Exhibit 10.5


LOAN AGREEMENT


by and among


THE ENTITIES SET FORTH ON EXHIBIT
A,


collectively, as Borrower


and


GRAMERCY WAREHOUSE FUNDING I LLC


as Lender


$90,286,551 Floating Rate
Mortgage Loan


Dated:  May 9, 2006















 


TABLE OF CONTENTS


 


ARTICLE I



DEFINITIONS


	
   

  	
   

  	
  Page

  
	
  Certain Definitions

  	
   

  	
  1

  



ARTICLE II



LOAN TERMS; REPRESENTATIONS, WARRANTIES

AND COVENANTS OF BORROWER


	
  Section 2.01

  	
   

  	
  The Loan

  	
   

  	
  26

  
	
  Section 2.02

  	
   

  	
  Representations, Warranties and Covenants of
  Borrower

  	
   

  	
  26

  
	
  Section 2.03

  	
   

  	
  Further Acts, etc.

  	
   

  	
  36

  
	
  Section 2.04

  	
   

  	
  Cross Default; Cross Collateralization

  	
   

  	
  36

  
	
  Section 2.05

  	
   

  	
  Representations and Warranties as to the Projects

  	
   

  	
  38

  
	
  Section 2.06

  	
   

  	
  Removal of Lien

  	
   

  	
  43

  
	
  Section 2.07

  	
   

  	
  Cost of Defending and Upholding this Agreement and
  the Lien of .the Mortgages

  	
   

  	
  44

  
	
  Section 2.08

  	
   

  	
  Use of the Projects

  	
   

  	
  44

  
	
  Section 2.09

  	
   

  	
  Financial Reports

  	
   

  	
  44

  
	
  Section 2.10

  	
   

  	
  Litigation

  	
   

  	
  47

  
	
  Section 2.11

  	
   

  	
  Updates of Representations

  	
   

  	
  47

  
	
  Section 2.12

  	
   

  	
  Condominium Provisions

  	
   

  	
  47

  



ARTICLE III



INSURANCE AND CASUALTY RESTORATION


	
  Section 3.01

  	
   

  	
  Insurance Coverage

  	
   

  	
  51

  
	
  Section 3.02

  	
   

  	
  Policy Terms

  	
   

  	
  53

  
	
  Section 3.03

  	
   

  	
  Assignment of Policies

  	
   

  	
  55

  
	
  Section 3.04

  	
   

  	
  Casualty Restoration

  	
   

  	
  56

  
	
  Section 3.05

  	
   

  	
  Compliance with Insurance Requirements

  	
   

  	
  60

  
	
  Section 3.06

  	
   

  	
  Event of Default During Restoration

  	
   

  	
  61

  
	
  Section 3.07

  	
   

  	
  Application of Proceeds to Debt Reduction

  	
   

  	
  62

  



 



 i
 






 



ARTICLE IV



IMPOSITIONS


	
  Section 4.01

  	
   

  	
  Payment of Impositions, Utilities and Taxes, etc.

  	
   

  	
  62

  
	
  Section 4.02

  	
   

  	
  Deduction from Value

  	
   

  	
  63

  
	
  Section 4.03

  	
   

  	
  No Joint Assessment

  	
   

  	
  63

  
	
  Section 4.04

  	
   

  	
  Right to Contest

  	
   

  	
  63

  
	
  Section 4.05

  	
   

  	
  No Credits on Account of the Debt

  	
   

  	
  64

  
	
  Section 4.06

  	
   

  	
  Documentary Stamps

  	
   

  	
  64

  



ARTICLE V



CENTRAL CASH MANAGEMENT


	
  Section 5.01

  	
   

  	
  Cash Flow

  	
   

  	
  64

  
	
  Section 5.02

  	
   

  	
  Establishment of Accounts

  	
   

  	
  65

  
	
  Section 5.03

  	
   

  	
  Permitted Investments

  	
   

  	
  66

  
	
  Section 5.04

  	
   

  	
  Servicing Fees

  	
   

  	
  66

  
	
  Section 5.05

  	
   

  	
  Monthly Funding of Sub-Accounts and Escrow Accounts

  	
   

  	
  66

  
	
  Section 5.06

  	
   

  	
  Payment of Basic Carrying Costs

  	
   

  	
  68

  
	
  Section 5.07

  	
   

  	
  Reletting Reserve Escrow Account

  	
   

  	
  68

  
	
  Section 5.08

  	
   

  	
  Recurring Replacement Reserve Escrow Account

  	
   

  	
  69

  
	
  Section 5.09

  	
   

  	
  Liquidity Reserve Escrow Account

  	
   

  	
  70

  
	
  Section 5.10

  	
   

  	
  Rate Cap Agreement

  	
   

  	
  71

  
	
  Section 5.11

  	
   

  	
  [Reserved]

  	
   

  	
  71

  
	
  Section 5.12

  	
   

  	
  Performance of Engineering Work

  	
   

  	
  72

  
	
  Section 5.13

  	
   

  	
  Loss Proceeds

  	
   

  	
  72

  
	
  Section 5.14

  	
   

  	
  Accrued Lease Liability Escrow Account

  	
   

  	
  73

  
	
  Section 5.15

  	
   

  	
  Lease Termination Payment Escrow Account

  	
   

  	
  74

  
	
  Section 5.16

  	
   

  	
  REIT Limitations on Investment of Sums in Escrow
  Accounts

  	
   

  	
  74

  



ARTICLE VI



CONDEMNATION


	
  Section 6.01

  	
   

  	
  Condemnation

  	
   

  	
  75

  



ARTICLE VII



LEASING AND MANAGEMENT


	
  Section 7.01

  	
   

  	
  Leases

  	
   

  	
  76

  
	
  Section 7.02

  	
   

  	
  Management of Projects

  	
   

  	
  78

  



 



 ii
 






 



ARTICLE VIII



MAINTENANCE AND REPAIR


	
  Section 8.01

  	
   

  	
  Maintenance and Repair of the Projects; Alterations;
  Replacement of Equipment

  	
   

  	
  79

  



ARTICLE IX



TRANSFER OR ENCUMBRANCE OF THE PROJECTS


	
  Section 9.01

  	
   

  	
  Other Encumbrances

  	
   

  	
  81

  
	
  Section 9.02

  	
   

  	
  No Transfer

  	
   

  	
  81

  
	
  Section 9.03

  	
   

  	
  Due on Sale

  	
   

  	
  81

  
	
  Section 9.04

  	
   

  	
  Transfer of Projects; Loan Assumption

  	
   

  	
  82

  



ARTICLE X



CERTIFICATES


	
  Section 10.01

  	
   

  	
  Estoppel Certificates

  	
   

  	
  84

  



ARTICLE XI



NOTICES


	
  Section 11.01

  	
   

  	
  Notices

  	
   

  	
  85

  



ARTICLE XII



INDEMNIFICATION


	
  Section 12.01

  	
   

  	
  Indemnification Covering Projects

  	
   

  	
  86

  



ARTICLE XIII



DEFAULTS


	
  Section 13.01

  	
   

  	
  Events of Default

  	
   

  	
  87

  
	
  Section 13.02

  	
   

  	
  Remedies

  	
   

  	
  89

  
	
  Section 13.03

  	
   

  	
  Payment of Debt After Default

  	
   

  	
  90

  
	
  Section 13.04

  	
   

  	
  Possession of the Projects

  	
   

  	
  91

  
	
  Section 13.05

  	
   

  	
  Interest After Default

  	
   

  	
  91

  
	
  Section 13.06

  	
   

  	
  Borrower’s Actions After Default

  	
   

  	
  91

  
	
  Section 13.07

  	
   

  	
  Control by Lender After Default

  	
   

  	
  91

  
	
  Section 13.08

  	
   

  	
  Right to Cure Defaults

  	
   

  	
  91

  



 



 iii
 






 



 


	
  Section 13.09

  	
   

  	
  Late Payment Charge

  	
   

  	
  92

  
	
  Section 13.10

  	
   

  	
  Recovery of Sums Required to Be Paid

  	
   

  	
  92

  
	
  Section 13.11

  	
   

  	
  Marshalling and Other Matters

  	
   

  	
  92

  
	
  Section 13.12

  	
   

  	
  Tax Reduction Proceedings

  	
   

  	
  93

  
	
  Section 13.13

  	
   

  	
  General Provisions Regarding Remedies

  	
   

  	
  93

  



ARTICLE XIV



COMPLIANCE WITH REQUIREMENTS


	
  Section 14.01

  	
   

  	
  Compliance with Legal Requirements

  	
   

  	
  93

  
	
  Section 14.02

  	
   

  	
  Compliance with Recorded Documents; No Future Grants

  	
   

  	
  94

  



ARTICLE XV



PREPAYMENT


	
  Section 15.01

  	
   

  	
  Prepayment

  	
   

  	
  93

  
	
  Section 15.02

  	
   

  	
  Release of Project

  	
   

  	
  94

  



ARTICLE XVI



ENVIRONMENTAL COMPLIANCE


	
  Section 16.01

  	
   

  	
  Covenants, Representations and Warranties

  	
   

  	
  96

  



ARTICLE XVII



COOPERATION; SECONDARY MARKET TRANSACTION


	
  Section 17.01

  	
   

  	
  Cooperation

  	
   

  	
  100

  
	
  Section 17.02

  	
   

  	
  Use of Information

  	
   

  	
  101

  
	
  Section 17.03

  	
   

  	
  Borrower Obligations Regarding Disclosure Documents

  	
   

  	
  101

  
	
  Section 17.04

  	
   

  	
  Borrower Indemnity Regarding Filings

  	
   

  	
  102

  
	
  Section 17.05

  	
   

  	
  Indemnification Procedure

  	
   

  	
  103

  
	
  Section 17.06

  	
   

  	
  Contribution

  	
   

  	
  103

  
	
  Section 17.07

  	
   

  	
  Rating Surveillance

  	
   

  	
  103

  
	
  Section 17.08

  	
   

  	
  Severance of Loan

  	
   

  	
  104

  



ARTICLE XVIII



MISCELLANEOUS


	
  Section 18.01

  	
   

  	
  Right of Entry

  	
   

  	
  104

  
	
  Section 18.02

  	
   

  	
  Cumulative Rights

  	
   

  	
  104

  
	
  Section 18.03

  	
   

  	
  Liability

  	
   

  	
  104

  



 



 iv
 






 



 


	
  Section 18.04

  	
   

  	
  Exhibits Incorporated

  	
   

  	
  105

  
	
  Section 18.05

  	
   

  	
  Severable Provisions

  	
   

  	
  105

  
	
  Section 18.06

  	
   

  	
  Duplicate Originals

  	
   

  	
  105

  
	
  Section 18.07

  	
   

  	
  No Oral Change

  	
   

  	
  105

  
	
  Section 18.08

  	
   

  	
  Waiver of Counterclaim, Etc

  	
   

  	
  105

  
	
  Section 18.09

  	
   

  	
  Headings; Construction of Documents; etc

  	
   

  	
  105

  
	
  Section 18.10

  	
   

  	
  Sole Discretion of Lender

  	
   

  	
  105

  
	
  Section 18.11

  	
   

  	
  Waiver of Notice

  	
   

  	
  106

  
	
  Section 18.12

  	
   

  	
  Binding Effect

  	
   

  	
  106

  
	
  Section 18.13

  	
   

  	
  Applicable Law

  	
   

  	
  106

  
	
  Section 18.14

  	
   

  	
  Intentionally Deleted

  	
   

  	
  107

  
	
  Section 18.15

  	
   

  	
  Actions and Proceedings

  	
   

  	
  107

  
	
  Section 18.16

  	
   

  	
  Usury Laws

  	
   

  	
  107

  
	
  Section 18.17

  	
   

  	
  Remedies of Borrower

  	
   

  	
  107

  
	
  Section 18.18

  	
   

  	
  Offsets, Counterclaims and Defenses

  	
   

  	
  107

  
	
  Section 18.19

  	
   

  	
  No Merger

  	
   

  	
  108

  
	
  Section 18.20

  	
   

  	
  Restoration of Rights

  	
   

  	
  108

  
	
  Section 18.21

  	
   

  	
  Waiver of Statute of Limitations

  	
   

  	
  108

  
	
  Section 18.22

  	
   

  	
  Intentionally Deleted

  	
   

  	
  108

  
	
  Section 18.23

  	
   

  	
  Application of Default Rate Not a Waiver

  	
   

  	
  108

  
	
  Section 18.24

  	
   

  	
  Intentionally Deleted

  	
   

  	
  108

  
	
  Section 18.25

  	
   

  	
  No Joint Venture or Partnership

  	
   

  	
  108

  
	
  Section 18.26

  	
   

  	
  Time of the Essence

  	
   

  	
  108

  
	
  Section 18.27

  	
   

  	
  Borrower’s Obligations Absolute

  	
   

  	
  108

  
	
  Section 18.28

  	
   

  	
  Publicity

  	
   

  	
  109

  
	
  Section 18.29

  	
   

  	
  Intentionally Deleted

  	
   

  	
  109

  
	
  Section 18.30

  	
   

  	
  Intentionally Deleted

  	
   

  	
  109

  
	
  Section 18.31

  	
   

  	
  Establishment of Working Capital Account

  	
   

  	
  109

  
	
  Section 18.32

  	
   

  	
  Exculpation

  	
   

  	
  109

  



 



 v
 






 



 


	
  EXHIBITS

  	
   

  	
   

  
	
  EXHIBIT A

  	
   

  	
  Description of Projects

  
	
  EXHIBIT B

  	
   

  	
  Summary Of Reserves

  
	
  EXHIBIT B-1

  	
   

  	
  Square Footages of the Projects

  
	
  EXHIBIT C

  	
   

  	
  Required Engineering Work

  
	
  EXHIBIT D

  	
   

  	
  Initial Allocated Loan Amount

  
	
  EXHIBIT E

  	
   

  	
  Environmental Reports

  
	
  EXHIBIT F

  	
   

  	
  List of Permitted Fund Managers

  
	
  EXHIBIT G

  	
   

  	
  Schedule of Liabilities (Section 2.02(g)(xiii))

  
	
  EXHIBIT H

  	
   

  	
  Schedule of Outstanding Work Obligations under Space
  Leases (Section 2.05(o)(iv))

  
	
  EXHIBIT I

  	
   

  	
  Schedule of Collective Bargaining Agreements
  (Section 2.02(u))

  
	
  EXHIBIT J

  	
   

  	
  Form of Cash Flow Statement
  (Section 2.09(c))

  



 



 vi















LOAN AGREEMENT


This LOAN AGREEMENT (this
“Agreement”) is
made as of the 9th day of May, 2006, by and between the entities set forth on Exhibit A
attached hereto and made a part hereof, each of which is a Delaware limited
liability company and each of which has its chief executive office c/o
Mack-Cali Realty Corp., 11 Commerce Drive, Cranford, New Jersey 07016,
Attention: Mitchell Hersh (collectively, hereinafter referred to as “Borrower”), jointly
and severally, and Gramercy Warehouse Funding I LLC, a Delaware limited
liability company, having an address at 420 Lexington Avenue, New York, New
York  10170, Attention:  Robert Foley (hereinafter referred to as “Lender”).


W I T N E S S E T H:


WHEREAS, Borrower has
requested from Lender, and Lender has agreed to make to Borrower upon the terms
and conditions set forth herein, a loan (hereinafter referred to as the “Loan”) in the
principal amount of NINETY MILLION TWO HUNDRED EIGHTY-SIX THOUSAND FIVE HUNDRED
FIFTY-ONE and NO/100 DOLLARS ($90,286,551.00)] (hereinafter referred to as the “Loan Amount”), which
Loan is evidenced by that certain Promissory Note, of even date herewith
(together with any supplements, amendments, modifications or extensions
thereof, hereinafter referred to as the “Note”) given by Borrower, as maker, to Lender, as
payee and is secured by, among other things, the Mortgages (as hereinafter
defined).


NOW THEREFORE, in
consideration of the making of the Loan and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
Borrower and Lender hereby agree as follows:


ARTICLE I


DEFINITIONS


Certain Definitions.


For all purposes of this
Agreement, except as otherwise expressly provided or unless the context clearly
indicates a contrary intent:


(i)            the
capitalized terms defined in this Section have the meanings assigned to
them in this Section, and include the plural as well as the singular;


(ii)           all
accounting terms not otherwise defined herein have the meanings assigned to
them in accordance with GAAP; and


(iii)          the
words “herein”, “hereof”, and “hereunder” and other
words of similar import refer to this Agreement as a whole and not to any
particular Section or other subdivision.









 



“401K Plan Assets”
shall mean only those specific assets that are required to be transferred, and
are actually so transferred, by Borrower, in its capacity as an employer, to a
separate trust account maintained for the benefit of its employees that are
participating in a so-called 401K plan, by reason of the deferral of compensation
otherwise payable to such employees participating in such plan.


“75 Agreement”
shall mean that certain agreement between Lender and the JV Member relating to
the payment to Lender of certain distributions of cash flow from the 75
Property.


“75 Property” shall
mean the property owned by 75 Livingston SPE LLC and located at 75 Livingston
Avenue, Roseland, New Jersey.


“Acceptable Substitute
Guarantor” shall have the meaning ascribed thereto in the definition of
Permitted Entity Transfers.


“Accrued Lease Liability Escrow Account”
shall mean an Escrow Account established and maintained pursuant to Section 5.14
hereof.


“Accrued Lease Liability Expenses”
shall mean any monetary obligations of Borrower payable with respect to Leases
existing as of the date hereof.


“ACH” shall have the
meaning set forth in Section 5.01 hereof.


“Actual Net Cash Flow”
shall mean Net Operating Income from all of the Projects, computed on a
trailing twelve (12)—month basis, and including, for the purpose of such
calculation, available interest reserves under the Loan for the succeeding
twelve (12)—month period. The Actual Net Cash Flow shall be calculated by
Borrower and shall be subject to the review and approval of Lender in its
reasonable discretion.


“Adjusted Net Cash Flow”
shall mean Pro-Forma Net Operating Income projected over the twelve (12)—month
period subsequent to the date of calculation less Pro-Forma Capital
Expenditures. The Adjusted Net Cash Flow shall be calculated by Borrower and
shall be subject to the review and approval of Lender in its reasonable
discretion.


“Affiliate” of any
specified Person shall mean any other Person directly or indirectly Controlling
or Controlled by or under direct or indirect common Control with such specified
Person.


“Allocated Loan Amount”
shall mean the portion of the Loan Amount allocated, for purposes of a Release,
to each Project, as set forth on Exhibit D hereto.


“Annual Budget” shall
mean an annual budget submitted by Borrower to Lender in accordance with the
terms of Section 2.09 hereof.


“Appraisal” shall mean
the appraisal(s) of the Projects and all supplemental reports or updates
thereto previously delivered to Lender in connection with the Loan, and any new
or updated appraisal(s) prepared after the date hereof pursuant to the
terms hereof, all of



 2
 






 



which shall conform to
the standards set forth in the Financial Institutions Reform, Recovery and
Enforcement Act of 1989, as amended.


“Appraiser” shall mean
the Person(s) who prepared the Appraisal (with respect to the Appraisals
delivered to Lender in connection with the closing of the Loan) or such other
independent, third party M.A.I. appraiser reasonably approved by Lender.


“Approved Annual Budget”
shall mean each Annual Budget approved by Lender in accordance with terms
hereof.


“Approved Manager Standard”
shall mean the standard of business operations, practices and procedures
customarily employed by entities (together with their Affiliates) having a
senior executive with at least seven (7) years’ experience in the
management of commercial office buildings which manage not less than five (5) properties
having an aggregate leasable square footage of not less than ten (10) million
leasable square feet.


“Architect” shall have
the meaning set forth in Section 3.04(b)(i) hereof.


“Assignment” shall
mean, collectively, the Assignments of Leases and Rents and Security Deposits
of even date herewith relating to the Projects given by Borrower to Lender.


“Assignment of
Rate Cap” shall mean that certain Collateral Assignment of Interest Rate
Hedge Agreement, dated as of the date hereof, executed by Borrower in
connection with the Loan for the benefit of Lender, as the same may be amended,
restated, replaced, supplemented or otherwise modified from time to time.


“Bank” shall mean the
bank, trust company, savings and loan association or savings bank designated by
Lender, in its sole and absolute discretion, in which the Central Account shall
be located.


“Bankruptcy Code” shall
mean 11 U.S.C. §101 et seq., as amended from time to time.


“Basic Carrying Costs”
shall mean the sum of the following costs associated with the Projects:  (a) Impositions and (b) insurance
premiums which, for the purposes of this Agreement, shall be equal to the
product of (i) $0.25 and (ii) the annual amount of the gross rentable
square footage of each Project, as set forth on Exhibit B-1. Lender
reserves the right to adjust the amount of the annual insurance premiums
included in the Basic Carrying Costs if, in Lender’s reasonable judgment, after
prior notice to and discussion with Borrower, the amount being escrowed would
be insufficient to purchase the insurance coverage on the Projects that is
required under this Agreement.


“Basic Carrying Costs Escrow Account”
shall mean the Escrow Account maintained pursuant to Section 5.06 hereof.


“Basic Carrying Costs Monthly Installment”
shall mean Lender’s estimate of one-twelfth (1/12th) of the annual amount for
Basic Carrying Costs. “Basic Carrying Costs Monthly Installment” shall also
include, if required by Lender, a sum of money which, together with such



 3
 






 



monthly installments,
will be sufficient to make the payment of each such Basic Carrying Cost at
least thirty (30) days prior to the date initially due. Should such Basic
Carrying Costs not be ascertainable at the time any monthly deposit is required
to be made, the Basic Carrying Costs Monthly Installments shall be determined
by Lender in its reasonable discretion on the basis of the aggregate Basic
Carrying Costs for the prior Fiscal Year or month or the prior payment period
for such cost. As soon as the Basic Carrying Costs are fixed for the then
current Fiscal Year, month or period, the next ensuing Basic Carrying Costs
Monthly Installment shall be adjusted to reflect any deficiency or surplus in
prior monthly payments. If at any time during the term of the Loan Lender
reasonably determines that there will be insufficient funds in the Basic
Carrying Costs Escrow Account to make payments when they become due and
payable, Lender shall have the right to adjust the Basic Carrying Costs Monthly
Installment such that there will be sufficient funds to make such payments.


“Basic Carrying Costs Sub-Account”
shall mean the Sub-Account of the Central Account established pursuant to Section 5.02
into which the Basic Carrying Costs Monthly Installment shall be deposited.


“Borrower” shall mean
Borrower named herein and any successor to the obligations of Borrower.


“Budget” shall have the
meaning set forth in Section 5.07 hereof.


“Business Day” shall
mean any day other than (a) a Saturday or Sunday, or (b) a day on
which banking and savings and loan institutions in the State of New York are
authorized or obligated by law or executive order to be closed, or at any time
during which the Loan is an asset of a Secondary Market Transaction, the
cities, states and/or commonwealths used in the comparable definition of “Business Day” in the
Secondary Market Transaction documents.


“By-Laws” shall have
the meaning set forth in Section 2.12.


“Capital Expenditures”
shall mean for any period, the amount expended for items capitalized under GAAP
including expenditures for building improvements or major repairs, leasing
commissions and tenant improvements.


“Cash Expenses” shall
mean for any period, the Operating Expenses for the Projects as set forth in an
Approved Annual Budget to the extent that such expenses are actually incurred
or to be incurred by Borrower minus payments into the Basic Carrying Costs
Sub-Account, the Debt Service Payment Sub-Account and the Recurring Replacement
Reserve Sub-Account.


“Central Account” shall
mean an Eligible Account, maintained at the Bank, in the name of Lender or its
successors or assigns (as secured party) as may be designated by Lender.


“Clearing Account”
shall mean, collectively, the Eligible Accounts, maintained at the Clearing Bank,
in the name of Lender or its successors or assigns (as secured party) as may be
designated by Lender.



 4
 






 



“Clearing Account Agreement”
shall mean collectively, those certain Clearing Account Agreements by and among
Borrower, Lender and Clearing Bank dated as of the date hereof.


“Clearing Bank” shall
mean Bank of America.


“Closing Date” shall
mean the date of the Note.


“Code” shall mean the
Internal Revenue Code of 1986, as amended and as it may be further amended from
time to time, any successor statutes thereto, and applicable U.S. Department of
Treasury regulations issued pursuant thereto.


“Condemnation Proceeds”
shall mean all of the proceeds in respect of any Taking or purchase in lieu
thereof.


“Condominium” shall
have the meaning set forth in Section 2.12.


“Condominium Act” shall
have the meaning set forth in Section 2.12.


“Contractual Obligation”
shall mean, as to any Person, any provision of any security issued by such
Person or of any agreement, instrument or undertaking to which such Person is a
party or by which it or any of the property owned by it is bound.


