges or
encumbrances other than the Permitted Exceptions.

 

(n) ERISA. The Borrower has made and shall continue to make all required
contributions to all employee benefit plans, if any, and the Borrower has no
knowledge of any material liability which has been incurred by the Borrower
which remains unsatisfied for any taxes or penalties with respect to any
employee benefit plan or any multi-employer plan, and each such plan has been
administered in compliance with its terms and the applicable provisions of the
Employee Retirement Income Security Act of 1974, as amended (“ERISA”) and any
other federal or state law.

 

(o) Contingent Liabilities. Neither Borrower nor any Indemnitor has any known
material contingent liabilities, except for contingent liabilities of any
Indemnitor explicitly set forth on the financial statements of such Indemnitor
that were delivered to Lender in connection with the Loan, or as were otherwise
expressly disclosed to Lender in writing prior to the date hereof with respect
to any Indemnitor.

 

(p) No Other Obligations. The Borrower has no material financial obligation
under any indenture, mortgage, deed of trust, loan agreement or other agreement
or instrument to which the Borrower is a party or by which the Borrower or the
Property is otherwise bound, other than (i) obligations incurred in the ordinary
course of the operation of the Property that do not violate Section 1.27, and
(ii) the Obligations.

 

(q) Fraudulent Conveyance. The Borrower (1) has not entered into the Loan or any
Loan Document with the actual intent to hinder, delay, or defraud any creditor
and (2) received reasonably equivalent value in exchange for its obligations
under the Loan Documents. Giving effect to the Loans contemplated by the Loan
Documents, the fair saleable value of the Borrower’s assets exceed and will,
immediately following the execution and delivery of the Loan Documents, exceed
the Borrower’s total liabilities, including, without limitation, subordinated,
unliquidated, disputed or contingent liabilities. The fair saleable value of the
Borrower’s assets is and will, immediately following the execution and delivery
of the Loan Documents, be greater than the Borrower’s probable liabilities,
including the maximum amount of its contingent liabilities or its debts as such
debts become absolute and matured. The Borrower’s assets do not and, immediately
following the execution and delivery of the Loan Documents will not, constitute
unreasonably small capital to carry out its business as conducted or

 

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as proposed to be conducted. The Borrower does not intend to, and does not
believe that it will, incur debts and liabilities (including, without
limitation, contingent liabilities and other commitments) beyond its ability to
pay such debts as they mature (taking into account the timing and amounts to be
payable on or in respect of obligations of the Borrower).

 

(r) Investment Company Act. Neither Borrower nor any Indemnitor is (1) an
“investment company” or a company “controlled” by an “investment company,”
within the meaning of the Investment Company Act of 1940, as amended; (2) 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 (3)
subject to any other federal or state law or regulation which purports to
restrict or regulate its ability to borrow money.

 

(s) Access/Utilities. The Property has adequate rights of access to public ways
and is served by adequate water, sewer, sanitary sewer and storm drain
facilities. All public utilities necessary to the continued use and enjoyment of
the Property as presently used and enjoyed are located in the public
right-of-way abutting the Property, and all such utilities are connected so as
to serve the Property without passing over other property, other than by means
of irrevocable easements set forth on the title report and survey delivered to
Lender. All roads, and access to such roads, necessary for the full utilization
of the Property for its current purpose have been completed and dedicated to
public use and accepted by all governmental authorities or are the subject of
access easements for the benefit of the Property without any further condition
or cost to Borrower or Tenant.

 

(t) Taxes Paid. Borrower has filed all federal, state, county and municipal tax
returns required to have been filed by Borrower, and has paid all taxes which
have become due pursuant to such returns or to any notice of assessment received
by Borrower, and Borrower has no knowledge of any basis for additional
assessment with respect to such Taxes and Other Charges. Further, the Property
is free from delinquent Taxes and Other Charges.

 

(u) Single Tax Lot. As of the date hereof, the Unit is part of a tax parcel
which includes all of the Condominium. Borrower shall use best efforts and take
all necessary actions in order for the Unit to be designated and assessed,
within as short a period of time subsequent to the date hereof as is legally
possible, as a single lot with no portion of said tax lot covering property
other than the Unit.

 

(v) Special Assessments. Except as disclosed in the title insurance policy,
there are no pending or, to the knowledge of the Borrower, proposed special or
other assessments for public improvements or otherwise affecting the Property,
nor, to the knowledge of the Borrower, are there any contemplated improvements
to the Property that may result in such special or other assessments.

 

(w) Flood Zone. The Property is not located in a flood hazard area as defined by
the Federal Insurance Administration.

 

(x) Seismic Exposure. The Real Estate is not located in Zone 3 or Zone 4 of the
“Seismic Zone Map of the U.S.”.

 

(y) Misstatements of Fact. No statement of fact made in the Loan Documents
contains any untrue statement of a material fact or omits to state any material
fact necessary to make statements contained herein or therein not misleading.
There is no fact presently known to the Borrower, any Indemnitor or any
Constituent Entity of Borrower or any Indemnitor which has not been disclosed
which adversely affects, or in the judgment of a reasonable person might
adversely affect, the business, operations or condition (financial or otherwise)
of the representing party. Further, and in clarification of the foregoing, all
reports, certificates, affidavits, statements and other data furnished by or on
behalf of

 

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Borrower, Indemnitor and each Constituent Entity of each of them to Lender, or
their respective agents, in connection with the Loan are true and correct in all
material respects and do not omit to state any fact or circumstance necessary to
make the statements contained therein not misleading.

 

(z) Condition of Improvements. The Property has not been damaged by fire, water,
wind or other cause of loss or any previous damage to the Property has been
fully restored. The Improvements are structurally sound, in good repair and free
of defects in materials and workmanship and have been constructed and installed
in substantial compliance with the plans and specifications relating thereto.
All major building systems located within the Improvements, including, without
limitation, the heating and air conditioning systems and the electrical and
plumbing systems, are in good working order and condition.

 

(aa) No Insolvency or Judgment. Neither Borrower, nor any Indemnitor, nor any
managing member or sole member of Borrower, (a) has been or is currently the
subject of or a party to any completed or pending bankruptcy, reorganization or
insolvency proceeding; or (b) is currently the subject of any judgment
unsatisfied of record or docketed in any court of the state in which the
Property is located or in any other court located in the United States, other
than, with respect to Indemnitor, any unsatisfied judgments in amounts of less
than $25,000, none of which such judgments, either individually or in the
aggregate, will impair the ability of Indemnitor to perform its obligations
under the Loan Documents. The proposed Loan will not render the Borrower or any
general partner or member of Borrower, as applicable, insolvent. As used in this
Mortgage, the term “insolvent” means that the sum total of all of an entity’s
liabilities (whether secured or unsecured, contingent or fixed, or liquidated or
unliquidated) is in excess of the value of all such entity’s non-exempt assets,
i.e., all of the assets of the entity that are available to satisfy claims of
creditors.

 

(bb) No Condemnation. No part of any property subject to the Mortgage has been
taken in condemnation or other like proceeding to an extent which would impair
the value of the Property, the Mortgage or the Loan or the usefulness of such
property for the purposes contemplated by the loan application relating to the
Loan (the “Loan Application”), nor is any proceeding pending, threatened or
known to be contemplated for the partial or total condemnation or taking of the
Property.

 

(cc) No Labor or Materialmen Claims. All parties furnishing labor and materials
have been paid in full and, except for such liens or claims insured against by
the policy of title insurance to be issued in connection with the Loan, there
are no mechanics’, laborers’ or materialmen’s liens or claims outstanding for
work, labor or materials affecting the Property, whether prior to, equal with or
subordinate to the lien of the Mortgage.

 

(dd) No Purchase Options. Excluding only the right of first offer held by
Brandywine Operating Partnership L.P. (“Brandywine”), set forth in the
Declaration, no tenant, person, party, firm, corporation or other entity has an
option, right of first offer, or right of first refusal, to purchase the
Property, any portion thereof or any interest therein. The right of first offer
held by Brandywine is, and at all times shall be, subject and subordinate to the
right of Lender to foreclose on the Property or to acquire title to the Property
through deed-in-lieu of foreclosure.

 

(ee) Leases. The Property is not subject to any leases, subleases, licenses,
concessions or other agreements related to the leasing or renting of the
Property or any portion thereof, except as set forth on the Rent Roll (as
defined herein). No person has any possessory interest in the Property or right
to occupy the same, except pursuant to the Leases. Borrower hereby represents
that: (i) Borrower has delivered a schedule (the “Rent Roll”) of all Leases
affecting the Property, which accurately and completely sets forth in all
material respects for each Lease, the following: the name of the Tenant, the
Lease expiration date, extension and renewal provisions, the base rent payable,
the security deposit

 

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held thereunder and any other material provisions of such Lease, which Rent Roll
is true, correct and complete as of the date hereof; and (ii) the Borrower is
the owner and holder of the landlord’s interest under the Leases, and there are
no prior assignments of all or any portion of the Leases or any portion of the
Rents and Profits which are presently outstanding and have priority over the
assignment of leases and rents contained herein in Section 1.9 given by Borrower
to Lender; and (iii) each Lease constitutes the legal, valid and binding
obligation of Borrower and, to the best of Borrower’s knowledge and belief, is
enforceable against the Tenant thereunder; and (iv) no default exists, or with
the passing of time or the giving of notice or both would exist, under any Lease
which would, in the aggregate, have a material adverse effect on Borrower or the
Property; and (v) no Tenant has any offset or defense to the payment of rent
under its Lease; and (vi) no Tenant has, as of the date hereof, paid rent under
its Lease more than one (1) month in advance, and the rents under such Lease has
not been waived, released, or otherwise discharged or compromised; and (vii) all
work required to be performed by Borrower as of the date hereof under each Lease
has been substantially performed as of the date hereof, all contributions to be
made as of the date hereof by Borrower to the Tenant thereunder have been made
and all other conditions precedent to each Tenant’s obligations thereunder have
been satisfied; and (viii) Borrower has delivered to Lender true, correct and
complete copies of all Leases described in the Rent Roll; and (ix) to the best
of Borrower’s knowledge and belief, each Tenant is free from bankruptcy,
reorganization or arrangement proceedings or a general assignment for the
benefit of creditors; and (x) no Lease provides any party with the right to
obtain a lien or encumbrance upon the Property superior to the lien of this
Mortgage.

 

(ff) Appraisal. To the best knowledge of Borrower, all requirements and
conditions of the appraisal of the Property submitted to Lender as part of the
Loan Application, upon which the value of the Property was conditioned, have
been fully satisfied.

 

(gg) Boundary Lines. Except as expressly reflected on the survey of the Property
delivered to Lender in connection with the Loan, all of the Improvements which
were included in determining the appraised value of the Property lie wholly
within the boundaries and building restriction lines of the Property, and no
improvements on adjoining properties encroach upon the Property, and no
easements or other encumbrances upon the Real Estate encroach upon any of the
Improvements, so as to affect the value or marketability of the Property except
those which are insured against by title insurance.

 

(hh) Survey. The survey of the Property delivered to Lender in connection with
this Mortgage, has been performed by a duly licensed surveyor or registered
professional engineer in the jurisdiction in which the Property is situated, is
certified to the Lender, its successors and assigns, and the title insurance
company, and is in accordance with the most current minimum standards for title
surveys as determined by the American Land Title Association, with the signature
and seal of a licensed engineer or surveyor affixed thereto, and does not fail
to reflect any material matter affecting the Property or the title thereto.

 

(ii) Forfeiture. There has not been and shall never be committed by Borrower or
any other person in occupancy of or involved with the operation or use of the
Property any act or omission affording the federal government or any state or
local government the right of forfeiture as against the Property or any part
thereof or any monies paid in performance of Borrower’s obligations under any of
the Loan Documents.

 

(jj) Use of Rents and Profits. All Rents and Profits generated by or derived
from the Property shall first be utilized solely for current expenses directly
attributable to the ownership and operation of the Property, including, without
limitation, current expenses relating to Borrower’s liabilities and obligations
with respect to this Mortgage and the other Loan Documents, and none of the
Rents and Profits generated by or derived from the Property shall be diverted by
Borrower or utilized for any other purposes unless all such current expenses
attributable to the ownership and operation of the Property have been fully paid
and satisfied.

 

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(kk) No Broker. No financial advisors, brokers, underwriters, placement agents,
agents or finders have been dealt with by the Borrower in connection with the
Loan, except for any broker whose full commission was paid out of the proceeds
of the Loan and is set forth in the written instructions from Borrower to Lender
regarding disbursement of the proceeds of the Loan.

 

(ll) Conviction of Criminal Acts. Each of Borrower, any Indemnitor, and any
managing member or sole member of Borrower, has never been convicted of a crime
(which shall not include traffic violations) and is not currently the subject of
any pending or, to Borrower’s knowledge, threatened criminal investigation or
proceeding.

 

(mm) Security Agreements. There are no security agreements or financing
statements affecting or encumbering any of the Property other than the security
agreements and financing statements created in favor of Lender.

 

(nn) Homestead. The Property forms no part of any property owned, used or
claimed by Borrower as a residence or business homestead and is not exempt from
forced sale under the laws of the State in which the Real Estate is located.
Borrower hereby disclaims and renounces each and every claim to all or any
portion of the Property as a homestead.

 

(oo) Contracts. Borrower will comply with all of its obligations under all
Contracts which are material to the operation of the Property in accordance with
Borrower’s current practice, and with all material obligations under all other
Contracts.

 

1.2 Defense of Title. If, while this Mortgage is in force, the title to the
Property or the interest of Lender therein shall be the subject, directly or
indirectly, of any action at law or in equity, or be attached directly or
indirectly, or endangered, clouded or adversely affected in any manner,
Borrower, at Borrower’s expense, shall take all necessary and proper steps for
the defense of said title or interest, including the employment of counsel
approved by Lender, the prosecution or defense of litigation, and the compromise
or discharge of claims made against said title or interest. Notwithstanding the
foregoing, in the event that Lender determines that Borrower is not adequately
performing its obligations under this Section, Lender may, without limiting or
waiving any other rights or remedies of Lender hereunder, take such steps with
respect thereto as Lender shall deem necessary or proper; any and all costs and
expenses incurred by Lender in connection therewith, together with interest
thereon at the Default Interest Rate, shall be immediately paid by Borrower on
demand.

 

1.3 Performance of Obligations. Borrower shall pay when due the principal of and
the interest on the Note. Borrower shall also pay and perform all of the
Obligations as and when due. Further, Borrower shall promptly and strictly
perform and comply with all covenants, conditions, obligations and prohibitions
required of Borrower in connection with any other document or instrument
affecting title to the Property, or any part thereof, regardless of whether such
document or instrument is superior or subordinate to this Mortgage.

 

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1.4 Insurance. Borrower shall, at Borrower’s expense, maintain (or cause Primary
Tenant to maintain) in force and effect on the Property at all times while this
Mortgage continues in effect the following insurance, to the extent that such
insurance is not maintained for the Condominium by the unit owners association
(the “Association”) in a manner satisfactory to Lender:

 

(a) Insurance against loss or damage to the Property by fire, windstorm, tornado
and hail and against loss and damage by such other, further and additional risks
as may be now or hereafter embraced by an “all-risk” form of insurance policy.
The amount of such insurance shall be not less than one hundred percent (100%)
of the full replacement (insurable) cost of the Improvements, furniture,
furnishings, fixtures, equipment and other items (whether personalty or
fixtures) included in the Property and owned by Borrower from time to time,
without reduction for depreciation. The determination of the replacement cost
amount shall be adjusted annually to comply with the requirements of the insurer
issuing such coverage or, at Lender’s election, by reference to such indices,
appraisals or information as Lender determines in its reasonable discretion.
Full replacement cost, as used herein, means, with respect to the Improvements,
the cost of replacing the Improvements without regard to deduction for
depreciation, exclusive of the cost of excavations, foundations and footings
below the lowest basement floor, and means, with respect to such furniture,
furnishings, fixtures, equipment and other items, the cost of replacing the
same, in each case, with inflation guard coverage to reflect the effect of
inflation, or annual valuation. Each policy or policies shall contain a
replacement cost endorsement and either an agreed amount endorsement (to avoid
the operation of any co-insurance provisions) or a waiver of any co-insurance
provisions, all subject to Lender’s approval. The deductible with respect to
such insurance shall not exceed $50,000.00 per claim.

 

(b) Comprehensive Commercial General Liability Insurance for personal injury,
bodily injury, death and property damage liability in amounts not less than
$1,000,000.00 per occurrence and $2,000,000.00 in the aggregate, together with
umbrella coverage in amounts not less than $5,000,000.00. During any
construction on the Property, Borrower’s general contractor for such
construction shall also provide the insurance required in this Subsection (b).
Lender hereby retains the right to periodically review the amount of said
liability insurance being maintained by Borrower and to require an increase in
the amount of said liability insurance should Lender deem an increase to be
reasonably prudent under then existing circumstances. No deductible shall be
permitted with respect to such insurance.

 

(c) General boiler and machinery insurance coverage is required if steam boilers
or other pressure-fired vessels are in operation at the Property. Minimum
liability amount per accident must equal the lesser of the replacement
(insurable) value of the Improvements housing such boiler or pressure-fired
machinery or $2,000,000.00. The deductible with respect to such insurance shall
not exceed $50,000.00 per claim.

 

(d) If the Property or any part thereof is identified by the Secretary of
Housing and Urban Development as being situated in an area now or subsequently
designated as having special flood hazards (including, without limitation, those
areas designated as Zone A or Zone V), flood insurance in an amount equal to the
lesser of: (i) the minimum amount required, under the terms of coverage, to
compensate for any damage or loss on a replacement basis (or the unpaid balance
of the Obligations if replacement cost coverage is not available for the type of
building insured); or (ii) the maximum insurance available under the appropriate
National Flood Insurance Administration program. The deductible with respect to
such insurance shall not exceed $50,000.00 per occurrence.

 

(e) During the period of any construction on the Property or renovation or
alteration of the Improvements, a so-called “Builder’s All-Risk Completed Value”
or “Course of Construction” insurance policy in non-reporting form for any
Improvements under construction, renovation or alteration in an amount approved
by Lender and Worker’s Compensation Insurance covering all persons engaged in
such construction, renovation or alteration. The deductible for such insurance,
if any, shall be satisfactory to Lender.

 

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(f) Loss of rents or loss of business income insurance in amounts sufficient to
compensate Borrower for all Rents and Profits during a period of not less than
eighteen (18) months in which the Property may be damaged or destroyed. The
amount of coverage shall be adjusted annually to reflect the Rents and Profits
or income payable during the succeeding eighteen (18) month period. The
deductible for such insurance, if any, shall be satisfactory to Lender.

 

(g) Any other insurance coverage required by Lender in connection with the
making of the Loan and in effect as of the date hereof.

 

(h) Such other insurance on the Property or on any replacements or substitutions
thereof or additions thereto as may from time to time be required by Lender
against other insurable hazards or casualties which at the time are commonly
insured against in the case of property similarly situated including, without
limitation, Sinkhole, Mine Subsidence, Terrorism, Earthquake and Environmental
insurance, due regard being given to the height and type of buildings, their
construction, location, use and occupancy; provided, that, solely with respect
to insurance against loss or damage to the Property resulting from Terrorism,
Borrower shall maintain such insurance in an amount equal to the lesser of (x)
the amount then required by Lender, and (y) the amount which is available for an
annual premium equal to two hundred percent (200%) of the annual premium which
Borrower is then currently paying for the “all-risk” insurance (but exclusive of
terrorism coverage) required under Section 1.4(a) above with respect to the
Property.

 

(i) It shall constitute a default under this Mortgage entitling Lender at its
option to accelerate the entire unpaid balance of the indebtedness secured
hereby if the Association or Borrower fail or refuse to maintain in full force
and effect a policy or policies of insurance meeting the requirements of Section
1.4(a). Such policy or policies maintained by the Association (as opposed to
directly by the Borrower) shall be written in the name of, and the proceeds
thereof shall be payable to, the members of the Association, as trustees for
each of the owners of the Condominium Units in the percentages established in
the Declaration, and to the respective mortgagees of the owners of the
Condominium Units, as their interests may appear. Said policy or policies shall
provide for separate protection for each Condominium Unit and its attached,
built-in, or installed fixtures and equipment to the full insurable replacement
value thereof, with a separate loss payable endorsement in favor of the
mortgagees of each Condominium Unit. Such policy or policies shall permit the
waiver of subrogation and shall provide that the insurance company or companies
will not look to the Association, or any owner of the Condominium Units for the
recovery of any loss under said policy or policies. Such policy or policies
shall not be cancelable except after 30 days written notice to Lender and the
original or a duplicate of such policy or policies shall be deposited with
Lender with evidence of the payment of premiums and with renewal policies to be
deposited with Lender not later than 30 days prior to the expiration of existing
policies. In the event that the policy or policies of insurance maintained by
the Association insures the Premises only on a contingent or conditional basis
which requires the individual owner of the Condominium Units to provide his own
insurance on his Condominium Unit, then Borrower shall furnish to Lender an
original policy of insurance meeting the requirements of this Section 1.4(a).
Anything hereinabove to the contrary notwithstanding, in the event the
Association, or Borrower, fail or refuse to provide insurance coverage as above
provided, Lender at its election may obtain such insurance for its benefit as
Lender and may add the premium therefor to the unpaid balance of the
indebtedness secured hereby.

