EXHIBIT 10.4

 

THIS DOCUMENT PREPARED BY

AND WHEN RECORDED MAIL TO:

 

Sidley Austin LLP

One South Dearborn Street

Chicago, Illinois 60603

 

Attn.:

Stanley B. Stallworth, Esq.

 

 

 

______________________________________________________________________________

SPACE ABOVE THIS LINE FOR RECORDER'S USE

 

MORTGAGE, ASSIGNMENT OF LEASES

AND RENTS, SECURITY

AGREEMENT AND FIXTURE FILING

 

 

THIS MORTGAGE, ASSIGNMENT OF LEASES AND RENTS, SECURITY AGREEMENT AND FIXTURE
FILING (as the same may be amended, restated, extended, supplemented or
otherwise modified from time to time, this “Mortgage”), is made as of the 10th
day of January, 2006, by 280 SHUMAN BLVD., L.L.C., a Delaware limited liability
company, having an address at c/o Prime Group Realty Trust, 77 West Wacker
Drive, Suite 3900, Chicago, Illinois 60601 (“Mortgagor”), to and for the benefit
of CITICORP USA, INC., a Delaware corporation, having an address at 666 Fifth
Avenue, 51st Floor, New York, New York 10103 (together with its successors and
assigns, “Mortgagee”). Capitalized terms used herein but not otherwise defined
shall have the respective meanings assigned to such terms in the Loan Agreement
(hereinafter defined).

 

 

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W I T N E S S E T H:

WHEREAS, PGRT EQUITY LLC, a Delaware limited liability company (the “Borrower”),
and Mortgagee are entering into a Loan Agreement dated as of the date hereof (as
amended, restated, modified, supplemented or substituted from time to time, the
“Loan Agreement”);

WHEREAS, pursuant to and following satisfaction of the conditions set forth in
the Loan Agreement, Mortgage has made a Loan, and Mortgagee has agreed to extend
certain other financial accommodations from time to time to Borrower, all in an
aggregate principal amount not to exceed Fifty-Eight Million and 00/100 Dollars
($58,000,000);

WHEREAS, Mortgagor is a Subsidiary of Borrower and has derived and will continue
to derive direct and indirect economic benefit from the financial accommodations
made by the Mortgagee to Borrower; and

WHEREAS, as a condition to Mortgagee’s continued extension of such credit and
financial accommodations to Borrower, including, without limitation, the
extension of credit evidenced pursuant to the Loan Agreement or any other Loan
Document, Mortgagee has required that Mortgagor enter into this Mortgage and
grant to Mortgagee the liens and security interests referred to herein to secure
(i) payment of the Debt, including, without limitation, the payment of the
principal amount evidenced by the Loan Documents together with interest thereon;
(ii)  payment of the principal amount, together with interest thereon, of all
present and future advances of money made by Mortgagee to the Borrower,
including, without limitation, the reborrowing of principal previously repaid
pursuant to the Loan Agreement, as well as all other Obligations; and
(iii) other payment and performance obligations related to this Mortgage (the
aforesaid Obligations, together with any other obligations evidenced by the Loan
Documents plus interest and all other payment and performance obligations under
the Loan Documents being hereinafter referred to collectively as the
“Liabilities”); and

WHEREAS, the Liabilities secured hereby shall not exceed an aggregate principal
amount, at any one time outstanding of Seventy Million and 00/100 Dollars
($70,000,000), provided, that the foregoing limitation shall apply only to the
lien upon the real property created by this Mortgage, and it shall not in any
manner limit, affect or impair any grant of a security interest or other right
in favor of the Mortgagee under the provisions of the Loan Agreement or under
any other security agreement at any time executed by Borrower or Mortgagor;]

NOW, THEREFORE, in consideration of the premises contained herein and to secure
payment and performance of the Liabilities and in consideration of One Dollar
($1.00) in hand paid, the receipt and sufficiency whereof are hereby
acknowledged, Mortgagor does hereby grant, remise, release, alien, convey,
bargain, sell, enfeoff, confirm, pledge, assign, hypothecate mortgage and
warrant unto Mortgagee, its successors and assigns, with power of sale, all of
Mortgagor’s right, title, interest and estate in and to the real property
described on Exhibit A attached hereto (the “Premises”) and the buildings,
structures, fixtures, additions, enlargements, extensions, modifications,
repairs, replacements and improvements now or hereafter located thereon (the
“Improvements”);

 

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TOGETHER WITH: all right, title, interest and estate of Mortgagor now owned, or
hereafter acquired, in and to the following property, rights, interests and
estates (the Premises and the Improvements, together with the following
property, rights, interests and estates being hereinafter described, are
collectively referred to herein as the “Mortgaged Property”):

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

(b)          all machinery, equipment, fixtures (including, but not limited to,
all heating, air conditioning, plumbing, lighting, communications and elevator
fixtures) and other property of every kind and nature, whether tangible or
intangible, whatsoever owned by Mortgagor, or in which Mortgagor has or shall
have an interest, now or hereafter located upon the Premises and the
Improvements, or appurtenant thereto, and usable in connection with the present
or future operation and occupancy of the Premises and the Improvements and all
building equipment, materials and supplies of any nature whatsoever owned by
Mortgagor, or in which Mortgagor has or shall have an interest, now or hereafter
located upon the Premises or the Improvements, or appurtenant thereto, and
usable in connection with the present or future operation, enjoyment and
occupancy of the Premises and the Improvements (hereinafter collectively called
the “Equipment”), including the proceeds of any sale or transfer of the
foregoing, and the right, title and interest of Mortgagor in and to any of the
Equipment which may be subject to any security interests, as defined in the
Uniform Commercial Code, as adopted and enacted by the state or states where any
of the Mortgaged Property is located (the “Uniform Commercial Code”) superior in
lien to the lien of this Mortgage;

(c)          all awards or payments, including interest thereon, which may
heretofore and hereafter be made with respect to the Mortgaged Property, whether
from the exercise of the right of eminent domain or condemnation (including, but
not limited to, any transfer made in lieu of or in anticipation of the exercise
of said rights), or for a change of grade, or for any other injury to or
decrease in the value of the Mortgaged Property;

(d)          all leases, tenancies, licenses, subleases, assignments and/or
other rental or occupancy agreements (including, without limitation, any and all
guarantees and supporting obligations of and security deposit and letter of
credit rights relating to any of the foregoing) heretofore or hereafter entered
into affecting the use, enjoyment or occupancy of the Premises and the
Improvements, including any extensions, renewals, modifications or amendments
thereof (collectively, the “Leases”), together with all rights, powers,
privileges, options and other benefits of Mortgagor as lessor under the Leases,
including, without limitation, the immediate and continuing right to receive and
collect all rents, income, revenues, issues, profits, condemnation awards,
insurance proceeds, moneys and security payable or receivable under the

 

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Leases or pursuant to any of the provisions thereof, whether as rent or
otherwise, the right to accept or reject any offer made by any tenant pursuant
to its Lease to purchase the Mortgaged Property and any other property subject
to the Lease as therein provided and to perform all other necessary or
appropriate acts with respect to such Leases as agent and attorney-in-fact for
Mortgagor, and the right to make all waivers and agreements, to give and receive
all notices, consents and releases, to take such action upon the happening of a
default under any Lease, including the commencement, conduct and consummation of
proceedings at law or in equity as shall be permitted under any provision of any
Lease or by any law, and to do any and all other things whatsoever which
Mortgagor is or may become entitled to do under any such Lease together with all
accounts receivable, contract rights, franchises, interests, estates or other
claims, both at law or in equity, relating to the Mortgaged Property, to the
extent not included in rent earnings and income under any of the Leases,
including the right to receive and collect any sums payable to Mortgagor
thereunder and all deposits or other security or advance payments made by
Mortgagor with respect to any of the services related to the Mortgaged Property
or the operation thereof, and together with all rents, rent equivalents
(including room revenues, if applicable), moneys payable as damages or in lieu
of rent or rent equivalents, royalties (including, without limitation, all oil
and gas or other mineral royalties and bonuses), income, receivables, receipts,
revenues, deposits (including, without limitation, security, utility and other
deposits), accounts, cash, issues, profits, charges for services rendered, and
other consideration of whatever form or nature received by or paid to or for the
account of or benefit of Mortgagor or its agents or employees from any and all
sources arising from or attributable to the Premises and the Improvements (the
“Rents”), and together with all proceeds from the sale or other disposition of
the Leases and the right to receive and apply the Rents to the payment of the
Liabilities;

(e)          all of Mortgagor’s right, title and interest in, to and under any
and all reserve, deposit or escrow accounts (the “Accounts”) made pursuant to
any of the Loan Documents, together with all income, profits, benefits,
investment property and advantages arising therefrom, and together with all
rights, powers, privileges, options and other benefits of Mortgagor under the
Accounts, and together with the right to do any and all other things whatsoever
which Mortgagor is or may become entitled to do under the Accounts;

(f)           all trade names, software, trademarks, trademark applications,
trademark licenses, servicemarks, logos, copyrights, copyright applications,
goodwill, books and records and all other general intangibles relating to or
used in connection with the operation of the Mortgaged Property;

(g)          all proceeds of and any unearned premiums on any insurance policies
covering the Mortgaged Property, including, without limitation, the right to
receive and apply the proceeds of any insurance, judgments, or settlements made
in lieu thereof, for damage to the Mortgaged Property or any part thereof;

