<PAGE>   1




                                                                    Exhibit 10.4


                                                                [Execution Copy]



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




                          CONSTRUCTION AGENCY AGREEMENT

                            dated as of June 21, 2000

                                      among

                  30 HUDSON STREET LESSOR URBAN RENEWAL L.L.C.,

                                       and

                  50 HUDSON STREET LESSOR URBAN RENEWAL L.L.C.,
                                  collectively,

                                    as Lessor

                                       and

                      GSJC 30 HUDSON URBAN RENEWAL L.L.C.,
                              as Construction Agent

                                       and

                      GSJC 50 HUDSON URBAN RENEWAL L.L.C.,
                              as Construction Agent


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

<PAGE>   2

                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
           Section                                                                                                Page
           -------                                                                                                ----

<S>                                                                                                               <C>
                                                          ARTICLE I
                                                        DEFINITIONS

           1.1.   Definitions; Interpretation; Amendment and
                  Restatement....................................................................................   2

                                                         ARTICLE II
                                             APPOINTMENT OF CONSTRUCTION AGENT

           2.1.   Appointment and Acceptance.....................................................................   2
           2.2.   Relationship as between Persons
                           Comprising Lessee.....................................................................   2
           2.3.   Term...........................................................................................   3
           2.4.   Construction Materials.........................................................................   3
           2.5.   Scope of Authority.............................................................................   4
           2.6.   Covenants of Construction Agents...............................................................   6
           2.7.   Title to the Improvements......................................................................   8
           2.8.   Interim Use....................................................................................   8

                                                         ARTICLE III
                                                     THE IMPROVEMENTS

           3.1.   Amendments; Modifications......................................................................   9
           3.2.   Casualty, Condemnation, Liquidated
                           Damages and Force Majeure Events.....................................................   10

                                                         ARTICLE IV
                                                     PAYMENT OF FUNDS

           4.1.   Funding of Improvement Costs..................................................................   11

                                                          ARTICLE V
                                           CONSTRUCTION AGENCY EVENTS OF DEFAULT

           5.1.   Construction Agency Events of Default.........................................................   12
           5.2.   Survival......................................................................................   16
           5.3.   Remedies Cumulative; Waivers..................................................................   16
           5.4.   Limitation on Recourse Liability of
</TABLE>


                                       i
<PAGE>   3

<TABLE>
<S>                                                                                                                <C>
                           Construction Agents..................................................................   19
           5.5.   Lessor's Right to Cure Construction Agents'
                           Defaults.............................................................................   20

           5.6.   Determination of Whether Budget is
                           "In Balance".........................................................................   20
           5.7.   Limitations on Construction Agents' Liability.................................................   21

                                                             ARTICLE VI
                                                     NO CONSTRUCTION AGENCY FEE


                                                             ARTICLE VII
                                                            MISCELLANEOUS

           7.1.   Notices.......................................................................................   21
           7.2.   Successors and Assigns........................................................................   21
           7.3.   GOVERNING LAW.................................................................................   22
           7.4.   Amendments, etc...............................................................................   22
           7.5.   Counterparts..................................................................................   22
           7.6.   Severability..................................................................................   22
           7.7.   Headings and Table of Contents................................................................   22
           7.8.   Exercise of Lessor's Rights...................................................................   22
           7.9.   Limited Liability.............................................................................   23
           7.10.  No Third Party Beneficiaries..................................................................   23
           7.11.  Survival of Agreements........................................................................   23
</TABLE>


                                       ii
<PAGE>   4

                          CONSTRUCTION AGENCY AGREEMENT

         Construction Agency Agreement, dated as of June 21, 2000 (this
"Agreement"), among 30 HUDSON STREET LESSOR URBAN RENEWAL L.L.C., and 50 HUDSON
STREET LESSOR URBAN RENEWAL L.L.C., each a New Jersey limited liability company
(collectively and individually, the "Lessor"), and GSJC 30 Hudson Urban Renewal
L.L.C., a New Jersey limited liability company ("30 Hudson") and GSJC 50 Hudson
Urban Renewal L.L.C., a New Jersey limited liability company ("50 Hudson"), as
Construction Agents.

                              W I T N E S S E T H:

         A. Lessor and Construction Agents are parties to that certain
Participation Agreement (as hereafter defined) pursuant to which each
Construction Agent, as a Lessee, has agreed to lease from Lessor, and Lessor has
agreed to lease to such Lessee, Lessor's interest in the Properties pursuant to
the Lease.

         B. Lessor, such Lessee and Construction Agents are parties to that
certain Participation Agreement of even date herewith (as amended, supplemented
or otherwise modified, the "Participation Agreement"), among, inter alia, The
Goldman Sachs Group, Inc., as Guarantor, 50 Hudson and 30 Hudson, as Lessee and
Construction Agents, Lessor, Ground Lessee, Ground Lessor, the Persons named
therein as Investors, Hudson Street Funding Corporation, Hudson Street Lessor
Investment Trust 2000-1, Wilmington Trust Company (not in its individual
capacity, except as specifically indicated but as investment trustee) Hatteras
Funding Corporation, the financial institutions named therein as Liquidity
Purchasers, and The Chase Manhattan Bank, as Collateral Agent.

         C. Subject to the terms and conditions hereof, (i) Lessor desires to
appoint Construction Agents as its sole and exclusive agents for the
construction of the Improvements on the Land in accordance with the Construction
Budget, Construction Schedule and Plans and Specifications (each as described
more fully in Exhibit A hereto and as each of the foregoing may be modified from
time to time in accordance with this Agreement)(collectively, the "Construction
Materials") and pursuant to this Agreement, and (ii) Construction Agents desire,
for the benefit of Lessor, to cause the Improvements to be constructed in
accordance with the Construction Materials and in each case in accordance with
the terms set forth herein and in the Lease.

         NOW, THEREFORE, in consideration of the foregoing, and for other good
and valuable consideration, the receipt and

<PAGE>   5

sufficiency of which are hereby acknowledged, and intending to be legally bound
hereby, the parties hereto covenant and agree as follows:


                                    ARTICLE I
                                   DEFINITIONS

         1.1. Definitions; Interpretation; Amendment and Restatement.
Capitalized terms used but not otherwise defined in this Agreement shall have
the meanings set forth in Appendix A to the Participation Agreement, and the
rules of interpretation set forth therein shall apply to this Agreement.


                                   ARTICLE II
                        APPOINTMENT OF CONSTRUCTION AGENT

         2.1.  Appointment and Acceptance.

         Pursuant to and subject to the terms and conditions set forth herein
and in the Participation Agreement and the other Operative Documents, Lessor
hereby irrevocably designates and appoints the Construction Agents as its
exclusive agents for the construction of the Improvements on the Land
substantially in accordance with the applicable Plans and Specifications, and
Construction Agents by entering into this Agreement accept such designation and
appointment.

         2.2.  Relationship as between Persons Comprising Lessee.

         (a) The Persons comprising Construction Agent or Construction Agents
(i.e., 30 Hudson and 50 Hudson) agree, as between themselves, that (i) they will
apportion and allocate between them, on an equitable basis, all of the
obligations, duties and liabilities of the "Construction Agent" hereunder, (ii)
to the fullest extent appropriate, an apportionment and allocation determined by
the relative developable floor areas of the Office Tower Improvements and the
Conference/Training Center Improvements shall be deemed for purposes of this
Section 2.2 to be equitably based, (iii) 30 Hudson shall be responsible for the
performance of all obligations of Construction Agents hereunder in respect of
the Site having an address of 30 Hudson Street and that 50 Hudson shall be
responsible for the performance of all obligations of Construction Agents
hereunder in respect of the Site having an address at 50 Hudson Street, and (iv)
each of said


                                       2
<PAGE>   6

Persons shall indemnify the other for its failure to perform in accordance with
the immediately preceding clause (iii).

         (b) Each Construction Agent hereby authorizes the other to execute and
deliver documents hereunder, on behalf of one or both Construction Agents.