 

All such insurance shall (i) be with insurers authorized to do business in the
state within which the Property is located and who have and maintain a rating of
at least “AA” from Standard & Poors (or, alternatively, if the insurers maintain
re-insurance with re-insurers maintaining such rating, Lender will not
unreasonably withhold its consent to satisfying such required rating by means of
a “cut-through” endorsement allowing recourse directly against a reinsurer
maintaining such rating), (ii) contain the complete address of the Property (or
a complete legal description), (iii) be for terms of at least one year, and (iv)
be subject to the approval of Lender as to insurance companies, amounts,
content, forms of policies, method by which premiums are paid and expiration
dates.

 

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Borrower shall as of the date hereof deliver to Lender evidence that said
insurance policies have been paid current as of the date hereof and certified
copies of such insurance policies and original certificates of insurance signed
by an authorized agent of the applicable insurance companies evidencing such
insurance satisfactory to Lender. Borrower shall renew all such insurance and
deliver to Lender certificates evidencing such renewals at least thirty (30)
days before any such insurance shall expire. Without limiting the required
endorsements to the insurance policies, Borrower further agrees that all such
policies shall include a standard, non-contributory, mortgagee clause naming:

 

CIBC Inc., its successors and/or assigns, as their interests may appear

Attn: Real Estate Finance Group

622 Third Avenue, 8th Floor

New York, New York 10017

 

(x) as an additional insured under all liability insurance policies, (y) as the
first mortgagee on all property insurance policies and (z) as the loss payee on
all loss of rents or loss of business income insurance policies. Borrower
further agrees that all such insurance policies: (1) shall provide for at least
thirty (30) days’ prior written notice to Lender prior to any cancellation or
termination thereof and prior to any modification thereof which affects the
interest of Lender; (2) shall contain an endorsement or agreement by the insurer
that any loss shall be payable to Lender in accordance with the terms of such
policy notwithstanding any act or negligence of Borrower which might otherwise
result in forfeiture of such insurance; (3) shall waive all rights of
subrogation against Lender; (4) in the event that the Real Estate or the
Improvements constitutes a legal non-conforming use under applicable building,
zoning or land use laws or ordinances, shall include an ordinance or law
coverage endorsement which will contain Coverage A: “Loss Due to Operation of
Law” (with a minimum liability limit equal to Replacement Cost With Agreed Value
Endorsement), Coverage B: “Demolition Cost” and Coverage C: “Increased Cost of
Construction” coverages; and (5) may be in the form of a blanket policy provided
that, in the event that any such coverage is provided in the form of a blanket
policy, Borrower hereby acknowledges and agrees that failure to pay any portion
of the premium therefor which is not allocable to the Property or by any other
action not relating to the Property which would otherwise permit the issuer
thereof to cancel the coverage thereof, would require the Property to be insured
by a separate, single-property policy. The blanket policy must properly identify
and fully protect the Property as if a separate policy were issued for 100% of
Replacement Cost at the time of loss and otherwise meet all of Lender’s
applicable insurance requirements set forth in this Section 1.4. The delivery to
Lender of the insurance policies or the certificates of insurance as provided
above shall constitute an assignment of all proceeds payable under such
insurance policies relating to the Property by Borrower to Lender as further
security for the Obligations. In the event of foreclosure of this Mortgage, or
other transfer of title to the Property in extinguishment in whole or in part of
the Obligations, all right, title and interest of Borrower in and to all
unearned insurance premiums and proceeds payable under such policies then in
force concerning the Property shall thereupon vest in the purchaser at such
foreclosure, or in Lender or other transferee in the event of such other
transfer of title whether or not the damage to the Property occurred prior to
such transfer of title. Approval of any insurance by Lender shall not be a
representation of the solvency of any insurer or the sufficiency of any amount
of insurance. In the event Borrower fails to provide, maintain, keep in force or
deliver and furnish to Lender the policies of insurance required by this
Mortgage or evidence of their renewal as required herein, Lender may, but shall
not be obligated to, procure such insurance and Borrower shall pay all amounts
advanced by Lender therefor, together with interest thereon at the Default
Interest Rate from and after the date advanced by Lender until actually repaid
by Borrower, promptly upon demand by Lender. Lender shall not be responsible for
nor incur any liability for the insolvency of the insurer or other failure of
the insurer to perform, even though Lender has caused the insurance to be placed
with the insurer after failure of Borrower to furnish such insurance. Borrower
shall

 

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not obtain insurance for the Property in addition to that required by Lender
without the prior written consent of Lender, which consent will not be
unreasonably withheld provided that (i) Lender is a named insured on such
insurance, (ii) Lender receives complete copies of all policies evidencing such
insurance, and (iii) such insurance complies with all of the applicable
requirements set forth herein. To the extent that at any time Lender agrees to
accept insurance from an insurer that is rated less than the foregoing, Lender
may terminate its waiver and reassert the aforesaid minimum rating requirements
upon any renewal of any insurance coverage, or at any time if the rating of any
insurer is reduced or Lender determines that any other material adverse event
has occurred with respect to the financial condition of such insurer.

 

1.5 Payment of Taxes. (a) Except to the extent provision is actually made
therefor pursuant to Section 1.6 of this Mortgage, Borrower shall pay or cause
to be paid all taxes, assessments, water rents, sewer rents, governmental
impositions and other charges, including, without limitation, vault charges and
license fees for the use of vaults, chutes and similar areas adjoining the Real
Estate, now or hereafter levied or assessed or imposed against, or which are or
may become a lien upon, the Property (“Taxes”), and all ground rents,
maintenance charges and similar charges, now or hereafter levied or assessed or
imposed against the Property or any part thereof (the “Other Charges”), and (b)
Borrower shall furnish Lender with receipts (or if receipts are not immediately
available, with copies of canceled checks evidencing payment with receipts to
follow promptly after they become available) showing payment of such Taxes and
Other Charges at least ten (10) days prior to the applicable delinquency date
therefor. Notwithstanding the foregoing, Borrower may in good faith, by
appropriate proceedings and upon notice to Lender, contest the validity,
applicability or amount of any asserted Taxes or Other Charges so long as (x)
such contest is diligently pursued, (y) Lender determines, in its subjective
opinion, that such contest suspends the obligation to pay the Taxes or Other
Charges and that nonpayment of such Taxes or Other Charges will not result in
the sale, loss, forfeiture or diminution of the Property or any part thereof or
any interest of Lender therein, and (z) prior to the earlier of the commencement
of such contest or the delinquency date of the asserted Taxes or Other Charges,
Borrower deposits in the Impound Account an amount determined by Lender to be
adequate to cover the payment of such Taxes or Other Charges and a reasonable
additional sum to cover possible interest, costs and penalties; provided,
however, that Borrower shall promptly cause to be paid any amount adjudged by a
court of competent jurisdiction to be due, with all interest, costs and
penalties thereon, promptly after such judgment becomes final; and provided,
further, that in any event each such contest shall be concluded, the Taxes or
Other Charges, as the case may be, together with any applicable interest, costs
and penalties, shall be paid prior to the date any writ or order is issued under
which the Property may be sold, lost or forfeited.

 

1.6 Tax and Insurance Impound Account. (a) Borrower shall establish and maintain
with Lender at all times while this Mortgage continues in effect an impound
account (the “Impound Account”) for payment of Taxes and Other Charges and for
the premiums on the insurance required to be maintained with respect to Borrower
and the Property (“Insurance Premiums”) and as additional security for the
Obligations. In addition to the initial deposit to the Impound Account required
simultaneously with the execution hereof, commencing on the first Payment Date
(as defined in the Note) and continuing thereafter on each Payment Date until
the Note and all other Obligations are fully paid and performed, Borrower shall
pay to Lender, for deposit to the Impound Account, an amount equal to
one-twelfth (1/12) of the amount of the annual Taxes and Other Charges that will
next become due and payable on the Property, plus one-twelfth (1/12) of the
amount of the annual Insurance Premiums that will next become due and payable,
each as estimated and determined by Lender. So long as no event occurs, and no
state of facts exists, which, with the giving of notice and/or the passage of
time, would constitute an Event of Default (as defined in Section 2.1 hereunder)
(such event or state of facts, a “Default”) has occurred and is continuing, all
sums in the Impound Account shall be held by Lender in the Impound Account to
pay said Taxes and Other Charges, in periodic installments, and Insurance
Premiums in one annual installment, in each case, before the same become
delinquent. Borrower shall be responsible for ensuring

 

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the receipt by Lender, at least thirty (30) days prior to the respective due
date for payment thereof, of all bills, invoices and statements for all Taxes
and Other Charges, and all Insurance Premiums, and so long as no Event of
Default has occurred and is continuing, Lender shall pay the governmental
authority or other party entitled thereto directly to the extent funds are
available for such purpose in the Impound Account. In making any payment from
the Impound Account, Lender shall be entitled to rely on any bill, statement or
estimate procured from the appropriate public office or insurance company or
agent without any inquiry into the accuracy of such bill, statement or estimate
and without any inquiry into the accuracy, validity, enforceability or
contestability of any tax, assessment, valuation, sale, forfeiture, tax lien or
title or claim thereof. The Impound Account shall not, unless otherwise
explicitly required by applicable law, be or be deemed to be escrow or trust
funds, but, at Lender’s option and in Lender’s discretion, may either be held in
a separate account or be commingled by Lender with the general funds of Lender.
No interest on the funds contained in the Impound Account shall be paid by
Lender to Borrower. The Impound Account is solely for the protection of Lender
and entails no responsibility on Lender’s part beyond the payment of Taxes and
Other Charges, and of Insurance Premiums, following receipt of bills, invoices
or statements therefor in accordance with the terms hereof and beyond the
allowing of due credit for the sums actually received. Upon assignment of this
Mortgage by Lender, any funds in the Impound Account shall be turned over to the
assignee and upon such delivery any responsibility of Lender, as assignor, with
respect thereto shall terminate. If the total funds in the Impound Account shall
exceed the amount of payments actually applied by Lender for the purposes of the
Impound Account, such excess may be credited by Lender on subsequent payments to
be made hereunder or, at the option of Lender, refunded to Borrower. If at any
time Lender determines that, with the making of all monthly deposits to the
Impound Account when due, the Impound Account nonetheless would not contain
sufficient funds to pay the next due periodic installments of all Taxes and
Other Charges at least 30 days prior to the delinquency date thereof, or to pay
the next due annual Insurance Premiums at least 30 days prior to the due date
thereof, Borrower shall, within ten (10) days after receipt of written notice
thereof, deposit with Lender the full amount of any such deficiency. If the
Borrower shall fail to deposit with Lender the full amount of such deficiency as
provided above, Lender shall have the option, but not the obligation, to make
such deposit and all amounts so deposited by Lender, together with interest
thereon at the Default Interest Rate from the date incurred by Lender until
actually paid by Borrower, shall be immediately paid by Borrower on demand. At
any time during the continuance of an Event of Default, Lender may, but shall
not be obligated to, apply at any time the balance then remaining in the Impound
Account against the Obligations in whatever order Lender shall subjectively
determine. No such application of the Impound Account shall be deemed to cure
any Default or Event of Default hereunder, and any such application shall not
limit Borrower’s obligation to deposit any deficiency of which Lender gives
notice. Upon full payment of the Obligations in accordance with its terms or at
such earlier time as Lender may elect, the balance of the Impound Account then
in Lender’s possession shall be paid over to Borrower and no other party shall
have any right or claim thereto.

 

(b) NOTWITHSTANDING THE FOREGOING PROVISIONS OF THIS SECTION 1.6, so long as (i)
Primary Tenant, or any assignee thereof approved by Lender, is the tenant under
the Primary Lease, (ii) the Primary Lease remains in full force and effect and
Primary Tenant is not in default (beyond any applicable notice and cure periods,
if any) under the Primary Lease, (iii) Primary Tenant is required under the
Primary Lease to maintain all of the insurance coverages as set forth in Section
1.4 of this Mortgage (collectively, the “Required Insurance”), (iv) Primary
Tenant continues to maintain the Required Insurance, (v) no Event of Default has
occurred hereunder and (vi) Borrower provides or causes to be provided to Lender
certificates evidencing renewal of all insurance required to be maintained
pursuant to Section 1.4 of this Mortgage not later than thirty (30) days before
any such insurance shall expire, then Borrower shall not be required to make
deposits of Insurance Premiums into the Impound Account as required by this
Section 1.6.

 

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(c) As of the date hereof, the Unit lies within a real estate tax lot (the
“Mixed Tax Lot”), a portion of which lot contain property other than the Unit
(such other property, the “Adjacent Property”). Notwithstanding anything in
Section 1.6(a) herein to the contrary, until such time as (x) the applicable
governmental authorities issue a separate tax lot identification for the Unit
(the “Separate Tax Lot”) so that no property other than the Unit lies within the
Separate Tax Lot, (y) the Separate Tax Lot and the Adjacent Property are each
assessed separately by the applicable governmental authorities and (z) a
separate tax bill is issued for each of the Separate Tax Lot and the Adjacent
Property ((x), (y) and (z) collectively, the “Tax Lot Conditions”), Lender shall
have the right (the “Full Tax Option”), in its sole discretion, to require that
Borrower deposit with Lender a reserve for the payment of Taxes and Other
Charges pursuant to the provisions of Section 1.6(a) hereof for both the Unit
and the Adjacent Property (i.e. Borrower shall reserve with respect to Taxes and
Other Charges payable for the entire Mixed Tax Lot as if the Adjacent Property
had been encumbered by the lien of the Mortgage). The amount of such Taxes and
Other Charges reserved with respect to the Adjacent Property is hereinafter
referred to as the “Adjacent Property Tax Amount”. In the event that Lender
elects to exercise the Full Tax Option, then, provided that no Event of Default
has occurred and is continuing, Lender shall, from time to time, disburse to
Borrower the Adjacent Property Tax Amount collected with respect to any
installment of Taxes and Other Charges payable in connection with the Unit and
the Adjacent Property upon receipt by Lender of evidence satisfactory to Lender
that all Taxes and Other Charges due in connection with such payment of Taxes
and Other Charges with respect to both the Unit and the Adjacent Property have
been fully and timely paid and that there are no other amounts outstanding or
due with respect to Taxes and Other Charges for either the Unit or the Adjacent
Property.

 

1.7 Condemnation and Casualty. Borrower shall give Lender prompt written notice
of the occurrence of any casualty affecting, or the institution of any
proceedings for eminent domain or for the condemnation of, the Property or any
portion thereof. All insurance proceeds on the Property, and all causes of
action, claims, compensation, awards and recoveries for any damage, condemnation
or taking of all or any part of the Property or for any damage or injury to it
for any loss or diminution in value of the Property, are hereby assigned to and
shall be paid to Lender. Lender may participate in any suits or proceedings
relating to any such proceeds, causes of action, claims, compensation, awards or
recoveries and Lender is hereby authorized, in its own name or in Borrower’s
name, to adjust any loss covered by insurance or any condemnation claim or cause
of action, and to settle or compromise any claim or cause of action in
connection therewith, and Borrower shall from time to time deliver to Lender any
instruments required to permit such participation; provided, however, that so
long as no Event of Default is continuing, Lender shall not have the right to
participate in the adjustment of any loss which is not in excess of the lesser
of (i) ten percent (10%) of the then outstanding principal balance of the Note
and (ii) $500,000.00. Lender may, at Lender’s option, (y) if requested by
Borrower and consented to by Lender, hold the balance of any of such proceeds to
be used to reimburse Borrower for the cost of restoring and repairing the
Property to the equivalent of its original condition or to a condition approved
by Lender (the “Restoration”), or (z) apply the balance of such proceeds to the
payment of the Obligations, whether or not then due. To the extent Lender,
pursuant to Borrower’s request and in accordance with the terms hereof,
determines to apply insurance or condemnation proceeds to Restoration, Lender
shall do so in accordance with Lender’s then-current policies relating to the,
as applicable, restoration of casualty damage on similar properties or
restoration or rebuilding of properties that have been the subject of a partial
condemnation. Lender shall not exercise its option to apply insurance proceeds
or condemnation proceeds to the payment of the Obligations if all of the
following conditions are met: (1) no Default or Event of Default has occurred
and is continuing; (2) in the case of casualty, less than forty percent (40%) of
the Improvements has been damaged, or in the case of a taking, less than
twenty-five percent (25%) of the improvements has been taken; (3) Lender
determines, in its reasonable discretion, that there will be sufficient funds to
complete the Restoration (including, without limitation, by means of a deposit
of any shortfall by Borrower with Lender prior to the commencement of the
Restoration or promptly upon Lender’s determination that such a shortfall
exists); (4) Lender determines, in its reasonable discretion, that the

 

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rental income from the Property after completion of the Restoration will be
sufficient to meet all operating costs and other expenses, deposits to the
Impound Account, deposits to reserves and loan repayment obligations relating to
the Property and that the debt service coverage ratio for the Property after
Restoration will be the same as on the closing date of the Loan and the ratio of
the loan to value after Restoration will be the same as on the closing date of
the Loan; (5) Lender determines, in its reasonable discretion, that (A) the
Restoration will be completed before the earlier of (i) one year before the
Anticipated Repayment Date of the Note or (ii) one year after the date of the
loss or casualty and (B) the rent loss insurance or business interruption
insurance referenced in Section 1.4(f) above will cover all payments due under
the Loan during the completion of the Restoration; and (6) upon Lender’s
request, Borrower provides Lender evidence of the availability during and after
the Restoration of the insurance required to be maintained by Borrower pursuant
to Section 1.4.

 

Unless Lender otherwise agrees in writing, any application of any awards or
proceeds to the Obligations shall not extend or postpone the due date of any
monthly installments referred to in the Note or the Loan Documents or change the
amount of such installments. Borrower agrees to execute such further evidence of
assignment of any awards or proceeds as Lender may require. Any reduction in the
Obligations resulting from Lender’s application of any sums received by it
hereunder shall take effect only when Lender actually receives such sums and
elects to apply such sums to the Obligations and, in any event, the unpaid
portion of the Obligations shall remain in full force and effect and Borrower
shall not be excused in the payment thereof; provided that if Lender applies any
awards or proceeds to the entire then-outstanding Obligations, any excess awards
or proceeds after the satisfaction in full of the Obligations shall be paid to
Borrower. Partial payments received by Lender, as described in the preceding
sentence, shall be applied first to the final payment due under the Note and
thereafter to installments due under the Note in the inverse order of their due
date. If Borrower elects to effect a Restoration, Borrower shall promptly and
diligently, at Borrower’s sole cost and expense and regardless of whether the
insurance proceeds or condemnation award, as appropriate, shall be sufficient
for the purpose, restore, repair, replace and rebuild the Property as nearly as
possible to its value, condition and character immediately prior to such
casualty or partial taking in accordance with the foregoing provisions and
Borrower shall pay to Lender all reasonable costs and expenses of Lender
incurred in administering said rebuilding, restoration or repair, provided the
Lender makes such proceeds or award available for such purpose. Borrower agrees
to execute and deliver from time to time such further instruments as may be
requested by Lender to confirm the foregoing assignment to Lender of any award,
damage, insurance proceeds, payment or other compensation. Lender is hereby
irrevocably constituted and appointed the attorney-in-fact of Borrower (which
power of attorney shall be irrevocable so long as any Obligations is
outstanding, shall be deemed coupled with an interest, shall survive the
voluntary or involuntary dissolution of Borrower and shall not be affected by
any disability or incapacity suffered by Borrower subsequent to the date
hereof), with full power of substitution, subject to the terms of this section,
to settle for, collect and receive any such awards, damages, insurance proceeds,
payments or other compensation from the parties or authorities making the same,
to appear in and prosecute any proceedings therefor and to give receipts and
acquittances therefor.

 

1.8 Mechanics’ Liens. Borrower shall pay when due all claims and demands of
mechanics, materialmen, laborers and others for any work performed or materials
delivered for the Real Estate or Improvements; provided, however, that, Borrower
shall have the right to contest in good faith any such claim or demand, so long
as it does so diligently, by appropriate proceedings and without prejudice to
Lender, and provided that neither the Property nor any interest therein would be
in any danger of sale, loss or forfeiture as a result of such proceeding or
contest. In the event Borrower shall contest any such claim or demand, Borrower
shall promptly notify Lender of such contest and thereafter shall, upon Lender’s
request, promptly provide a bond, cash deposit or other security satisfactory to
Lender to protect Lender’s interest and security should the contest be
unsuccessful. If Borrower shall fail to immediately discharge or provide
security against any such claim or demand as aforesaid, Lender may

 

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do so and any and all expenses incurred by Lender, together with interest
thereon at the Default Interest Rate from the date incurred by Lender until
actually paid by Borrower, shall be immediately paid by Borrower on demand.

