EXHIBIT 10.70

CONTINENTAL TOWERS, L.L.C.

(Mortgagor or Borrower)

to

WELLS FARGO BANK, N.A., as trustee for the registered holders of

COBALT CMBS COMMERCIAL MORTGAGE TRUST 2006-C1,

COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES,

SERIES 2006-C1

(Mortgagee or Lender)

This Mortgage, Security Agreement and Fixture Financing Statement

also constitutes a Fixture Financing Statement.

AMENDED AND RESTATED

MORTGAGE, SECURITY AGREEMENT AND FIXTURE FINANCING STATEMENT

Dated: As of December 29, 2006

PROPERTY LOCATION:

Permanent Tax Identification Numbers: 08-16-100-034, 08-16-100-035, and
08-16-100-036

1701 Golf Road

Rolling Meadows, Cook County, Illinois

DOCUMENT PREPARED BY AND WHEN RECORDED RETURN TO:

 

WINSTEAD SECHREST & MINICK P.C.

5400 Renaissance Tower

1201 Elm Street

Dallas, Texas 75270

Attention: Christopher T. Nixon, Esq.

 

 

43412-20/Continental Towers

THIS AMENDED AND RESTATED MORTGAGE, SECURITY AGREEMENT AND FIXTURE FINANCING
STATEMENT (this “Mortgage” or “Security Instrument”), made as of December 29,
2006, by CONTINENTAL TOWERS, L.L.C., a Delaware limited liability company
(“Mortgagor” or “Borrower”), having its principal place of business at c/o Prime
Group Realty Trust, 77 West Wacker Drive, Suite 3900, Chicago, Illinois 60601,
and to WELLS FARGO BANK, N.A., as trustee for the registered holders of COBALT
CMBS COMMERCIAL MORTGAGE TRUST 2006-C1, COMMERCIAL MORTGAGE PASS-THROUGH
CERTIFICATES, SERIES 2006-C1, c/o CWCAPITAL LLC, a Massachusetts limited
liability company, having its principal office at One Charles River Place,
63 Kendrick Street, Needham, Massachusetts 02494 (“Mortgagee” or “Lender”).

W I T N E S S E T H:

To secure the payment of (i) the indebtedness evidenced by those certain Amended
and Restated Promissory Notes as described below (such Promissory Notes together
with all extensions, renewals or modifications thereof hereinafter collectively
called the “Note”, and the indebtedness evidenced by the Note hereinafter being
referred to as the “Loan”): (A) that certain Promissory Note (singularly, the
“Borrower Note”) of even date of this Mortgage, made by Borrower and payable to
the order of Lender in the original principal sum of SEVENTY-THREE MILLION SIX
HUNDRED THOUSAND AND NO/100 DOLLARS ($73,600,000.00), lawful money of the United
States of America, to be paid with interest at a rate per annum of 5.864% and
having a maturity date of December 1, 2016 (the indebtedness evidenced by the
Borrower Note hereinafter being referred to as the “Borrower Loan”), and
(B) that certain Promissory Note (singularly, the “Other Note”) of even date of
this Mortgage, made by CONTINENTAL TOWERS ASSOCIATES III, LLC, a Delaware
limited liability company (“Other Borrower”), and payable to the order of Lender
in the original principal sum of FORTY-ONE MILLION FOUR HUNDRED THOUSAND AND
NO/100 DOLLARS ($41,400,000.00), lawful money of the United States of America,
to be paid with interest at a rate per annum of 5.864% and having a maturity
date of December 1, 2016 (the indebtedness evidenced by the Other Note hereafter
being referred to as the “Other Loan”), and all other sums due hereunder, under
the Other Mortgage (hereinafter defined), under the other Loan Documents
(hereinafter defined) and under the Note; (ii) any and all future or additional
advances (whether or not obligatory) made by Lender to protect or preserve the
Security Property or the lien or security interest created hereby on the
Security Property, or for taxes, assessments or insurance premiums 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 Security Property at the time of such advances)
together with interest thereon at the Default Interest Rate (as defined in the
Note) such advances to be secured to the same extent as if such future advances
were made on the date hereof and although there may be no indebtedness
outstanding at the time any advance is made; and (iii) ANY AND ALL OTHER
INDEBTEDNESS NOW OWING OR WHICH MAY HEREAFTER BE OWING BY BORROWER OR OTHER
BORROWER TO LENDER HEREUNDER, UNDER THE OTHER MORTGAGE, UNDER THE NOTE AND THE
OTHER LOAN DOCUMENTS, 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, AMENDMENTS,

 

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RESTATEMENTS, CONSOLIDATIONS, SUBSTITUTIONS, REPLACEMENTS AND EXTENSIONS THEREOF
(said indebtedness and interest due under the Note and all other sums due
hereunder, under the Other Mortgage, under the Note and the other Loan Documents
being hereinafter collectively referred to as the “Debt”). The principal amount
of the Debt shall not exceed double the aggregate original principal amount of
the Note and the Other Note.

Borrower has mortgaged, given, granted, bargained, transferred, sold, alienated,
enfeoffed, conveyed, confirmed, warranted, pledged, assigned, and hypothecated
and by these presents does hereby deed, mortgage, give, grant, bargain, sell,
alien, enfeoff, convey, confirm, warrant, pledge, assign and hypothecate unto
Lender, the real property described in Exhibit A attached hereto (the
“Premises”) and all of Borrower’s right, title and interest to the buildings,
structures, fixtures, additions, enlargements, extensions, modifications,
repairs, replacements and improvements now or hereafter located thereon (the
“Improvements”);

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

GRANTING CLAUSE ONE

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, all rights to oil, gas, minerals, coal and other
substances of any kind or character, 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, highway, alley or avenue, opened,
vacated 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, curtsey and rights of curtsey, property, possession, claim and demand
whatsoever, both at law and in equity, of Borrower of, in and to the Premises
and the Improvements and every part and parcel thereof, with the appurtenances
thereto;

GRANTING CLAUSE TWO

All machinery, furniture, furnishings, equipment, computer software and
hardware, fixtures (including, without limitation, 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 Borrower, or in which Borrower 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 Borrower, or
in which Borrower has or shall have an interest, now or hereafter located upon
the Premises and the Improvements, or appurtenant thereto, or usable in
connection with the present or future operation, enjoyment and occupancy of the
Premises and the Improvements (hereinafter collectively referred to as the
“Equipment”), including any leases of any of the foregoing, any deposits
existing at any time in connection with any of the

 

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foregoing, and the proceeds of any sale or transfer of the foregoing, and the
right, title and interest of Borrower in and to any of the Equipment that 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 Security Property
is located (the “Uniform Commercial Code”), superior in lien to the lien of this
Security Instrument;

GRANTING CLAUSE THREE

Awards or payments, including interest thereon, that may heretofore and
hereafter be made with respect to the Premises and the Improvements, whether
from the exercise of the right of eminent domain or condemnation (including,
without limitation, 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 Premises and Improvements;

GRANTING CLAUSE FOUR

All leases and other agreements or arrangements heretofore or hereafter entered
into affecting the use, enjoyment or occupancy of, or the conduct of any
activity upon or in, the Premises and the Improvements, including any
extensions, renewals, modifications or amendments thereof (the “Leases”) and all
rents, rent equivalents, moneys payable as damages or in lieu of rent or rent
equivalents, lease termination fees and penalties, 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 Borrower or its
agents or employees from any and all sources arising from or attributable to the
Premises and the Improvements (the “Rents”), 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 Debt;

GRANTING CLAUSE FIVE

All proceeds of and any unearned premiums on any insurance policies covering the
Security 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 Security Property;

GRANTING CLAUSE SIX

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

GRANTING CLAUSE SEVEN

All accounts, escrows, documents, instruments, chattel paper, claims, deposits
and general intangibles, as the foregoing terms are defined in the Uniform
Commercial Code, and all franchises, trade names, trademarks, symbols, service
marks, books, records, plans, specifications, designs, drawings, permits,
consents, licenses, management agreements, contract

 

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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 Security Property),
approvals, actions, refunds of real estate taxes and assessments (and any other
governmental impositions related to the Security Property), and causes of action
that now or hereafter relate to, are derived from or are used in connection with
the Security Property, or the use, operation, maintenance, occupancy or
enjoyment thereof or the conduct of any business or activities thereon
(hereinafter collectively referred to as the “Intangibles”); and

GRANTING CLAUSE EIGHT

All proceeds, products, offspring, rents and profits from any of the foregoing,
including, without limitation, those from sale, exchange, transfer, collection,
loss, damage, disposition, substitution or replacement of any of the foregoing.

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

PROVIDED, HOWEVER, these presents are upon the express condition that, if
Borrower shall well and truly pay to Lender the Debt at the time and in the
manner provided in the Note and this Security Instrument and shall well and
truly abide by and comply with each and every covenant and condition set forth
herein, in the Note and in the other Loan Documents in a timely manner, these
presents and the estate hereby granted shall cease, terminate and be void;

AND Borrower represents and warrants to and covenants and agrees with Lender as
follows:

PART I

 

GENERAL PROVISIONS

1.            Payment of Debt and Incorporation of Covenants, Conditions and
Agreements. Borrower shall pay the Debt at the time and in the manner provided
in the Note and in this Security Instrument. All the covenants, conditions and
agreements contained in (a) the Note and (b) all and any of the documents
including the Note, this Security Instrument and the Other Mortgage now or
hereafter executed by Borrower and/or others and by or in favor of Lender, which
evidences, secures or guarantees all or any portion of the payments due under
the Note or otherwise is executed and/or delivered in connection with the Note
and this Security Instrument (the “Loan Documents”) are hereby made a part of
this Security Instrument to the same extent and with the same force as if fully
set forth herein.

2.            Warranty of Title. Borrower warrants that Borrower has good,
marketable and insurable title to the Security Property and has the full power,
authority and right to execute, deliver and perform its obligations under this
Security Instrument and to deed, encumber, mortgage, give, grant, bargain, sell,
alienate, enfeoff, convey, confirm, pledge, assign and hypothecate the same and
that Borrower possesses fee estate in the Premises and the Improvements and that
it owns the Security Property free and clear of all liens, encumbrances

 

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and charges whatsoever subject only to those exceptions shown in the title
insurance policy insuring the lien of this Security Instrument (the “Permitted
Exceptions”) and that this Security Instrument is and will remain a valid and
enforceable first lien on and security interest in the Security Property,
subject only to said exceptions. Borrower shall forever warrant, defend and
preserve such title and the validity and priority of the lien of this Security
Instrument and shall forever warrant and defend the same to Lender against the
claims of all persons whomsoever.

 

3.

Insurance.

(a)          Borrower, at its sole cost and expense, for the mutual benefit of
Borrower and Lender, shall obtain and maintain during the entire term of this
Security Instrument (the “Term”) policies of insurance against loss or damage by
fire, lightning, hail, windstorm, explosion, vandalism, malicious mischief,
riot, civil commotion, acts of terrorism, burglary and theft, and such perils as
are included in a standard “all-risk” endorsement, and against loss or damage by
all risks and hazards covered by a standard extended coverage insurance policy.
Such insurance shall be in an amount equal to the greater of (i) the then full
replacement cost of the Improvements and Equipment, without deduction for
physical depreciation, or (ii) the outstanding principal balance of the Loan.
The policies of insurance carried in accordance with this Section shall be paid
annually in advance and shall contain a “Replacement Cost Endorsement” and no
coinsurance or if coinsurance, then an “Agreed Amount Endorsement” with a waiver
of depreciation, and shall have a deductible no greater than $25,000; provided,
however, that hail, windstorm and storm coverage shall have a deductible of no
greater than five percent (5%) of the total amount of damage subject to a
$100,000.00 minimum deductible.

(b)          Borrower, at its sole cost and expense, for the mutual benefit of
Borrower and Lender, shall also obtain and maintain during the Term the
following policies of insurance:

(i)           Flood insurance if any part of the Security Property is located in
an area identified by the Federal Emergency Management Agency as an area having
special flood hazards in an amount equal to the replacement cost of the Security
Property or such other amount to be determined by Lender.

(ii)          Comprehensive public liability insurance, including broad form
property damage, blanket contractual and personal injuries (including death
resulting therefrom) coverages and containing minimum limits per occurrence of
$1,000,000 and $2,000,000 in the aggregate for any policy year with a deductible
or self insured retention no greater than $25,000.00. In addition, at least
$10,000,000 excess and/or umbrella liability insurance shall be obtained and
maintained for any and all claims, including all legal liability imposed upon
Borrower and all court costs and attorneys’ fee incurred in connection with the
ownership, operation and maintenance of the Security Property. Lender shall be
named an Additional Insured with respect to all liability coverage.

(iii)        Rental loss and/or business interruption insurance in an amount
sufficient to compensate Borrower for all Gross Income from Operations during a
period of not less than eighteen (18) months. The amount of such insurance shall
be increased from time to time during the Term as and when new Leases and
renewal Leases are entered into and the Rents increase or the estimate of (or
the actual) gross revenue, as may be applicable, increases. For

 

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purposes of this Security Instrument, “Gross Income from Operations” shall mean
all income, computed on an accrual basis in accordance with generally accepted
accounting practices and principles, derived for each full or partial month
during the Term from the ownership and operation of the Security Property from
whatever source, including, but not limited to, Leases, all guest room revenues,
all food, beverage, and merchandise sales receipts, all interest income, if any,
rent, utility charges, escalations, forfeited security deposits, service fees or
charges, license fees, parking fees, rent concessions or credits, and any
business interruption insurance proceeds but excluding sales, use and occupancy
or other taxes on receipts required to be accounted for by Borrower to any
government or governmental agency, refunds and uncollectible accounts, sales of
furniture, fixtures and equipment, proceeds of casualty insurance and
condemnation awards, and interest on credit accounts. Gross Income from
Operations shall not be diminished as a result of this Security Instrument or
the creation of any intervening estate or interest in the Security Property or
any part thereof.

(iv)         Insurance against loss or damage from (A) leakage of sprinkler
systems and (B) explosion of steam boilers, air conditioning equipment, high
pressure piping, machinery and equipment, pressure vessels or similar apparatus
now or hereafter installed in the Improvements (without exclusion for
explosions), to the extent that such items now or hereafter exist upon the
Security Property, in an amount at least equal to the outstanding principal
amount of the Note or $2,000,000, whichever is less.

(v)          If the Security Property includes commercial property, worker’s
compensation insurance with respect to any employees of Borrower, as required by
any governmental authority or legal requirement.

(vi)         During any period of repair or restoration, builder’s “all risk”
insurance in an amount equal to not less than the full insurable value of the
Security Property insuring against such risks (including, without limitation,
fire and extended coverage and collapse of the Improvements to agreed limits) as
Lender may request, in form and substance acceptable to Lender.

(vii)       If the Security Property is or becomes a legal “non-conforming” use,
“Ordinance or Law Coverage” endorsement and insurance coverage to compensate for
the cost of demolition, the increased cost of construction and the loss of value
on the undamaged portion of the Security Property in an amount equal to the
original principal balance of the Loan in amounts as requested by Lender.

(viii)      Such other insurance as may be customary for properties of the same
type as the Security Property in the geographic area in which the Security
Property is located and as may from time to time be reasonably required by
Lender in order to protect its interests.

(c)          All policies of insurance (the “Policies”) required pursuant to
this Section: (i) shall be issued by companies approved by Lender and licensed
to do business in the state where the Security Property is located, with a
claims paying ability rating of “A-” or better by Standard & Poor’s Rating
Services, a division of the McGraw Hill Companies, Inc.; (ii) shall name Lender
and its successors and/or assigns as their interest may appear as the

 

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Lender/mortgagee; (iii) shall contain a non-contributory standard mortgagee
clause and a lender’s loss payable endorsement or their equivalents, naming
Lender as the person to which all payments made by such insurance company shall
be paid; (iv) shall contain a waiver of subrogation against Lender; (v) shall be
maintained throughout the Term without cost to Lender; (vi) shall be assigned
and the originals delivered to Lender; (vii) shall contain such provisions as
Lender deems reasonably necessary or desirable to protect its interest
including, without limitation, endorsements providing that neither Borrower,
Lender nor any other party shall be a co-insurer under said Policies and that
Lender shall receive at least thirty (30) days prior written notice of any
modification, reduction or cancellation; and (viii) shall be reasonably
satisfactory in form and substance to Lender and shall be approved by Lender as
to amounts, form, risk coverage, deductibles, loss payees and insureds. Borrower
shall pay the premiums for such Policies (the “Insurance Premiums”) as the same
become due and payable and shall furnish to Lender evidence of the renewal of
each of the Policies with receipts for the payment of the Insurance Premiums or
other evidence of such payment reasonably satisfactory to Lender (provided,
however, that Borrower is not required to furnish such evidence of payment to
Lender in the event that such Insurance Premiums have been paid by Lender
pursuant to Section 6 hereof). Within thirty (30) days after request by Lender,
Borrower shall obtain such increases in the amounts of coverage required
hereunder as may be reasonably requested by Lender, taking into consideration
changes in the value of money over time, changes in liability laws and changes
in prudent customs and practices.

As required pursuant to the Collateral Protection Act, 815 ILCS 180/10(3),
Borrower is hereby notified that 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 at
Borrower’s expense to protect Lender’s interests in the Security Property. This
insurance may, but need not, protect Borrower’s interests. The coverage Lender
purchases may not pay any claim that Borrower makes or any claim that is made
against Borrower in connection with the Security Property. Borrower may later
cancel any insurance purchased by Lender, but only after providing Lender with
evidence that Borrower has obtained insurance as required by the terms of this
Mortgage. If Lender purchases insurance for the Security Property as set forth
herein, Borrower shall pay all amounts advanced by Lender, together with
interest thereon at the Default Interest Rate (as defined in the Note) from and
after the date advanced by Lender until actually repaid by Borrower, promptly
upon demand by Lender. Any amounts so advanced by Lender, together with interest
thereon, shall be secured by this Mortgage and by all of the other Loan
Documents securing all or any part of the Debt. The costs of the insurance may
be more than the cost of insurance Borrower may be able to obtain on its own.

 

4.

Casualty.

(a)          If the Security Property shall be damaged or destroyed, in whole or
in part, by fire or other casualty (an “Insured Casualty”), Borrower shall give
prompt notice thereof to Lender. Following the occurrence of an Insured
Casualty, Borrower, regardless of whether insurance proceeds are available,
shall promptly proceed to restore, repair, replace or rebuild the same to be of
at least equal value and of substantially the same character as immediately
prior to such damage or destruction, all to be effected in accordance with
applicable law. The actual, out-of-pocket expenses incurred by Lender in the
adjustment and collection of insurance proceeds

 

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shall become part of the Debt and be secured hereby and shall be reimbursed by
Borrower to Lender upon demand.

(b)          In case of loss or damages covered by any of the Policies, the
following provisions shall apply:

(i)           In the event of an Insured Casualty that does not exceed the
lesser of (a) $2,500,000.00 or (b) ten percent (10%) of the then outstanding
principal balance of the Note, Borrower may settle and adjust any claim without
the consent of Lender and agree with the insurance company or companies on the
amount to be paid upon the loss; provided that such adjustment is carried out in
a competent and timely manner. In such case, Borrower is hereby authorized to
collect and receipt for any such insurance proceeds.

(ii)          In the event an Insured Casualty shall exceed the lesser of
(a) $2,500,000.00 or (b) ten percent (10%) of the then outstanding principal
balance of the Note, then and in that event, Lender may settle and adjust any
claim without the consent of Borrower and agree with the insurance company or
companies on the amount to be paid on the loss and the proceeds of any such
policy shall be due and payable solely to Lender and held in escrow by Lender in
accordance with the terms of this Security Instrument.

(iii)        In the event of an Insured Casualty where the loss is in an
aggregate amount less than thirty percent (30%) of the original principal
balance of the Note, and if, in the reasonable judgment of Lender, the Security
Property can be restored within nine (9) months of the Insured Casualty and no
later than six (6) months prior to the Maturity Date (as defined in the Note) to
an economic unit not materially less valuable (including an assessment of the
impact of the termination of any Leases due to such Insured Casualty) and not
less useful than the same was immediately prior to the Insured Casualty, and
after such restoration will adequately secure the outstanding balance of the
Debt, then, if no Event of Default (as hereinafter defined) shall have occurred
and be then continuing, the proceeds of insurance (after reimbursement of any
actual, out-of-pocket expenses incurred by Lender) shall be applied towards the
cost of restoring, repairing, replacing or rebuilding the Security Property or
part thereof subject to the Insured Casualty, in the manner set forth below.
Borrower hereby covenants and agrees to commence and diligently to prosecute
such restoring, repairing, replacing or rebuilding; provided always, that
Borrower shall pay all costs (and if required by Lender, Borrower shall deposit
the total thereof with Lender in advance) of such restoring, repairing,
replacing or rebuilding in excess of the net proceeds of insurance made
available pursuant to the terms hereof.

(iv)         Except as provided above in clauses (ii) and (iii) of this
Section 4, the proceeds of insurance collected upon any Insured Casualty shall,
at the option of Lender in its sole discretion, be applied to the payment of the
Debt or applied to reimburse Borrower for the cost of restoring, repairing,
replacing or rebuilding the Security Property or part thereof subject to the
Insured Casualty, in the manner set forth below. Any such application to the
Debt shall be without any prepayment consideration. Any such application to the
Debt shall be applied to those payments of principal and interest last due under
the Note but shall not postpone or reduce any payments otherwise required
pursuant to the Note other than such last due payments. In the event Lender
elects for the proceeds of insurance to be applied to the payment of the Debt,

 

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Borrower and Other Borrower shall have the right to prepay the entirety of the
Debt without any prepayment consideration within fifteen (15) days after Lender
provides notice to Borrower of Lender’s election to so apply such proceeds.
Notwithstanding the foregoing, in the event of an Insured Casualty, as defined
in the Other Mortgage, with respect to the Other Property in which Lender elects
for the proceeds of insurance to be applied to pay the entirety of the Other
Loan, Borrower shall have the right to prepay the entirety of the Borrower Note
without any prepayment consideration within fifteen (15) days after Lender
notifies Other Borrower of Lender’s election to so apply such proceeds. In no
event shall Borrower have the right to prepay the entirety of the Borrower Note
as a result of the application by Lender of insurance proceeds unless the
entirety of the Debt pursuant to the terms hereof is simultaneously prepaid in
full.