(h)          the right, following an Event of Default, in the name and on behalf
of Mortgagor, to appear in and defend any action or proceeding brought with
respect to the Mortgaged Property and to commence any action or proceeding to
protect the interest of the Mortgagee in the Mortgaged Property or any part
thereof;

 

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(i)           all accounts, escrows, reserves, documents, instruments, chattel
paper, monetary obligations, claims, deposits, investment property and general
intangibles, as the foregoing terms are defined in the Uniform Commercial Code,
and all books, records, plans, specifications, designs, drawings, permits,
consents, licenses, franchises, management agreements, contracts, contract
rights (including, without limitation, any contract with any architect or
engineer or with any other provider of goods or services for or in connection
with any construction, repair, or other work upon the Mortgaged Property),
approvals, actions, refunds or real estate taxes and assessments (and any other
governmental impositions related to the Mortgaged Property), and causes of
action that now or hereafter relate to, are derived from or are used in
connection with the Mortgaged Property, or the use, operation, management,
improvement, alteration, repair, maintenance, occupancy or enjoyment thereof or
the conduct of any business or activities thereon;

(j)           all accounts receivable, contract rights, interests, estate or
other claims, both in law and in equity, which Mortgagor now has or may
hereafter acquire in the Mortgaged Property or any part thereof;

(k)          all rights which Mortgagor now has or may hereafter acquire, to be
indemnified and/or held harmless from any liability, loss, damage, cost or
expense (including, without limitation, attorneys’ fees and disbursements)
relating to the Mortgaged Property or any part thereof;

 

(l)

all personal property of Mortgagor; and

 

 

(m)

any and all proceeds and products of any of the foregoing.

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

PROVIDED, HOWEVER, these presents are upon the express condition that, if
Mortgagor shall well and truly pay to Mortgagee the Liabilities at the time and
in the manner provided in the Note and this Mortgage and shall pay all other
sums due under the Loan Agreement or any other Loan Document, these presents and
the estate hereby granted shall cease, terminate and be void;

AND Mortgagor represents and warrants to and covenants and agrees with Mortgagee
as follows:

1.            Payment of Debt and Incorporation of Covenants, Conditions and
Agreements. Mortgagor shall pay the Debt at the time and in the manner provided
in the Note, the Loan Agreement and in this Mortgage. Mortgagor will duly and
punctually perform all of the Liabilities, including all of the covenants,
conditions and agreements contained in the Note, the Loan Agreement, this
Mortgage and the other Loan Documents all of which covenants, conditions and
agreements are hereby made a part of this Mortgage to the same extent and with
the same force as if fully set forth herein.

2.            Warranty of Title. Mortgagor warrants that Mortgagor has a good,
marketable and insurable fee simple interest in the Mortgaged Property and has
the right to mortgage, give,

 

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grant, bargain, sell, alien, enfeoff, convey, confirm, pledge, assign and
hypothecate the Mortgaged Property and that Mortgagor possesses a fee simple
estate in the Mortgaged Property and that it owns the Mortgaged Property free
and clear of all liens, encumbrances and charges whatsoever except for the
Permitted Liens. Mortgagor represents and warrants that none of the Permitted
Liens will materially and adversely affect (i) Mortgagor’s ability to pay in
full in a timely manner its obligations, including, without limitation, the
Liabilities, (ii) the use of the Mortgaged Property for the use currently being
made thereof, (iii) the operation of the Mortgaged Property, or (iv) the value
of the Mortgaged Property. Mortgagor shall forever warrant, defend and preserve
such title and the validity and priority of the lien of this Mortgage and shall
forever warrant and defend the same to Mortgagee against the claims of all
persons whomsoever.

3.            Insurance. (a) Mortgagor, at its sole cost and expense, shall
maintain or cause to be maintained insurance with respect to the Mortgaged
Property for the mutual benefit of Mortgagor and Mortgagee as required by
Section 5.4 of the Loan Agreement.

(b)          If the Mortgaged Property shall be damaged or destroyed, in whole
or in part, by fire or other casualty (an “Insured Casualty”), Mortgagor shall
give immediate notice thereof to Mortgagee and to the insurance carrier. Subject
to the terms of the Loan Agreement, Mortgagor shall promptly repair, replace or
rebuild the Mortgaged Property in accordance with, and all amounts paid with
respect to such Insured Casualty under all insurance policies maintained by
Mortgagor shall be governed by, the terms and conditions of Section 7.3 of the
Loan Agreement. The expenses incurred by Mortgagee in the adjustment and
collection of insurance proceeds shall become part of the Liabilities and shall
be secured hereby and shall be reimbursed by Mortgagor to Mortgagee upon demand.

4.            Payment of Impositions and Other Charges. Subject to Mortgagor’s
right to contest set forth in Section 7.4(b) of the Loan Agreement and the
provisions of Section 5 below, Mortgagor shall cause to be paid all Real
Property Taxes, Other Property Charges and impositions that are to be paid by
Mortgagor under the terms of the Loan Agreement which are now, or hereafter may
be, levied or assessed or imposed against the Mortgaged Property or any part
thereof (collectively, “Impositions”) as the same become due and payable.
Mortgagor shall promptly pay for all utility services provided to the Mortgaged
Property. Mortgagor shall furnish to Mortgagee or its designee receipts for the
payment of the Impositions prior to the date the same shall become delinquent.

5.            Impositions and Insurance Reserve. Mortgagor shall make monthly
deposits into the Escrow Fund relating to the Mortgaged Property and any other
Reserves relating to the Mortgaged Property, of amounts sufficient to pay
Impositions and insurance premiums in accordance with the terms of Section 7.4
of the Loan Agreement.

6.            Condemnation. Mortgagor shall promptly give Mortgagee written
notice of the actual or threatened commencement of any condemnation or eminent
domain proceeding affecting the Mortgaged Property or any portion thereof and
shall deliver to Mortgagee copies of any and all papers served in connection
with such proceedings. Subject to the terms of Section 7.3(b) of the Loan
Agreement, Mortgagee is hereby irrevocably appointed as Mortgagor’s
attorney-in-fact, coupled with an interest, with exclusive power to collect,
receive and retain any

 

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award or payment for said condemnation or eminent domain and to make any
compromise or settlement in connection with such proceeding. Notwithstanding any
taking by any public or quasi public authority through eminent domain or
otherwise (including but not limited to any transfer made in lieu of or in
anticipation of the exercise of such taking), Mortgagor shall continue to pay
the Liabilities at the time and in the manner provided for its payment in the
Loan Agreement. Subject to the terms of the Loan Agreement, Mortgagor shall
cause the award or payment made in any condemnation or eminent domain
proceeding, which is payable to Mortgagor, to be paid directly to Mortgagee. The
application of any such award or payment shall be governed by the applicable
provisions of the Loan Agreement.

7.            Maintenance of Mortgaged Property. Mortgagor shall cause the
Mortgaged Property to be operated and maintained in a good and safe condition
and repair and in keeping with the condition and repair of properties of a
similar use, value, age, nature and construction. Mortgagor shall not use,
maintain or operate the Mortgaged Property in any manner which constitutes a
public or private nuisance or which makes void, voidable, or cancelable, or
increases the premium of, any insurance then in force with respect thereto. The
Improvements and the Equipment shall not be removed or demolished and no
Material Alterations shall be made thereto (except for normal replacement or
disposal of the Equipment and except as otherwise expressly permitted in Section
8.16 of the Loan Agreement) without the consent of Mortgagee. Mortgagor shall
promptly comply in all material respects with all laws, orders and ordinances
affecting the Mortgaged Property, or the use thereof.

8.            Use of Mortgaged Property. Mortgagor shall not initiate, join in,
acquiesce in, or consent to any change in any private restrictive covenant,
zoning law or other public or private restriction, limiting or defining the uses
which may be made of the Mortgaged Property or any part thereof, nor shall
Mortgagor initiate, join in, acquiesce in, or consent to any zoning change or
zoning matter affecting the Mortgaged Property, which in any of the foregoing
cases could reasonably be expected to result in a Material Adverse Effect. If
under applicable zoning provisions the use of all or any portion of the
Mortgaged Property is or shall become a nonconforming use, Mortgagor will not
cause or permit such nonconforming use to be discontinued or abandoned without
the express written consent of Mortgagee, which consent shall not be
unreasonably withheld. Mortgagor shall not permit or suffer to occur any waste
on or to the Mortgaged Property or to any portion thereof and shall not take any
steps whatsoever to convert the Mortgaged Property, or any portion thereof, to a
condominium or cooperative form of management. Mortgagor will not install or
permit to be installed on the Premises any underground storage tank or
above-ground storage tank in violation of the Environmental Laws.