         2.3. Term. This Agreement shall commence on the Documentation Date and
shall terminate with respect to the Properties upon the first to occur of:

                  (a) Substantial Completion of both the Properties and the
         completion of Final Completion Work in accordance with Section 2.6(e)
         with respect to both of the Properties and the performance of all other
         material obligations of the Construction Agents hereunder with respect
         thereto; and

                  (b) payment by Lessee or Lessor's receipt through other
         provisions of the Operative Documents of the Lease Balance and all
         other amounts owing under the Operative Documents (including Article V
         of the Lease, incorporated herein by reference), and termination of the
         Commitments in accordance with the Participation Agreement; and

                  (c) termination of this Agreement by Lessor pursuant to
         Article V.

         2.4. Construction Materials; Construction Documents. (a) The
Construction Agents shall develop, define, refine and detail proposed budgets,
construction schedules and Plans and Specifications for the Properties. The
Construction Agents shall cause each such proposal to provide for compliance and
conformance with generally accepted construction practices, Applicable Law,
Insurance Requirements and Environmental Requirements and shall cause each such
proposal to have a reasonable likelihood that it can be completed as intended on
time and within budget.

         (b) Subject to each of the terms and conditions in this Agreement,
Construction Agents may execute any of their duties under this Agreement by or
through agents, developers, consultants, advisors, contractors, employees or
attorneys-in-fact, and Construction Agents with respect to each Property shall
enter into such agreements with architects and contractors as Construction
Agents deem necessary or desirable for the completion of the Construction
pursuant hereto (as such documents


                                       3
<PAGE>   7

may be amended, supplemented or otherwise modified except as prohibited hereby,
the "Construction Documents").

         (c) As the Construction Documents are for the benefit of Lessor,
Construction Agents hereby assign all the proceeds (including Liquidated
Damages, insurance proceeds and warranty payments), if any, resulting from the
Construction Documents to Lessor and hereby agrees to file applicable UCC-1
financing statements in respect of the foregoing.

         2.5. Scope of Authority. (a) Subject to the terms, conditions,
restrictions and limitations set forth in the Operative Documents, Lessor hereby
expressly authorizes Construction Agents (or any agent, consultant, advisor,
developer, employee, attorney-in-fact or contractor of a Construction Agent to
which a Construction Agent has made a delegation of authority pursuant to the
terms of this Agreement), and Construction Agents unconditionally agree, for the
benefit of Lessor, to take all action necessary or (as determined by
Construction Agents) desirable for the performance and satisfaction of all of
Construction Agents' obligations hereunder with respect to the Properties,
including:

                  (i) performing or causing the performance of all design and
         supervisory functions and all engineering work related to the
         Construction and the retention and supervision of the General
         Contractor (if Construction Agents elect to retain a General
         Contractor);

                  (ii) negotiating and entering into, or causing the negotiation
         and execution and delivery of, all contracts or arrangements to procure
         the labor, materials, supplies and equipment necessary or (as
         determined by the Construction Agents) desirable to construct the
         Improvements;

                  (iii) obtaining or causing to be obtained all necessary
         permits, licenses, consents, approvals and other authorizations,
         including those required under Applicable Laws (including Environmental
         Laws), from all Governmental Authorities in connection with the
         acquisition of the Sites and the Construction of the Improvements
         thereon;

                  (iv) maintaining or causing to be maintained all books and
         records with respect to the Construction and the operation and
         management of the Properties;

                  (v) performing or causing the performance of any other acts
         necessary or desirable (as reasonably determined by


                                       4
<PAGE>   8

         Construction Agents) in connection with the construction and
         development of the Improvements in accordance in all material respects
         with the Construction Materials, any Applicable Laws and all Insurance
         Requirements; provided, however, that the foregoing shall not limit
         Construction Agents' right to engage in Permitted Contests;

                  (vi) paying when due or causing to be paid when due (subject
         to reimbursement as provided for under this Agreement) pursuant to and
         subject to the Construction Budget or the Participation Agreement, all
         Improvement Costs (including costs associated with the Construction
         Agents' actions as provided in Section 2.5(a)(viii) below, pursuant to
         and subject to the Construction Budget) provided, however, that the
         foregoing shall not limit Construction Agents' right to engage in
         Permitted Contests. Construction Agents acknowledge that any liability
         resulting to Collateral Agent, any Participant or any other Indemnitee
         as a result of or arising from any such negotiation, Permitted Contest,
         or act or omission of either Construction Agent or their designees with
         respect to such Permitted Contest will be a Claim subject to
         indemnification under Article IX of the Participation Agreement;

                  (vii) enforcing or causing the enforcement in all material
         respects of performance by each party to each Construction Document of
         its respective obligations, warranties and other design, construction
         and other obligations with respect to the design, engineering,
         construction and completion of the Improvements on the applicable Site
         or pursuing remedies with respect to the breach of those obligations,
         in each case, as deemed appropriate by Construction Agents in their
         discretion; and

                  (viii) using the proceeds of any insurance maintained with
         respect to the Improvements to complete construction of or rebuild any
         portion of such Improvements with respect to a Casualty or Condemnation
         and to fund all Construction Period Accrued Interest accruing during
         such Construction or rebuild, provided that the foregoing shall not
         affect Construction Agents' right to purchase the Properties in
         accordance with Article V of the Lease which shall be applicable during
         the Construction Period and is hereby incorporated herein by reference.

         (b) Neither Construction Agents nor any of their Affiliates or agents
shall enter into any contract which would impose any


                                       5
<PAGE>   9

liability or obligation on Lessor (other than Lessor's obligation to
Construction Agents to provide Advances in accordance with and subject to the
terms and conditions of the Operative Documents).

         (c) Subject to the terms and conditions of this Agreement and the other
Operative Documents, Construction Agents shall have sole management and control
over the construction means, methods, sequences and procedures and the hiring,
termination and contracting for and supervision of and payment for the labor,
personnel and services with respect to the Construction; provided, however, that
this subsection (c) shall not give rise to any rights in any Person other than
Lessor, the Participants and the other Indemnitees.

         (d) All fees and expenses of Lessees and Construction Agents under any
Operative Document which are included in and which may be paid in accordance
with the Construction Budget shall be paid or reimbursed through Advances.

         2.6.  Covenants of Construction Agents.  Construction Agents
shall with respect to the Land:

                  (a) following the commencement of Construction, cause the
         Construction to proceed diligently and without material interruption
         (subject to Force Majeure Events) in accordance in all material
         respects with the applicable Construction Materials and Insurance
         Requirements and all Applicable
         Laws;

                  (b) take or cause to be taken commercially reasonable and
         practical steps to minimize liabilities of Lessor or any Agent or
         Participant, delays, increased costs and the disruption of the
         construction process arising from Force Majeure Events, Casualties and
         Condemnations;

                  (c) subject to Section 3.2, cause Substantial Completion to
         occur on or prior to the Outside Completion Date;

                  (d) cause all Liens (including Liens or claims for materials
         supplied or labor or services performed in connection with the
         construction of the Improvements), other than Permitted Liens, to be
         removed or discharged; provided, however, that the foregoing shall not
         limit Construction Agents' right to engage in Permitted Contests;


                                       6
<PAGE>   10

                  (e) following Substantial Completion, cause all Final
         Completion Work to be completed in a timely manner (subject to Force
         Majeure Events), but in no event later than the Lease Term Expiration
         Date;

                  (f) at all times during Construction, cause title to all
         Improvements on or within the Land (including any personal property
         which either Construction Agent acquires with Advances whether or not
         such personal property so acquired has become a permanent part of such
         Improvements) to be and remain vested in Lessor free of all Liens,
         other than Permitted Liens and Lessor Liens, and cause to be on file
         (including financing statements and fixture filings) with the
         applicable filing office all necessary documents under Article 9 of the
         UCC to perfect Lessor's and Collateral Agent's interest in such
         personalty free of all Liens other than Permitted Liens and Lessor
         Liens unless and only for such period of time as any Construction Agent
         is prevented from doing the same as the result of the failure of the
         Lessor to sign and return any reasonable documentation prepared by
         Construction Agents in performance of this Section;

                  (g) at all times prior to the Lease Commencement Date,
         maintain, for the benefit of Lessor, the insurance described in
         Schedule 2.6(g). In addition, Construction Agents shall from time to
         time, but in intervals of not less than twelve (12) months nor more
         than fifteen (15) months, each, (i) undertake all actions and due
         diligence as reasonably necessary to determine whether the insurance
         coverage required to be maintained hereunder is in compliance with the
         requirements thereunder, including any increases in coverage required
         as a result of any change in any Applicable Laws, and (ii) if
         Construction Agents determine that such insurance coverage does not
         meet such requirements, promptly take all actions and steps necessary
         to cause such coverage to comply with such requirements and shall
         notify Lessor and Collateral Agent of the steps being taken by
         Construction Agents or on their behalf;

                  (h) provide to Lessor and Collateral Agent monthly, or within
         10 days after request by Lessor, if not provided by Construction Agents
         in prior 30 days, Construction Agents' certification stating: (A) that
         the Construction Budget is In Balance, and that Construction Agents
         reasonably believe the Construction of the Improvements will continue
         to be completed In Balance (or, if not, a description of why not);


                                       7
<PAGE>   11

         (B) that the remaining contingency reserves, as such amounts may be
         adjusted pursuant to this Agreement, are sufficient to complete the
         Construction; and (C) the anticipated date on which the Construction
         will be completed.