 

1.9 Assignment of Leases and Rents and Profits. As additional and collateral
security for the payment of the Obligations and cumulative of any and all rights
and remedies herein provided for, Borrower hereby absolutely and presently
assigns to Lender all existing and future Leases, and all existing and future
Rents and Profits. Borrower hereby grants to Lender the sole, exclusive and
immediate right, without taking possession of the Property, to demand, collect
(by suit or otherwise), receive and give valid and sufficient receipts for any
and all of said Rents and Profits, for which purpose Borrower does hereby
irrevocably make, constitute and appoint Lender its attorney-in-fact with full
power to appoint substitutes or a trustee to accomplish such purpose (which
power of attorney shall be irrevocable so long as any Obligations is
outstanding, shall be deemed to be coupled with an interest, shall survive the
voluntary or involuntary dissolution of Borrower and shall not be affected by
any disability or incapacity suffered by Borrower subsequent to the date
hereof). Lender shall be without liability for any loss that may arise from a
failure or inability to collect Rents and Profits, proceeds or other payments.
However, until the occurrence of an Event of Default under this Mortgage,
Borrower shall have a license to collect and receive the Rents and Profits when
due and prepayments thereof for not more than one month prior to due date
thereof. Upon the occurrence of an Event of Default, Borrower’s license shall
automatically terminate without notice to Borrower and Lender may thereafter,
without taking possession of the Property, collect the Rents and Profits itself
or by an agent or receiver. From and after the termination of such license,
Borrower shall be the agent of Lender in collection of the Rents and Profits and
all of the Rents and Profits so collected by Borrower shall be held in trust by
Borrower for the sole and exclusive benefit of Lender and Borrower shall, within
one (1) business day after receipt of any Rents and Profits, pay the same to
Lender to be applied by Lender as hereinafter set forth. Neither the demand for
or collection of Rents and Profits by Lender, nor the exercise of Lender’s
rights as assignee of the Leases, shall constitute any assumption by Lender of
any obligations under any Lease or other agreement relating thereto. Lender is
obligated to account only for such Rents and Profits as are actually collected
or received by Lender. Borrower irrevocably agrees and consents that the
respective payors of the Rents and Profits shall, upon demand and notice from
Lender of an Event of Default hereunder, be required to pay said Rents and
Profits to Lender without liability to determine the actual existence of any
Event of Default claimed by Lender. Borrower hereby waives any right, claim or
demand which Borrower may now or hereafter have against any such payor by reason
of such payment of Rents and Profits to Lender, and any such payment shall
discharge such payor’s obligation to make such payment to Borrower. All Rents
and Profits collected or received by Lender shall be applied against all
expenses of collection, including, without limitation, attorneys’ fees, against
costs of operation and management of the Property and against the Obligations,
in whatever order or priority as to any of the items so mentioned as Lender
directs in its sole subjective discretion and without regard to the adequacy of
its security. Neither the exercise by Lender of any rights under this Section
nor the application of any Rents and Profits to the Obligations shall cure or be
deemed a waiver of any Default or Event of Default hereunder. The assignment of
Leases and of Rents and Profits hereinabove granted shall continue in full force
and effect during any period of foreclosure or redemption with respect to the
Property.

 

1.10 Leases.

 

(a) Entering Into Leases. Borrower may enter into a proposed Lease (which
includes the renewal or extension of an existing Lease (a “Renewal Lease”))
without the prior written consent of Lender if such proposed Lease (i) provides
for rental rates and terms comparable to existing local market rates and terms
(taking into account the type and quality of the tenant) as of the date such
Lease is executed by Borrower (unless, in the case of a Renewal Lease, the rent
payable during such renewal, or a formula or other method to compute such rent,
is provided for in the original Lease), (ii) is an arms-length

 

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transaction with a bona fide, independent third party tenant for occupancy by
the lessee under such Lease, (iii) does not have a materially adverse effect on
the value of the Property taken as a whole, (iv) is subject and subordinate to
the Mortgage, and obligates the lessee thereunder to attorn to Lender, (v) does
not contain any option or right of first refusal to purchase all or any portion
of the Property, (vi) expressly provides that the portion of the Property
demised thereby shall not be used for a “Prohibited Use” (as defined below) and
(vii) is written on the standard form of lease which was either delivered to
Lender simultaneously herewith or was subsequently approved by Lender, in either
case with only immaterial variations from such standard form. As used in this
Mortgage, a “Prohibited Use” shall mean (1) operation of a dry-cleaning
business, except for a dry-cleaning business at which no on-site cleaning
operations of any sort are undertaken (i.e., a so-called drop-off station); (2)
operation of a gasoline station or automobile service or maintenance facility;
(3) operation of a car wash; (4) operation of any other business that, in the
ordinary course of operation, would be likely to result in the release of
Hazardous Substances (as defined in Section 1.25 hereof); (5) the sale or
display of obscene or pornographic material, the conduct of obscene, nude or
semi-nude live performances, or similar purposes; and (6) the operation of a
cabaret, dance hall or similar venue. All proposed Leases which do not satisfy
the requirements set forth in this Section 1.10 (a) shall be subject to the
prior approval of Lender, at Borrower’s expense (and, in conjunction therewith,
Borrower shall provide Lender with such information as Lender shall reasonably
request with respect to such proposed Lease and the Tenant thereunder). Promptly
upon entering into any Lease without Lender’s approval pursuant to this Section
1.10 (a), Borrower shall promptly deliver to Lender a copy of such Lease,
together with Borrower’s certification that such Lease satisfies all of the
conditions of this Paragraph. Upon Lender’s request, Borrower shall deliver to
Lender a true, correct and complete copy of each Lease then in effect.

 

(b) Covenants Regarding Leases. Borrower (i) shall observe and perform all the
obligations imposed upon the lessor under each Lease, and shall not do or permit
to be done anything to impair the value of any Lease in any material respect as
security for the Obligations; (ii) upon request (which request is hereby deemed
given with respect to any “Major Lease”, as defined below), shall promptly send
copies to Lender of all notices of default which Borrower shall send or receive
thereunder; (iii) shall enforce all of the material terms, covenants and
conditions contained in each Lease upon the part of the Tenant thereunder to be
observed or performed, (iv) shall not collect any of the Rents more than one (1)
month in advance (it being acknowledged that security deposits shall not be
deemed Rents collected in advance); (v) shall not execute any other assignment
of the lessor’s interest in any of the Leases or the Rents and Profits (other
than to Lender as security for the Obligations); and (vi) shall not consent to
any assignment of or subletting under any Lease not in accordance with the terms
of such Lease, in each case without the prior written consent of Lender. Within
30 days after Lender’s request therefor (which request shall not be made more
than twice in any calendar year absent an Event of Default), Borrower shall
deliver to Lender an estoppel certificate from each Tenant.

 

(c) Amendments to Leases. Provided no Event of Default exists hereunder,
Borrower may, without the consent of Lender, amend, modify or waive the
provisions of any Lease or terminate, reduce rents under, accept a surrender of
space under, or shorten the term of, any Lease (including any guaranty, letter
of credit or other credit support with respect thereto) (the foregoing,
collectively, a “Lease Modification”) provided that (i) such Lease Modification
(taking into account, in the case of a termination, reduction in rent, surrender
of space or shortening of term, the planned alternative use of the affected
space) does not have a materially adverse effect on the value of the Property
taken as a whole, (ii) such Lease Modification is in the normal course of
business and is consistent with sound and customary leasing and management
practices for similar properties in the community in which the Property is
located, and (iii) such Lease, as amended, modified or waived, is otherwise in
compliance with the requirements of this Mortgage and any subordination
agreement binding upon Lender with respect to such Lease. A termination of a
Lease with a Tenant who is in default beyond applicable notice and grace periods
shall not be considered an action which has a materially adverse effect

 

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on the value of the Property taken as a whole. Any Lease Modification which does
not satisfy the requirements set forth in this Section 1.10 (c) shall be subject
to the prior approval of Lender, at Borrower’s expense (and, in conjunction
therewith, Borrower shall provide Lender with such information as Lender shall
reasonably request with respect to such proposed Lease Modification and the
Tenant under the Lease affected thereby). Promptly upon entering into any Lease
Modification without Lender’s approval pursuant to this Section 1.10 (c),
Borrower shall promptly deliver to Lender a copy of such instrument, together
with Borrower’s certification that such instrument satisfies all of the
conditions of this Paragraph.

 

(d) Major Leases. Notwithstanding anything contained herein to the contrary,
Borrower shall not, without the prior written consent of Lender, enter into,
renew, extend, amend, modify, waive any provisions of, terminate, reduce rents
under, accept a surrender of space under, or shorten the term of, any Major
Lease. The term “Major Lease” shall mean any Lease demising in the aggregate
more than the lesser of (i) 15,000 rentable square feet or (ii) fifteen percent
(15%) of the total rentable square feet at the Property.

 

(e) Security Deposits. All security deposits of tenants, whether held in cash or
in any other form, shall not be commingled with any other funds of Borrower or
any other person and, if cash, shall be deposited by Borrower at such commercial
or savings bank or banks, or otherwise held in compliance with applicable law,
as may be reasonably satisfactory to Lender. Any bond or other instrument which
Borrower is permitted to hold in lieu of cash security deposits under any
applicable legal requirements shall be maintained in full force and effect in
the full amount of such deposits unless replaced by cash deposits as hereinabove
described; shall be issued by an institution reasonably satisfactory to Lender;
shall, if permitted pursuant to any applicable legal requirements, name Lender
as payee or mortgagee thereunder or, at Lender’s option, be assigned or fully
assignable to Lender; and shall, in all respects, comply with any 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. Upon an Event of Default
under this Mortgage, Borrower shall, immediately upon Lender’s request (if
permitted by applicable law), deliver to Lender the security deposits (and any
interest previously earned thereon and not disbursed to the person(s) lawfully
entitled to receive same) with respect to all or any portion of the Property, to
be held by Lender subject to the terms of the Leases.

 

(f) Tenant Financial Information. Borrower shall cause each Lease entered into
on or after the date hereof which, if all Tenants paid all rents as and when due
under their respective Leases, would yield one-third or more of the aggregate
rental income of the Property (a “Major Income Lease”) to require the Tenant
under such Lease to deliver to Borrower periodic operating statements with
respect to (i) such Tenant’s operations at the Property, and (ii) the operations
of such Tenant and, if applicable, any parent or affiliated entity of such
Tenant which operates, or has subsidiaries that operate, comparable businesses
(collectively, “Tenant Financial Information”). Notwithstanding the provisions
of Section 1.10(a) above, any Major Income Lease entered into after the date
hereof which does not require the Tenant to provide Tenant Financial Information
upon request shall require the prior written approval of Lender. Borrower shall,
from time to time promptly upon request of Lender, request Tenant Financial
Information from the Tenant under each Major Income Lease (and use all
commercially reasonable efforts to obtain such Tenant Financial Information),
and promptly upon receipt thereof, deliver such Tenant Financial Information to
Lender, provided, however, that (1) prior to a Secondary Market Transaction
consisting of a securitization, Lender shall not require Borrower to request
Tenant Financial Information more than three (3) times, and (2) following a
Secondary Market Transaction consisting of a securitization, provided no Event
of Default is continuing, Lender shall not request such information without
reasonable cause (which reasonable cause shall include, without limitation, the
occurrence of any default by the Tenant under a Major Income Lease or if such
Tenant ceases to conduct its business in the premises demised by such Major
Income Lease).

 

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1.11 Alienation and Further Encumbrances.

 

(a) Borrower acknowledges that Lender has relied upon the financial capability
and operating experience of the principals of Borrower in connection with the
closing of the loan evidenced by the Note. Accordingly, notwithstanding anything
to the contrary contained in Section 5.6 hereof, neither the Property, nor any
part thereof or interest therein, shall be sold, conveyed, disposed of,
alienated, hypothecated, leased (except to Tenants under Leases which are not in
violation of Section 1.10 hereof), assigned, pledged, mortgaged, further
encumbered or otherwise transferred, nor Borrower shall be divested of its title
to the Property or any interest therein, in any manner or way, whether
voluntarily or involuntarily (any of the foregoing, a “Transfer”), except as
expressly set forth in this Section 1.11, in each case without the prior written
consent of Lender being first obtained, which consent may be withheld in
Lender’s sole discretion. For the purposes of this Section 1.11, a “Transfer”
shall also include (i) transfers of direct or indirect ownership interests in
Borrower, and the creation of new or additional ownership interests in Borrower,
or in any Constituent Entity of Borrower, in each case except as set forth in
Section 1.11(c) below, (ii) an installment sales agreement with respect to the
Property or any portion thereof, (iii) a Lease of all or substantially all of
the Property other than for actual occupancy by a space tenant thereunder, (iv)
any sale or assignment of any of Borrower’s right, title and interest in, to and
under any Leases or Rents and Profits, other than to Lender, (v) if Borrower or
any Constituent Entity of Borrower is a partnership or joint venture, the
addition, change, removal or resignation of any general partner, or the transfer
or pledge of any interest (whether as a general partner or limited partner) of
any general partner in such partnership, and (vi) if Borrower or any Constituent
Entity of Borrower is a limited liability company, the addition, change, removal
or resignation of any manager, managing member or sole member, or the transfer
or pledge of any interest (whether as a managing member or otherwise) of such
manager, managing member or sole member in such limited liability company, or
the transfer of control (as defined in Section 1.27) of such manager, managing
member or sole member.

 

(b) Notwithstanding the foregoing provisions of this Section, Lender shall not
unreasonably withhold its consent to the sale of the Property in its entirety
(hereinafter, “Sale”) to a single-purpose entity with organizational documents
containing provisions substantially similar to those set forth in Section 1.27
and otherwise acceptable to Lender (hereinafter, “Buyer”) provided that such
Sale occurs after the earlier to occur of a Secondary Market Transaction (as
defined herein) and the second (2nd) anniversary of the date hereof, and each of
the following terms and conditions are satisfied in connection with such Sale:

 

(1) No Default or Event of Default is then continuing;

 

(2) Borrower gives Lender written notice of the terms of such prospective Sale
not less than thirty (30) days before the date on which such Sale is scheduled
to close, accompanied by all information concerning the proposed Buyer as Lender
would require in evaluating an initial extension of credit to a borrower and a
non-refundable application fee in the amount of $2,500.00. Lender shall have the
right to approve or disapprove the proposed Buyer in its reasonable discretion
(it being acknowledged that Lender may, as a condition to approving any proposed
Buyer, require confirmation in writing from each of the Rating Agencies (as
defined herein) that such Sale will not result in a qualification, downgrade or
withdrawal of any rating in effect immediately prior to such Sale for any
securities issued in connection with a Secondary Market Transaction), and such
approval, if given, may be given subject to such conditions as Lender may deem
appropriate;

 

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(3) Borrower pays Lender, concurrently with the closing of such Sale, a
non-refundable assumption fee in an amount equal to all out-of-pocket costs and
expenses, including, without limitation, attorneys’ fees, incurred by Lender in
connection with the Sale plus an amount equal to one percent (1.0%) of the then
outstanding principal balance of the Note;

 

(4) Buyer assumes and agrees to pay the Obligations (subject to the provisions
of Section 5.25 hereof) and, prior to or concurrently with the closing of such
Sale, the 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;

 

(5) Borrower and the Buyer execute and cause to be filed in such public records
as Lender deems appropriate, without any cost or expense to Lender, new
financing statements or financing statement amendments and any additional
documents reasonably requested by Lender;

 

(6) Borrower causes to be delivered to Lender, without any cost or expense to
Lender, such endorsements to Lender’s title insurance policy, hazard insurance
endorsements or certificates and other similar materials as Lender may deem
necessary at the time of the Sale, all in form and substance satisfactory to
Lender, including, without limitation, an endorsement or endorsements to
Lender’s title insurance policy insuring the lien of this Mortgage, 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 (4) of this Section, with no additional exceptions added to such
policy and insuring that fee simple title to the Property is vested in the
Buyer;

 

(7) 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 satisfactory to Lender and shall be
binding upon the Buyer;

 

(8) Subject to the provisions of Section 5.25 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. Borrower shall be released from and relieved of any personal
liability under the Note or any of the other Loan Documents for any acts or
events occurring or obligations arising after the closing of such Sale which are
not caused by or arising out of any acts or events occurring or obligations
arising prior to or simultaneously with the closing of such Sale; and

 

(9) Such Sale is not construed so as to relieve any Indemnitor of its
obligations under any Loan Document, and a Constituent Entity of the Buyer
approved by Lender in its sole discretion (a “Successor Indemnitor”) assumes the
obligations of such Indemnitor and executes such documents as may be required by
Lender to evidence such assumption. Each Indemnitor shall be released from and
relieved of any of its obligations under any indemnity or guaranty executed in
connection with the Loan for any acts or events occurring or obligations arising
after the closing of such Sale which are not caused by or arising out of any
acts or events occurring or obligations arising prior to or simultaneously with
the closing of such Sale;

 

(10) Buyer has furnished to Lender all appropriate papers evidencing the Buyer’s
capacity and good standing, and the authority of the signers to execute the
assumption of the

 

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Loan Documents and the Obligations, which papers shall include certified copies
of all documents relating to the organization and formation of the Buyer and of
the entities, if any, which are Constituent Entities of the Buyer, all of which
shall be satisfactory to Lender;

 

(11) Buyer shall assume the obligations of Borrower under any management
agreements pertaining to the Property, or shall cause the new manager and
management agreement to satisfy the requirements of Section 1.24 hereof; and

 

(12) Buyer shall furnish an opinion of counsel satisfactory to Lender that the
acquisition of the Property and the assumption of the Loan Documents and
Obligations by Buyer and, to the extent applicable, Successor Indemnitor, was
validly authorized, and duly executed and delivered, and constitutes the legal,
valid and binding obligations of Buyer and Successor Indemnitor, enforceable
against each of them in accordance with their respective terms, and with respect
to such other matters as Lender may reasonably require.

 

(c) Provided no Default shall then be continuing, the following direct or
indirect transfers of interests in Borrower, or any Constituent Entity of
Borrower, shall be permitted without the prior written consent of Lender:

 

(1) If Borrower (or any Constituent Entity of Borrower) is a corporation, any
direct or indirect transfer of stock in such corporation, or the issuance of new
stock in such corporation, which does not result in a change of control (as
defined under Rule 405 under the Securities Act of 1933, as amended) of such
corporation; provided that none of (A) the sale of all or substantially all of
the assets of GSI, and/or the sale or transfer of 50% or more of the stock in
GSI, through a merger, consolidation or otherwise, (B) the sale or transfer of
stock in GSI on a nationally recognized stock exchange, or (C) the issuance or
transfer of any stock or other securities of GSI, shall be prohibited or require
the consent of Lender under this Section 1.11;

 

(2) If Borrower (or any Constituent Entity of Borrower) is a limited
partnership, any direct or indirect transfer of limited partnership interests in
such limited partnership, or the issuance of new limited partnership interests
which results in the dilution of the existing limited partners, so that after
giving effect to such transfer or issuance, (x) not more than 49% of the equity
interests in such partnership have been transferred or issued from and after the
date hereof and (y) the persons responsible for the management of the Borrower
and the Property remain unchanged;

 

(3) If Borrower (or any Constituent Entity of Borrower) is a limited liability
company, any direct or indirect transfer of membership interests in Borrower, or
the issuance of new membership interests which results in the dilution of the
existing members, so that after giving effect to such transfer or issuance, (x)
not more than 49% of the equity interests in such limited liability company have
been transferred or issued from and after the date hereof and (y) the persons
responsible for the management of the Borrower and the Property remain
unchanged; provided that none of (A) the sale of all or substantially all of the
assets of GSI, and/or the sale or transfer of 50% or more of the stock in GSI,
through a merger, consolidation or otherwise, (B) the sale or transfer of stock
in GSI on a nationally recognized stock exchange, or (C) the issuance or
transfer of any stock or other securities of GSI, shall be prohibited or require
the consent of Lender under this Section 1.11; and

 

(4) Either (a) any transfer for estate planning purposes by the Indemnitor, or
(b) any involuntary transfer caused by the death of a holder of ownership
interests in Borrower, or in any general partner or managing member of Borrower,
in each case so long as (y) Borrower is reconstituted, if required, following
any such death and (z) either (i) those persons responsible for the management
of the Borrower and the Property remain unchanged as a result of such death or
estate planning or (ii) the person(s) to become responsible for management of
the Borrower and the Property are approved by Lender.

 

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Borrower shall give Lender (i) prior written notice of any event set forth in
Subparagraphs (1), (2) or (3) above, and (ii) prompt written notice after any
event giving rise to a transfer set forth in Subparagraph (4) above, in each
case together with copies of all documents, instruments and agreements effecting
such transfer, all of which shall be certified by Borrower to be true, correct
and complete.