“Control” means, when
used with respect to any specific Person, the possession, directly or
indirectly, of the power to direct or cause the direction of the management and
policies of such Person whether through ownership of voting securities,
beneficial interests, by contract or otherwise. The definition is to be
construed to apply equally to variations of the word “Control” including “Controlled,” “Controlling” or “Controlled by”. 


“Creditor” shall have
the meaning set forth in Section 2.04(b).


“Credit Tenant”
shall mean a tenant under a Space Lease which has a long term unsecured senior
debt rating of (a) BBB- or better as issued by Standard & Poor’s
or (b) Baa3 or better as issued by Moody’s.


“Current Month” shall
mean each Interest Accrual Period.


“Debt” shall mean the
outstanding principal amount set forth in, and evidenced by, this Agreement and
the Note together with all interest accrued and unpaid thereon and all other
sums due to Lender in respect of the Loan under the Note, this Agreement, the
Mortgages or any other Loan Document.


“Debtor” shall have the
meaning set forth in Section 2.04(b).


“Debt Service” shall
mean the amount of interest and principal payments due and payable in accordance
with the Note during an applicable period.



 5
 






 



“Debt Service Coverage Ratio”
shall mean the quotient obtained by dividing (a) Actual Net Cash Flow for
the specified period by (b) Pro-Forma Debt Service with respect to such
period.


“Debt Service Payment Sub-Account”
shall mean the Sub-Account of the Central Account established pursuant to Section 5.02
hereof into which the Required Debt Service Payment shall be deposited.


“Declaration” shall
have the meaning set forth in Section 2.12.


“Default” shall mean any
Event of Default or event which would constitute an Event of Default if all
requirements in connection therewith for the giving of notice, the lapse of
time, and the happening of any further condition, event or act, had been
satisfied.


“Default Rate” shall
mean the lesser of (a) the highest rate allowable at law and (b) three
percent (3%) above the interest rate set forth in the Note.


“Default Rate Interest”
shall mean, to the extent the Default Rate becomes applicable, interest in
excess of the interest which would have accrued on (a) the principal
amount of the Loan which is outstanding from time to time and (b) any
accrued but unpaid interest, if the Default Rate was not applicable.


“Development Laws”
shall mean all applicable subdivision, zoning, environmental protection,
wetlands protection, or land use laws or ordinances, and any and all applicable
rules and regulations of any Governmental Authority promulgated thereunder
or related thereto.


“Disclosure Document”
shall have the meaning set forth in Section 17.02 hereof.


“Eligible Account”
shall mean a segregated account which is either (a) an account or accounts
maintained with a federal or state chartered depository institution or trust
company the long term unsecured debt obligations of which are rated by each of
the Rating Agencies (or, if not rated by Fitch, Inc. (“Fitch”), otherwise
acceptable to Fitch, as confirmed in writing that such account would not, in
and of itself, result in a downgrade, qualification or withdrawal of the then
current ratings assigned to any certificates issued in connection with a
Secondary Market Transaction) in its highest rating category at all times (or,
in the case of the Basic Carrying Costs Escrow Account, the long term unsecured
debt obligations of which are rated at least “AA” (or its equivalent)) by each of the Rating
Agencies (or, if not rated by Fitch, otherwise acceptable to Fitch, as
confirmed in writing that such account would not, in and of itself, result in a
downgrade, qualification or withdrawal of the then current ratings assigned to
any certificates issued in connection with a Secondary Market Transaction) or,
if the funds in such account are to be held in such account for less than
thirty (30) days, the short term obligations of which are rated by each of the
Rating Agencies (or, if not rated by Fitch, otherwise acceptable to Fitch, as
confirmed in writing that such account would not, in and of itself, result in a
downgrade, qualification or withdrawal of the then current ratings assigned to
any certificates issued in connection with a Secondary Market Transaction) in
its highest rating category at all times or (b) a segregated trust account
or accounts maintained with a federal or state chartered depository institution
or trust company acting in its fiduciary capacity which, in the case of a state
chartered



 6
 






 



depository institution is
subject to regulations substantially similar to 12 C.F.R. § 9.10(b), having in
either case a combined capital and surplus of at least $100,000,000 and subject
to supervision or examination by federal and state authority, or otherwise
acceptable (as evidenced by a written confirmation from each Rating Agency that
such account would not, in and of itself, cause a downgrade, qualification or
withdrawal of the then current ratings assigned to any certificates issued in
connection with a Secondary Market Transaction) to each Rating Agency, which
may be an account maintained by Lender or its agents. Eligible Accounts shall
bear interest (other than the Basic Carrying Costs Sub-Account and Basic
Carrying Costs Escrow Account) for the benefit of Borrower and shall be taxable
to Borrower and shall be added to and disbursed in the same manner and under
the same conditions as the principal sum on which said interest accrued. The
title of each Eligible Account shall indicate that the funds held therein are
held in trust for the uses and purposes set forth herein.


“Eligibility
Requirements” means, with respect to any Person, that such Person (i) has
total assets (in name or under management) in excess of $600,000,000 and
(except with respect to a pension advisory firm or similar fiduciary)
capital/statutory surplus or shareholder’s equity of $250,000,000 and (ii) is
regularly engaged in the business of making or owning commercial real estate loans
(including mezzanine loans) or operating commercial properties.


“Engineer” shall have
the meaning set forth in Section 3.04(b)(i) hereof.


“Engineering Escrow Account”
shall mean an Escrow Account established and maintained pursuant to Section 5.12
hereof relating to payments for any Required Engineering Work.


“Environmental Indemnity Agreement”
shall mean that certain Hazardous Substances Indemnity Agreement of even date
herewith by and among Borrower and Guarantor in favor of Lender.


“Environmental Report”
shall mean the environmental audit report(s) for the Projects and any
supplements or updates thereto, previously delivered to Lender in connection
with the Loan, which documents are set forth on Exhibit E attached hereto.


“Environmental Statute”
shall mean  any applicable local, state
or federal law, rule or regulation pertaining to environmental regulation,
contamination or clean up, including, without limitation, the Comprehensive
Environmental Response, Compensation and Liability Act of 1980 (42 U.S.C. §9601
et seq. and 40 CFR §302.1 et seq.), the Resource Conservation and Recovery Act
of 1976 (42 U.S.C. §6901 et seq.), the Federal Water Pollution Control Act (33
U.S.C. §1251 et seq. and 40 CFR §116.1 
et seq.), those relating to lead based paint, and the Hazardous
Materials Transportation Act (49 U.S.C. §1801 et seq.), and the regulations
promulgated pursuant to said laws, all as amended.


“Equipment” shall have
the meaning set forth in each of the Mortgages.


“ERISA” shall mean the
Employee Retirement Income Security Act of 1974, as amended from time to time,
and the regulations promulgated thereunder. Section references to ERISA
are to ERISA, as in effect at the date of this Agreement and, as of the
relevant date, any



 7
 






 



subsequent provisions of
ERISA, amendatory thereof, supplemental thereto or substituted therefor.


“ERISA Affiliate” shall
mean any corporation or trade or business that is a member of any group of
organizations (a) described in Section 414(b) or (c) of the
Code of which Borrower or Guarantor is a member and (b) solely for
purposes of potential liability under Section 302(c)(11) of ERISA and Section 412(c)(11)
of the Code and the lien created under Section 302(f) of ERISA and Section 412(n) of
the Code, described in Section 414(m) or (o) of the Code of
which Borrower or Guarantor is a member.


“Escrow Account” shall
mean each of the Liquidity Reserve Escrow Account, Engineering Escrow Account,
Basic Carrying Costs Escrow Account, the Recurring Replacement Reserve Escrow
Account, the Reletting Reserve Escrow Account, the Accrued Lease Liability
Escrow Account, and, if established, the Lease Termination Payment Escrow
Account, each of which shall be an Eligible Account or book entry sub-account
of an Eligible Account.


“Event of Default”
shall have the meaning set forth in Section 13.01 hereof.


“Exchange Act” shall
have the meaning set forth in Section 17.02 hereof.


“Exit Fee”
shall mean, with respect to any payment, repayment or prepayment of all or any
portion of the Principal Amount, including, but not limited to, the payment of
any Release Amount, an amount equal to one-quarter of one percent (0.25%) of
the Principal Amount being paid, repaid or prepaid.


“Extraordinary Expense”
shall mean an extraordinary operating expense or capital expense not set forth
in the Approved Annual Budget or allotted for in the Recurring Replacement
Reserve Sub-Account.


“First Interest Accrual Period”
shall have the meaning set forth in the Note.


“Fiscal Year” shall
mean the twelve (12) month period commencing on January 1 and ending on December 31
during each year of the term of this Agreement, or such other fiscal year of
Borrower as Borrower may select from time to time with the prior written
consent of Lender, which shall not be unreasonably withheld, conditioned or
delayed.


“Fixtures”
shall have the meaning set forth in the Mortgages.


“GAAP” shall mean
generally accepted accounting principles in effect from time to time in the
United States of America, consistently applied.


“Governmental Authority”
shall mean, with respect to any Person, any U.S. federal or State government or
other political subdivision thereof and any entity, including any regulatory or
administrative authority or court, exercising executive, legislative, judicial,
regulatory or administrative or quasi administrative functions of or pertaining
to government, and any arbitration board or tribunal, in each case having
jurisdiction over such applicable



 8
 






 



Person or such Person’s
property and any stock exchange on which shares of capital stock of such Person
are listed or admitted for trading.


“Guarantor” shall mean,
collectively, Mack-Cali Realty L.P. and SL Green Operating Partnership, L.P.
and any other Person now or hereafter guaranteeing, in whole or in part, the
obligations of Borrower under the Loan Documents.


“Guaranty” shall mean
the guaranties executed by Guarantor with respect to the Loan, and, if
applicable, the guaranties executed and delivered by any successor guarantor,
which guaranties shall be in the form of the Guaranty executed and delivered on
the date hereof, mutatis mutandis.


“Hazardous Material”
shall mean  all hazardous, toxic or
harmful substances, wastes, materials, pollutants or contaminants (including,
without limitation, asbestos, lead based paint, polychlorinated biphenyls,
petroleum products, flammable explosives, radioactive materials, infectious
substances or raw materials which include hazardous constituents) or any other
substances or materials which are included under or regulated by Environmental
Statutes.


“Impositions” shall
mean all taxes (including, without limitation, all real estate, ad valorem,
sales (including those imposed on lease rentals), use, single business, gross
receipts, value added, intangible, transaction, privilege or license or similar
taxes), assessments (including, without limitation, all assessments for public
improvements or benefits, whether or not commenced or completed prior to the
date hereof and whether or not commenced or completed within the term of this
Agreement), ground rents, water, sewer or other rents and charges, excises,
levies, fees (including, without limitation, license, permit, inspection,
authorization and similar fees), and all other governmental charges, in each
case whether general or special, ordinary or extraordinary, or foreseen or
unforeseen, of every character in respect of the Projects and/or any Rent
(including all interest and penalties thereon), which at any time prior to,
during or in respect of the term hereof may be assessed or imposed on or in
respect of or be a lien upon (a) Borrower (including, without limitation,
all franchise, single business or other taxes imposed on Borrower for the
privilege of doing business in the jurisdictions in which the Projects or any
other collateral delivered or pledged to Lender in connection with the Loan are
located) or Lender, (b) the Projects or any part thereof or any Rents
therefrom or any estate, right, title or interest therein, or (c) any
occupancy, operation, use or possession of, or sales from, or activity
conducted on, or in connection with the Projects, or any part thereof, or the
leasing or use of the Projects, or any part thereof, or the acquisition or
financing of the acquisition of the Projects, or any part thereof, by Borrower.


“Improvements” shall
have the meaning set forth in the Mortgages.


“Indemnified Parties”
shall have the meaning set forth in Section 12.01 hereof.


“Independent” shall
mean, when used with respect to any Person, a Person who (a) is in fact
independent, (b) does not have any direct financial interest or any
material indirect financial interest in Borrower, or in any Affiliate of
Borrower or any constituent partner, shareholder, member or beneficiary of
Borrower, (c) is not connected with Borrower or any Affiliate of Borrower
or any constituent partner, shareholder, member or beneficiary of Borrower



 9
 






 



as an officer, employee,
promoter, underwriter, trustee, partner, director or person performing similar
functions and (d) is not a member of the immediate family of a Person
defined in (b) or (c) above. Whenever it is herein provided that any
Independent Person’s opinion or certificate shall be provided, such opinion or
certificate shall state that the Person executing the same has read this
definition and is Independent within the meaning hereof.


“Initial Engineering Deposit”
shall equal the amount set forth on Exhibit B attached hereto and made a
part hereof.


“Initial Reletting Reserve Deposit”
shall equal the amount set forth on Exhibit B attached hereto and made a
part hereof.


“Insolvency
Opinion” shall have the meaning set forth in Section 2.02(g)(xix)
hereof.


“Institutional Lender”
shall mean any of the following Persons: 
(a) any bank, savings and loan association, savings institution,
trust company or national banking association, acting for its own account or in
a fiduciary capacity, (b) any charitable foundation, (c) any
insurance company or pension and/or annuity company, (d) any fraternal
benefit society, (e) any pension, retirement or profit sharing trust or
fund within the meaning of Title I of ERISA or for which any bank, trust
company, national banking association or investment adviser registered under
the Investment Advisers Act of 1940, as amended, is acting as trustee or agent,
(f) any investment company or business development company, as defined in
the Investment Company Act of 1940, as amended, (g) any small business
investment company licensed under the Small Business Investment Act of 1958, as
amended, (h) any broker or dealer registered under the Securities Exchange
Act of 1934, or any investment adviser registered under the Investment Adviser
Act of 1940, as amended, (i) any government, any public employees’ pension
or retirement system, or any other government agency supervising the investment
of public funds, or (j) any other entity all of the equity owners of which
are Institutional Lenders; provided that each of said Persons shall have net
assets in excess of $1,000,000,000 and a net worth in excess of $500,000,000,
be in the business of making commercial mortgage loans, secured by properties
of like type, size and value as the Projects and have a long term credit rating
which is not less than “BBB-”
(or its equivalent) from the Rating Agency.


“Insurance Proceeds”
shall mean all of the proceeds received under the insurance policies required
to be maintained by Borrower pursuant to Article III hereof.


“Insurance Requirements”
shall mean all terms of any insurance policy required by this Agreement, all
requirements of the issuer of any such policy, and all regulations and then
current standards applicable to or affecting each Project or any use or
condition thereof, which may, at any time, be recommended by the Board of Fire
Underwriters, if any, having jurisdiction over any Project, or such other
Person exercising similar functions.


“Interest Accrual Period”
shall have the meaning set forth in the Note.


“Interest Rate” shall
have the meaning set forth in the Note.



 10
 






 



“Intra-Obligor Loan”
and “Intra-Obligor Loans”
shall have the meanings set forth in Section 2.04(b).


“Intra-Obligor Loan Amount”
shall have the meaning set forth in Section 2.04(b).


“Issuer” shall have the
meaning set forth in Section 17.03 hereof.


“Issuer Group” shall
have the meaning set forth in Section 17.03 hereof.


“JV Member” shall mean
Mack-Green-Gale LLC, a Delaware limited liability company. Lender acknowledges
that the name of JV Member may be changed, provided that written notice of such
change is given to Lender within ten (10) Business Days after such change
is effected.


“Late Charge” shall
have the meaning set forth in Section 13.09 hereof.


“Lease
Termination Payment Escrow Account” shall mean the Escrow Account, if any,
maintained (to the extent established) pursuant to Section 5.15 hereof
relating to the payment of certain amounts more specifically provided for
therein.


“Leases” shall have the
meaning set forth in the Mortgages.


“Legal Requirement”
shall mean as to any Person, the certificate of incorporation, by laws,
certificate of limited partnership, agreement of limited partnership or other
organization or governing documents of such Person, and any law, statute,
order, ordinance, judgment, decree, injunction, treaty, rule or regulation
(including, without limitation, Environmental Statutes, Development Laws and
Use Requirements) or determination of an arbitrator or a court or other
Governmental Authority, in each case applicable to or binding upon such Person
or any of its property or to which such Person or any of its property is
subject.


“Lender” shall mean the
Lender named herein and its successors or assigns.


“Liabilities” shall
have the meaning set forth in Section 12.01 hereof.


“LIBOR Margin” shall
have the meaning set forth in the Note.


“LIBOR Rate” shall have
the meaning set forth in the Note.


“Liquidity
Reserve Escrow Account” shall mean the Escrow Account maintained pursuant
to Section 5.09 hereof.


“Liquidity
Reserve Expenses” shall have the meaning set forth in Section 5.09(a) hereof.


“Loan” shall have the
meaning set forth in the Recitals hereto.


“Loan Amount” shall
have the meaning set forth in the Recitals hereto.



 11
 






 



“Loan Documents” shall
mean this Agreement, the Note, the Mortgages, the Clearing Account Agreement,
the Guaranty, the Environmental Indemnity Agreement, the Assignment, the
Assignment of Rate Cap, and any and all other agreements, instruments,
certificates or documents executed and delivered by Borrower or any Affiliate
of Borrower in connection with the Loan.


“Loan Year” shall mean
each 365 day period (or 366 day period if the month of February in a leap
year is included) commencing on the first day of the month following the
Closing Date (provided, however, that the first Loan Year shall
also include the period from the Closing Date to the end of the month in which
the Closing Date occurs).


“Lockout Date” shall
mean November 9, 2006.


“Loss Proceeds” shall
mean, collectively, all Insurance Proceeds and all Condemnation Proceeds.


“Major Space Lease”
shall mean any Space Lease of a tenant and/or Affiliate of such tenant where
such tenant and/or such Affiliate (a) leases, in the aggregate, the
greater of (y) 15,000 gross rentable square feet of space in a Project,
and (z) ten (10%) of the gross rentable square feet of space in a Project,
or (b) is an Affiliate of Borrower or Guarantor.


“Management Agreement”
shall have the meaning set forth in Section 7.02 hereof.


“Manager” shall mean
the Person(s), other than Borrower, which manages one or more Projects on
behalf of Borrower. As of the date hereof, the Projects are managed by The Gale
Company LLC, an Affiliate of MCRLP.


“Manager Certification”
shall have the meaning set forth in Section 2.09(d) hereof.


“Material Adverse Effect”
shall mean any event or condition that has a material adverse effect on (a) the
Projects, unless the context otherwise requires, considered in the aggregate, (b) the
business, prospects, profits, management, operations or condition (financial or
otherwise) of Borrower, unless the context otherwise requires, considered in
the aggregate, (c) the enforceability, validity and, if applicable,
perfection or priority of the lien of any Loan Document or (d) the ability
of Borrower to perform any material obligations under any Loan Document.


“Maturity”, when used
with respect to the Note, shall mean the Maturity Date set forth in the Note or
such other date pursuant to the Note on which the final payment of principal,
and premium, if any, on the Note becomes due and payable as therein or herein
provided, whether at Stated Maturity or by declaration of acceleration, or
otherwise.


“Maturity Date” shall
mean the Maturity Date set forth in the Note.


“MCC” shall
mean Mack-Cali Realty Corporation, a Maryland corporation.



 12
 






 



“MCRLP”
shall mean Mack-Cali, L.P., a Delaware limited partnership.


“MCRLP Borrower”
shall mean, as the context shall require, either or both of (a) JV Member
or (b) SLG Gale PE II LLC, in such Person’s capacity as the borrower of
Permitted MCRLP Financing.


“Mortgage” shall mean
one of, and “Mortgages”
shall mean, collectively, the Mortgage, Assignment of Leases and Rents,
Security Agreement and Fixture Filings of even date herewith from each Borrower
encumbering the Project that such Borrower owns.


“Multiemployer Plan”
shall mean a multiemployer plan defined as such in Section 3(37) of ERISA
to which contributions have been, or were required to have been, made by
Borrower, Guarantor or any ERISA Affiliate and which is covered by Title IV of
ERISA.


“Net Capital Expenditures”
shall mean for any period the amount by which Capital Expenditures during such
period exceeds reimbursements for such items during such period from any fund
established pursuant to the Loan Documents.


“Net Operating Income”
shall mean in each Fiscal Year or portion thereof during the term hereof,
Operating Income less Operating Expenses.


“Net Proceeds” shall mean the excess of (a) the purchase
price actually received by the applicable Borrower with respect to the sale of
a Release Parcel pursuant to Section 15.04 hereof, over (b) all
reasonable and customary costs and expenses, including, without limitation,
attorneys’ fees and disbursements and any brokerage fees, if applicable,
incurred by the applicable Borrower in connection with such sale of the Release
Parcel.


“Note” shall have the
meaning set forth in the Recitals hereto.


“OFAC List” means the
list of specially designated nationals and blocked persons subject to financial
sanctions that is maintained by the U.S. Treasury Department, Office of Foreign
Assets Control and accessible through the internet website
www.treas.gov/ofac/t11sdn.pdf.


“Officer’s Certificate”
shall mean a certificate delivered to Lender by Borrower which is signed on
behalf of Borrower by an authorized representative of Borrower which states
that the items set forth in such certificate are true, accurate and complete in
all material respects.


“Operating Expenses”
shall mean, in each Fiscal Year or portion thereof during the term hereof or
other period of determination, all expenses directly attributable to the
operation, repair and/or maintenance of the Projects constituting security for
the Debt including, without limitation, (a) Impositions, (b) insurance
premiums, (c) management fees, whether or not actually paid, equal to the
greater of the actual management fees and three percent (3%) of annual “base” or “fixed” Rent due under
the Leases and (d) costs attributable to the operation, repair and
maintenance of the systems for heating, ventilating and air conditioning the
Improvements and actually paid for by Borrower. Operating Expenses shall not
include interest, principal and premium, if any, due under the Note or
otherwise in connection with the Debt, income taxes, any capital improvement
costs, any non-cash charge or expense such as



 13
 






 



depreciation or
amortization or any item of expense otherwise includable in Operating Expenses
which is paid directly by any tenant except real estate taxes paid directly to
any taxing authority by any tenant.


“Operating Income”
shall mean, in each Fiscal Year or portion thereof during the term hereof or
other period of determination, all revenue derived by Borrower arising from the
Projects, including, without limitation, rental revenues (whether denominated
as basic rent, additional rent, escalation payments, electrical payments or
otherwise) and other fees and charges payable pursuant to Leases or otherwise
in connection with the Projects, and business interruption, rent or other
similar insurance proceeds. Operating Income shall not include (a) Insurance
Proceeds (other than proceeds of rent, business interruption or other similar
insurance allocable to the applicable period) and Condemnation Proceeds (other
than Condemnation Proceeds arising from a temporary taking or the use and
occupancy of all or part of a Project allocable to the applicable period), or
interest accrued on such Condemnation Proceeds, (b) proceeds of any
financing, (c) proceeds of any sale, exchange or transfer of a Project or
any part thereof or interest therein, (d) capital contributions or loans
to Borrower or an Affiliate of Borrower, (e) any item of income otherwise
includable in Operating Income but paid directly by any tenant to a Person
other than Borrower except for real estate taxes paid directly to any taxing
authority by any tenant, (f) any other extraordinary, non-recurring
revenues, (g) Rent paid by or on behalf of any lessee under a Space Lease
in whole or partial consideration for the termination of any Space Lease, with
the exception of the Amortized Termination Payment Amount (as defined below),
which shall be included in Operating Income or (h) sales tax rebates from
any Governmental Authority. For the purposes of this Agreement, the “Amortized Termination Payment Amount”
shall mean that portion of such termination payment which is equal to the
product of (i) the allocable monthly amount of such termination payment,
which itself is equal to the quotient obtained by dividing (A) the total
amount of such termination payment by (B) the number of months remaining
in what was the unexpired term of the Space Lease in question  (i.e., prior to termination) and (ii) the
number of months of such unexpired term that occur during the applicable Fiscal
Year or portion thereof with respect to which such calculation is being made.


“Origination Fee” shall
have the meaning set forth in Section 2.01(c).


“Partners” shall have
the meaning set forth in Section 18.32.


“Payment Date” shall
have the meaning set forth in the Note.


“PBGC” shall mean the
Pension Benefit Guaranty Corporation established under ERISA, or any successor
thereto.


“Permitted Encumbrances”
shall have the meaning set forth in Section 2.05(a) hereof.