                  (i) Neither Construction Agent shall incur or allow the
         incurrence of any Improvement Costs, individually or in the aggregate,
         (A) in excess of the sum of the Aggregate Available Commitments and
         Other Available Amounts as of the date of determination thereof or (B)
         that would or could reasonably be expected to cause the aggregate
         Improvement Costs not to be In Balance.

                  (j) Construction Agents shall deliver to Lessor and Collateral
         Agent (i) annually (unless an Event of Default has occurred and is
         continuing in which case as requested) copy of the then current Plans
         and Specifications and (ii) within 30 days after Substantial Completion
         copies of the then current Plans and Specifications.

         2.7. Title to the Improvements. Title to the Improvements (including,
all materials or equipment incorporated therein or paid for out of Advances)
shall automatically, without further act of either Construction Agent, vest in
Lessor.

         2.8. Interim Use. (a) At Lessee's option from and after Substantial
Completion of the Conference/Training Center and five or more floors of the
Office Tower, Construction Agents shall have the right to place such
Improvements in service and to lease and occupy such substantially completed
portions of the Improvements. The Construction Agents shall have the further
right from time to time to lease additional floors of the Office Tower as they
are substantially completed and ready to be placed in service. Such right to
lease and occupy the substantially completed portions may be exercised by Lessee
giving at least 30 days' prior written notice to Lessor or Collateral Agent
specifying the date such lease is to begin, the portions to be occupied and the
rent in respect thereof (determined in accordance with Section 2.8(b)); upon the
giving of such notice of exercise, the interim right to use shall be operative,
without the need for any further lease agreement.

         (b) Construction Agents shall pay rent on a monthly basis ("Interim
Rent") for any portion of the Improvements leased pursuant to Section 2.8(a), in
an amount equal to Construction Period Accrued Interest and Construction Period
Accrued Yield fairly allocable in accordance with GAAP (allocated as of the end


                                       8
<PAGE>   12

of each period for which Construction Period Accrued Interest and Construction
Period Accrued Yield are determined on the basis of the cost of the portion of
the Properties leased pursuant to Section 2.8(a) relative to the portions not so
leased) to the Advances applied to constructing such Improvements. Interim Rent
is payable on each Advance Date.

                                   ARTICLE III
                                THE IMPROVEMENTS

         3.1. Amendments; Modifications. (a) Except as otherwise provided in
Section 3.1(b) below, Construction Agents may revise, amend or modify any of the
Construction Materials or enter into any change orders with respect to any
Improvements without the prior written consent of Lessor if such revision,
amendment, modification or change order will not extend Substantial Completion
beyond the Outside Completion Date. Any amendment to the Construction Materials
for which Construction Agents do not seek the approval of the Lessor shall be
deemed a certification by the Construction Agent that such amendment complies
with the foregoing requirement. Any revision, amendment, modification or change
order not permitted by this Section 3.1 shall be subject to Lessor's approval,
which may be withheld in Lessor's sole and absolute discretion.

         (b) The Construction Agents shall be permitted to amend the
Construction Budget to adjust amounts allocated to any item or contingency
reserve in the Construction Budget, provided, that no such amendment or
adjustment shall permit the then-unspent portions of the Construction Budget to
exceed the then-applicable Aggregate Available Commitments.

         3.2.  Casualty, Condemnation, Liquidated Damages and Force
Majeure Events.

         (a) Subject to Section 3.2(b), if at any time prior to Substantial
Completion there occurs a Casualty, Condemnation or Force Majeure Event or
Liquidated Damages are paid under the Construction Documents, then, in
accordance with the procedures for making Advances in the Operative Documents,
the Lessor shall make (x) so long as no Construction Agency Event of Default or
Bankruptcy Default shall have occurred and be continuing, insurance proceeds
and/or condemnation awards and/or Liquidated Damages with respect thereto
available for Improvement Costs and (y) Advances for Improvement Costs and
Construction Agents shall (i) promptly and diligently complete the Construction
in


                                       9
<PAGE>   13

accordance with the Construction Materials and with the terms hereof and (ii)
cause Substantial Completion to occur on or prior to the Outside Completion
Date.

         (b) If Construction Agents reasonably determine that a Force Majeure
Event will cause Substantial Completion to occur later than the Outside
Completion Date, Construction Agents may request that the applicable Outside
Completion Date be extended by Lessor for the period (not to exceed ninety (90)
days following the original Outside Completion Date) reasonably necessary to
achieve Substantial Completion in light of such Force Majeure Event. Any such
request shall be in writing delivered to Lessor and Collateral Agent and shall
contain a certification by Construction Agents (1) describing the facts and
circumstances giving rise to such Force Majeure Event, the expected duration of
such Force Majeure Event and the date Construction Agents reasonably believe
Substantial Completion will be achieved, (2) that the remaining Aggregate
Available Commitments, together with insurance proceeds paid and Other Available
Amounts, if any, with respect to such Force Majeure Event and, if the
Construction Agent has exercised its rights in respect thereof, the amounts of
Interim Rent under Section 2.8(b) which Construction Agents agree to pay with
respect to amounts accruing during the period of such extension, are adequate to
achieve Substantial Completion within such extension period in accordance with
the Construction Materials (excluding all Construction Period Accrued Interest,
Construction Period Accrued Yield and Construction Period Fees accruing during
such extension period) and (3) that the occurrence of such Force Majeure Event
and the Construction to occur following such date will not materially affect the
appraised value set forth in the Appraisal delivered with respect to such Site
pursuant to Section 4.1(x) of the Participation Agreement. Construction Agents
shall also supply to Lessor and Collateral Agent such other information as each
such Person may reasonably request. The consent of Lessor under this Section
shall not be withheld or delayed if the determination is made that the request
meets the requirements set forth herein in all material respects.

         Notwithstanding the foregoing paragraph, the Outside Completion Date
shall be automatically extended for the period (not to exceed a total of sixty
(60) days following the original Outside Completion Date) necessary to achieve
Substantial Completion in light of such Force Majeure Event, provided, that (A)
the length of the extension required in light of such Force Majeure Event is
certain (either because the Force Majeure Event has ended or because the
Construction Agents have entered into a


                                       10
<PAGE>   14

replacement contract with a definite term (unimpeded by such Force Majeure
Event) to complete the work originally interrupted by the Force Majeure Event),
and (B) the Construction Agents deliver to the Collateral Agent certification
(without assumptions or, except as set forth therein, qualifications) as to and
describing the items supporting each of the matters set forth in clauses (1),
(2) and (3) of the foregoing paragraph and stating the length of the required
extension as provided in clause (A) of this paragraph.


                                   ARTICLE IV
                                PAYMENT OF FUNDS

         4.1.  Funding of Improvement Costs.

         (a) During the course of the Construction of Improvements, Construction
Agents shall request that Lessor advance funds for the payment or reimbursement
of Improvement Costs and Lessor shall comply with such request to the extent
provided for under the Participation Agreement. Construction Agents and Lessor
acknowledge and agree that Construction Agents' right to request funds and
Lessor's obligation to advance funds for the payment of Improvement Costs are
subject in all respects to the terms of this Agreement, the Participation
Agreement and each of the other Operative Documents.