(v)          In the event Borrower is entitled to reimbursement out of insurance
proceeds held by Lender, such proceeds shall be disbursed from time to time upon
Lender being furnished with (1) evidence reasonably satisfactory to it of the
estimated cost of completion of the restoration, repair, replacement and
rebuilding, (2) funds or, at Lender’s option, assurances reasonably satisfactory
to Lender that such funds are available, sufficient in addition to the proceeds
of insurance to complete the proposed restoration, repair, replacement and
rebuilding, and (3) such architect’s certificates, waivers of lien, contractor’s
sworn statements, title insurance endorsements, bonds, plats of survey and such
other reasonable evidences of cost, payment and performance as Lender may
reasonably require and approve. Lender may, in any event, require that all plans
and specifications for such restoration, repair, replacement and rebuilding be
submitted to and reasonably approved by Lender prior to commencement of work. No
payment made prior to the final completion of the restoration, repair,
replacement and rebuilding shall exceed ninety percent (90%) of the first fifty
percent (50%) of the value of the work performed and ninety-five percent (95%)
of the remaining fifty percent (50%) of the value of the work performed from
time to time; funds other than proceeds of insurance shall be disbursed prior to
disbursement of such proceeds; and at all times, the undisbursed balance of such
proceeds remaining in the hands of Lender, together with funds deposited for
that purpose or irrevocably committed to the reasonable satisfaction of Lender
by or on behalf of Borrower for that purpose, shall be at least sufficient in
the reasonable judgment of Lender to pay for the cost of completion of the
restoration, repair, replacement or rebuilding, free and clear of all liens or
claims for lien. Any surplus which may remain out of insurance proceeds held by
Lender after payment of such costs of restoration, repair, replacement or
rebuilding shall be paid to Borrower.

5.            Payment of Taxes, Etc. Subject to Borrower’s contest rights set
forth in Section 31 below, Borrower shall pay all taxes, assessments, water
rates and sewer rents, now or hereafter levied or assessed or imposed against
the Security Property or any part thereof (the “Taxes”) and all ground rents,
maintenance charges, other impositions, and other charges, including, without
limitation, vault charges and license fees for the use of vaults, chutes and
similar areas adjoining the Premises, now or hereafter levied or assessed or
imposed against the Security Property or any part thereof (the “Other Charges”)
as the same become due and payable. Borrower will deliver to Lender receipts for
payment or other evidence satisfactory to Lender that the Taxes and Other
Charges have been so paid or are not then delinquent no later than ten (10) days
prior to the date on which the Taxes and/or Other Charges would otherwise be
delinquent if not paid. Borrower shall not suffer and shall promptly cause to be
paid and discharged any lien or charge whatsoever which may be or become a lien
or charge against the Security Property, and shall promptly pay for all utility
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Property. Borrower shall furnish to Lender receipts for the payment of the Taxes
and the Other Charges prior to the date the same shall become delinquent
(provided, however, that Borrower is not required to furnish such receipts for
payment of Taxes in the event that such Taxes have been paid for by Lender
pursuant to Section 6 hereof).

 

6.

Tax and Insurance Impound Fund; Other Reserves.

(a)          Tax and Insurance Impound Fund. Borrower shall pay to Lender on the
“Payment Date” (as defined in the Note) in each calendar month one-twelfth of
the amount of Taxes and Insurance Premiums that Lender reasonably estimates will
be payable during the next ensuing twelve (12) months. Borrower shall also pay
to Lender on demand, a sum of money which Lender reasonably estimates, together
with such monthly deposits, will be sufficient to make each payment of Taxes and
Insurance Premiums at least 30 days prior to the date the same becomes initially
due. Funds paid to Lender pursuant to this provision, together with any
additions thereto, may be hereinafter called the “Tax and Insurance Impound
Fund”. Lender will apply the Tax and Insurance Impound Fund to payments of Taxes
and Insurance Premiums required to be made by Borrower pursuant to Sections 3
and 5 hereof. In making any payment relating to the Tax and Insurance Impound
Fund, Lender may do so according to any bill, statement or estimate procured
from the appropriate public office (with respect to Taxes) or insurer or agent
(with respect to Insurance Premiums), without inquiry into the accuracy of such
bill, statement or estimate or into the validity of any tax, assessment, sale,
forfeiture, tax lien or title or claim thereof unless with respect to the
payment of Taxes and Other Charges, Lender has received from Borrower, not less
than thirty (30) days prior to the date on which such Taxes and Other Charges
become delinquent and prior to Lender’s payment thereof, notice that Borrower is
contesting such Taxes and Other Charges pursuant to, and in accordance with,
Section 31 hereof, in which case, provided no Event of Default has occurred and
is continuing, Lender shall not pay such Taxes and Other Charges except in
accordance with Section 31 hereof or until (a) Lender receives notice from
Borrower or the applicable taxing or assessing authority that such contest is
resolved, or (b) an Event of Default occurs. If the amount of the Tax and
Insurance Impound Fund shall exceed the amounts which Lender reasonably
estimates shall be due for Taxes and Insurance Premiums in the following 12
months, Lender shall return any excess to Borrower or credit such excess against
future payments to be made to the Tax and Insurance Impound Fund. If at any time
Lender reasonably determines that the Tax and Insurance Impound Fund is not or
will not be sufficient to pay the Taxes and Insurance Premiums as required
herein, Lender may notify Borrower of such determination and Borrower shall
increase its monthly payments to Lender by the amount that Lender reasonably
estimates is sufficient to make up the deficiency at least thirty (30) days
prior to delinquency of the Taxes and/or expiration of the Policies, as the case
may be, provided Borrower receives not less than ten (10) days prior written
notice of any such increase. No earnings or interest on the Tax and Insurance
Impound Fund shall be payable to Borrower. In the event Borrower notifies Lender
that it has paid the Taxes to the appropriate public office notwithstanding the
funds available in the Tax and Insurance Impound Fund therefor, if Lender so
elects at any time thereafter, Borrower shall provide, at Borrower’s expense, a
tax service contract for the Term issued by a tax reporting agency acceptable to
Lender. If Lender does not so elect, Borrower shall reimburse Lender for the
cost of making annual tax searches throughout the Term.

 

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(b)          Replacement Escrow Fund. At Closing, Borrower and Other Borrower
shall reserve from the proceeds of the Loan an aggregate amount equal to
$15,548.00; $9,950.72 of which shall be reserved by Borrower and $5,597.28 of
which shall be reserved by Other Borrower. Borrower and Other Borrower shall
also pay to Lender on the Payment Date in each calendar month an amount equal to
$15,548.00 ($9,950.72 of which shall be reserved by Borrower and $5,597.28 of
which shall be reserved by Other Borrower) which shall be deposited with and
held by Lender in an interest-bearing account for the purposes specified in this
Subsection. Funds paid to Lender pursuant to this Subsection, together with any
interest thereon and additions thereto, may be referred to herein as the
“Replacement Escrow Fund”. Borrower’s and Other Borrower’s obligation to pay the
monthly amount for deposit into the Replacement Escrow Fund shall be suspended
during any time when the balance in the Replacement Escrow Fund equals or
exceeds $554,583.00. At such time as the balance is less than $554,583.00, then
Borrower’s and Other Borrower’s obligation to make such monthly payments shall
resume, subject to subsequent suspension and resumption in accordance with the
foregoing. Borrower and Other Borrower shall utilize funds drawn from the
Replacement Escrow Fund for the purchase, replacement and repairs of
furnishings, fixtures and equipment required to be made to the Security Property
or the Other Property and for any other work reasonably approved by Lender,
provided such costs and expenses (i) are not incurred for routine maintenance at
the Security Property or the Other Property , (ii) are not for items as to which
other Reserves are established hereunder, and (iii) are categorized under
generally accepted accounting principles as capital costs and not as operating
expense. By means of example and not as a limitation, the Replacement Escrow
Fund may be used for the following replacements: roofing, HVAC systems, window
systems, flooring, landscaping, paving and appliances. Upon written application
of Borrower and Other Borrower, Borrower and Other Borrower shall be entitled to
draw upon the Replacement Escrow Fund to pay for costs for which such Reserve
has been established after such costs shall have been incurred by Borrower and
Other Borrower and invoiced, provided that the Disbursement Conditions shall
have been satisfied. It is expressly agreed and understand that the Replacement
Escrow Fund referenced in this Mortgage is the very same Replacement Escrow Fund
which is identically referenced in the Other Mortgage. The Replacement Escrow
Fund in both this Mortgage and the Other Mortgage shall be maintained in the
aggregate by Lender with disbursement to Borrower or Other Borrower or otherwise
as Lender may elect consistent with the terms and provisions of this Section
6(b) in the corresponding Section 6(b) of the Other Mortgage.

(c)          Leasing Escrow Fund. Borrower and Other Borrower shall pay to
Lender on the Payment Date in each calendar month an amount equal to $65,647.00,
($42,014.08 of which shall be paid by Borrower and $23,632.92 of which shall be
paid by Other Borrower), which shall be deposited with and held by Lender in an
interest-bearing account for the purposes specified in this Subsection. Funds
paid to Lender pursuant to this Subsection, together with any interest thereon
and additions thereto, may be referred to herein as the “Leasing Escrow Fund”.
In addition, Borrower and Other Borrower shall pay to Lender for deposit in the
Leasing Escrow Fund all funds received by Borrower or Other Borrower from or on
behalf of tenants or lease guarantors in connection with the termination of any
Lease, including, but not limited to, any settlement amounts, cancellation fees,
penalties, drawings under letters of credit, debits to security deposits, and
funds for tenant improvements, leasing commissions or other charges
(collectively, “Lease Settlement Payments”). Borrower’s and Other Borrower’s
obligation to pay the monthly amount for deposit into the Leasing Escrow Fund
shall be suspended during any

 

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time when the balance in the Leasing Escrow Fund (exclusive of the amount of
Lease Settlement Payments in connection with any Lease at the Security Property
or the Other Property for less than 3,500 square feet of space that have been
deposited therein) equals or exceeds $2,495,625.00. At such time as the balance
(exclusive of Lease Settlement Payments in connection with any Lease at the
Security Property or the Other Property for less than 3,500 square feet of
space) is less than $2,495,625.00, then Borrower’s and Other Borrower’s
obligation to make such monthly payments shall resume, subject to subsequent
suspension and resumption in accordance with the foregoing. Borrower and Other
Borrower shall utilize funds drawn from the Leasing Escrow Fund only for tenant
improvement and leasing commission obligations incurred following the date
hereof for new Leases entered into by Borrower in accordance with the provisions
of Section 8 below and the corresponding Section 8 of the Other Mortgage. Upon
written application of Borrower and Other Borrower, Borrower and Other Borrower
shall be entitled to draw upon the Leasing Escrow Fund to pay for costs for
which such Reserve has been established after such costs shall have been
incurred by Borrower or Other Borrower and invoiced, provided that the
Disbursement Conditions shall have been satisfied. It is expressly agreed and
upon that the Leasing Escrow Fund referenced in this Mortgage is the very same
Leasing Escrow Fund which is identically referenced in the Other Mortgage. The
Leasing Escrow Fund in both this Mortgage and the Other Mortgage shall be
maintained in the aggregate by Lender with disbursement to Borrower or Other
Borrower or otherwise as Lender may elect consistent with the terms and
provisions of this Section 6(c) in the corresponding Section 6(c) of the Other
Mortgage.

(d)          Abatement Escrow Fund. At Closing, Borrower shall pay to Lender an
amount equal to $2,058,000.00 which shall be deposited with and held by Lender
for the purposes specified in this Subsection. Funds paid to Lender pursuant to
this Subsection, together with any additions thereto, may be referred to herein
as the “Abatement Escrow Fund”. The amount of such payment applied to the
Abatement Escrow Funds equals the amount of rent abatement incentives previously
offered to tenants of the Security Property and which are outstanding as of the
effective date of this Mortgage. Upon written application of Borrower and upon
providing sufficient evidence to Lender of the application by a respective
tenant at the Security Property of any such available rent abatement, Borrower
shall be entitled to draw upon the Abatement Escrow Fund, once per month, in an
amount equal to the aggregate amount of the applied rent abatements for that
month, until all such rent abatements have been applied, provided that items
(i), (ii), (vi), (vii), (viii), and (ix) of the Disbursement Conditions shall
have been satisfied.

(e)          Security Interest. Borrower hereby pledges to Lender and grants to
Lender a security interest in any and all monies now or hereafter deposited in
the Tax and Insurance Impound Fund, the Replacement Escrow Fund, the Leasing
Escrow Fund and the Abatement Escrow Fund (each a “Reserve” and collectively
“Reserves”) and all proceeds thereof as security for the payment of the Debt and
performance of all obligations secured by this Security Instrument. Upon the
occurrence and during the continuance of an Event of Default, (i) Lender shall
have no obligation to disburse any amounts from any of the Reserves to the
Borrower or otherwise, (ii) Lender is hereby authorized and shall be entitled to
do any one or more of the following, at Lender’s election (1) continue to hold
any moneys in any of the Reserves as security, (2) pay or apply any such moneys
for the purposes of the applicable Reserve irrespective of the default, or
(3) pay or apply any such moneys against any obligation of

 

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Borrower under the Loan Documents (including full or partial payment of the
Debt) in any order that Lender may determine in its sole discretion.

(f)           Disbursement Conditions. Where this Security Instrument provides
that the “Disbursement Conditions” shall be satisfied, the same are as follows:
(i) no Event of Default shall have occurred and continue without cure,
(ii) Borrower shall provide to Lender a draw request on Lender’s standard form,
together with such documentation and certifications as Lender may reasonably
request, (iii) Borrower shall provide Lender with all invoices, receipts, lien
waivers and other documentation of lawful and workmanlike progress or completion
and lien-free status, all as may be reasonably requested by Lender,
(iv) Borrower shall provide Lender such evidence as may be reasonably
satisfactory to Lender that, after payment of the requested disbursement, the
funds remaining in the applicable Reserve (together with deposits that are
required to be made therein, if applicable) shall be sufficient to pay for the
remainder of the work for which the Reserve was established, (v) Lender shall
have completed such field inspections as it deems necessary, and Borrower shall
pay any actual, out-of-pocket costs and expenses incurred by Lender in
connection with the same, (vi) disbursements from each Reserve shall be
requested no more frequently than once each month (except for the Tax and
Insurance Impound Fund if Taxes and Insurance Premiums are due in the same
month), and in the case of work to be performed and reimbursed pursuant to the
Leasing Escrow Fund or the Replacement Escrow Fund, disbursement shall occur
only after completion of the work except as provided in subsection 6(h) below,
(vii) disbursement shall not be requested in amounts less than $1,000, and
(viii) all documents and information provided under this provision shall be in
form and substance satisfactory to Lender in its reasonable discretion.

(g)          Partial Disbursements from the Leasing Escrow Fund and the
Replacement Escrow Fund. If (1) the cost of a particular item of work to which
any such request for disbursement from the Leasing Escrow Fund or the
Replacement Escrow Fund (each, a “Work Reserve”) relates shall exceed $150,000
(“Work”), (2) the contractor performing such item of Work requires periodic
payments pursuant to the terms of a written contract, and (3) Lender has
approved in writing in advance such periodic payments (such approval not to be
unreasonably withheld or delayed), a request for disbursement from such Work
Reserve may be made after completion of a portion of the Work under such
contract, provided (v) such contract requires payment upon completion of such
portion of the Work, (w) the materials for which the request is made are on site
at the Security Property or the Other Property, as applicable, and are properly
secured or have been installed in the Security Property or the Other Property,
as applicable, and (x) items (i), (ii), (iii), (iv), (v), (viii) and (ix) of the
Disbursement Conditions have been satisfied.

(i)           Each periodic payment disbursement from a Work Reserve, except for
a final disbursement, shall be in the amount of actual costs incurred for
completed Work, as certified by the Contractor performing such work or, to the
extent required by Lender, in its reasonable discretion, an architect selected
by Borrower or Other Borrower, as applicable, and reasonably approved by Lender
(the “Approved Architect”), less a retainage equal to ten percent (10%) of the
first fifty percent (50%) of such costs incurred and five percent (5%) of the
remaining fifty percent (50%) of such costs incurred until such portion of the
Work applicable to such retainage has been completed. The retainage shall in no
event be less than the percentage of such costs that the contract with the
relevant contractor or supplier specifies to be retained and

 

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advanced as part of the final disbursement. No funds will be advanced for
materials stored at any Security Property or the Other Property, as applicable,
unless such materials are properly stored and secured at the Security Property
or the Other Property, as applicable, in accordance with the Borrower’s and
Other Borrower’s customary procedures and sound construction practices as
reasonably determined by Lender. The retainage shall not be released until the
applicable contractor or the Approved Architect certifies to Lender that the
portion of the Work applicable to such retainage has been completed
substantially in accordance with the provisions of this Section 6(i) and that
all material approvals for that portion of the Work have been obtained from all
appropriate governmental authorities, and Lender receives evidence reasonably
satisfactory to Lender that the costs of the Work have been paid in full or will
be paid in full out of the retainage.

(ii)          The amount of all invoices in connection with the Work with
respect to which a periodic payment disbursement from a Work Reserve is
requested and which has been approved by Lender shall be disbursed by Lender
either directly to Borrower or Other Borrower, as applicable (in which event,
Borrower or Other Borrower, as applicable, covenants and agrees to promptly pay
such invoices) or, if an Event of Default has occurred and is continuing, at
Lender’s option and in Lender’s sole and absolute discretion, directly to the
contractor, supplier, materialman, mechanic or subcontractor indicated on said
invoices unless already paid by Borrower or Other Borrower and Lender has
received satisfactory evidence of such payment in which case Lender shall
reimburse Borrower or Other Borrower, as applicable. In the event that Borrower
or Other Borrower requests that any amounts be disbursed directly to Borrower or
Other Borrower pursuant to the foregoing sentence, Borrower or Other Borrower,
as applicable, shall be required to deliver evidence reasonably acceptable to
Lender of payment of all invoices for which disbursements were previously made
to Borrower or Other Borrower, as applicable, as a condition to such requested
disbursement.

(iii)         No more than one disbursement will be made by Lender from a Work
Reserve in any calendar month. Lender shall not be required to make any periodic
payment disbursement from a Work Reserve with respect to the Security Property
or the Other Property unless such requested disbursement is in an amount equal
to or greater than $10,000 or it is the last disbursement for such Work.

(iv)         In connection with Lender’s advance approval of periodic payments
for any partial disbursement from a Work Reserve, Lender reserves the right, at
its option and as a condition to any such partial disbursement, to reasonably
approve (1) all drawings and plans and specifications, if any, for any Work the
anticipated cost of which will exceed $200,000, and (2) all contracts and work
orders with materialmen, mechanics, suppliers, subcontractors, contractors and
other parties providing labor or materials in connection with any Work the
anticipated cost of which will exceed $200,000. Any such approval shall not be
unreasonably withheld, conditioned or delayed and shall be deemed given if
Lender fails to respond within ten (10) Business Days after Lender receives all
information reasonably required to adequately review such drawings, plans and
specifications, contracts or work orders.

(v)          In addition to the above conditions, any retainage held by Lender
pursuant to Section 6(h)(i) above in connection with any Work for which
disbursement from the Leasing Escrow Fund is available shall, at Lender’s
option, not be released until Borrower or

 

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Other Borrower, as applicable, has delivered to Lender an estoppel certificate
or letter executed by the applicable tenant certifying that all applicable Work
has been completed (except for minor or insubstantial details of construction
that remain to be performed (i.e., so-called “punch list” items)) by Borrower or
Other Borrower, as applicable, in accordance with the applicable Lease and that
such tenant has accepted the premises covered thereby.

(h)          General Provisions Regarding Reserves. Borrower’s and Other
Borrower’s obligations to make deposits into each Reserve are separate from
Borrower’s and Other Borrower’s obligations to make deposits into each other
Reserve, and from its obligations to pay as and when due all principal,
interest, and other amounts evidenced and secured by the Loan Documents. The
Reserves shall be held in Lender’s name at one or more financial institutions
selected by Lender in its reasonable discretion. Interest earned on each of the
Reserves other than the Tax and Insurance Impound Fund shall be added to the
applicable Reserve, and may be held, disbursed and applied in the same manner as
other moneys in such Reserve; provided, however, by notice to Lender, Borrower
and Other Borrower may collectively allocate interest accruals on the Leasing
Escrow Fund amongst themselves and Lender will report such interest consistent
with that designation. Lender shall have no obligation to produce any specific
rate of return on any of the Reserves. Provided that Lender shall hold (and
invest if applicable) the Reserves in accordance with the customary standards
used by holders of such funds in connection with rated debt or rated pools of
debt, Lender shall not be responsible for any loss. The Reserves are not and
shall not be trust funds. Lender is authorized to commingle moneys held in the
Reserves among the Reserves and with other moneys held by Lender. Nothing in
this Section 6 shall excuse Borrower’s or Other Borrower’s performance of any
obligation set forth elsewhere in this Security Instrument or in the Loan
Documents.

7.            Condemnation. Borrower shall promptly give Lender written notice
of the actual or threatened commencement of any condemnation or eminent domain
proceeding (a “Condemnation”) and shall deliver to Lender copies of any and all
papers served in connection with such Condemnation. Following the occurrence of
a Condemnation, Borrower, regardless of whether an Award (hereinafter defined)
is available, shall promptly proceed to restore, repair, replace or rebuild the
same to the extent practicable to be of at least equal value and of
substantially the same character as immediately prior to such Condemnation, all
to be effected in accordance with applicable law.

(a)          Lender is hereby irrevocably appointed as Borrower’s
attorney-in-fact, coupled with an interest, with exclusive power to collect,
receive and retain any award or payment (“Award”) for any taking accomplished
through a Condemnation (a “Taking”) and to make any compromise or settlement in
connection with such Condemnation, subject to the provisions of this Security
Instrument. Notwithstanding any Taking by any public or quasi-public authority
(including, without limitation, any transfer made in lieu of or in anticipation
of such a Taking), Borrower shall continue to pay the Debt at the time and in
the manner provided for in the Note, in this Security Instrument and the other
Loan Documents and the Debt shall not be reduced unless and until any Award
shall have been actually received and applied by Lender to Lender’s actual,
out-of-pocket expenses of collecting the Award and to discharge of the Debt.
Borrower shall cause any Award that is payable to Borrower to be paid directly
to Lender.