9.            Transfer or Encumbrance of the Mortgaged Property. (a) Mortgagor
acknowledges that Mortgagee has examined and relied on the creditworthiness and
experience of Mortgagor in owning and operating properties such as the Mortgaged
Property in agreeing to make the Loan, and that Mortgagee will continue to rely
on Mortgagor’s ownership of the Mortgaged Property as a means of maintaining the
value of the Mortgaged Property as security for repayment of the Liabilities.
Except as expressly permitted under this Mortgage, the Loan Agreement or under
the other Loan Documents, Mortgagor shall not cause or suffer to occur or exist,
directly or indirectly, voluntarily or involuntarily, by operation of law or
otherwise, any sale, transfer, mortgage, pledge, lien or encumbrance (other than
Permitted Liens) (collectively, “Transfers”) of (i) all or any part of the
Mortgaged Property or any interest therein, or (ii) any

 

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direct or indirect beneficial ownership interest (in whole or in part) in
Mortgagor, irrespective of the number of tiers of ownership, without the prior
written consent of Mortgagee.

(b)          The occurrence of any Transfer in violation of this Section 9 shall
constitute an Event of Default hereunder, whereupon Mortgagee at its option,
without being required to demonstrate any actual impairment of its security or
any increased risk of default hereunder, may declare the Liabilities immediately
due and payable.

(c)          Mortgagee’s consent to any Transfer of the Mortgaged Property or
any interest in Mortgagor shall not be deemed to be a waiver of Mortgagee’s
right to require such consent to any future occurrence of same. Any attempted or
purported Transfer of the Mortgaged Property or of any direct or indirect
interest in Mortgagor, if made in contravention of this Section 9, shall be null
and void and of no force and effect.

10.          Taxes on Security; Documentary Stamps; Intangibles Tax. (a)
Mortgagor shall pay all taxes, charges, filing, registration and recording fees,
excises and levies payable with respect to the Note, this Mortgage or the liens
created or secured by the Loan Documents, other than income, franchise and doing
business taxes imposed on Mortgagee. If there shall be enacted any law
(i) deducting the Loan from the value of the Mortgaged Property for the purpose
of taxation, (ii) affecting any lien on the Mortgaged Property, or (iii)
changing existing laws of taxation of mortgages, deeds of trust, security deeds,
or Liabilities secured by real property, or changing the manner of collecting
any such taxes, Mortgagor shall promptly pay to Mortgagee, on demand, all taxes,
costs and charges for which Mortgagee is or may be liable as a result thereof;
however, if such payment would be prohibited by law or would render the Loan
usurious, then instead of collecting such payment, Mortgagee may declare all
amounts owing under the Loan Documents to be immediately due and payable.

(b)          If at any time the United States of America, any State thereof or
any subdivision of any such State shall require revenue or other stamps to be
affixed to the Note or this Mortgage, or impose any other tax or charge on the
same, Mortgagor will pay for the same, with interest and penalties thereon, if
any. Mortgagor hereby agrees that, in the event that it is determined that
additional documentary stamp tax or intangible tax is due hereon or any mortgage
or promissory note executed in connection herewith (including, without
limitation, the Note), Mortgagor shall indemnify and hold harmless Mortgagee for
all such documentary stamp tax and/or intangible tax, including all penalties
and interest assessed or charged in connection therewith. Mortgagor shall pay
same within ten (10) days after demand of payment from Mortgagee and the payment
of such sums shall be secured by this Mortgage and such sums shall bear interest
at the Default Rate from and after the eleventh (11th) day after demand until
paid in full.

(c)          Mortgagor shall hold harmless and indemnify Mortgagee, its
successors and assigns, against any liability incurred by reason of the
imposition of any tax on the making and recording of this Mortgage.

11.          No Credits on Account of the Liabilities. Mortgagor will not claim
or demand or be entitled to any credit or credits on account of the Liabilities
for any part of the Impositions assessed against the Mortgaged Property, or any
part thereof, and no deduction shall otherwise

 

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be made or claimed from the assessed value of the Mortgaged Property, or any
part thereof, for real estate tax purposes by reason of this Mortgage or the
Liabilities. In the event such claim, credit or deduction shall be required by
law, Mortgagee shall have the option, by written notice of not less than ninety
(90) days, to declare the Liabilities immediately due and payable.

12.          Performance of Other Agreements. Mortgagor shall duly and
punctually observe and perform each and every material term, provision,
condition, and covenant to be observed or performed by Mortgagor pursuant to the
terms of any agreement or recorded instrument (including all instruments
comprising the Permitted Liens) affecting or pertaining to the Mortgaged
Property, and will not suffer or permit any default or event of default (after
giving effect to any applicable notice requirements and cure periods) to exist
under any of the foregoing.

13.          Further Acts; Secondary Market Transactions. (a) Mortgagor will, at
its sole cost and expense, and without expense to Mortgagee, do, execute,
acknowledge and deliver all and every such further acts, deeds, conveyances,
mortgages, assignments, notices of assignment, Uniform Commercial Code financing
statements or continuation statements, transfers and assurances as Mortgagee
shall, from time to time, reasonably require, for the better assuring,
conveying, assigning, transferring, and confirming unto Mortgagee the property
and rights hereby mortgaged, given, granted, bargained, sold, alienated,
enfeoffed, conveyed, confirmed, pledged, assigned and hypothecated or intended
now or hereafter so to be, or which Mortgagor may be or may hereafter become
bound to convey or assign to Mortgagee, or for carrying out the intention or
facilitating the performance of the terms of this Mortgage or for filing,
registering or recording this Mortgage. Mortgagor, on demand, will execute and
deliver and, upon Mortgagor’s failure to do so within five (5) Business Days
after Mortgagee’s request therefor, hereby authorizes Mortgagee to execute in
the name of Mortgagor or without the signature of Mortgagor to the extent
Mortgagee may lawfully do so, one or more financing statements, chattel
mortgages or other instruments, to evidence more effectively the security
interest of Mortgagee in the Mortgaged Property. Upon foreclosure or the
appointment of a receiver, Mortgagor will, at its sole cost and expense,
cooperate fully and completely to effect the assignment or transfer of any
license, permit, agreement or any other right necessary or useful to the
operation of the Mortgaged Property. Mortgagor grants to Mortgagee an
irrevocable power of attorney coupled with an interest for the purpose of
exercising and perfecting any and all rights and remedies available to Mortgagee
at law and in equity, including, without limitation, such rights and remedies
available to Mortgagee pursuant to this Section.

(b)          Subject to the terms and conditions set forth in the Loan
Agreement, Mortgagee shall have the right to engage in one or more Secondary
Market Transactions and, in connection therewith, Mortgagee may transfer its
obligations under this Mortgage, the Note, the Loan Agreement and under the
other Loan Documents (or may transfer the portion thereof corresponding to the
transferred portion of the Liabilities), and thereafter Mortgagee shall be
relieved of any obligations hereunder and under the other Loan Documents arising
after the date of said transfer with respect to the transferred interest.

14.          Recording of Mortgage, Etc. Upon the execution and delivery of this
Mortgage and thereafter, from time to time, Mortgagor will cause this Mortgage,
and any security instrument creating a lien or security interest or evidencing
the lien hereof upon the Mortgaged

 

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Property and each instrument of further assurance to be filed, registered or
recorded in such manner and in such places as may be required by any present or
future law in order to publish notice of and fully to protect the lien or
security interest hereof upon, and the interest of Mortgagee in, the Mortgaged
Property. Mortgagor will pay all filing, registration or recording fees, and all
expenses incident to the preparation, execution and acknowledgment of this
Mortgage, any mortgage supplemental hereto, any security instrument with respect
to the Mortgaged Property and any instrument of further assurance, and all
federal, state, county and municipal, taxes, duties, imposts, assessments and
charges arising out of or in connection with the execution and delivery of this
Mortgage, any mortgage supplemental hereto, any security instrument with respect
to the Mortgaged Property or any instrument of further assurance, except where
prohibited by law so to do.

15.          Reporting Requirements. Mortgagor agrees to give prompt notice to
Mortgagee of the insolvency or bankruptcy filing of Mortgagor or the death,
insolvency or bankruptcy filing of any Guarantor.

 

16.

Intentionally Deleted.

17.          Remedies. Upon the occurrence and during the continuance of an
Event of Default, Mortgagee may, at Mortgagee’s option, by Mortgagee itself, or
otherwise, do any one or more of the following:

(a)          Right to Perform Mortgagor’s Covenants. If Mortgagor has failed to
keep or perform any covenant whatsoever contained in this Mortgage or the other
Loan Documents, Mortgagee may, but shall not be obligated to do so, perform or
attempt to perform said covenant; and any payment made or expense incurred in
the performance or attempted performance of any such covenant, together with any
sum expended by Mortgagee that is chargeable to Mortgagor or subject to
reimbursement by Mortgagor under the Loan Documents, shall be and become a part
of the Liabilities, and Mortgagor promises, upon demand, to pay to Mortgagee, at
the place where the Note is payable, all sums so incurred, paid or expended by
Mortgagee, with interest from the date when paid, incurred or expended by
Mortgagee at the Default Rate .