         (b) The proceeds of any funds made available to Lessor under the
Operative Documents to pay Improvement Costs shall be made available to
Construction Agents in accordance with the Advance Request relating thereto.

         (c) The Construction Agents may disburse proceeds from an Advance
Request only for payment or its reimbursement of Improvement Costs as set forth
on the Advance Request or otherwise permitted by the Operative Documents.

         (d) Construction Agents and Lessor, each acknowledge that the
Collateral Agent or the Investors may direct the Ground Lessee to borrow funds
from the Lenders and the Investors for the payment or reimbursement of
Transaction Costs and other expenditures, all in accordance with the
Participation Agreement and the other Operative Documents.


                                    ARTICLE V
                      CONSTRUCTION AGENCY EVENTS OF DEFAULT


                                       11
<PAGE>   15

         5.1.  Construction Agency Events of Default.

                           5.1.1. Defined.  Any one or more of the following
         events shall be a "Construction Agency Event of Default":

                  (a) Construction Agents apply any Advance for the purposes
         other than as set forth in the related Advance Request or Construction
         Agents otherwise apply any funds paid by Lessor to either Construction
         Agent for purposes not permitted hereby or by any other Operative
         Document, and such failure fails to be remedied for 10 days after such
         misapplication, or there shall exist any other misapplication of funds
         relating to any Property, including, but not limited to fraud, illegal
         acts or willful misconduct by any Construction Agent or its Affiliates
         or any Person under the direct or indirect supervision of the
         Construction Agent related to or in respect of the transactions
         contemplated herein or the Operative Documents or with respect to any
         Property or Site;

                  (b) Construction Agents shall fail to comply with Section
         2.6(c); provided that, if such failure is capable of cure within sixty
         (60) days, Construction Agents may request that the Outside Completion
         Date be extended by the Lessor for the period (not to exceed sixty (60)
         days following the original applicable Outside Completion Date,
         including any extensions pursuant to Section 3.2) reasonably necessary
         to cure such default. Any such request shall be in writing delivered to
         Collateral Agent and Lessor at least ten (10) Business Days prior to
         the Outside Completion Date and shall contain a certification by
         Construction Agents (1) describing the facts and circumstances giving
         rise to such failure to complete such Improvements by the Outside
         Completion Date and the date Construction Agents reasonably believe
         cure of such default will be achieved, (2) that the undisbursed portion
         of the Construction Budget and Other Available Amounts not previously
         applied are adequate to achieve Completion of such Improvements in
         accordance with the applicable Plans and Specifications and to pay in
         accordance with Section 2.2.10 of the Participation Agreement all
         Construction Period Accrued Interest, Construction Period Accrued Yield
         and Construction Period Fees accruing during such period, and (3) that
         such delay will not affect the Fair Market Value of such Improvements
         as set forth in the Appraisal. Construction Agents shall also supply to
         Collateral Agent such other information that Collateral Agent may
         reasonably request. Collateral Agent


                                       12
<PAGE>   16

         (at the written direction of the Directing Party) will consent to
         Construction Agents' request if the Majority Banks determine that the
         request meets the requirements set forth herein with respect to such
         Improvements and that such cure can be completed within the sixty (60)
         day period. If such request is granted, Construction Agents shall
         promptly and diligently undertake the cure of such default;

                  (c) the Construction Budget shall not be In Balance and such
         failure to be In Balance shall continue for a period of thirty (30)
         days after (i) notification or certification of such condition by
         either of the Construction Agents pursuant to Section 5.6(a)(i) or the
         Participation Agreement or (ii) receipt by Construction Agents from
         Collateral Agent (at the written direction of the Directing Party) of a
         notification of the determination by Collateral Agent (at the written
         direction of the Directing Party) of such failure pursuant to Section
         5.6(b);

                  (d) an Insolvency Event with respect to any Construction Agent
         or the Guarantor shall have occurred and be continuing;

                  (e) GS shall default in the due performance and observance of
         any of its obligations under Section 6.3(b) or (c) of the Participation
         Agreement;

                  (f) any false statement or inaccuracy by any Construction
         Agent, any Lessee, Ground Lessor, or Guarantor in its capacity as such,
         in any representation, warranty, statement or certification by such
         Construction Agents in any certificate, Advance Request, or Operative
         Document where the same has a Material Adverse Effect; and such falsity
         or inaccuracy shall remain uncured for a period of thirty (30) days
         after receipt of notice thereof by Construction Agent from Lessor or
         Collateral Agent, provided, however, that if such inaccuracy is capable
         of cure but cannot be cured by payment of money or cannot be cured by
         diligent efforts within such thirty (30) day period, but such diligent
         efforts shall be properly commenced within such thirty (30) day cure
         period and the Construction Agents are diligently pursuing, and shall
         continue to pursue diligently, remedy of such inaccuracy, the cure
         period shall be extended, but in no event beyond the Outside Completion
         Date;

                  (g) except as otherwise permitted under the Operative
         Documents, any Lien granted pursuant to any Operative


                                       13
<PAGE>   17

         Document affecting any portion of the Properties shall, in whole or in
         material part, cease to be a perfected first priority security interest
         (other than Permitted Liens and Lessor Liens) with respect to any Site
         for which such Lien is required under the Operative Documents, other
         than with respect to an immaterial portion of any such Site, unless
         such cessation shall be the result of the failure of Lessor to sign and
         return any reasonable documentation prepared by the Construction Agents
         in performance of Section 2.6(f) or willful misconduct of the
         Collateral Agent or Lessor, provided, however, that with respect to any
         Lien which fails to be so effective or perfected, Construction Agents
         shall have thirty (30) days from the earlier of the Construction
         Agents' knowledge of such condition and receipt of notice thereof from
         Lessor or Collateral Agent to cure such failure;

                  (h) any Construction Agent shall fail to observe or perform
         any term, covenant or condition of this Agreement (except those
         specified in clauses (a) through (e) above)and the same shall have a
         Material Adverse Effect, and such inaccuracy shall remain uncured for a
         period of thirty (30) days after receipt of notice thereof by either
         Construction Agent or the Guarantor from Lessor or Collateral Agent,
         provided, however, that if such inaccuracy is capable of cure but
         cannot be cured solely by payment of money or cannot be cured by
         diligent efforts within such thirty (30) day period, but such diligent
         efforts shall be properly commenced within such thirty (30) day cure
         period and the Construction Agents are diligently pursuing, and shall
         continue to pursue diligently, remedy of such inaccuracy, the cure
         period shall be extended, but in no event beyond the Outside Completion
         Date;

                  (i) GS & Co. shall default in its obligations under Section
         3.01(d) of the Commercial Paper Placement Agreement (HSFC) or HSFC, by
         reason of Section 3(d) of the Administration Agreement, is unable to
         issue Commercial Paper Notes, and, in each case, HSFC shall not
         otherwise have sufficient funds to pay obligations owed in respect of
         maturing Commercial Paper Notes of HSFC or to fund its portion of any
         Advance Request;

                  (j) an event described in Section 7.3 of the Participation
         Agreement shall have occurred; or


                                       14
<PAGE>   18

                  (k) the Ground Lease shall terminate by reason of default by
         Ground Lessor in its obligations thereunder.