“Permitted Entity Transfers”
shall mean:


(i)            (A) the sale of securities
evidencing ownership of MCC and SLG listed and traded on any public exchange
and/or (B) Transfers (in one or more transactions) of limited partnership
interests in Gale SLG NJ Operating Partnership, L.P. comprising not more than
4%



 14
 






 



in the aggregate of the
total indirect ownership interest in Borrower and/or (C) Transfers of
limited partnership interests in MCRLP and/or SLGOP provided, that (1) such
Transfers described in clauses (B) and (C) of this subsection (i),
shall not result in either (I) a change in Control of Borrower (it being
agreed that, for the purposes of this definition of Permitted Entity Transfers,
a “change of Control of Borrower” will not be deemed to have occurred provided
that, after any such Transfer, either MCC or SLG retains Control of Borrower),
or (II) the transferee, together with its Affiliates, increasing its
direct or indirect interest in Borrower, to an amount which equals or exceeds
49% of the direct or indirect ownership interests in Borrower;


(ii)           any transaction in the nature of a
reorganization, restructuring, sale, merger or combination involving MCC or
SLG, provided, that, with respect to any such reorganization, restructuring,
sale, merger or
combination, (1) after giving effect thereto, (A) Borrower is
Controlled, directly or indirectly, by SLG or MCC (or any Affiliate of either
thereof which is Controlled by SLG or MCC) and (B) neither SLG nor MCC
shall have Transferred more than 49%, in the aggregate, of their respective
direct or indirect interests in Borrower, unless, if the requirements of clause
(A) and/or (B) are not satisfied, (x) the surviving entity of
such transaction, which is the transferee of the direct or indirect interests
in Borrower, shall be a Qualified Transferee, (y) to the extent
that the same will result in a change in Control of Borrower or results in the
transferee, together with its Affiliates, increasing its direct or indirect
interest in Borrower to an amount which equals or exceeds 49% of the ownership
interests in Borrower, Borrower shall have delivered to Lender, at least ten (10) Business
Days prior to the effective date of the transactions resulting in such change
in Control or increase in ownership interests, a new Insolvency Opinion reflecting
the same, in form, content and substance, and issued by legal counsel,
reasonably acceptable to Lender and the Rating Agency, if required by the
Rating Agency; and (z) the entity which is proposed to succeed MCRLP or
SLGOP, as the case may be, as Guarantor under the Guaranty has, at the time
such new Guaranty is executed and delivered, and maintains while the applicable
Guaranty is effective, a net worth of not less than $250,000,000.00 (of which
$50,000,000.00 consists of liquid assets) (such entity described in this clause
(z), an “Acceptable Substitute Guarantor”);


(iii)          Transfers between SLG and/or MCC (and
their respective Affiliates owning direct or indirect interests in Borrower) of
direct or indirect interests in Borrower; and


(iv)          Transfers by each of MCC and SLG to
its respective Affiliates, provided that, at all times after such Transfer,
such Affiliate remains Controlled by such transferor and such transferor owns,
directly or indirectly, at least 25% of such Affiliate that is the transferee
of such interests.


In addition, in
connection with any transaction that would otherwise constitute a Permitted
Entity Transfer, it shall be a condition precedent to the consummation thereof
that (a) at the time of consummation thereof, there shall exist no Default
or Event of Default (provided that the conditions set forth in this clause (a) and
clause (c) below shall not apply with respect to a Permitted Entity
Transfer described in subsection (i) above, but not otherwise described in
subsection (ii) above), i.e., sales of publicly traded securities
may be consummated without prior notice and notwithstanding the existence of a
Default or Event of Default, unless such sales are being consummated in
connection with a reorganization, restructuring, sale, merger or combination
described in subsection (ii) above, (b) to the extent that any such
Transfer causes



 15
 






 



the transferee, together
with its Affiliates, to acquire Control of Borrower or to increase its direct
or indirect interest in Borrower, to an amount which equals or exceeds 49% of
the ownership interests in Borrower, Borrower shall have delivered to Lender,
at least ten (10) Business Days prior to the effective date of any such
Transfer, a new Insolvency Opinion reflecting such Transfer, in form, content and
substance, and issued by legal counsel, reasonably acceptable to Lender and the
Rating Agencies; (c) Borrower shall give Lender notice of such Transfer
together with copies of all instruments effecting such Transfer not less than
ten (10) days prior to the date of such Transfer and (d) Borrower and
Sole Member shall continue to comply with requirements of Sections 2.02(g),
2.02(t) and 2.02(w) hereof.


“Permitted Fund
Manager” means any Person that on the date of determination is one of the
entities listed on Exhibit F or any other nationally-recognized manager of
investment funds investing in debt or equity interests relating to commercial
real estate, provided such entity is (i) investing through a fund with
committed capital of at least $250,000,000 and (ii) not subject to a
Proceeding.


“Permitted Investments”
shall mean any one or more of the following obligations or securities payable
on demand or having a scheduled maturity on or before the Business Day
preceding the date upon which such funds are required to be drawn, and having
at all times the required ratings, if any, provided for in this definition,
unless each Rating Agency shall have confirmed in writing to Lender that a
lower rating would not, in and of itself, result in a downgrade, qualification
or withdrawal of the then current ratings assigned to any Securities (the “Certificates”): (a) any
Money Market Account (but not any Money Market Account structured as a
regulated investment company as defined under Section 851 of the Code) so
long as the Fund is rated “AAA M” or “AAA M-G” by each Rating Agency (or, if
not rated by any Rating Agency other than S&P, otherwise acceptable to such
Rating Agency or Agencies, as applicable, as confirmed in writing that such
investment would not, in and of itself, result in a downgrade, qualification or
withdrawal of the then current ratings assigned to any Securities); and (b) provided
the requirements of Section 5.16 hereof are and remain satisfied, such
other obligations as are acceptable as Permitted Investments to each Rating
Agency, as confirmed in writing to Lender, that such obligations would not, in
and of itself, result in a downgrade, qualification or withdrawal of the then
current ratings assigned to any Securities; provided,
however, that (i) the investments  must have a predetermined fixed dollar of
principal due at maturity that cannot vary or change, (ii) if rated by
Standard & Poor’s, the investments must not have an “r” highlighter affixed
to their rating, (iii) if such investments have a variable rate of
interest, such interest rate must be tied to a single interest rate index plus
a fixed spread (if any) and must move proportionately with that index, and (iv) such
investments must not be subject to liquidation prior to their maturity; and
provided, further, that, with respect to each investment described above, in
the judgment of Lender, such instrument continues to qualify as a “cash flow
investment” pursuant to Code Section 860G(a)(6) earning a passive
return in the nature of interest and that no instrument or security shall be a
Permitted Investment if (y) such instrument or security evidences a right
to receive only interest payments or (z) the right to receive principal
and interest payments derived from the underlying investment provides a yield
to maturity in excess of 120% of the yield to maturity at par of such
underlying investment. Without limiting the foregoing, a Permitted Investment
shall not include any obligation or investment that does not constitute cash, a
cash item or Government securities within the meaning of Section 856(c)(4)(A) of
the Code.



 16














 


“Permitted
MCRLP Financing” shall mean:  the
loans, if originated, (a) in the maximum amount of $10,000,000.00, made by
Mack-Cali Ventures L.L.C. or a Controlled Affiliate thereof (“MCRLP Lender”) to JV Member and (b) in
the maximum amount of $3,725,000.00, made by such MCRLP Lender, to SLG Gale PE
II LLC, and (1) in the case of the loan to JV Member, is unsecured, and (2) in
the case of the loan to SLG Gale PE II LLC, may be secured by, inter  alia,
a pledge of SLG Gale PE II LLC’s indirect membership interests in JV Member; provided
that (i) the principal amounts of such loans do not exceed the amounts set
forth above, (ii) no Default or Event of Default shall be continuing at
the time such debt is incurred, (iii) such loan shall not mature earlier
than the Loan, (iv) the loans are, at all times, held by MCRLP or an
Affiliate thereof that is at all times Controlled by MCC, (v) Borrower
shall pay all reasonable out-of-pocket expenses of Lender associated with the
Permitted MCRLP Financing, including the cost of any review of the loan
documents and the negotiation of the subordination and standstill agreement
described below, (vi) such MCRLP Lender shall not be entitled to enter
into any intercreditor agreement with Lender and shall have no rights
whatsoever with respect to the Loan, the Borrower or against Lender, (vii) MCRLP
Lender will not be permitted to receive and shall within one (1) Business
Day of receipt remit to Lender or as Lender directs any payments on account of
the Permitted MCRLP Financing unless (A) all current payments under the
Loan have been paid in full and (B) all Operating Expenses and other costs
incurred with respect to the operation, maintenance, repair and improvement of
the Projects then due and payable have been paid in full, (viii) the
Permitted MCRLP Financing shall not constitute a claim against JV Member,
except to the extent JV Member has cash available to pay such Permitted MCRLP
Financing and (ix) prior to the closing of such Permitted MCRLP Financing,
such MCRLP Lender enters into a subordination and standstill agreement, with
respect to each of the loans, in form and substance reasonably acceptable to
Lender and MCRLP Lender, which agreement shall provide, among other things,
that, provided that the holder of the loans is and at all times remains MCRLP
Lender or a Qualified Transferee, Lender will permit the holder of the loans to
exercise its rights under such loans, if an Event of Default occurs under the
Loan, to assume control over (A) the JV Member, in the case of the loan to
JV Member or (B) the Projects, in the case of the loan to SLG Gale PE II
LLC. In all cases, the terms and documentation of any Permitted MCRLP Financing
shall be subject to the approval of Lender in its reasonable discretion.


“Permitted Transfers”
shall mean:  (i) Space Leases
entered into in accordance with Section 7.01 hereof; (ii) a Permitted
Encumbrance; (iii) provided that no Default or Event of Default shall then
exist, a Transfer of up to 49%, in the aggregate, of the direct or indirect
interests in Borrower or Sole Member to any Person provided that (A) such
Transfer shall not (x) cause the transferee, together with its Affiliates,
to acquire Control of Borrower or Sole Member or to increase its direct or
indirect interest in Borrower or Sole Member to an amount which equals or
exceeds 49% of the ownership interest in the Borrower or Sole Member or (y) result
in Borrower or Sole Member no longer being Controlled by either (1) MCC
and/or SLG or (2) (A) MCC or (B) SLG, in either case, sharing
Control with a Qualified Transferee, (B) after giving effect to such
Transfer, MCC (together with unrelated limited partners in Gale SLG NJ
Operating Partnership, L.P. (“NJOP”) owning, for this purpose, not more
than 4% of such equity interests) and/or SLG (together with unrelated limited
partners in NJOP owning, for this purpose, not more than 4% of such equity
interests), shall continue to own more than 50% of all equity interests (direct
or indirect) in Borrower and Sole Member and there shall not be a change in
Control of the Borrower or Sole Member, (C) Borrower shall give Lender
notice of such 



 17
 






 



Transfer together with
copies of all instruments effecting such Transfer not less than ten (10) days
prior to the date of such Transfer and (D) Borrower and Sole Member shall
continue to comply with requirements of Sections 2.02(g), 2.02(t) and 2.02(w) hereof;
(iv) a Permitted Entity Transfer or (v) a Release pursuant to Section 15.02.


“Person” shall mean any
individual, corporation, limited liability company, partnership, joint venture,
estate, trust, unincorporated association, any federal, state, county or
municipal government or any bureau, department or agency thereof and any
fiduciary acting in such capacity on behalf of any of the foregoing.


“Plan” shall mean an
employee benefit or other plan established or maintained by Borrower, Guarantor
or any ERISA Affiliate during the five-year period ended prior to the date of
this Agreement or to which Borrower, Guarantor or any ERISA Affiliate makes, is
obligated to make or has, within the five year period ended prior to the date
of this Agreement, been required to make contributions (whether or not covered
by Title IV of ERISA or Section 302 of ERISA or Section 401(a) or
412 of the Code), other than a Multiemployer Plan.


“Principal Amount”
shall mean the Loan Amount as such amount may be reduced from time to time
pursuant to the terms of this Agreement, the Note or the other Loan Documents.


“Principal Payments”
shall mean all payments of principal, if any, made pursuant to the terms of the
Note.


“Proceeding”
shall mean any case, proceeding or other action under any existing or future
law of any jurisdiction relating to bankruptcy, insolvency, reorganization or
relief of debtors.


“Pro-Forma Capital Expenditures”
shall mean, for purposes of calculating Adjusted Net Cash Flow, an amount equal
to (a) the number of square feet comprising the Total GLA multiplied by (b) $0.35.


“Pro-Forma Debt Service”
shall mean, with respect to a period of calculation, an amount equal to the greater
of (a) Debt Service and (b) the Stressed Debt Service.


“Pro-Forma Net Operating Income”
shall mean Pro-Forma Operating Income less Pro-Forma Operating Expenses.


“Pro-Forma Operating Expenses”
shall mean projected annualized Operating Expenses based on a trailing twelve
(12)-month period as reasonably adjusted by Lender (upwards, but not downwards)
to take into account, among other things, (a) anticipated increases or
decreases, as the case may be, in Operating Expenses including, without
limitation, real estate taxes and insurance which shall be included at their
respective stabilized and recurring levels and (b) exclusions for
non-recurring and capital expenses.


“Pro-Forma Operating Income”
shall mean projected annualized Operating Income based on the most recent Rent
Roll and such other information as is required to be delivered by Borrower
pursuant to Section 2.09 hereof, as reasonably adjusted by Lender (a) to




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include only fixed rents
from tenants in occupancy with a remaining term under their respective Space
Lease of at least twelve (12) months or, as to tenants in occupancy with a
remaining term of less than twelve (12) months, only those tenants which have
not notified the applicable Borrower in writing of their decision to not renew
or extend their Space Lease beyond the then termination date thereof, unless a
replacement tenant has executed a letter of intent for such space at market
rates or better; (b) to exclude Rents from temporary or month to month
tenants; (c) to exclude Rents from tenants operating under bankruptcy
protection and which have not affirmed their respective Leases; (d) to
exclude Rents from any tenant which is an Affiliate of Borrower or Guarantor
other than Leases to affiliated property managers aggregating not more than [4,000] square feet per Project at market rates; (e) to
exclude Rents from any tenant which is more than three (3) months
delinquent in payment of base or fixed rent; (f) to include
reimbursements, not in excess of corresponding expense items, based on a trailing
12-month period; (g) to include any Rent from a Credit Tenant under
its Space Lease (whether or not in occupancy of its space) provided that the
remaining initial term of such Space Lease (exclusive of any extensions) is for
a period of twelve (12) months or longer; (h) to include other income on a
case-by-case basis but only to the extent it is reasonably determined by Lender
to be both stabilized and recurring; (i) to include any free Rent or
abated Rent with respect to tenants that are in occupancy provided, that, such
free or abated Rent shall only be included for maximum period of ninety (90)
days; and (j) to reflect a vacancy and credit loss allowance equal to the
greater of: (y) the actual vacancy loss for each Project or (z) 10%
of total revenues for such Project.


“Prohibited Person”
means any Person identified on the OFAC List or any other Person with whom a
U.S. Person may not conduct business or transactions by prohibition of Federal
law or Executive Order of the President of the United States of America.


“Project” shall mean
one of, and “Projects”
shall mean the collective group of, the parcels of real property and
Improvements thereon owned by a Borrower and encumbered by a Mortgage, together
with all rights pertaining to such real property and Improvements, and all
other collateral for the Loan applicable to such parcels of real property and
Improvements, respectively, as more particularly described in the granting
clauses of the Mortgages and referred to therein as the Mortgaged Property. Each
Project, as identified by its street address, and the applicable Borrower that
is the owner of each Project is set forth on Exhibit A attached hereto.
Any reference to “the Projects”
shall be deemed to be a reference to the Projects, as a collective whole, and
to the all of the Projects on an individual basis.


“Property Agreements”
shall mean all agreements, grants of easements and/or rights-of-way, reciprocal
easement agreements, permits, declarations of covenants, conditions and
restrictions, disposition and development agreements, planned unit development
agreements, management or parking agreements, party wall agreements or other
instruments affecting a Project, which, either individually or in the aggregate
with all other agreements affecting a particular Project, are material in
nature, but not including any brokerage agreements, management agreements,
service contracts, Space Leases or the Loan Documents.


“Provided Information”
shall have the meaning set forth in Section 17.01 hereof.


“Qualified Transferee”
means one or more of the following:



 19
 






 



(A)          a real estate investment trust, bank,
saving and loan association, investment bank, insurance company, trust company,
commercial credit corporation, pension plan, pension fund or pension advisory
firm, mutual fund, government entity or plan, provided that any such Person
referred to in this clause (A) satisfies the Eligibility Requirements;


(B)           an investment company, money
management firm or “qualified institutional buyer” within the meaning of Rule 144A
under the Securities Act of 1933, as amended, or an institutional “accredited
investor” within the meaning of Regulation D under the Securities Act of 1933,
as amended, provided that any such Person referred to in this clause (B) satisfies
the Eligibility Requirements;


(C)           an institution substantially similar
to any of the foregoing entities described in clauses (A) or (B) that
satisfies the Eligibility Requirements;


(D)          any entity Controlling, Controlled by,
under common Control with, any of the entities described in clause (A), (B), (C) or
(F) of this definition;


(E)           [RESERVED];


(F)           an investment fund, limited liability
company, limited partnership or general partnership where a Permitted Fund
Manager or an entity that is otherwise a Qualified Transferee under clauses
(A), (B), (C) or (D) of this definition acts as the general partner,
managing member or fund manager and at least 50% of the equity interests in
such investment vehicle are owned, directly or indirectly, by one or more
entities that are otherwise Qualified Transferees under clauses (A), (B), (C) or
(D) of this definition; provided, however, that so long as the
organizational documents of the applicable investment fund, limited liability
company, limited partnership or general partnership vest all managerial control
in a Permitted Fund Manager, then the other Persons owning equity interests in
such investment vehicle shall not be required to satisfy the conditions set
forth in clause (ii) of the definition of “Eligibility Requirements”
relating to the nature of their business experience but shall nonetheless be
required to satisfy the conditions set forth in clause (i) of the
definition of “Eligibility Requirements”;


(G)           any Person which is a Qualified
Transferee (pursuant to the foregoing clauses) but is acting in any agency
capacity in connection with a lending syndicate, so long as at least fifty-one
percent (51%) or more of the lenders in the lending syndicate (by then current
loan balance) are Qualified Transferees (pursuant to the foregoing clauses); or


(H)          any other Person for which the Rating
Agencies have issued a Rating Comfort Letter.


Solely for
purposes of this definition of Qualified Transferee, “Control” shall mean the
ownership, directly or indirectly, in the aggregate of more than fifty percent
(50%) of the beneficial ownership interests of an entity and the possession,
directly or indirectly, of the power to direct or cause the direction of the
management or policies of an entity, whether through the ability to exercise
voting power, by contract or otherwise. “Controlled by,” “Controlling” and “under
common Control with” shall have the respective correlative meaning thereto. For
purposes of this definition, if more than one Qualified Transferee owns
(directly or 



 20
 






 



indirectly), more than fifty
percent (50%) of the beneficial ownership interests of an entity and one or
more of the Qualified Transferees possess the power to direct or cause the
direction of the management or policies of the entity, whether through the
ability to exercise voting power, by contract or otherwise, even though each
such Qualified Transferee individually owns less than fifty percent (50%) of
such beneficial interests, such entity shall be deemed to be “Controlled” by a
Qualified Transferee.


“Rate Cap Agreement”
shall mean that certain interest rate cap agreement (together with the
confirmation and schedules relating thereto) with a notional amount which shall
not at any time be less than the Principal Amount and a LIBOR Rate strike price
equal to seven percent (7.0%), entered into by Borrower in accordance with the
terms hereof or of the other Loan Documents and any interest rate cap
agreements subsequently entered into in replacement or substitution therefor by
Borrower with respect to the Loan, including, without limitation, the
Replacement Rate Cap Agreement.


“Rating Agency” shall
mean Standard & Poor’s Ratings Services, Inc., a division of The
McGraw-Hill Company, Inc. (“Standard &
Poor’s”), Fitch and Moody’s Investors Service, Inc. (“Moody’s”),
collectively, and any successor to any of them; provided,
however, that at any time after a Secondary Market Transaction, “Rating Agency” or “Rating
Agencies” shall mean those of the foregoing rating agencies that from time
to time rate the securities issued in connection with such Secondary Market
Transaction.


“Rating Comfort Letter”
shall mean a letter issued by each of the applicable Rating Agencies which
confirms that the taking of the action referenced therein will not result in
any qualification, withdrawal or downgrading of any existing ratings of
Securities created in a Secondary Market Transaction.


“Recurring Replacement Expenditures”
shall mean expenditures related to capital repairs, replacements and
improvements performed at the Projects from time to time.


“Recurring Replacement Monthly
Installment” shall mean the amount per month set forth on Exhibit B
attached hereto and made a part hereof, it being agreed that no Recurring
Replacement Monthly Installment shall be payable with respect to a Project
after the same has been Released.


“Recurring Replacement Reserve Escrow
Account” shall mean the Escrow Account maintained pursuant to
Section 5.08 hereof relating to the payment of Recurring Replacement
Expenditures.


“Recurring Replacement Reserve
Sub-Account” shall mean the Sub-Account of the Central
Account established pursuant to Section 5.02 hereof into which the
Recurring Replacement Monthly Installment shall be deposited.


“Registration Statement”
shall have the meaning set forth in Section 17.03 hereof.


“Release” and “Released” shall have
the meanings set forth in Section 15.02.



 21
 






 



“Release Amount” shall
mean, with respect to each Project that is Released pursuant to Section 15.02
hereof, an amount equal to one hundred ten percent (110%) of the Allocated Loan
Amount of such Project.


“Reletting Expenditures”
shall mean all reasonable and actual out-of-pocket expenditures payable to
bona-fide third parties or to the Manager incurred by Borrower relating to
reletting of space at the Projects and in connection with any brokerage
commissions due and payable (including override commissions), or any
improvements and replacements required to be made by Borrower (or reasonable
and actual out-of-pocket expenditures paid to tenants in connection with any
improvements and replacements made by tenants at the Projects) under the terms
of any Lease to prepare the relevant space for occupancy by the tenant
thereunder (including performing base building standard work for such space).


“Reletting Reserve Escrow Account”
shall mean the Escrow Account maintained pursuant to Section 5.07 hereof
relating to the payment of Reletting Expenditures and which shall be initially
funded with the Initial Reletting Reserve Deposit.


“Reletting Reserve Monthly Installment”
shall mean the amount set forth on Exhibit B attached hereto and made a
part hereof, it being agreed that no Recurring Replacement Monthly Installment
shall be payable with respect to a Project after the same has been Released.


“Reletting Reserve Sub-Account”
shall mean the Sub-Account of the Central Account established pursuant to Section 5.02
hereof into which the Reletting Reserve Monthly Installment shall be deposited.


“REMIC”
shall mean a “real estate mortgage investment conduit” within the meaning of Section 860D
of the Code.


“Rents” shall mean all
rents, rent equivalents, moneys payable as damages (including payments by
reason of the rejection of a Lease in a proceeding under the Bankruptcy Code)
or in lieu of rent or rent equivalents, royalties (including all oil and gas or
other mineral royalties and bonuses), income, fees, receivables, receipts,
revenues, deposits (including security, utility and other deposits), accounts,
cash, issues, profits, charges for services rendered, and other payment and
consideration of whatever form or nature received by or paid to or for the
account of or benefit of Borrower or any of its agents or employees from any
and all sources arising from or attributable to the Projects and the
Improvements, including all receivables, customer obligations, installment
payment obligations and other obligations now existing or hereafter arising or
created out of the sale, lease, sublease, license, concession or other grant of
the right of the use and occupancy of the Projects and Insurance Proceeds, if
any, from business interruption or other loss of income insurance.


“Rent Roll” shall have
the meaning set forth in Section 2.05 (o) hereof.


“Replacement Rate Cap Agreement”
shall have the meaning set forth in Section 5.10 hereof.


“Required Debt Service Payment”
shall mean, as of any Payment Date, (a) the amount of interest and
principal, if any, then due and payable pursuant to the Note, together with 



 22
 






 



any other sums due
thereunder, including, without limitation, any prepayments required to be made
or for which notice has been given under this Agreement, Default Rate Interest
and premium, if any, paid in accordance therewith plus (b) reasonable
out-of-pocket fees incurred by Lender in connection with its administration and
servicing of the Central Account or fees payable to Servicer pursuant to Section 5.04
hereof.


“Required Engineering Work”
shall mean the immediate engineering and/or environmental remediation work set
forth on Exhibit C attached hereto and made a part hereof.


“Required
Special Servicer Rating” means (i) a rating of “CSS1” in the case of
Fitch, Inc., (ii) on the Standard & Poor’s list of approved
special servicers in the case of Standard & Poor’s and (iii) in
the case of Moody’s, such special servicer is acting as special servicer in a
commercial mortgage loan securitization that was rated by Moody’s within the
twelve (12) month period prior to the date of determination, and Moody’s has
not downgraded or withdrawn the then-current rating on any class of commercial
mortgage securities or placed any class of commercial mortgage securities on
watch citing the continuation of such special servicer as special servicer of
such commercial mortgage securities.