(b)          Right of Entry. Mortgagee may, prior or subsequent to the
institution of any foreclosure proceedings, enter upon the Mortgaged Property,
or any part thereof, and take exclusive possession of the Mortgaged Property and
of all books, records, and accounts relating thereto and to exercise without
interference from Mortgagor any and all rights which Mortgagor has with respect
to the management, possession, operation, protection, or preservation of the
Mortgaged Property, including, without limitation, the right to rent the same
for the account of Mortgagor and to deduct from such Rents all costs, expenses,
and liabilities of every character incurred by the Mortgagee in collecting such
Rents and in managing, operating, maintaining, protecting, or preserving the
Mortgaged Property and to apply the remainder of such Rents on the Liabilities
in such manner as Mortgagee may elect. All such costs, expenses, and liabilities
incurred by Mortgagee in collecting such Rents and in managing, operating,
maintaining, protecting, or preserving the Mortgaged Property, if not paid out
of Rents as hereinabove provided, shall constitute a demand obligation owing by
Mortgagor and shall bear interest from the date of expenditure until paid at the
Default Rate as specified in the Note, all of which shall constitute a portion
of the Liabilities. If Mortgagee elects to enter the Mortgaged Property as

 

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provided for herein, Mortgagee may invoke any and all legal remedies to
dispossess Mortgagor, including specifically one or more actions for forcible
entry and detainer, trespass to try title, and restitution. In connection with
any action taken by the Mortgagee pursuant to this subsection, Mortgagee shall
not be liable for any loss sustained by Mortgagor resulting from any failure to
let the Mortgaged Property, or any part thereof, or from any other act or
omission of Mortgagee in managing the Mortgaged Property unless such loss is
caused by the willful misconduct or gross negligence of Mortgagee, its agents,
employees or officers, nor shall Mortgagee be obligated to perform or discharge
any obligation, duty, or liability under any Lease or under or by reason hereof
or the exercise of rights or remedies hereunder. Mortgagor shall and does hereby
agree to indemnify, defend and hold harmless the Indemnified Parties (as defined
in Section 23 below) from and against, any and all liability, claim, demand,
loss, damage, cost or expense (including, without limitation, reasonable
attorneys’ fees and disbursements) which may or might be suffered or incurred by
any Indemnified Party under any such Lease or under or by reason hereof or the
exercise of rights or remedies hereunder, or by reason of any alleged
obligations or undertakings on its part to perform or discharge any of the
terms, covenants, or agreements contained in any such Lease as and to the extent
provided under Section 23 below. Nothing in this subsection shall impose any
duty, obligation, or responsibility upon any Indemnified Party for the control,
care, management, leasing, or repair of the Mortgaged Property, nor for the
carrying out of any of the terms and conditions of any such Lease prior to the
transfer of title to the Mortgaged Property to any Indemnified Party by
foreclosure, deed-in-lieu thereof, exercise of power of sale or otherwise.
Mortgagor hereby assents to, ratifies, and confirms any and all actions of the
Mortgagee with respect to the Mortgaged Property taken under this subsection.

(c)          Right to Accelerate. Mortgagee may, without notice or demand,
declare the entire unpaid balance of the Liabilities immediately due and
payable.

(d)          Mortgagee’s Judicial Remedies. Mortgagee may proceed by suit or
suits, at law or in equity, to enforce the payment of the Liabilities to
foreclose the liens and security interests of this Mortgage as against all or
any part of the Mortgaged Property, and to have all or any part of the Mortgaged
Property sold under the judgment or decree of a court of competent jurisdiction.
This remedy shall be cumulative of any other nonjudicial remedies available to
the Mortgagee under this Mortgage or the other Loan Documents. Proceeding with a
request or receiving a judgment for legal relief shall not be or be deemed to be
an election of remedies or bar any available nonjudicial remedy of the
Mortgagee.

(e)          Mortgagee’s Right to Appointment of Receiver. Mortgagee, as a
matter of right and (i) without regard to the sufficiency of the security for
repayment of the Liabilities and without notice to Mortgagor, (ii) without any
showing of insolvency, fraud, or mismanagement on the part of Mortgagor,
(iii) without the necessity of filing any judicial or other proceeding other
than the proceeding for appointment of a receiver, and (iv) without regard to
the then value of the Mortgaged Property, shall be entitled to the appointment
of a receiver or receivers for the protection, possession, control, management
and operation of the Mortgaged Property, including (without limitation), the
power to collect the Rents, enforce this Mortgage and, in case of a sale and
deficiency, during the full statutory period of redemption (if any), whether
there be a redemption or not, as well as during any further times when
Mortgagor, except for the intervention of such receiver, would be entitled to
collection of such Rents. Mortgagor hereby

 

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irrevocably consents to the appointment of a receiver or receivers. Any receiver
appointed pursuant to the provisions of this subsection shall have the usual
powers and duties of receivers in such matters.

(f)           Mortgagee’s Uniform Commercial Code Remedies. Mortgagee may
exercise its rights of enforcement under the Uniform Commercial Code in effect
in the state in which the Mortgaged Property is located.

(g)          Other Rights. Mortgagee (i) may surrender the insurance policies
maintained pursuant to the Loan Agreement or any part thereof, and upon receipt
of the proceeds shall apply the unearned insurance premiums as a credit on the
Liabilities, and, in connection therewith, Mortgagor hereby appoints Mortgagee
as agent and attorney-in-fact (which is coupled with an interest and is
therefore irrevocable) for Mortgagor to collect such insurance premiums; (ii)
may apply the Escrow Fund and any other Reserves held pursuant to this Mortgage
or the other Loan Documents, and any other funds held by Mortgagee toward
payment of the Liabilities; and (iii) shall have and may exercise any and all
other rights and remedies which Mortgagee may have at law or in equity, or by
virtue of any of the Loan Documents, or otherwise.

(h)          Discontinuance of Remedies. If Mortgagee shall have proceeded to
invoke any right, remedy, or recourse permitted under the Loan Documents and
shall thereafter elect to discontinue or abandon same for any reason, Mortgagee
shall have the unqualified right so to do and, in such event, Mortgagor and
Mortgagee shall be restored to their former positions with respect to the
Liabilities, the Loan Documents, the Mortgaged Property or otherwise, and the
rights, remedies, recourses and powers of Mortgagee shall continue as if same
had never been invoked.

(i)           Remedies Cumulative. All rights, remedies, and recourses of
Mortgagee granted in the Note, this Mortgage, the Loan Agreement and the other
Loan Documents, any other pledge of collateral, or otherwise available at law or
equity: (i) shall be cumulative; (ii) may be pursued separately, successively,
or concurrently against Mortgagor, the Mortgaged Property, or any one or more of
them, at such time and in such order as Mortgagee may determine in its sole
discretion; (iii) may be exercised as often as occasion therefor shall arise, it
being agreed by Mortgagor that the exercise or failure to exercise any of same
shall in no event be construed as a waiver or release thereof or of any other
right, remedy, or recourse; (iv) shall be nonexclusive of any other right, power
or remedy which Mortgagee may have against Mortgagor pursuant to this Mortgage,
the Loan Agreement or the other Loan Documents, or otherwise available at law or
in equity; (v) shall not be conditioned upon Mortgagee exercising or pursuing
any remedy in relation to the Mortgaged Property prior to Mortgagee bringing
suit to recover the Liabilities; and (vi) in the event Mortgagee elects to bring
suit on the Liabilities and obtains a judgment against Mortgagor prior to
exercising any remedies in relation to the Mortgaged Property, all liens and
security interests, including the lien of this Mortgage, shall remain in full
force and effect and may be exercised thereafter at Mortgagee’s option.

(j)           Election of Remedies. Mortgagee may release, regardless of
consideration, any part of the Mortgaged Property without, as to the remainder,
in any way impairing, affecting, subordinating, or releasing the lien or
security interests evidenced by this Mortgage or the other

 

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Loan Documents or affecting the obligations of Mortgagor or any other party to
pay the Liabilities. For payment of the Liabilities, Mortgagee may resort to any
collateral securing the payment of the Liabilities in such order and manner as
Mortgagee may elect. No collateral taken by Mortgagee shall in any manner impair
or affect the lien or security interests given pursuant to the Loan Documents,
and all collateral shall be taken, considered, and held as cumulative.

(k)          Bankruptcy Acknowledgment. If the Mortgaged Property or any portion
thereof or any interest therein becomes property of any bankruptcy estate or
subject to any state or federal insolvency proceeding, or in the event of the
filing of any voluntary or involuntary petition under the Bankruptcy Code by or
against Mortgagor then Mortgagee shall immediately become entitled, in addition
to all other relief to which Mortgagee may be entitled under this Mortgage, to
obtain (i) an order from any bankruptcy court or other appropriate court
granting immediate relief from the automatic stay pursuant to § 362 of the
Bankruptcy Code so as to permit Mortgagee to pursue its rights and remedies
against Mortgagor as provided under this Mortgage and all other rights and
remedies of Mortgagee at law and in equity under applicable state law, and
(ii) an order from the Bankruptcy Court prohibiting Mortgagor’s use of all “cash
collateral” as defined under § 363 of the Bankruptcy Code. Mortgagor shall not
assert or request any other party to assert, that the automatic stay under § 362
of the Bankruptcy Code operate or be interpreted to stay, interdict, condition,
reduce or inhibit the ability of Mortgagee to enforce any rights it has by
virtue of this Mortgage, or any other rights that Mortgagee has, whether now or
hereafter acquired, against any guarantor of the Liabilities. Mortgagor shall
not seek a supplemental stay or any other relief, whether injunctive or
otherwise, pursuant to § 105 of the Bankruptcy Code or any other provision
therein to stay, interdict, condition, reduce or inhibit the ability of
Mortgagee to enforce any rights it has by virtue of this Mortgage against any
guarantor of the Liabilities. Any bankruptcy petition or other action taken by
Mortgagor to stay, condition, or inhibit Mortgagee from exercising its remedies
are hereby admitted by Mortgagor to be in bad faith and Mortgagor further admits
that Mortgagee would have just cause for relief from the automatic stay in order
to take such actions authorized under state law.