                  5.1.2 Consequences. Upon the occurrence of a Construction
         Agency Event of Default, Lessor may, in addition to the other rights
         and remedies provided for in this Article V or under the Mortgage,
         immediately terminate this Agreement, by giving Construction Agents
         written notice of such termination, and upon the giving of such notice,
         this Agreement shall terminate and all rights of Construction Agents
         and all obligations of Lessor under this Agreement shall cease;
         provided, however, that this Agreement shall terminate immediately
         without notice upon the occurrence of an Insolvency Event described in
         Section 5.1.1(d) or upon the occurrence of the events described in
         Section 5.1.1(i), whether or not another Construction Agency Event of
         Default described in one or more other clauses of Section 5.1.1 shall
         have been or thereafter is declared. Upon any termination, all rights
         of Construction Agents and all obligations of Lessor(after the date of
         termination and payment of the amounts referred to below in this
         Section 5.1.2), other than its obligation under the last sentence of
         Section 2.2.1 of the Participation Agreement, shall cease and (i)
         Lessor may require Construction Agents to (or shall require
         Construction Agents to, if a Construction Agency Event of Default
         described in Section 5.1.1(d) or 5.5.1(i) has occurred) (subject to
         Section 5.4 below) immediately pay to Collateral Agent, on behalf of
         Lessor, as and for liquidated damages, an amount equal to (A) if a Full
         Recourse Construction Event of Default has occurred, the Permitted
         Lease Balance and (B) otherwise, the Construction Period Maximum
         Guaranty Amount, and (ii) Construction Agents may at their election,
         within 10 days after such termination, exercise the option to purchase
         the Properties from Lessor by paying immediately (but in any event
         within 5 days after such 10 day period) an amount equal to the excess
         of the (x) Lease Balance plus, without duplication, all Construction
         Period Accrued Interest, Construction Period Accrued Yield and Fees and
         any other amounts then due and owing under the Operative Documents, as
         of the date of such payment over (y) amounts paid by the Construction
         Agents under clause (i) above. Unless Construction Agents shall have so
         exercised the purchase option, Lessor shall cause the Properties to be
         sold in accordance with Section 5.3(a). If Construction Agents shall
         have so exercised the purchase option (and made all applicable payments
         in respect thereof), Lessor shall convey title to the Improvements to


                                       15
<PAGE>   19

         Lessee or their designee in accordance with Article XV of the Lease
         assuming for these purposes that said Article of the Lease were then
         applicable.

         5.2. Survival. The termination of this Agreement, in whole or in part,
pursuant to Section 5.1 shall in no event relieve Construction Agents of their
liability hereunder which accrued prior to such termination, all of which shall
survive any such termination.

         5.3. Remedies Cumulative; Waivers. Upon the occurrence and continuance
of a Construction Agency Event of Default, at Lessor's option and without
limiting Lessor in the exercise of any other right or remedy Lessor may have on
account (including, without limitation, any remedies under any other Operative
Document or as set forth in Section 5.1.2), and without any further demand or
notice, but subject to Section 5.4 below and the proviso of the first sentence
of Section 5.1.2 and the second sentence of Section 5.1.2 above, Lessor may
cause the following to occur:

                  (a) Lessor shall have all the rights and may pursue any of the
         remedies hereunder with respect to Construction Period Maximum Guaranty
         Amount as are provided to it in the Lease with respect to the payment
         of Residual Value Guaranty Amount as if those provisions were
         incorporated herein including, Lessor acting as exclusive sales agent
         for the Properties. Lessor and Collateral Agent may foreclose the lien
         of the Lessee Mortgage on all or any portion of the Properties and
         other Collateral, including all or any of such Sites and the related
         Mortgage. If Lessor has neither sold nor foreclosed upon the Properties
         within 2 years after receipt of the Permitted Lease Balance or
         Construction Period Maximum Guaranty Amount, as applicable, Lessor will
         appoint a qualified independent sales agent to sell the Properties and
         Lessor shall sell the Properties pursuant to the first bona fide offer
         received of an all cash purchase price at the then Fair Market Value of
         the Properties to the extent the conditions therefor are satisfied. Any
         proceeds resulting from the operation of this Section 5.3(a) will be
         applied in accordance with Article X of the Participation Agreement.

                  (b) Lessor may continue this Agreement in effect for so long
         as Lessor shall determine, and Lessor may enforce all of Lessor's
         rights and remedies under this Agreement, and require the completion of
         the Improvements by the


                                       16
<PAGE>   20

         Construction Agents as herein described, so long as Lessor satisfies
         its obligations under Section 4.1 and provides or otherwise obtains the
         funds therefor and advances such funds to the Construction Agents.

                  (c) Lessor may terminate this Agreement at any time,
         notwithstanding a prior election under Section 5.3(b) to cause the
         completion of the Improvements with respect thereto directly through
         Lessor or one or more successor construction agents.

                  (d) Lessor may exercise any other right or remedy that may be
         available to it under Applicable Laws or in equity, or proceed by
         appropriate court action (legal or equitable) to enforce the terms or
         to recover damages for the breach hereof.

                  (e) Subject to the provisions hereof, as a matter of right and
         without notice to Construction Agents, Guarantor or anyone claiming
         under either of the Construction Agents, and without regard to the then
         value of the Collateral or the interest of any Lessee therein, Lessor
         shall have the right to apply to any court having jurisdiction to
         appoint a receiver or receivers of the Collateral or any portion
         thereof at Lessee and Construction Agents' sole cost and expense
         (subject to Section 5.4 hereof), and Construction Agents hereby
         irrevocably consent to such appointment and waive notice of any
         application therefor. Any such receiver or receivers shall have all the
         usual powers and duties of receivers in like or similar cases and all
         the powers and duties of Lessor in case of entry as provided in this
         Agreement and shall continue as such and exercise all such powers until
         the latest to occur of (i) the date of confirmation of sale of the
         applicable Collateral; (ii) the disbursement of all proceeds of such
         Collateral collected by such receiver and the payment of all expenses
         incurred in connection therewith; or (iii) the termination of such
         receivership with the consent of Lessor or pursuant to an order by a
         court of competent jurisdiction.

                  (f) To the extent permitted by, and subject to the mandatory
         requirements of, any Applicable Law, each and every right, power and
         remedy herein specifically given to Lessor or otherwise in this
         Agreement shall be cumulative and, subject to Section 5.4, shall be in
         addition to every other right, power and remedy herein specifically
         given or now or hereafter existing at law, in equity or by statute,


                                       17
<PAGE>   21

         and each and every right, power and remedy whether specifically herein
         given or otherwise existing may be exercised from time to time and as
         often and in such order as may be deemed expedient by Lessor, and the
         exercise or the beginning of the exercise of any power or remedy shall
         not be construed to be a waiver of the right to exercise at the same
         time or thereafter any other right, power or remedy. Lessor's consent
         to any request made by any Construction Agents shall not be deemed to
         constitute or preclude the necessity for obtaining Lessor's consent, in
         the future, to all similar requests. No express or implied waiver by
         Lessor of any Construction Agency Event of Default shall in any way be,
         or be construed to be, a waiver of any future or subsequent
         Construction Agency Event of Default. To the extent permitted by any
         Applicable Law, Construction Agents hereby waive any rights now or
         hereafter conferred by statute or otherwise that may require Lessor to
         sell, lease or otherwise use the Properties, any Site, the other
         collateral or any part thereof in mitigation of Lessor's damages upon
         the occurrence of a Construction Agency Event of Default or that may
         otherwise limit or modify any of Lessor's rights or remedies under this
         Article V.

                  (g) No failure to exercise and no delay in exercising, on the
         part of Lessor, any right, remedy, power or privilege under this
         Agreement or under the other Operative Documents shall operate as a
         waiver thereof; nor shall any single or partial exercise of any right,
         remedy, power or privilege under this Agreement preclude any other or
         further exercise thereof or the exercise of any other right, remedy,
         power or privilege. The rights, remedies, powers and privileges
         provided in this Agreement are cumulative and not exclusive of any
         rights, remedies, powers and privileges provided by law.

                  (h) Upon termination of this Agreement as a result of a
         Construction Agency Event of Default, the Construction Agents shall pay
         on behalf of Lessor to the Collateral Agent, for application in
         accordance with Article X of the Participation Agreement, in
         immediately available funds, the Construction Period Maximum Guaranty
         Amount.

         5.4. Limitation on Recourse Liability of Construction Agents. (a)
Notwithstanding anything set forth herein to the contrary, the aggregate amount
payable by the Construction Agents on a recourse basis under this Article V as
the result of the occurrence of a Construction Agency Event of Default shall be


                                       18
<PAGE>   22

subject to the limitations on the recourse liability of Construction Agents set
forth in Section 11.2 of the Participation Agreement.

                  (b) Lessor's exercise of any remedy provided hereunder or
         otherwise available at law or equity, including any demand for
         reimbursements of amounts expended by or on behalf of Lessor to cure
         any Construction Agency Event of Default shall be subject to the
         condition that such exercise shall not impair or otherwise reduce the
         Construction Agents' obligation to pay the Construction Period Maximum
         Guaranty and the timely application of such amount to the outstanding
         HSFC Loan balance in accordance with the Participation Agreement,
         except to the extent that any payment by Construction Agents on account
         of such exercise shall be applied to the repayment of the HSFC Loan
         balance.