“Retention Amount”
shall have the meaning set forth in Section 3.04(b)(vii) hereof.


“Scheduled
Release Date” shall have the meaning set forth in Section 15.04
hereof.


“Secondary Market Transaction”
shall have the meaning set forth in Section 17.01 hereof.


“Securities” shall have
the meaning set forth in Section 17.01 hereof.


“Securities Act” shall
have the meaning set forth in Section 17.02 hereof.


“Security Deposit Account”
shall have the meaning set forth in Section 5.01 hereof.


“Single Purpose Entity”
shall mean a corporation, partnership, joint venture, limited liability
company, trust or unincorporated association, which is formed or organized
solely for the purpose of holding, directly, an ownership interest in a
Project, does not engage in any business unrelated to such Project, does not
have any assets other than those related to its interest in such Project or any
indebtedness other than as permitted by this Agreement or the other Loan
Documents, has its own separate books and records and has its own accounts, in
each case which are separate and apart from the books and records and accounts
of any other Person, holds itself out as being a Person separate and apart from
any other Person and which otherwise satisfies the criteria of the Rating
Agency, as in effect on the Closing Date, for a special-purpose
bankruptcy-remote entity.


“SLG” shall
mean SL Green Realty Corp., a Maryland corporation.



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“SLGOP”
shall mean SL Green Operating Partnership, L.P., a Delaware limited
partnership.


“Sole Member”
shall mean Gale SLG NJ Mezz LLC, a Delaware limited liability company.


“Solvent” shall mean,
as to any Person, that (a) the sum of the assets of such Person, at a fair
valuation, exceeds its liabilities, including contingent liabilities, (b) such
Person has sufficient capital with which to conduct its business as presently
conducted and as proposed to be conducted and (c) such Person has not
incurred debts, and does not intend to incur debts, beyond its ability to pay
such debts as they mature. For purposes of this definition, “debt” means any
liability on a claim, and “claim” means (a) a right to payment, whether or
not such right is reduced to judgment, liquidated, unliquidated, fixed,
contingent, matured, unmatured, disputed, undisputed, legal, equitable, secured
or unsecured, or (b) a right to an equitable remedy for breach of
performance if such breach gives rise to a payment, whether or not such right
to an equitable remedy is reduced to judgment, fixed, contingent, matured,
unmatured, disputed, undisputed, secured, or unsecured. With respect to any
such contingent liabilities, such liabilities shall be computed in accordance
with GAAP at the amount which, in light of all the facts and circumstances
existing at the time, represents the amount which can reasonably be expected to
become an actual or matured liability.


“Space Leases” shall
mean any Lease or sublease thereunder (including, without limitation, any Major
Space Lease) or any other agreement providing for the use and occupancy of a
portion of a Project, as the same may be amended, renewed or supplemented.


“Special Transfer”
shall have the meaning set forth in Section 9.04 hereof.


“Standard Lease
Form” shall mean, as the context shall require, either of the two (2) standard
forms of Lease submitted to Lender, in connection with the closing of the Loan,
and identified by Borrower as Borrower’s standard forms of Lease.


“State” shall mean any
of the states which are members of the United States of America.


“Stated Maturity”, when
used with respect to the Note or any installment of interest and/or principal
payment thereunder, shall mean the date specified in the Note as the fixed date
on which a payment of all or any portion of principal and/or interest is due
and payable.


“Stressed Debt Service”
shall mean an amount calculated by Lender equal to the constant payment of
interest that would be due during a period of calculation upon an assumed
interest only loan having (i) a principal balance equal to the Principal
Amount as of the date of such calculation, and (ii) an interest rate equal
to nine (9%) percent.


“Sub-Accounts” shall
have the meaning set forth in Section 5.02 hereof.


“Substantial Casualty”
shall have the meaning set forth in Section 3.04 hereof.



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“Supplemental
Disbursement Date” shall have the meaning set forth in Section 5.05
hereof.


“Taking” shall mean a
condemnation or taking pursuant to the lawful exercise of the power of eminent
domain.


“TRIA”
shall mean the Terrorism Risk Insurance Act of 2002, as the same may be amended
or otherwise modified.


“Total GLA” shall mean
the total gross leasable area of the Projects, including all Space Leases.


“Transfer” shall mean
the conveyance, assignment, sale, mortgaging, encumbrance, pledging,
hypothecation, granting of a security interest in, granting of options with
respect to, or other disposition of (directly or indirectly, voluntarily or
involuntarily, by operation of law or otherwise, and whether or not for
consideration or of record) all or any portion of any legal or beneficial
interest (a) in all or any portion of any Project or (b) in any
Person having a legal or beneficial ownership in Borrower, and shall also
include, without limitation to the foregoing, the following:  an installment sales agreement wherein
Borrower agrees to sell a Project or any part thereof or any interest therein
for a price to be paid in installments; an agreement by Borrower leasing all or
substantially all of a Project to one or more Persons pursuant to a single or
related transactions, or a sale, assignment or other transfer of, or the grant
of a security interest in, Borrower’s right, title and interest in and to any
Leases or any Rent; any instrument subjecting a Project to a condominium regime
or transferring ownership to a cooperative corporation; and the dissolution or
termination of Borrower or the merger or consolidation of Borrower with any
other Person.


“UCC” shall mean the
Uniform Commercial Code as in effect in the State in which the Project is
located.


“Underwriters” shall
have the meaning set forth in Section 17.03 hereof.


“Underwriter Group”
shall have the meaning set forth in Section 17.03 hereof.


“Unscheduled Payments”
shall mean (a) all Loss Proceeds that Borrower has elected or is required
to apply to the repayment of the Debt pursuant to this Agreement, the Note or
any other Loan Documents, (b) any funds representing a voluntary or
involuntary principal prepayment other than scheduled Principal Payments and (c) any
Net Proceeds.


“Use Requirements”
shall mean any and all building codes, permits, certificates of occupancy or
compliance, laws, regulations, or ordinances (including, without limitation,
health, pollution, fire protection, medical and day-care facilities, waste
product and sewage disposal regulations), restrictions of record, easements,
reciprocal easements, declarations or other agreements affecting the use of a
Project or any part thereof.


“Welfare Plan” shall
mean an employee welfare benefit plan as defined in Section 3(1) of
ERISA established or maintained by Borrower, Guarantor or any ERISA Affiliate
or that covers any current or former employee of Borrower, Guarantor or any
ERISA Affiliate.



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“Work” shall have the
meaning set forth in Section 3.04(a)(i) hereof.


“Yield
Maintenance Premium” shall have the meaning set forth in Section 13.03
hereof.


ARTICLE II


LOAN TERMS;
REPRESENTATIONS, WARRANTIES

AND COVENANTS OF BORROWER


Section 2.01           The Loan. (a) Lender is
making a loan (the “Loan”)
to Borrower on the date hereof, in the Principal Amount of $90,286,551.00,
which shall mature on the Maturity Date. Borrower acknowledges receipt of the
Loan, the proceeds of which are being and shall be used to (i) refinance
the existing debt encumbering the Projects, (ii) fund certain of the
Escrow Accounts, and (iii) pay transaction costs. No excess proceeds may
be distributed to the direct or indirect members of Borrower. No amount repaid
in respect of the Loan may be reborrowed.


(b)           Borrower will pay
the Debt at the time and in the manner provided in the Note, this Agreement and
the other Loan Documents, all in lawful money of the United States of America
in immediately available funds.


(c)           On the date hereof,
Borrower shall pay to Lender an origination fee in the amount of $451,432.76
(the “Origination Fee”).


(d)           Upon any payment,
repayment or prepayment of Principal, including, but not limited to, a payment
made in connection with a Release and the repayment of the Loan on the Maturity
Date, Borrower shall pay to Lender, the Exit Fee. Upon the repayment of the
Loan in full, the Borrower shall pay to Lender the amount by which (i) $225,716.37
exceeds (ii) the total amount of Exit Fees theretofore paid, if any, by
Borrower pursuant to this Section 2.01(d). All Exit Fees hereunder
shall be deemed to be earned by Lender upon the funding of the Loan.


Section 2.02           Representations, Warranties and
Covenants of Borrower. Borrower represents, warrants and covenants to
Lender (each of which representations shall, as the context requires, refer to
each entity comprising Borrower and to each Project and shall be deemed made by
each such Borrower with respect to each such Project):


(a)           Organization and
Authority. Borrower (i) is a limited liability company, duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its formation, (ii) has all requisite power and authority
and all necessary licenses and permits to own and operate the Project and to
carry on its business as now conducted and as presently proposed to be
conducted and (iii) is duly qualified, authorized to do business and in
good standing in the jurisdiction where the Project is located and in each
other jurisdiction where the conduct of its business or the nature of its
activities makes such qualification necessary. Sole Member is a limited
liability company, duly organized, validly existing, and in good standing under
the laws of the jurisdiction of its formation.



 26
 






 



(b)           Power.
Borrower and Sole Member have full power and authority to execute, deliver and
perform, as applicable, the Loan Documents to which it is a party, to make the
borrowings thereunder, to execute and deliver the Note and to grant to Lender a
first, prior, perfected and continuing lien on and security interest in the
Project, subject only to the Permitted Encumbrances.


(c)           Authorization
of Borrowing. The execution, delivery and performance of the Loan Documents
to which Borrower is a party, the making of the borrowings thereunder, the
execution and delivery of the Note, the grant of the liens on the Projects
pursuant to the Loan Documents to which Borrower is a party and the
consummation of the Loan are within the powers of Borrower and have been duly
authorized by Borrower by all requisite action (and Borrower hereby represents
that no approval or action of any member, limited partner or shareholder, as
applicable, of Borrower is required to authorize any of the Loan Documents to
which Borrower is a party, other than those which have been obtained) and will
constitute the legal, valid and binding obligation of Borrower, enforceable
against Borrower in accordance with their terms, except as enforcement may be
stayed or limited by bankruptcy, insolvency or similar laws affecting the
enforcement of creditors’ rights generally and by general principles of equity
(whether considered in proceedings at law or in equity) and will not (i) violate
any provision of its partnership agreement or partnership certificate or
certificate of incorporation or by-laws, or operating agreement, or articles of
organization, as applicable, or, to its knowledge, any law, judgment, order, rule or
regulation of any court, arbitration panel or other Governmental Authority,
domestic or foreign, or other Person affecting or binding upon Borrower or the
Projects, or (ii) violate any provision of any indenture, agreement,
mortgage, deed of trust, contract or other instrument to which Borrower or Sole
Member is a party or by which any of their respective property, assets or
revenues are bound, or be in conflict with, result in an acceleration of any
obligation or a breach of or constitute (with notice or lapse of time or both)
a default or require any payment or prepayment under, any such indenture,
agreement, mortgage, deed of trust, contract or other instrument, or (iii) result
in the creation or imposition of any lien, except those in favor of Lender as
provided in the Loan Documents to which it is a party.


(d)           Consent.
Neither Borrower nor Sole Member is required to obtain any consent, approval or
authorization from, or to file any declaration or statement with, any
Governmental Authority or other agency in connection with or as a condition to
the execution, delivery or performance of this Agreement, the Note or the other
Loan Documents which has not been so obtained or filed.


(e)           Interest
Rate. The rate of interest paid under the Note and the method and manner of
the calculation thereof do not violate any usury or other law or applicable
Legal Requirement.


(f)            Other
Agreements. Borrower is not a party to nor is otherwise bound by any
agreements or instruments which, individually or in the aggregate, are
reasonably likely to have a Material Adverse Effect. Neither Borrower nor Sole
Member is in violation of its organizational documents or other restriction or
any agreement or instrument by which it is bound, or any judgment, decree,
writ, injunction, order or award of any arbitrator, court or Governmental
Authority, or any Legal Requirement, in each case, applicable to Borrower or
the 



 27
 






 



 


Projects, except for such violations that would not, individually or in
the aggregate, have a Material Adverse Effect.


(g)           Maintenance
of Existence.(i) Borrower is familiar with all of the criteria of the
Rating Agency required to qualify as a special-purpose bankruptcy-remote entity
and Borrower, at all times since its formation has been a duly formed and
existing entity and shall preserve and keep in full force and effect its
existence as a Single Purpose Entity.


(ii)      Borrower at all times
since its organization has complied, and will continue to comply in all
material respects (it being agreed that all of the SPE Provisions, as defined
below, are material in nature), with the provisions of its certificate and
agreement of partnership or certificate of incorporation and by-laws or
articles of organization and operating agreement, as applicable, and the laws
of its jurisdiction of organization relating to partnerships, corporations or
limited liability companies, as applicable.


(iii)     Borrower has done or
caused to be done and will do all things necessary to observe organizational
formalities and preserve its existence and Borrower will not amend, modify or
otherwise change in any material respect (it being agreed that any amendment,
modification or change which affects any provision relating to the nature of
the entity as a special-purpose, bankruptcy-remote entity (an “SPE Provision”) is per se material in
nature) the certificate and agreement of partnership or certificate of
incorporation and by-laws or articles of organization and operating agreement,
as applicable, or other organizational documents of Borrower without the prior
written consent of Lender, which shall not be unreasonably withheld,
conditioned or delayed, unless it relates to any SPE Provision.


(iv)    Borrower has at all times
accurately maintained, and will continue to accurately maintain, its financial
statements, accounting records and other partnership, company or corporate
documents separate from those of any other Person and Borrower will file its
own tax returns or, if Borrower is part of a consolidated group for purposes of
filing tax returns, Borrower will be shown as separate members of such group. Borrower
has not at any time since its formation commingled, and will not commingle, its
assets with those of any other Person and will maintain its assets in such a
manner such that it will not be costly or difficult to segregate, ascertain or
identify its assets from those of any other Person. Borrower will not permit any
Affiliate independent access to its bank accounts. Borrower has at all times
since its formation accurately maintained and utilized, and will continue to
accurately maintain and utilize, its own separate bank accounts, payroll and
separate books of account, stationery, invoices and checks.


(v)     Borrower has at all times
paid, and will continue to pay, its liabilities only from its own assets and
shall allocate and charge fairly and reasonably any overhead which Borrower
shares with any other Person, including, without limitation, for office space
and services performed by any employee of another Person.


(vi)    Borrower has at all times
identified itself, and will continue to identify itself, in all dealings with
the public, under its own name and as a separate and 



 28
 






 



 


distinct entity and shall correct any known misunderstanding regarding
its status as a separate and distinct entity. Borrower has not at any time
identified itself, and will not identify itself, as being a division of any
other Person.


(vii)   Borrower has been at all
times, and will continue to be, adequately capitalized in light of the nature
of its businesses.


(viii)  Borrower (A) has not
owned, does not own and will not own any assets or property other than the
Projects and any incidental personal property necessary for the ownership,
management or operation of the Projects, (B) has not engaged and will not
engage in any business other than the ownership, management and operation of
the Projects, (C) has not incurred and will not incur any debt, secured or
unsecured, direct or contingent (including guaranteeing any obligation), other
than (W) obligations owed to tenants under Space Leases, (X) the
Loan, and (Y) unsecured trade debt which (1) is not evidenced by a
note, (2) is incurred in the ordinary course of the operation of the
Projects, (3) does not exceed either four (4%) percent of the Allocated
Loan Amount, with respect to any particular Project, or $4,000,000.00, in the
aggregate, with respect to all Projects (it being agreed that “unsecured trade
debt” shall not include obligations for the payment of tenant improvement costs
and leasing commissions in connection with Space Leases) and (4) which is,
unless being contested in accordance with the terms of this Agreement, paid
prior to the earlier to occur of the sixtieth (60th) day after the date
incurred and the date when due, (D) has not and will not pledge its assets
for the benefit of any other Person, and (E) has not made and will not
make any loans other than Intra-Obligor Loans or advances to any Person
(including any Affiliate).


(ix)     Borrower will not (i) change
its name, or (ii) change its principal place of business unless, as to
this clause (ii), it has given Lender not less than thirty (30) days prior
written notice of its intention to change its principal place of business and
of the address of such new principal place of business.


(x)      Borrower does not have,
and will at no time have, any subsidiaries.


(xi)     Borrower will preserve
and maintain its existence as a Delaware limited liability company and all
material rights, privileges, tradenames and franchises.


(xii)    Borrower will not merge
or consolidate with, or sell all or substantially all of its assets to any
Person, or liquidate, wind up or dissolve itself (or suffer any liquidation,
winding up or dissolution). Borrower will not 
acquire any business or assets from, or capital stock or other ownership
interest of, or be a party to any acquisition of, any Person.


(xiii)   Borrower has not at any
time since its formation assumed, guaranteed or held itself out to be
responsible for, and will not assume, guarantee or hold itself out to be
responsible for the liabilities or the decisions or actions respecting the
daily business affairs of its partners, shareholders or members or any predecessor
company, corporation or partnership, each as applicable, any Affiliates, or any
other Persons. Borrower has not at any time since its formation acquired, and
will not acquire, 



 29
 






 



 


obligations or securities of its partners or shareholders, members or
any predecessor company, corporation or partnership, each as applicable, or any
Affiliates. Borrower has not at any time since its formation made, and will not
make, loans to its partners, members or shareholders or any predecessor
company, corporation or partnership, each as applicable, or any Affiliates of
any of such Persons other than Intra-Obligor Loans. Except as set forth on Exhibit G
attached hereto, Borrower has no known contingent liabilities nor does it have
any material financial liabilities under any indenture, mortgage, deed of
trust, loan agreement or other agreement or instrument to which such Person is
a party or by which it is otherwise bound other than under the Loan Documents.


(xiv)   Borrower has not at any
time since its formation entered into and was not a party to, and, will not
enter into or be a party to, any transaction with its Affiliates, members,
partners or shareholders, as applicable, or any Affiliates thereof except in
the ordinary course of business of Borrower on terms which are no less
favorable to Borrower than would be obtained in a comparable arm’s length
transaction with an unrelated third party.


(xv)    Sole Member will at all
times comply, and will cause Borrower to comply, with each of the
representations, warranties, and covenants contained in this Section 2.02(g) as
if such representation, warranty or covenant was made directly by Sole Member.


(xvi)   Borrower shall at all
times cause there to be at least two duly appointed non-member managers of
Borrower (each, an “Independent
Manager”),  For
purposes hereof, “Independent Manager” shall mean a natural person who,
for the five-year period prior to his or her appointment as Independent Manager
has not been, is not now, and during the continuation of his or her service as
Independent Manager is not:  (i) an
employee, director, stockholder, partner, trustee, attorney, counsel or officer
of the Borrower or any of its Affiliates (other than his or her service as an
Independent Manager); (ii) a creditor, customer or supplier of or other
person who derives any of its revenues from its activities with the Borrower or
any of its Affiliates; (iii) any member of the Immediate Family of a
person described in (i) or (ii); or (iv) a Person Controlling or
under common Control with any Person excluded from serving as Independent
Manager under (i) or (ii). A natural person who satisfies the foregoing
definition other than subparagraph (ii) shall not be disqualified from
serving as an Independent Manager of the Borrower if such individual is an Independent
Manager provided by a nationally-recognized company that provides professional
Independent Managers (a “Professional Independent Manager”) and other
corporate services in the ordinary course of its business. A natural person who
otherwise satisfies the foregoing definition other than subparagraph (i) by
reason of being an Independent Manager of a “special purpose entity” affiliated
with the Borrower shall not be disqualified from serving as an Independent
Manager of the Borrower if such individual is either (i) a Professional
Independent Manager or (ii) the fees that such individual earns from
serving as Independent Manager of Affiliates of the Borrower constitute in the
aggregate less than five percent (5%) of such individual’s annual income. Notwithstanding
the immediately preceding sentence, an Independent Manager may not
simultaneously serve as Independent Manager of the Borrower and an Independent
Manager of a special purpose



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entity that owns a direct or indirect equity interest in the Borrower
or a direct or indirect interest in any co-borrower with the Borrower. For
purposes of this paragraph, a “special purpose entity” is an entity whose
organizational documents contain restrictions on its activities and impose
requirements intended to preserve the such entity’s separateness that are
substantially similar to the requirements of a Single Purpose Entity.


(xvii)  Borrower shall not cause
or permit the board of managers or other governing board or body of Borrower to
take any action which, under the terms of Borrower’s articles of organization
or operating agreement requires a vote of the board of managers or other
governing board or body of Borrower unless at the time of such action there
shall be at least two members who are Independent Managers.


(xviii) Borrower shall pay the
salaries of its own employees and maintain a sufficient number of employees in
light of their contemplated business operations.


(xix)   Borrower shall conduct its
business so that the assumptions made with respect to Borrower in that certain
opinion letter relating to substantive non-consolidation dated the date hereof
(the “Insolvency Opinion”)
delivered in connection with the Loan shall be true and correct in all respects
material to such Insolvency Opinion.


(h)           No
Defaults. No Default or Event of Default exists or would occur as a result
of the consummation of the transactions contemplated by the Loan Documents. Borrower
is not in default in the payment or performance of any of its Contractual
Obligations in any material respect.


(i)            Consents
and Approvals. Borrower has obtained or made all necessary (i) consents,
approvals and authorizations, and registrations and filings of or with all
Governmental Authorities and (ii) consents, approvals, waivers and
notifications of partners, stockholders, creditors, lessors and other
nongovernmental Persons, in each case, which are required to be obtained or
made by Borrower in connection with the execution and delivery of, and the
performance by Borrower of its obligations under, the Loan Documents.


(j)            Investment
Company Act Status, etc. Borrower is not (i) an “investment company,”
or a company “controlled” by an “investment company,” as such terms are defined
in the Investment Company Act of 1940, as amended, (ii) a “holding company”
or a “subsidiary company” of a “holding company” or an “affiliate” of either a “holding
company” or a “subsidiary company” within the meaning of the Public Utility
Holding Company Act of 1935, as amended, or (iii) subject to any other
federal or state law or regulation which purports to restrict or regulate its
ability to borrow money.


(k)           Compliance
with Law. Borrower is in compliance in all material respects with all Legal
Requirements to which it or any Project is subject, including, without
limitation, all Environmental Statutes, the Occupational Safety and Health Act
of 1970, the Americans with Disabilities Act, ERISA and all material building
department requirements for each of the Projects. No portion of any Project has
been or will be purchased, improved, fixtured, equipped



 31
 






 



 


or furnished with proceeds of any illegal activity and, to the best of
Borrower’s knowledge, no illegal activities are being conducted at or from any
Project.


(l)            Financial
Information. Borrower has delivered to Lender the financial statements for
the Projects and Borrower for (A) calendar year 2005 and (B) the
first calendar quarter of 2006, and Borrower has no knowledge that the
information contained in those statements is not accurate in any material
respect.


(m)          Transaction
Brokerage Fees. Borrower has not dealt with any financial advisors,
brokers, underwriters, placement agents, agents or finders in connection with
the transactions contemplated by this Agreement. All brokerage fees,
commissions and other expenses payable in connection with the transactions
contemplated by the Loan Documents have been paid in full by Borrower
contemporaneously with the execution of the Loan Documents and the funding of
the Loan. Borrower hereby agrees to indemnify and hold Lender harmless for,
from and against any and all claims, liabilities, costs and expenses of any
kind in any way relating to or arising from (i) a claim by any Person that
such Person acted on behalf of Borrower in connection with the transactions
contemplated herein or (ii) any breach of the foregoing representation. The
provisions of this subsection (m) shall survive the repayment of the Debt.


(n)           Federal
Reserve Regulations. No part of the proceeds of the Loan will be used for
the purpose of purchasing or acquiring any “margin stock” within the meaning of Regulations
T, U or X of the Board of Governors of the Federal Reserve System or for any
other purpose which would be inconsistent with such Regulations T, U or X or
any other Regulations of such Board of Governors, or for any purposes
prohibited by Legal Requirements or by the terms and conditions of the Loan
Documents.


(o)           Pending
Litigation. Except as disclosed in the Form 10-Q filed by MCC on
May 4, 2006, there are no actions, suits or proceedings pending or, to the
best knowledge of Borrower, threatened against or affecting Borrower, SLG, MCC,
the Guarantors or the Projects in any court or before any Governmental
Authority which if adversely determined either individually or collectively has
or is reasonably likely to have a Material Adverse Effect.