 

1.12 Payment of Utilities, Assessments, Charges, Etc. Borrower shall pay when
due all utility charges (e.g., for gas, electricity, water and sewer services
and similar charges) which are incurred by Borrower or its agents, and all other
assessments or charges of a similar nature, or assessments payable pursuant to
any restrictive covenants, whether public or private, affecting the Real Estate
and/or the Improvements or any portion thereof, whether or not such assessments
or charges are or may become liens thereon.

 

1.13 Access Privileges and Inspections. Lender and the agents, representatives
and employees of Lender shall, subject to the rights of tenants, have full and
free access to the Real Estate and the Improvements and any other location where
books and records concerning the Property are kept at all reasonable times and
upon reasonable notice for the purposes of inspecting the Property and of
examining, copying and making extracts from the books and records of Borrower
relating to the Property. Borrower shall lend assistance to all such agents,
representatives and employees of Lender, at no additional cost to Borrower so
long as no Event of Default has occurred.

 

1.14 Waste; Alteration of Improvements. Borrower shall not commit, suffer or
permit any waste on the Property nor take any actions that might invalidate any
insurance carried on the Property. Borrower shall maintain the Property in good
condition and repair. No part of the Improvements may be removed, demolished or
materially altered, in each case, without the prior written consent of Lender,
except as required (i) pursuant to Applicable Laws, (ii) to cause the Property
not to be in violation of any Lease approved or deemed approved pursuant to
Section 1.10 hereof or (iii) to perform the Initial Improvements (as defined in
the Primary Lease); provided that the plans and specifications for the Initial
Improvements shall be subject to Lenders review and approval. Without the prior
written consent of Lender in each case, Borrower shall not commence construction
of any improvements on the Real Estate other than improvements required for the
maintenance or repair of the Property. If Lender’s approval is requested
pursuant the terms of this Section 1.14 for the plans and specifications for the
Initial Improvements, Lender’s approval shall be deemed withheld absent notice
from Lender to the contrary unless Borrower complies with the following
procedures: Borrower shall request such approval by delivering notice to Lender
in accordance with Section 5.5 of this Mortgage, with the following legend on
such request: THIS IS A REQUEST FOR CONSENT UNDER THE LOAN BY CIBC INC. TO 935
HQ ASSOCIATES, LLC. FAILURE TO RESPOND TO THIS REQUEST WILL RESULT IN THE
REQUEST BEING DEEMED GRANTED. If, within five (5) business days of delivery of
notice as aforesaid, Lender has not responded (either affirmatively or
negatively) to Borrower with respect to such written request, then such request
shall be deemed granted.

 

1.15 Zoning. Without the prior written consent of Lender in each case, Borrower
shall not seek, make, suffer, consent to or acquiesce in any change in the
zoning or conditions of use of the Real Estate or the Improvements. If, under
applicable zoning provisions, the use of all or any part of the Real Estate or
the Improvements is or becomes a nonconforming use, Borrower shall not cause or
permit such use to be discontinued or abandoned without the prior written
consent of Lender. Without Lender’s prior written consent, Borrower shall not
file or subject any part of the Real Estate or the Improvements to any
declaration of condominium or co-operative or convert any part of the Real
Estate or the Improvements to a condominium, co-operative or other form of
multiple ownership and governance.

 

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1.16 Financial Statements, Books and Records, and Informational Reporting.
Borrower shall keep accurate books and records of account of the Property and
its own financial affairs sufficient to permit the preparation of financial
statements therefrom in accordance with generally accepted accounting
principles. Lender and its duly authorized representatives shall have the right
to examine, copy and audit Borrower’s records and books of account at all
reasonable times. So long as this Mortgage continues in effect, Borrower shall
provide to Lender, in addition to any other financial statements required
hereunder or under any of the other Loan Documents, the following financial
statements and information, all of which must be certified to Lender as being
true and correct by Borrower or the person or entity to which they pertain, as
applicable, be prepared in accordance with generally accepted accounting
principles consistently applied and be in form and substance acceptable to
Lender:

 

(a) copies of all tax returns filed by Borrower, within thirty (30) days after
the date of filing;

 

(b) at any time when the Primary Lease is not in full force and effect, monthly
operating statements for the Property (including a current Rent Roll containing
the information set forth in Paragraph 1.1(ee) above), within ten (10) days
after the end of each month during the first twelve (12) months of the term of
the Loan or until the occurrence of a Secondary Market Transaction;

 

(c) quarterly operating statements for the Property, within thirty (30) days
after the end of each calendar quarter;

 

(d) annual balance sheets for the Property and annual financial statements for
Borrower (or for Indemnitor if Borrower’s financial statements are consolidated
with those of Indemnitor), within ninety (90) days after the end of each
calendar year, and, if Borrower’s financial statements are not consolidated with
those of Indemnitor, annual financial statements of Indemnitor upon demand by
Lender following the occurrence of an Event of Default;

 

(e) a current Rent Roll, containing the information set forth in Paragraph
1.1(ee) above, dated as of January 1 of each calendar year and certified by
Borrower as being true, correct and complete, which shall be delivered to Lender
on or before February 15 of each year; and

 

(f) such other information with respect to the Property, Borrower, the
principals in Borrower, and each Indemnitor which may reasonably be requested
from time to time by Lender, within a reasonable time after the applicable
request.

 

If any of the aforementioned materials are not furnished to Lender within the
applicable time periods, in addition to any other rights and remedies of Lender
contained herein, Lender shall have the right, but not the obligation, to obtain
the same by means of an audit by an independent certified public accountant
selected by Lender, in which event Borrower agrees to pay, or to reimburse
Lender for, any expense of such audit and further agrees to provide all
necessary information to said accountant and to otherwise cooperate in the
making of such audit.

 

1.17 Further Documentation. Borrower shall, on the request of Lender and at the
expense of Borrower, promptly: (a) correct any defect, error or omission which
may be discovered in the contents of this Mortgage or in the contents of any of
the other Loan Documents; (b) execute, acknowledge, deliver and record or file
such further instruments (including, without limitation, further mortgages,
deeds of trust, security deeds, security agreements, financing statements,
continuation statements and assignments of rents or leases) and promptly do such
further acts as may be necessary, desirable or proper to carry out more
effectively the purposes of this Mortgage and the other Loan

 

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Documents and to subject to the liens and security interests hereof and thereof
any property intended by the terms hereof and thereof to be covered hereby and
thereby, including specifically, but without limitation, any renewals,
additions, substitutions, replacements or appurtenances to the Property; (c)
execute, acknowledge, deliver, procure and record or file any document or
instrument (including specifically any financing statement) deemed advisable by
Lender to protect, continue or perfect the liens or the security interests
hereunder against the rights or interests of third persons; and (d) furnish to
Lender, upon Lender’s request, a duly acknowledged written statement and
estoppel certificate addressed to such party or parties as directed by Lender
and in form and substance supplied by Lender, setting forth all amounts due
under the Note, stating whether any Default or Event of Default exists, stating
whether any offsets or defenses exist against the Obligations, affirming that
the Loan Documents are the legal, valid and binding obligations of Borrower, and
containing such other matters as Lender may reasonably require.

 

1.18 Payment of Costs; Reimbursement to Lender. Borrower shall pay all
reasonable costs and expenses of every character incurred in connection with the
closing of the Loan or otherwise attributable or chargeable to Borrower as the
owner of the Property, including, without limitation, appraisal fees, recording
fees, documentary, stamp, mortgage or intangible taxes, brokerage fees and
commissions, title policy premiums and title search fees, public records search
fees, escrow fees and reasonable attorneys’ fees. If Borrower defaults in any
such payment, which default is not cured within any applicable grace or cure
period, Lender may pay the same and Borrower shall reimburse Lender on demand
for all such costs and expenses incurred or paid by Lender, together with such
interest thereon at the Default Interest Rate from and after the date of
Lender’s making such payment until reimbursement thereof by Borrower. Further,
Borrower shall promptly notify Lender in writing of any litigation or threatened
litigation affecting the Property, or any other demand or claim which, if
enforced, could impair or threaten to impair Lender’s security hereunder.
Without limiting or waiving any other rights and remedies of Lender hereunder,
if any action or proceeding of any kind (including, but not limited to, any
bankruptcy, insolvency, arrangement, reorganization or other debtor relief
proceeding) is commenced which might affect Lender’s interest in the Property or
Lender’s right to enforce its security, or upon the occurrence of any other
Event of Default, then Lender may, at its option, with or without notice to
Borrower, make any appearances, disburse any sums and take any actions as may be
necessary or desirable to protect or enforce the security of this Mortgage or to
remedy such Event of Default (without, however, waiving any Default). Borrower
agrees to pay on demand all expenses of Lender incurred with respect to the
foregoing (including, but not limited to, reasonable fees and disbursements of
counsel), together with interest thereon at the Default Interest Rate from and
after the date on which Lender incurs such expenses until reimbursement thereof
by Borrower. The necessity for any such actions and of the amounts to be paid
shall be determined by Lender in its discretion. Lender is hereby empowered to
enter and to authorize others to enter upon the Property or any part thereof for
the purpose of performing or observing any such defaulted term, covenant or
condition without thereby becoming liable to Borrower or any person in
possession holding under Borrower. Borrower hereby acknowledges and agrees that
the remedies set forth in this Section 1.18 shall be exercisable by Lender, and
any and all payments made or costs or expenses incurred by Lender in connection
therewith shall be secured hereby and shall be, without demand, immediately
repaid by Borrower with interest thereon at the Default Interest Rate,
notwithstanding the fact that such remedies were exercised and such payments
made and costs incurred by Lender after the filing by Borrower of a voluntary
case or the filing against Borrower of an involuntary case pursuant to or within
the meaning of the Bankruptcy Reform Act of 1978, as amended, Title 11 U.S.C.,
or after any similar action pursuant to any other debtor relief law (whether
statutory, common law, case law or otherwise) of any jurisdiction whatsoever,
now or hereafter, in effect, which may be or become applicable to Borrower,
Lender, any Indemnitor, the Obligations or any of the Loan Documents. Borrower
hereby indemnifies and holds Lender harmless from and against all loss, cost and
expenses with respect to any Default hereof, any liens (i.e., judgments,
mechanics’ and materialmen’s liens, or otherwise), charges and encumbrances
filed against the Property, and from any claims and demands for

 

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damages or injury, including claims for property damage, personal injury or
wrongful death, arising out of or in connection with any accident or fire or
other casualty on the Real Estate or the Improvements or any nuisance made or
suffered thereon, including, in any case, attorneys’ fees, costs and expenses as
aforesaid, whether at pretrial, trial or appellate level, and such indemnity
shall survive payment in full of the Obligations. This Section shall not be
construed to require Lender to incur any expenses, make any appearances or take
any actions.

 

1.19 Security Interest and Security Agreement. This Mortgage is also a security
agreement under the Uniform Commercial Code for any of the Property which, under
applicable law, may be subject to a security interest under the Uniform
Commercial Code, whether acquired now or in the future, including, without
limitation, the Reserves, all products, and cash and non-cash proceeds thereof
(collectively, “UCC Collateral”). Borrower hereby grants to Lender a security
interest in the UCC Collateral. Borrower shall execute and deliver to Lender,
upon Lender’s request, financing statements, continuation statements and
amendments, in such form as Lender may require, to perfect or continue the
perfection of this security interest. Borrower shall pay all costs of preparing
and filing such statements, and all costs and expenses of any record searches
for financing statements that Lender may require. Without the prior written
consent of Lender, Borrower shall not create or permit to exist any other lien
or security interest in any of the UCC Collateral. The name and address of
Borrower (as Debtor under any applicable Uniform Commercial Code) and Lender (as
Secured Party under any applicable Uniform Commercial Code) are as set forth on
Page 1 of this Mortgage.

 

1.20 Easements and Rights-of-Way. Borrower shall not grant any easement or
right-of-way with respect to all or any portion of the Real Estate or the
Improvements without the prior written consent of Lender. The purchaser at any
foreclosure sale hereunder may, at its discretion, disaffirm any easement or
right-of-way granted in violation of any of the provisions of this Mortgage and
may take immediate possession of the Property free from, and despite the terms
of, such grant of easement or right-of-way. If Lender consents to the grant of
an easement or right-of-way, Lender agrees to grant such consent provided that
Lender is paid a standard review fee together with all other expenses,
including, without limitation, attorneys’ fees, incurred by Lender in the review
of Borrower’s request and in the preparation of documents effecting the
subordination.

 

1.21 Compliance with Laws. Borrower shall at all times comply with all
Applicable Laws, even if such compliance shall require structural changes to the
Property. Borrower may, upon providing Lender with security reasonably
satisfactory to Lender, proceed diligently and in good faith to contest the
validity or applicability of any Applicable Law so long as the Property shall
not be subject to any lien, charge, fine or other liability, and shall not be in
danger of being forfeited, lost or closed, during or as a result of such
contest. Borrower shall not alter the Property in any manner that would
materially increase Borrower’s responsibilities for compliance with Applicable
Laws without the prior approval of Lender. Borrower shall not use or occupy, or
allow the use or occupancy of, the Property in any manner which violates any
Lease or any Applicable Law or which constitutes a public or private nuisance or
which makes void, voidable or cancelable, any insurance then in force with
respect thereto. Borrower shall, from time to time, upon Lender’s request,
provide Lender with evidence reasonably satisfactory to Lender that the Property
complies with all Applicable Laws.

 

1.22 Additional Taxes. In the event of the enactment after this date of any law
of the state where the Property is located or of any other governmental entity
deducting from the value of the Property for the purpose of taxation any lien or
security interest thereon, or imposing upon Lender the payment of the whole or
any part of the Taxes or Other Charges herein required to be paid by Borrower,
or changing in any way the laws relating to the taxation of mortgages or
security agreements or debts secured by mortgages or security agreements or the
interest of the Lender or secured party in the property covered thereby, or the
manner of collection of such Taxes or Other Charges, so as to adversely affect
this

 

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Mortgage or the Obligations or Lender, then, and in any such event, Borrower,
upon demand by Lender, shall pay such Taxes or Other Charges, or reimburse
Lender therefor; provided, however, that if in the opinion of counsel for Lender
(a) it might be unlawful to require Borrower to make such payment, or (b) the
making of such payment might result in the imposition of interest beyond the
maximum amount permitted by law, then and in either such event, Lender may
elect, by notice in writing given to Borrower, to declare all of the Obligations
to be and become due and payable in full thirty (30) days from the giving of
such notice.

 

1.23 Borrower’s Waivers. To the full extent permitted by law, Borrower shall not
at any time insist upon, plead, claim or take the benefit or advantage of any
law now or hereafter in force providing for any appraisement, valuation, stay,
moratorium or extension, or any law now or hereafter in force providing for the
reinstatement of the Obligations prior to any sale of the Property to be made
pursuant to any provisions contained herein or prior to the entering of any
decree, judgment or order of any court of competent jurisdiction, or any right
under any statute to redeem all or any part of the Property so sold. Borrower,
for Borrower and Borrower’s successors and assigns, and for any and all persons
ever claiming any interest in the Property, to the full extent permitted by law,
hereby knowingly, intentionally and voluntarily with and upon the advice of
competent counsel: (a) waives, releases, relinquishes and forever forgoes all
rights of valuation, appraisement, stay of execution, reinstatement and notice
of election or intention to mature or declare due the Obligations (except such
notices as are specifically provided for herein); (b) waives, releases,
relinquishes and forever forgoes all right to a marshalling of the assets of
Borrower, including the Property, to a sale in the inverse order of alienation,
or to direct the order in which any of the Property shall be sold in the event
of foreclosure of the liens and security interests hereby created and agrees
that any court having jurisdiction to foreclose such liens and security
interests may order the Property sold as an entirety; and (c) waives, releases,
relinquishes and forever forgoes all rights and periods of redemption provided
under applicable law. To the full extent permitted by law, Borrower shall not
have or assert any right under any statute or rule of law pertaining to the
exemption of homestead or other exemption under any federal, state or local law
now or hereafter in effect, the administration of estates of decedents or other
matters whatever to defeat, reduce or affect the right of Lender under the terms
of this Mortgage to a sale of the Property, for the collection of the
Obligations without any prior or different resort for collection, or the right
of Lender under the terms of this Mortgage to the payment of the Obligations out
of the proceeds of sale of the Property in preference to every other claimant
whatever. Further, Borrower hereby knowingly, intentionally and voluntarily,
with and upon the advice of competent counsel, waives, releases, relinquishes
and forever forgoes all present and future statutes of limitations as a defense
to any action to enforce the provisions of this Mortgage or to collect any of
the Obligations the fullest extent permitted by law. Borrower covenants and
agrees that upon the commencement of a voluntary or involuntary bankruptcy
proceeding by or against Borrower, Borrower shall not seek a supplemental stay
or otherwise shall not seek pursuant to 11 U.S.C. §105 or any other provision of
the Bankruptcy Reform Act of 1978, as amended, or any other debtor relief law
(whether statutory, common law, case law, or otherwise) of any jurisdiction
whatsoever, now or hereafter in effect, which may be or become applicable, to
stay, interdict, condition, reduce or inhibit the ability of Lender to enforce
any rights of Lender against any Indemnitor of the secured obligations or any
other party liable with respect thereto by virtue of any indemnity, guaranty or
otherwise.

 

1.24 Management.

 

(a) The management of the Property shall be by either (1) Borrower or an entity
affiliated with Borrower approved by Lender for so long as Borrower or said
affiliated entity is managing the Property in a first class manner; or (2) a
professional property management company approved by Lender, and in either case
pursuant to a written agreement approved by Lender. Borrower represents that, as
of the date hereof, Borrower has not retained either a property manager or a
leasing agent for the Property. In no event shall any manager be removed,
replaced or retained, or any management agreement

 

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entered into, modified or amended in any material respect, in each case without
the prior written consent of Lender, which shall not unreasonably be withheld or
delayed. After an Event of Default hereunder or a default under any management
contract then in effect, which default is not cured within any applicable grace
or cure period, Lender shall have the right to terminate, or to direct Borrower
to terminate, such management contract upon thirty (30) days’ notice and to
retain, or to direct Borrower to retain, a new management agent approved by
Lender. It shall be a condition of Lender’s consent to any management agreement,
whether with an affiliate of Borrower or a professional property management
company, that such manager enter into an agreement with Lender whereby the
manager acknowledges and agrees to the aforesaid rights of Lender, and as to
such other matters as Lender may require. Lender shall not withhold its consent
to Brandywine Realty Services Corporation (“Brandywine Services”) serving as the
property manager for the Association pursuant to a management contract between
Brandywine Services and the Association.

 

(b) Without limiting the restrictions set forth in Section 1.24(a) pertaining to
the management agreement for the Property, Borrower may not terminate any other
Contract that is material to the operation of the Property, or enter into any
amendment thereto that makes the terms thereof materially less favorable to
Borrower, in each case without the prior written consent of Lender, which shall
not unreasonably be withheld or delayed, provided, however, that if the other
party to such Contract is in default thereunder, and Borrower can replace the
goods or services provided on terms not materially disadvantageous to Borrower,
then the prior written consent of Lender shall not be required to terminate such
Contract. Borrower shall perform its obligations under each Contract and each of
the General Intangibles, except where Borrower’s failure to do so would not have
a material adverse effect on Borrower or the Property. Borrower represents that
its interest under each Contract, and each General Intangible, is not subject to
any claim, setoff, lien, deduction or encumbrance of any nature, other than that
created by this Mortgage. At any time during the continuance of an Event of
Default, Lender may (but shall not be obligated to) take such action as Lender
may determine to be reasonably necessary to protect the rights of Borrower under
any or all of the Contracts and/or the General Intangibles. Should Lender, or
Lender’s designee, acquire the Property (whether pursuant to exercise of
Lender’s remedies hereunder or by transfer in lieu thereof), Lender may elect to
assume Borrower’s interests under any or all of the Contracts or General
Intangibles as Lender shall determine, and Borrower shall cause to be
terminated, without obligation to Lender or the successor owner of the Property,
such other Contracts and/or General Intangibles as Lender may direct.