         5.5. Lessor's Right to Cure Construction Agents' Defaults. Lessor,
without waiving or releasing any obligation or Construction Agency Event of
Default, may (but shall be under no obligation to) remedy any Construction
Agency Event of Default, and in furtherance of such right, Lessor may make
Advance Requests, execute Construction Documents and otherwise exercise all
rights and perform all duties of each applicable Construction Agent hereunder
and Lessees under the Participation Agreement with respect to the Construction.
All reasonable out of pocket costs and expenses so incurred (including
reasonable fees and expenses of counsel), together with interest thereon at the
Overdue Rate from the date on which such sums or expenses are paid by Lessor,
shall (subject to Section 5.4 above) be funded and paid by Lessor through
Advances.

         5.6. Determination of Whether Budget is "In Balance".

         (a) If Collateral Agent (at the written direction of the Directing
Party)determines that the Construction Budget may not be In Balance, Collateral
Agent shall give notice to such effect to Construction Agents, together with a
reasonably detailed explanation of the basis for Collateral Agent's
determination and to the extent available calculations upon which Collateral
Agent has based its determination. Within ten (10) days following Construction
Agents' receipt of such notice, Construction Agents shall deliver a
certification to Collateral Agent that either (i) the Construction Budget which
is the subject of such notice is not In Balance and describing the steps
Construction Agents are taking to remedy such condition, if any, or (ii) the
Construction Budget is In Balance and stating sufficient detail to describe


                                       19
<PAGE>   23

why Construction Agents believe the Construction Budget is In Balance.

         (b) If after receipt by the Collateral Agent of a certification from
the Construction Agents pursuant to Section 5.6(a)(i) above that the
Construction Budget is In Balance, Collateral Agent (at the written direction of
the Directing Party) still disagrees with such Certification, Collateral Agent
may give notice to such effect to Construction Agents and pursue such remedies
as may be available hereunder.

         5.7. Limitations on Construction Agents' Liability. In any action or
proceeding involving any state law, any federal bankruptcy, insolvency or
reorganization law, or any other law affecting the rights of creditors
generally, if the obligations of Construction Agents under the Operative
Documents would otherwise be held or determined to be voidable, invalid or
unenforceable as a fraudulent transfer or otherwise as a result or on account of
the amount of its liability under the Operative Documents, then, notwithstanding
any other provision hereof to the contrary, the amount of such liability shall,
without any further action by Construction Agents or any other Person, be
automatically limited and reduced to the highest amount which is valid and
enforceable.


                                   ARTICLE VI
                           NO CONSTRUCTION AGENCY FEE

         Construction Agents shall not be entitled to, and Lessor shall have no
obligation to pay, any agency fee or other fee or compensation, and no such
Person shall not be entitled to, and Lessor shall have no obligation to make or
pay, any reimbursement therefor. It being understood that this Agreement is
being entered into as consideration for and as an inducement to Lessor and the
Participants entering into the Lease and the other Operative Documents.


                                   ARTICLE VII
                                  MISCELLANEOUS

         7.1. Notices. All notices, consents, directions, approvals,
instructions, requests, demands and other communications required or permitted
by the terms hereof to be given to any Person shall be given in writing in the
manner provided in, shall be sent to the respective addresses set forth


                                       20
<PAGE>   24

in, and the effectiveness thereof shall be governed by the provisions of,
Section 12.3 of the Participation Agreement.

         7.2. Successors and Assigns. This Agreement shall be binding upon and
inure to the benefit of Lessor, Construction Agents and, to the extent permitted
by the Operative Documents, their respective successors and assigns; provided,
however, that except as permitted by Sections 2.4 and 2.5 or to an entity owned
(directly or indirectly) by Guarantor (and in either case, the Obligors shall
remain primarily liable), Construction Agents shall not assign any of their
rights nor delegate any of their duties or obligations under this Agreement
without the prior written consent of the Collateral Agent (at the written
directions of the Directing Party)and Lessor.

         7.3. GOVERNING LAW. THIS AGREEMENT HAS BEEN DELIVERED IN, AND SHALL IN
ALL RESPECTS BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF, THE
STATE OF NEW YORK, WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES TO THE EXTENT
PERMITTED BY APPLICABLE LAW (EXCEPT SECTION 5-1401 OF THE NEW YORK GENERAL
OBLIGATIONS LAW), EXCEPT AS TO MATTERS RELATING TO THE CREATION OF INTERESTS IN
REAL PROPERTY OR LIENS AND THE EXERCISE OF REMEDIES WITH RESPECT TO THE PORTIONS
OF THE PROPERTIES CONSTITUTING REAL PROPERTY, WHICH SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW JERSEY.

         7.4. Amendments, etc. Lessor and Construction Agents may, from time to
time, enter into written amendments, supplements or modifications hereto,
subject to the restrictions set forth in Section 12.5 of the Participation
Agreement.

         7.5. Counterparts. This Agreement may be executed on any number of
separate counterparts and all of said counterparts taken together shall be
deemed to constitute one and the same instrument.

         7.6. Severability. Any provision of this Agreement that is prohibited
or unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.

         7.7. Headings and Table of Contents. The headings and table of contents
contained in this Agreement are for convenience


                                       21
<PAGE>   25

of reference only and shall not limit or otherwise affect the meaning hereof.

         7.8. Exercise of Lessor's Rights. Subject to the Excluded Amounts,
Construction Agents hereby acknowledge and agree that, subject to and in
accordance with the terms of the Security Agreement dated concurrently herewith
made by Lessor in favor of Collateral Agent, the rights and powers of Lessor
under this Agreement have been assigned to and may be exercised by Collateral
Agent in accordance with Section 12.5 of the Participation Agreement.

         7.9. Limited Liability. Construction Agents each agree that Lessor's
obligations and liability under this Agreement are limited pursuant to Section
12.10 of the Participation Agreement. Except for the rights of Lessee to payment
pursuant to the express provisions of Article X of the Participation Agreement,
any rights of the Construction Agents against the Lessor shall be fully
subordinated to the claims of the Ground Lessee until such claims are
indefeasibly paid in full (but excluding Construction Agents' right under the
last paragraph of Section 2.2.1 of the Participation Agreement).

         7.10. No Third Party Beneficiaries. Except to the extent provided in
other Operative Documents, no provision in this Agreement shall give rise to any
rights in any Person (except any Person party to an Operative Document), and
there shall be no third party beneficiaries of, and no other Persons shall be
entitled to rely on this Agreement. Any attempt by any other such Person to so
rely shall immediately be void.

         7.11. Survival of Agreements. All covenants of the Construction Agents
provided for in Section 2.6(e) shall survive the termination of this Agreement.

                                  [END OF PAGE]
                            [SIGNATURE PAGES FOLLOW]


                                       22
<PAGE>   26

         IN WITNESS WHEREOF, the parties hereto have caused this CONSTRUCTION
AGENCY AGREEMENT to be duly executed and delivered by their proper and duly
authorized officers as of the day and year first above written.