(p)           Solvency;
No Bankruptcy. Each of Borrower and Sole Member (i) is and, to the
actual knowledge of Borrower, has at all times been Solvent and will remain
Solvent immediately upon the consummation of the transactions contemplated by
the Loan Documents and (ii) is free from bankruptcy, reorganization or
arrangement proceedings or a general assignment for the benefit of creditors
and is not contemplating the filing of a petition under any state or federal
bankruptcy or insolvency laws or the liquidation of all or a major portion of
such Person’s assets or property and Borrower has no knowledge of any Person
contemplating the filing of any such petition against it or Sole Member. None
of the transactions contemplated hereby will be or have been made with an
intent to hinder, delay or defraud any present or future creditors of Borrower
and Borrower has received reasonably equivalent value in exchange for its
obligations under the Loan Documents. Borrower’s assets do not, and immediately
upon consummation of the transaction contemplated in the Loan Documents will
not, constitute unreasonably small capital to carry out its business as
presently conducted or as proposed to be conducted. Borrower does not intend
to, nor believe that it will, incur debts and liabilities beyond its ability to
pay such debts as they may mature.



 32
 






 



 


(q)           Use
of Proceeds. The proceeds of the Loan shall be applied by Borrower to, inter
alia, (i) satisfy certain mortgage loans presently encumbering all
or a part of the Projects and (ii) pay certain transaction costs incurred
by Borrower in connection with the Loan. No portion of the proceeds of the Loan
will be used for family, personal, agricultural or household use or distributed
to Sole Member or any other Person for any reason.


(r)            Tax
Filings. Borrower and Sole Member have filed all federal, state and local
tax returns required to be filed and have paid or made adequate provision for
the payment of all federal, state and local taxes, charges and assessments
payable by Borrower and Sole Member. Borrower and Sole Member believe that
their respective tax returns properly reflect the income and taxes of Borrower
and Sole Member for the periods covered thereby, subject only to reasonable
adjustments required by the Internal Revenue Service or other applicable tax
authority upon audit.


(s)           Not
Foreign Person. Borrower is not a “foreign person” within the meaning of §1445(f)(3) of
the Code.


(t)            ERISA.


(i)            Except
with respect to the 401K Plan Assets, if any, the assets of Borrower are not
and will not become treated as “plan
assets”, whether by operation of law or under regulations
promulgated under ERISA. Each Plan and Welfare Plan, and, to the actual
knowledge of Borrower, each Multiemployer Plan, is in compliance in all material
respects with, and has been administered in all material respects in compliance
with, its terms and the applicable provisions of ERISA, the Code and any other
applicable Legal Requirement, and no event or condition has occurred and is
continuing as to which Borrower would be under an obligation to furnish a
report to Lender under clause (ii)(A) of this Section. Other than an
application for a favorable determination letter with respect to a Plan, there
are no pending issues or claims before the Internal Revenue Service, the United
States Department of Labor or any court of competent jurisdiction related to
any Plan or Welfare Plan under which Borrower or any ERISA Affiliate, directly
or indirectly (through an indemnification agreement or otherwise), could be
subject to any material risk of liability under Section 409 or 502(i) of
ERISA or Section 4975 of the Code. No Welfare Plan provides or will
provide benefits, including, without limitation, death or medical benefits
(whether or not insured) with respect to any current or former employee of
Borrower or any ERISA Affiliate beyond his or her retirement or other
termination of service other than (A) coverage mandated by applicable law,
(B) death or disability benefits that have been fully provided for by
fully paid up insurance or (C) severance benefits.


(ii)           Borrower
will furnish to Lender as soon as possible, and in any event within ten (10) days
after Borrower knows or has reason to believe that any of the events or
conditions specified below with respect to any Plan, Welfare Plan or
Multiemployer Plan has occurred or exists, an Officer’s Certificate setting
forth details respecting such event or condition and the action, if any, that
Borrower or its ERISA Affiliate proposes to take with respect thereto (and a
copy of any report or notice required to be filed with or given to PBGC (or any
other relevant Governmental Authority) by Borrower or an ERISA Affiliate with
respect to such event 



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or condition, if such report or notice is required to be filed with the
PBGC or any other relevant Governmental Authority:


(i)            any reportable
event, as defined in Section 4043 of ERISA and the regulations issued
thereunder, with respect to a Plan, as to which PBGC has not by regulation
waived the requirement of Section 4043(a) of ERISA that it be
notified within thirty (30) days of the occurrence of such event (provided that
a failure to meet the minimum funding standard of Section 412 of the Code
and of Section 302 of ERISA, including, without limitation, the failure to
make on or before its due date a required installment under Section 412(m) of
the Code and of Section 302(e) of ERISA, shall be a reportable event
regardless of the issuance of any waivers in accordance with Section 412(d) of
the Code), and any request for a waiver under Section 412(d) of the
Code for any Plan;


(ii)           the distribution
under Section 4041 of ERISA of a notice of intent to terminate any Plan or
any action taken by Borrower or an ERISA Affiliate to terminate any Plan;


(iii)          the institution by
PBGC of proceedings under Section 4042 of ERISA for the termination of, or
the appointment of a trustee to administer, any Plan, or the receipt by
Borrower or any ERISA Affiliate of a notice from a Multiemployer Plan that such
action has been taken by PBGC with respect to such Multiemployer Plan;


(iv)          the complete or
partial withdrawal from a Multiemployer Plan by Borrower or any ERISA Affiliate
that results in liability under Section 4201 or 4204 of ERISA (including
the obligation to satisfy secondary liability as a result of a purchaser
default) or the receipt by Borrower or any ERISA Affiliate of notice from a
Multiemployer Plan that it is in reorganization or insolvency pursuant to Section 4241
or 4245 of ERISA or that it intends to terminate or has terminated under Section 4041A
of ERISA;


(v)           the institution of a
proceeding by a fiduciary of any Multiemployer Plan against Borrower or any
ERISA Affiliate to enforce Section 515 of ERISA, which proceeding is not
dismissed within thirty (30) days;


(vi)          the adoption of an
amendment to any Plan that, pursuant to Section 401(a)(29) of the Code or Section 307
of ERISA, would result in the loss of tax-exempt status of the trust of which
such Plan is a part if Borrower or an ERISA Affiliate fails to timely provide
security to the Plan in accordance with the provisions of said Sections; or


(vii)         the imposition of a
lien or a security interest in connection with a Plan.


(iii)          Borrower
shall not knowingly engage in or permit any transaction in connection with
which Borrower or any ERISA Affiliate could be subject to either a civil
penalty or tax assessed pursuant to Section 502(i) or 502(l) of
ERISA or Section 4975 of the 



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Code, permit any Welfare Plan to provide benefits, including without
limitation, medical benefits (whether or not insured), with respect to any
current or former employee of Borrower or any ERISA Affiliate beyond his or her
retirement or other termination of service other than (A) coverage
mandated by applicable law, (B) death or disability benefits that have
been fully provided for by paid up insurance or otherwise or (C) severance
benefits, permit the assets of Borrower to become “plan assets”, except with respect to 401K Plan
Assets, if any, whether by operation of law or under regulations promulgated
under ERISA or adopt, amend (except as may be required by applicable law) or
increase the amount of any benefit or amount payable under, or permit any ERISA
Affiliate to adopt, amend (except as may be required by applicable law) or
increase the amount of any benefit or amount payable under, any employee
benefit plan (including, without limitation, any employee welfare benefit plan)
or other plan, policy or arrangement, except for increases that, in the
aggregate, do not result in a material increase in benefits expense to Borrower
or any ERISA Affiliate.


(u)           Labor
Matters. No organized work stoppage or labor strike is pending or, to
Borrower’s actual knowledge, threatened by employees or other laborers at any
Project and neither Borrower nor Manager (with respect to any Project) (i) is
involved in or, to Borrower’s actual knowledge, threatened with any labor
dispute, grievance or litigation relating to labor matters involving any
employees and other laborers at any Project, including, without limitation, violation
of any federal, state or local labor, safety or employment laws (domestic or
foreign) and/or charges of unfair labor practices or discrimination complaints;
(ii) has, to Borrower’s actual knowledge, engaged in any unfair labor
practices within the meaning of the National Labor Relations Act or the Railway
Labor Act; or (iii) is a party to, or bound by, any collective bargaining
agreement or union contract with respect to employees and other laborers at any
Project and no such agreement or contract is currently being negotiated by
Borrower, Manager or any of their Affiliates (with respect to any Project),
except as set forth in Schedule I attached hereto.


(v)           Borrower’s
Legal Status. Borrower’s exact legal name that is indicated on the
signature page hereto, organizational identification number and place of
business or, if more than one, its chief executive office, as well as Borrower’s
mailing address, if different, which were identified by Borrower to Lender and
contained in this Agreement, are true, accurate and complete. Borrower (i) will
not change its name, its place of business or, if more than one place of
business, its chief executive office, or its mailing address or organizational
identification number if it has one without giving Lender at least thirty (30)
days prior written notice of such change, (ii) if Borrower does not have
an organizational identification number and later obtains one, Borrower shall
promptly notify Lender of such organizational identification number and (iii) Borrower
will not change its type of organization, jurisdiction of organization or other
legal structure.


(w)          Compliance
with Anti-Terrorism, Embargo and Anti-Money Laundering Laws. None of (i) Borrower,
Sole Member, any Guarantor, or, to Borrower’s knowledge, any Person who owns
any direct or indirect equity interest (other than publicly held shares in SLG
and/or MCC) in or Controls Borrower, Sole Member or any Guarantor currently is
identified on the OFAC List or otherwise qualifies as a Prohibited Person, and
Borrower has implemented procedures, approved by Sole Member, to ensure that no
Person who now or hereafter owns an equity interest (other than publicly held
shares in SLG and/or MCC) in Borrower or Sole 



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Member is a Prohibited Person or Controlled by a Prohibited Person, and
(ii) Borrower, Sole Member, or any Guarantor are in violation of any Legal
Requirements relating to anti-money laundering or anti-terrorism, including,
without limitation, Legal Requirements related to transacting business with
Prohibited Persons or the requirements of the Uniting and Strengthening America
by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act
of 2001, U.S. Public Law 107-56, and the related regulations issued
thereunder, including temporary regulations, all as amended from time to time. To
the best of Borrower’s knowledge, (i) no tenant at any Project currently
is identified on the OFAC List or otherwise qualifies as a Prohibited Person,
and (ii) no tenant at any Project is owned or Controlled, directly or
indirectly, by a Prohibited Person. Borrower has determined that Manager has
implemented procedures, approved by Borrower, to ensure that no tenant at any
Project is a Prohibited Person or owned or Controlled by a Prohibited Person.


Section 2.03           Further Acts, etc. Borrower
will, at the cost of Borrower, and without expense to Lender, execute and
deliver to Lender upon demand such documents, instruments, certificates,
assignments and other writings, and do such other acts necessary or desirable,
to evidence, preserve and/or protect the collateral at any time securing or
intended to secure the Debt and/or for the better and more effective carrying
out of the intents and purposes of the Loan Documents, as Lender shall, from
time to time, reasonably require, provided that the same does not (y) increase
the rights of Lender or (z) increase the obligations or decrease the
rights of Borrower or Guarantor under the Loan Documents. Borrower hereby
authorizes Lender, if Borrower fails to execute within five (5) Business
Days after request, to execute in the name of Borrower or without the signature
of Borrower to the extent Lender may lawfully do so, one or more financing
statements, chattel mortgages or comparable security instruments to evidence
more effectively the liens of the Mortgages upon the Projects. Borrower grants
to Lender an irrevocable power of attorney coupled with an interest for the
purpose of, protecting, perfecting, preserving and realizing upon the interests
granted pursuant to the Mortgages or to effect the intent of this Agreement,
all as fully and effectually as Borrower might or could do; provided, however,
that Lender will not exercise such powers of attorney unless (i) Borrower
fails to execute any of the foregoing within five (5) Business Days after
it receives written request from Lender to do so, or (ii) an Event of
Default then exists; and Borrower hereby ratifies all that Lender shall
lawfully do or cause to be done by virtue hereof. Upon receipt of an affidavit
of an officer of Lender as to the loss, theft, destruction or mutilation of the
Note or any other Loan Document which is not of public record, and, in the case
of any such mutilation, upon surrender and cancellation of such Note or other
applicable Loan Document, Borrower will issue, in lieu thereof, a replacement
Note or other applicable Loan Document, dated the date of such lost, stolen,
destroyed or mutilated Note or other Loan Document in the same principal amount
thereof and otherwise of like tenor.


Section 2.04           Cross Default; Cross
Collateralization.


(a)           Each Borrower acknowledges that
Lender has made the Loan to Borrowers upon the security of their collective
interest in the Projects and in reliance upon the aggregate of the Projects
taken together being of greater value as collateral security than the sum of
the Projects taken separately. Each Borrower agrees that the Mortgages are and
will be cross-collateralized and cross-defaulted with each other so that (i) an
Event of Default under any of the Mortgages shall constitute an Event of
Default under the other Mortgages which secures the 



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Note; (ii) an Event of Default under the Note or
this Agreement shall constitute an Event of Default under each Mortgage; and (iii) each
Mortgage shall constitute security for the Note as if a single blanket lien
were placed on all of the Projects as security for the Note. Each Borrower
covenants and agrees that in the case of an Event of Default (i) Lender
shall have the right to pursue all of its rights and remedies in one
proceeding, or separately and independently in separate proceedings from time
to time, as mortgagee, in its sole and absolute discretion, shall determine
from time to time, (ii) Lender is not required to either marshal assets,
sell any individual Project in any inverse order of alienation, or be subject
to any “one action” or “election of remedies” law or rule, (iii) the
exercise by Lender of any remedies against any one Project will not impede
Lender from subsequently or simultaneously exercising remedies against any other
Project and (iv) all liens and other rights, remedies or privileges
provided to Lender shall remain in full force and effect until Lender has
exhausted all of its remedies against the Projects and all Projects have been
foreclosed, sold and/or otherwise realized upon in satisfaction of the Loan.


(b)           Each
Borrower hereby acknowledges and agrees that, by virtue of the foregoing
provisions of subsection (a), each Borrower has a direct and material interest
in preventing the occurrence of an Event of Default under any of the Loan
Documents. Accordingly, each Borrower is willing to continue to make or receive
loans (each an “Intra-Obligor Loan”,
and collectively, the “Intra-Obligor
Loans”) in order to provide for the payment of all amounts
due under the Loan Documents and, in so doing, to avoid an Event of Default
thereunder. In the event and to the extent that the proceeds from any of the
Projects or any other collateral granted to Lender by any Borrower (the “Creditor”) are applied
to any payments due with respect to the Projects or other collateral owned by
any other Borrower (the “Debtor”)
from and after the date hereof, then the Creditor shall be deemed to have made
an Intra-Obligor Loan to Debtor in the amount of such proceeds so applied (the “Intra-Obligor Loan Amount”).
Such Intra-Obligor Loan shall be deemed to be made on a non-recourse basis and
shall be repaid out of the future proceeds of the Project or other collateral
owned by the Debtor, together with interest thereon at a rate to be agreed upon
from time to time by each Borrower.


(c)           All
Intra-Obligor Loans deemed to be made under this Agreement shall be evidenced
by this Agreement, shall be an obligation of the Debtor which owes such
Intra-Obligor Loan solely by its execution of this Agreement and shall not be
evidenced by any separate instrument. Each party hereby waives presentment,
notice of dishonor, protest and notice of non-payment or non-performance with
respect to each Intra-Obligor Loan for which it is liable under this Agreement.
Interest and principal on Intra-Obligor Loans shall be paid solely out of Net
Proceeds from the Project or other property owned by the Debtor and shall be
subject in all cases to the terms and conditions of the Loan Documents, and the
payments from such sources shall be the sole and exclusive remedy available to
any Creditor during the term of the Loan. Each such payment of principal or
interest on Intra-Obligor Loans shall be subordinate and subject to the prior
payment of all amounts payable under the Loan Documents. To the extent such
sources of payment are insufficient to pay interest and principal on any
Intra-Obligor Loan, the Creditor owed such Intra-Obligor Loan shall not have
any claim against the Debtor which owes such Intra-Obligor Loan for such amounts
or lien on or security interest in any of the assets of such Debtor and no
further or additional recourse shall be available against the Debtor. All
payments received on account of any Intra-Obligor Loan under this Agreement
shall be credited first to interest, then to principal. Accrued but unpaid
interest shall not be compounded.


 



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Section 2.05           Representations and Warranties as
to the Projects. Borrower represents and warrants with respect to the
Projects as of the date hereof as follows (each of which representations shall,
as the context requires, refer to each entity comprising Borrower and to each
Project and shall be deemed made by each such Borrower with respect to each
such Project):


(a)           Lien
Priority. The Mortgages are a valid and enforceable first liens on the
Projects, free and clear of all encumbrances and liens having priority over the
liens of the Mortgages, except for the items set forth as exceptions to or
subordinate matters in the title insurance policies insuring the liens of the
Mortgages, none of which, individually or in the aggregate, materially
interfere with the benefits of the security intended to be provided by the
Mortgages, materially affect the value or marketability of any Project,
materially impair the use or operation of any Project for the use currently
being made thereof or materially impair Borrower’s ability to pay its
obligations in a timely manner (such items, being the “Permitted Encumbrances”).


(b)           Title.
Borrower has, subject only to the Permitted Encumbrances, good, insurable and
marketable fee simple title to the Projects (including, without limitation, the
Improvements and Fixtures with respect thereto) and to all easements and rights
benefiting the Projects and has the right, power and authority to mortgage,
encumber, give, grant, bargain, sell, alien, enfeoff, convey, confirm, pledge,
assign, and hypothecate the Projects. For so long as all or any portion of the
Debt remains outstanding, Borrower will preserve its interest in and title to
the Projects and will warrant and defend the same to Lender against any and all
claims made by, through or under Borrower and will warrant and defend the
validity and priority of the lien and security interest created herein against
the claims of all Persons whomsoever claiming by, through or under Borrower. The
foregoing warranty of title shall survive the foreclosure of any or all of the
Mortgages and shall inure to the benefit of and be enforceable by Lender in the
event Lender acquires title to the Project(s) pursuant to any foreclosure.
In addition, there are no outstanding options to purchase or rights of first
refusal to purchase any Project or Borrower’s ownership thereof.


(c)           Taxes
and Impositions. All taxes and other Impositions and governmental
assessments due and owing in respect of, and affecting, the Projects have been
paid. Borrower has paid all Impositions which constitute special governmental
assessments in full, except for those assessments which are permitted by
applicable Legal Requirements to be paid in installments, in which case all
installments which are due and payable have been paid in full. There are no
pending, or to Borrower’s best knowledge, proposed special or other assessments
for public improvements or otherwise affecting any Project, nor are there any
contemplated improvements to any Project that may result in such special or
other assessments.


(d)           Casualty;
Flood Zone. Each Project is in good repair and free and clear of any
damage, destruction or casualty (whether or not covered by insurance) that
would materially affect the value of such Project or the use for which such
Project was intended, there exists no structural or other material defects or
damages in or to any Project and Borrower has not received any written notice
from any insurance company or bonding company of any material defect or
inadequacies in any Project, or any part thereof, which would materially and
adversely affect the insurability of the same or cause the imposition of
extraordinary premiums or charges 



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thereon or of any
termination or threatened termination of any policy of insurance or bond. No
portion of any Project is located in an “area of special flood hazard,” as that
term is defined in the regulations of the Federal Insurance Administration,
Department of Housing and Urban Development, under the National Flood Insurance
Act of 1968, as amended (24 CFR § 1909.1) or Borrower has obtained the flood
insurance required by Section 3.01(a)(vi) hereof. No Project lies in
a 100 year flood plain that has been identified by the Secretary of Housing and
Urban Development or any other Governmental Authority or, if it does, Borrower
has obtained the flood insurance required by Section 3.01(a)(vi) hereof.


(e)           Completion;
Encroachment. All Improvements necessary for the efficient use and
operation of the Projects, including, without limitation, all Improvements
which were included for purposes of determining the appraised value of each
Project in the Appraisal(s), have been completed and, except as shown on the
surveys, none of said Improvements lie outside the boundaries and building
restriction lines applicable to any Project. Except as set forth in each title
insurance policy insuring the lien of each Mortgage, no improvements on
adjoining properties encroach upon any Project.


(f)            Separate
Lot. Each Project is taxed separately without regard to any other real
estate and constitute a legally subdivided lot under all applicable Legal
Requirements (or, if not subdivided, no subdivision or platting of any Project
is required under applicable Legal Requirements), and for all purposes may be
mortgaged, encumbered, conveyed or otherwise dealt with as an independent
parcel. No Project benefits from any tax abatement or exemption.


(g)           Use.
The existence of all Improvements, the present use and operation thereof and
the access of the Projects and the Improvements to all of the utilities and
other items referred to in paragraph (k) below are in compliance in all
material respects with all Leases affecting the Projects and all applicable
Legal Requirements, including, without limitation, Environmental Statutes,
Development Laws and Use Requirements. Borrower has not received any notice
from any Governmental Authority alleging any material uncured violation
relating to any Project of any applicable Legal Requirements.


(h)           Licenses
and Permits. Borrower currently holds and will continue to hold all
certificates of occupancy, licenses, registrations, permits, consents,
franchises and approvals of any Governmental Authority or any other Person
which are material for the lawful occupancy and operation of the Projects or
which are material to the ownership or operation of the Projects or the conduct
of Borrower’s business. All such certificates of occupancy, licenses,
registrations, permits, consents, franchises and approvals are current and in
full force and effect.


(i)            Environmental
Matters. Borrower has received and reviewed the Environmental Report and
has no reason to believe that the Environmental Report contains any untrue
statement of a material fact or omits to state a material fact necessary to
make the statements contained therein or herein, in light of the circumstances
under which such statements were made, not misleading.


(j)            Property
Proceedings. There are no actions, suits or proceedings pending or, to
Borrower’s actual knowledge after due inquiry and investigation, threatened in
any court or before any Governmental Authority or arbitration board or tribunal
(i) relating to (A) the zoning 



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of a Project or any part thereof, (B) any certificates of
occupancy, licenses, registrations, permits, consents or approvals issued with
respect to a Project or any part thereof, (C) the condemnation of a
Project or any part thereof, or (D) the condemnation or relocation of any
roadways abutting a Project required for access or the denial or limitation of
access to a Project or any part thereof from any point of access to such
Project, (ii) asserting that (A) any such zoning, certificates of
occupancy, licenses, registrations, permits, consents and/or approvals do not
permit the operation of any material portion of a Project as presently being conducted,
(B) any material improvements located on a Project or any part thereof
cannot be located thereon or operated with their intended use or (C) the
operation of any Project or any part thereof is in violation in any material
respect of any Environmental Statutes, Development Laws or other Legal
Requirements or Space Leases or Property Agreements or (iii) which might (A) affect
the validity or priority of any Loan Document or (B) have a Material
Adverse Effect. Borrower is not aware of any facts or circumstances which may
give rise to any actions, suits or proceedings described in the preceding
sentence.


(k)           Utilities.
Each Project has all necessary legal access to water, gas and electrical
supply, storm and sanitary sewerage facilities, other required public utilities
(with respect to each of the aforementioned items, by means of either a direct
connection to the source of such utilities or through connections available on
publicly dedicated roadways directly abutting such Project or through permanent
insurable easements benefiting such Project), fire and police protection,
parking, and means of direct access between such Project and public highways
over recognized curb cuts (or such access to public highways is through private
roadways which may be used for ingress and egress pursuant to permanent
insurable easements).


(l)            Mechanics’
Liens. Except as set forth in the title policies issued to Lender on the
date hereof described in subsection (m) below, each Project is free and
clear of any mechanics’ liens or liens in the nature thereof, and no rights are
outstanding that under law could give rise to any such liens, any of which
liens are or may be prior to, or equal with, the lien of the applicable
Mortgage, except those which are insured against by the title insurance policy
insuring the lien of such Mortgage.


(m)          Title
Insurance. Lender has received lenders’ title insurance policies insuring
the Mortgages as first liens on the Projects, subject only to Permitted
Encumbrances.


(n)           Insurance.
The Projects are insured in accordance with the requirements set forth in Article III
hereof.


(o)           Space
Leases.


(i)           Borrower has
delivered a true, correct and complete schedule of all Space Leases as of the
date hereof, which accurately and completely sets forth in all material
respects, for each such Space Lease, the following (collectively, the “Rent Roll”):  the name and address of the tenant; the lease
expiration date, extension and renewal provisions; the base rent and percentage
rent payable; all additional rent and pass through obligations; and the
security deposit held thereunder and the location of such deposit.



 40
 






 



(ii)          Each Space Lease
constitutes the legal, valid and binding obligation of Borrower and, to the
knowledge of Borrower, is enforceable against the tenant thereof. No default on
the part of Borrower (and, to Borrower’s knowledge, on the part of any tenant)
exists, or with the passing of time or the giving of notice would exist, (A) under
any Major Space Lease or (B) to the best knowledge of Borrower, under any
other Space Leases which would, in the aggregate, have a Material Adverse
Effect.