 

1.25 Hazardous Waste and Other Substances.

 

(a) Borrower hereby represents and warrants to Lender that, as of the date
hereof, except as disclosed in writing to Lender: (i) to the best of Borrower’s
knowledge, information and belief, except as expressly set forth in the
environmental report prepared for Lender in connection with the Loan (the
“Environmental Report”), the Property is not in violation of any local, state or
federal law, rule or regulation pertaining to environmental regulation,
contamination or clean-up (collectively, “Environmental Laws”), including,
without limitation, the Comprehensive Environmental Response, Compensation and
Liability Act of 1980 (42 U.S.C. §9601 et seq. and 40 CFR §302.1 et seq.), the
Resource Conservation and Recovery Act of 1976 (42 U.S.C. §6901 et seq.), the
Federal Water Pollution Control Act (33 U.S.C. §1251 et seq. and 40 CFR § 116.1
et seq.), those relating to lead based paint, and the Hazardous Materials
Transportation Act (49 U.S.C. §1801 et seq.), and the regulations promulgated
pursuant to said laws, all as amended; (ii) to the best of Borrower’s knowledge,
information and belief, except as expressly set forth in the Environmental
Report, no hazardous, toxic or harmful substances, wastes, materials, pollutants
or contaminants (including, without limitation, asbestos, lead based paint,
polychlorinated biphenyls, petroleum products, flammable explosives, radioactive
materials, infectious substances or raw materials which include hazardous
constituents) or any other substances or materials which are included under or
regulated by Environmental Laws, or any molds, spores or fungus or other

 

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harmful microbial matter (collectively, “Hazardous Substances”) are located on
or have been handled, generated, stored, processed or disposed of on or released
or discharged from the Property (including underground contamination) except for
those substances used by Borrower or Tenants in the ordinary course of their
respective business and in compliance with all Environmental Laws; (iii) the
Property is not subject to any private or governmental lien or judicial or
administrative notice or action relating to Hazardous Substances; (iv) to the
best of Borrower’s knowledge, information and belief, except as expressly set
forth in the Environmental Report, there are no existing or closed underground
storage tanks or other underground storage receptacles for Hazardous Substances
on the Property; (v) Borrower has received no notice of, and to the best of
Borrower’s knowledge and belief, there exists no investigation, action,
proceeding or claim by any agency, authority or unit of government or by any
third party which could result in any liability, penalty, sanction or judgment
under any Environmental Laws with respect to any condition, use or operation of
the Property nor does Borrower know of any basis for such a claim; and (vi)
Borrower has received no notice of and, to the best of Borrower’s knowledge and
belief, there has been no claim by any party that any use, operation or
condition of the Property has caused any nuisance or any other liability or
adverse condition on any other property nor does Borrower know of any basis for
such a claim.

 

(b) Borrower shall keep or cause the Property to be kept free from Hazardous
Substances (except those substances used by Borrower and Tenants in the ordinary
course of their respective business and, in each case, in compliance with all
Environmental Laws) and in compliance with all Environmental Laws, shall not
install or use any underground storage tanks, shall expressly prohibit the use,
generation, handling, storage, production, processing and disposal of Hazardous
Substances by all Tenants and, without limiting the generality of the foregoing,
during the term of this Mortgage, shall not install in the Improvements or
permit to be installed in the Improvements asbestos-containing materials
(“ACMs”) or any substance containing ACMs. Borrower shall, if required under
applicable Environmental Laws, maintain all applicable Material Safety Data
Sheets with respect to the Property, and make same available to Lender or
Lender’s consultants upon reasonable notice.

 

(c) Borrower shall promptly notify Lender if Borrower shall become aware of the
possible existence of any Hazardous Substances on the Property or if Borrower
shall become aware that the Property is or may be in direct or indirect
violation of any Environmental Laws. Further, immediately upon receipt of the
same, Borrower shall deliver to Lender copies of any and all orders, notices,
permits, applications, reports, and other communications, documents and
instruments pertaining to the actual, alleged or potential presence or existence
of any Hazardous Substances at, on, about, under, within, near or in connection
with the Property. Borrower shall, promptly and when and as required by
Environmental Laws, at Borrower’s sole cost and expense, take all actions as
shall be necessary or advisable for the clean-up of any and all portions of the
Property or other affected property, including, without limitation, all
investigative, monitoring, removal, containment and remedial actions in
accordance with all applicable Environmental Laws (and in all events in a manner
satisfactory to Lender), and shall further pay or cause to be paid, at no
expense to Lender, all clean-up, administrative and enforcement costs of
applicable governmental agencies which may be asserted against the Property; in
the event Borrower fails to take such actions, (1) Lender may, but shall not be
obligated to, cause the Property or other affected property to be freed from any
Hazardous Substances or otherwise brought into conformance with Environmental
Laws and any and all costs and expenses incurred by Lender in connection
therewith, together with interest thereon at the Default Interest Rate from the
date incurred by Lender until actually paid by Borrower, shall be immediately
paid by Borrower on demand, and (2) Borrower hereby grants to Lender and its
agents and employees access to the Property and a license to remove any items
deemed by Lender to be Hazardous Substances and to do all things Lender shall
deem necessary to bring the Property in conformance with Environmental Laws.
Borrower covenants and agrees, at Borrower’s sole cost and expense, to
indemnify, defend (at trial and appellate levels, and with attorneys,
consultants and experts acceptable to Lender), and hold Lender harmless from and
against any and all liens, damages, losses,

 

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liabilities, obligations, settlement payments, penalties, assessments,
citations, directives, claims, litigation, demands, defenses, judgments, suits,
proceedings, costs, disbursements or expenses of any kind or of any nature
whatsoever (including, without limitation, reasonable attorneys’, consultants’
and experts’ fees and disbursements actually incurred in investigating,
defending, settling or prosecuting any claim, litigation or proceeding) which
may at any time be imposed upon, incurred by or asserted or awarded against
Lender or the Property, and arising directly or indirectly from or out of: (i)
the presence, release or threat of release of any Hazardous Substances on, in,
under or affecting all or any portion of the Property or any surrounding areas,
regardless of whether or not caused by or within the control of Borrower; (ii)
the violation of any Environmental Laws relating to or affecting the Property,
whether or not caused by or within the control of Borrower; (iii) the failure by
Borrower to comply fully with the terms and conditions of this Section 1.25;
(iv) the breach of any representation or warranty contained in this Section
1.25; or (v) the enforcement of this Section 1.25, including, without
limitation, the cost of assessment, containment and/or removal of any and all
Hazardous Substances from all or any portion of the Property or any surrounding
areas, the cost of any actions taken in response to the presence, release or
threat of release of any Hazardous Substances on, in, under or affecting any
portion of the Property or any surrounding areas to prevent or minimize such
release or threat of release so that it does not migrate or otherwise cause or
threaten danger to present or future public health, safety, welfare or the
environment, and costs incurred to comply with the Environmental Laws in
connection with all or any portion of the Property or any surrounding areas. The
indemnity set forth in this Section 1.25(c) shall also include any diminution in
the value of the security afforded by the Property or any future reduction in
the sales price of the Property by reason of any matter set forth in this
Section 1.25(c). Lender’s rights under this Section shall survive payment in
full of the Obligations and shall be in addition to all other rights of Lender
under this Mortgage, the Note and the other Loan Documents.

 

(d) Upon Lender’s request, at any time after the occurrence of an Event of
Default hereunder or at such other time as Lender has reasonable grounds to
believe that Hazardous Substances are or have been released, stored or disposed
of on or around the Property or that the Property may be in violation of the
Environmental Laws, Borrower shall provide, at Borrower’s sole cost and expense,
an inspection or audit of the Property prepared by a hydrogeologist or
environmental engineer or other appropriate consultant approved by Lender
indicating the presence or absence of Hazardous Substances on the Property or an
inspection or audit of the Improvements prepared by an engineering or consulting
firm approved by Lender indicating the presence or absence of friable asbestos
or substances containing asbestos on the Property. If Borrower fails to provide
such inspection or audit within thirty (30) days after such request, Lender may
order the same, and Borrower hereby grants to Lender and its employees and
agents access to the Property and a license to undertake such inspection or
audit. The cost of such inspection or audit, together with interest thereon at
the Default Interest Rate from the date incurred by Lender until actually paid
by Borrower, shall be immediately due and payable to Lender by Borrower on
demand.

 

(e) The obligations of Borrower under this Mortgage (including, without
limitation, this Section 1.25) with respect to Hazardous Substances shall not in
any way limit the obligations of any party under the Hazardous Substances
Indemnity

 

1.26 Indemnification; Subrogation.

 

(a) Borrower shall indemnify, defend and hold Lender harmless against: (i) any
and all claims for brokerage, leasing, finders or similar fees which may be made
relating to the Property or the Obligations, and (ii) any and all liability,
obligations, losses, damages, penalties, claims, actions, suits, costs and
expenses (including Lender’s reasonable attorneys’ fees, together with
reasonable appellate counsel fees, if any) of whatever kind or nature which may
be asserted against, imposed on or incurred by Lender in connection with the
Obligations, this Mortgage, the Property, or any part thereof, or the

 

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exercise by Lender of any rights or remedies granted to it under this Mortgage;
provided, however, that nothing herein shall be construed to obligate Borrower
to indemnify, defend and hold harmless Lender from and against any and all
liabilities, obligations, losses, damages, penalties, claims, actions, suits,
costs and expenses enacted against, imposed on or incurred by Lender by reason
of Lender’s willful misconduct or gross negligence.

 

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

 

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

 

1.27 Single-Purpose Entity Covenants. Borrower hereby represents, warrants and
covenants, as of the date hereof and until such time as the Obligations is paid
in full, that without, in each case, the prior written consent of Lender (which
may be withheld or conditioned by Lender in its sole and absolute discretion for
any reason or for no reason):

 

(a) The sole purpose of Borrower has been, is and will be, to acquire, own,
hold, maintain, and operate the Property, together with such other activities as
may be necessary or advisable in connection with the ownership of the Property.
Borrower has not engaged, and does not and shall not engage, in any business,
and it has and shall have no purpose, unrelated to the Property. Borrower has
not owned, does not own and shall not acquire, any real property or own assets
other than those related to the Property and/or otherwise in furtherance of the
limited purposes of Borrower.

 

(b) Neither Borrower, nor any general partner, manager or managing member (a
“Controlling Entity”) of Borrower, as applicable, shall have the authority to
perform any act in respect of Borrower in violation of any (a) applicable laws
or regulations or (b) any agreement between Borrower and Lender (including,
without limitation, the Loan Documents).

 

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(c) Borrower shall not:

 

(1) make any loans to the holder (directly or indirectly) of any equity
interests in Borrower (collectively, the “Equity Holders”), any Affiliate (as
defined below) of Borrower or of any Equity Holders;

 

(2) except as expressly permitted by the Lender in writing, sell, encumber
(except with respect to the Lender) or otherwise transfer or dispose of all or
substantially all of the properties of Borrower (a sale or disposition will be
deemed to be “all or substantially all of the properties of Borrower” if the
sale or disposition includes the Property or if the total value of the
properties sold or disposed of in such transaction and during the twelve months
preceding such transaction is sixty six and two thirds percent (66 2/3%) or more
in value of Borrower’s total assets as of the end of the most recently completed
fiscal year of Borrower);

 

(3) to the fullest extent permitted by law, dissolve, wind-up, or liquidate
Borrower;

 

(4) merge, consolidate or acquire all or substantially all of the assets of an
Affiliate of same or other person or entity;

 

(5) change the nature of the business conducted by Borrower; or

 

(6) except as permitted by the Lender in writing, amend, modify or otherwise
change the Organizational Documents (as defined below) of Borrower (which
approval, after a Secondary Market Transaction with respect to the Loan, may be
conditioned upon Lender’s receipt of confirmation from each of the applicable
Rating Agencies that such amendment, modification or change would not result in
the qualification, withdrawal or downgrade of any securities rating).

 

(d) Borrower shall not, and no Equity Holder or other person or entity on behalf
of Borrower shall, without the prior written affirmative vote of one hundred
percent (100%) of the members, partners or stockholders of Borrower: (1)
institute proceedings to be adjudicated bankrupt or insolvent; (2) consent to
the institution of bankruptcy or insolvency proceedings against it; (3) file a
petition seeking, or consenting to, reorganization or relief under any
applicable federal or state law relating to bankruptcy; (4) consent to the
appointment of a receiver, liquidator, assignee, trustee, sequestrator (or other
similar official) of Borrower or a substantial part of its property; (5) make
any assignment for the benefit of creditors; (6) admit in writing its inability
to pay its debts generally as they become due or declare or effect a moratorium
on its debts; or (7) take any action in furtherance of any such action ((1)
through (7) above, with respect to any individual or entity, collectively, a
“Bankruptcy Action”).

 

(e) Borrower shall have no indebtedness or incur any liability other than (1)
unsecured debts and liabilities for trade payables and accrued expenses incurred
in the ordinary course of its business of operating the Property, provided,
however, that such unsecured indebtedness or liabilities (y) are in amounts that
are normal and reasonable under the circumstances, but in no event to exceed
three percent (3%) of the original principal amount of the Loan and (z) are not
evidenced by a note and are paid when due, but in no event for more than sixty
(60) days from the date that such indebtedness or liabilities are incurred and
(2) the Obligations. No indebtedness other than the Loan shall be secured
(senior, subordinated or pari passu) by the Property.

 

(f) The following provisions shall apply only when Borrower is a limited
liability company or a partnership. A Bankruptcy Action by or against any
partner or member of Borrower, as applicable, shall not cause such partner or
member of Borrower, as applicable, to cease to be a partner or

 

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member of Borrower and upon the occurrence of a Bankruptcy Action, Borrower
shall continue without dissolution. Additionally, to the fullest extent
permitted by law, if any partner or member of Borrower, as applicable, ceases to
be a partner or member of Borrower, as applicable, such event shall not
terminate Borrower and Borrower shall continue without dissolution.

 

(g) Borrower shall at all times observe the applicable legal requirements for
the recognition of Borrower as a legal entity separate from any Equity Holders
or Affiliates of Borrower or of any Equity Holder, including, without
limitation, as follows:

 

(1) Borrower shall either (a) maintain its principal executive office separate
from that of any Affiliate of Borrower or of any Equity Holder and shall
conspicuously identify such office and numbers as its own, or (b) shall allocate
by written agreement fairly and reasonably any rent, overhead and expenses for
shared office space. Additionally, Borrower shall use its own separate
stationery, invoices and checks which reflects its name, address, telephone
number and facsimile number.

 

(2) Borrower shall maintain correct and complete financial statements, accounts,
books and records and other entity documents separate from those of any
Affiliate of Borrower or of any Equity Holder or any other person or entity.
Borrower shall prepare unaudited quarterly and annual financial statements, and
Borrower’s financial statements shall substantially comply with generally
accepted accounting principles.

 

(3) Borrower shall maintain its own separate bank accounts, payroll and correct,
complete and separate books of account.

 

(4) To the extent Borrower is required by applicable law to file tax returns,
Borrower shall file or cause to be filed its own separate tax returns.

 

(5) Borrower shall hold itself out to the public (including any of its
Affiliates’ creditors) under Borrower’s own name and as a separate and distinct
entity and not as a department, division or otherwise of any Affiliate of
Borrower or of any Equity Holder.

 

(6) Borrower shall observe all customary formalities regarding the existence of
Borrower, including holding meetings and maintaining current and accurate minute
books separate from those of any Affiliate of Borrower or of any Equity Holder.

 

(7) Borrower shall hold title to its assets in its own name and act solely in
its own name and through its own duly authorized officers and agents. No
Affiliate of Borrower or of any Equity Holder shall be appointed or act as agent
of Borrower, other than as a property manager or leasing agent with respect to
the Property.

 

(8) Investments shall be made in the name of Borrower directly by Borrower or on
its behalf by brokers engaged and paid by Borrower.

 

(9) Except as required by Lender, Borrower shall not guarantee, pledge or assume
or hold itself out or permit itself to be held out as having guaranteed, pledged
or assumed any liabilities or obligations of any Equity Holder or any Affiliate
of Borrower, nor shall it make any loan, except as permitted in the Loan
Documents.

 

(10) Borrower is and will be solvent.

 

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(11) Assets of Borrower shall be separately identified, maintained and
segregated. Borrower’s assets shall at all times be held by or on behalf of
Borrower and if held on behalf of Borrower by another entity, shall at all times
be kept identifiable (in accordance with customary usages) as assets owned by
Borrower. This restriction requires, among other things, that (i) funds of
Borrower shall be deposited or invested in Borrower’s name, (ii) funds of
Borrower shall not be commingled with the funds of any Affiliate of Borrower or
of any Equity Holder, (iii) Borrower shall maintain all accounts in its own name
and with its own tax identification number, separate from those of any Affiliate
of Borrower or of any Equity Holder, and (iv) funds of Borrower shall be used
only for the business of Borrower.

 

(12) Borrower shall maintain its assets in such a manner that it is not costly
or difficult to segregate, ascertain or identify its individual assets from
those of any Affiliate of Borrower or of any Equity Holder.

 

(13) Borrower shall pay or cause to be paid its own liabilities and expenses of
any kind, including but not limited to salaries of its employees, only out of
its own separate funds and assets.

 

(14) Borrower shall at all times be adequately capitalized to engage in the
transactions contemplated at its formation.

 

(15) Borrower shall not do any act which would make it impossible to carry on
the ordinary business of Borrower.

 

(16) All data and records (including computer records) used by Borrower or any
Affiliate of Borrower in the collection and administration of any loan shall
reflect Borrower’s ownership interest therein.

 

(17) No funds of Borrower shall be invested in securities issued by, nor shall
Borrower acquire the indebtedness or obligation of, an Affiliate of Borrower or
of an Equity Holder.

 

(18) Borrower shall maintain an arm’s length relationship with each of its
Affiliates and may enter into contracts or transact business with its Affiliates
only on commercially reasonable terms that are no less favorable to Borrower
than is obtainable in the market from a person or entity that is not an
Affiliate of Borrower or of any Equity Holder.

 

(19) Borrower shall correct any misunderstanding that is known by Borrower
regarding its name or separate identity.

 

(h) Any indemnification obligation of Borrower to the holder of any equity
interest in Borrower shall (1) be fully subordinated to the Loan and (2) not
constitute a claim against Borrower or its assets until such time as the Loan
has been indefeasibly paid in accordance with its terms and otherwise has been
fully discharged (or has been defeased in accordance with the Note).

 

(i) The following shall only apply if and when Borrower is a limited
partnership. Each general partner of Borrower may not be an individual. Each
general partner of Borrower shall at all times have as its sole purpose to act
as the general partner of Borrower, and shall be engaged in no other business or
have any other purpose. Additionally, any additional or substitute general
partner of Borrower shall have organizational documents that (1) include
covenants substantially similar to the foregoing provisions of this Section
1.27, inclusive of all single purpose/bankruptcy remote provisions, and (2) are
acceptable to the Lender.

 

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(j) Borrower shall cause the Organizational Documents of Borrower to include, at
all times, requirements substantially similar to the foregoing, in a manner
satisfactory to Lender. At any time when Borrower is a limited partnership, the
Organizational Documents of the general partner shall include provisions
substantially similar to those set forth in Section 1.27(i) above.

 

(k) As used in this Mortgage:

 

(1) “Affiliate” means any person or entity which directly or indirectly through
one or more intermediaries controls, is controlled by or is under common control
with a specified person or entity. For purposes of the definition of
“Affiliate”, the terms “control”, “controlled”, or “controlling” with respect to
a specified person or entity shall include, without limitation, (i) the
ownership, control or power to vote ten percent (10%) or more of (x) the
outstanding shares of any class of voting securities or (y) beneficial
interests, of any such person or entity, as the case may be, directly or
indirectly, or acting through one or more persons or entities, (ii) the control
in any manner over the general partner(s) or the election of more than one
director or trustee (or persons exercising similar functions) of such person or
entity, or (iii) the power to exercise, directly or indirectly, control over the
management or policies of such person or entity.

 

(2) “Constituent Entity” shall mean, with respect to any entity, (i) with
respect to any limited partnership, (x) any general partner of such limited
partnership and (y) any limited partner of such partnership which owns (or is
owned by any person or entity owning, holding or controlling, directly or
indirectly) the right to receive 50% or more of the income, distributable funds
or losses of such partnership; (ii) with respect to any general partnership or
joint venture, any partner or venturer in such general partnership or joint
venturer; (iii) with respect to any corporation, (x) any officer or director of
such corporation, and (y) any person or entity which owns or controls 50% or
more of any class of stock of such corporation; and (iv) with respect to any
limited liability company, (x) any manager of such limited liability company,
(y) any managing member of such limited liability company, or the sole member of
any limited liability company having only one (1) member, and (z) any
non-managing member of such limited liability company which owns (or is owned by
any person or entity owning, holding or controlling, directly or indirectly) the
right to receive 50% or more of the income, distributable funds or losses of
such limited liability company. For all purposes of this Mortgage unless
expressly noted, “control” and “controlled by” shall have the meanings assigned
to them in Rule 405 under the Securities Act of 1933, as amended.

 

(3) “Organizational Documents” shall mean, with respect to any entity, the
documents customarily used to form an entity and provide for its governance, as
the same may be amended from time to time, including, without limitation, (a)
with respect to a corporation, the articles of incorporation or certificate of
incorporation or charter, and the by-laws; (b) with respect to a limited
liability company, the articles of organization and the operating agreement; (c)
with respect to a limited partnership, the certificate of limited partnership
and the limited partnership agreement; and (d) with respect to a general
partnership, the agreement of partnership.

 

1.28 Reserve Accounts and Disbursement Requests. At Lender’s option, as
additional security for the indebtedness secured hereby, Borrower shall
establish and maintain the reserve accounts required by this Section 1.28,
subject to the security interest therein as more fully set forth in Section 1.19
hereof.