                                       30 HUDSON STREET LESSOR URBAN
                                       RENEWAL L.L.C., as Lessor

                                       By: Hudson Street Lessor
                                       L.L.C., its sole member

                                       By: Hudson Street Lessor
                                       Investment Trust 2000-1, its
                                       sole member

                                       By: Wilmington Trust Company,
                                       not in its individual capacity
                                       but as its Trustee


                                       By /s/ Kathleen A. Pedelini
                                          __________________________________
                                       Name:  Kathleen A. Pedelini
                                       Title: Administrative Account Manager


                                       50 HUDSON STREET LESSOR URBAN
                                       RENEWAL L.L.C., as Lessor

                                       By: Hudson Street Lessor
                                       L.L.C., its sole member

                                       By: Hudson Street Lessor
                                       Investment Trust 2000-1, its
                                       sole member

                                       By: Wilmington Trust Company,
                                       not in its individual capacity
                                       but as its Trustee


                                       By  /s/ Kathleen A. Pedelini
                                           _________________________________
                                       Name:   Kathleen A. Pedelini
                                       Title:  Administrative Account Manager


<PAGE>   27


                                       GSJC 30 HUDSON URBAN RENEWAL
                                       L.L.C., jointly and severally as
                                       Lessee and Construction Agent

                                       By: The Goldman Sachs Group,
                                       Inc., its sole member

                                          /s/ Barry L. Zubrow
                                       By _________________________________
                                       Name:  Barry L. Zubrow
                                       Title: Executive Vice President


                                       GSJC 50 HUDSON URBAN RENEWAL
                                       L.L.C., jointly and severally as
                                       Lessee and Construction Agent

                                       By: The Goldman Sachs Group,
                                       Inc., its sole member

                                           /s/ Barry L. Zubrow
                                       By _________________________________
                                       Name:  Barry L. Zubrow
                                       Title: Executive Vice President


                                      S-2
<PAGE>   28

                                                                 Schedule 2.6(g)

(A) Insurance By The Construction Agent: The Construction Agent shall maintain
or cause others to maintain in full force and effect at all times prior to the
Lease Commencement Date, insurance policies with responsible insurance companies
authorized to do business in New Jersey (if so required by law or regulation)
with (i) a Best Insurance Reports rating of "A-" or better and an financial size
category of "IX" or higher, (ii) or a Standard & Poors financial strength rating
of "BBB+" or higher, (iii) or other companies acceptable to the Lessor, with
limits and coverage provisions sufficient to satisfy the requirements set forth
below.

         (1)      General Liability Insurance: Liability insurance on an
                  occurrence basis against claims filed in anywhere in the world
                  and occurring the United States for the Construction Agent's,
                  contractor's and sub-contractor's liability arising out of
                  claims for personal injury (including bodily injury and death)
                  and property damage. Such insurance shall provide coverage for
                  products-completed operations (which coverage shall remain in
                  effect for a period of at least three years following the
                  Construction Period Termination Date), blanket contractual,
                  broad form property damage, personal injury insurance and
                  independent contractors with a $1,000,000 minimum limit per
                  occurrence for combined bodily injury and property damage
                  provided that policy aggregates, if any, shall apply
                  separately to claims occurring with respect to the
                  Improvements. A maximum deductible or self-insured retention
                  of $250,000 per occurrence shall be allowed. All loss payments
                  due under the deductible shall be pre-funded by the
                  Construction Agent through additional premium payments.

         (2)      Automobile Liability Insurance: Automobile liability insurance
                  for the Construction Agent's liability arising out of claims
                  for bodily injury and property damage covering all owned (if
                  any), leased (if any), non-owned and hired vehicles used in
                  the performance of the Construction Agent's obligations under
                  the Construction Agreement with a $1,000,000 minimum limit per
                  accident for combined bodily injury and property damage and
                  containing appropriate no-fault insurance provisions wherever
                  applicable. A maximum deductible

<PAGE>   29

                  or self-insured retention of $250,000 per occurrence shall be
                  allowed.

         (3)      Excess Liability Insurance: Excess liability insurance on an
                  occurrence basis covering claims in excess of the underlying
                  insurance described in the foregoing subsections (1) and (2),
                  with a $100,000,000 minimum limit per occurrence, provided
                  that aggregate limits of liability, if any, shall apply
                  separately to claims occurring with respect to the
                  Improvements.

                  The amounts of insurance required in the foregoing subsections
                  (1), (2) and this subsection (3) may be satisfied by
                  Construction Agent purchasing coverage in the amounts
                  specified or by any combination of primary and excess
                  insurance, so long as the total amount of insurance meets the
                  requirements specified above.

         (4)      Aircraft Liability Insurance: If the performance of the
                  Construction Agreement requires the use of any aircraft that
                  is owned, leased or chartered by the Construction Agent or any
                  of its contractors or sub-contractors, aircraft liability
                  insurance insuring the Construction Agent (and contractors and
                  sub-contractors if applicable) with a $50,000,000 minimum
                  limit per occurrence for property damage and bodily injury,
                  including passengers and crew provided that policy aggregates,
                  if any, shall apply separately to claims occurring with
                  respect to the Improvements.

         (5)      Marine Liability Insurance: Marine liability insurance for the
                  Construction Agent's liability arising out of claims for
                  bodily injury or property damage arising out of any vessel or
                  barge owned, rented or chartered by the Construction Agent or
                  its subcontractors with a $25,000,000 minimum limit per
                  occurrence provided that policy aggregates, if any, shall
                  apply separately to claims occurring with respect to the
                  Project.

         (6)      Pollution Liability Insurance: Pollution liability insurance
                  for bodily injury, property damage and remediation of
                  pollutants. The insurance is to include coverage for sudden
                  and accidental environmental accidents on the Land and
                  off-site with a $25,000,000 minimum limit per occurrence.


                                       2
<PAGE>   30

         (7)      Builder's Risk Insurance: Property damage insurance on an "all
                  risk" basis insuring the Construction Agent and Lessor, as
                  their interests may appear, including coverage for the perils
                  of earth movement (including but not limited to earthquake,
                  landslide, subsidence and volcanic eruption), flood, boiler
                  and machinery accidents.

                  8.       Property Covered: The builder's risk insurance shall
                           provide coverage for (i) the Improvements, (ii)
                           property of others in the care, custody or control of
                           the Construction Agent or Construction Agent, (iii)
                           all preliminary works and temporary works, (iv)
                           foundations and other property below the surface of
                           the ground, (v) electronic equipment and media.

                  (b)      Additional Coverages: The builder's risk policy shall
                           insure (i) the cost of preventive measures to reduce
                           or prevent a loss (sue & labor) in an amount not less
                           than $25,000,000, (ii) inland transit with sub-limits
                           sufficient to insure the largest single shipment to
                           or from the Land from anywhere within the United
                           States or Canada, (iii) attorney's fees, engineering
                           and other consulting costs, and permit fees directly
                           incurred in order to repair or replace damaged
                           insured property in a minimum amount of $25,000,000,
                           (iv) expediting expenses in an amount not less than
                           $25,000,000, (v) off-site storage with sub-limits
                           sufficient to insure the full replacement value of
                           any property or equipment not stored on the Land and
                           (vi) the removal of debris with a sub-limit not less
                           than 25 percent of the loss amount or $5,000,000,
                           whichever is greater.

                  (c)      Special Clauses: The builder's risk policy shall
                           include (i) a 72 hour flood/storm/earthquake clause,
                           (ii) an unintentional errors and omissions clause,
                           (iii) a requirement that the insurer pay losses
                           within 30 days after receipt of an acceptable proof
                           or loss or partial proof of loss, (iv) an other
                           insurance clause making this insurance primary over
                           any other insurance and (v) a clause stating that the
                           policy shall not be subject to cancellation by the
                           insurer except for non-payment of premium, fraud or
                           material misrepresentation.

                  (d)      Prohibited Exclusions: The builder's risk policy
                           shall not contain any (i) coinsurance provisions,
                           (ii) exclusion for loss or damage resulting from
                           freezing, mechanical breakdown or (iii) exclusion for
                           resultant damage caused by ordinary wear and tear,
                           gradual deterioration, normal subsidence, settling,
                           cracking, expansion or contraction, faulty
                           workmanship, design or materials.


                                       3
<PAGE>   31

                  (e)      Sum Insured: The builder's risk policy shall (i) be
                           on a completed value form, with no periodic reporting
                           requirements, (ii) insure 100% of the replacement
                           value of the Improvements, (iii) value losses at
                           replacement cost, without deduction for physical
                           depreciation or obsolescence including custom duties,
                           taxes and fees (if rebuilt or repaired), (v) insure
                           earth movement and flood coverage without a
                           sub-limit.

                  (f)      Deductible: The builder's risk insurance shall have
                           no deductible greater than $500,000 per occurrence
                           for flood and $50,000 per occurrence for all other
                           coverage.

         (8)      Delayed Startup Insurance: Delayed startup coverage insuring
                  the Construction Agent and Lessor, as their interests may
                  appear, for loss of rental income, Construction Period
                  Interest, Construction Period Yield and other fixed expenses
                  of the Construction Agent arising out of a delay in completion
                  of the Improvements beyond the fourth anniversary of the
                  Documentation Date due to a peril insured by the builder's
                  risk policy required above, in an amount not less than
                  $180,000,000.