(iii)         No tenant under any
Space Lease has, as of the date hereof, paid Rent more than thirty (30) days in
advance, and the Rents under such Space Leases have not been waived, released,
or otherwise discharged or compromised.


(iv)         Except as has been
disclosed by Borrower in Exhibit H attached hereto, all work to be
performed by Borrower under the Space Leases has been substantially performed,
all contributions to be made by Borrower to the tenants thereunder have been
made except for any held-back amounts, and all other conditions precedent to
each such tenant’s obligations thereunder have been satisfied, with the
exception of such obligations, if any, which, either individually or
collectively, are not material in nature.


(v)          Each tenant under a
Space Lease or such tenant’s authorized subtenant is currently occupying the
space demised by such Space Lease.


(vi)         Borrower has
delivered to Lender true, correct and complete copies of all Space Leases
described in the Rent Roll.


(vii)        Each Space Lease is
in full force and effect and (except as disclosed on the Rent Roll) has not
been assigned, modified, supplemented or amended in any way.


(viii)       Each tenant under
each Space Lease is free from bankruptcy, reorganization or arrangement
proceedings or, to the actual knowledge of Borrower, a general assignment for
the benefit of creditors.


(ix)          No Space Lease
provides any party with the right to obtain a lien or encumbrance upon a Project
superior to the lien of the applicable Mortgage.


(x)           The options
permitting tenants under Space Leases demising less than 10,000 square feet to
terminate their respective Space Leases will not, in the aggregate, have a
Material Adverse Effect on any or all of the Projects.


(p)           Property Agreements.


(i)           Borrower has
delivered to Lender true, correct and complete copies of all material Property
Agreements.


(ii)          No Property
Agreement provides any party with the right to obtain a lien or encumbrance
upon a Project superior to the lien of the applicable Mortgage.



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(iii)         No default by
Borrower (or, to Borrower’s knowledge, by other parties thereto) exists or with
the passing of time or the giving of notice or both would exist under any
Property Agreement which would, individually or in the aggregate, have a
Material Adverse Effect.


(iv)         Borrower has not
received or given any written communication which alleges that a default exists
or, with the giving of notice or the lapse of time, or both, would exist under
the provisions of any Property Agreement.


(v)          No condition exists
whereby Borrower or any future owner of a Project may be required to purchase
any other parcel of land which is subject to any Property Agreement or which
gives any Person a right to purchase, or right of first refusal with respect
to, a Project.


(vi)         To the best knowledge
of Borrower, no offset or any right of offset exists respecting continued
contributions to be made by any party to any Property Agreement except as
expressly set forth therein. Except as previously disclosed to Lender in
writing, no material exclusions or restrictions on the utilization, leasing or
improvement of any Project (including non compete agreements) exist in any
Property Agreement.


(vii)        All “pre opening” requirements
contained in all Property Agreements (including, but not limited to, all off
site and on site construction requirements), if any, have been fulfilled, and,
to the best of Borrower’s knowledge, no condition now exists whereby any party
to any such Property Agreement could refuse to honor its obligations
thereunder.


(viii)       All work, if any, to
be performed by Borrower under each of the Property Agreements has been
substantially performed, all contributions to be made by Borrower to any party
to such Property Agreements have been made, and all other conditions to such
party’s obligations thereunder have been satisfied.


(q)           Personal
Property. Borrower owns no personal property that is material to the
operation of the Projects.


(r)            Leasing
Brokerage and Management Fees. Except as previously disclosed to Lender in
writing, there are no brokerage fees or commissions payable by Borrower with
respect to the leasing of space at the Projects and there are no management
fees payable by Borrower with respect to the management of the Projects.


(s)           Security
Deposits. All security deposits held by Borrower in the form of cash
deposits with respect to the Projects on the date hereof have been transferred
to the Security Deposit Account on the date hereof, if, pursuant to applicable
Legal Requirements, such security deposits are required to be held in a
segregated account. Borrower is in compliance with all Legal Requirements
relating to such security deposits as to which failure to comply might,
individually or in the aggregate, have a Material Adverse Effect.


(t)            [Reserved.]



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(u)           Representations
Generally. The representations and warranties contained in this Agreement,
and the review and inquiry made on behalf of Borrower therefor, have all been
made by Persons having the requisite expertise and knowledge to provide such
representations and warranties. No representation, warranty or statement of
fact made by or on behalf of Borrower in this Agreement or in any certificate,
document or schedule furnished to Lender pursuant hereto, contains any untrue
statement of a material fact or omits to state any material fact necessary to
make statements contained therein or herein not misleading (which may be to
Borrower’s best knowledge where so provided herein). There are no facts presently
known to Borrower which have not been disclosed to Lender which would,
individually or in the aggregate, have a Material Adverse Effect nor as far as
Borrower can foresee might, individually or in the aggregate, have a Material
Adverse Effect.


Section 2.06           Removal of Lien.


(a)           Borrower shall, at its expense,
maintain each Mortgage as a first lien on the Projects encumbered thereby and
shall keep the Projects free and clear of all liens and encumbrances of any
kind and nature other than the Permitted Encumbrances. Borrower shall, within
thirty (30) days following the filing thereof, promptly discharge of record, by
bond or otherwise, any such liens and, promptly upon request by Lender, shall
deliver to Lender evidence reasonably satisfactory to Lender of the discharge
thereof.


(b)           Without
limitation to the provisions of Section 2.06(a) hereof, Borrower
shall (i) pay, from time to time when the same shall become due, all
claims and demands of mechanics, materialmen, laborers, and others which, if
unpaid, might result in, or permit the creation of, a lien on a Project or any
part thereof, (ii) cause to be removed of record (by payment or posting of
bond or settlement or otherwise) any mechanics’, materialmens’, laborers’ or
other lien on a Project, or any part thereof, or on the revenues, rents,
issues, income or profit arising therefrom, and (iii) in general, do or
cause to be done, without expense to Lender, everything reasonably necessary to
preserve in full the lien of the Mortgages. If Borrower fails to comply with
the requirements of this Section 2.06(b), then, upon five (5) Business
Days’ prior notice to Borrower, Lender may, but shall not be obligated to, pay
any such lien, and Borrower shall, within five (5) Business Days after
Lender’s demand therefor, reimburse Lender for all sums so expended, together
with interest thereon at the Default Rate from the date advanced, all of which
shall be deemed part of the Debt. Nothing contained herein shall be deemed a
consent or request of Lender, express or implied, by inference or otherwise, to
the performance of any alteration, repair or other work by any contractor,
subcontractor or laborer or the furnishing of any materials by any materialmen
in connection therewith.


(c)           Notwithstanding
the foregoing, Borrower may contest any lien (other than a lien relating to
non-payment of Impositions, the contest of which shall be governed by Section 4.04
hereof) of the type set forth in subparagraph (b)(ii) of this Section 2.06
provided that, following prior notice to Lender (i) Borrower is contesting
the validity of such lien with due diligence and in good faith and by
appropriate proceedings, without cost or expense to Lender or any of its
agents, employees, officers, or directors, (ii) Borrower shall preclude
the collection of, or other realization upon, any contested amount from the
applicable Project or any revenues from or interest in such Project, (iii) neither
the Project nor any part thereof nor interest therein, shall be in any danger
of being sold, forfeited or lost by reason of such contest by Borrower, (iv) such




 43
 






 



contest by Borrower shall not affect the ownership, use or occupancy of
such Project, (v) such contest by Borrower shall not subject Lender or
Borrower to the risk of civil or criminal liability (other than the civil
liability of Borrower for the amount of the lien in question), (vi) such
lien is subordinate to the lien of the related Mortgage(s), (vii) Borrower
has not consented to such lien, (viii) Borrower has given Lender prompt
notice of the filing of such lien and, upon request by Lender from time to
time, notice of the status of such contest by Borrower and/or confirmation of
the continuing satisfaction of the conditions set forth in this Section 2.06(c),
(ix) Borrower shall promptly pay the obligation secured by such lien upon
a final determination of Borrower’s liability therefor, and (x) if
requested by Lender, with respect to any Contract wherein the amount claimed is
in excess of $125,000.00, Borrower shall deliver to Lender cash, a bond or other
security reasonably acceptable to Lender equal to 125% of the contested amount
pursuant to collateral arrangements reasonably satisfactory to Lender.


Section 2.07           Cost of Defending and Upholding
this Agreement and the Lien of .the Mortgages  If any action or proceeding is commenced to
which Lender is made a party relating to the Loan Documents and/or the Projects
or Lender’s interest therein or in which it becomes necessary to defend or
uphold the lien of the Mortgages or the terms of this Agreement or any other
Loan Document, Borrower shall, promptly after demand, reimburse Lender for all
reasonable out-of-pocket expenses (including, without limitation, reasonable
attorneys’ fees and disbursements) incurred by Lender in connection therewith,
and such sum, together with interest thereon at the Default Rate from and after
such demand until fully paid, shall constitute a part of the Debt.


Section 2.08           Use of the Projects. Borrower
will use, or cause to be used, the Projects for such use as is permitted pursuant
to applicable Legal Requirements including, without limitation, under the
certificate of occupancy applicable to each such Project. Borrower shall not
suffer or permit the Projects or any portion thereof to be used by the public,
any tenant, or any Person not subject to a Lease, in a manner as is reasonably
likely to impair Borrower’s title to any of the Projects, or in such manner as
may give rise to a claim or claims of adverse usage or adverse possession by
the public, or of implied dedication of any of the Projects or any part
thereof.


Section 2.09           Financial Reports.


(a)           Borrower will keep and maintain or
will cause to be kept and maintained on a Fiscal Year basis, in accordance with
GAAP (or such other accounting basis reasonably acceptable to Lender)
consistently applied, proper and accurate books, federal income tax returns
(subject to Section 2.09(i) hereof), records and accounts reflecting (i) all
of the financial affairs of Borrower and (ii) all items of income and
expense in connection with the operation of the Projects or in connection with
any services, equipment or furnishings provided in connection with the
operation thereof, to the extent realized by Borrower. Lender shall have the
right from time to time at all times during normal business hours upon not less
than three (3) Business Days prior notice to examine such books, federal
income tax returns (subject to Section 2.09(i) hereof), records and
accounts at the office of Borrower or other Person maintaining such books,
federal income tax returns (subject to Section 2.09(i) hereof),
records and accounts and to make such copies or extracts thereof as Lender
shall desire. After the occurrence of an Event of Default, Borrower shall pay
any costs and expenses incurred by Lender to examine Borrower’s 



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and Guarantor’s
accounting records with respect to the Projects, as Lender shall determine to
be necessary or appropriate in the protection of Lender’s interest.


(b)           Borrower
will furnish Lender (i) annually, within one hundred twenty (120) days
following the end of each Fiscal Year of Borrower, (ii) quarterly, within
forty-five (45) days following the end of each fiscal quarter of Borrower
(other than the fourth quarter financial statements, which shall be delivered
contemporaneously with or as a part of the annual financial statements) and (iii) on
a monthly basis, within thirty five (35) days following the end of each
calendar month, with a complete copy of Borrower’s financial statement covering
(i) all of the financial affairs of Borrower and (ii) the operation
of the Projects for such Fiscal Year, fiscal quarters or calendar months, as
applicable, containing a statement of revenues and expenses, a statement of
assets and liabilities and a statement of Borrower’s equity. Lender agrees and
acknowledges that the form of the monthly statements to be provided hereunder
shall be consistent with those produced by Borrower in the ordinary course of
its business pursuant to its internal accounting procedures and shall not be
required to be in compliance with GAAP. Borrower’s obligation hereunder for the
delivery of monthly financial statements shall commence with the statements for
the month of July 2006. Together with the financial statements required to
be furnished pursuant to this Section 2.09(b), Borrower shall furnish to
Lender (A) an Officer’s Certificate certifying as of the date thereof (1) that
the financial statements accurately represent the results of operations and
financial condition of Borrower and the Projects all (other than the monthly
statements) in accordance with GAAP (or such other accounting basis reasonably
acceptable to Lender) consistently applied, and (2) whether there exists a
Default or Event of Default under the Note or any other Loan Document executed
and delivered by Borrower, and if such event or circumstance exists, the nature
thereof, the period of time it has existed and the action then being taken to
remedy such event or circumstance and (B) together with the financial
statements delivered pursuant to Section 2.09(b)(ii) above, a
statement showing (1) Pro-Forma Net Operating Income for the subsequent
twelve (12) month period adjusted to reflect the Adjusted Net Cash Flow
(subject to verification by Lender in its reasonable discretion) and (2) the
calculation of the Debt Service Coverage Ratio.


(c)           Borrower
will furnish Lender quarterly, within forty-five (45) days following the end of
each quarter, with a true, complete and correct cash flow statement with
respect to the Projects and the 75 Property (and, following an Event of Default
and during the continuance thereof, monthly, within twenty (20) days following
the end of each month, as to the 75 Property) in the form attached hereto as Exhibit J
and made a part hereof, together with an Officer’s Certificate with respect
thereto, showing (i) all cash receipts of any kind whatsoever and all cash
payments and disbursements, (ii) year-to-date summaries of such cash
receipts, payments and disbursements, and (iii) a list of all litigation
and proceedings affecting Borrower, Sole Member or the Projects in which the
amount involved is $250,000 or more, if not covered by insurance (or $1,000,000
or more whether or not covered by insurance).


(d)           Borrower
will furnish Lender quarterly, within forty-five (45) days following the end of
each quarter, with a certification of Manager stating that all Operating
Expenses with respect to the Projects which had accrued as of the last day of
the month preceding the delivery of the cash flow statement referred to in
clause (c) above have been fully paid or otherwise reserved for by Manager
(any such certification or any certification furnished by a Manager pursuant to
clause (c) above, a “Manager
Certification”).



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(e)           Borrower
will furnish Lender (i) annually, within thirty (30) days following the
end of each year, (ii) quarterly, within twenty (20) days after Lender’s
request therefor, and (iii) within twenty (20) days following the end of
each month, with a true, complete and correct rent roll for the Projects,
including a list of which tenants are in default under their respective leases,
dated as of the date of Lender’s request, identifying each tenant, the monthly
rent and additional rent, if any, payable by such tenant, the expiration date
of such tenant’s Lease, the security deposit, if any, held by Borrower under
the Lease, the space covered by the Lease, each tenant that has filed a
bankruptcy, insolvency, or reorganization proceeding since delivery of the last
such rent roll, and the arrearages for such tenant, if any, and such rent roll shall
be accompanied by an Officer’s Certificate, dated as of the date of the
delivery of such rent roll, certifying that such rent roll is true, correct and
complete in all material respects as of its date.


(f)            Borrower
shall furnish to Lender, within thirty (30) days after Lender’s request
therefor, with such further detailed information with respect to the operation
of the Projects and the financial affairs of Borrower as may be reasonably
requested by Lender.


(g)           Borrower
shall cause Manager to furnish to Lender, within forty five (45) days following
the end of each quarter (other than the fourth quarter, which shall be
delivered with the annual financial statements), a schedule of tenant security
deposits showing any activity in the Security Deposit Account, if any, for such
quarter, together with a certification of Manager as to the balance in such
Security Deposit Account, if any, and that such tenant security deposits are
being held in accordance with all Legal Requirements.


(h)           Borrower
will furnish Lender annually, within ninety (90) days after the end of each
Fiscal Year, with a report setting forth (i) the Net Operating Income for
such Fiscal Year, (ii) the average occupancy rate of the Projects during
such Fiscal Year, (iii) the capital repairs, replacements and improvements
performed at the Projects during such Fiscal Year and the aggregate Recurring
Replacement Expenditures made in connection therewith, and (iv) the
balance contained in each of the Escrow Accounts as of the end of such Fiscal
Year (which balance Lender shall provide upon Borrower’s written request
therefor).


(i)            Unless
Borrower is a disregarded entity for tax purposes and not required to file any
tax returns, Borrower shall furnish to Lender annually, within thirty (30) days
of filing its respective tax return, a copy of such tax return.


(j)            Borrower
shall submit to Lender for Lender’s written approval an Annual Budget, with
respect to each Fiscal Year during the term of the Loan, not later than January 31
of such Fiscal Year, in form reasonably satisfactory to Lender setting forth in
reasonable detail budgeted monthly operating income and monthly operating
capital and other expenses (including, without limitation, expected Capital
Expenditures and Reletting Expenditures) for the Projects. Borrower has
delivered to Lender a true, correct and complete copy of the Annual Budget for
2006. Each Annual Budget shall contain, among other things, limitations on
management fees, third party service fees, and other expenses as Borrower may
reasonably determine. Lender shall have the right to approve such Annual Budget
which approval shall not be unreasonably withheld, and in the event that Lender
objects to the proposed Annual Budget submitted by Borrower, Lender shall
advise Borrower of such objections within fifteen (15) days 



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after receipt thereof (and deliver to Borrower a reasonably detailed
description of such objections) and Borrower shall, within five (5) Business
Days after receipt of notice of any such objections, revise such Annual Budget
and resubmit the same to Lender. Lender shall advise Borrower of any objections
to such revised Annual Budget within ten (10) days after receipt thereof
(and deliver to Borrower a reasonably detailed description of such objections)
and Borrower shall revise the same in accordance with the process described
herein until Lender approves an Annual Budget; provided,
however, that if Lender shall not advise Borrower of its objections to any
proposed Annual Budget within the applicable time period set forth in this
Section, then such proposed Annual Budget shall be deemed approved by Lender. Until
such time that Lender approves a proposed Annual Budget, the most recently
Approved Annual Budget shall apply; provided that, such Approved Annual Budget
shall be adjusted to reflect actual increases in Basic Carrying Costs and
utilities expenses. In the event that Borrower must incur an Extraordinary
Expense, then Borrower shall promptly deliver to Lender a reasonably detailed
explanation of such proposed Extraordinary Expense for Lender’s approval, which
approval shall not be unreasonably withheld, conditioned or delayed, provided, however, Borrower shall be permitted
to incur an Extraordinary Expense reasonably necessary to prevent or address
imminent danger to Persons or property without the prior approval of Lender
provided that Borrower promptly advises Lender of such Extraordinary Expense
and the nature thereof.


(k)           In
the event that Borrower fails to deliver any of the financial statements,
reports or other information required to be delivered to Lender pursuant to
this Section 2.09 on or prior to their due dates, if any such failure
shall continue for ten (10) days following notice thereof from Lender,
Borrower shall pay to Lender on each Payment Date for each month or portion
thereof that any such financial statement, report or other information remains
undelivered, an administrative fee in the amount of Five Hundred Dollars ($500)
multiplied by the number of undelivered statements, reports or other items up to
a maximum amount of Two Thousand Dollars ($2,000) for any applicable reporting
period. Borrower agrees that such administrative fee (i) is a fair and
reasonable fee necessary to compensate Lender for its additional administrative
costs and increased costs relating to Borrower’s failure to deliver the
aforementioned statements, reports or other items as and when required
hereunder and (ii) is not a penalty.


Section 2.10           Litigation. Borrower will give
prompt written notice to Lender of any litigation or governmental proceedings
pending or threatened (in writing) against Borrower which might have a Material
Adverse Effect.


Section 2.11           Updates of Representations. Borrower
shall deliver to Lender within ten (10) Business Days after the request of
Lender an Officer’s Certificate updating all of the representations and
warranties contained in this Agreement and the other Loan Documents and
certifying that all of the representations and warranties contained in this
Agreement and the other Loan Documents, as updated pursuant to such Officer’s
Certificate, are true, accurate and complete as of the date of such Officer’s
Certificate.


Section 2.12           Condominium Provisions. With
respect to each Project that is comprised of condominium units (each such
Project, a “Condominium”),
Borrower hereby represents and warrants, and covenants and agrees, as follows:



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(a)           To
the Borrower’s actual knowledge, the Condominium was created in accordance with
all applicable laws (the “Condominium
Act”) by declaration of condominium recorded in the real estate
records of the county in which such Project is located (the “Declaration”). A Board of
Managers (the “Board of Managers”)
governs the Condominium pursuant to the By-Laws of the Condominium (the “By-Laws”), which have been
duly recorded in said real estate records. All of the Condominium units are
owned solely by the Borrower and no other Person has any interest in such units
or the Condominium common areas.


(b)           In
the event of a conflict between the terms of this Agreement concerning the use
of insurance proceeds in the event of damage to the Project or the terms of
this Agreement concerning the use of awards from condemnation or taking of the
Project and the terms of the Declaration or By-Laws regarding the same, the
terms and provisions of the this Agreement will control. In the event of damage
or destruction to, or condemnation or taking of, all or any part of the
Condominium which requires a vote of the unit owners of the Condominium to
repair and restore the Condominium, Borrower hereby assigns to Lender Borrower’s
full right and power to vote in such matters and hereby irrevocably appoints
Lender as Borrower’s attorney-in-fact coupled with an interest to cast Borrower’s
vote in such matters as Lender deems appropriate in its sole judgment,
consistent with the provisions of this Agreement with respect to repair and
restoration of Projects generally.


(c)           Borrower
will fully and faithfully perform and comply in all material respects with the
material terms, material conditions, and material provisions of the
Declaration, By-Laws, rules and regulations of the Condominium and any
other material documents creating or governing the Condominium.


(d)           In
addition to the Events of Default specified in Section 13.01 hereof, the
principal sum secured by the Mortgages, together with the accrued and unpaid
interest thereon, will immediately become due at the option of Lender if:


(1)           Borrower fails
within any applicable grace and notice periods to fully and faithfully perform
and comply with the material terms, conditions and provisions of the
Declaration, By-Laws, rules and regulations of the Condominium, or any
other documents creating or governing the Condominium and such failure has or
is reasonably likely to have a Material Adverse Effect;


(2)           The Declaration,
By-Laws, rules and regulations of the Condominium or any other document
creating or governing the Condominium is changed in a manner which materially
and adversely affects the lien or security of this Agreement, as determined by
Lender in its reasonable discretion;


(3)           (A) The
Condominium is terminated or the Condominium is withdrawn from the provisions
of the Condominium Act and, in either case, the lien of the applicable Mortgage
is materially and adversely affected, or (B) the unit owners of the
Condominium do not resolve to repair and restore the Condominium after damage
to all or a substantial 



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part of the
Condominium or after condemnation or taking of any part of the Condominium,
subject to the rights of Borrower to obtain a Release of the affected Project
pursuant to Section 15.02 hereof;


(4)           The Condominium Act
or any part or provisions thereof is determined to be invalid or unenforceable
and such determination materially adversely affects the lien of the related
Mortgage or the rights of Lender hereunder, as reasonably determined by Lender;
or


(5)           There is a transfer,
release, creation of liens, partition, subdivision, condemnation or taking of
all or part of the common elements of the Condominium which materially and
adversely affects the lien or security of the applicable Mortgage, as
reasonably determined by Lender.


In the event that any of
the foregoing shall occur and continue beyond any applicable grace and notice
periods, Borrower may cure any such default by causing, in accordance with the
terms and provisions of this Agreement and the other Loan Documents, the
Release of the affected Project within 90 days thereafter. Notwithstanding the
foregoing provisions of this Section 2.12, (i) for so long as all of
the Condominium units are owned by the Borrower, Borrower shall not be required
to comply with the provisions of subsection (c) above and (ii) Borrower
shall be permitted to terminate the Condominium, provided that (A) the
lien of the Mortgage on the subject Project is not adversely affected thereby, (B) Borrower
provides to Lender evidence reasonably satisfactory to Lender that the title
policy insuring the lien of Lender’s mortgage on the subject Project remains in
full force and effect notwithstanding such termination of the Condominium, (C) Borrower
delivers to Lender not less than thirty (30) days’ prior written notice of
Borrower’s intention to terminate such Condominium, (D) such termination
of the Condominium shall not adversely affect or otherwise diminish Lender’s
rights under this Agreement or the other Loan Documents and (E) Borrower
executes and delivers to Lender, promptly following request therefor, such
documents as Lender shall reasonably require confirming the continued validity
and effectiveness of this Agreement and the other Loan Documents.


(e)           Lender
may pay for the account and on behalf of Borrower any amount which Borrower is
obligated to pay, including common charges and expenses or special assessments,
to the Board of Managers or pursuant to the Declaration, By-Laws, rules and
regulations of the Condominium or any other documents creating or governing the
Condominium, upon default, beyond any applicable grace and notice periods, by
Borrower in paying the same, and Lender may perform any action which Borrower
may or is obligated to do pursuant to the Declaration, By-Laws, rules and
regulations of the Condominium or any other document creating or governing the
Condominium upon default, beyond any applicable grace and notice periods, by
Borrower in doing the same. All reasonable sums paid by Lender for the expense
of any such action or proceeding described in this Section 2.12 (including
reasonable counsel fees and expenses) shall be paid by Borrower to Lender
promptly on demand, together with interest thereon at the Default Rate after
demand by Lender through the date actually paid by Borrower. Any such sum paid
by Lender and the interest thereon shall be a lien on the Project prior to any
claim, lien, right, title or interest in, to or on the Project attaching or accruing




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subsequent to the lien of the Mortgages, and shall be deemed to be
evidenced and secured by the Mortgages.