 

(a) Replacement Reserve. Borrower agrees that it will perform all repairs and
replacements necessary to maintain the Property in good working order, in
accordance with its condition as of the date hereof. Simultaneously herewith,
and on each Payment Date until the Note is paid in full, Borrower shall pay to
Lender the sum of $1,808.00 to be held in a reserve fund (the “Replacement

 

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Reserve”) subject to this Mortgage, for payment of certain repairs and
replacements at the Property which, under generally accepted accounting
principles, are categorized as capital expenses and not as operating expenses
(the “Repairs”). Borrower shall perform all Repairs in a good and workmanlike
manner, in accordance with all applicable codes and regulations, and each case
in a manner satisfactory to Lender and as necessary to maintain the Property in
good condition and in compliance with all applicable laws, ordinances, rules and
regulations. So long as no Default shall exist and be continuing, Lender shall,
to the extent funds are available for such purpose in the Replacement Reserve,
disburse to Borrower the amount paid or incurred by Borrower in performing the
Repairs as required above upon satisfaction of the requirements set forth in
Section 1.29 of this Mortgage. Lender may, at Borrower’s expense, make or cause
to be made an inspection of the Property to determine the need, as determined by
Lender in its reasonable judgment, for further Repairs of the Property. In the
event that such inspection reveals that further Repairs are required, Lender
shall provide Borrower with a written description of the required Repairs, and
Borrower shall complete such Repairs to Lender’s reasonable satisfaction within
ninety (90) days after Lender’s notice, or such later date as may be approved by
Lender in its discretion.

 

(b) Common Charges Reserve. Borrower agrees that it will perform all obligations
necessary to maintain the Unit in good standing with the Condominium
Association, in accordance with the Declaration and the rules promulgated
thereunder. Simultaneously herewith, as additional security for the Obligations,
Borrower shall pay to Lender an amount equal to six (6) times the current amount
of the monthly common charges and assessments (“Common Charges”) payable with
respect to the Unit, to be held in a reserve fund (the “Common Charges Reserve”)
subject to this Mortgage. Borrower shall increase the amount in the Common
Charges Reserve from time to time as the Common Charges are increased, so that
the balance of the Common Charges Reserve at all times is not less than six (6)
times the then-current monthly Common Charges. So long as Borrower maintains the
Common Charges Reserve, Borrower shall not be required to make deposits into the
Impound Account on account of Common Charges.

 

1.29 Disbursements from the Property Reserve Accounts. So long as no Event of
Default shall have occurred and be continuing under this Mortgage, all sums in
each of the Replacement Reserve (the foregoing, collectively, the “Property
Reserve Accounts”) shall be held by Lender in the respective Property Reserve
Account as set forth above for the purposes set forth in Section 1.28. So long
as no Event of Default has occurred and is continuing, Lender shall disburse to
Borrower, from the appropriate Property Reserve Account for the purposes set
forth in Section 1.28, an amount equal to the actual expenses incurred to date
by Borrower, less any prior disbursements to Borrower from any of the Property
Reserve Account for such expenditure, but only to the extent that such expense
is one for which, pursuant to Section 1.28, the proceeds of a Property Reserve
Account may be disbursed. Disbursements shall be made to Borrower within ten
(10) days following Lender’s receipt of each of the following:

 

(a) a written request from Borrower for such disbursement, accompanied by a
certification by Borrower, in the form therefor then utilized by Lender or
Lender’s servicing agent;

 

(b) copies of invoices, receipts or other evidence satisfactory to Lender
verifying payment of the costs and expenses for which Borrower is requesting
such disbursement;

 

(c) for disbursement requests in connection with a single project, or group of
related projects, for which Borrower is seeking reimbursement of $10,000 or
more, affidavits, lien waivers or other evidence reasonably satisfactory to
Lender showing that all materialmen, laborers, contractors, suppliers and other
parties who have or might claim statutory or common law liens, or who have
furnished labor, materials or supplies to or in connection with the Property,
have been paid all amounts due;

 

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(d) for disbursement requests in connection with a single project, or group of
related projects, for which Borrower is seeking reimbursement of $20,000 or
more, a certification from an inspecting architect or other third party
acceptable to Lender, verifying that the any work for which Borrower is
requesting a disbursement has been properly completed and that the cost of such
work bears a reasonable relationship to the costs incurred therefor;

 

(e) a copy of the certificate of occupancy for the Improvements if, as a result
of any work undertaken by Borrower, it was necessary to receive an amendment to
the existing certificate of occupancy (or similar instrument) issued with
respect to the Improvements, or to obtain a new certificate of occupancy for the
Improvements, or a certification of Borrower that no such amended or new
certificate of occupancy is required; and

 

(f) payment of an administrative fee of $150.00 per request.

 

Lender shall not be required to make an advance from each Property Reserve
Account more frequently than once in any thirty (30) day period. In making any
disbursement from a Property Reserve Account, Lender shall be entitled to rely
on the disbursement request from Borrower without any inquiry into the accuracy,
validity or contestability of any amount set forth therein. The Reserves shall
not, unless otherwise explicitly required by applicable law, be or be deemed to
be escrow or trust funds. Lender may, at its discretion, hold the Reserves
either in a separate account or commingled by Lender with any other funds in the
possession or control of Lender. The Reserves are solely for the protection of
Lender, and entail no responsibility on Lender’s part beyond making
disbursements upon strict satisfaction of the requirements of Section 1.28 and
this Section 1.29 and beyond the allowing of due credit for the sums actually
received. To the extent that any funds in any of the Reserves are invested in
any investment suitable for the investment of escrows and reserves established
under mortgage loans included in a Secondary Market Transaction in which some or
all of the securities issued thereby are rated “AAA” (or the equivalent rating)
by one or more Rating Agencies, as the standards therefor are established from
time to time (or if Lender reasonably determines that no such standards exist,
such investments as are otherwise acceptable to Lender, in the exercise of
prudent lending standards), Borrower shall bear the risk of loss of such
investments. In the event that the amounts on deposit in any of the Property
Reserve Account are insufficient to reimburse Borrower for amounts otherwise
properly requested, Lender shall not be obligated or authorized to transfer
funds from other Reserves, and Borrower shall pay the amount of such deficiency.
Upon assignment of this Mortgage by Lender, any funds in the Reserves shall be
turned over to the assignee, and any responsibility of the assignor with respect
thereto shall terminate.

 

1.30 Interest-Bearing Reserves. Lender shall cause funds in the Replacement
Reserve and the Letter of Credit Reserve (as defined in that certain Letter of
Credit Agreement dated as of the date hereof between Borrower and Lender)
(referred to in this Section 1.30 as the “Interest-Bearing Reserve”) to be
deposited into an interest bearing account of the type customarily maintained by
Lender or its servicing agent for the investment of similar reserves, which
account may not yield the highest interest rate then available. Interest payable
on such amounts shall be computed based on the daily outstanding balance in the
Interest-Bearing Reserve. Such interest shall be calculated on a simple,
non-compounded interest basis based solely on contributions made to the
Interest-Bearing Reserve by Borrower. All interest earned on amounts contributed
to the Interest-Bearing Reserve shall be retained by Lender and added to the
balance in such Interest-Bearing Reserve and shall be disbursed for payment of
the items for which other funds in such Interest-Bearing Reserve are to be
disbursed. Borrower acknowledges that all Reserves other than the
Interest-Bearing Reserves shall not accrue or bear interest for the benefit of
Borrower, and no interest shall be payable thereon by Lender.

 

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1.31 Condominium Provisions.

 

(a) Borrower shall comply with all terms, conditions and covenants of the
Declaration and all by-laws, rules and regulations promulgated or otherwise
existing with respect to the Condominium (collectively, the “Rules”) as those
are in force and effect.

 

(b) Borrower shall not, without Lender’s prior written consent, modify, amend,
supplement or in any other manner change the terms, conditions and covenants of
the Declaration or the Rules so as to affect, alter or impair the lien of this
Mortgage or the security therefor, or in a manner which materially increases the
obligations or diminishes the rights of Lender, nor may Borrower waive or
consent to the waiver of any enforcement of the provisions thereof with respect
to another unit owner.

 

(c) Borrower shall promptly deliver to Lender a true and full copy of each and
every notice of default or notice requiring the performance of any act by
Borrower received by Borrower with respect to any obligation of Borrower under
the provisions of the Declaration or the Rules.

 

(d) Borrower shall not, except with the prior written consent of Lender (i)
institute any action or proceeding for partition of the property of which the
Premises are a part; (ii) vote for or consent to any modification of, amendment
to or relaxation in the enforcement of any provision of the Declaration or the
Rules which affects, alters or impairs the lien of this Mortgage or the security
therefor, or which materially increases the obligations or diminishes the rights
of Lender; (iii) in the event of damage to or destruction of the Unit or any of
them, vote in opposition to a motion to repair, restore, or rebuild.

 

(e) In each and every case in which, under the provisions of the Declaration or
the Rules, the consent or the vote of the owners of Units is required, Borrower
shall not vote or give such consent so as to impair the lien of this Mortgage or
the security therefor without, in each and every case, the prior written consent
of Lender.

 

(f) Borrower shall promptly pay, as the same become due and payable, all common
charges or other payments for maintenance and reserve funds (“Common Charges”)
and all assessments (“Assessments”) as required by the Declaration or the Rules
or any resolutions adopted pursuant thereto, and shall promptly upon demand
exhibit to Lender receipts for all such payments. In the event that Borrower
fails to make such payments as the same become due and payable, Lender may from
time to time at its option, but without any obligation to do so and without
notice to or demand upon Borrower, make such payments, and the same shall be
added to the debt secured hereby, and shall bear interest until repaid at the
Default Interest Rate (as defined in the Note); provided, however, that the
failure of the Borrower to make any such payment to the maintenance fund or to
exhibit such receipts shall, at the election of Lender constitute a breach of
covenant under this Mortgage entitling Lender to accelerate the indebtedness
secured hereby.

 

(g) In the event of the failure of Borrower to perform any of its obligations
relating to the Real Estate under the Declaration or Rules within a period of
ten (10) business days (unless the Association requires sooner performance)
after notice from the Association or from Lender, or in the case of any such
default which cannot with due diligence be cured or remedied within such period,
if Borrower fails to proceed promptly after such notice to cure or remedy the
same with due diligence, then in any such case, Lender may from time to time at
its option, but without any obligation so to do, cure or remedy any such default
of Borrower (Borrower hereby authorizing Lender to enter upon the Real Estate as
may be necessary for such purposes), and all sums expended by Lender for such
purposes, including reasonable counsel fees, shall be added to the debt secured
hereby, shall become due and payable and shall bear interest until repaid at the
Default Interest Rate (as defined in the Note) and shall be added to the
indebtedness secured hereby; provided, however, that the failure of Borrower to
keep or perform any such notice, or, in the case in which such cannot be kept or
performed within such ten (10) day period,

 

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provided Borrower has commenced to cure such default and is diligently pursuing
same to completion, such additional time as is needed to so complete, shall, at
the election of Lender, constitute a breach of covenant under this Mortgage
entitling Lender to accelerate the indebtedness secured hereby.

 

(h) Upon the occurrence of an Event of Default hereunder, Lender may by notice
to Borrower require the resignation of Borrower’s designees to the Association,
if any, and the appointment in lieu thereof of Lender’s designees.

 

(i) Borrower shall, at the option of Lender exercisable at any time after the
occurrence of an Event of Default hereunder, pay to Lender at the time of each
payment of an installment of interest or principal under the Note, an additional
amount sufficient to discharge the obligations under clause (f) when they become
due. The determination of the amount so payable and of the fractional part
thereof to be deposited with Lender in an Impound Account. Nothing herein
contained shall be deemed to affect any right or remedy or Lender under any
provisions of this Mortgage or of any statute or rule of law to pay any such
amount and to add the amount so paid, together with interest at the Default
Interest Rate, (as defined in the Note) to the indebtedness hereby secured.

 

1.32 Completion of Initial Improvements. All of the following conditions
(collectively, the “Completion Conditions”) shall be satisfied, and Borrower
shall deliver to Lender evidence acceptable to Lender that same have been
satisfied, on or before October 31, 2004 (as same may be extended pursuant to
Section 1.33 below, the “Completion Date”):

 

(a) all work in connection with the Initial Improvements (as defined in the
Primary Lease) shall have been substantially completed in accordance with all
applicable plans and specifications and in compliance with all applicable laws,
and Lender shall have received written confirmation from Lender’s Consultant (as
defined below) of same.;

 

(b) a permanent certificate of occupancy shall have been issued with respect to
100% of the premises demised to Primary Tenant pursuant to the Primary Lease
(the “Primary Leased Premises”);

 

(c) all tenant improvement allowances due and owing by Borrower to the tenant
under the Primary Lease shall have been paid by Borrower;

 

(d) Primary Tenant shall be in occupancy and conducting business in all or
substantially all of the Primary Leased Premises;

 

(e) Primary Tenant shall be paying rent under the Primary Lease;

 

(f) Primary Tenant shall provide Lender with an estoppel confirming the
foregoing matters and otherwise reasonably acceptable to Lender;

 

(g) Borrower shall deliver to Lender an updated as-built survey, in form and
substance reasonably acceptable to Lender, for the Property;

 

(h) all contractors performing work or providing services in connection with the
construction of the Initial Improvements shall have been paid in full and
Borrower shall provide Lender with copies of final lien waivers from all such
contractors whose total contract price in connection with such work is $10,000
or more; and

 

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(i) no default shall have occurred and be continuing under the Primary Lease.

 

Upon the substantial completion of the Initial Improvements, Borrower shall
notify Lender of same and request that an engineer or other professional
consultant selected by Lender (“Lender’s Consultant”) inspect the Initial
Improvements to confirm that the Initial Improvements have been substantially
completed in accordance with all applicable plans and specifications and in
compliance with all applicable laws (the “Final Inspection”). Borrower shall pay
all costs incurred by Lender (including, without limitation, the reasonable fees
of Lender’s Consultant) in connection with the Final Inspection. In addition to
the Final Inspection, Lender’s Consultant, on behalf of Lender, may make
periodic inspections (at Borrower’s reasonable expense) of the Property to
evaluate the progress of the construction of the Initial Improvements; provided
that, so long as no Event of Default has occurred, Borrower shall only be
required to reimburse Lender for the costs incurred by Lender in connection with
up to one (1) such periodic inspection in any calendar month (provided that in
all events, Borrower shall pay all of Lender’s costs in connection with the
Final Inspection).

 

Other than as expressly set forth in the preceding paragraph, all costs incurred
by Lender in connection with this Section 1.32 (including, without limitation,
reasonable attorneys’ fees) shall be paid by Borrower to Lender upon demand
therefor by Lender to Borrower.

 

1.33 Extension of Completion Date. Borrower may extend the Completion Date for
up to two (3) additional periods of one (1) month each (each such period being
an “Extension Term”), provided that on or before the then-current Completion
Date (prior to the extension of same then being requested), Borrower submits to
Lender a written notice (an “Extension Notice”) of its election to so extend the
Completion Date together with a payment to Lender of a fee in an amount equal to
one-third of one percent (0.33%) of the original principal amount of the Loan;
and (2) no Default or Event of Default shall exist under the Note, this Mortgage
or any of the other Loan Documents, as of either the date on which the Extension
Notice is submitted to Lender or the date on which the extension is to become
effective. Notwithstanding anything herein to the contrary, in no event shall
the Completion Date be extended pursuant to this Section 1.33 and no Extension
Notice shall be effective unless as of the date on which the Extension Notice is
submitted to Lender and the date on which the extension is to become effective,
Lender determines (in its reasonable discretion) that the parties responsible
under the Primary Lease for the construction of the Initial Improvements are
diligently pursuing the completion of same and Borrower is diligently pursuing
the satisfaction of all of the Completion Conditions.

 

ARTICLE II

EVENTS OF DEFAULT

 

2.1 Events of Default. The occurrence of any of the following shall be an “Event
of Default” hereunder:

 

(a) Borrower fails to punctually perform any covenant, agreement, obligation,
term or condition of the Note, this Mortgage or any other Loan Document which
requires payment of any money to Lender, and (1) in the case of any Monthly
Payment Amount due under the Note or any payment to any Reserve required under
this Mortgage, such failure continues beyond the applicable grace period set
forth in the Note with respect to the Monthly Payment Amount, (2) in the case of
any other amount due from Borrower to Lender, such failure continues for the
applicable period set forth therein or, if no period is set forth, for seven (7)
days after such payment becomes due or, if due on demand, is demanded.

 

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(b) Borrower (i) fails to provide insurance as required by Section 1.4 hereof or
(ii) fails to perform any covenant, agreement, obligation, term or condition set
forth in Section 1.5 hereof .

 

(c) Borrower fails to perform any other covenant, agreement, obligation, term or
condition set forth herein other than those otherwise described in this Section
2.1 and, to the extent such failure or default is susceptible of being cured,
the continuance of such failure or default for thirty (30) days after written
notice thereof from Lender to Borrower; provided, however, that if such default
is susceptible of cure but such cure cannot be accomplished with reasonable
diligence within said period of time, and if Borrower commences to cure such
default promptly after receipt of notice thereof from Lender, and thereafter
prosecutes the curing of such default with reasonable diligence, such period of
time shall be extended for such period of time as may be necessary to cure such
default with reasonable diligence, but not to exceed an additional sixty (60)
days.

 

(d) Any representation or warranty made herein, in or in connection with the
Loan Application or any commitment relating to the Loan, or in any of the other
Loan Documents to Lender, by Borrower, by any Indemnitor or by any Constituent
Entity of Borrower or any Indemnitor, is determined by Lender to have been false
or misleading in any material respect at the time made.

 

(e) A Transfer, except as expressly permitted by Section 1.11 hereof.

 

(f) A default occurs under any of the other Loan Documents which has not been
cured within any applicable grace or cure period therein provided.

 

(g) Borrower, any Indemnitor, any Constituent Entity of Borrower or any
Indemnitor or Primary Tenant or any guarantor of the Primary Lease, becomes
insolvent, or shall make a transfer in fraud of creditors, or shall make an
assignment for the benefit of creditors, shall file a petition in bankruptcy,
shall voluntarily be adjudicated insolvent or bankrupt or shall admit in writing
the inability to pay debts as they mature, shall petition or apply to any
tribunal for or shall consent to or shall not contest the appointment of a
receiver, trustee, custodian or similar officer for Borrower, any Indemnitor,
any such Constituent Entity, Primary Tenant or any such guarantor of the Primary
Lease, or for a substantial part of the assets of Borrower, any such Indemnitor,
any such Constituent Entity, Primary Tenant or any such guarantor of the Primary
Lease, or shall commence any case, proceeding or other action under any
bankruptcy, reorganization, arrangement, readjustment or debt, dissolution or
liquidation law or statute of any jurisdiction, whether now or hereafter in
effect.

 

(h) A petition is filed or any case, proceeding or other action is commenced
against Borrower, against any Indemnitor, against any Constituent Entity of
Borrower or any Indemnitor or against Primary Tenant or any guarantor of the
Primary Lease, seeking to have an order for relief entered against it as debtor
or seeking reorganization, arrangement, adjustment, liquidation, dissolution or
composition of it or its debts or other relief under any law relating to
bankruptcy, insolvency, arrangement, reorganization, receivership or other
debtor relief under any law or statute of any jurisdiction whether now or
hereafter in effect or a court of competent jurisdiction enters an order for
relief against Borrower, against any Indemnitor, against any Constituent Entity
of Borrower or any Indemnitor or against Primary Tenant or any guarantor of the
Primary Lease, as debtor, or an order, judgment or decree is entered appointing,
with or without the consent of Borrower, of any Indemnitor or of any Constituent
Entity of Borrower or any Indemnitor or of Primary Tenant or any guarantor of
the Primary Lease, a receiver, trustee, custodian or similar officer for
Borrower, for any such Indemnitor or for any such Constituent Entity or for
Primary Tenant or any guarantor of the Primary Lease, or for any substantial
part of any of the properties of Borrower, any such Indemnitor, any such
Constituent Entity or Primary Tenant or any guarantor of the Primary Lease, and
if any such event shall occur, such petition, case, proceeding, action, order,
judgment or decree shall not be dismissed within sixty (60) days after being
commenced.

 

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(i) The Property or any part thereof shall be taken on execution or other
process of law (other than by eminent domain) in any action against Borrower.

 

(j) Borrower abandons all or a portion (other than a de minimis portion) of the
Property.

 

(k) The holder of any lien or security interest on the Property (without
implying the consent of Lender to the existence or creation of any such lien or
security interest), whether superior or subordinate to this Mortgage or any of
the other Loan Documents, declares a default and such default is not cured
within any applicable grace or cure period set forth in the applicable document
or such holder institutes foreclosure or other proceedings for the enforcement
of its remedies thereunder.

 

(l) The Property, or any part thereof, is subjected to actual or threatened
waste or to removal, demolition or material alteration so that the value of the
Property is materially diminished thereby, and Lender determines that it is not
adequately protected from any loss, damage or risk associated therewith.