                  Such insurance shall (a) have a deductible of not greater than
                  30 days aggregate for all occurrences during the construction
                  period, (b) have an indemnity period not less than 12 months,
                  (c) include an interim payments (or partial payment) clause
                  allowing for the monthly payment of a claim pending final
                  determination of the full claim amount, (d) cover loss
                  sustained when access to the Land is prevented due to an
                  insured peril at premises in the vicinity of the Land, (e)
                  cover loss sustained due to the action of a public authority
                  preventing access to the Land due to imminent or actual loss
                  or destruction arising from an insured peril at premises in
                  the vicinity of the Land, (f) insure loss caused by damage to
                  finished equipment or machinery while awaiting shipment at a
                  supplier's premises, (g) insure loss caused by damage or
                  mechanical breakdown to construction plant and equipment at
                  the Land not already insured by Section (7) above, (h) not
                  contain any form of a coinsurance provision or include a
                  waiver of such provision and (i) cover loss sustained due to
                  the accidental interruption or failure of supplies of
                  electricity, gas, sewers, water or telecommunication up to the
                  terminal point of the utility supplier with the Land.

         (9)      Endorsements: All policies of liability insurance required to
                  be maintained by the Construction Agent shall be endorsed as
                  follows:

                  (a)      To name the Lessor as a named insured;


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<PAGE>   32

                  (b)      To provide a severability of interests and cross
                           liability clause;

                  (c)      That the insurance shall be primary and not excess to
                           or contributing with any insurance or self-insurance
                           maintained by the Lessor.

         (10)     Waiver of Subrogation: The Construction Agent hereby waives
                  any and every claim for recovery from the Lessor for any and
                  all loss or damage covered by any of the insurance policies to
                  be maintained under this Agreement to the extent that such
                  loss or damage is recovered under any such policy. Inasmuch as
                  the foregoing waiver will preclude the assignment of any such
                  claim to the extent of such recovery, by subrogation (or
                  otherwise), to an insurance company (or other person), the
                  Construction Agent shall give written notice of the terms of
                  such waiver to each insurance company which has issued, or
                  which may issue in the future, any such policy of insurance
                  (if such notice is required by the insurance policy) and shall
                  cause each such insurance policy to be properly endorsed by
                  the issuer thereof to, or to otherwise contain one or more
                  provisions that, prevent the invalidation of the insurance
                  coverage provided thereby by reason of such waiver.

(B)      Conditions:

         (1)      Loss Notification: The Construction Agent shall promptly
                  notify the Collateral Agent of any single loss or event likely
                  to give rise to a claim against an insurer for an amount in
                  excess of $5,000,000 covered by any insurance maintained
                  pursuant to this Agreement.

         (2)      Payment of Loss Proceeds: All policies of insurance required
                  to be maintained pursuant to Sections (A)(7) and (8), shall
                  provide that the proceeds of such policies shall be payable
                  solely to the Collateral Agent.

         (3)      Loss Adjustment and Settlement: A loss under any insurance
                  required to be carried under Sections (A)(7) and (8), shall be
                  adjusted with the insurance companies, including the filing in
                  a timely manner of appropriate proceedings, by the
                  Construction Agent, subject to the approval of the Lessor if
                  such loss is in excess of $5,000,000. In addition the
                  Construction Agent may in its reasonable judgment consent to
                  the settlement of any loss, provided that in the event that
                  the amount of the loss exceeds $5,000,000 the terms of such
                  settlement is concurred with by the Agent.

         (4)      Policy Cancellation and Change: All policies of insurance
                  required to be maintained pursuant to this Schedule 2.6(g)
                  shall be endorsed so that if at any time should they be
                  canceled, or coverage be reduced (by any party including the


                                       5
<PAGE>   33

                  insured) which affects the interests of the Lessor, such
                  cancellation or reduction shall not be effective as to the
                  Lessor for 60 days, except for non-payment of premium which
                  shall be for 10 days, after receipt by the Agent of written
                  notice from such insurer of such cancellation or reduction.

         (5)      Miscellaneous Policy Provisions: All policies of insurance
                  required to be maintained pursuant to Sections (A)(7) and (8),
                  shall (i) not include any annual or term aggregate limits of
                  liability except as regards the insurance applicable to the
                  perils of flood and earth movement and pollutant clean up of
                  land and water at the Land (project site), (ii) shall include
                  the Lessor as additional insureds as their interest may
                  appear, and (iii) include a clause requiring the insurer to
                  make final payment on any claim within 30 days after the
                  submission of proof of loss and its acceptance by the insurer.

         (6)      Separation of Interests: All policies (other than in respect
                  to liability or workers compensation insurance) shall insure
                  the interests of the Lessor regardless of any breach or
                  violation by the Construction Agent or any other Party of
                  warranties, declarations or conditions contained in such
                  policies, any action or inaction of the Construction Agent or
                  others.

         (7)      Acceptable Policy Terms and Conditions: All policies of
                  insurance required to be maintained pursuant to this Agreement
                  shall contain terms and conditions reasonably acceptable to
                  the Lessor.

         (8)      Waiver of Subrogation: All policies of insurance to be
                  maintained by the provisions of this Agreement shall provide
                  for waivers of subrogation in favor of the Lessor.

(C)      Evidence of Insurance: On the Initial Advancement Date and at least 10
         days prior to each policy anniversary, the Construction Agent shall
         furnish the Lessor with (1) certificates of insurance or binders, in a
         form acceptable to the Agent, evidencing all of the insurance required
         by the provisions of this Agreement and (2) a schedule of the insurance
         policies held by or for the benefit of the Construction Agent and
         required to be in force by the provisions of this Agreement. Such
         certificates of insurance/binders shall be executed by each insurer or
         by an authorized representative of each insurer where it is not
         practical for such insurer to execute the certificate itself. Such
         certificates of insurance/binders shall identify underwriters, the type
         of insurance, the insurance limits and the policy term and shall
         specifically list the special provisions enumerated for such insurance
         required


                                       6
<PAGE>   34

         by this Agreement. Upon request, the Construction Agent will promptly
         furnish the Lessor with copies of all insurance policies, binders and
         cover notes or other evidence of such insurance relating to the
         insurance required to be maintained by the Construction Agent. The
         schedule of insurance shall include the name of the insurance company,
         policy number, type of insurance, major limits of liability and
         expiration date of the insurance policies.

(D)      Reports: Concurrently with the furnishing of the certification referred
         to in Section (C), the Construction Agent shall furnish the Lessor with
         a report of an independent broker, signed by an officer of the broker,
         stating that in the opinion of such broker, the insurance then carried
         or to be renewed is in accordance with the terms of this Agreement and
         attaching an updated copy of the schedule of insurance required by
         Section (C) above. In addition the Construction Agent will advise the
         Lessor in writing promptly of any default in the payment of any premium
         and of any other act or omission on the part of the Construction Agent
         which may invalidate or render unenforceable, in whole or in part, any
         insurance being maintained by the Construction Agent pursuant to this
         Agreement.

(E)      No Duty of Agent to Verify or Review: No provision of this Agreement
         shall impose on the Lessor any duty or obligation to verify the
         existence or adequacy of the insurance coverage maintained by the
         Construction Agent, nor shall the Lessor be responsible for any
         representations or warranties made by or on behalf of the Construction
         Agent to any insurance company or underwriter. Any failure on the part
         of the Lessor to pursue or obtain the evidence of insurance required by
         this Agreement from the Construction Agent and/or failure of the Lessor
         to point out any non-compliance of such evidence of insurance shall not
         constitute a waiver of any of the insurance requirements in this
         Agreement.


                                       7
<PAGE>   35

                                                                       Exhibit A



<PAGE>   36

A.       Construction Budget

[See Attached]

<PAGE>   37

B.       Construction Schedule

[See Attached]


<PAGE>   38

C.       Plans and Specifications

[See Attached]


<PAGE>   39

Section                                                               Page
-------                                                               ----
           Schedule 2.6(g) -        Insurance Provisions

                                    EXHIBITS

           EXHIBIT A  -  Construction Materials


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