(f)            Upon
default by Borrower in timely paying to Lender any sum required as provided
above in Section 2.12(e), the whole of the Debt and all other sums and
interest secured by this Agreement shall immediately become due and payable at
the option of Lender. Nothing contained in Section 2.12(e) above
shall obligate Lender to pay any sums or perform any acts on behalf of Borrower.
Furthermore, if Lender pays such amounts or performs such acts on behalf of
Borrower, the same shall not constitute a waiver or forgiveness by Lender of
Borrower’s default under this Agreement or any estoppel against Lender from
declaring Borrower in default hereunder.


(g)           Borrower
hereby grants to Lender and its successors and assigns, a true and lawful power
of attorney and proxy, with full power of substitution, for and in its name, to
vote and otherwise act with respect to the Project at all annual, special, and
other meetings of the condominium owners (the “Owners”), or by written consent in lieu thereof, and
at any other time Borrower is required or permitted to vote or act as an Owner (i) at
any time Borrower or the Owners vote or act to change an Owner’s or the Owners’
percentage of the undivided interest in the common elements, if such change
could reasonably be expected to have an adverse effect upon Lender or the
security for the Loan (ii) [Reserved],
(iii) at any time Borrower or the Owners vote or act to modify or amend
the Declaration, if such change could reasonably be expected to have an adverse
effect upon Lender or the security for the Loan, (iv) at any time Borrower
or the Owners vote or act to modify or amend the By-Laws, if such change could
reasonably be expected to have an adverse effect upon Lender or the security
for the Loan, (v) at any time Borrower or the Owners vote to repair or not
repair, as the case may be, the Common Elements and/or any Unit or Units (as
such terms are defined in the Declaration) of the Condominium upon the
occurrence of a fire, other casualty or condemnation or eminent domain, and (vi) upon
the occurrence and during the continuance of an Event of Default under the Loan
Documents, at any time Borrower or the Owners have the right to vote pursuant
to the Declaration and/or By-Laws. From and after the occurrence of an Event of
Default, Lender shall have the right to require that any members (or
representatives) of the Board of Managers elected (or appointed) by Borrower
tender their written resignation to the Board of Managers and replace such
member or representative with a person elected or appointed by Lender. Lender
has required that, with respect to all of the current members so appointed or
elected by Borrower, which are Mitchell E. Hersh, Mark Yeager, Ronald Gentile
and Joseph Adamo, Borrower tender written resignations from each of them as of
the date hereof and Lender may submit such written resignations to the Board of
Managers from and after the occurrence of an Event of Default. The grant of the
power of attorney and proxy set forth above is intended to be fully effective
without further action by Borrower and is intended to be relied upon by the
Owners, the Board of Managers and the Condominium for all purposes. Notwithstanding
the foregoing, upon request of Lender, Borrower will promptly execute and
deliver to Lender and its successors and assigns, a separate power of attorney
and proxy, in recordable form and otherwise in form and substance reasonably
acceptable to Lender, confirming the foregoing grant to Lender.



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ARTICLE III


INSURANCE AND CASUALTY RESTORATION


Section 3.01           Insurance Coverage. Borrower
shall, at its expense, maintain the following insurance coverages with respect
to the each Project during the term of this Agreement:


(a)                  (i)       Insurance against loss or damage by fire,
casualty and other hazards included in an “all-risk” extended coverage endorsement or its
equivalent, with such endorsements as Lender may from time to time reasonably
require and which are customarily required by Institutional Lenders of similar
properties similarly situated in an amount not less than the greater of (A) 100%
of the insurable replacement value of such Project (exclusive of the land and
footings and foundations) and (B) such other amount as is necessary to
prevent any reduction in such policy by reason of and to prevent Borrower,
Lender or any other insured thereunder from being deemed to be a co-insurer and
if a Project constitutes a legal non-conforming use, an ordinance of law
coverage endorsement which contains “Demolition
Cost” (in an amount equal to 10% of the “all risk” extended
insurance coverage), “Loss Due to
Operation of Law” (in an amount equal to 100% of the “all risk”
extended insurance coverage) and “Increased
Cost of Construction” coverages (in an amount equal to 25% of the
“all risk” insurance extended coverage), covering the Project. Not more
frequently than once every three (3) years, Borrower, at its option, shall
either (A) have the Appraisal updated or obtain a new appraisal of each of
the Projects, (B) have a valuation of each of the Projects made by or for
its insurance carrier conducted by an appraiser experienced in valuing
properties of similar type to that of each of the Projects which are in the
geographical area in which the applicable Projects are located or (C) provide
such other evidence as will enable Lender to determine, in its reasonable
discretion, whether there shall have been an increase in the insurable value of
the Projects and Borrower shall deliver such updated Appraisal, new appraisal,
insurance valuation or other evidence reasonably acceptable to Lender, as the
case may be, and, if such updated Appraisal, new appraisal, insurance
valuation, or other evidence reasonably acceptable to Lender reflects an
increase in the insurable value of the Projects, the amount of insurance
required hereunder shall be increased accordingly and Borrower shall deliver
evidence reasonably satisfactory to Lender that such policy has been so
increased.


(ii)      Commercial general
liability insurance against claims for personal and bodily injury and/or death
to one or more persons or property damage, occurring on, in or about the
Projects in such amounts as Lender may from time to time reasonably require
(but in no event shall Lender’s requirements be increased more frequently than
once during each twelve (12) month period) and which are customarily required
by Institutional Lenders for similar properties similarly situated, but not
less than $1,000,000 per occurrence and $2,000,000 general aggregate on a per
location basis and, in addition thereto, not less than $75,000,000 excess
and/or umbrella liability insurance shall be maintained for any and all claims.


(iii)     Business income or loss
of rents or other similar insurance (A) with loss payable to Lender, (B) covering
all risks required to be covered by the insurance provided for in Section 3.01(a)(i) hereof,
(C) in an amount not less than 100% 



 51
 






 



of the
projected fixed or base rent plus percentage rent for the succeeding eighteen
(18) month period. The amount of such insurance shall be determined upon the
execution of this Agreement, and not more frequently than once each calendar
year thereafter based on Borrower’s reasonable estimate of projected fixed or
base rent plus percentage rent, from the Projects for the next succeeding
eighteen (18) months, (D) containing an unlimited indemnity period during
the time that it takes to repair or rebuild the damaged property, and (E) containing
an extended period of indemnity endorsement which provides that after the
physical loss to the Property has been repaired, the continued loss of income
will be insured until such income either returns to the same level it was at
prior to the loss, or the expiration of twelve (12) months from the date that
the Property is repaired or replaced and operations are resumed, whichever
first occurs, and notwithstanding that the policy may expire prior to the end
of such period. In the event that a Project shall be damaged or destroyed,
Borrower shall and hereby does assign to Lender all payment of claims under the
policies of such insurance, and all amounts payable thereunder, and all net
amounts, shall be collected by Lender under such policies and shall be applied
in accordance with this Agreement; provided,
however, that nothing herein contained shall be deemed to relieve Borrower
of its obligations to timely pay all amounts due under the Loan Documents.


(iv)     Intentionally Omitted.


(v)      Insurance against loss or
damages from explosion of steam boilers, air conditioning equipment, pressure
vessels or similar apparatus now or hereafter installed at the Projects, in
such amounts as Lender may from time to time reasonably require and which are
then customarily required by Institutional Lenders of similar properties
similarly situated.


(vi)     If, as to any Project,
the Improvements thereon or any part thereof is situated in an area designated
by the Federal Emergency Management Agency (“FEMA”) as a special flood
hazard area (Zone A or Zone V), flood insurance in an amount equal to the
minimum amount required, under the terms of coverage, to compensate for any
damage or loss on a replacement basis (or the unpaid balance of the
indebtedness secured hereby if replacement cost coverage is not available for
the type of building insured). In addition, at Lender’s discretion, regardless
of whether a particular Project is located in a special flood hazard area,
Borrower shall maintain flood insurance in amounts satisfactory to Lender, and
in all cases, having a maximum permissible deductible of $100,000.


(vii)    Worker’s compensation
insurance or other similar insurance which may be required by Governmental
Authorities or Legal Requirements.


(viii)   Insurance against loss
resulting from mold, spores or fungus on or about the Projects.


(ix)     During any period of the
term of the Loan that TRIA is in effect, if “acts of terrorism” or other
similar acts or events are hereafter excluded from the insurance policies
maintained pursuant to subsections (i), (ii) and (iii) above, Borrower




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shall obtain
an endorsement to such policy, or a separate policy insuring against terrorism
and “fire following”, each in an amount equal to one hundred percent (100%) of
the “Full Replacement Cost” for Certified Acts of Terrorism as defined by TRIA
and in an amount satisfactory to Lender for Non-certified Acts of Terrorism
which for purposes of this Agreement shall mean actual replacement value
(exclusive of costs of excavations, foundations, underground utilities and
footings) with a waiver of depreciation, but the amount shall in no event be
less than the total outstanding principal balance of the Loan. The endorsement
or policy shall be in form and substance reasonably satisfactory to Lender and
shall meet Rating Agency criteria for securitized loans. During  any period of the term of the Loan that TRIA
is not in effect, Borrower shall maintain the insurance coverage described in
the immediately preceding sentence but the total annual premium payable by
Borrower for such terrorism coverage shall not exceed an amount greater than
two hundred percent (200%) of the total annual premium being paid by Borrower
as of the Closing Date for such terrorism coverage.


(x)      Such other insurance as
may from time to time be required by Lender and which is then customarily
required by Institutional Lenders for similar properties similarly situated,
against other insurable hazards, including, but not limited to, malicious
mischief, vandalism, sinkhole and mine subsidence, windstorm and/or earthquake,
due regard to be given to the size and type of the related Project,
Improvements, Fixtures and Equipment and their location, construction and use. Additionally,
Borrower shall carry such insurance coverage as Lender may from time to time
require if the failure to carry such insurance may result in a downgrade,
qualification or withdrawal of any class of securities issued in connection
with a Secondary Market Transaction or, if the Loan is not yet part of a
Secondary Market Transaction, would result in an increase in the subordination
levels of any class of securities anticipated to be issued in connection with a
proposed Secondary Market Transaction.


(b)           Borrower
shall cause any Manager of the Projects to maintain fidelity insurance in an
amount equal to the least of (i) the Operating Income of the applicable
Projects for the six (6) month period immediately preceding the date on
which the premium for such insurance is due and payable, (ii) $500,000.00
and (iii) such lesser amount as Lender shall reasonably approve.


Section 3.02           Policy Terms.


(a)           All insurance required by this Article III
shall be in the form (other than with respect to Sections 3.01(a)(vi) and (vii) above
when insurance in those two sub-sections is placed with a governmental agency
or instrumentality on such agency’s forms) and amount and with deductibles as,
from time to time, shall be reasonably acceptable to Lender, under valid and
enforceable policies issued by financially responsible insurers authorized to
do business in the State where the Projects are located, with a general
policyholder’s service rating of not less than A and a financial rating of not
less than A:X as rated in the most currently available Best’s Insurance Reports
(or the equivalent, if such rating system shall hereafter be altered or replaced)
and shall have a claims paying ability rating and/or financial strength rating,
as applicable, of not less than “A” (or its equivalent), or such lower claims
paying ability rating and/or financial strength rating, as applicable, as
Lender shall, in its sole and absolute discretion, consent to, from 



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a Rating Agency
(one of which after a Secondary Market Transaction in which Standard &
Poor’s rates any securities issued in connection with such Secondary Market
Transaction, shall be Standard & Poor’s), with an exception for
Factory Mutual subject to it maintaining its S&P rating of BBB and AM Best
rating of A+XV. If either rating for Factory Mutual is lowered, Borrower must
replace Factory Mutual within 60 days with other insurers that meet the requirements
set forth in this Agreement. Borrower’s failure to effect such replacement
timely shall constitute an Event of Default under this Agreement. Certified
copies of all insurance policies or certificates (the form and substance of
which must be reasonably satisfactory to Lender) evidencing such policies shall
be promptly delivered to and held by Lender. All such policies (except policies
for worker’s compensation) shall name Lender, its successors and/or assigns as
an additional named insured, shall provide for loss payable to Lender, its
successors and/or assigns and shall contain (or have attached):  (i) standard “non-contributory mortgagee” endorsement or its
equivalent relating, inter alia, to recovery by Lender notwithstanding the
negligent or willful acts or omissions of Borrower; (ii) a waiver of
subrogation endorsement as to Lender; (iii) an endorsement indicating that
neither Lender nor Borrower shall be or be deemed to be a co-insurer with
respect to any casualty risk insured by such policies and shall provide for a
deductible per loss of an amount not more than the lesser of (x) that
which is customarily maintained by owners of similar properties similarly
situated and (y) five percent (5%) of the Actual Net Cash Flow, and (iv) a
provision that such policies shall not be canceled, terminated, denied renewal
or amended, including, without limitation, any amendment reducing the scope or
limits of coverage, without at least thirty (30) days’ prior written notice to
Lender in each instance. Notwithstanding the foregoing provisions of clause (iii) above,
Lender agrees that, in lieu of a deductible under its general liability
insurance policy, Borrower may include in such policy a self-insured retention
in an amount not to exceed $150,000.00 per 
occurrence, with an aggregate cap of $2,000,000.00 per policy period. Not
less than ten (10) days prior to the expiration dates of the insurance
policies obtained pursuant to this Agreement, originals or certified copies of
renewals of such policies (or certificates evidencing such renewals) bearing
notations evidencing the payment of premiums or accompanied by other reasonable
evidence of such payment (which premiums shall not be paid by Borrower through
or by any financing arrangement which would entitle an insurer to terminate a
policy) shall be delivered by Borrower to Lender. Borrower shall not carry
separate insurance, concurrent in kind or form or contributing in the event of
loss, with any insurance required under this Article III.


(b)           If
Borrower fails to maintain and deliver to Lender the certified copies of the
policies or certificates of insurance required by this Agreement, or if there
are insufficient funds in the Basic Carrying Costs Escrow Account to pay the
premiums for same, Lender may, at its option, procure such insurance, and
Borrower shall pay, or as the case may be, reimburse Lender for, all premiums
thereon promptly, upon demand by Lender, with interest thereon at the Default
Rate from the date paid by Lender to the date of repayment and such sum shall
constitute a part of the Debt.


(c)           Borrower
shall notify Lender of the renewal premium of each insurance policy and Lender
shall be entitled to pay such amount on behalf of Borrower from the Basic
Carrying Costs Escrow Account. With respect to insurance policies which require
periodic payments (i.e., monthly or quarterly) of premiums, Lender shall be
entitled to pay such amounts fifteen (15) days (or such lesser number of days
as Lender shall determine) prior to the respective due dates of such installments.



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(d)           The
insurance required by this Agreement may, at the option of Borrower, be
effected by blanket and/or umbrella policies issued to Borrower covering the
Projects provided that, in each case, the policies otherwise comply with the
provisions of this Agreement and allocate to the Projects, from time to time
(but in no event less than once a year), the coverage specified by this
Agreement, without possibility of reduction or coinsurance by reason of, or
damage to, any other property (real or personal) named therein. If the
insurance required by this Agreement shall be effected by any such blanket or
umbrella policies, Borrower shall furnish to Lender (i) certified copies
of the policies or certificates of insurance together with reasonable access to
the original of such policy to review such policy’s coverage of the Projects,
with schedules attached thereto showing the amount of the insurance provided
under such policies applicable to the Projects and (ii) an Officer’s
Certificate setting forth (A) the number of properties covered by such
policy, (B) the location by city (if available, otherwise, county) and
state of the properties, (C) the average square footage of the properties,
(D) a brief description of the typical construction type included in the
blanket policy and (E) such other information as Lender may reasonably
request.


Section 3.03           Assignment of Policies.


(a)           Borrower hereby assigns to Lender the
proceeds of all insurance (other than worker’s compensation and liability
insurance) obtained pursuant to this Agreement, all of which proceeds shall be
payable to Lender as collateral and further security for the payment of the
Debt and the performance of Borrower’s obligations hereunder and under the
other Loan Documents, and Borrower hereby authorizes and directs the issuer of
any such insurance to make payment of such proceeds directly to Lender, except
as provided in Section 3.04(a)(ii) below. Except as otherwise
expressly provided in Section 3.04 or elsewhere in this Article III,
Lender shall have the option, in its discretion, and without regard to the
adequacy of its security, to apply all or any part of the proceeds it may
receive pursuant to this Article in such manner as Lender may elect to any
one or more of the following:  (i) the
payment of the Debt, whether or not then due, in any proportion or priority as
Lender, in its discretion, may elect, (ii) the repair or restoration of
the affected Project, (iii) the cure of any Event of Default or (iv) the
reimbursement of the costs and expenses of Lender incurred pursuant to the
terms hereof in connection with the recovery of the Insurance Proceeds. Nothing
herein contained shall be deemed to excuse Borrower from repairing or
maintaining the Projects as provided in this Agreement or restoring all damage
or destruction to the Projects, regardless of the sufficiency of the Insurance
Proceeds, and the application or release by Lender of any Insurance Proceeds
shall not cure or waive any Default or notice of Default.


(b)           In
the event of the foreclosure of a Mortgage or any other transfer of title or
assignment of all or any part of the Projects in extinguishment, in whole or in
part, of the Debt, all right, title and interest of Borrower in and to all
policies of insurance required by this Agreement shall inure to the benefit of
the successor in interest to Borrower or the purchaser of the Projects. If,
prior to the receipt by Lender of any proceeds, the Projects or any portion
thereof shall have been sold on foreclosure of any or all of the Mortgages or
by deed in lieu thereof or otherwise, or any claim under such insurance policy
arising during the term of this Agreement is not paid until after the
extinguishment of the Debt, and Lender shall not have received the entire
amount of the Debt outstanding at the time of such extinguishment, whether or
not a deficiency judgment on this Agreement shall have been sought or recovered
or denied, 



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then, the proceeds of any such insurance to the extent of the amount of
the Debt not so received, shall be paid to and be the property of Lender,
together with interest thereon at the Default Rate, and the reasonable attorney’s
fees, costs and disbursements incurred by Lender in connection with the
collection of the proceeds which shall be paid to Lender and Borrower hereby
assigns, transfers and sets over to Lender all of Borrower’s right, title and
interest in and to such proceeds. Notwithstanding any provisions of this
Agreement to the contrary, Lender shall not be deemed to be a trustee or other
fiduciary with respect to its receipt of any such proceeds, which may be
commingled with any other monies of Lender; provided,
however, that Lender shall use such proceeds for the purposes and in the
manner permitted by this Agreement. Any proceeds deposited with Lender shall be
held by Lender in an interest-bearing account, but Lender makes no
representation or warranty as to the rate or amount of interest, if any, which
may accrue on such deposit and shall have no liability in connection therewith.
Interest accrued, if any, on the proceeds shall be deemed to constitute a part
of the proceeds for purposes of this Agreement. The provisions of this Section 3.03(b) shall
survive foreclosure, deed in lieu thereof or other termination of any of the
Mortgages or the exercise of the rights and remedies of Lender under this
Agreement or the other Loan Documents after a Default.


Section 3.04           Casualty Restoration.


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


(ii)      Borrower shall not
adjust, compromise or settle any claim for Insurance Proceeds without the prior
written consent of Lender, which shall not be unreasonably withheld or delayed;
provided, however, that, except during the
continuance of an Event of Default, Lender’s consent shall not be required with
respect to the adjustment, compromising or settlement of any claim for
Insurance Proceeds in an amount no more than the lesser of (i) five
percent (5%) of the Allocated Loan Amount for the applicable Project, and (ii) $1,000,000.00.
In addition, if damage to a Property covered by any of the policies required to
be maintained under this Agreement occurs where the loss does not exceed
$500,000.00, provided no Default or Event of Default has occurred and is
continuing, Borrower is hereby authorized to collect and receipt for the
Insurance Proceeds and agrees to utilize the same for repair and restoration as
required under this Agreement.



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(iii)     Subject to Section 3.04(a)(iv),
Lender shall apply any Insurance Proceeds which it may receive towards the Work
in accordance with Section 3.04(b) and the other applicable sections
of this Article III.


(iv)     If (A) an Event of
Default shall exist, (B) Lender is not reasonably satisfied that the Debt
Service Coverage Ratio, after substantial completion of the Work and a
reasonable amount of time to effect the leasing up of the Project, will be at
least equal to the greater of (x) the Debt Service Coverage Ratio as of
the day immediately prior to the occurrence of such casualty and (y) the
Debt Service Coverage Ratio as of the date hereof, (C) more than thirty
percent (30%) of the reasonably estimated fair market value of the affected
Project is damaged or destroyed, (D) one or more Major Leases constituting
in excess of twenty-five percent (25%) of the leaseable square footage of the
Project that is physically affected by such destruction shall not continue in
full force and effect or are not reasonably likely (as reasonably determined by
Lender) to be replaced within six (6) months following completion of the
Work with Space Lease(s) acceptable to Lender, (E) Lender is not
reasonably satisfied that the Work can be substantially completed (subject only
to minor punchlist items) six (6) months prior to Maturity or (F) Lender
shall be satisfied that any operating deficits, including all scheduled
payments of principal and interest under the Note, which will be incurred with
respect to the Project as a result of the occurrence of any such casualty or
condemnation, whichever the case may be, will be covered out of the insurance
coverage referred to in Section 3.01(a)(iii) above (each, a “Substantial Casualty”),
Lender shall have the option, in its sole discretion to apply the applicable
Insurance Proceeds it may receive pursuant to this Agreement (less any
out-of-pocket cost to Lender of recovering and paying out such proceeds
incurred pursuant to the terms hereof and not otherwise reimbursed to Lender,
including, without limitation, reasonable attorneys’ fees and expenses) to the
payment of the Debt, without any prepayment fee or charge of any kind, or to
allow such proceeds to be used for the Work pursuant to the terms and subject
to the conditions of Section 3.04(b) hereof and the other applicable
sections of this Article III. In the event that Lender shall elect to
apply such proceeds to the Debt, (i) the Allocated Loan Amount of the
affected Project shall be reduced on a dollar for dollar basis with the amount
of proceeds so applied, (ii) Borrower shall have the right,
notwithstanding whether the Lockout Date has or has not occurred, to cause a
Release of such Project, and (iii) in connection with such Release, (A) the
Release Amount shall be the Allocated Loan Amount of such Project as so reduced
and (B) Borrower shall not be required to satisfy the other conditions to
a Release with respect to the Project, except those set forth in Section 15.02(b),
(c), (f), (h) and (i).


(v)      In the event that Lender
elects or is obligated hereunder to allow Insurance Proceeds to be used for the
Work, any excess proceeds remaining after completion of such Work shall be
applied to the payment of the Debt without any prepayment fee or charge of any
kind.


(b)           If
any Condemnation Proceeds in accordance with Section 6.01(a), or any
Insurance Proceeds in accordance with Section 3.04(a), are to be applied
to the repair, restoration or rebuilding of a Project, then such proceeds shall
be deposited into a segregated interest-bearing bank account at the Bank, which
shall be an Eligible Account, held by Lender and shall 



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be paid out from time to time to Borrower as the Work
progresses (less any out-of-pocket cost to Lender of recovering and paying out
such proceeds, including, without limitation, reasonable attorneys’ fees and
costs allocable to inspecting the Work and the plans and specifications
therefor) subject to Section 5.13 hereof and to all of the following
conditions:


(i)       An Independent architect or engineer
selected by Borrower and reasonably acceptable to Lender (an “Architect” or “Engineer”)
or a Person otherwise reasonably acceptable to Lender, shall have delivered to
Lender a certificate estimating the cost of completing the Work, and, if the
amount set forth therein is more than the sum of the amount of Insurance
Proceeds then being held by Lender in connection with a casualty and amounts
agreed to be paid as part of a final settlement under the insurance policy upon
or before completion of the Work, Borrower shall have delivered to Lender (A) cash
collateral in an amount equal to such excess, (B) an unconditional,
irrevocable, clean sight draft letter of credit, in form, substance and issued
by a bank reasonably acceptable to Lender, in the amount of such excess and
draws on such letter of credit shall be made by Lender to make payments
pursuant to this Article III following exhaustion of the Insurance
Proceeds therefore, (C) a completion bond in form, substance and issued by
a surety company reasonably acceptable to Lender, or (D) such other
collateral as shall be reasonably acceptable to Lender.