 

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(b)          In the event of any Condemnation where the Award is in an aggregate
amount less than the lesser of (i) $1,600,000.00 or (ii) ten percent (10%) of
the then outstanding original principal balance of the Note, and if, in the
reasonable judgment of Lender, the Security Property can be restored within nine
(9) months of the Condemnation and no later than six (6) months prior to the
Maturity Date to an economic unit not less valuable (including an assessment of
the impact of the termination of any Leases due to such Condemnation) and not
less useful than the same was prior to the Condemnation, and after such
restoration will adequately secure the outstanding balance of the Debt, then, if
no Event of Default shall have occurred and be then continuing, the proceeds of
the Award (after reimbursement of any actual, out-of-pocket expenses incurred by
Lender) shall be applied to reimburse Borrower for the cost of restoring,
repairing, replacing or rebuilding the Security Property or part thereof subject
to Condemnation, in the manner set forth below. Borrower hereby covenants and
agrees to commence and diligently to prosecute such restoring, repairing,
replacing or rebuilding; provided always, that Borrower shall pay all costs (and
if required by Lender, Borrower shall deposit the total thereof with Lender in
advance) of such restoring, repairing, replacing or rebuilding in excess of the
Award made available pursuant to the terms hereof.

(c)          Except as provided above, the Award collected upon any Condemnation
shall, at the option of Lender in its sole discretion, be applied to the payment
of the Debt or applied towards the cost of restoring, repairing, replacing or
rebuilding the Security Property or part thereof subject to the Condemnation, in
the manner set forth below. Any such application to the Debt shall be without
any prepayment consideration. Any such application to the Debt shall be applied
to those payments of principal and interest last due under the Note but shall
not postpone or reduce any payments otherwise required pursuant to the Note
other than such last due payments. If the Security Property is sold, through
foreclosure or otherwise, prior to the receipt by Lender of such Award, Lender
shall have the right, whether or not a deficiency judgment on the Note shall be
recoverable or shall have been sought, recovered or denied, to receive all or a
portion of said Award sufficient to pay the Debt. In the event Lender elects for
the Award to be applied to the payment of the Debt, Borrower and Other Borrower
shall have the right to prepay the entirety of the Debt without any prepayment
consideration within fifteen (15) days after Lender provides notice to Borrower
of Lender’s election to so apply the Award. Notwithstanding the foregoing, in
the event of a Condemnation, as defined in the Other Mortgage, with respect to
the Other Property in which Lender elects for the Award, as defined in the Other
Mortgage, to be applied to pay the entirety of the Other Loan, Borrower shall
have the right to prepay the entirety of the Borrower Note without any
prepayment consideration within fifteen (15) days after Lender notifies Other
Borrower of Lender’s election to so apply such Award. In no event shall Borrower
have the right to prepay the entirety of the Borrower Note pursuant to the terms
hereof as a result of the application by Lender of a condemnation award unless
the entirety of the Debt is simultaneously prepaid in full.

(d)          In the event Borrower is entitled to payment of the Award received
by Lender, such proceeds shall be disbursed from time to time upon Lender being
furnished with (1) evidence reasonably satisfactory to it of the estimated cost
of completion of the restoration, repair, replacement and rebuilding resulting
from such condemnation, (2) funds or, at Lender’s option, assurances reasonably
satisfactory to Lender that such funds are available, sufficient in addition to
the proceeds of the Award to complete the proposed restoration, repair,
replacement and rebuilding, and (3) such architect’s certificates, waivers of
lien, contractor’s sworn

 

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statements, title insurance endorsements, bonds, plats of survey and such other
evidences of costs, payment and performance as Lender may reasonably require and
approve; and Lender may, in any event, require that all plans and specifications
for such restoration, repair, replacement and rebuilding be submitted to and
reasonably approved by Lender prior to commencement of work. No payment made
prior to the final completion of the restoration, repair, replacement and
rebuilding shall exceed ninety percent (90%) of the value of the work performed
up to the completion of fifty percent (50%) of the work and thereafter
ninety-five percent (95%) of the value of the work performed from time to time;
funds other than proceeds of the Award shall be disbursed prior to disbursement
of such proceeds; and at all times, the undisbursed balance of such proceeds
remaining in hands of Lender, together with funds deposited for that purpose or
irrevocably committed to the reasonable satisfaction of Lender by or on behalf
of Borrower for that purpose, shall be at least sufficient in the reasonable
judgment of Lender to pay for the costs of completion of the restoration,
repair, replacement or rebuilding, free and clear of all liens or claims for
lien. Any surplus which may remain out of the Award received by Lender after
payment of such costs of restoration, repair, replacement or rebuilding shall,
in the sole and absolute discretion of Lender, be retained by Lender and applied
to payment of the Debt.

 

 

8.

Leases and Rents.

(a)          Borrower does hereby absolutely and unconditionally assign to
Lender, all Borrower’s right, title and interest in all current and future
Leases and Rents, it being intended by Borrower that this assignment constitutes
a present, absolute assignment and not an assignment for additional security
only. Such assignment to Lender shall not be construed to bind Lender to the
performance of any of the covenants, conditions or provisions contained in any
such Lease or otherwise impose any obligation upon Lender. Borrower agrees to
execute and deliver to Lender such additional instruments, in form and substance
satisfactory to Lender, as may hereafter be requested by Lender to further
evidence and confirm such assignment. Nevertheless, subject to the terms of this
Section, Lender grants to Borrower a revocable license to operate and manage the
Security Property and to collect the Rents. Borrower shall hold the Rents, or a
portion thereof, sufficient to discharge all current sums due on the Debt, in
trust for the benefit of Lender for use in the payment of such sums. Upon and
during the continuance of an Event of Default, without the need for notice or
demand, the license granted to Borrower herein shall automatically be revoked,
and Lender shall immediately be entitled to possession of all Rents, whether or
not Lender enters upon or takes control of the Security Property. Lender is
hereby granted and assigned by Borrower the right, at its option, upon
revocation of the license granted herein, to enter upon the Security Property in
person, by agent or by court-appointed receiver to collect the Rents. Any Rents
collected after the revocation of the license may be applied toward payment of
the Debt in such priority and proportions as Lender in its sole discretion shall
deem proper. Anything to the contrary set forth herein or elsewhere
notwithstanding, if Lender shall have required and Borrower shall have executed
a Cash Management Agreement in favor of Lender, then, except to the extent that
Lender in its sole discretion determines otherwise, (i) the provisions of the
Cash Management Agreement shall control over any conflicting provisions of this
Section, (ii) the provisions of the Cash Management Agreement which require that
Rents shall be delivered or paid directly to a lockbox or similar cash control
mechanism shall take priority over any conflicting provisions herein or
elsewhere in the Loan Documents, and (iii) the provisions of the Cash Management
Agreement which specify the order of application of Rents

 

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shall take priority over any conflicting provisions in this Section or elsewhere
in the Loan Documents, other than provisions granting to Lender any rights
following and during the continuance of a default or an Event of Default.

(b)          All non-residential Leases executed after the date hereof shall
provide that they are subordinate to this Security Instrument and that the
tenant agrees to attorn to Lender. Unless specifically approved by Lender, none
of the Leases shall contain any option to purchase, any right of first refusal
to purchase or, with respect to any Major Lease, any right to terminate the
lease term (except in the event of the destruction or condemnation of all or
substantially all of the Security Property) to the extent such termination right
would disqualify such Lease from being a Major Lease. Leases executed after the
date hereof shall not contain any provisions which adversely affect the Security
Property or have a material adverse effect on the rights of any holder of the
Loan without the prior written consent of Lender. Each tenant shall conduct
business only in that portion of the Security Property covered by its lease.
Upon request, Borrower shall furnish Lender with executed copies of all Leases.

(c)          Borrower shall not, without the prior consent of Lender which
consent shall not be unreasonably withheld (i) enter into any Lease of all or
any part of the Security Property in excess of (x) 90,000 rentable square feet
(inclusive of expansion options), or (y) 20,000 rentable square feet (inclusive
of expansion options) with a term greater than five (5) years (inclusive of
extension options) (a “Major Lease”), (ii) cancel, terminate, abridge or
otherwise modify the terms of any Major Lease, or accept a surrender thereof,
(iii) consent to any assignment of or subletting under any Major Lease not in
accordance with its terms, (iv) cancel, terminate, abridge or otherwise modify
any guaranty of any Major Lease or the terms thereof, (v) accept prepayments of
installments of Rents for a period of more than one (1) month in advance or
(vi) further assign the whole or any part of the Leases or the Rents except to
Subordinate Lender pursuant to the Subordinate Loan Documents. If Lender fails
to respond to a request for consent hereunder within ten (10) business days of
receipt thereof, such consent shall be deemed granted, provided that such
request shall have been accompanied by all information reasonably requested by
Lender or reasonably necessary for Lender to evaluate such request and shall
have clearly stated, in 14 point type or greater, that if Lender fails to
respond to such request within ten (10) business days, Lender’s consent shall be
deemed to have been granted. Notwithstanding the foregoing, Lender’s consent
shall not be required for renewal Leases containing economic terms which are no
less favorable than the terms that are existing under the original Lease. In
addition, Borrower shall not (A) lease all or any part of the Security Property,
(B) cancel, terminate, abridge or otherwise modify the terms of any Lease, or
accept a surrender thereof, (C) consent to any assignment of or subletting under
any Lease not in accordance with its terms or (D) cancel, terminate, abridge or
otherwise modify any guaranty of any Lease or the terms thereof, unless such
actions are exercised for a commercially reasonable purpose in arms-length
transactions for market rate terms (provided, however, that Borrower may,
subject to all other terms of this Mortgage, lease any part of the Security
Property to an affiliated entity if such action is exercised for a commercially
reasonable purpose and for market rate terms).

(d)          Borrower (i) shall observe and perform in all material respects all
the obligations imposed upon the lessor under the Leases and shall not do or
permit to be done anything to impair the value of the Leases as security for the
Debt; (ii) shall promptly send copies to Lender of all notices of default which
Borrower shall send or receive thereunder;

 

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(iii) shall use commercially reasonable efforts to enforce all the material
terms, covenants and conditions contained in the Leases upon the part of the
lessee thereunder to be observed or performed, short of termination thereof;
(iv) shall not collect any of the Rents more than one (1) month in advance;
(v) shall not execute any other assignment of the lessor’s interest in the
Leases or the Rents other than any such assignment set forth specifically in the
Subordinate Loan Documents; (vi) shall deliver to Lender, upon Lender’s
reasonable request, tenant estoppel certificates from each commercial tenant at
the Security Property in form and substance reasonably satisfactory to Lender,
provided that Borrower shall not be required to deliver such certificates more
frequently than one (1) time in any calendar year (except in the event an Event
of Default has occurred and remains uncured); and (vii) shall execute and
deliver at the reasonable request of Lender all such further assurances,
confirmations and assignments in connection with the Security Property as Lender
shall from time to time reasonably require.

(e)          All security deposits of tenants, whether held in cash or any other
form, shall not be commingled with any other funds of Borrower 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 legal requirements, name Lender as payee or Lender
thereunder (or at Lender’s option, be 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. Following the occurrence and during the continuance of any Event
of Default, Borrower shall, upon Lender’s request, if permitted by any
applicable legal requirements, turn over to Lender the security deposits with
respect to all or any portion of the Security Property, to be held by Lender
subject to the terms of the Leases.

9.            Maintenance and Use of Security Property. Borrower shall cause the
Security Property to be maintained in a good and safe condition and repair. The
Improvements and the Equipment shall not be removed, demolished or materially
altered (except for normal replacement of the Equipment and in connection with
the performance of tenant improvements work required under applicable Leases)
without the consent of Lender. Borrower shall promptly comply with all laws,
orders and ordinances affecting the Security Property, or the use thereof.
Borrower 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 Security
Property or any part thereof. If under applicable zoning provisions the use of
all or any portion of the Security Property is or shall become a nonconforming
use, Borrower will not cause or permit such nonconforming use to be discontinued
or abandoned without the express written consent of Lender. Except as
specifically approved by Lender, Borrower shall not (i) change the use of the
Security Property, (ii) permit or suffer to occur any waste on or to the
Security Property or to any portion thereof or (iii) take any steps whatsoever
to convert the Security Property, or any portion thereof, to a condominium or
cooperative form of management. Borrower will not install or permit to be
installed on the Premises any underground storage tank.

 

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10.

Transfer or Encumbrance of the Security Property.

(a)          Borrower acknowledges that Lender has examined and relied on the
creditworthiness and experience of Borrower in owning and operating properties
such as the Security Property in agreeing to make the Loan, and that Lender will
continue to rely on Borrower’s ownership of the Security Property as a means of
maintaining the value of the Security Property as security for repayment of the
Debt. Borrower acknowledges that Lender has a valid interest in maintaining the
value of the Security Property so as to ensure that, should Borrower default in
the repayment of the Debt, Lender can recover the Debt by a sale of the Security
Property. Except as otherwise expressly permitted pursuant to this Section 10 or
Section 31, Borrower shall not, without the prior written consent of Lender,
sell, convey, alienate, mortgage, encumber, pledge or otherwise transfer the
Security Property or any part thereof, or permit the Security Property or any
part thereof to be sold, conveyed, alienated, mortgaged, encumbered, pledged or
otherwise transferred. During the six month period after Closing, any transfer
for which Lender’s consent is required under this Section 10 shall be
conditioned upon, among other things requested by lender, written confirmation
from Lender that such transfer shall not affect or impair Lender’s underwritten
loan to value requirements.

(b)          A sale, conveyance, alienation, mortgage, encumbrance, pledge or
transfer within the meaning of this Section 10 shall be deemed to include (i) an
installment sales agreement wherein Borrower agrees to sell the Security
Property or any part thereof for a price to be paid in installments; (ii) an
agreement by Borrower leasing all or a substantial part of the Security Property
for other than actual occupancy by a space tenant thereunder; (iii) a sale,
assignment or other transfer of, or the grant of a security interest in,
Borrower’s right, title and interest in and to any Leases or any Rents; (iv) if
Borrower, Guarantor or any general partner or managing member of Borrower or
Guarantor is a corporation, the voluntary or involuntary sale, conveyance or
transfer of such corporation’s stock (or the stock of any corporation directly
or indirectly controlling such corporation by operation of law or otherwise) or
the creation or issuance of new stock in all instances in one or a series of
transactions by which an aggregate of more than 49% of such corporation’s stock
shall be vested in a party or parties who are not now stockholders or any change
in the control of such corporation; (v) if Borrower, any Guarantor or any
general partner of Borrower or any Guarantor is a limited or general
partnership, joint venture or limited liability company, the change, removal,
resignation or addition of a general partner, managing member, joint venturer or
the transfer, assignment or pledge of any ownership interest of any general
partner, managing member or joint venturer in Borrower or the transfer,
assignment or pledge of any ownership interest in any general partner, managing
member or joint venturer; or (vi) if Borrower or any Guarantor is a limited
partnership or limited liability company, the voluntary or involuntary sale,
conveyance, transfer or pledge of any limited partnership interests or
non-managing membership interests or the creation or issuance of new limited
partnership interests or non-managing membership interests, by which an
aggregate of more than 49% of such limited partnership interests or non-managing
membership interests are held by, or pledged to, parties who are not currently
limited partners or members.

(c)          Lender shall not be required to demonstrate any actual impairment
of its security or any increased risk of default hereunder in order to declare
the Debt immediately due and payable upon Borrower’s sale, conveyance,
alienation, mortgage, encumbrance, pledge or transfer of the Security Property
in violation of this Section 10 without Lender’s consent. This

 

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provision shall apply to every sale, conveyance, alienation, mortgage,
encumbrance, pledge or transfer of the Security Property in violation of this
Section 10 regardless of whether voluntary or not, or whether or not Lender has
consented to any previous sale, conveyance, alienation, mortgage, encumbrance,
pledge or transfer of the Security Property.

(d)          Lender’s consent to one sale, conveyance, alienation, mortgage,
encumbrance, pledge or transfer of the Security Property shall not be deemed to
be a waiver of Lender’s right to require such consent to any future occurrence
of same. Any sale, conveyance, alienation, mortgage, encumbrance, pledge or
transfer of the Security Property made in contravention of this Section shall be
null and void and of no force and effect.

(e)          Borrower agrees to bear and shall pay a non-refundable application
fee in the amount of $5,000 and to reimburse Lender on demand for all reasonable
out-of-pocket expenses (including, without limitation, reasonable fees and
expenses of attorneys and accountants, fees and expenses of any applicable
rating agency, title search costs and title insurance endorsement premiums)
incurred by Lender in connection with the review, approval and documentation of
any such sale, conveyance, alienation, mortgage, encumbrance, pledge or
transfer.

(f)           Lender’s consent to the sale or transfer of the Security Property
will not be unreasonably withheld or delayed after consideration of all relevant
factors, provided that:

(i)           No Event of Default or event which with the giving of notice or
the passage of time would constitute an Event of Default shall have occurred and
remain uncured;

(ii)          The proposed transferee (“Transferee”) shall be a reputable entity
or person of good character, creditworthy, with sufficient financial worth
considering the obligations assumed and undertaken, as evidenced by financial
statements and other information reasonably requested by Lender with an
organizational structure and documentation reasonably acceptable to Lender;

(iii)        The Transferee and its property manager shall have sufficient
experience in the ownership and management of properties similar to the Security
Property, and Lender shall be provided with reasonable evidence thereof (and
Lender reserves the right to approve the Transferee without approving the
substitution of the property manager);

(iv)         Lender, at its option, shall have recommendations in writing from
the Rating Agencies to the effect that such transfer will not result in a
requalification, reduction or withdrawal of any current securities rating
assigned in a Securitization. The term “Rating Agencies” as used herein shall
mean each of Standard & Poor’s Ratings Group, a division of The McGraw-Hill
Companies, Inc., Moody’s Investors Service, Inc., Duff and Phelps Credit Rating
Co. and Fitch Investors Service, L.P., or any other nationally-recognized
statistical rating agency which has been approved by Lender;

(v)          The Transferee shall have executed and delivered to Lender an
assumption agreement in form and substance reasonably acceptable to Lender,
evidencing such Transferee’s agreement to abide and be bound by the terms of the
Note, this Security Instrument

 

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and the other Loan Documents, together with such legal opinions and title
insurance endorsements as may be reasonably requested by Lender;

(vi)         A party associated with the Transferee approved by Lender in its
sole discretion assumes the obligations of the current indemnitor under its
guaranty or indemnity agreement and such party associated with the Transferee
executes, without any cost or expense to Lender, a new guaranty or indemnity
agreement in form and substance reasonably satisfactory to Lender and delivers
such legal opinions as Lender may reasonably require;

(vii)       Subject to the provisions of Section 2.04 of the Note, such sale or
transfer 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 or transfer 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 or transfer 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 or transfer;

(viii)      Such sale or transfer is not construed so as to relieve any current
indemnitor of its obligations under any guaranty or indemnity agreement for any
acts or events occurring or obligations arising prior to or simultaneously with
the closing of such sale or transfer, and each such current indemnitor executes,
without any cost or expense to Lender, such documents and agreements as Lender
shall reasonably require to evidence and effectuate the ratification of each
such guaranty and indemnity agreement. Each such current indemnitor shall be
released from and relieved of any of its obligations under any guaranty or
indemnity agreement executed in connection with the loan secured hereby for any
acts or events occurring or obligations arising after the closing of such sale
or transfer 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 or transfer; and

(ix)         Lender shall have received an assumption fee equal to the greater
of (i) $15,000.00 or (ii) one-half of one percent (0.5%) of the Debt on the date
of such assumption and the payment of, or reimbursement for, all reasonable
costs and expenses actually incurred by Lender (including reasonable attorneys’
fees and costs) in connection with such assumption.

(x)          Such sale or transfer shall occur only with the simultaneous sale
or transfer of the Other Property to the identical Transferee in accordance with
the terms of the Other Mortgage.

 

(g)

Intentionally deleted.

(h)          Notwithstanding anything to the contrary contained herein, so long
as Borrower is Continental Towers, L.L.C., a Delaware limited liability company,
Borrower is permitted to incur, and shall contemporaneously herewith amend and
restate, the subordinate

 

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debt outstanding as of the date of this Mortgage (the “Subordinate Debt”) in the
amount of $83,024,815.00 from PGRT Equity, LLC, a Delaware limited liability
company (the “Subordinate Lender”) a wholly-owned subsidiary of Prime Group
Realty, L.P., a Delaware limited partnership, subject to Borrower’s strict
compliance with the following requirements:

(i)           The Subordinate Debt shall only be undertaken pursuant to those
amended and restated loan documents reasonably acceptable to Lender and executed
contemporaneously herewith (the “Subordinate Loan Documents”), which Subordinate
Loan Documents shall not be amended or modified in any manner absent obtaining
the prior written consent of Lender; provided, however, that upon a transfer of
the Security Property from Borrower to a Transferee pursuant to the terms and
conditions of Section 10(j) below, Lender shall not unreasonably withhold its
consent to non-economic modifications of the Subordinate Loan Documents provided
that such modifications do not adversely affect the Loan, Borrower, or Security
Property in any manner;

(ii)          The Subordinate Debt shall be secured only by a lien on the
Security Property and the Other Property, an assignment of leases and rents, and
an assignment of Borrower’s rent account, each which shall be expressly subject
and subordinate to the lien of this Mortgage; and

(iii)         Subordinate Lender shall not be entitled to exercise any rights or
remedies under the Subordinate Loan Documents or otherwise (including, but not
limited to foreclosure of the Security Property) without the prior written
consent of Lender except in a manner consistent, and in strict accordance, with
Section 10(i) below and the Amended and Restated Subordination and Standstill
Agreement between Lender and Subordinate Lender dated of even date herewith (the
“Subordination and Standstill Agreement”).