 

(m) Any dissolution, termination, partial or complete liquidation, merger or
consolidation of Borrower, any Indemnitor or any Constituent Entity of Borrower
or any Indemnitor, without the prior written consent of Lender.

 

(n) If Borrower shall fail to perform any of its obligations with respect to the
Association, the Declaration, the Rules or the Condominium as set forth in
Section 1.31 or if for any reason all or any portion of the land subject to the
Declaration is withdrawn from condominium ownership; or if by reason of damage
or destruction of all or any portion of the Improvements the Association or the
owners of the Condominium units do not duly and promptly resolve to proceed with
the repair or restoration of any such damage or destruction; or if by reason of
the failure of Borrower to perform any act, as for example notification to the
Association under the Declaration or the Rules, Lender shall not be entitled to
the protective provisions under the Declaration or the Rules.

 

(o) The Completion Conditions have not been satisfied on or before the
Completion Date.

 

ARTICLE III

REMEDIES

 

3.1 Remedies Available. If there shall occur an Event of Default under this
Mortgage, then the Property shall be subject to sale and this Mortgage shall be
subject to foreclosure, all as provided by law, and Lender may, at its option
and by or through a trustee, nominee, assignee or otherwise, to the fullest
extent permitted by law, exercise any or all of the following rights, remedies
and recourses, either successively or concurrently:

 

(a) Acceleration. Accelerate the maturity date of the Note and declare any or
all of the Obligations to be immediately due and payable without any
presentment, demand, protest, notice, or action of any kind whatever (each of
which is hereby expressly waived by Borrower), whereupon the same shall become
immediately due and payable. Upon any such acceleration, payment of such
accelerated amount shall constitute a prepayment of the principal balance of the
Note and any applicable prepayment fee provided for in the Note shall then be
immediately due and payable.

 

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(b) Entry on the Property. Either in person or by agent, with or without
bringing any action or proceeding, or by a receiver appointed by a court and
without regard to the adequacy of its security, enter upon and take possession
of the Property, or any part thereof, without force or with such force as is
permitted by law and without notice or process or with such notice or process as
is required by law unless such notice and process is waivable, in which case
Borrower hereby waives such notice and process, and do any and all acts and
perform any and all work which may be desirable or necessary in Lender’s
judgment to complete any unfinished construction on the Real Estate (including,
without limitation, the Initial Improvements), to preserve the value,
marketability or rentability of the Property, to increase the income therefrom,
to manage and operate the Property or to protect the security hereof and all
sums expended by Lender therefor, together with interest thereon at the Default
Interest Rate, shall be immediately due and payable to Lender by Borrower on
demand.

 

(c) Collect Rents and Profits. With or without taking possession of the
Property, sue or otherwise collect the Rents and Profits, including those past
due and unpaid.

 

(d) Appointment of Receiver. Upon, or at any time prior to or after, initiating
the exercise of any power of sale, instituting any judicial foreclosure or
instituting any other foreclosure of the liens and security interests provided
for herein or any other legal proceedings hereunder, make application to a court
of competent jurisdiction for appointment of a receiver for all or any part of
the Property, as a matter of strict right and without notice to Borrower and
without regard to the adequacy of the Property for the repayment of the
Obligations or the solvency of Borrower or any person or persons liable for the
payment of the Obligations, and Borrower does hereby irrevocably consent to such
appointment, waives any and all notices of and defenses to such appointment and
agrees not to oppose any application therefor by Lender, but nothing herein is
to be construed to deprive Lender of any other right, remedy or privilege Lender
may now have under the law to have a receiver appointed, provided, however,
that, the appointment of such receiver, trustee or other appointee by virtue of
any court order, statute or regulation shall not impair or in any manner
prejudice the rights of Lender to receive payment of the Rents and Profits
pursuant to other terms and provisions hereof. Any such receiver shall have all
of the usual powers and duties of receivers in similar cases, including, without
limitation, the full power to hold, develop, rent, lease, manage, maintain,
operate and otherwise use or permit the use of the Property upon such terms and
conditions as said receiver may deem to be prudent and reasonable under the
circumstances as more fully set forth in Section 3.3 below. Such receivership
shall, at the option of Lender, continue until full payment of all of the
Obligations or until title to the Property shall have passed by foreclosure sale
under this Mortgage or deed in lieu of foreclosure.

 

(e) Foreclosure. Immediately commence an action to foreclose this Mortgage or to
specifically enforce its provisions or any of the Obligations pursuant to the
statutes in such case made and provided and sell the Property or cause the
Property to be sold in accordance with the requirements and procedures provided
by said statutes in a single parcel or in several parcels at the option of
Lender.

 

(1) In the event foreclosure proceedings are filed by Lender, all expenses
incident to such proceeding, including, but not limited to, attorneys’ fees and
costs, shall be paid by Borrower and secured by this Mortgage and by all of the
other Loan Documents securing all or any part of the indebtedness evidenced by
the Note. The Obligations and all other obligations secured by this Mortgage,
including, without limitation, interest at the Default Interest Rate (as defined
in the Note), any prepayment charge, fee or premium required to be paid under
the Note in order to prepay principal (to the extent permitted by applicable
law), reasonable attorneys’ fees and any other amounts due and unpaid to Lender
under the Loan Documents, may be bid by Lender in the event of a foreclosure
sale hereunder. In the event of a judicial sale pursuant to a foreclosure
decree, it is understood and agreed that Lender or its assigns may become the
purchaser of the Property or any part thereof.

 

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(2) Lender may, by following the procedures and satisfying the requirements
prescribed by applicable law, foreclose on only a portion of the Property and,
in such event, said foreclosure shall not affect the lien of this Mortgage on
the remaining portion of the Property foreclosed.

 

(f) Rights under the Uniform Commercial Code. Exercise any or all of the
remedies of a secured party under the Uniform Commercial Code against the UCC
Collateral, either separately or together, and in any order, without in any way
affecting the availability of Lender’s other remedies. Furthermore, to the
extent permitted by law, in conjunction within, addition to or in substitution
for the rights and remedies available to Lender pursuant to any applicable
Uniform Commercial Code: in the event of a foreclosure sale with respect to the
portions of the Property which are not UCC Collateral, the Property (including
the UCC Collateral) may, at the option of Lender, be sold as a whole or in
parts, as determined by Lender in its sole discretion; and (2) it shall not be
necessary that (x) Lender take possession of the UCC Collateral, or any part
thereof, prior to the time that any sale pursuant to the provisions of this
Section is conducted, or (y) the UCC Collateral, or any part thereof, be present
at the location of such sale; and (3) Lender may appoint or delegate any one or
more persons as agent to perform any act or acts necessary or incident to any
sale held by Lender, including the sending of notices and the conduct of the
sale, but in the name and on behalf of Lender.

 

(g) Other. Exercise any other right or remedy available hereunder, under any of
the other Loan Documents or at law or in equity.

 

3.2 Application of Proceeds. To the fullest extent permitted by law, the
proceeds of any sale under this Mortgage shall be applied to the extent funds
are so available to the following items in such order as Lender in its
discretion may determine:

 

(a) To payment of the costs, expenses and fees of taking possession of the
Property, and of holding, operating, maintaining, using, leasing, repairing,
improving, marketing and selling the same and of otherwise enforcing Lender’s
right and remedies hereunder and under the other Loan Documents, including, but
not limited to receivers’ fees, court costs, attorneys’, accountants’,
appraisers’, managers’ and other professional fees, title charges and transfer
taxes.

 

(b) To payment of all sums expended by Lender under the terms of any of the Loan
Documents and not yet repaid, together with interest on such sums at the Default
Interest Rate.

 

(c) To payment of the Obligations and all other obligations secured by this
Mortgage, including, without limitation, interest at the Default Interest Rate
and, to the extent permitted by applicable law, any prepayment fee, charge or
premium required to be paid under the Note in order to prepay principal, in any
order that Lender chooses in its sole discretion.

 

The remainder, if any, of such funds shall be disbursed to Borrower or to the
person or persons legally entitled thereto.

 

3.3 Right and Authority of Receiver or Lender in the Event of Default; Power of
Attorney. Upon the occurrence of an Event of Default hereunder, and entry upon
the Property pursuant to Section 3.1(b) hereof or appointment of a receiver
pursuant to Section 3.1(d) hereof, and under such terms and conditions as may be
prudent and reasonable under the circumstances in Lender’s or the receiver’s
sole discretion, all at Borrower’s expense, Lender or said receiver, or such
other persons or entities as they shall hire, direct or engage, as the case may
be, may do or permit one or more of the following,

 

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successively or concurrently: (a) enter upon and take possession and control of
any and all of the Property; (b) take and maintain possession of all documents,
books, records, papers and accounts relating to the Property; (c) exclude
Borrower and its agents, servants and employees wholly from the Property; (d)
manage and operate the Property; (e) preserve and maintain the Property; (f)
make repairs and alterations to the Property; (g) complete any construction or
repair of the Improvements (including, without limitation, the Initial
Improvements), with such changes, additions or modifications of the plans and
specifications or intended disposition and use of the Improvements as Lender may
in its sole discretion deem appropriate or desirable to place the Property in
such condition as will, in Lender’s sole discretion, make it or any part thereof
readily marketable or rentable; (h) conduct a marketing or leasing program with
respect to the Property, or employ a marketing or leasing agent or agents to do
so, directed to the leasing or sale of the Property under such terms and
conditions as Lender may in its sole discretion deem appropriate or desirable;
(i) employ such contractors, subcontractors, materialmen, architects, engineers,
consultants, managers, brokers, marketing agents, or other employees, agents,
independent contractors or professionals, as Lender may in its sole discretion
deem appropriate or desirable to implement and effectuate the rights and powers
herein granted; (j) execute and deliver, in the name of Lender as
attorney-in-fact and agent of Borrower or in its own name as Lender, such
documents and instruments as are necessary or appropriate to consummate
authorized transactions; (k) enter into such Leases, whether of real or personal
property, under such terms and conditions as Lender may in its sole discretion
deem appropriate or desirable; (l) collect and receive the Rents and Profits
from the Property; (m) eject Tenants or repossess personal property, as provided
by law, for breaches of the conditions of their Leases; (n) sue for unpaid Rents
and Profits, payments, income or proceeds in the name of Borrower or Lender; (o)
maintain actions in forcible entry and detainer, ejectment for possession and
actions in distress for rent; (p) compromise or give acquittance for Rents and
Profits, payments, income or proceeds that may become due; (q) delegate or
assign any and all rights and powers given to Lender by this Mortgage; and (r)
do any acts which Lender in its sole discretion deems appropriate or desirable
to protect the security hereof and use such measures, legal or equitable, as
Lender may in its sole discretion deem appropriate or desirable to implement and
effectuate the provisions of this Mortgage. This Mortgage shall constitute a
direction to and full authority to any Tenant, lessee, or other third party who
has heretofore dealt or contracted or may hereafter deal or contract with
Borrower or Lender, at the request of Lender, to pay all amounts owing under any
Lease, contract or other agreement to Lender without proof of the Event of
Default relied upon. Any such Tenant, lessee or third party is hereby
irrevocably authorized to rely upon and comply with (and shall be fully
protected by Borrower in so doing) any request, notice or demand by Lender for
the payment to Lender of any Rents and Profits or other sums which may be or
thereafter become due under its Lease, contract or other agreement, or for the
performance of any undertakings under any such Lease, contract or other
agreement, and shall have no right or duty to inquire whether any Event of
Default under this Mortgage, or any default under any of the other Loan
Documents, has actually occurred or is then existing. Borrower hereby
constitutes and appoints Lender, its assignees, successors, transferees and
nominees, as Borrower’s true and lawful attorney-in-fact and agent, with full
power of substitution in the Property, in Borrower’s name, place and stead, to
do or permit any one or more of the foregoing described rights, remedies, powers
and authorities, successively or concurrently, and said power of attorney shall
be deemed a power coupled with an interest and irrevocable so long as any
Obligations is outstanding. Any money advanced by Lender in connection with any
action taken under this Section 3.3, together with interest thereon at the
Default Interest Rate from the date of making such advancement by Lender until
actually paid by Borrower, shall be a demand obligation owing by Borrower to
Lender.

 

3.4 Occupancy After Foreclosure. In the event there is a foreclosure sale
hereunder and at the time of such sale, Borrower or Borrower’s representatives,
successors or assigns, or any other persons claiming any interest in the
Property by, through or under Borrower (except tenants of space in the
Improvements subject to Leases entered into prior to the date hereof), are
occupying or using the Property, or any part thereof, then, to the extent not
prohibited by applicable law, each and all shall, at the

 

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option of Lender or the purchaser at such sale, as the case may be, immediately
become the tenant of the purchaser at such sale, which tenancy shall be a
tenancy from day-to-day, terminable at the will of either landlord or tenant, at
a reasonable rental per day based upon the value of the Property occupied or
used, such rental to be due daily to the purchaser. Further, to the extent
permitted by applicable law, in the event the tenant fails to surrender
possession of the Property upon the termination of such tenancy, the purchaser
shall be entitled to institute and maintain an action for unlawful detainer of
the Property in the appropriate court of the county in which the Real Estate is
located.

 

3.5 Notice to Account Debtors. Lender may, at any time after an Event of Default
hereunder, notify the account debtors and obligors of any accounts, chattel
paper, negotiable instruments or other evidences of indebtedness, to Borrower
included in the Property to pay Lender directly. Borrower shall at any time or
from time to time upon the request of Lender provide to Lender a current list of
all such account debtors and obligors and their addresses.

 

3.6 Cumulative Remedies. All remedies contained in this Mortgage are cumulative
and Lender shall also have all other remedies provided at law and in equity or
in any other Loan Documents. Such remedies may be pursued separately,
successively or concurrently at the sole subjective direction of Lender and may
be exercised in any order and as often as occasion therefor shall arise. No act
of Lender shall be construed as an election to proceed under any particular
provisions of this Mortgage to the exclusion of any other provision of this
Mortgage or as an election of remedies to the exclusion of any other remedy
which may then or thereafter be available to Lender. No delay or failure by
Lender to exercise any right or remedy under this Mortgage shall be construed to
be a waiver of that right or remedy or of any Event of Default hereunder. Lender
may exercise any one or more of its rights and remedies at its option without
regard to the adequacy of its security.

 

3.7 Payment of Expenses. Borrower shall pay on demand all of Lender’s expenses
incurred in any efforts to enforce any terms of this Mortgage, whether or not
any lawsuit is filed and whether or not foreclosure is commenced but not
completed, including, but not limited to, legal fees and disbursements,
foreclosure costs and title charges, together with interest thereon from and
after the date incurred by Lender until actually paid by Borrower at the Default
Interest Rate. Furthermore, Borrower shall, and does hereby, indemnify Lender
for, and hold Lender harmless from, any and all claims, actions, demands
liabilities, loss or damage which may or might be incurred by Lender under this
Mortgage or by the exercise of rights or remedies hereunder, and from any and
all claims and demands whatsoever which may be asserted against Lender by reason
of any alleged obligations or undertakings on Lender’s part with respect to the
Property except as expressly set forth in the Loan Documents, other than those
finally determined to have resulted solely from the gross negligence or willful
misconduct of Lender. Should Lender incur any such liability, the amount
thereof, including, without limitation, costs, expenses and attorneys’ fees,
together with interest thereon at the Default Interest Rate from the date
incurred by Lender until actually paid by Borrower, shall be immediately due and
payable to Lender from Borrower on demand.

 

ARTICLE IV

[INTENTIONALLY OMITTED]

 

ARTICLE V

MISCELLANEOUS TERMS AND CONDITIONS

 

5.1 Time of Essence. Time is of the essence with respect to all provisions of
the Loan Documents.

 

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5.2 Release of Mortgage. If all of the Obligations be paid and performed, then
and in that event only, upon delivery and recordation of a written satisfaction
of this Mortgage, all rights under this Mortgage shall terminate except for
those provisions hereof which by their terms survive, and the Property shall
become wholly clear of the liens, security interests, conveyances and
assignments evidenced hereby, which shall be released by Lender in due form at
Borrower’s cost. No release of this Mortgage or the lien hereof shall be valid
unless executed by Lender.

 

5.3 Certain Rights of Lender. Without affecting Borrower’s liability for the
payment of any of the Obligations, Lender may from time to time and without
notice to Borrower: (a) release any person liable for the payment of the
Obligations; (b) extend or modify the terms of payment of the Obligations; (c)
accept additional real or personal property of any kind as security or alter,
substitute or release any property securing the Obligations; (d) consent in
writing to the making of any subdivision map or plat thereof; (e) join in
granting any easement therein; or (f) join in any extension agreement of the
Mortgage or any agreement subordinating the lien hereof.

 

5.4 Waiver of Certain Defenses. No action for the enforcement of the lien hereof
or of any provision hereof shall be subject to any defense which would not be
good and available to the party interposing the same in an action at law upon
the Note or any of the other Loan Documents.

 

5.5 Notices. All notices, demands, requests or other communications to be sent
by one party to the other hereunder or required by law shall be in writing and
shall be deemed to have been validly given or served by delivery of the same in
person to the intended addressee, or by depositing the same with Federal Express
or another reputable private courier service for next business day delivery,
with all charges prepaid, or by depositing the same in the United States mail,
postage prepaid, certified mail, return receipt requested, in any event
addressed to the intended addressee at its address set forth on the first page
of this Mortgage or at such other address as may be designated by such party as
herein provided. All notices, demands and requests shall be effective upon such
personal delivery, or one (1) business day after being deposited with the
private courier service, or three (3) business days after being deposited in the
United States mail as required above. Rejection or other refusal to accept or
the inability to deliver because of changed address of which no notice was given
as herein required shall be deemed to be receipt of the notice, demand or
request sent. By giving to the other party hereto at least fifteen (15) days’
prior written notice thereof in accordance with the provisions hereof, the
parties hereto shall have the right from time to time to change their respective
addresses and each shall have the right to specify as its address any other
address within the United States of America.

 

5.6 Successors and Assigns. The terms, provisions, indemnities, covenants and
conditions hereof shall be binding upon Borrower and the successors and assigns
of Borrower, including all successors in interest of Borrower in and to all or
any part of the Property, and shall inure to the benefit of Lender, its
successors and assigns, and shall constitute covenants running with the land.
All indemnities in this Mortgage for the benefit of Lender shall inure to the
benefit of Lender and each of its directors, officers, shareholders, partners,
members, managers, employees and agents (including, without limitation, any
servicers retained by Lender with respect to the Loan), and pledgees and
participants of the Obligations, and their respective successors and assigns.
All references in this Mortgage to Borrower or Lender shall be deemed to include
each such party’s successors and assigns. If Borrower consists of more than one
person or entity, each will be jointly and severally liable to perform the
obligations of Borrower.

 

5.7 Severability. A determination that any provision of this Mortgage is
unenforceable or invalid shall not affect the enforceability or validity of any
other provision, and any determination that the application of any provision of
this Mortgage to any person or circumstance is illegal or unenforceable shall
not affect the enforceability or validity of such provision as it may apply to
any other persons or circumstances.

 

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5.8 Interpretation. Within this Mortgage, words of any gender shall be held and
construed to include any other gender, and words in the singular shall be held
and construed to include the plural, and vice versa, unless the context
otherwise requires. The headings of the sections and paragraphs of this Mortgage
are for convenience of reference only, are not to be considered a part hereof
and shall not limit or otherwise affect any of the terms hereof. In the event of
any inconsistency between the provisions hereof and the provisions in any of the
other Loan Documents, it is intended that the provisions of this Mortgage shall
be controlling.

 

5.9 Waiver: Discontinuance of Proceedings. Lender may waive any single Event of
Default by Borrower hereunder without waiving any other prior or subsequent
Event of Default. Lender may remedy any Event of Default by Borrower hereunder
without waiving the Event of Default remedied. Neither the failure by Lender to
exercise, nor the delay by Lender in exercising, any right, power or remedy upon
any Event of Default by Borrower hereunder shall be construed as a waiver of
such Event of Default or as a waiver of the right to exercise any such right,
power or remedy at a later date. No single or partial exercise by Lender of any
right, power or remedy hereunder shall exhaust the same or shall preclude any
other or further exercise thereof, and every such right, power or remedy
hereunder may be exercised at any time and from time to time. No modification or
waiver of any provision hereof nor consent to any departure by Borrower
therefrom shall in any event be effective unless the same shall be in writing
and signed by Lender, and then such waiver or consent shall be effective only in
the specific instance and for the specific purpose given. No notice to nor
demand on Borrower in any case shall of itself entitle Borrower to any other or
further notice or demand in similar or other circumstances. Acceptance by Lender
of any payment in an amount less than the amount then due on any of the
Obligations shall be deemed an acceptance on account only and shall not in any
way affect the existence of a Default or an Event of Default hereunder. In case
Lender shall have proceeded to invoke any right, remedy or recourse permitted
hereunder or under the other Loan Documents and shall thereafter elect to
discontinue or abandon the same for any reason, Lender shall have the
unqualified right to do so and, in such an event, Borrower and Lender shall be
restored to their former positions with respect to the Obligations, the Loan
Documents, the Property and otherwise, and the rights, remedies, recourses and
powers of Lender shall continue as if the same had never been invoked.