(l)           Application of Proceeds. The proceeds from any sale, lease, or
other disposition made pursuant to this Mortgage, or the proceeds from the
surrender of any insurance policies pursuant hereto, or any Rents collected by
Mortgagee from the Mortgaged Property or the Escrow Fund or other Reserves under
the Loan Agreement or sums received pursuant to Section 6 hereof, or proceeds
from insurance which Mortgagee elects to apply to the Liabilities pursuant to
Section 3 hereof, shall be applied by Mortgagee to the Liabilities in such
order, priority and proportions as Mortgagee in its sole discretion shall
determine.

18.          Security Agreement. This Mortgage is both a real property mortgage
and a “security agreement” within the meaning of the Uniform Commercial Code.
The Mortgaged Property includes both real and personal property and all other
rights and interests, whether tangible or intangible in nature, of Mortgagor in
the Mortgaged Property. Mortgagor by executing and delivering this Mortgage has
granted and hereby grants to Mortgagee, as security for the Liabilities, a
security interest in the Mortgaged Property to the full extent that the
Mortgaged Property may be subject to the Uniform Commercial Code (said portion
of the Mortgaged Property so subject to the Uniform Commercial Code being called
in this Section 18 the “Collateral”). Mortgagor hereby agrees to execute and
deliver to Mortgagee, in form and substance reasonably satisfactory to
Mortgagee, such financing statements and such further

 

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assurances as Mortgagee may from time to time reasonably consider necessary to
create, perfect, and preserve Mortgagee’s security interest herein granted. This
Mortgage shall also constitute a “fixture filing” for the purposes of the
Uniform Commercial Code as to all or any part of the Mortgaged Property which
now or hereafter constitute “fixtures” under the Uniform Commercial Code.
Information concerning the security interest herein granted may be obtained from
the parties at the addresses of the parties set forth in the first paragraph of
this Mortgage. If an Event of Default shall occur, Mortgagee, in addition to any
other rights and remedies which it may have, shall have and may exercise
immediately and without demand, any and all rights and remedies granted to a
secured party upon default under the Uniform Commercial Code, including, without
limiting the generality of the foregoing, the right to take possession of the
Collateral or any part thereof, and to take such other measures as Mortgagee may
deem necessary for the care, protection and preservation of the Collateral. Upon
request or demand of Mortgagee, Mortgagor shall, at its expense, assemble the
Collateral and make it available to Mortgagee at a convenient place acceptable
to Mortgagee. Mortgagor shall pay to Mortgagee on demand any and all expenses,
including legal expenses and attorneys’ fees, incurred or paid by Mortgagee in
protecting the interest in the Collateral and in enforcing the rights hereunder
with respect to the Collateral. Any notice of sale, disposition or other
intended action by Mortgagee with respect to the Collateral sent to Mortgagor in
accordance with the provisions hereof at least five (5) days prior to such
action, shall constitute commercially reasonable notice to Mortgagor. The
proceeds of any disposition of the Collateral, or any part thereof, may be
applied by Mortgagee to the payment of the Liabilities in such priority and
proportions as Mortgagee in its discretion shall deem proper. In the event of
any change in name, identity or structure of any Mortgagor, such Mortgagor shall
notify Mortgagee thereof and promptly after Mortgagee’s request shall execute,
file and record such Uniform Commercial Code forms as are necessary to maintain
the priority of Mortgagee’s lien upon and security interest in the Collateral,
and shall pay all expenses and fees in connection with the filing and recording
thereof. If Mortgagee shall require the filing or recording of additional
Uniform Commercial Code forms or continuation statements, Mortgagor shall,
promptly after request, execute, file and record such Uniform Commercial Code
forms or continuation statements as Mortgagee shall deem necessary, and shall
pay all expenses and fees in connection with the filing and recording thereof,
it being understood and agreed, however, that no such additional documents shall
increase Mortgagor’s obligations under the Note, this Mortgage and the other
Loan Documents. Mortgagor hereby irrevocably appoints Mortgagee as its
attorney-in-fact, coupled with an interest upon Mortgagor’s failure to do so
within five (5) Business Days after request by Mortgagee, to file with the
appropriate public office on its behalf any financing or other statements signed
only by Mortgagee, as Mortgagor’s attorney-in-fact, in connection with the
Collateral covered by this Mortgage. Notwithstanding the foregoing, Mortgagor
shall appear and defend in any action or proceeding which affects or purports to
affect the Mortgaged Property and any interest or right therein, whether such
proceeding affects title or any other rights in the Mortgaged Property (and in
conjunction therewith, Mortgagor shall fully cooperate with Mortgagee in the
event Mortgagee is a party to such action or proceeding).

19.          Actions and Proceedings. Upon the occurrence and during the
continuance of an Event of Default, Mortgagee has the right to appear in and
defend any action or proceeding brought with respect to the Mortgaged Property
and to bring any action or proceeding, in the name and on behalf of Mortgagor,
which Mortgagee, in its discretion, decides should be brought to protect its
interest in the Mortgaged Property. Mortgagee shall, at its option, be
subrogated to

 

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the lien of any mortgage or other security instrument discharged in whole or in
part by the Liabilities, and any such subrogation rights shall constitute
additional security for the payment of the Liabilities.

20.          Waiver of Setoff and Counterclaim, Marshalling, Statute of
Limitations, Automatic or Supplemental Stay, Etc. (a) All amounts due under this
Mortgage, the Loan Agreement, the Note and the other Loan Documents shall be
payable without setoff, counterclaim or any deduction whatsoever. Mortgagor
hereby waives the right to assert a setoff, counterclaim or deduction in any
action or proceeding in which Mortgagee is a participant, or arising out of or
in any way connected with this Mortgage, the Note, any of the other Loan
Documents, or the Liabilities.

(b)          Mortgagor hereby expressly, irrevocably, and unconditionally waives
and releases, to the extent permitted by law (i) the benefit of all
appraisement, valuation, stay, extension, reinstatement and redemption laws now
or hereafter in force and all rights of marshalling, sale in the inverse order
of alienation, or any other right to direct in any manner the order or sale of
any of the Mortgaged Property in the event of any sale hereunder of the
Mortgaged Property or any part thereof or any interest therein; (ii) any and all
rights of redemption from sale under any order or decree of foreclosure of this
Mortgage on behalf of Mortgagor, and on behalf of each and every person
acquiring any interest in or title to the Mortgaged Property subsequent to the
date of this Mortgage and on behalf of all persons to the extent permitted by
applicable law; and (iii) all benefits that might accrue to Mortgagor by virtue
of any present or future law exempting the Mortgaged Property from attachment,
levy or sale on execution or providing for any appraisement, valuation, stay of
execution, exemption from civil process, redemption, or extension of time for
payment. Mortgagee shall not be under any obligation to marshal any assets in
favor of any Person or against or in payment of any or all of the Liabilities.

(c)          To the extent permitted by applicable law, Mortgagee’s rights
hereunder shall continue even to the extent that a suit for collection of the
Liabilities, or part thereof, is barred by a statute of limitations. Mortgagor
hereby expressly waives and releases to the fullest extent permitted by law, the
pleading of any statute of limitations as a defense to payment of the
Liabilities.

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

22.          Handicapped Access. (a) Mortgagor agrees that the Mortgaged
Property shall at all times comply in all material respects with applicable
requirements of the Americans with Disabilities Act of 1990, the Fair Housing
Amendments Act of 1988, all state and local laws and ordinances related to
handicapped access and all rules, regulations, and orders issued pursuant
thereto including, without limitation, the Americans with Disabilities Act
Accessibility

 

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Guidelines for Buildings and Facilities (as the same may be amended, modified,
replaced or substituted from time to time, collectively “Access Laws”).

(b) Mortgagor agrees to give prompt notice to Mortgagee of the receipt by
Mortgagor of any complaints related to violation of any Access Laws and of the
commencement of any proceedings or investigations which relate to compliance
with applicable Access Laws but only to the extent that such complaints,
proceedings or investigations, if adversely determined, could have a Material
Adverse Effect.