(i)           Notwithstanding anything to the contrary contained herein or in
the Subordinate Loan Documents, Subordinate Lender shall have the right, to the
extent available under the Subordinate Loan Documents, to foreclose the Security
Property, or accept a deed in lieu of foreclosure of the Security Property
(either such transfer is referred to hereinafter as a “Foreclosure”), only in
the event Subordinate Lender obtains Lender’s prior written consent to do so.
Lender’s consent to a Foreclosure by Subordinate Lender pursuant to the terms of
the Subordinate Loan Documents will not be unreasonably withheld, conditioned or
delayed after consideration of all relevant factors, provided that:

(i)           No Event of Default shall have occurred and remain uncured
(excluding specifically any default under the Subordinate Loan Documents);

(ii)          The proposed Transferee is Prime (hereinafter defined) or an
affiliate of Prime that is directly or indirectly owned and controlled entirely
by Prime;

(iii)        The proposed Transferee shall be a reputable entity or person of
good character, creditworthy, with sufficient financial worth considering the
obligations assumed and undertaken, as evidenced by financial statements and
other information reasonably requested by Lender. Lender acknowledges that Prime
meets this requirement as of the date of this Mortgage;

 

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(iv)         The proposed Transferee shall have an organizational structure and
documentation reasonably acceptable to Lender;

(v)          The proposed Transferee and its property manager shall have
sufficient experience in the ownership and management of properties similar to
the Security Property, and Lender shall be provided with reasonable evidence
thereof (and Lender reserves the right to approve the Transferee without
approving the substitution of the property manager);

(vi)         Lender, at its option, shall have recommendations in writing from
the Rating Agencies to the effect that such transfer will not result in a
requalification, reduction or withdrawal of any current securities rating
assigned in a Securitization;

(vii)       The proposed Transferee shall have executed and delivered to Lender
an assumption agreement in form and substance reasonably acceptable to Lender,
evidencing such Transferee’s agreement to abide and be bound by the terms of the
Note, this Security Instrument and the other Loan Documents, together with such
legal opinions and title insurance endorsements as may be reasonably requested
by Lender;

(viii)      Prime is, and continues upon such transfer to be, an indemnitor
under the Guaranty for the benefit of Lender dated as of even date herewith and
executes, without any cost or expense to Lender, a new guaranty or indemnity
agreement in form and substance satisfactory to Lender and delivers such legal
opinions as Lender may reasonably require;

(ix)         Subject to the provisions of Section 2.04 of the Note, such sale or
transfer 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 or transfer 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 or transfer 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 or transfer;

(x)          The Foreclosure of the Subordinate Debt shall not occur until the
maturity date, or upon a default by Borrower, of the Subordinate Debt;

(xi)         The lien of this Mortgage and all of Lender’s rights and remedies
under the Loan Documents shall not be adversely affected in any manner by the
Foreclosure, or, if so affected, Borrower and Prime shall execute any and all
documentation Lender reasonably deems necessary or appropriate to protect such
rights and remedies of Lender;

(xii)       Borrower shall reimburse Lender for all reasonable costs and
expenses (including all reasonable attorneys’ fees and costs) actually incurred
by Lender in connection with any such transfer;

 

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(xiii)      No action is taken by the Subordinate Lender to force or place
Borrower into bankruptcy and the proposed Transferee assumes or satisfies in
full all permitted liabilities of Borrower; and

(xiv)      The Foreclosure of the Subordinate Debt shall not occur without the
simultaneous transfer of the Other Property to the identical Transferee in
accordance with the requirements of the Other Mortgage.

(j)           Notwithstanding anything in this Section 10 to the contrary,
without requiring Lender’s consent or the payment of any application, assumption
or transfer fees, so long as Borrower is Continental Towers, L.L.C., a Delaware
limited liability company, Yochanan Danziger shall have the right to transfer
(directly or indirectly) the entirety (but expressly not only a portion) of his
ownership interest in CTA Member, Inc., a Delaware corporation (“CTAM”) and the
entirety (but expressly not only a portion) of his non-managing membership
interest in CTA General Partner, LLC, a Delaware limited liability company
(“CTAGP”) to either (A) Prime Group Realty, L.P., a Delaware limited liability
company (“Prime”), (B) an affiliate of Prime that is directly or indirectly
owned and controlled entirely by Prime, or (C) an executive officer of Prime;
subject to the following conditions precedent:

(i)           No Event of Default or event which with the giving of notice or
the passage of time would constitute an Event of Default shall have occurred and
remain uncured;

(ii)          Borrower provides to Lender thirty (30) days prior notice of any
such transfer;

(iii)        If the proposed Transferee is an entity or person other than Prime,
the proposed Transferee shall be reasonably acceptable to Lender, considering
all relevant factors;

(iv)         Subject to the provisions of Section 2.04 of the Note, such
transfer is not construed so as to relieve Borrower of any personal liability
under the Note or any of the other Loan Documents 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;

(v)          Such sale or transfer is not construed so as to relieve any current
indemnitor of its obligations under any guaranty or indemnity agreement for any
acts or events occurring or obligations arising prior to or simultaneously with
the closing of such sale or transfer, and each such current indemnitor executes,
without any cost or expense to Lender, such documents and agreements as Lender
shall reasonably require to evidence and effectuate the ratification of each
such guaranty and indemnity agreement;

(vi)         Prime is, and continues upon such transfer to be, an indemnitor
under the Guaranty for the benefit of Lender dated as of even date herewith; and

(vii)       Borrower shall reimburse Lender for all reasonable costs and
expenses (including all reasonable attorneys’ fees and costs) actually incurred
by Lender in connection with any such transfer.

 

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(k)          Notwithstanding anything in this Section 10 to the contrary, so
long as Prime is the Guarantor, Lender’s consent shall not be required, nor
shall the payment of any application, assumption or transfer fees be due, in
connection with:

(A)(1)  the transfer of any general partnership interests in Guarantor made to
Prime Group Realty Trust, a Maryland Trust (“PGRT”) in connection with the
issuance and sale of any equity securities by PGRT; (2) the issuance and
exchange of any equity securities of PGRT for (x) limited partnership interests
in Guarantor or (y) shares of any outstanding class of equity securities of
PGRT, or

(B)(1)  the transfer to a Permitted Transferee (as defined below) of all or
substantially all of assets of PGRT or Guarantor which results in a change of
control of Guarantor or PGRT, or (2) the transfer to a Permitted Transferee of
more than 49% of the ownership interests in Guarantor or PGRT, or (3) any
merger, consolidation, or other corporate reorganization of Guarantor or PGRT
with or into a Permitted Transferee, shall be permitted subject to the following
conditions precedent:

 

(i)

No Event of Default shall have occurred and remain uncured;

(ii)          Borrower provides to Lender thirty (30) days prior notice of any
such transfer;

(iii)         Such transfer is not construed so as to relieve Prime or its
successor in the case of Section 10(k)(B)(3) above, of its obligations under any
guaranty or indemnity agreement for any acts or events occurring or obligations
arising prior to or simultaneously with the closing of such sale or transfer,
and Prime or its successor in the case of Section 10(k)(B)(3) above, executes,
without any cost or expense to Lender, such documents and agreements as Lender
shall reasonably require to evidence and effectuate the ratification of each
such guaranty and indemnity agreement; and

(iv)         Lender shall have received reimbursement for, all reasonable costs
and expenses actually incurred by Lender (including reasonable attorneys’ fees
and costs) in connection with such transfer.

(l)           For purposes of Section 10(k) above, “Permitted Transferee” shall
mean any of the following entities:

(i)           a pension fund, pension trust or pension account that immediately
prior to such transfer owns, directly or indirectly, total gross real estate
assets of at least the greater of (A) $500,000,000 or (B) an amount equal to the
amount of total gross real estate assets of PGRT immediately prior to the
proposed transfer to Permitted Transferee;

(ii)          a pension fund advisor who (i) immediately prior to such transfer,
controls, directly or indirectly, at least the greater of (A) $500,000,000 of
total gross real estate assets or (B) total gross real estate assets equal to
the amount of total gross real estate assets of PGRT immediately prior to the
proposed transfer to Permitted Transferee, and (ii) is acting on behalf of one
or more pension funds that, in the aggregate, satisfy the requirements of clause
(a) of this definition;

 

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(iii)         an insurance company which is subject to supervision by the
insurance commissioner, or a similar official or agency, of a state or territory
of the United States (including the District of Columbia) which, immediately
prior to such transfer, controls, directly or indirectly, total gross real
estate assets of at least the greater of (A) $500,000,000 or (B) an amount equal
to the amount of gross real estate assets of PGRT immediately prior to the
proposed transfer to Permitted Transferee;

(iv)         a corporation organized under the banking laws of the United States
or any state or territory of the United States (including the District of
Columbia) which, immediately prior to such transfer, controls, directly or
indirectly total gross real estate assets of at least the greater of (A)
$500,000,000 or (B) an amount equal to the amount of gross real estate assets of
PGRT immediately prior to the proposed transfer to Permitted Transferee;

(v)          any other entity who (i) owns or operates, directly or indirectly,
at least five (5) Class A office buildings totaling no less than the greater of
(A) 4,000,000 square feet (exclusive of the Security Property) or (B) or the
square footage of all such office buildings owned, directly or indirectly, by
PGRT immediately prior to the proposed transfer, (ii) has a net worth,
determined as of a date no more than six (6) months prior to the date of such
transfer, of at least the greater of (A) the net worth of PGRT as of the closing
date of the Loan or (B) the net worth of PGRT as of the date which is six (6)
months prior to the date of such transfer and (iii) immediately prior to such
transfer, controls, directly or indirectly, total gross real estate assets of at
least the greater of (A) $500,000,000 or (B) an amount equal to the amount of
gross real estate assets owned, directly or indirectly, by PGRT immediately
prior to the proposed transfer to Permitted Transferee, provided such entity is
reasonably acceptable to Lender based upon, among other things, its credit
history and general reputation; or

(vi)         any entity in which more than fifty percent (50%) of the ownership
interests are owned directly or indirectly by any of the entities listed in
subsections (iii) through (v) of this definition of “Permitted Transferee”, or
any combination of more than one such entity, and which is controlled directly
or indirectly by such entity or entities;

in each event (i) with respect to which Lender shall have received information
satisfactory to it confirming that neither the proposed Permitted Transferee nor
any affiliate of the proposed Permitted Transferee (A) is on the OFAC List or
would, if such entity assumes the Loan or obtains an interest in Borrower, cause
Lender to be in violation of any applicable statute, rule, regulation or other
law or (B) has been, within the seven (7) years prior to the proposed Transfer,
subject to any material, uncured event of default in connection with a loan
financing which resulted in litigation or an acceleration of indebtedness or the
subject of any bankruptcy, reorganization or insolvency proceeding, and (ii)
with respect to which such entity shall have sufficient experience in the
ownership and management of properties similar to the Security Property, as
determined by Lender in its reasonable discretion, and Lender shall have been
provided with reasonable evidence thereof.

 

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11.          Representations and Covenants Concerning the Borrower and Security
Property. Borrower represents, warrants and covenants as follows:

(a)          Organization and Existence. Each Borrower is duly organized and
validly existing as a limited liability company in good standing under the laws
of Delaware and in all other jurisdictions in which Borrower is transacting
business. 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. Each Borrower and any managing
member have delivered to Lender true and correct copies of their organizational
documents and there are no other documents or agreements which supplement, amend
or otherwise modify such organizational documents.

(b)          Authorization. Borrower has taken all necessary actions for the
authorization of the borrowing on account of the Loan and for the execution and
delivery of the Loan Documents, including, without limitation, that those
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.

(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 by Lender and its successors, transferees and
assigns, subject only to bankruptcy laws and general principles of equity.

(e)          No Defenses. The Note, this Security Instrument 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 Security
Instrument or any of the other Loan Documents, or the exercise of any right
thereunder, render this Security Instrument unenforceable, in whole or in part,
or subject to any right of rescission, set-off, counterclaim or defense,
including the defense of usury. None of Borrower, Guarantor, nor any constituent
(irrespective of the number of tiers of ownership) partner, member, manager,
shareholder, officer, director or other person related to Borrower (the
“Borrower Affiliates”) has any claim or right whatsoever against Lender or any
shareholder, director, officer, member, manager, partner, employee, agent or
attorney of Lender, and their successors and assigns (the “Lender Parties”),
except only for the express contractual obligations of Lender set forth in the
Loan Documents which are executed and delivered to become first effective as of
this date. Any rights or claims contrary to this provision, whether known or
unknown, are hereby expressly waived, including without limitation any such
rights or claims arising from any course of dealing, statement, agreement,
assurance, or inducement, document or instrument to which Lender or any other
Lender Party is a party or otherwise is bound.

 

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(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
Guarantor or any general partner or managing member of Borrower or any
Guarantor. To the best of Borrower’s knowledge, after due inquiry and
investigation, 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. To the best of
Borrower’s knowledge, after due inquiry and investigation, all of the
Improvements and the use of the Security Property comply in all material
respects with, and shall remain in compliance in all material respects with, all
applicable statutes, rules, regulations and private covenants now or hereafter
relating to the ownership, construction, use or operation of the Security
Property, including all applicable statutes, rules and regulations pertaining to
requirements for equal opportunity, anti-discrimination, fair housing,
environmental protection, zoning and land use. To the best of Borrower’s
knowledge, after due inquiry and investigation, the Improvements comply with,
and shall remain in compliance with, applicable health, fire and building codes.
To the best of Borrower’s knowledge, after due inquiry and investigation, there
is no evidence of any illegal activities relating to controlled substances on
the Security Property. To the best of Borrower’s knowledge, after due inquiry
and investigation, 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 Security Property as
an office building have been obtained and are in full force and effect. To the
best of Borrower’s knowledge, after due inquiry and investigation, 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 Security Property, an
adverse outcome of which would materially affect the Borrower’s performance
under the Note, this Security Instrument or the other Loan Documents.

(k)          Title. Borrower has good and marketable fee simple title to the
Security Property, and good title to the Equipment, subject to no liens, charges
or encumbrances other than the Permitted Exceptions. The possession of the
Security Property has been peaceful and undisturbed and title thereto has not
been disputed or questioned to the best of Borrower’s knowledge.

 

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

(m)         First Lien. Upon the execution by Borrower and the recording of this
Security Instrument, and upon the execution and filing of UCC-1 financing
statements or amendments thereto, Lender will have a valid first lien on the
Security Property and a valid security interest in the Equipment subject to no
liens, charges or encumbrances other than the Permitted Exceptions.

(n)          ERISA. Borrower has made and shall continue to make all required
contributions to all employee benefit plans, if any, and Borrower has no
knowledge of any material liability which has been incurred by 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. Borrower has no known material contingent
liabilities.

(p)          No Other Obligations. Borrower has no material financial obligation
under any indenture, mortgage, deed of trust, loan agreement or other agreement
or instrument to which Borrower is a party or by which Borrower or the Security
Property is otherwise bound, other than (a) obligations incurred in the ordinary
course of the operation of the Security Property, (b) obligations under this
Security Instrument and the other Loan Documents, and (c) obligations under the
Subordinate Loan Documents. No member or partner has pledged or otherwise
conveyed their respective ownership interests in Borrower as security for any
financial obligation of Borrower or such member or partner.

(q)          Fraudulent Conveyance. 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 Loan contemplated by
the Loan Documents, including the effect of Section 5 of the Subordination and
Standstill Agreement on the Subordinate Lender’s rights under the Subordinate
Loan Documents, the fair saleable value of Borrower’s assets exceed and will,
immediately following the execution and delivery of the Loan Documents, exceed
Borrower’s total liabilities, including, without limitation, subordinated,
unliquidated, disputed or contingent liabilities. Giving effect to the Loan
contemplated by the Loan Documents, including the effect of Section 5 of the
Subordination and Standstill Agreement on the Subordinate Lender’s rights under
the Subordinate Loan Documents, 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 Borrower’s probable liabilities, including the
maximum amount of its contingent liabilities or its debts as such debts become
absolute and matured. Borrower’s assets do not and, immediately following the
execution and delivery of the Loan Documents will not, constitute unreasonably

 

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small capital to carry out its business as conducted or as proposed to be
conducted. 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 Borrower).

(r)           Investment Company Act. Borrower is not (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 Security 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 Security Property as presently used and enjoyed are located in
the public right-of-way abutting the Security Property, and all such utilities
are connected so as to serve the Security Property without passing over other
property. All roads necessary for the full utilization of the Security 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 Security Property.

(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.

(u)          Single Tax Lot. Within 90 days after the date of this Mortgage,
Borrower shall cause the Premises to consist of a single lot or multiple tax
lots; no portion of said tax lot(s) shall cover property other than the Premises
or a portion of the Premises and no portion of the Premises lies in any other
tax lot. As soon as possible after any Partial Release, Borrower shall cause the
Release Lot and the unreleased portion of the Security Property to each be
assessed as a separate tax lot with respect to all property taxes and
assessments.

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

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

(x)          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

 

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the Borrower which has not been disclosed which adversely affects, nor as far as
the Borrower can foresee, might adversely affect the business, operations or
condition (financial or otherwise) of the representing party.

(y)          Condition of Improvements. The Security Property has not been
damaged by fire, water, wind or other cause of loss or any previous damage to
the Security Property has been fully restored.

(z)          No Insolvency or Judgment. Neither Borrower nor any member of
Borrower, nor any guarantor of the Loan is currently (a) the subject of or a
party to any completed or pending bankruptcy, reorganization or insolvency
proceeding; or (b) the subject of any judgment unsatisfied of record or docketed
in any court of the state in which the Security Property is located or in any
other court located in the United States. Giving effect to the Loan contemplated
by the Loan Documents, including the effect of Section 5 of the Subordination
and Standstill Agreement on the Subordinate Lender’s rights under the
Subordinate Loan Documents, the Loan will not render the Borrower nor any member
of Borrower insolvent. Giving effect to the Loan contemplated by the Loan
Documents, including the effect of Section 5 of the Subordination and Standstill
Agreement on the Subordinate Lender’s rights under the Subordinate Loan
Documents, Borrower is and will remain solvent and Borrower will pay its debts
and liabilities (including, as applicable, shared personnel and overhead
expenses) from its assets as the same shall become due. As used herein, 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.

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

(bb)        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 Security Property,
whether prior to, equal with or subordinate to the lien of this Security
Instrument.

(cc)        No Purchase Options. No tenant, person, party, firm, corporation or
other entity has an option to purchase the Security Property, any portion
thereof or any interest therein.

(dd)        Leases. The Security Property is not subject to any Leases other
than the Leases described in the rent roll delivered to Lender in connection
with this Security Instrument. No person has any possessory interest in the
Security Property or right to occupy the same except under and pursuant to the
provisions of the Leases. As of the date hereof, (i) the Borrower is the owner
and holder of the landlord’s interest under each Lease; (ii) there are no prior
assignments of any Lease or any portion of Rents which are presently outstanding
and have priority over the

 

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Assignment of Leases and Rents (the “Assignment of Leases and Rents”), dated the
date hereof, given by Borrower to Lender and intended to be duly recorded;
(iii) the Leases have not been modified or amended, except as disclosed to
Lender in writing on the date hereof; (iv) each Lease is in full force and
effect; (v) other than disclosed on Exhibit B attached hereto, neither Borrower
nor any tenant under any Lease is in default beyond any applicable cure period
under any of the terms, covenants or provisions of the Lease, and Borrower knows
of no event which, but for the passage of time or the giving of notice or both,
would constitute an event of default under any Lease; (vi) to the best of
Borrower’s knowledge, there are no offsets or defenses to the payment of any
portion of the Rents; and (vii) all Rents due and payable under each Lease have
been paid in full and no said Rents have been paid more than one (1) month in
advance of the due dates thereof.

(ee)        Boundary Lines. Except as set forth on Lender’s policy of title
insurance for the Security Property, all of the Improvements which were included
in determining the appraised value of the Security Property lie wholly within
the boundaries and building restriction lines of the Security Property, and no
improvements on adjoining properties encroach upon the Security Property, and no
easements or other encumbrances upon the Premises encroach upon any of the
Improvements, so as to affect the value or marketability of the Security
Property except those which are insured against by title insurance.

(ff)         Survey. The survey of the Security Property delivered to Lender in
connection with this Security Instrument has been performed by a duly licensed
surveyor or registered professional engineer in the jurisdiction in which the
Security Property is situated, is certified to the Lender, its successors and
assigns and the title insurance company, 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
Security Property or the title thereto.

(gg)        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 Security Property any act or omission affording the federal
government or any state or local government the right of forfeiture as against
the Security Property or any part thereof or any monies paid in performance of
Borrower’s obligations under any of the Loan Documents. Borrower hereby
covenants and agrees not to commit, permit or suffer to exist any act, omission
or circumstance affording such right of forfeiture. In furtherance thereof,
Borrower hereby indemnifies Lender and agrees to defend and hold Lender harmless
from and against any loss, damage or injury incurred by Lender as a result of
any default by Borrower which affords the federal government or any state or
local government the right of forfeiture as against the Security Property or any
part thereof or any monies paid in performance of Borrower’s obligations under
any of the Loan Documents. Without limiting the generality of the foregoing, the
filing of formal charges or the commencement of proceedings against Borrower or
all or any part of the Security Property under any federal or state law for
which forfeiture of the Security Property or any part thereof or of any monies
paid in performance of Borrower’s obligations under the Loan Documents is a
potential result, shall, at the election of Lender, constitute an Event of
Default hereunder without notice or opportunity to cure.

 

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(hh)        Adequate Capitalization. Borrower is adequately capitalized and will
maintain adequate capital for the normal obligations reasonably foreseeable in a
business of its size and character and in light of its contemplated business
operations.

(ii)          Management Agreement. The Management Agreement dated December 29,
2006 (the “Management Agreement”) between Borrower and PRIME GROUP MANAGEMENT,
L.L.C. (“Manager”) pursuant to which Manager operates the Security Property is
in full force and effect and there is no default or violation by any party
thereunder. The fee due under the Management Agreement, and the terms and
provisions of the Management Agreement, are subordinate to this Security
Instrument and Manager shall attorn to Lender. Borrower shall not terminate,
cancel, modify, renew or extend the Management Agreement, or enter into any
agreement relating to the management or operation of the Security Property with
Manager or any other party, except as expressly permitted by the Amended and
Restated Assignment and Subordination Management Agreement by and among
Borrower, Lender and Manager dated as of even date hereof, without the express
written consent of Lender, which consent shall not be unreasonably withheld. If
at any time Lender consents to the appointment of a new Manager, such new
Manager and Borrower shall, as a condition of Lender’s consent, execute a
Consent and Agreement of Manager in the form then used by Lender.