 

5.10 Governing Law. This Mortgage will be governed by and construed in
accordance with the laws of the State in which the Real Estate is located,
provided that to the extent any of such laws may now or hereafter be preempted
by Federal law, in which case such Federal law shall so govern and be
controlling.

 

5.11 Counting of Days. The term “days” when used herein shall mean calendar
days. If any time period ends on a Saturday, Sunday or holiday officially
recognized by the state within which the Real Estate is located, the period
shall be deemed to end on the next succeeding business day. The term “business
day” when used herein shall mean a weekday, Monday through Friday, except a
legal holiday or a day on which banking institutions in the State in which the
Real Estate is located are authorized by law to be closed.

 

5.12 Relationship of the Parties. The relationship between Borrower and Lender
is that of a borrower and a lender only and neither of those parties is, nor
shall it hold itself out to be, the agent, employee, joint venturer or partner
of the other party.

 

5.13 Application of the Proceeds of the Note. To the extent that proceeds of the
Note are used to pay indebtedness secured by any outstanding lien, security
interest, charge or prior encumbrance against the Property, such proceeds have
been advanced by Lender at Borrower’s request and Lender shall be subrogated to
any and all rights, security interests and liens owned by any owner or holder of
such outstanding liens, security interests, charges or encumbrances,
irrespective of whether said liens, security interests, charges or encumbrances
are released.

 

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5.14 Unsecured Portion of Indebtedness. If any part of the Obligations cannot be
lawfully secured by this Mortgage or if any part of the Property cannot be
lawfully subject to the lien and security interest hereof to the full extent of
such indebtedness, then all payments made shall be applied on said indebtedness
first in discharge of that portion thereof which is unsecured by this Mortgage.

 

5.15 Cross Default. An Event of Default shall be a default under each of the
other Loan Documents.

 

5.16 Interest After Sale. In the event the Property or any part thereof shall be
sold upon foreclosure as provided hereunder, to the extent permitted by law, the
sum for which the same shall have been sold shall, for purposes of redemption
(pursuant to the laws of the state in which the Property is located), bear
interest at the Default Interest Rate.

 

5.17 Construction of this Document. This document may be construed as a
mortgage, security deed, deed of trust, chattel mortgage, conveyance,
assignment, security agreement, pledge, financing statement, hypothecation or
contract, or any one or more of the foregoing, as determined by Lender, in order
to fully effectuate the liens and security interests created hereby and the
purposes and agreements herein set forth.

 

5.18 No Merger. It is the desire and intention of the parties hereto that this
Mortgage and the lien hereof do not merge in fee simple title to the Property.
It is hereby understood and agreed that should Lender acquire any additional or
other interests in or to the Property or the ownership thereof, then, unless a
contrary intent is manifested by Lender as evidenced by an appropriate document
duly recorded, this Mortgage and the lien hereof shall not merge in such other
or additional interests in or to the Property, toward the end that this Mortgage
may be foreclosed as if owned by a stranger to said other or additional
interests.

 

5.19 Rights With Respect to Junior Liens. Any person or entity purporting to
have or to take a junior mortgage or other lien upon the Property or any
interest therein shall be subject to the rights of Lender to amend, modify,
increase, vary, alter or supplement this Mortgage, the Note or any of the other
Loan Documents and to extend the maturity date of the Obligations and to
increase the amount of the Obligations and to waive or forebear the exercise of
any of its rights and remedies hereunder or under any of the other Loan
Documents and to release any collateral or security for the Obligations, in each
and every case without obtaining the consent of the holder of such junior lien
and without the lien or security interest of this Mortgage losing its priority
over the rights of any such junior lien.

 

5.20 Lender May File Proofs of Claim. In the case of any receivership,
insolvency, bankruptcy, reorganization, arrangement, adjustment, composition or
other proceedings affecting Borrower or the principals or general partners or
members in Borrower, or their respective creditors or property, Lender, to the
extent permitted by law, shall be entitled to file such proofs of claim and
other documents as may be necessary or advisable in order to have the claims of
Lender allowed in such proceedings for the entire Obligations at the date of the
institution of such proceedings and for any additional amount which may become
due and payable by Borrower hereunder after such date.

 

5.21 Fixture Filing. To the extent permitted under applicable law, this Mortgage
shall be effective from the date of its recording as a financing statement filed
as a fixture filing with respect to all goods constituting part of the Property
which are or are to become fixtures. This Mortgage shall also be effective as a
financing statement covering minerals or the like (including oil and gas) and is
to be filed

 

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for record in the Real Estate Records of the county where the Property is
situated. The mailing address of Borrower and the address of Lender from which
information concerning the security interests may be obtained are set forth
above.

 

5.22 After-Acquired Property. All property acquired by Borrower after the date
of this Mortgage which by the terms of this Mortgage shall be subject to the
lien and the security interest created hereby, shall immediately upon the
acquisition thereof by Borrower and without further mortgage, conveyance or
assignment become subject to the lien and security interest created by this
Mortgage. Nevertheless, Borrower shall execute, acknowledge, deliver and record
or file, as appropriate, all and every such further mortgages, security
agreements, financing statements, assignments and assurances, as Lender shall
require for accomplishing the purposes of this Mortgage.

 

5.23 No Representation. By accepting delivery of any item required to be
observed, performed or fulfilled or to be given to Lender pursuant to the Loan
Documents, including, but not limited to, any officer’s certificates, balance
sheet, statement of profit and loss or other financial statement, survey,
appraisal or insurance policy, Lender shall not be deemed to have warranted,
consented to, or affirmed the sufficiency, legality, effectiveness or legal
effect of the same, or of any term, provision or condition thereof, and such
acceptance of delivery thereof shall not be or constitute any warranty, consent
or affirmation with respect thereto by Lender.

 

5.24 Counterparts. This Mortgage may be executed in any number of counterparts,
each of which shall be effective only upon delivery and thereafter shall be
deemed an original, and all of which shall be taken to be one and the same
instrument, for the same effect as if all parties hereto had signed the same
signature page. Any signature page of this Mortgage may be detached from any
counterpart of this Mortgage without impairing the legal effect of any
signatures thereon and may be attached to another counterpart of this Mortgage
identical in form hereto but having attached to it one or more additional
signature pages.

 

5.25 Exculpation. Notwithstanding anything to the contrary contained in this
Mortgage, the liability of Borrower and its officers, directors, members and
general partners for the Obligations and for the performance of the other
agreements, covenants and obligations contained herein and in the other Loan
Documents shall be limited as set forth in Section 1.05 of the Note.

 

5.26 Recording and Filing. Borrower will cause the Loan Documents and all
amendments and supplements thereto and substitutions therefor to be recorded,
filed, re-recorded and re-filed in such manner and in such places as Lender
shall reasonably request, and will pay on demand all such recording, filing,
re-recording and re-filing taxes, fees and other charges. Borrower shall
reimburse Lender, or its servicing agent, for the costs incurred in obtaining a
tax service company to verify the status of payment of Taxes and Other Charges
on the Property.

 

5.27 Entire Agreement and Modification. This Mortgage and the other Loan
Documents contain the entire agreements between the parties relating to the
subject matter hereof and thereof and all prior agreements relative hereto and
thereto which are not contained herein or therein are terminated. This Mortgage
and the other Loan Documents may not be amended, revised, waived, discharged,
released or terminated orally but only by a written instrument or instruments
executed by the party against which enforcement of the amendment, revision,
waiver, discharge, release or termination is asserted. Any alleged amendment,
revision, waiver, discharge, release or termination which is not so documented
shall not be effective as to any party.

 

5.28 Maximum Interest. The provisions of Section 2.03 of the Note are
incorporated in this Mortgage by reference as if more fully set forth herein.

 

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5.29 Secondary Market Transaction.

 

(a) Cooperation. Borrower acknowledges that Lender may effectuate a Secondary
Market Transaction. Borrower shall cooperate in good faith with Lender in
effecting any such Secondary Market Transaction and shall cooperate in good
faith to implement all requirements imposed by any Investor (as defined herein)
or Rating Agency involved therein, including, without limitation, all structural
or other changes to Borrower and/or the Obligations, and modifications to any
Loan Documents; provided, however, that the Borrower shall not be required to
modify any Loan Documents if such modification would (A) increase the interest
rate payable under the Note, (B) shorten the period until the stated maturity of
the Note, (C) modify the amortization of principal of the Note, or (D) modify
any other material term of the Obligations. Borrower shall provide such
information and documents relating to Borrower, any Indemnitor, the Property and
any Tenants as Lender may reasonably request in connection with such Secondary
Market Transaction. Borrower shall make available to Lender all information
concerning its business and operations that Lender may reasonably request.

 

(b) Disclosure; Indemnification. Lender shall be permitted to share all
information provided in connection with the Loan with the Investors, Rating
Agencies, investment banking firms, accounting firms, law firms and other
third-party advisory firms involved with the Loan Documents or the applicable
Secondary Market Transaction. It is understood that the information provided to
Lender in connection with the Loan may ultimately be incorporated into the
offering documents for the Secondary Market Transaction and thus potential
Investors may also see some or all of the information with respect to the Loan,
the Property, Borrower and the holders of direct or indirect interests in
Borrower. Borrower irrevocably waives any and all rights it may have under any
applicable laws (including, without limitation, any right of privacy) to
prohibit such disclosure. Lender and all of the aforesaid third-party advisors
and professional firms shall be entitled to rely on the information supplied by,
or on behalf of, Borrower. Borrower hereby indemnifies Lender as to any losses,
claims, damages or liabilities that arise out of or are based upon any untrue
statement or alleged untrue statement of any material fact contained in the
information provided by or on behalf of Borrower, 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. Lender may publicize the existence of the Obligations in
connection with its marketing for a Secondary Market Transaction or otherwise as
part of its business development.

 

(c) Definitions: A “Secondary Market Transaction” shall be (1) any sale of the
Mortgage, Note and other Loan Documents to one or more investors as a whole
loan, (2) a participation of the Obligations to one or more investors, (3) a
securitization of the Loan, (4) any other sale or transfer of the Obligations or
any interest therein to one or more investors. “Rating Agency” shall mean any
nationally-recognized statistical rating organization that has been designated
by Lender to provide, or that provides, a rating on Borrower, the Loan or any
securities evidencing an interest in, inter alia, a trust or other entity which
is the holder of the Note. “Investor” shall mean any actual or potential
purchaser, transferee, assignee, servicer, participant or investor in a
Secondary Market Transaction.

 

5.30 SUBMISSION TO JURISDICTION; WAIVER OF JURY TRIAL.

 

(a) BORROWER, TO THE FULL EXTENT PERMITTED BY LAW, HEREBY KNOWINGLY,
INTENTIONALLY AND VOLUNTARILY, WITH AND UPON THE ADVICE OF COMPETENT COUNSEL,
(i) SUBMITS TO PERSONAL JURISDICTION IN THE STATE IN WHICH THE REAL ESTATE IS
LOCATED OVER ANY SUIT, ACTION OR PROCEEDING BY ANY PERSON ARISING FROM OR
RELATING TO THE NOTE, THIS MORTGAGE OR ANY OTHER OF THE LOAN DOCUMENTS, (ii)
AGREES THAT ANY SUCH ACTION, SUIT OR PROCEEDING MAY BE BROUGHT IN ANY STATE OR
FEDERAL COURT OF COMPETENT

 

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JURISDICTION OVER THE COUNTY IN WHICH THE REAL ESTATE IS LOCATED, (iii) SUBMITS
TO THE JURISDICTION OF SUCH COURTS, AND, (iv) TO THE FULLEST EXTENT PERMITTED BY
LAW, AGREES THAT IT WILL NOT BRING ANY ACTION, SUIT OR PROCEEDING IN ANY OTHER
FORUM (BUT NOTHING HEREIN SHALL AFFECT THE RIGHT OF LENDER TO BRING ANY ACTION,
SUIT OR PROCEEDING IN ANY OTHER FORUM). BORROWER FURTHER CONSENTS AND AGREES TO
SERVICE OF ANY SUMMONS, COMPLAINT OR OTHER LEGAL PROCESS IN ANY SUCH SUIT,
ACTION OR PROCEEDING BY REGISTERED OR CERTIFIED U.S. MAIL, POSTAGE PREPAID, TO
THE BORROWER AT THE ADDRESS FOR NOTICES DESCRIBED IN SECTION 5.5 HEREOF, AND
CONSENTS AND AGREES THAT SUCH SERVICE SHALL CONSTITUTE IN EVERY RESPECT VALID
AND EFFECTIVE SERVICE (BUT NOTHING HEREIN SHALL AFFECT THE VALIDITY OR
EFFECTIVENESS OF PROCESS SERVED IN ANY OTHER MANNER PERMITTED BY LAW).

 

(b) LENDER AND BORROWER, TO THE FULL EXTENT PERMITTED BY LAW, HEREBY KNOWINGLY,
INTENTIONALLY AND VOLUNTARILY, WITH AND UPON THE ADVICE OF COMPETENT COUNSEL,
WAIVE, RELINQUISH AND FOREVER FORGO THE RIGHT TO A TRIAL BY JURY IN ANY ACTION
OR PROCEEDING BASED UPON, ARISING OUT OF, OR IN ANY WAY RELATING TO THE
OBLIGATIONS OR ANY CONDUCT, ACT OR OMISSION OF LENDER OR BORROWER, OR ANY OF
THEIR DIRECTORS, OFFICERS, PARTNERS, MEMBERS, EMPLOYEES, AGENTS OR ATTORNEYS, OR
ANY OTHER PERSONS AFFILIATED WITH LENDER OR BORROWER, IN EACH OF THE FOREGOING
CASES, WHETHER SOUNDING IN CONTRACT, TORT OR OTHERWISE.

 

5.31 State-Specific Provisions. The following provisions shall govern and
control in the event of a conflict with any other provision of this Mortgage:

 

(a) Pursuant to 42 Pa. C.S.A. §8144, this Mortgage secures the unpaid balance of
advances made, with respect to the Property, for the payment of taxes,
assessments, maintenance charges, insurance premiums or costs incurred by Lender
for the protection of the Property or the lien of this Mortgage, and expenses
incurred by Lender by reason of an Event of Default, and the priority of the
lien of such advances shall relate back to the date of recording of this
Mortgage.

 

(b) Confession of Judgment. FOR THE PURPOSE OF OBTAINING POSSESSION OF THE
PROPERTY UPON THE OCCURRENCE OF AN EVENT OF DEFAULT HEREUNDER, BORROWER HEREBY
AUTHORIZES AND EMPOWERS ANY ATTORNEY OF ANY COURT OF RECORD IN THE COMMONWEALTH
OF PENNSYLVANIA OR ELSEWHERE, AS ATTORNEY FOR BORROWER AND ALL PERSONS CLAIMING
UNDER OR THROUGH BORROWER TO SIGN AN AGREEMENT FOR ENTERING IN ANY COMPETENT
COURT AN ACTION IN EJECTMENT FOR POSSESSION OF THE PROPERTY AND TO APPEAR FOR
AND CONFESS JUDGMENT AGAINST BORROWER AND AGAINST ALL PERSONS CLAIMING UNDER OR
THROUGH BORROWER, IN FAVOR OF LENDER, FOR RECOVERY BY LENDER OF POSSESSION
THEREOF, FOR WHICH THIS MORTGAGE, OR A COPY THEREOF VERIFIED BY AFFIDAVIT, SHALL
BE A SUFFICIENT WARRANT; AND THEREUPON A WRIT OF POSSESSION MAY IMMEDIATELY
ISSUE FOR POSSESSION OF THE PROPERTY, WITHOUT ANY PRIOR WRIT OR PROCEEDING
WHATSOEVER AND WITHOUT ANY STAY OF EXECUTION. IF FOR ANY REASON AFTER SUCH
ACTION HAS BEEN COMMENCED IT SHOULD BE DISCONTINUED, OR POSSESSION OF THE
PROPERTY SHALL REMAIN IN OR BE RESTORED TO BORROWER, LENDER SHALL HAVE THE RIGHT
FOR THE SAME EVENT OF DEFAULT OR ANY SUBSEQUENT EVENT OF DEFAULT TO BRING ONE OR
MORE FURTHER ACTIONS AS ABOVE PROVIDED TO RECOVER POSSESSION OF THE PROPERTY.
LENDER MAY BRING AN ACTION IN EJECTMENT AND CONFESS JUDGMENT THEREIN BEFORE OR

 

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AFTER THE INSTITUTION OF PROCEEDINGS TO FORECLOSE THIS MORTGAGE OR TO ENFORCE
THE NOTE, OR AFTER ENTRY OF JUDGMENT THEREIN OR ON THE NOTE, OR AFTER A
SHERIFF’S SALE OF THE PROPERTY IN WHICH LENDER IS THE SUCCESSFUL BIDDER; THE
AUTHORIZATION TO PURSUE SUCH PROCEEDINGS FOR OBTAINING POSSESSION AND CONFESS
JUDGMENT THEREIN IS AN ESSENTIAL PART OF THE REMEDIES FOR ENFORCEMENT OF THIS
MORTGAGE AND THE NOTE, AND SHALL SURVIVE ANY EXECUTION SALE TO LENDER.

 

BORROWER CONFIRMS TO LENDER THAT (I) BORROWER IS A BUSINESS ENTITY AND THAT ITS
PRINCIPALS ARE KNOWLEDGEABLE IN BUSINESS MATTERS; (II) THE TERMS OF THIS
MORTGAGE, INCLUDING THE FOREGOING WARRANT OF ATTORNEY TO CONFESS JUDGMENT, HAVE
BEEN NEGOTIATED AND AGREED UPON IN A COMMERCIAL CONTEXT; AND (III) IT HAS FULLY
REVIEWED THE AFORESAID WARRANT OF ATTORNEY TO CONFESS JUDGMENT WITH ITS OWN
COUNSEL AND IS KNOWINGLY AND VOLUNTARILY WAIVING CERTAIN RIGHTS IT WOULD
OTHERWISE POSSESS, INCLUDING BUT NOT LIMITED TO, THE RIGHT TO ANY NOTICE OR A
HEARING PRIOR TO THE ENTRY OF JUDGMENT BY LENDER PURSUANT TO THE AFORESAID
WARRANT OF ATTORNEY.

 

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

 

935 HQ ASSOCIATES, LLC, a Delaware limited liability company By:   GSI Commerce,
Inc., a Delaware corporation, its Managing Member

    By:   /s/ Jordan Copland     Name:   Jordan Copland     Title:   Executive
Vice President

 

The address of the within Lender is:

 

622 Third Avenue, 8th Floor

New York, New York 10017

 

/s/ Ingrid Hlawaty

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On behalf of the Lender

 

COMMONWEALTH OF PENNSYLVANIA

 

COUNTY OF Philadelphia

 

On this, the 9th day of June, 2004 before me, a Notary Public, personally
appeared Jordan M. Copland, known to me (or satisfactorily proven) to be the
Executive Vice President of GSI Commerce, Inc., a Delaware corporation, the sole
member of 935 HQ Associates, LLC, a Delaware limited liability company and
acknowledged that being duly authorized to do so, executed the foregoing
instrument on behalf of such limited partnership as general partner of such
limited partnership for the purposes therein contained.

 

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

 

/s/ Sheldon Bender

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

  [SEAL] Name: Sheldon Bender    

 

My commission expires: May 2, 2006

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EXHIBIT A

 

PROPERTY DESCRIPTION

 

ALL THAT CERTAIN unit in the property known, named and identified in the
Declaration of Condominium of First Avenue Corporate Center, a Condominium (the
“Declaration”), located in King of Prussia, Montgomery County, Commonwealth of
Pennsylvania, which has heretofore been submitted to the provisions of the
Pennsylvania Uniform Condominium Act, 68 P.S.A. §3101, et seq., by the recording
in the Office of the Montgomery County Clerk of the Declaration, dated June ,
2004, designated in such Declaration as Unit One as more fully described in such
Declaration, together with a proportionate undivided interest in the Common
Elements (as defined in such Declaration) of fifty percent (50%).

 

BEING a part of County Parcel No. 58-00-06853-00-1, to be separately assessed as
a new tax parcel number upon recordation of the Declaration.

 

BEING part of the same premises which 935 First Avenue Associates a Pennsylvania
limited partnership by Deed dated June 19, 2001 and recorded June 27, 2001 in
Montgomery County in Deed Book 5365 page 311 granted and conveyed unto NSHE
Keystone, LLC, a Delaware limited liability company in fee.

 

AND BEING part of the same premises which NSHE Keystone, LLC, a Delaware limited
liability company by Quit Claim Deed dated December 20, 2001 and recorded May
22, 2002 in Montgomery County in Deed Book 5409 page 260 granted and conveyed
unto Brandywine Operating Partnership, L.P., a Delaware limited partnership in
fee.