23.          Indemnification. In addition to the payment of expenses as required
elsewhere herein and in the other Loan Documents, Mortgagor agrees to indemnify,
defend, protect, pay and hold Mortgagee, its successors and assigns (including,
without limitation, the trustee and/or the trust under any trust agreement
executed in connection with any Securitization backed in whole or in part by the
Loan and any other person which may hereafter be the holder of the Note or any
interest therein), and the officers, directors, stockholders, partners, members,
employees, agents, and Affiliates of Mortgagee and such successors and assigns
(collectively, the “Indemnified Parties”) harmless from and against any and all
liabilities, obligations, claims, damages, penalties, causes of action, costs
and expenses (including without limitation reasonable attorneys’ fees and
expenses) (collectively, the “Indemnified Claims”), imposed upon or incurred by
or asserted against any Indemnified Party by reason of any of the following (to
the extent that insurance proceeds paid to the applicable Indemnified Party on
account of the following shall be inadequate): (i) ownership of the Mortgage,
the Mortgaged Property or any interest therein or receipt of any rents; (ii) any
accident, injury to or death of persons or loss of or damage to property
occurring in, on or about the Mortgaged Property or any part thereof or on the
adjoining sidewalks, curbs, adjacent property or adjacent parking areas, streets
or ways; (iii) any use, nonuse or condition in, on or about the Mortgaged
Property or any part thereof or on the adjoining sidewalks, curbs, adjacent
property or adjacent parking areas, streets or ways; (iv) performance of any
labor or services or the furnishing of any materials or other property in
respect of the Mortgaged Property or any part thereof; (v) any failure of the
Premises or the Improvements to comply with any applicable law, statute, code,
ordinance, rule or regulation; (vi) any Event of Default by Mortgagor under this
Mortgage, the Loan Agreement or any other Loan Documents; (vii) any actions
taken by any Indemnified Party in the enforcement of this Mortgage and the other
Loan Documents in accordance with their respective terms; (viii) any failure to
act on the part of any Indemnified Party hereunder; (ix) any representation or
warranty made in the Note, this Mortgage or any of the other Loan Documents
being false or misleading in any material respect as of the date such
representation or warranty was made; (x) any claim by brokers, finders or
similar persons claiming to be entitled to a commission in connection with any
Lease or other transaction involving the Mortgaged Property or any part thereof
under any legal requirement or any liability asserted against Mortgagee with
respect thereto; and (xi) the claims of any lessee of any or any portion of the
Mortgaged Property or any person acting through or under any lessee or otherwise
arising under or as a consequence of any Lease. Notwithstanding the foregoing,
Mortgagor shall not be liable for any Indemnified Claims arising (A) from the
gross negligence or willful misconduct of any Indemnified Party or (B) under
clauses (i) – (v) above to the extent the facts, events or circumstances giving
rise to such Indemnified Claim arise after the date that any Indemnified Party
takes title to the Mortgaged Property by foreclosure, deed-in-lieu thereof, the
exercise of any power of sale or otherwise. Any amounts payable to an
Indemnified Party by reason of the application of this Section 23 shall be

 

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secured by this Mortgage shall become immediately due and payable and shall bear
interest at the Default Rate from the date loss or damage is sustained by such
Indemnified Party until paid. The obligations and liabilities of Mortgagor under
this paragraph shall survive the termination, satisfaction, or assignment of
this Mortgage and the exercise by Mortgagee of any of its rights or remedies
hereunder, including, but not limited to, the acquisition of the Mortgaged
Property by foreclosure or a conveyance in lieu of foreclosure.

(a)          Notices. Any notice, request, demand, statement, authorization,
approval, consent or acceptance made hereunder shall be in writing and shall be
hand delivered or sent by Federal Express or other reputable courier service, or
by registered or certified mail, postage prepaid with return receipt requested,
and shall be deemed given (i) upon delivery, if delivered in person, (ii) one
(1) Business Day after being deposited with Federal Express or any other
reputable overnight courier service, or (ii) three (3) Business Days after being
postmarked and addressed as follows if sent by registered or certified mail,
return receipt requested, addressed as follows:

 

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                If to Mortgagee:

Citicorp USA, Inc.

666 Fifth Avenue

Fifth Floor

New York, New York 10103

Attention: Diana Yusun

 

With a copy to:

Sidley Austin LLP

One South Dearborn

Chicago, Illinois 60603

Attention: Virginia Aronson

If to Mortgagor:

280 Shuman Blvd., L.L.C.

c/o Prime Office Company LLC

77 West Wacker Drive

Suite 3900

Chicago, Illinois 60601

Attention: Jeffrey Patterson

 

With a copy to:

PGRT Equity LLC

c/o Prime Office Company LLC

Suite 3900

Chicago, Illinois 60601

Attention: James Hoffman

 

With a copy to:

The Lightstone Group

326 Third Street

Lakewood, New Jersey 08701

Attention: David Lichtenstein

 

With a copy to:

 

Herrick, Feinstein LLP

2 Park Avenue

New York, New York 10016

Attention: Sheldon Chanales

Each party may designate a change of address by notice to the other party, given
at least fifteen (15) days before such change of address is to become effective.

 

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24.          Authority. (a) Mortgagor (and the undersigned representative of
Mortgagor, if any) has full power, authority and right to execute, deliver and
perform its obligations pursuant to this Mortgage, and to mortgage, give, grant,
bargain, sell, alien, enfeoff, convey, confirm, warrant, pledge, hypothecate and
assign the Mortgaged Property pursuant to the terms hereof and to keep and
observe all of the terms of this Mortgage on Mortgagor’s part to be performed;
and (b) Mortgagor represents and warrants that Mortgagor is not a “foreign
person” within the meaning of Section 1445(f)(3) of the Internal Revenue Code of
1986, as amended and the related Treasury Department regulations.

25.          Waiver of Notice. Mortgagor shall not be entitled to any notices of
any nature whatsoever from Mortgagee except with respect to matters for which
this Mortgage or the Loan Agreement specifically and expressly provides for the
giving of notice by Mortgagee to Mortgagor and except with respect to matters
for which Mortgagee is required by applicable law to give notice, and Mortgagor
hereby expressly waives the right to receive any notice from Mortgagee with
respect to any matter for which this Mortgage or the Loan Agreement do not
specifically and expressly provide for the giving of notice by Mortgagee to
Mortgagor.

26.          Remedies of Mortgagor. In the event that a claim or adjudication is
made that Mortgagee has acted unreasonably or unreasonably delayed acting in any
case where by law or under the Note, this Mortgage or the other Loan Documents,
it has an obligation to act reasonably or promptly, Mortgagee shall not be
liable for any monetary damages, and Mortgagor’s remedies shall be limited to
injunctive relief or declaratory judgment.

27.          Sole Discretion of Mortgagee. Whenever pursuant to this Mortgage or
the other Loan Documents, Mortgagee exercises any right given to it to consent,
approve or disapprove, or any arrangement or term is to be satisfactory to
Mortgagee, the decision of Mortgagee to consent, approve or disapprove, or to
decide that arrangements or terms are satisfactory or not satisfactory shall be
in the sole discretion of Mortgagee and shall be final and conclusive, except as
may be otherwise expressly and specifically provided herein. Notwithstanding
anything to the contrary contained herein, it shall be understood and agreed
that any such consent, approval, or disapproval may be conditioned, among other
things, upon Mortgagee obtaining confirmation by the Rating Agencies that the
action or other matter subject to Mortgagee’s consent, approval, or disapproval
shall not adversely affect the rating of any securities issued or to be issued
in connection with any Securitization or secondary market transaction,
notwithstanding that such condition may not be expressly set forth in the
provision or provisions of the Loan Documents which require that Mortgagee’s
consent be obtained.

28.          Non-Waiver. The failure of Mortgagee to insist upon strict
performance of any term hereof shall not be deemed to be a waiver of any term of
this Mortgage. Mortgagor shall not be relieved of Mortgagor’s obligations
hereunder by reason of (a) the failure of Mortgagee to comply with any request
of Mortgagor or Guarantor to take any action to foreclose this Mortgage or
otherwise enforce any of the provisions hereof or of the Note or other Loan
Documents, (b) the release, regardless of consideration, of the whole or any
part of the Mortgaged Property, or of any person liable for the Liabilities or
any portion thereof, or (c) any agreement or stipulation by Mortgagee extending
the time of payment or otherwise modifying or supplementing the terms of the
Note, this Mortgage, or the other Loan Documents. Mortgagee may resort for the
payment of the Liabilities to any other security held by Mortgagee in such order
and manner as Mortgagee,

 

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in its discretion, may elect. Mortgagee may take action to recover the
Liabilities, or any portion thereof, or to enforce any covenant hereof without
prejudice to the right of Mortgagee thereafter to foreclosure this Mortgage. The
rights and remedies of Mortgagee under this Mortgage shall be separate, distinct
and cumulative and none shall be given effect to the exclusion of the others. No
act of Mortgagee shall be construed as an election to proceed under any one
provision herein to the exclusion of any other provision. Mortgagee shall not be
limited exclusively to the rights and remedies herein stated but shall be
entitled to every right and remedy now or hereafter afforded at law or in
equity.

29.          Liability. Subject to the provisions hereof requiring Mortgagee’s
consent to any transfer of the Mortgaged Property, this Mortgage shall be
binding upon and inure to the benefit of Mortgagor and Mortgagee and their
respective successors and assigns forever.

30.          Inapplicable Provisions. If any term, covenant or condition of this
Mortgage is held to be invalid, illegal or unenforceable in any respect, this
Mortgage shall be construed without such provision.

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

32.          Counterparts. This Mortgage may be executed in any number of
counterparts each of which shall be deemed to be an original but all of which
when taken together shall constitute one agreement.