(jj)          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 DRAPER AND KRAMER, INC. (“Broker”). Pursuant to a
separate agreement between Borrower and Broker, a brokerage commission is due
and payable on the date hereof. Borrower shall pay such commission in addition
to any sums payable to Lender by Borrower hereunder or under any of the other
Loan Documents. In no event shall Lender be responsible for the payment of any
such commission. Broker is not a third party beneficiary hereunder and has no
right to require that either Borrower or Lender amend this Security Instrument
or any of the other Loan Documents in any manner.

(kk)        Subordinate Loan Status. As of the date hereof, (a) the current
unpaid balance of the Subordinate Debt is $83,024,815.00, and (b) there are no
past due payments under the Subordinate Debt, nor does there exist any breach of
any of the terms and provisions of any of the Subordinate Loan Documents.

(ll)          Subordinate Loan Amendments. Except as otherwise expressly
provided in Section 10, Borrower shall not consent to any amendment or
modification of the Subordinate Loan Documents without the prior written consent
of Lender.

12.          Single Purpose Entity/Separateness. Borrower represents, warrants
and covenants as of the date of hereof and (except for items (f) and (m), which
are representations made only as of the date hereof, and are not continuing
covenants) until such time as the Debt is paid in full as follows:

(a)          Borrower does not own and will not own any asset or property other
than (i) the Security Property, and (ii) incidental personal property necessary
for the ownership or operation of the Security Property.

 

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(b)          Borrower has not engaged in and will not engage in any business
other than the ownership, management and operation of the Security Property and
Borrower will conduct and operate its business as presently conducted and
operated.

(c)          Borrower will not enter into any contract or agreement with any
affiliate of the Borrower, any constituent party of Borrower, any guarantor (a
“Guarantor”) of the Debt or any part thereof or any affiliate of any constituent
party or Guarantor, except the Management Agreement and otherwise except upon
terms and conditions that are intrinsically fair and substantially similar to
those that would be available on an arms-length basis with third parties other
than any such party.

(d)          Borrower has not incurred and will not incur any indebtedness,
secured or unsecured, direct or indirect, absolute or contingent (including
guaranteeing any obligation), other than (i) the Debt, (ii) unsecured trade and
operational debt and lease obligations incurred in the ordinary course of
business not outstanding for more than sixty (60) days (subject to the
provisions of Section 31 hereof) with trade creditors and in amounts as are
normal and reasonable under the circumstances, but, in no event, to exceed three
percent (3%) of original principal balance, (iii) debt incurred in the financing
of equipment and other personal property used on the Premises, but, in no event,
to exceed $128,000.00, and (iv) the Subordinate Debt. No indebtedness other than
the Debt and the Subordinate Debt may be secured (subordinate or pari passu) by
the Security Property.

(e)          Borrower has not made and will not make any loans or advances to
any third party (including any affiliate or constituent party, any Guarantor or
any affiliate of any constituent party or Guarantor), and shall not acquire
obligations or securities of its affiliates.

(f)           After giving effect to the Loan contemplated by the Loan
Documents, including the effect of Section 5 of the Subordination and Standstill
Agreement on Subordinate Lender’s rights under the Subordinate Loan Documents,
Borrower is solvent and reasonably expects to be able to pay its debts from its
assets as the same shall become due.

(g)          Borrower has done or caused to be done and will do all things
necessary to observe organizational formalities and preserve its existence, and
Borrower will at all times have provisions in its organizational documents
imposing on it substantially the same requirements as are specified in this
Section 12, and will not, nor will any partner, member, shareholder, trustee,
Lender, or principal amend, modify or otherwise change any provision of such
party’s organizational documents which pertains to the subject matter of this
Section 12.

(h)          Borrower shall continuously maintain its existence and right to do
business in the state where the Security Property is located.

(i)           Borrower will conduct and operate its business as presently
conducted and operated.

(j)           Borrower will maintain all of its books, records, financial
statements and bank accounts separate from those of its affiliates and any
constituent party and Borrower will file its own tax returns unless required
otherwise by applicable law. Borrower shall maintain its books, records,
resolutions and agreements as official records.

 

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(k)          Borrower will be, and at all times will hold itself out to the
public as, a legal entity separate and distinct from any other entity (including
any affiliate of Borrower, any constituent party of Borrower, any Guarantor or
any affiliate of any constituent party or Guarantor), shall correct any known
misunderstanding regarding its status as a separate entity, shall conduct
business in its own name, shall not identify itself or any of its affiliates as
a division or part of the other and shall maintain and utilize a separate
invoices and checks.

(l)           Neither Borrower nor any constituent party will seek the
dissolution, winding up, liquidation, consolidation or merger in whole or in
part, of the Borrower.

(m)         Borrower has and reasonably expects to maintain adequate capital for
the normal obligations reasonably foreseeable in a business of its size and
character and in light of its contemplated business operations.

(n)          Borrower will not commingle the funds and other assets of Borrower
with those of any affiliate or constituent party, any Guarantor, or any
affiliate of any constituent party of Guarantor, or any other person.

(o)          Borrower has and will maintain its assets in such a manner that it
will not be costly or difficult to segregate, ascertain or identify its
individual assets from those of any affiliate or constituent party, any
Guarantor, or any affiliate of any constituent party or Guarantor, or any other
person.

(p)          Borrower does not and will not guarantee, become obligated for, or
hold itself out to be responsible for the debts or obligations of any other
person or entity or the decisions or actions respecting the daily business or
affairs of any other person or entity.

(q)          Borrower will not permit any affiliate or constituent party (other
than Manager) independent access to its bank accounts.

(r)           Borrower shall pay the salaries of its own employees and maintain
a sufficient number of employees, if any, in light of its contemplated business
operations.

(s)           If Borrower is a limited partnership or a limited liability
company, the general partner or managing member (the “SPC Entity”) shall be a
limited liability company whose sole asset is its interest in Borrower and the
SPC Entity will at all times comply, and will cause Borrower to comply, with
each of the representations, warranties, and covenants contained in this
Section 12 as if such representation, warranty or covenant was made directly by
such general partner or managing member.

(t)           Borrower shall at all times cause there to be at least one duly
appointed member of the board of directors or manager (an “Independent
Director”) of the SPC Entity reasonably satisfactory to Lender who shall not
have been at the time of such individual’s appointment, and may not have been at
any time during the preceding five years (i) a shareholder of, or an officer,
director, attorney, counsel, partner or employee of, Borrower, Guarantor or any
of its shareholders, subsidiaries or affiliates, (ii) a customer of, or supplier
to, Borrower, Guarantor or any of its shareholders, subsidiaries or affiliates,
(iii) a person or other entity controlling or under common control with any such
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(iv) a member of the immediate family of any such shareholder, officer,
director, partner, employee, supplier or customer of any other director of
Borrower or Guarantor. As used herein, the term “control” means the possession,
directly or indirectly, of the power to direct or cause the direction of the
management and policies of a person or entity, whether through ownership of
voting securities, by contract or otherwise.

(u)          Borrower shall not cause or permit the managers of the SPC Entity
to take any action which, under the terms of any certificate of organization or
operating agreement with respect to any membership, requires a vote of the
managers of the SPC Entity unless at the time of such action there shall be at
least one member or manager who is an Independent Director.

(v)          SPC Entity shall not, without the unanimous consent of its manager
(including the Independent Manager), institute proceedings for itself or
Borrower to be adjudicated bankrupt or insolvent; consent to the institution of
a bankruptcy or insolvency proceedings against it or Borrower; file a petition
seeking, or consent to, reorganization or relief under any applicable federal or
state law relating to bankruptcy; consent to the appointment of a receiver,
liquidator, assignee, trustee, sequestrator (or other similar official) for
itself or Borrower or a substantial part of its or Borrower’s property; make any
assignment for the benefit of creditors; or admit in writing its inability to
pay its debts generally as they become due.

(w)         SPC Entity shall not, without the unanimous consent of its managers
(including the Independent Manager), for itself or for Borrower (i) liquidate or
dissolve, in whole or in part; (ii) consolidate, merge or enter into any form of
consolidation with or into any other person or entity, nor convey, transfer or
lease its or Borrower’s assets substantially as an entirety to any person or
entity nor permit any person or entity to consolidate, merge or enter into any
form of consolidation with or into itself or Borrower; or (iii) amend any
provisions of its or Borrower’s organizational documents containing provisions
similar to those contained in this Section 12.

(x)          Borrower shall conduct its business so that the assumptions made
with respect to Borrower and its affiliates in the opinions of their legal
counsel that have been delivered to Lender in connection with the Loan at all
times shall be true and correct in all respects.

(y)          The historical operations of Borrower have been wholly consistent
with the terms and provisions of this Section 12.

13.          Estoppel Certificates and No Default Affidavits. After request by
Lender, Borrower shall within ten (10) days furnish Lender with a statement,
duly acknowledged and certified, setting forth (i) the amount of the original
principal amount of the Note, (ii) the unpaid principal amount of the Note,
(iii) the rate of interest of the Note, (iv) the date installments of interest
and/or principal were last paid, (v) any offsets or defenses to the payment of
the Debt, if any, (vi) that the Note, this Security Instrument and the other
Loan Documents are valid, legal and binding obligations and have not been
modified or if modified, giving particulars of such modification; and
(vii) reaffirming all representations and warranties of Borrower set forth
herein and in the other Loan Documents as of the date requested by Lender or, to
the extent of any changes to any such representations and warranties, so stating
such changes.

 

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14.          Controlling Agreement. It is expressly stipulated and agreed to be
the intent of Borrower, and Lender at all times to comply with applicable state
law or applicable United States federal law (to the extent that it permits
Lender to contract for, charge, take, reserve, or receive a greater amount of
interest than under state law) and that this Section 14 (and the similar
provision contained in the Note) shall control every other covenant and
agreement in this Security Instrument and the other Loan Documents. If the
applicable law (state or federal) is ever judicially interpreted so as to render
usurious any amount called for under the Note or under any of the other Loan
Documents, or contracted for, charged, taken, reserved, or received with respect
to the Debt, or if Lender’s exercise of the option to accelerate the maturity of
the Note, or if any prepayment by Borrower results in Borrower having paid any
interest in excess of that permitted by applicable law, then it is Borrower’s
and Lender’s express intent that all excess amounts theretofore collected by
Lender shall be credited on the principal balance of the Note and all other Debt
(or, if the Note and all other Debt have been or would thereby be paid in full,
refunded to Borrower), and the provisions of the Note and the other Loan
Documents immediately be deemed reformed and the amounts thereafter collectible
hereunder and thereunder reduced, without the necessity of the execution of any
new documents, so as to comply with the applicable law, but so as to permit the
recovery of the fullest amount otherwise called for hereunder or thereunder. All
sums paid or agreed to be paid to Lender for the use, forbearance, or detention
of the Debt shall, to the extent permitted by applicable law, be amortized,
prorated, allocated, and spread throughout the full stated term of the Debt
until payment in full so that the rate or amount of interest on account of the
Debt does not exceed the maximum lawful rate from time to time in effect and
applicable to the Debt for so long as the Debt is outstanding. Notwithstanding
anything to the contrary contained herein or in any of the other Loan Documents,
it is not the intention of Lender to accelerate the maturity of any interest
that has not accrued at the time of such acceleration or to collect unearned
interest at the time of such acceleration.

15.          Changes in Laws Regarding Taxation. If any law is enacted or
adopted or amended after the date of this Security Instrument which deducts the
Debt from the value of the Security Property for the purpose of taxation or
which imposes a tax, either directly or indirectly, on the Debt or Lender’s
interest in the Security Property, Borrower will pay such tax, with interest and
penalties thereon, if any. In the event Lender is advised by counsel chosen by
it that the payment of such tax or interest and penalties by Borrower would be
unlawful or taxable to Lender or unenforceable or provide the basis for a
defense of usury, then in any such event, Lender shall have the option, by
written notice of not less than one hundred eighty (180) days, to declare the
Debt immediately due and payable without any prepayment consideration.

16.          No Credits on Account of the Debt. Borrower will not claim or
demand or be entitled to any credit or credits on account of the Debt for any
part of the Taxes or Other Charges assessed against the Security Property, or
any part thereof, and no deduction shall otherwise be made or claimed from the
assessed value of the Security Property, or any part thereof, for real estate
tax purposes by reason of this Security Instrument or the Debt. In the event
such claim, credit or deduction shall be required by law, Lender shall have the
option, by written notice of not less than one hundred eighty (180) days, to
declare the Debt immediately due and payable without any prepayment
consideration.

 

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17.          Documentary Stamps. 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 Security Instrument, or impose
any other tax or charge on the same, Borrower will pay for the same, with
interest and penalties thereon, if any.

 

18.

Books and Records.

(a)          The financial statements, rent rolls, operating statements and
balance sheets heretofore furnished to Lender are, as of the dates specified
therein, complete and correct and fairly present the financial condition of the
Borrower and any other persons or entities that are the subject of such
financial statements, and are prepared in accordance with generally accepted
accounting principles. Since the date of such financial statements, there has
been no materially adverse change in the financial condition, operation or
business of Borrower from that set forth in said financial statements. Borrower
hereby represents and warrants that no information material to the financial
condition of the Borrower, any Guarantor or Security Property has been withheld
or otherwise not delivered to Borrower.

(b)          Borrower will maintain full and accurate books of accounts and
other records reflecting the results of the operations of the Security Property
and will furnish to Lender on or before forty-five (45) days after the end of
each calendar quarter the following items, each certified by Borrower as being
true and correct: (i) a written statement (rent roll) dated as of the last day
of each such calendar quarter identifying each of the Leases by the term, space
occupied, rental required to be paid, the expiration date of each lease,
security deposit paid, any rental concessions, and identifying any defaults or
payment delinquencies thereunder; (ii) monthly and year to date operating
statements prepared for each calendar month during each such calendar quarter,
noting income and expenses, and including an itemization of actual (not pro
forma) capital and other information necessary and sufficient under generally
accepted accounting practices to fairly represent the financial position and
results of operation of the Security Property during such calendar month, all in
form satisfactory to Lender; (iii) a property balance sheet for each such
calendar quarter. Until a Securitization has occurred, the Borrower shall
furnish monthly each of the items listed in the immediately preceding sentence
within twenty (20) days after the end of such month. Within forty-five (45) days
following the end of each calendar quarter and within one hundred twenty (120)
days following the end of each calendar year, Borrower shall furnish statements
of its financial affairs and condition including a balance sheet and a statement
of profit and loss for the Borrower in such detail as Lender may reasonably
request, and setting forth the financial condition and the income and expenses
for the Security Property for the immediately preceding calendar year or
quarter, as applicable, which statements shall be prepared by Borrower. All
information required to be provided herein shall be accompanied by a certificate
executed by the chief financial officer of Borrower, the managing member or the
general partner of Borrower, as applicable, stating that each such statement or
item of information presents fairly the financial condition of the Security
Property being reported upon and shall be audited by a “Big Five” accounting
firm or other independent certified public accountant acceptable to Lender.
Lender acknowledges that the accounting firm of Grant Thornton LLP is an
accounting firm acceptable to Lender. Each such quarterly and annual financial
statement shall be prepared in accordance with generally accepted accounting
principles consistently applied. At any time and from time to time Borrower
shall deliver to

 

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Lender or its agents such other financial data as Lender or its agents shall
reasonably request with respect to the ownership, maintenance, use and operation
of the Security Property.

19.          Performance of Other Agreements. Borrower shall observe and perform
in all material respects the terms to be observed or performed by Borrower
pursuant to the terms of any agreement or recorded instrument affecting or
pertaining to the Security Property.

20.          Further Acts, Etc. Borrower will, at the cost of Borrower, and
without expense to Lender, do, execute, acknowledge and deliver all and every
such further acts, deeds, conveyances, mortgages, assignments, notices of
assignment, Uniform Commercial Code financing statements or continuation
statements, transfers and assurances as Lender shall, from time to time,
reasonably require, for the better assuring, conveying, assigning, transferring,
and confirming unto Lender the property and rights hereby deeded, mortgaged,
given, granted, bargained, sold, alienated, enfeoffed, conveyed, confirmed,
pledged, assigned and hypothecated or intended now or hereafter so to be, or
which Borrower may be or may hereafter become bound to convey or assign to
Lender, or for carrying out the intention or facilitating the performance of the
terms of this Security Instrument or for filing, registering or recording this
Security Instrument or for facilitating the sale of the Loan and the Loan
Documents as described herein below. Borrower, on demand, will execute and
deliver and hereby authorizes Lender to execute in the name of Borrower or
without the signature of Borrower to the extent Lender may lawfully do so, one
or more financing statements, chattel mortgages or other instruments, to
evidence more effectively the security interest of Lender in the Security
Property. Upon foreclosure, the appointment of a receiver or any other relevant
action, Borrower will, at the cost of Borrower and without expense to Lender,
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 or the Security Property. Borrower grants to Lender an irrevocable
power of attorney coupled with an interest for the purpose of exercising and
perfecting any and all rights and remedies available to Lender at law and in
equity, including, without limitation, such rights and remedies available to
Lender pursuant to this Section.

21.          Recording of Security Instrument, Etc. Borrower forthwith upon the
execution and delivery of this Security Instrument and thereafter, from time to
time, will cause this Security Instrument, and any security instrument creating
a lien or security interest or evidencing the lien hereof upon the Security
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 Lender in, the Security
Property. Borrower will pay all filing, registration or recording fees, and all
expenses incident to the preparation, execution and acknowledgment of this
Security Instrument, any mortgage, deed of trust or similar instrument
supplemental hereto, any security instrument with respect to the Security
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 Security Instrument, any
mortgage, deed of trust or similar instrument supplemental hereto, any security
instrument with respect to the Security Property or any instrument of further
assurance, except where prohibited by law so to do. Borrower shall hold harmless
and indemnify Lender, its successors and assigns, against any liability incurred
by reason of the imposition of any tax on the making and recording of this
Security Instrument.

 

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22.          Reporting Requirements. Borrower agrees to give prompt notice to
Lender of the insolvency or bankruptcy filing of Borrower or the death,
insolvency or bankruptcy filing of any Guarantor.

23.          Events of Default. The Debt shall become immediately due and
payable at the option of Lender upon the happening of any one or more of the
following events of default (each an “Event of Default”):

(a)          failure of Borrower to pay (i) any scheduled payment (whether such
amount is interest, principal, Reserves, or otherwise) owing to Lender as and
when the same is due under the Note (taking into account any applicable grace
period expressly set forth in Section 2.01 of the Note), this Security
Instrument or any of the other Loan Documents, or (ii) any other amount from
time to time owing to Lender under the Note, this Security Instrument or any of
the other Loan Documents within five business days following written notice that
the same is due;

(b)          subject to Borrower’s right to contest as provided herein, if any
of the Taxes or Other Charges are not paid when the same are due and payable
(unless sums equaling the amount of Taxes and Other Charges then due and payable
have been delivered to Lender in accordance with Section 6 hereof);

(c)          if the Policies are not kept in full force and effect, or if the
Policies are not delivered to Lender upon request;

(d)          if Borrower transfers or encumbers any portion of the Security
Property without Lender’s prior written consent, except as may be otherwise
permitted under Sections 10 and 31;

(e)          if any representation or warranty of Borrower, or of any Guarantor,
made herein or in any other Loan Document or in any certificate, report,
financial statement or other instrument or document furnished to Lender shall
have been false or misleading in any material respect when made and Borrower
fails to correct such statement, instrument, or document within thirty (30) days
after Borrower first becomes aware of the need for such correction;

(f)           if Borrower, any principal, managing member or general partner in
Borrower or any Guarantor shall make an assignment for the benefit of creditors
or if Borrower shall generally not be paying its debts as they become due;

(g)          if a receiver, liquidator or trustee of Borrower, any principal,
managing member or general partner in Borrower or of any Guarantor shall be
appointed or if Borrower, any principal, managing member or general partner in
Borrower or any Guarantor shall be adjudicated a bankrupt or insolvent, or if
any petition for bankruptcy, reorganization or arrangement pursuant to federal
bankruptcy law, or any similar federal or state law, shall be filed by or
against, consented to, or acquiesced in by, Borrower, any principal, managing
member or general partner in Borrower or any Guarantor or if any proceeding for
the dissolution or liquidation of Borrower, any principal, managing member or
general partner in Borrower or of any Guarantor shall be instituted; however, if
such appointment, adjudication, petition or proceeding was involuntary and not
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or general partner in Borrower or such Guarantor, upon the same not being
discharged, stayed or dismissed within sixty (60) days;

(h)          if Borrower shall be in default beyond any applicable cure period
under any other deed of trust, mortgage or security agreement covering any part
of the Security Property whether it be superior or junior in lien to this
Security Instrument;

(i)           subject to Borrower’s right to contest as provided herein, if the
Security Property becomes subject to any mechanic’s, materialman’s or other lien
and such lien is not removed of record or insured over in a manner reasonably
acceptable to Lender within thirty (30) days after Borrower becomes aware of the
filing or recording of such lien (except a lien for local real estate taxes and
assessments not then due and payable);

(j)           if Borrower fails to cure properly any violations of laws or
ordinances affecting or which may be interpreted to affect the Security Property
within thirty (30) days after Borrower first receives notice of any such
violations; provided, however, if such default is reasonably susceptible of
cure, but not within such thirty (30) day period, then Borrower may be permitted
up to an additional sixty (60) days to cure such default or such additional time
period as may be required by applicable law.

(k)          except as permitted in this Security Instrument, the alteration,
improvement, demolition or removal of any of the Improvements without the prior
consent of Lender;

(l)           if Borrower shall continue to be in default under any term,
covenant, or provision of the Note or any of the other Loan Documents, beyond
applicable cure periods contained in those documents;

(m)         if without Lender’s prior written consent, (i) the Management
Agreement is terminated, (ii) the ownership, management or control of Manager is
transferred, (iii) there is a material change in the Management Agreement,
(iv) if there shall be a material default by Borrower under the Management
Agreement; or (v) the management of the Security Property is transferred to an
entity other than Manager (except as expressly permitted by the Assignment and
Subordination of Management Agreement by and among Borrower, Lender, and Manager
dated as of even date hereof);

(n)          if Borrower ceases to continuously operate the Security Property or
any material portion thereof as an office building for any reason whatsoever
(other than temporary cessation in connection with any repair or renovation
thereof undertaken with the consent of Lender); or

(o)          if Borrower fails to cure a default under any other term, covenant
or provision of this Security Instrument within thirty (30) days after Borrower
first receives notice of any such default; provided, however, if such default is
reasonably susceptible of cure, but not within such thirty (30) day period, then
Borrower may be permitted up to an additional ninety (90) days to cure such
default provided that Borrower diligently and continuously pursues such cure.

 

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(p)          The occurrence of any Event of Default pursuant to the Amended and
Restated Mortgage, Security Agreement and Fixture Financing Statement (the
“Other Mortgage”) dated of even date herewith executed by Other Borrower for the
benefit of Lender, which said Other Mortgage amends and restates the Original
Mortgage (as defined in Section 65 hereof) relative to the property described on
Exhibit C attached hereto and incorporated herein by reference (the “Other
Property”).

24.          Late Payment Charge. If any scheduled payment on the Debt is not
paid on or before the date on which such payment is due (other than any payment
due on the Maturity Date) (taking into account any applicable grace period
expressly set forth in Section 2.02 of the Note), or if any other payment
secured hereby is not paid within five days following written notice that the
same is due, then Borrower shall pay to Lender upon demand an amount equal to
the lesser of five percent (5%) of such unpaid portion of the Debt or the
maximum amount permitted by applicable law in order to defray a portion of the
expenses incurred by Lender in handling and processing such delinquent payment
and to compensate Lender for the loss of the use of such delinquent payment, and
such amount shall be secured by this Security Instrument. Borrower recognizes
that its default in making, when due, any payment under this Note will require
Lender to incur additional expense in servicing and administering the Loan and
in loss to Lender of the use of the money due and in frustration to Lender in
meeting its other financial and loan commitments. Borrower additionally
acknowledges that the damages caused thereby would be extremely difficult and
impractical to ascertain. Borrower agrees (a) that an amount equal to the late
charge plus the accrual of interest at the Default Interest Rate (as defined in
the Note) is a reasonable estimate of the damage to Lender in the event of a
late payment, and (b) that the accrual of interest at the Default Interest Rate
following any other Event of Default is a reasonable estimate of the damage to
Lender in the event of such other Event of Default, regardless of whether there
has been an acceleration of the Loan.

25.          Right To Cure Defaults. Upon the occurrence and during the
continuance of any Event of Default or if Borrower fails to make any payment
(including, without limitation, any required payments for taxes, insurance or to
discharge any liens with respect to the Security Property) or to do any act as
herein provided, Lender may, but without any obligation to do so and without
notice to or demand on Borrower and without releasing Borrower from any
obligation hereunder, make or do the same in such manner and to such extent as
Lender may deem necessary to protect the security hereof. Lender is authorized
to enter upon the Security Property for such purposes or appear in, defend, or
bring any action or proceeding to protect its interest in the Security Property
or to foreclose this Security Instrument or collect the Debt, and the cost and
expense thereof (including reasonable attorneys’ fees and disbursements to the
extent permitted by law), with interest at the Default Interest Rate (as defined
in the Note) for the period after notice from Lender that such cost or expense
was incurred to the date of payment to Lender, shall constitute a portion of the
Debt, shall be secured by this Security Instrument and the other Loan Documents
and shall be due and payable to Lender upon demand.

 

26.

Additional Remedies.

(a)          Upon the occurrence and during the continuance of any Event of
Default, Lender may take such action, without notice or demand, as it deems
advisable to protect and enforce its rights against Borrower and in and to the
Security Property, including, without

 

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limitation, the following actions, each of which may be pursued concurrently or
otherwise, at such time and in such order as Lender may determine, in its sole
discretion, without impairing or otherwise affecting the other rights and
remedies of Lender:

 

(i)

declare the entire Debt to be immediately due and payable;

(ii)          institute a proceeding or proceedings, judicial or nonjudicial, by
advertisement or otherwise, for the complete foreclosure of this Security
Instrument in which case the Security Property or any interest therein may be
sold for cash or upon credit in one or more parcels or in several interests or
portions and in any order or manner;

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

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

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

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

(vii)       apply for the appointment of a trustee, receiver, liquidator or
conservator of the Security Property, without notice and without regard for the
adequacy of the security for the Debt and without regard for the solvency of the
Borrower, any Guarantor or of any person, firm or other entity liable for the
payment of the Debt;

(viii)      enforce Lender’s interest in the Leases and Rents and enter into or
upon the Security Property, either personally or by its agents, nominees or
attorneys and dispossess Borrower and its agents and servants therefrom, and
thereupon Lender may (A) use, operate, manage, control, insure, maintain,
repair, restore and otherwise deal with all and every part of the Security
Property and conduct the business thereat; (B) complete any construction on the
Security Property in such manner and form as Lender deems advisable; (C) make
alterations, additions, renewals, replacements and improvements to or on the
Security Property; (D) exercise all rights and powers of Borrower with respect
to the Security Property, whether in the name of Borrower or otherwise,
including, without limitation, the right to make, cancel, enforce or modify
Leases, obtain and evict tenants, and demand, sue for, collect and receive all
Rents; and (E) apply the receipts from the Security Property to the payment of
Debt, after deducting therefrom all expenses (including reasonable attorneys’
fees and disbursements) incurred in connection with the aforesaid operations and
all amounts necessary to pay the taxes, assessments insurance and other charges
in connection with the Security Property, as well as just and reasonable
compensation for the services of Lender, its counsel, agents and employees;

 

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(ix)         require Borrower to pay monthly in advance to Lender, or any
receiver appointed to collect the Rents, the fair and reasonable rental value
for the use and occupation of any portion of the Security Property occupied by
Borrower and require Borrower to vacate and surrender possession to Lender of
the Security Property or to such receiver and, in default thereof, evict
Borrower by summary proceedings or otherwise; or

(x)          pursue such other rights and remedies as may be available at law or
in equity or under the Uniform Commercial Code including without limitation the
right to receive and/or establish a lock box for all Rents proceeds from the
Intangibles and any other receivables or rights to payments of Borrower relating
to the Security Property.

In the event of a sale, by foreclosure or otherwise, of less than all of the
Security Property, this Security Instrument shall continue as a lien on the
remaining portion of the Security Property.

(b)          The proceeds of any sale made under or by virtue of this Section,
together with any other sums which then may be held by Lender under this
Security Instrument, whether under the provisions of this Section or otherwise,
shall be applied by Lender to the payment of the Debt in such priority and
proportion as Lender in its sole discretion shall deem proper.

(c)          Lender may adjourn from time to time any sale by it to be made
under or by virtue of this Security Instrument by announcement at the time and
place appointed for such sale or for such adjourned sale or sales; and, except
as otherwise provided by any applicable provision of law, Lender, without
further notice or publication, may make such sale at the time and place to which
the same shall be so adjourned.

(d)          Upon the completion of any sale or sales pursuant hereto, Lender,
or an officer of any court empowered to do so, shall execute and deliver to the
accepted purchaser or purchasers a good and sufficient instrument, or good and
sufficient instruments, conveying, assigning and transferring all estate, right,
title and interest in and to the property and rights sold. Lender is hereby
irrevocably appointed the true and lawful attorney of Borrower, in its name and
stead, to make all necessary conveyances, assignments, transfers and deliveries
of the Security Property and rights so sold and for that purpose Lender may
execute all necessary instruments of conveyance, assignment and transfer, and
may substitute one or more persons with like power, Borrower hereby ratifying
and confirming all that its said attorney or such substitute or substitutes
shall lawfully do by virtue hereof. Any sale or sales made under or by virtue of
this Section, whether made under or by virtue of judicial proceedings or of a
judgment or decree of foreclosure and sale, shall operate to divest all the
estate, right, title, interest, claim and demand whatsoever, whether at law or
in equity, of Borrower in and to the properties and rights so sold, and shall be
a perpetual bar both at law and in equity against Borrower and against any and
all persons claiming or who may claim the same, or any part thereof from,
through or under Borrower.

(e)          Upon any sale made under or by virtue of this Section, whether made
under or by virtue of judicial proceedings or of a judgment or decree of
foreclosure and sale, Lender may bid for and acquire the Security Property or
any part thereof and in lieu of paying cash therefor may make settlement for the
purchase price by crediting upon the Debt the net sales

 

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price after deducting therefrom the actual, out-of-pocket expenses of the sale
and costs of the action and any other sums which Lender is authorized to deduct
under this Security Instrument.

(f)           No recovery of any judgment by Lender and no levy of an execution
under any judgment upon the Security Property or upon any other property of
Borrower shall affect in any manner or to any extent the lien of this Security
Instrument upon the Security Property or any part thereof, or any liens, rights,
powers or remedies of Lender hereunder, but such liens, rights, powers and
remedies of Lender shall continue unimpaired as before.

(g)          Lender may terminate or rescind any proceeding or other action
brought in connection with its exercise of the remedies provided in this Section
at any time before the conclusion thereof, as determined in Lender’s sole
discretion and without prejudice to Lender.

(h)          Lender may resort to any remedies and the security given by the
Note, this Security Instrument or the Loan Documents in whole or in part, and in
such portions and in such order as determined by Lender’s sole discretion. No
such action shall in any way be considered a waiver of any rights, benefits or
remedies evidenced or provided by the Note, this Security Instrument or any of
the other Loan Documents. The failure of Lender to exercise any right, remedy or
option provided in the Note, this Security Instrument or any of the other Loan
Documents shall not be deemed a waiver of such right, remedy or option or of any
covenant or obligation secured by the Note, this Security Instrument or the
other Loan Documents. No acceptance by Lender of any payment after the
occurrence of any Event of Default and no payment by Lender of any obligation
for which Borrower is liable hereunder shall be deemed to waive or cure any
Event of Default with respect to Borrower, or Borrower’s liability to pay such
obligation. No sale of all or any portion of the Security Property, no
forbearance on the part of Lender, and no extension of time for the payment of
the whole or any portion of the Debt or any other indulgence given by Lender to
Borrower, shall operate to release or in any manner affect the interest of
Lender in the remaining Security Property or the liability of Borrower to pay
the Debt. No waiver by Lender shall be effective unless it is in writing and
then only to the extent specifically stated. All actual, out-of-pocket costs and
expenses of Lender in exercising the rights and remedies under this Section 26
(including reasonable attorneys’ fees and disbursements to the extent permitted
by law), shall be paid by Borrower immediately upon notice from Lender, with
interest at the Default Interest Rate for the period after notice from Lender
and such costs and expenses shall constitute a portion of the Debt and shall be
secured by this Security Instrument.

(i)           The interests and rights of Lender under the Note, this Security
Instrument or in any of the other Loan Documents shall not be impaired by any
indulgence, including (i) any renewal, extension or modification which Lender
may grant with respect to any of the Debt, (ii) any surrender, compromise,
release, renewal, extension, exchange or substitution which Lender may grant
with respect to the Security Property or any portion thereof; or (iii) any
release or indulgence granted to any maker, endorser, Guarantor or surety of any
of the Debt.

(j)           Upon the occurrence and during the continuance of any breach,
default, or Event of Default, Lender shall not be obligated to render any
performance to Borrower under the Loan Documents.

 

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(k)          Anything to the contrary herein or elsewhere notwithstanding,
except as specifically provided otherwise by law, without the prior written
consent of Lender, which may be withheld or conditioned in Lender’s sole and
absolute discretion, Borrower shall have no right to cure any Event of Default
(and no right to cure shall be implied) and Lender shall have no obligation to
accept the cure of, or to waive, any Event of Default, regardless of tender of
delinquent payments or other performance by Borrower, or any other event or
condition whatsoever. Borrower hereby (i) acknowledges that Lender may refuse
(in its sole and absolute discretion for any reason whatsoever) any cure of any
Event of Default, and notwithstanding any purported cure of such Event of
Default, Lender may exercise any and/or all rights and remedies available to it;
and (ii) waives any and all rights to cure any Event of Default.

(l)           In the event there is a foreclosure or comparable sale or sales
hereunder and at the time of such sale or sales, Borrower or Borrower’s
representatives, successors or assigns, or any other persons claiming any
interest in the Security 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 Security Property, or any part thereof,
then, to the extent not prohibited by applicable law, each and all shall, at the
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 Security 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 Security Property upon the termination of such tenancy, the
purchaser shall be entitled to institute and maintain an action for unlawful
detainer of the Security Property in the appropriate court of the county in
which the Premises is located.

27.          Right of Entry. In addition to any other rights or remedies granted
under this Security Instrument, Lender and its agents, during the Term, shall
have the right to enter and inspect the Security Property upon reasonable prior
notice during normal business hours. The cost of such inspections or audits
shall be borne by Borrower should Lender determine that an Event of Default
exists, including the cost of all follow up or additional investigations or
inquiries deemed reasonably necessary by Lender. The cost of such inspections,
if not paid for by Borrower following demand, may be added to the principal
balance of the sums due under the Note and this Security Instrument and shall
bear interest thereafter until paid at the Default Interest Rate.

 

28.

Security Agreement.

(a)          This Security Instrument is both a real property lien instrument
and a “security agreement” within the meaning of the Uniform Commercial Code.
The Security Property includes both real and personal property and all other
rights and interests, whether tangible or intangible in nature, of Borrower in
the Security Property. Borrower by executing and delivering this Security
Instrument has granted and hereby grants to Lender, as security for the Debt, a
security interest in the Security Property to the full extent that the Security
Property may be subject to the Uniform Commercial Code (said portion of the
Security Property so subject to the Uniform Commercial Code being called in this
Section the “Collateral”). This Security Instrument covers all items of the
Collateral that are or are to become fixtures. Information

 

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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
Security Instrument. The record owner of the Security Property is Borrower.

(b)          If an Event of Default shall occur, Lender, in addition to any
other rights and remedies which it may have, shall have and may exercise
immediately and without demand, any and all rights and remedies granted to a
secured party upon default under the Uniform Commercial Code, including, without
limiting the generality of the foregoing, the right to take possession of the
Collateral or any part thereof, and to take such other measures as Lender may
deem necessary for the care, protection and preservation of the Collateral.
After the occurrence, and during the continuance, of an Event of Default, upon
request or demand of Lender, Borrower shall at its expense assemble the
Collateral and make it available to Lender at a convenient place acceptable to
Lender. Borrower shall pay to Lender on demand any and all actual out-of-pocket
expenses, including attorneys’ fees and disbursements, incurred or paid by
Lender 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 Lender with respect to the Collateral sent to Borrower
in accordance with the provisions hereof at least five (5) days prior to such
action, shall constitute commercially reasonable notice to Borrower. The
proceeds of any disposition of the Collateral, or any part thereof, may be
applied by Lender to the payment of the Debt in such priority and proportions as
Lender in its sole discretion shall deem proper. In the event of any change in
name, identity or structure of any Borrower, such Borrower shall notify Lender
thereof and promptly after request shall execute, file and record such Uniform
Commercial Code forms as are necessary to maintain the priority of Lender’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 Lender shall
require the filing or recording of additional Uniform Commercial Code forms or
continuation statements, Borrower shall, promptly after request, execute, file
and record such Uniform Commercial Code forms or continuation statements as
Lender shall deem necessary, and shall pay all actual, out-of-pocket expenses
and fees in connection with the filing and recording thereof, it being
understood and agreed, however, that no such additional documents shall increase
Borrower’s obligations under the Note, this Security Instrument and any of the
other Loan Documents. Borrower hereby irrevocably appoints Lender as its
attorney-in-fact, coupled with an interest, to file with the appropriate public
office on its behalf any financing or other statements signed only by Lender, as
secured party, in connection with the Collateral covered by this Security
Instrument.

29.          Actions and Proceedings. Lender has the right to appear in and
defend any action or proceeding brought with respect to the Security Property
and to bring any action or proceeding, in the name and on behalf of Borrower,
which Lender, in its sole discretion, decides should be brought to protect their
interest in the Security Property. Lender shall, at its option, be subrogated to
the lien of any deed of trust, mortgage or other security instrument discharged
in whole or in part by the Debt, and any such subrogation rights shall
constitute additional security for the payment of the Debt.

30.         Waiver of Setoff and Counterclaim. All amounts due under this
Security Instrument, the Note and the other Loan Documents shall be payable
without setoff, counterclaim or any deduction whatsoever. Borrower hereby waives
the right to assert a setoff, counterclaim (other than a mandatory or compulsory
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proceeding in which Lender is a participant, or arising out of or in any way
connected with this Security Instrument, the Note, any of the other Loan
Documents, or the Debt.

31.          Contest of Certain Claims. Notwithstanding the provisions of
Sections 5 and 12(d)(ii) hereof, Borrower shall not be in default for failure to
pay or discharge Taxes, Other Charges or mechanic’s or materialman’s lien
asserted against the Security Property, or unsecured or operational debt with
trade creditors if, and so long as, (a) Borrower shall have notified Lender of
same promptly after obtaining knowledge thereof; (b) Borrower shall diligently
and in good faith contest the same by appropriate legal proceedings which shall
operate to prevent the enforcement or collection of the same and the sale of the
Security Property or any part thereof, to satisfy the same; (c) Borrower shall
provide to Lender title insurance over such items in a manner reasonably
acceptable to Lender (with respect to Taxes, Other Charges or mechanic’s or
materialman’s lien) or shall have furnished to Lender a cash deposit, or an
indemnity bond satisfactory to Lender with a surety reasonably satisfactory to
Lender, in an amount equal to 125% of the amount of the Taxes, Other Charges,
mechanic’s or materialman’s lien claim, or trade creditor claim, plus a
reasonable additional sum to pay all costs, interest and penalties that may be
imposed or incurred in connection therewith, to assure payment of the matters
under contest and to prevent any sale or forfeiture of the Security Property or
any part thereof; (d) Borrower shall promptly upon final determination thereof
pay the amount of any such Taxes, Other Charges or claim so determined, together
with all costs, interest and penalties which may be payable in connection
therewith; (e) the failure to pay the Taxes, Other Charges, mechanic’s or
materialman’s lien claim, or trade creditor claim does not constitute a default
under any other deed of trust, mortgage or security interest covering or
affecting any part of the Security Property; and (f) notwithstanding the
foregoing, Borrower shall immediately upon request of Lender pay (and if
Borrower shall fail so to do, Lender may, but shall not be required to, pay or
cause to be discharged or bonded against) any such Taxes, Other Charges or claim
notwithstanding such contest, if in the opinion of Lender, the Security Property
or any part thereof or interest therein may be in danger of being sold,
forfeited, foreclosed, terminated, cancelled or lost. Lender may pay over any
such cash deposit or part thereof to the claimant entitled thereto at any time
when, in the judgment of Lender, the entitlement of such claimant is
established.

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

33.          Marshalling and Other Matters. Borrower hereby waives, to the
extent permitted by law, the benefit of all appraisement, valuation, stay,
extension, reinstatement and redemption laws now or hereafter in force and all
rights of marshalling in the event of any sale hereunder of the Security
Property or any part thereof or any interest therein. Further, Borrower hereby
expressly waives any and all rights and periods of redemption from sale under
735 ILCS 5/15-1601(b) or any other applicable law or any other order or decree
of foreclosure of this Security Instrument on behalf of Borrower, and on behalf
of each and every person acquiring any interest in or title to the Security
Property subsequent to the date of this Security Instrument and on behalf of all
persons to the extent permitted by applicable law.

 

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34.          Hazardous Substances. Borrower hereby represents and warrants to
Lender that, to the best of Borrower’s knowledge, after due inquiry and
investigation except as disclosed in the environmental report delivered to
Lender in connection with the Loan (the “Phase I Report”): (a) the Security
Property is not in direct or indirect violation of any local, state, federal or
other governmental authority, statute, ordinance, code, order, decree, law, rule
or regulation pertaining to or imposing liability or standards of conduct
concerning environmental regulation, contamination or clean-up including,
without limitation, the Comprehensive Environmental Response, Compensation and
Liability Act, as amended (“CERCLA”), the Resource Conservation and Recovery
Act, as amended (“RCRA”), the Emergency Planning and Community Right-to-Know Act
of 1986, as amended, the Hazardous Substances Transportation Act, as amended,
the Solid Waste Disposal Act, as amended, the Clean Water Act, as amended, the
Clean Air Act, as amended, the Toxic Substance Control Act, as amended, the Safe
Drinking Water Act, as amended, the Occupational Safety and Health Act, as
amended, any state super-lien and environmental clean-up statutes and all rules
and regulations adopted in respect to the foregoing laws whether presently in
force or coming into being and/or effectiveness hereafter (collectively,
“Environmental Laws”); (b) the Security Property is not subject to any private
or governmental lien or judicial or administrative notice or action or inquiry,
investigation or claim relating to hazardous and/or toxic, dangerous and/or
regulated, substances, wastes, materials, raw materials which include hazardous
constituents, pollutants or contaminants including without limitation,
petroleum, tremolite, anthlophylie, actinolite or polychlorinated biphenyls and
any other substances or materials which are included under or regulated by
Environmental Laws or which are considered by scientific opinion to be otherwise
dangerous in terms of the health, safety and welfare of humans (collectively,
“Hazardous Substances”); (c) no Hazardous Substances are or have been (including
the period prior to Borrower’s acquisition of the Security Property) discharged,
generated, treated, disposed of or stored on, incorporated in, or removed or
transported from the Security Property other than in compliance with all
Environmental Laws; (d) no Hazardous Substances are present in, on or under any
nearby real property which could migrate to or otherwise affect the Security
Property; and (e) no underground storage tanks exist on any of the Security
Property. So long as Borrower owns or is in possession of the Security Property,
Borrower (i) shall keep or cause the Security Property to be kept free from
Hazardous Substances except for those substances used by Borrower or tenants in
the ordinary course of their businesses and in compliance with all Environmental
Laws, (ii) shall promptly notify Lender if Borrower shall become aware of any
Hazardous Substances on or near the Security Property and/or if Borrower shall
become aware that the Security Property is in direct or indirect violation of
any Environmental Laws and/or if Borrower shall become aware of any condition on
or near the Security Property which shall pose a threat to the health, safety or
welfare of humans, and (iii) Borrower shall remove such Hazardous Substances
and/or cure such violations and/or remove such threats, as applicable, as
required by law (or as shall be required by Lender in the case of removal which
is not required by law, but in response to the opinion of a licensed
hydrogeologist, licensed environmental engineer or other qualified consultant
engaged by Lender (“Lender’s Consultant”)), promptly after Borrower becomes
aware of same, at Borrower’s sole expense. Notwithstanding anything to the
contrary in this Section, the Borrower and/or tenants on the Security Property
may use and store immaterial amounts of Hazardous Substances at the Security
Property if such use or storage is in connection with the ordinary cleaning and
maintenance of the Security Property so long as such use and storage (A) does
not violate any applicable Environmental Laws and (B) is not the subject of any
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Phase I Report. Nothing herein shall prevent Borrower from recovering such
expenses from any other party that may be liable for such removal or cure. The
obligations and liabilities of Borrower under this Section 34 shall survive any
termination, satisfaction, or assignment of this Security Instrument and the
exercise by Lender of any of its rights or remedies hereunder, including,
without limitation, the acquisition of the Security Property by foreclosure or a
conveyance in lieu of foreclosure.