33.          Definitions. Unless the context clearly indicates a contrary intent
or unless otherwise specifically provided herein, words used in this Mortgage
may be used interchangeably in singular or plural form and the word “Mortgagor”
shall mean “each Mortgagor and any subsequent owner or owners of the Mortgaged
Property or any part thereof or any interest therein,” the word “Mortgagee”
shall mean “Mortgagee and any subsequent holder of the Note,” the word
“Liabilities” shall mean “the Note and any other evidence of Debt secured by
this Mortgage,” the word “person” shall include an individual, corporation,
partnership, trust, unincorporated association, government, governmental
authority, and any other entity, and the words “Mortgaged Property” shall
include any portion of the Mortgaged Property and any interest therein and the
words “attorneys’ fees” shall include any and all reasonable attorneys’ fees,
paralegal and law clerk fees, including, but not limited to, fees at the
pre-trial, trial and appellate levels incurred or paid by Mortgagee in
protecting its interest in the Mortgaged Property and Collateral and enforcing
its rights hereunder. Whenever the context may require, any pronouns used herein
shall include the corresponding masculine, feminine or neuter forms, and the
singular form of nouns and pronouns shall include the plural and vice versa.

34.          Homestead. Mortgagor hereby waives and renounces all homestead and
exemption rights provided by the constitution and the laws of the United States
and of any state, in and to the Mortgaged Property as against the collection of
the Liabilities, or any part hereof.

35.          Assignments. Mortgagee shall have the right to assign or transfer
its rights under this Mortgage and the other Loan Documents without limitation,
including, without limitation,

 

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the right to assign or transfer its rights to a servicing agent. Any assignee or
transferee shall be entitled to all the benefits afforded Mortgagee under this
Mortgage and the other Loan Documents. Mortgagee agrees to provide Mortgagor
with notice of any such assignment; provided, however, that Mortgagor’s consent
shall not be required in connection with any such assignment and no delay or
failure by Mortgagee to provide such notice shall limit the effectiveness of
such assignment.

36.          Survival of Liabilities; Survival of Warranties and
Representations. Each and all of the covenants, obligations, representations and
warranties of Mortgagor shall survive the execution and delivery of the Loan
Documents and the transfer or assignment of this Mortgage (including, without
limitation, any transfer of the Mortgage by Mortgagee of any of its rights,
title and interest in and to the Mortgaged Property to any party, whether or not
affiliated with Mortgagee).

37.          Covenants Running with the Land. All covenants, conditions,
warranties, representations and other obligations contained in this Mortgage and
the other Loan Documents are intended by Mortgagor and Mortgagee to be, and
shall be construed as, covenants running with the Mortgaged Property until the
lien of this Mortgage has been fully released by Mortgagee, pursuant to the
terms hereof.

38.          Governing Law; Jurisdiction. THIS MORTGAGE SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO
CONTRACTS MADE AND PERFORMED IN THE STATE OF NEW YORK AND ANY APPLICABLE LAWS OF
THE UNITED STATES OF AMERICA, EXCEPT THAT AT ALL TIMES THE PROVISIONS FOR THE
CREATION, PERFECTION AND ENFORCEMENT OF THE LIENS AND SECURITY INTERESTS CREATED
PURSUANT TO THIS MORTGAGE SHALL BE GOVERNED BY THE LAWS OF THE STATE OF
ILLINOIS.

39.          Time of Essence. Time is of the essence as to all of the terms,
covenants and condition of this Mortgage and the other Loan Documents.

40.          No Third-Party Beneficiaries. The provisions of this Mortgage and
the other Loan Documents are for the benefit of Mortgagor and Mortgagee and
shall not inure to the benefit of any third party (other than any successor or
assignee of Mortgagee or permitted assignee of Mortgagor). This Mortgage and the
other Loan Documents shall not be construed as creating any rights, claims or
causes of action against Mortgagee or any of its officers, directors, agents or
employees in favor of any party other than Mortgagor including but not limited
to any claims to any sums held in the Impositions and Insurance Reserve or any
other Reserves.

41.          Relationship of Parties. The relationship of Mortgagee and
Mortgagor is solely that of debtor and creditor, and Mortgagee has no fiduciary
or other special relationship with the Mortgagor, and no term or condition of
any of the Loan Documents shall be construed to be other than that of debtor and
creditor. Mortgagor represents and acknowledges that neither the Loan Documents
nor any course of dealing between the parties creates any partnership or joint
venture between Mortgagor and Mortgagee or any other person, nor does it provide
for any shared appreciation rights or other equity participation interest.

 

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42.          Successors and Assigns. This Mortgage shall be binding upon and
inure to the benefit of the parties hereto and their respective successors and
assigns, except that Mortgagor may not assign its rights or obligations
hereunder except as expressly provided in Section 9 hereof or as permitted under
the Loan Agreement.

43.          Investigations. Any and all representations, warranties, covenants
and agreements made in this Mortgage (and/or in other Loan Documents) shall
survive any investigation or inspection made by or on behalf of Mortgagee.

44.          Assignment of Leases. (a) Mortgagor acknowledges and confirms that
it has executed and delivered to Mortgagee the Assignment of Leases and Rents
(the “Assignment of Leases”) intending that such instrument create a present,
absolute assignment to Mortgagee of the Leases and Rents. Without limiting the
intended benefits or the remedies provided under the Assignment of Leases,
Mortgagor hereby assigns to Mortgagee, as further security for the Liabilities
and the Liabilities, the Leases and Rents. While any Event of Default exists,
Mortgagee shall be entitled to exercise any or all of the remedies provided in
the Assignment of Leases and in Section 17 hereof, including, without
limitation, the right to have a receiver appointed. If any conflict or
inconsistency exists between the assignment of the Leases and Rents in this
Mortgage and the absolute assignment of the Leases and the Rents in the
Assignment of Leases, the terms of the Assignment of Leases shall control.

(b)          So long as any part of the Liabilities and the Liabilities secured
hereby remain unpaid and undischarged, the fee and leasehold estates to the
Mortgaged Property shall not merge, but shall remain separate and distinct,
notwithstanding the union of such estates either in Mortgagor, Mortgagee, any
lessee or any third party by purchase or otherwise.

45.          Waiver of Right to Trial by Jury. EACH OF MORTGAGOR AND MORTGAGEE
HEREBY AGREES NOT TO ELECT A TRIAL BY JURY OF ANY ISSUE TRIABLE OF RIGHT BY
JURY, AND WAIVES ANY RIGHT TO TRIAL BY JURY FULLY TO THE EXTENT THAT ANY SUCH
RIGHT SHALL NOW OR HEREAFTER EXIST WITH REGARD TO THIS MORTGAGE OR THE OTHER
LOAN DOCUMENTS, OR ANY CLAIM, COUNTERCLAIM OR OTHER ACTION ARISING IN CONNECTION
THEREWITH. THIS WAIVER OF RIGHT TO TRIAL BY JURY IS GIVEN KNOWINGLY AND
VOLUNTARILY BY EACH OF MORTGAGOR AND MORTGAGEE, AND IS INTENDED TO ENCOMPASS
INDIVIDUALLY EACH INSTANCE AND EACH ISSUE AS TO WHICH THE RIGHT TO A TRIAL BY
JURY WOULD OTHERWISE ACCRUE. MORTGAGEE IS HEREBY AUTHORIZED TO FILE A COPY OF
THIS SECTION IN ANY PROCEEDING AS CONCLUSIVE EVIDENCE OF THIS WAIVER BY
MORTGAGOR.

46.          Expenses and Attorneys’ Fees. Mortgagor agrees to promptly pay all
reasonable fees, costs and expenses incurred by Mortgagee in connection with any
matters contemplated by or arising out of this Mortgage and the other Loan
Documents, including, without limitation, reasonable fees, costs and expenses
(including reasonable attorneys’ fees and fees of other professionals retained
by Mortgagee) incurred in any action to enforce this Mortgage or the other Loan
Documents or to collect any payments due from Mortgagor under this Mortgage, the
Loan Agreement, the Note or any other Loan Document or incurred in connection
with any refinancing or restructuring of the credit arrangements provided under
this Mortgage incurred in

 

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connection with a “workout” or in connection with any insolvency or bankruptcy
proceedings with respect to Mortgagor, and all such fees, costs and expenses
shall be part of the Liabilities, payable on demand.

47.          Amendments and Waivers. Except as otherwise provided herein, no
amendment, modification, termination or waiver of any provision of this
Mortgage, the Note or any other Loan Document, or consent to any departure
therefrom, shall in any event be effective unless the same shall be in writing
and signed by Mortgagee and any other party to be charged. Each amendment,
modification, termination or waiver shall be effective only in the specific
instance and for the specific purpose for which it was given. No notice to or
demand on Mortgagor in any case shall entitle Mortgagor to any other or further
notice or demand in similar or other circumstances.

48.          Servicer. Mortgagee shall have the right at any time throughout the
term of the Loan to designate or appoint one or more Servicers (as defined in
the Loan Agreement) to administer this Mortgage and the other Loan Documents,
and to change or replace any Servicer. All of Mortgagee’s rights under this
Mortgage and the other Loan Documents may be exercised by any such Servicer
designated by Mortgagee. Any such Servicer shall be entitled to the benefit of
all obligations of Mortgagor in favor of Mortgagee.

49.          Copy of Mortgage. MORTGAGOR REPRESENTS AND WARRANTS THAT IT HAS
RECEIVED A TRUE COPY OF THIS MORTGAGE WITHOUT CHARGE.

50.          Limitation on Recourse. The obligations of Mortgagor hereunder are
subject to limitations on recourse as provided in Article XII of the Loan
Agreement.

51.          Satisfaction of Mortgage. Upon payment of the Liabilities in full,
Mortgagee, at Mortgagor’s sole cost and upon Mortgagor’s request, shall execute
and deliver to Mortgagor a satisfaction or reconveyance of Mortgage, duly
acknowledged and in recordable form, UCC-3 financing statements terminating any
UCC-1 financing statements filed by Mortgagee relating to the Mortgaged
Property, and such other documents or instruments as may be required to release
the Lien of the Loan Documents from the Mortgaged Property.

52.           Conflict. The terms and provisions of this Mortgage shall be
construed to the extent possible consistently with those of the Loan Agreement
as being in addition to and supplementing the provisions of the Loan Agreement
and the other Loan Documents; however, in the event that notwithstanding such
construction there is an irresolvable conflict between the provisions of this
Mortgage and the provisions of the Loan Agreement, the provisions of the Loan
Agreement shall govern and control.

53.          State Specific Provisions. The following provisions are included in
this Mortgage specifically to comply with provisions of Illinois law or custom:

(a) Mortgagor represents and warrants to Mortgagee that the proceeds of the Debt
secured hereby shall be used solely for business purposes and in furtherance of
the regular business affairs of Mortgagor, and the entire principal obligation
secured by this Mortgage constitutes (i) a “business loan” as that term is
defined in, and for all purposes

 

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of, 815 ILCS 205/4(c) and (ii) a “loan secured by a mortgage on real estate”
within the purview and operation of 815 ILCS 205/4(l).

 

(b) This Mortgage secures the payment of the entire Debt secured hereby;
provided, however, that the total amount secured by this Mortgage (excluding
interest, costs, expenses, charges, fees, protective advances and
indemnification obligations, all of any type or nature) shall not exceed an
amount equal to two hundred percent (200%) of the face amount of the Note.

 

(c) Pursuant to the terms of the Collateral Protection Act, 815 ILCS 180/1 et
seq., Mortgagor is hereby notified that unless Mortgagor provides Mortgagee with
evidence of the insurance coverage required by this Mortgage, Mortgagee may
purchase insurance at Mortgagor’s expense to protect Mortgagee’s interests in
the Premises or any part of the Mortgaged Property, which insurance may, but
need not, protect the interests of Mortgagor. The coverage purchased by
Mortgagee may not pay any claim made by Mortgagor or any claim made against
Mortgagor in connection with the Premises or any part of the Mortgaged Property.
Mortgagor may later cancel any insurance purchased by Mortgagee, but only after
providing Mortgagee with evidence that Mortgagor has obtained the insurance as
required hereunder. If Mortgagee purchases insurance for the Premises, the
Mortgagor will be responsible for the costs of such insurance, including
interest and any other charges imposed in connection with the placement of the
insurance, until the effective date of the cancellation or expiration of the
insurance. The costs of the insurance may be added to the Debt secured hereby.
The costs of such insurance may be greater than the cost of insurance Mortgagor
may be able to obtain for itself.

 

(d) It is the intention of Mortgagor and Mortgagee that the enforcement of the
terms and provisions of this Mortgage shall be accomplished in accordance with
the Illinois Mortgage Foreclosure Law (the “Act”), 735 ILCS 5/15-1101 et seq.,
and with respect to such Act, Mortgagor agrees and covenants that:

 

(i) Mortgagee shall have the benefit of all of the provisions of the Act,
including all amendments thereto which may become effective from time to time
after the date hereof. In the event any provision of the Act which is
specifically referred to herein may be repealed, Mortgagee shall have the
benefit of such provision as most recently existing prior to such repeal, as
though the same were incorporated herein by express reference. If any provision
in this Mortgage shall be inconsistent with any provision of the Act, provisions
of the Act shall take precedence over the provisions of this Mortgage but shall
not invalidate or render unenforceable any other provision of this Mortgage that
can be construed in a manner consistent with the Act. If any provision of this
Mortgage shall grant to Mortgagee (including Mortgagee acting as a
mortgagee-in-possession) or a receiver appointed pursuant to the provisions of
Section 5.3(c) of this Mortgage any powers, rights or remedies prior to, upon or
following the occurrence of an Event of Default which are more limited than the
powers, rights or remedies that would otherwise be vested in Mortgagee or in
such receiver under the Act in the absence of said provision, Mortgagee and such
receiver shall be vested with the

 

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powers, rights and remedies granted in the Act to the full extent permitted by
law. Without limiting the generality of the foregoing, all expenses incurred by
Mortgagee, whether incurred before or after any decree or judgment of
foreclosure, and whether or not enumerated in this Mortgage, shall be added to
the Liabilities and shall have the benefit of all applicable provisions of the
Act.

 

(ii) Wherever provision is made in this Mortgage for insurance policies to bear
mortgagee clauses or other loss payable clauses or endorsements in favor of
Mortgagee, or to confer authority upon to settle or participate in the
settlement of losses under policies of insurance or to hold and disburse or
otherwise control the use of insurance proceeds, from and after the entry of
judgment of foreclosure, all such rights and powers of the Mortgagee shall
continue in the Mortgagee as judgment creditor or mortgagee until confirmation
of sale.

 

(iii) In addition to any provision of this Mortgage authorizing the Mortgagee to
take or be placed in possession of the Premises, or for the appointment of a
receiver, Mortgagee shall have the right, in accordance with Sections 15-1701
and 15-1702 of the Act, to be placed in the possession of the Premises or at its
request to have a receiver appointed, and such receiver, or Mortgagee, if and
when placed in possession, shall have, in addition to any other powers provided
in this Mortgage, all rights, powers, immunities, and duties and provisions for
in Sections 15-1701 and 15-1703 of the Act.

 

(iv) Mortgagor acknowledges that the Premises do not constitute agricultural
real estate, as said term is defined in Section 15-1201 of the Act or
residential real estate as defined in Section 15-1219 of the Act.

 

(v) Mortgagor hereby expressly waives any and all rights of reinstatement and
redemption, if any, under any order or decree of foreclosure of this Mortgage,
on its own behalf and on behalf of each and every person, it being the intent
hereof that any and all such rights of reinstatement and redemption of Mortgagor
and of all other persons are and shall be deemed to be hereby waived to the full
extent permitted by the provisions of Section 5/15-1601 of the Act or other
applicable law or replacement statutes.

 

54.          Contemporaneous Security Instruments. THIS MORTGAGE IS MADE
CONTEMPORANEOUSLY WITH THE OTHER SECURITY INSTRUMENTS DATED AS OF THE DATE
HEREOF GIVEN BY AFFILIATES OF MORTGAGOR TO MORTGAGEE, COVERING PROPERTIES
LOCATED IN THE STATE OF ILLINOIS (the “Other Security Instruments”). The Other
Security Instruments further secure the obligations of Mortgagor to Mortgagee
under the Note. Upon the occurrence of an Event of Default, Mortgagee may
proceed under this Mortgage and/or the Other Security Instruments against any of
such property and/or the Mortgaged Property in one or more parcels and in such
manner and order as Mortgagee shall elect. Mortgagor hereby irrevocably waives
and releases, to the extent permitted by law, and whether now or hereafter in
force, any right to have the Mortgaged Property and/or the property

 

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covered by the Other Security Instruments marshalled upon any foreclosure of
this Mortgage or the Other Security Instruments.

 

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

 

MORTGAGOR:

 

 

 

280 SHUMAN BLVD., L.L.C., a Delaware limited

 

liability company

 

 

 

By:       PGRT EQUITY LLC, a Delaware limited

 

liability company, its sole member

 

 

 

By:       Prime Group Realty Limited Partnership, a

 

Delaware limited partnership, its sole member

 

 

 

By:       Prime Group Realty Trust, a Maryland real

 

estate investment trust, its general partner

 

 

 

By:       /s/David Lichtenstein

 

Name: David Lichtenstein

 

Title:   Chairman

 

 

 

 

 

 

 

 

 

 

 

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ACKNOWLEDGMENT

 

STATE OF NJ)

 

) SS

COUNTY OF Ocean)

 

I, Sara Boxer, a Notary Public in and for said County, in the State aforesaid,
do hereby certify that David Lichtenstein, the Chairman of Prime Group Realty
Trust, a Maryland real estate investment trust that is the general partner of
Prime Group Realty, L.P., that is the sole member of PGRT EQUITY LLC, a Delaware
limited liability company, as Assignor aforesaid, who is personally known to me
to be the same person whose name is subscribed to as the foregoing instrument as
such Chairman, appeared before me this day in person and acknowledged that
she/he signed and delivered the said instrument as her/his own free and
voluntary act for and on behalf of Prime Group Realty Trust on behalf of PGRT
EQUITY LLC which executed the document on behalf of 280 Shuman Blvd., LLC, for
the uses and purposes therein set forth.

Given under my hand and notarial seal this 11th day of January, 2006.

 

/s/ Sara Boxer

 

Notary Public

 

 

 

Sara Boxer

 

(Type or Print Name)

 

 

 

(SEAL)

Sara Boxer

 

Notary Public of New Jersey

 

My Commission Expires FEB 14, 2008

 

 

Commission Expires:

 

2/14/08

 

 

 

 

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EXHIBIT A

 

Legal Description of Premises

 

 

ADDRESS OF PROPERTY:

P.I.N. No(s).

280 Shuman Boulevard

Naperville, Illinois 60563

 

 

[Remainder of Exhibit A follows this Page.]

[INTENTIONALLY OMITTED]

 

 

 

 

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