35.          Asbestos. Borrower represents and warrants that, to the best of
Borrower’s knowledge, after due inquiry and investigation, no asbestos or any
substance or material containing friable asbestos (“Asbestos”) is located on the
Security Property except as may have been disclosed in the Phase I Report
delivered to Lender in connection with the Loan. Borrower shall not install in
the Security Property, nor permit to be installed in the Security Property,
Asbestos and shall remove any Asbestos promptly upon discovery to the
satisfaction of Lender, at Borrower’s sole expense. Borrower shall in all
instances comply with, and ensure compliance by all occupants of the Security
Property with, all applicable federal, state and local laws, ordinances, rules
and regulations with respect to Asbestos, and shall keep the Security Property
free and clear of any liens imposed pursuant to such laws, ordinances, rules or
regulations. In the event that Borrower receives any notice or advice from any
governmental agency or any source whatsoever with respect to Asbestos on,
affecting or installed on the Security Property, Borrower shall immediately
notify Lender. The obligations and liabilities of Borrower under this Section 35
shall survive any termination, satisfaction, or assignment of this Security
Instrument and the exercise by Lender of any of its rights or remedies
hereunder, including but not limited to, the acquisition of the Security
Property by foreclosure or a conveyance in lieu of foreclosure.

36.          Environmental Monitoring. Borrower shall give prompt written
notices to Lender of: (a) any proceeding or inquiry by any party with respect to
the presence of any Hazardous Substance or Asbestos on, under, from or about the
Security Property, (b) all claims made or threatened by any third party against
Borrower or the Security Property relating to any loss or injury resulting from
any Hazardous Substance or Asbestos, and (c) Borrower’s discovery of any
occurrence or condition on any real property adjoining or in the vicinity of the
Security Property that could cause the Security Property to be subject to any
investigation or cleanup pursuant to any Environmental Law. Borrower shall
permit Lender to join and participate in, as a party if it so elects, any legal
proceedings or actions initiated with respect to the Security Property in
connection with any Environmental Law or Hazardous Substance, and Borrower shall
pay all attorneys’ fees and disbursements incurred by Lender in connection
therewith. Upon Lender’s written request, at any time after the occurrence of or
during the continuance of an Event of Default or at such other time Lender has
determined (in the exercise of its good faith judgment but in no event more than
one (1) time in any consecutive twelve (12) month period absent the occurrence
and continuance of an Event of Default) that reasonable cause exists for the
performance of an environmental inspection or audit of the Security Property,
Borrower shall provide at Borrower’s sole expense, (i) an inspection or audit of
the Security Property prepared by a licensed hydrogeologist or licensed
environmental engineer reasonably approved by Lender indicating the presence or
absence of Hazardous Substances on, in or near the Security Property, and
(ii) an inspection or audit of the Security Property prepared by a duly
qualified engineering or consulting firm reasonably accepted to Lender,
indicating the presence or absence of Asbestos on the Security Property. If
Borrower fails to provide such inspection or audit within sixty (60) days after
such request Lender may, upon not less than ten (10) days prior written notice
to

 

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Borrower, order same, and Borrower hereby grants to Lender and its employees and
agents access to the Security Property and a license to undertake such
inspection or audit. The cost of such inspection or audit may be added to the
Debt and shall bear interest thereafter until paid at the Default Interest Rate.
If no Event of Default has occurred and is continuing and Lender requests any
such inspection or audit more than one (1) time in any consecutive twelve (12)
month period, Lender shall have the right to obtain such additional audit or
inspection at Lender’s sole cost and expense. In the event that any
environmental site assessment report prepared in connection with such inspection
or audit recommends that an operations and maintenance plan be implemented for
Asbestos or any Hazardous Substance, Borrower shall cause such operations and
maintenance plan to be prepared and implemented at Borrower’s expense upon
request of Lender. In the event that any investigation, site monitoring,
containment cleanup, removal, restoration, or other work of any kind is
reasonably necessary or desirable under an applicable Environmental Law (the
“Remedial Work”), Borrower shall commence and thereafter diligently prosecute to
completion all such Remedial Work within ninety (90) days after written demand
by Lender for performance thereof (or any such shorter period of time as may be
required under applicable law). All Remedial Work shall be performed by
contractors approved in advance by Lender, and under the supervision of a
consulting engineer approved by Lender. All costs and expenses of such Remedial
Work shall be paid by Borrower including, without limitation, Lender’s
reasonable attorneys’ fees and disbursements incurred in connection with
monitoring or review of such Remedial Work. In the event Borrower shall fail to
timely commence, or cause to be commenced, or fail to diligently prosecute to
completion, such Remedial Work, Lender may, but shall not be required to, cause
such Remedial Work to be performed, and all costs and expenses thereof, or
incurred in connection therewith, may be added to the Debt and shall bear
interest thereafter until paid at the Default Interest Rate.

 

37.

Handicapped Access.

(a)          Borrower agrees that the Security Property shall at all times
strictly comply to the extent applicable with the requirements of the Americans
with Disabilities Act of 1990, the Fair Housing Amendments Act of 1988 (if
applicable), 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 Guidelines
for Buildings and Facilities (collectively “Access Laws”).

(b)          Notwithstanding any provisions set forth herein or in any other
document regarding Lender’s approval of alterations of the Security Property,
Borrower shall not alter the Security Property in any manner which would
increase Borrower’s responsibilities for compliance with the applicable Access
Laws without the prior written approval of Lender. The foregoing shall apply to
tenant improvements constructed by Borrower or by any of its tenants. Lender may
condition any such approval upon receipt of a certificate of Access Law
compliance from an architect, engineer, or other person acceptable to Lender.

(c)          Borrower agrees to give prompt notice to Lender of the receipt by
Borrower 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.

 

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38.         Indemnification. In addition to any other indemnifications provided
herein or in the other Loan Documents, Borrower shall protect, defend, indemnify
and save harmless Lender from and against all liabilities, obligations, claims,
demands, damages, penalties, causes of action, losses, fines, costs and expenses
(including, without limitation, reasonable attorneys’ fees and disbursements),
imposed upon or incurred by or asserted against Lender by reason of
(a) ownership of this Security Instrument, the Security Property (prior to the
date Lender or its successors or assignees or a purchaser at a foreclosure or a
grantee of a deed in lieu of foreclosure takes title to the Security Property by
foreclosure, deed in lieu of foreclosure, or otherwise) or any interest therein
or receipt of any Rents; (b) any accident, injury to or death of persons or loss
of or damage to property occurring in, on or about the Security Property or any
part thereof or on the adjoining sidewalks, curbs, adjacent property or adjacent
parking areas, streets or ways; (c) any use, nonuse or condition in, on or about
the Security Property or any part thereof or on adjoining sidewalks, curbs,
adjacent property or adjacent parking areas, streets or ways; (d) any failure on
the part of Borrower to perform or comply with any of the terms of this Security
Instrument; (e) performance of any labor or services or the furnishing of any
materials or other property in respect of the Security Property or any part
thereof; (f) the presence, disposal, escape, seepage, leakage, spillage,
discharge, emission, release, or threatened release of any Hazardous Substance
or Asbestos on, from, or affecting the Security Property first arising prior to
the date Lender or its successors or assignees or a purchaser at a foreclosure
or a grantee of a deed in lieu of foreclosure takes title to the Security
Property by foreclosure, deed in lieu of foreclosure, or otherwise; (g) any
personal injury (including wrongful death) or property damage (real or personal)
arising out of or related to such Hazardous Substance or Asbestos (prior to the
date Lender or its successors or assignees or a purchaser at a foreclosure or a
grantee of a deed in lieu of foreclosure takes title to the Security Property by
foreclosure, deed in lieu, or otherwise); (h) any lawsuit brought or threatened,
settlement reached, or government order relating to such Hazardous Substance or
Asbestos if and to the extent due to the actions of Lender or its successors or
assignees or a purchaser at a foreclosure or a grantee of a deed in lieu of
foreclosure or its successors or assigns after a foreclosure, or deed in lieu of
a foreclosure; (i) any violation of the Environmental Laws, which are based upon
or in any way related to such Hazardous Substance or Asbestos including, without
limitation, the costs and expenses of any Remedial Work, attorney and consultant
fees and disbursements, investigation and laboratory fees, court costs, and
litigation expenses; (j) any failure of the Security Property to comply with any
Access Laws (prior to the date Lender or its successors or assignees or a
purchaser at a foreclosure or a grantee of a deed in lieu of foreclosure takes
title to the Security Property by foreclosure, deed in lieu of foreclosure, or
otherwise); (k) any representation or warranty made in the Note, this Security
Instrument 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;
(l) any claim by brokers, finders or similar persons claiming to be entitled to
a commission in connection with the Loan, any Lease or other transaction
involving the Security Property or any part thereof under any legal requirement
or any liability asserted against Lender with respect thereto relating to events
occurring prior to the date Lender or its successors or assignees or a purchaser
at a foreclosure or a grantee of a deed in lieu of foreclosure takes title to
the Security Property by foreclosure, deed in lieu of foreclosure, or otherwise;
and (m) the claims of any lessee of any or any portion of the Security Property
or any person acting through or under any lessee or otherwise arising under or
as a consequence of any Lease relating to events occurring prior to the date
Lender or its successors or assignees or a purchaser at a foreclosure or a
grantee of a deed in

 

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lieu of foreclosure takes title to the Security Property by foreclosure, deed in
lieu of foreclosure, or otherwise. Any amounts payable to Lender by reason of
the application of this Section shall be secured by this Security Instrument and
shall become immediately due and payable and shall bear interest at the Default
Interest Rate from the date loss or damage is sustained by Lender until paid.
The obligations and liabilities of Borrower under this Section 38 shall survive
and termination, satisfaction, or assignment of this Security Instrument and the
exercise by Lender of any of its rights or remedies hereunder, including, but
not limited to, the acquisition of the Security Property by foreclosure or a
conveyance in lieu of foreclosure.

39.          Notices. Any notice, report, demand or other instrument authorized
or required to be given or furnished (“Notices”) shall be in writing and shall
be given as follows: (a) by hand delivery; (b) by deposit in the United States
mail as first class certified mail, return receipt requested, postage paid;
(c) by overnight nationwide commercial courier service; or (d) by telecopy
transmission (other than for notices of default) with a confirmation copy to be
delivered by duplicate notice in accordance with any of clauses (a)-(c) above,
in each case, addressed to the party intended to receive the same at the
following address(es):

 

Lender:

Wells Fargo Bank, N.A., as trustee for the registered holders of Cobalt CMBS
Commercial Mortgage Trust 2006-C1, Commercial Mortgage Pass-Through
Certificates, Series 2006-C1

c/o CWCapital LLC

One Charles River Place

63 Kendrick Street

Needham, Massachusetts 02494

Attention: Legal Division

 

Telecopier:

(781) 707-9397

 

Re:

Continental Towers,

Rolling Meadows, Illinois

 

with copies to:

Wells Fargo Bank, N.A., as trustee for the registered holders of Cobalt CMBS
Commercial Mortgage Trust 2006-C1, Commercial Mortgage Pass-Through
Certificates, Series 2006-C1

c/o CWCapital LLC

One Charles River Place

63 Kendrick Street

Needham, Massachusetts 02494

Attention: Loan Administration

 

Telecopier:

(781) 707-9498

 

Re:

Continental Towers,

Rolling Meadows, Illinois

 

Borrower:

At the address set forth in the introductory paragraph of this Security
Instrument with one notice sent to the attention of Jeffrey Patterson and a
second sent to James Hoffman.

 

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with copies to:

Winston & Strawn LLP

35 W. Wacker Drive

Chicago, Illinois 60601-9703

Attention: Christine Graff

 

Any party may change the address to which any such Notice is to be delivered, by
furnishing ten (10) days written notice of such change to the other parties in
accordance with the provisions of this Section 39. Notices shall be deemed to
have been given on the date they are actually received; provided, that the
inability to deliver Notices because of a changed address of which no Notice was
given, or rejection or refusal to accept any Notice offered for delivery shall
be deemed to be receipt of the Notice as of the date of such inability to
deliver or rejection or refusal to accept delivery. Notice for either party may
be given by its respective counsel. Additionally, notice from Lender may also be
given by the Servicer. Borrower hereby requests that a copy of any Notice of
Default or Notice of Sale be mailed to Borrower at the address provided herein.

 

40.

Authority.

(a)          Borrower (and the undersigned representative of Borrower, if any)
represent and warrant that it (or they, as the case may be) has full power,
authority and right to execute, deliver and perform its obligations pursuant to
this Security Instrument, and to deed, mortgage, give, grant, bargain, sell,
alien, enfeoff, convey, confirm, warrant, pledge, hypothecate and assign the
Security Property pursuant to the terms hereof and to keep and observe all of
the terms of this Security Instrument on Borrower’s part to be performed.

(b)          Borrower represents and warrants that Borrower 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, including
temporary regulations.

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

42.          Remedies of Borrower. In the event that a claim or adjudication is
made that Lender has acted unreasonably or unreasonably delayed acting in any
case where by law or under the Note, this Security Instrument or any of the
other Loan Documents, it has an obligation to act reasonably or promptly,
Lender, so long as it has acted in good faith, shall not be liable for any
monetary damages, and Borrower’s remedies shall be limited to injunctive relief
or declaratory judgment.

43.          Sole Discretion of Lender. Wherever pursuant to this Security
Instrument, Lender exercises any right given to it to consent or not consent or
approve or disapprove, or any arrangement or term is to be satisfactory to
Lender, the decision of Lender to consent or not

 

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consent, to approve or disapprove or to decide that arrangements or terms are
satisfactory or not satisfactory shall be in the sole discretion of Lender and
shall be final and conclusive, except as may be otherwise expressly and
specifically provided herein.

44.          Non-Waiver. The failure of Lender to insist upon strict performance
of any term hereof shall not be deemed to be a waiver of any term of this
Security Instrument. Borrower shall not be relieved of Borrower’s obligations
hereunder by reason of (a) the failure of Lender to comply with any request of
Borrower or Guarantor to take any action to foreclose this Security Instrument
or otherwise enforce any of the provisions hereof or of the Note, or the other
Loan Documents, (b) the release, regardless of consideration, of the whole or
any part of the Security Property, or of any person liable for the Debt or any
portion thereof, or (c) any agreement or stipulation by Lender extending the
time of payment or otherwise modifying or supplementing the terms of the Note,
this Security Instrument or any of the other Loan Documents. Lender may resort
for the payment of the Debt to any other security held by Lender in such order
and manner as Lender, in its sole discretion, may elect. Lender may take action
to recover the Debt, or any portion thereof, or to enforce any covenant hereof
without prejudice to the right of Lender thereafter to foreclosure this Security
Instrument. The rights and remedies of Lender under this Security Instrument
shall be separate, distinct and cumulative and none shall be given effect to the
exclusion of the others. No act of Lender shall be construed as an election to
proceed under any one provision herein to the exclusion of any other provision.
Lender shall not be limited exclusively to the rights and remedies herein stated
but shall be entitled to every right and remedy now or hereafter afforded at law
or in equity.

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

46.          Liability. If Borrower consists of more than one person, the
obligations and liabilities of each such person hereunder shall be joint and
several. Subject to the provisions hereof requiring Lender’s consent to any
transfer of the Security Property, this Security Instrument shall be binding
upon and inure to the benefit of Borrower and Lender and their respective
successors and assigns forever.

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

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

49.          Duplicate Originals. This Security Instrument may be executed in
any number of duplicate originals and each such duplicate original shall be
deemed to be an original.

 

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50.          Definitions. Unless the context clearly indicates a contrary intent
or unless otherwise specifically provided herein, words used in this Security
Instrument may be used interchangeably in singular or plural form and the word
“Borrower” shall mean “each Borrower and any subsequent owner or owners of the
Security Property or any part thereof or any interest therein,” the word
“Lender” shall mean “Lender and any subsequent holder of the Note,” the word
“Note” shall mean “the Note and any other evidence of indebtedness secured by
this Security Instrument and the Other Mortgage,” the word “person” shall
include an individual, corporation, partnership, trust, unincorporated
association, government, governmental authority, and any other entity, and the
words “Security Property” shall include any portion of the Security Property and
any interest therein and the words “attorneys’ fees” shall include any and all
reasonable attorneys’ fees, paralegal and law clerk fees, including, without
limitation, fees at the pre-trial, trial and appellate levels incurred or paid
by Lender in protecting its interest in the Security 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.

51.          Homestead. Borrower 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 Security Property as against the collection of
the Debt, or any part hereof.

52.          Assignments. Lender shall have the right to assign or transfer its
rights under this Security Instrument without limitation. Any assignee or
transferee shall be entitled to all the benefits afforded Lender under this
Security Instrument.

53.         Waiver of Jury Trial. BORROWER 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 THE NOTE, THIS SECURITY INSTRUMENT, 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 BORROWER,
AND IS INTENDED TO ENCOMPASS INDIVIDUALLY EACH INSTANCE AND EACH ISSUE AS TO
WHICH THE RIGHT TO A TRIAL BY JURY WOULD OTHERWISE ACCRUE. LENDER IS HEREBY
AUTHORIZED TO FILE A COPY OF THIS SECTION IN ANY PROCEEDING AS CONCLUSIVE
EVIDENCE OF THIS WAIVER BY BORROWER.

54.          Recourse Provisions. Notwithstanding anything to the contrary
contained in this Security Instrument, the liability of Borrower and its
officers, directors, general partners, managers, members and principals for the
indebtedness secured hereby 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 2.04 of the Note.

55.          Acceleration in Case of Insolvency. If Borrower shall voluntarily
file a petition under Title 11 of the U.S. Code (the “Act”), as such Act may
from time to time be amended, or under any similar or successor Federal statute
relating to bankruptcy, insolvency, arrangements or reorganizations, or under
any state bankruptcy or insolvency act, or file an answer in any

 

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involuntary proceeding admitting insolvency or inability to pay debts, or if
Borrower or any Guarantor shall collude with any person or entity to file an
involuntary petition under the Act as to which Borrower or any Guarantor is the
debtor or as to which any property of any of them is property of the estate
therein, or if in the absence of such collusion Borrower shall fail to use its
best efforts to obtain vacation of involuntary proceedings brought for the
reorganization, dissolution or liquidation of Borrower, then Lender may, at
Lender’s option, declare all of the sums secured by this Security Instrument to
be immediately due and payable without prior notice, and Lender may invoke any
remedies permitted or provided for herein or in any of the Loan Documents or
pursuant to applicable law. Any reasonable attorney’s fees and other reasonable
out-of-pocket expenses incurred by Lender in connection with Borrower’s or any
Guarantor’s bankruptcy or any of the other aforesaid events shall be additional
indebtedness of Borrower secured by this Security Instrument.

 

56.

[Reserved].

 

57.

[Reserved].

 

58.

Miscellaneous.

(a)          Any consent or approval by Lender in any single instance shall not
be deemed or construed to be Lender’s consent or approval in any like matter
arising at a subsequent date, and the failure of Lender to promptly exercise any
right, power, remedy, consent or approval provided herein or at law or in equity
shall not constitute or be construed as a waiver of the same nor shall Lender be
estopped from exercising such right, power, remedy, consent or approval at a
later date. Any consent or approval requested of and granted by Lender pursuant
hereto shall be narrowly construed to be applicable only to Borrower and the
matter identified in such consent or approval and no third party shall claim any
benefit by reason thereof, and any such consent or approval shall not be deemed
to constitute Lender a venturer or partner with Borrower nor shall privity of
contract be presumed to have been established with any such third party. If
Lender deems it to be in its best interest to retain assistance of persons,
firms or corporations (including, without limitation, attorneys, title insurance
companies, appraisers, engineers and surveyors) with respect to a request for
consent or approval, Borrower shall reimburse Lender for all costs reasonably
incurred in connection with the employment of such persons, firms or
corporations.

(b)          Borrower covenants and agrees that during the Term, unless Lender
shall have previously consented in writing, (a) Borrower will take no action
that would cause it to become an “employee benefit plan” as defined in 29 C.F.R.
Section 2510.3-101, or “assets of a governmental plan” subject to regulation
under the state statutes, and (b) Borrower will not sell, assign or transfer the
Security Property, or any portion thereof or interest therein, to any transferee
that does not execute and deliver to Lender its written assumption of the
obligations of this covenant. Borrower further covenants and agrees to protect,
defend, indemnify and hold Lender harmless from and against all loss, cost,
damage and expense (including without limitation, all attorneys’ fees and excise
taxes, costs of correcting any prohibited transaction or obtaining an
appropriate exemption) that Lender may incur as a result of Borrower’s breach of
this covenant. This covenant and indemnity shall survive the extinguishment of
the lien of this Security Instrument by foreclosure or action in lieu thereof.

 

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(c)          The Loan Documents contain the entire agreement between Borrower
and Lender relating to or connected with the Loan. Any other agreements relating
to or connected with the Loan not expressly set forth in the Loan Documents are
null and void and superseded in their entirety by the provisions of the Loan
Documents.

(d)          Borrower acknowledges that, with respect to the Loan, Borrower is
relying solely on its own judgment and advisors in entering into the Loan
without relying in any manner on any statements, representations or
recommendations of Lender or any parent, subsidiary or affiliate of Lender.
Borrower acknowledges that Lender engages in the business of real estate
financings and other real estate transactions and investments which may be
viewed as adverse to or competitive with the business of the Borrower or its
affiliates. Borrower acknowledges that it is represented by competent counsel
and has consulted counsel before executing the Loan Documents.

(e)          Borrower covenants and agrees to pay Lender upon receipt of written
notice from Lender, all reasonable costs and expenses (including reasonable
attorneys’ fees and disbursements) incurred by Lender in connection with (i) the
preparation, negotiation, execution and delivery of this Security Instrument and
the other Loan Documents; (ii) Borrower’s performance of and compliance with
Borrower’s respective agreements and covenants contained in this Security
Instrument and the other Loan Documents on its part to be performed or complied
with after the date hereof; (iii) Lender’s performance and compliance with all
agreements and conditions contained in this Security Instrument and the other
Loan Documents on its part to be performed or complied with after the date
hereof; (iv) the negotiation, preparation, execution, delivery and
administration of any consents, amendments, waivers or other modifications to
this Security Instrument and the other Loan Documents; and (v) the filing and
recording fees and expenses, title insurance fees and expenses, and other
similar expenses incurred in creating and perfecting the lien in favor of Lender
pursuant to this Security Instrument and the other Loan Documents.

(f)           This Security Instrument shall be governed by and construed in
accordance with the laws of the State in which the Premises are located and the
applicable laws of the United States of America.

59.          Management of the Security Property. Borrower shall maintain the
Management Agreement for the operation of the Security Property in full force
and effect and timely perform all of Borrower’s obligations thereunder and
enforce performance of all obligations of the Manager thereunder, and not permit
the termination or amendment of such Management Agreement unless the prior
written consent of Lender is first obtained. Borrower will enter into and cause
the Manager (whether such manager is an entity affiliated with Borrower or is a
professional property management company) to enter into an assignment and
subordination of such Management Agreement in recordable form satisfactory to
Lender, assigning and subordinating the Manager’s interest in the Security
Property and all fees and other rights of the manager pursuant to such
Management Agreement to the rights of Lender. Upon (a) an Event of Default, or
(b) the gross negligence, malfeasance, or willful misconduct of Manager with
respect to the management of the Security Property, Borrower at Lender’s
request, shall terminate the Management Agreement and replace the Manager with a
Manager approved by Lender. Upon the default by Manager under the Management
Agreement beyond any applicable

 

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cure period thereunder, Lender shall have the right to require the Manager to
enter into a sub-management agreement with a Manager approved by Lender (which
said agreement shall be acceptable to Lender in its sole discretion) such that
the sub-manager shall have all of the rights, obligations and responsibilities
of the Manager set forth in the Management Agreement from the effective date of
such sub-management agreement until the indebtedness evidenced by the Note is
paid in full; at which time the term of said sub-management agreement shall
automatically expire. Unless otherwise approved in writing by Lender, at all
times while any portion of the Debt is outstanding, Borrower shall cause the
Manager of the Security Property and the entity designated as the property
manager of the Other Property to be the identical entity.

60.          Sale of Notes and Securitization. Borrower acknowledges that Lender
and its successors and assigns shall have the right to do any and all of the
following: (i) sell this Security Instrument, the Note and other Loan Documents
to one or more investors as a whole loan, (ii) participate the Loan secured by
this Security Instrument to one or more investors, (iii) deposit this Security
Instrument, the Note and other Loan Documents with a trust, which trust may sell
certificates to investors evidencing an ownership interest in the trust assets,
(iv) otherwise sell the Loan or interest therein to investors, or (v) cause the
Note, this Security Instrument and the other Loan Documents to be split into two
or more notes, parts or interests, in whatever proportion Lender deems
appropriate, which may be in the form of pari passu interests, senior and junior
interests, or other interests, and thereafter to sell, assign, participate,
syndicate or securitize all or any part of either or both of such severed or
split obligations and documents (the transactions referred to in clauses (i)
through (v) are hereinafter each referred to as “Secondary Market Transaction”
or “Securitization”, and any securities secured by or evidencing ownership
interests in the Note and this Security Instrument or otherwise issued in
connection with a Secondary Market Transaction may be referred to as
“Securities”).

Borrower shall cooperate with Lender in effecting any such Secondary Market
Transaction and shall cooperate to implement all requirements imposed by any
Rating Agency involved in any Secondary Market Transaction. Without limitation,
at the request of Lender Borrower shall:

(a)          (i)          provide such financial and other information with
respect to the Security Property, the Borrower and the Manager, (ii) provide
budgets relating to the Security Property, (iii) perform or permit or cause to
be performed or permitted such site inspection, appraisals, market studies,
environmental reviews and reports (Phase I’s and, if appropriate, Phase II’s),
engineering reports and other due diligence investigations of the Security
Property, as may be reasonably requested by the holder of the Note or the Rating
Agencies or as may be necessary or appropriate in connection with the Secondary
Market Transaction and (iii) make such representations and warranties as of the
closing date of the Secondary Market Transaction with respect to the Security
Property, Borrower, and the Loan Documents as are consistent with those
contained herein and are customarily provided in securitization transactions and
as may be reasonably requested by the holder of the Note or the Rating Agencies
and consistent with the facts covered by such representations and warranties as
they exist on the date thereof, including the representations and warranties
made in the Loan Documents (collectively, the “Provided Information”), together,
if customary, with appropriate verification and/or consents of the Provided
Information through letters of auditors or opinions of counsel of independent
attorneys acceptable to the Lender and the Rating Agencies;

 

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(b)          at Borrower’s expense (except with respect to Section 60(v) above,
which shall be at Lender’s expense), cause counsel to render opinions consistent
with those delivered as of the date hereof, which may be relied upon by the
holder of the Note, the Rating Agencies and their respective counsel, agents and
representatives, as to non-consolidation, fraudulent conveyance, and true sale
or any other opinion customary in securitization transactions with respect to
the Security Property and Borrower and its affiliates, which counsel and
opinions shall be reasonably satisfactory to the holder of the Note and the
Rating Agencies;

(c)          execute such amendments to the Loan Documents and organizational
documents, enter into a lockbox or similar arrangement with respect to the Rents
and establish and fund such reserve funds (including, without limitation,
reserve funds for deferred maintenance and capital improvements) as may be
requested by the holder of the Note or the Rating Agencies or otherwise to
effect the Secondary Market Transaction. Borrower shall not be required to
modify any documents evidencing or securing the Loan so as to modify (A) the
interest rate payable under the Note, (B) the stated maturity of the Note, (C)
the amortization of principal of the Note, (D) the non-recourse provisions of
the Loan or (E) any other material economic term of the Loan. However, in the
case of split notes, the interest rate and principal amortization may be
changed, provided that for the combined obligations taken as an aggregate, the
over-all interest rate and amortization of principal shall remain the same; and

(d)          to the extent not already required to be provided by Borrower under
this Agreement, Borrower shall use reasonable efforts to satisfy the market
standards to which the holder of the Note customarily adheres or which may be
reasonably required in the marketplace or by the Rating Agencies in connection
with any Secondary Market Transaction.

All reasonable third party costs and expenses incurred by Lender in connection
with Borrower’s complying with requests made under Section 60(i) through (iv)
shall be paid by the Borrower. All reasonable actual third party costs and
expenses incurred by Lender or Borrower in connection with Borrower’s complying
with requests made under Section 60(v) shall be paid by the Lender.

In the event that the provisions of this Security Instrument or any Loan
Documents require the receipt of written confirmation from each Rating Agency
with respect to the ratings on the Certificates, or, in accordance with the
terms of the transaction documents relating to a Secondary Market Transaction,
such a rating confirmation is required in order for the consent of the Lender to
be given, the Borrower shall pay all of the costs and expenses of the Lender,
Servicer and each Rating Agency in connection therewith, and, if applicable,
shall pay any fees imposed by any Rating Agency as a condition to the delivery
of such confirmation.

 

61.

Securitization Indemnification.

(a)          Borrower understands that certain of the Provided Information may
be included in disclosure documents in connection with the Secondary Market
Transaction, including, without limitation, a prospectus, prospectus supplement
or private placement memorandum (each, a “Disclosure Document”) and may also be
included in filings with the Securities and Exchange Commission pursuant to the
Securities Act of 1933, as amended (the “Securities Act”), or the Securities and
Exchange Act of 1934, as amended (the “Exchange  

 

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Act”), or provided or made available to investors or prospective investors in
the Securities, the Rating Agencies, and service providers relating to the
Secondary Market Transaction. In the event that the Disclosure Document is
required to be revised prior to the sale of all Securities, the Borrower will
cooperate with the holder of the Note in updating the Disclosure Document by
providing all current information necessary to keep the Disclosure Document
accurate and complete in all material respects.

62.          Servicer. At the option of Lender, the Loan may be serviced by a
servicer/trustee (the “Servicer”) selected by Lender and Lender may delegate all
or any portion of its responsibilities under this Security Instrument and the
other Loan Documents to the Servicer pursuant to a servicing agreement (the
“Servicing Agreement”) between Lender and Servicer.

63.          Partial Release. Subject to the provisions of this Section 63,
Lender shall release (a “Partial Release”) one or more unimproved portions of
the Security Property; the dimensions, location, and configuration of which
shall be subject to Lender’s approval, which shall be granted or denied by
Lender in Lender’s sole and absolute discretion (the “Release Lot”). Lender
shall release the Release Lot upon satisfaction of each and every of the
following conditions precedent (singularly and collectively referred to as the
“Partial Release Conditions”):

(a)          Any and all sums then due and payable to Lender under the Loan
Documents shall be fully paid (including, without limitation, principal and
interest under the Note and all sums constituting the Reserves and any other
escrow required under the Loan Documents) and no Event of Default (as described
in Section 23 hereof) shall exist and be continuing, nor shall Lender have given
Borrower notice of any event or condition which, with the passage of time or the
giving of notice (or both), could result in an Event of Default if not cured by
Borrower.

(b)          At least thirty (30) days prior to the effective date of any
proposed Partial Release, Borrower shall prepare and deliver to Lender (at
Borrower’s sole cost and expense) a proposed re-plat of the Release Lot and the
unreleased portion of the Security Property and a survey plat and field notes
for the Release Lot and for the remainder of the Security Property, all prepared
by a licensed surveyor or engineer (which surveys and re-plats shall be, in
form, consistent with surveys and re-plats for mortgage loans generally
acceptable to prudent institutional commercial loan lenders undertaking similar
review or exercising reasonable and similar discretion with respect to a
property similar in nature and location to the Security Property (“Prudent
Lender Standards”)) and shall depict the exact location of the Release Lot
relative to the remainder of the Security Property and the location of all
applicable title matters.

(c)          Borrower must provide evidence, which would be deemed satisfactory
pursuant to Prudent Lender Standards, to Lender of the following matters: (i)
that the Release Lot and the balance of the Security Property shall comply with
all federal, state and local environmental, land use and zoning laws (including,
without limitation, minimum lot size, parking regulations, set-back lines,
density requirements, lot coverage ratios, frontage, subdivision, site plan
approval and access to a public right-of-way); (ii) that all required notices
have been given and consents obtained in connection with the proposed Partial
Release, including (without limitation) the consent of any governmental entity
and any indemnitor; (iii)

 

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that access to the remainder of the Security Property following the Partial
Release to any previously dedicated streets and utilities shall not be impaired
and that the construction of any future improvements on the Release Lot shall
not impair the visibility or use of the remainder of the Security Property; and
(iv) that the future uses of the Release Lot will not violate any exclusivity
provision in any Lease pertaining to the Security Property nor any covenant,
restriction, condition or other title matter then encumbering the Security
Property.

(d)          Lender must have been provided complete information with respect to
the proposed parking arrangement for the unreleased portion of the Security
Property both immediately following the Partial Release and thereafter, which
such proposed parking arrangement must be legally adequate for the remainder of
the Security Property, must be deemed satisfactory pursuant to Prudent Lender
Standards, and must include, to the extent Lender deems necessary or desirable,
(i) a temporary parking arrangement reasonably convenient to the unreleased
portion of the Security Property during the pendency of any construction on the
Release Lot, (ii) a final parking arrangement after completion of any
anticipated Improvements on the Release Lot, (iii) an insurable easement
arrangement with respect to both the temporary and permanent parking
arrangement, which parking facility will be without cost or expense to the owner
of the unreleased portion of the Security Property, and (iv) a new loan policy
of title insurance (or an endorsement to the existing loan policy of title
insurance) providing title coverage to Lender with respect to such easement
estate without exception and without any exception for liens.

(e)          Prior to the effective date of the proposed Partial Release, and to
the extent Lender deems necessary or desirable, Borrower shall encumber the
Release Lot with a recorded development or similar agreement (which must be
deemed satisfactory pursuant to Prudent Lender Standards) covering such matters
as mutual parking and access, maintenance, shared utilities, drainage and other
similar issues and containing appropriate restrictions on the type,
construction, location, height and use of any improvements then existing or
thereafter to be constructed on the Release Lot.

(f)           Lender shall have received evidence in writing from the Rating
Agency to the effect that the proposed Partial Release will not result in a
requalification, reduction, downgrade or withdrawal of any rating initially
assigned or to be assigned in a Secondary Market Transaction (hereinafter
defined) or, if no such rating has been issued such Partial Release shall not
have an adverse affect on the level of rating attainable in connection with the
Loan.

(g)          The Release Lot shall be conveyed, contemporaneously with the
Partial Release, such that Borrower shall continue to satisfy each of the
requirements described in Section 12 hereof following such Partial Release.
Without limiting the generality of the foregoing, Borrower acknowledges and
agrees that, after the provision of the Partial Release, Borrower shall own no
other asset other than the Security Property (excluding the Release Lot) but
including the new easement rights to be provided to Borrower as described in
this Section 63.

(h)          No proposed Partial Release shall (i) deny any unreleased portion
of the Security Property reasonable access to public streets, roads or
utilities, (ii) unreasonably divide any portion or tract of the remainder of the
Security Property into strips or parcels, or

 

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(iii) otherwise negatively impact in any manner whatsoever (whether due to the
configuration of the Release Lot, any proposed Improvements thereof or
otherwise) the remainder of the Security Property.

(i)           Borrower shall submit a prepared partial release instrument (the
“Partial Release Instrument”), which must be deemed satisfactory pursuant to
Prudent Lender Standards, and any information necessary for Lender to process
the Partial Release Instrument, including a lot and block or metes and bounds
description of the Release Lot, the name and address of the title insurance
company to whose attention the Partial Release Instrument should be directed,
numbers that reference the Partial Release Instrument (i.e., tax parcel numbers,
title company order numbers, release numbers, etc.), the date when the Partial
Release is to become effective, the name and address of the prospective
purchaser of the Release Lot and such other documents and information as Lender
may reasonably request in order to process the Partial Release Instrument. The
Partial Release Instrument shall be delivered, in escrow, by Lender to the title
company so designated, to be held, released, delivered and recorded in
accordance with Lender’s escrow instructions requiring the satisfaction of all
Partial Release Conditions. In no event shall the execution and delivery of a
Partial Release Instrument affect any of Lender’s obligations under this
Mortgage or the other Loan Documents.

(j)           Borrower shall deliver to Lender (i) an endorsement to Lender’s
policy of title insurance for the Security Property bringing the date of such
policy to the date of the Partial Release and evidencing the continued first
lien priority of the Mortgage (and with no such additional title matters)
subject, however, to the Partial Release and additional easement coverage
described hereinabove, or (ii) a new policy of title insurance, other
endorsements or other information as Lender may require.

(k)          Borrower shall deliver to Lender a written agreement, in form and
substance acceptable to Lender, providing that in the event any affiliate of
Borrower owns or manages the Release Lot, Borrower shall agree, and shall cause
such affiliate to agree, not to offer to any existing tenant at the Security
Property any incentives or discounts of any type not offered to all other
potential tenants to entice or otherwise encourage any such tenant to terminate
its lease at the Security Property and lease space at the Release Lot. Said
written agreement shall be delivered, in escrow, by Lender to the title company
so designated, to be held, released, delivered and recorded in accordance with
Lender’s escrow instructions requiring the satisfaction of all Partial Release
Conditions.

(l)           All reasonable costs and expenses actually incurred by Lender (and
any servicer of the Loan) in connection with the completion (and verification of
completion) of all Partial Release Conditions, payment of all required fees of
any Rating Agency and relative to the review, approval and execution of any
Partial Release, shall be paid by Borrower prior to and as a condition of the
execution of any Partial Release Instrument, including (but not limited to)
reasonable attorneys’ fees, all costs and expenses of Lender (and any servicer
of the Loan) incurred in connection with obtaining any engineering reports,
opinions and consents, Rating Agency letters and any endorsement to Lender’s
policy of title insurance. All recording fees and taxes are to be paid by
Borrower.

 

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(m)         The satisfaction of such other conditions precedent to satisfy
Prudent Lender Standards, including but not limited to obtaining (i) an updated
appraisal acceptable to Lender of each proposed Release Lot and of the remainder
of the Security Property and (ii) a tax opinion from Borrower’s counsel, in form
and substance acceptable to Lender, opining that the proposed Partial Release
will not violate any REMIC rules, regulations, or requirements from a tax
perspective.

(n)          In no event shall the fair market value, as determined by an
updated appraisal acceptable to Lender, of all of the Release Lots, in the
aggregate, equal or exceed ten percent (10%) of the fair market value of the
Security Property as of the date of the proposed Partial Release.

64.          Survival. All representations and warranties made by Borrower
herein shall survive the execution hereof.

65.          Amendment and Restatement. This Amended and Restated Mortgage,
Security Agreement and Fixture Financing Statement, together with the Other
Mortgage, shall amend and restate, but shall not replace, the Mortgage, Security
Agreement and Fixture Financing Statement executed by Borrower and Other
Borrower for the benefit of CWCapital LLC, a Massachusetts limited liability
company (“CWC”) dated November 21, 2006 and recorded at Document Number
0633134007 in the Cook County, Illinois Recorder’s Office (the “Original
Mortgage”). CWC assigned the entirety of its interest in the Original Mortgage
to Lender pursuant to the Assignment of Mortgage, Security Agreement and Fixture
Financing Statement dated as of December 21, 2006 and executed by CWC for the
benefit of Lender. CWC also assigned the entirety of its interest in the other
Loan Documents to Lender as of December 21, 2006. All terms, conditions and
obligations of the Original Mortgage shall remain in full force and effect as
assigned to Lender and as restated herein and in the Other Mortgage and amended
hereby and by the Other Mortgage, and all rights and remedies provided for
therein shall be preserved to the Lender. Nothing contained herein or done
pursuant hereto shall affect or be construed to affect the priority of the lien
or security interest created by the Original Mortgage over the priority of other
liens, charges, encumbrances or other security interests. Borrower does hereby
confirm, ratify and reaffirm the obligations contained in the Original Mortgage,
as assigned to Lender and as amended and restated hereby and by the Other
Mortgage. This Amended and Restated Mortgage, Security Agreement and Fixture
Financing Statement is an amendment and restatement only and not a novation; and
except as herein provided and in the Other Mortgage, all of the terms and
conditions of the Original Mortgage shall remain in full force and effect until
payment of the Debt in full.

PART II

 

STATE SPECIFIC PROVISIONS

66.          Business Loan. Borrower certifies and agrees that the proceeds of
the loans secured by this Mortgage will be held for the purposes specified in
Section 4 of the Illinois Interest Act (815 ILCS 205/1 et seq.), and that the
principal obligation secured hereby constitutes a “business loan” within the
definition and purview of said Section.

 

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67.          Not Residential or Agricultural Real Estate. Borrower hereby
acknowledges that the Premises does not constitute agricultural real estate or
residential real estate, as such terms are defined in the Act.

68.          Mortgagee Receives Benefit of Act. Lender shall have the benefit of
all of the provisions of the Illinois Mortgage Foreclosure Act, 735 ILCS
5/15-1101 et seq. (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, Lender 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.

 

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

 

CONTINENTAL TOWERS, L.L.C.,
a Delaware limited liability company

By:   CTA GENERAL PARTNER, LLC,
a Delaware limited liability company,
its sole member

By:   CTA MEMBER, INC.,
a Delaware corporation,
its managing member

By: [s] Paul G. Del Vecchio  

Name:     Yochanan Danziger,
   by Paul G. Del Vecchio,
                   Attorney-In-Fact
Title:       President

 

 

 

AMENDED AND RESTATED MORTGAGE, SECURITY AGREEMENT

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STATE OF ILLINOIS

§

 

§

COUNTY OF COOK

§

This instrument was ACKNOWLEDGED before me on December 28, 2006 by PAUL G.
DEL VECCHIO, Attorney-In-Fact for YOCHANAN DANZIGER, the President of CTA
MEMBER, INC., a Delaware corporation, as managing member of CTA GENERAL PARTNER,
LLC, a Delaware limited liability company, as sole member of CONTINENTAL TOWERS,
L.L.C., a Delaware limited liability company, on behalf of said limited
liability company.

[S E A L]

[s] Joella Malone

 

Notary Public, State of Illinois

My Commission Expires:

 

Joella Malone

07/10/09_________________

Printed Name of Notary Public

 

 

Attachments

Exhibit A

Legal Description

Exhibit B

Lease Defaults

Exhibit C

Legal Description of Other Property

 

 

AMENDED AND RESTATED MORTGAGE, SECURITY AGREEMENT

AND FIXTURE FINANCING STATEMENT - Acknowledgment Page

43412-20/Continental Towers

EXHIBIT A

 

LEGAL DESCRIPTION

[Intentionally omitted]

 

EXHIBIT A, Legal Description – Solo Page

43412-20/Continental Towers

EXHIBIT B

 

LEASE DEFAULTS

[Intentionally omitted]

 

 

EXHIBIT B, Required Repairs – Solo Page

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EXHIBIT C

 

OTHER PROPERTY

[Intentionally omitted]

 

 

EXHIBIT C, Other Property – Solo Page

43412-20/Continental Towers