 


(ii)      If the cost of the Work
is reasonably estimated by an Architect or Engineer in a certification
reasonably acceptable to Lender to be equal to or exceed five percent (5%) of
the Loan Amount, such Work shall be performed under the supervision of an
Architect or Engineer, it being understood that the plans and specifications
with respect thereto shall provide for Work so that, upon completion thereof,
the Project shall be at least equal in replacement value and general utility to
the Project prior to the damage or destruction.


(iii)     Each request for payment
shall be made on not less than ten (10) days’ prior notice to Lender and
shall be accompanied by a certificate of an Architect or Engineer, or, if the
Work is not required to be supervised by an Architect or Engineer, by an
Officer’s Certificate stating (A) that payment is for Work completed in
compliance with the plans and specifications, if required under clause (ii) above,
(B) that the sum requested is required to reimburse Borrower for payments
by Borrower to date, or is due to the contractors, subcontractors, materialmen,
laborers, engineers, architects or other Persons rendering services or
materials for the Work (giving a brief description of such services and
materials), and that when added to all sums previously paid out by Lender does
not exceed the value of the Work done to the date of such certificate, (C) if
the sum requested is to cover payment relating to repair and restoration of
personal property required or relating to the Project, that title to the
personal property items covered by the request for payment is vested in
Borrower (unless Borrower is lessee of such personal property), and (D) that
the Insurance Proceeds and other amounts deposited by Borrower held by Lender
after such payment is not less than the estimated remaining cost to complete
such Work; provided, however, that if such certificate is given by an Architect or
Engineer, such Architect or Engineer shall certify as to clause (A) above,
and such Officer’s Certificate shall certify as to the remaining clauses above,
and provided, further, that Lender shall not be obligated to disburse such
funds if Lender determines, in 



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Lender’s
reasonable discretion, that Borrower is not be in compliance with this Section 3.04(b).
Additionally, each request for payment shall contain a statement signed by
Borrower stating that the requested payment is for Work satisfactorily done to
date.


(iv)     Each request for payment
shall be accompanied by bills and invoices covering that part of the Work for
which payment or reimbursement is being requested and, if required by Lender,
waivers of lien (which may be conditioned upon payment), in customary form and
substance, a search prepared by a title company or licensed abstractor, or by
other evidence reasonably satisfactory to Lender that there has not been filed
with respect to the Project any mechanic’s or other lien or instrument for
retention of title relating to any part of the Work not discharged of record. Additionally,
as to any personal property covered by the request for payment, Lender shall be
furnished with evidence of having incurred a payment obligation therefor and
such further evidence reasonably satisfactory to assure Lender that UCC filings
therefor provide a valid first lien on the personal property.


(v)      Lender shall have the
right to inspect the Work at all reasonable times upon reasonable prior notice
and may condition any disbursement of Insurance Proceeds upon satisfactory
compliance by Borrower with the provisions hereof. Neither the approval by
Lender of any required plans and specifications for the Work nor the inspection
by Lender of the Work shall make Lender responsible for the preparation of such
plans and specifications, or the compliance of such plans and specifications of
the Work, with any applicable law, regulation, ordinance, covenant or
agreement.


(vi)     Insurance Proceeds shall
not be disbursed more frequently than once every thirty (30) days.


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



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lien of the
applicable Mortgage and evidence of payment of any premium payable for such
endorsement.


(viii)   Upon failure on the part
of Borrower promptly to commence the Work or to proceed diligently and
continuously (subject only to force majeure) to completion of the Work, which
failure shall continue after notice for thirty (30) days (but in no event more
than ninety (90) days in the case of force majeure), Lender may apply any
Insurance Proceeds or Condemnation Proceeds it then or thereafter holds to the
payment of the Debt in accordance with the provisions of the Note; provided, however,
that Lender shall be entitled to apply at any time all or any portion of the
Insurance Proceeds or Condemnation Proceeds it then holds to the extent
necessary to cure any Event of Default under this Agreement, the Note or any
other Loan Document.


(c)           If
Borrower (i) within ninety (90) days after the occurrence of any damage to
any Project or any portion thereof (or such shorter period as may be required
under any Major Space Lease) shall fail to submit to Lender for approval plans
and specifications (if required pursuant to Section 3.04(b)(ii) hereof)
for the Work (approved by the Architect and by all Governmental Authorities
whose approval is required), (ii) after any such plans and specifications
are approved by all Governmental Authorities, the Architect and Lender, shall
fail to promptly commence such Work or (iii) shall fail to diligently
prosecute such Work to completion, then, in addition to all other rights
available hereunder, at law or in equity, Lender, or any receiver of any
Project or any portion thereof, upon five (5) Business Days prior notice
to Borrower (except in the event of emergency in which case no notice shall be
required), may (but shall have no obligation to) perform or cause to be
performed such Work, and may take such other steps as it reasonably deems
advisable. Borrower hereby waives, for Borrower, any claim, other than for
gross negligence or willful misconduct, against Lender and any receiver arising
out of any act or omission of Lender or such receiver pursuant to this
paragraph (c), and Lender may apply all or any portion of the Insurance
Proceeds (without the need to fulfill any other requirements of this Section 3.04)
to reimburse Lender and such receiver, for all costs not reimbursed to Lender
or such receiver upon demand together with interest thereon at the Default Rate
from the date such amounts are advanced until the same are paid to Lender or
the receiver.


(d)           Except as provided in Section 3.04(a)(ii) above,
Borrower hereby irrevocably appoints Lender as its attorney-in-fact, coupled
with an interest, to collect and receive any Insurance Proceeds paid with
respect to any portion of the Projects or the insurance policies required to be
maintained hereunder, and to endorse any checks, drafts or other
instruments representing any Insurance Proceeds whether payable by reason of
loss thereunder or otherwise.


Section 3.05           Compliance with Insurance
Requirements. Borrower promptly shall comply with, and shall cause the
Projects to comply with, all Insurance Requirements, even if such compliance requires
structural changes or improvements or would result in interference with the use
or enjoyment of any of the Projects or any portion thereof provided a Borrower
shall have a right to contest in good faith and with diligence such Insurance
Requirements provided (a) no Event of Default shall exist during such
contest and such contest shall not subject any of the Projects or any portion
thereof to any lien or affect the priority of the lien of the related Mortgage,
(b) failure to comply with such Insurance Requirements will not subject
Lender or 



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any of its agents,
employees, officers or directors to any civil or criminal liability, (c) such
contest will not cause any reduction in insurance coverage, (d) such
contest shall not affect the ownership, use or occupancy of any of the
Projects, (e) none of the Projects or any part thereof or any interest
therein shall not be in any danger of being sold, forfeited or lost by reason
of such contest by Borrower, (f) Borrower has given Lender prompt notice
of such contest and, upon request by Lender from time to time, notice of the
status of such contest by Borrower and/or information of the continuing
satisfaction of the conditions set forth in clauses (a) through (e) of
this Section 3.05, (g) upon a final determination of such contest,
Borrower shall promptly comply with the requirements thereof, and (h) prior
to and during such contest, Borrower shall furnish to Lender security
satisfactory to Lender, in its reasonable discretion, against loss or injury by
reason of such contest or the non-compliance with such Insurance Requirement
(and if such security is cash, Lender shall deposit the same in an
interest-bearing account and interest accrued thereon, if any, shall be deemed
to constitute a part of such security for purposes of this Agreement and the
Mortgages, but Lender (i) makes no representation or warranty as to the
rate or amount of interest, if any, which may accrue thereon and shall have no
liability in connection therewith and (ii) shall not be deemed to be a
trustee or fiduciary with respect to its receipt of any such security and any
such security may be commingled with other monies of Lender). If Borrower shall
use any of the Projects or any portion thereof in any manner which could permit
the insurer to cancel any insurance required to be provided hereunder, Borrower
immediately shall obtain a substitute policy which shall satisfy the
requirements of this Agreement and which shall be effective on or prior to the
date on which any such other insurance policy shall be canceled. Borrower shall
not by any action or omission invalidate any insurance policy required to be
carried hereunder unless such policy is replaced as aforesaid, or materially
increase the premiums on any such policy above the normal premium charged for
such policy. Borrower shall cooperate with Lender in obtaining for Lender the
benefits of any insurance proceeds lawfully or equitably payable to Lender in
connection with the transaction contemplated hereby.


Section 3.06           Event of Default During
Restoration. Notwithstanding anything to the contrary contained in this
Agreement including, without limitation, the provisions of this Article 3,
if an Event of Default exists (a) at the time of any casualty affecting a
Project or any part thereof, or (b) at any time during any Work, or (c) at
any time that Lender is holding or is entitled to receive any Insurance
Proceeds pursuant to this Agreement, then Lender shall have no obligation to
make such proceeds available for Work and Lender shall have the right and
option, to be exercised in its sole and absolute discretion and election, with
respect to the Insurance Proceeds, either to retain and apply such proceeds in
reimbursement for the actual costs, fees and expenses incurred by Lender in
accordance with the terms hereof in connection with the adjustment of the loss
and any balance toward payment of the Debt in such priority and proportions as
Lender, in its sole discretion, shall deem proper, or towards the Work, upon
such terms and conditions as Lender shall determine, or to cure such Event of
Default, or to any one or more of the foregoing as Lender, in its sole and
absolute discretion, may determine. If Lender shall receive and retain such
Insurance Proceeds, the lien of the Mortgages shall be reduced only by the
amount thereof received, after reimbursement to Lender of expenses of
collection, and actually applied by Lender in reduction of the principal sum
payable under the Note in accordance with the Note.



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Section 3.07           Application of Proceeds to Debt
Reduction.


(a)           No damage to any Project, or any part
thereof, by fire or other casualty whatsoever, whether such damage be partial
or total, shall relieve Borrower from its liability to pay in full the Debt and
to perform its obligations under this Agreement and the other Loan Documents.


(b)           If any Insurance Proceeds are applied to reduce the Debt,
Lender shall apply the same in accordance with the provisions of the
Note.


ARTICLE
IV


IMPOSITIONS


Section 4.01           Payment of Impositions, Utilities
and Taxes, etc.


(a)           Borrower shall pay or cause to be
paid all Impositions at least five (5) Business Days prior to the date
upon which any fine, penalty, interest or cost for nonpayment is imposed, and
furnish to Lender, upon request, receipted bills of the appropriate taxing
authority or other documentation reasonably satisfactory to Lender evidencing
the payment thereof. If Borrower shall fail to pay any Imposition in accordance
with this Section and is not contesting or causing a contesting of such
Imposition in accordance with Section 4.04 hereof, or if there are
insufficient funds in the Basic Carrying Costs 
Escrow Account to pay any Imposition, Lender shall have the right, but
shall not be obligated, to pay that Imposition, and Borrower shall repay to
Lender, on demand, any amount paid by Lender, with interest thereon at the
Default Rate from the date of the advance thereof to the date of repayment, and
such amount shall constitute a portion of the Debt secured by the Mortgages.


(b)           Borrower
shall, prior to the date upon which any fine, penalty, interest or cost for the
nonpayment is imposed, pay or cause to be paid all charges payable by Borrower
for electricity, power, gas, water and other services and utilities in
connection with the Projects, and shall, upon request, which request shall not
be made more than twice during any 12-month period, unless a Default
shall have occurred and be continuing, deliver to Lender receipts or other
documentation reasonably satisfactory to Lender evidencing payment thereof. If
Borrower shall fail to pay any amount required to be paid by Borrower pursuant
to this Section 4.01 and is not contesting such charges in accordance with
Section 4.04 hereof, Lender shall have the right, but shall not be
obligated, to pay that amount, and Borrower will repay to Lender, promptly
after demand, any amount paid by Lender with interest thereon at the Default
Rate from the date of the advance thereof to the date of repayment, and such
amount shall constitute a portion of the Debt secured by the Mortgages.


(c)           Borrower
shall pay all taxes, charges, filing, registration and recording fees, excises
and levies imposed upon Lender by reason of or in connection with its ownership
of any Loan Document or any other instrument related thereto, or resulting from
the execution, delivery and recording of, or the lien created by, or the
obligation evidenced by, any of them, other than income, franchise and other
similar taxes imposed on Lender and shall pay all corporate stamp taxes, if
any, and other taxes, required to be paid on the Loan Documents. If 



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Borrower shall fail to make any such payment within ten (10) Business
Days after written notice thereof from Lender, Lender shall have the right, but
shall not be obligated, to pay the amount due, and Borrower shall reimburse
Lender therefor, on demand, with interest thereon at the Default Rate from the
date of the advance thereof to the date of repayment, and such amount shall
constitute a portion of the Debt secured by the Mortgages.


Section 4.02           Deduction from Value. In the
event of the passage after the date of this Agreement of any Legal Requirement
deducting from the value of the Projects for the purpose of taxation, any lien
thereon or changing in any way the Legal Requirements now in force for the
taxation of this Agreement and/or the Debt for federal, state or local
purposes, or the manner of the operation of any such taxes so as to adversely
affect the interest of Lender, or impose any tax or other charge on any Loan
Document, then Borrower will pay such tax, with interest and penalties thereon,
if any, within the statutory period. In the event the payment of such tax or
interest and penalties by Borrower would be unlawful, or taxable to Lender or
unenforceable or provide the basis for a defense of usury, then in any such
event, Lender shall have the option, by written notice of not less than one
hundred twenty (120) days, to declare the Debt immediately due and payable,
with no prepayment fee or charge of any kind.


Section 4.03           No Joint Assessment. Borrower
shall not consent to or initiate the joint assessment of any Project (a) with
any other real property constituting a separate tax lot and Borrower represents
and covenants that each Project is and shall remain one or more separate tax
lots or (b) with any portion of such Project which may be deemed to
constitute personal property, or any other procedure whereby the lien of any
taxes which may be levied against such personal property shall be assessed or
levied or charged to such Project as a single lien.


Section 4.04           Right to Contest. Borrower
shall have the right, after prior notice to Lender, at its sole expense, to
contest by appropriate legal proceedings diligently conducted in good faith,
without cost or expense to Lender or any of its agents, employees, officers or
directors, the validity, amount or application of any Imposition or any charge
described in Section 4.01(b), provided that (a) no Event of Default
shall exist during such proceedings and such contest shall not (unless Borrower
shall comply with clause (d) of this Section 4.04) subject any of the
Projects or any portion thereof to any lien or affect the priority of the lien
of any Mortgage, (b) failure to pay such Imposition or charge will not
subject Lender or any of its agents, employees, officers or directors to any
civil or criminal liability, (c) the contest suspends enforcement of the
Imposition or charge (unless Borrower first pays the Imposition or charge), (d) prior
to and during such contest, Borrower shall furnish to Lender security satisfactory
to Lender, in its reasonable discretion, against loss or injury by reason of
such contest or the non-payment of such Imposition or charge (and if such
security is cash, Lender may deposit the same in an interest-bearing account
and interest accrued thereon, if any, shall be deemed to constitute a part of
such security for purposes of this Agreement and the Mortgages, but Lender (i) makes
no representation or warranty as to the rate or amount of interest, if any,
which may accrue thereon and shall have no liability in connection therewith
and (ii) shall not be deemed to be a trustee or fiduciary with respect to
its receipt of any such security and any such security may be commingled with
other monies of Lender), (e) such contest shall not materially and
adversely affect the ownership, use or occupancy of any of the Projects, (f) none
of the Projects or any part thereof or any interest therein shall not be in any
danger of being sold, forfeited or lost by reason of such contest by Borrower, (g) Borrower
has given Lender notice of the commencement of 



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such contest and
upon request by Lender, from time to time, notice of the status of such contest
by Borrower and/or confirmation of the continuing satisfaction of clauses (a) through
(f) of this Section 4.04, and (h) upon a final determination of
such contest, Borrower shall promptly comply with the requirements thereof. Upon
completion of any contest, Borrower shall immediately pay the amount due, if
any, and deliver to Lender proof of the completion of the contest and payment
of the amount due, if any, following which Lender shall return the security, if
any, deposited with Lender pursuant to clause (d) of this Section 4.04.
Borrower shall not pay any Imposition in installments unless permitted by applicable
Legal Requirements, and shall, upon the request of Lender, deliver copies of
all notices and bills relating to any Imposition or other charge covered by
this Article IV to Lender.


Section 4.05           No Credits on Account of the Debt.
Borrower will not claim or demand or be entitled to any credit or credits on
account of the Debt for any part of the Impositions assessed against any of the
Projects or any part thereof and no deduction shall otherwise be made or
claimed from the taxable value of any of the Projects, or any part thereof, by
reason of this Agreement or the Debt. In the event such claim, credit or
deduction shall be required by Legal Requirements, Lender shall have the
option, by written notice of not less than thirty (30) days, to declare the Debt
immediately due and payable, and Borrower hereby agrees to pay such amounts not
later than one hundred twenty (120) days after such notice.


Section 4.06           Documentary Stamps. If, at any
time, the United States of America, any State or Commonwealth thereof or any
subdivision of any such State shall require revenue or other stamps to be
affixed to the Note, any of the Mortgages, this Agreement or any other Loan
Document, or impose any other tax or charges on the same, Borrower will pay the
same, with interest and penalties thereon, if any.


ARTICLE V


CENTRAL CASH MANAGEMENT


Section 5.01           Cash Flow. Borrower hereby
acknowledges and agrees that (a) the Rents (which for the purposes of this
Section 5.01 shall not include security deposits from tenants under Leases
held by Borrower and not applied towards Rent) derived from the Projects, (b) Loss
Proceeds and (c) all proceeds of the Rate Cap Agreement shall be utilized (i) to
fund the Basic Carrying Costs Sub-Account, (ii) to pay all amounts to
become due and payable under the Note by funding the Debt Service Payment
Sub-Account, (iii) to fund the Recurring Replacement Reserve Sub-Account
and (iv) to fund the Reletting Reserve Sub-Account. Borrower shall cause
Manager to collect all security deposits from tenants under valid Leases, which
shall be held by Manager, as agent for Borrower, in accordance with applicable
law and, if in cash, and required by Legal Requirements to be maintained in a
segregated account, in a segregated demand deposit bank account at Signature
Bank, or such other commercial or savings bank or banks as may be selected by
Borrower and reasonably satisfactory to Lender (the “Security Deposit Account”). Borrower shall notify
Lender of any security deposits held as letters of credit and, upon Lender’s
request, such letters of credit shall be promptly delivered to Lender. Borrower
shall have no right to withdraw funds from the Security Deposit Account;
provided that, except during the continuance of an Event of Default, Borrower
may withdraw funds from the Security Deposit Account to refund or apply
security deposits as required or 



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permitted by the
Leases or by applicable Legal Requirements. During the continuance of an Event
of Default, all withdrawals from the Security Deposit Account must be approved
by Lender, which approval shall not be withheld (and shall be granted promptly)
if a refund or application of such security deposits is required by the Leases
or by the applicable Legal Requirements. Borrower shall cause all Rent which is
due and payable to Borrower pursuant to the terms of the Leases (other than
security deposits under valid Leases which are held in the Security Deposit
Account) to be paid through automated clearing house funds (“ACH”), by Federal wire
or by check directly to the Clearing Account. Pursuant to the Clearing Account
Agreement, Borrower shall cause the Clearing Account Bank to transfer on each
Business Day all available funds on deposit in the Clearing Account to the
Central Account. Borrower shall give each tenant under a Lease an irrevocable
direction in the form of Exhibit E attached hereto and made a part hereof
to deliver all rent payments made by tenants and other payments constituting
Rent directly to the Clearing Account and shall deliver copies of such letters
to Lender, together with an Officer’s Certificate certifying that such letters
were mailed to each tenant under the Leases promptly after the Closing Date. If,
notwithstanding the foregoing, any Rent is received by Borrower or Manager,
then (a) such amounts shall be held in trust for the benefit, and as the
property, of Lender, (b) such amounts shall not be commingled with any
other funds or property of Borrower or Manager and (c) Borrower or Manager
shall deposit such amounts in the Clearing Account within three (3) Business
Days of receipt. Upon execution of any Space Lease after the Closing Date,
Borrower shall deliver to Lender a copy of the irrevocable direction letter
referred to above, the receipt of which has been acknowledged by the tenant
under such Space Lease. Lender may elect for Cause to change the financial
institution in which the Clearing Account and Central Account shall be
maintained; however, Lender shall give Borrower not fewer than five (5) Business
Days’ prior notice of such change. All fees and charges of the bank(s) in
which the Clearing Account and Central Account is located shall be paid by
Borrower. For purposes of this Section 5.01, “Cause” shall mean (i) any
financial institution which maintains the Clearing Account or the Central Account
shall be in default of the Clearing Account Agreement or any other agreement
relating to the Clearing Account and/or the Central Account, (ii) Lender
reasonably determines that the financial condition of such financial
institution has deteriorated materially, or (iii) an Event of Default
shall have occurred and be continuing.


Section 5.02           Establishment of Accounts. Lender
has established the Escrow Accounts (except the Lease Termination Payment
Escrow Account which, to the extent of the payment by any tenant of any Lease
Termination Payments, will be established by Lender) and the Central Account in
the name of Lender as secured party. The Escrow Accounts, the Central Account
and the Clearing Account shall be under the sole dominion and control of Lender
and funds held therein shall not constitute trust funds. Borrower hereby
irrevocably directs and authorizes Lender to withdraw funds from the Central
Account, Clearing Account and the Escrow Accounts, all in accordance with the
terms and conditions of this Agreement. Borrower shall have no right of
withdrawal in respect of the Clearing Account, Central Account or the Escrow
Accounts. Each transfer of funds to be made hereunder shall be made only to the
extent that funds are on deposit in the Central Account or the affected
Sub-Account or Escrow Account, and Lender shall have no responsibility to make
additional funds available in the event that funds on deposit are insufficient.
The Central Account shall contain the Basic Carrying Costs Sub-Account, the Debt
Service Payment Sub-Account, the Recurring Replacement Reserve Sub-Account, the
Reletting Reserve Sub-Account and the Bank Fees Sub-Account, each of which 



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accounts shall be Eligible Accounts or book-entry sub-accounts of an
Eligible Account (each a “Sub-Account” and collectively, the “Sub-Accounts”) to
which certain funds shall be allocated and from which disbursements shall be
made pursuant to the terms of this Agreement. Sums held in the Escrow Accounts
may be commingled with other monies held by Lender.


Section 5.03           Permitted Investments. All
sums deposited into the Liquidity Reserve Escrow Account, the Recurring
Replacement Reserve Escrow Account, the Reletting Reserve Escrow Account, the
Engineering Escrow Account and the Accrued Lease Liability Escrow Account may
be invested in Permitted Investments; however, Borrower acknowledges that
Lender makes no representation or warranty as to the rate of return earned
thereon. Lender shall not have any liability for any loss in investments of
funds in such Escrow Accounts and no such loss shall affect Borrower’s
obligation to fund, or liability for funding, the Central Account and each
Sub-Account and Escrow Account, as the case may be. Borrower agrees that Lender
shall include all such earnings on the aforesaid Escrow Accounts as income of
Borrower (and, if Borrower is a partnership, limited liability company or other
pass-through entity, the partners, members or beneficiaries of Borrower, as the
case may be) for federal and applicable state and local tax purposes. All
interest paid or other earnings on funds deposited into the Escrow Accounts
made hereunder shall be deposited into the Central Account and shall be
allocated to the Liquidity Reserve Escrow Account, the Recurring Replacement
Reserve Escrow Account, the Reletting Reserve Escrow Account or the Accrued
Lease Liability Escrow Account, as applicable. Borrower shall pay all costs,
fees and expenses incurred in connection with the establishment and maintenance
of, or the disbursement from any of the foregoing Escrow Accounts, which sums
shall be due and payable by Borrower upon demand and may be deducted by Lender
from amounts on deposit in the Central Account or the Escrow Accounts.


Section 5.04           Servicing Fees. At the option
of Lender, the Loan may be serviced by Lender or by a servicer (the “Servicer”) selected by
Lender and Lender may delegate all or any portion of its responsibilities under
this Agreement to the Servicer. Borrower shall pay all servicing fees of
Servicer pursuant to the Servicer’s then standard conditions and rates or of
Lender, if Lender is servicing the Loan on its own behalf, in any case, not to
exceed two basis points (i.e., 0.02%) per annum paid on the aggregate balance
of the Principal Amount computed on the basis of the actual number of days
elapsed in a 360 day year.


Section 5.05           Monthly Funding of Sub-Accounts
and Escrow Accounts.


(a)           On or before each Payment Date during
the term of the Loan, commencing on the first (1st) Payment Date occurring
after the month in which the Loan is initially funded, Borrower shall pay, or
cause to be paid to the Central Account the following:  the Basic Carrying Costs Monthly Installment,
the Required Debt Service Payment, the Recurring Replacement Reserve Monthly
Installment and the Reletting Reserve Monthly Installment, pursuant to clauses (i) through
(v) of this Section 5.05(a) and all funds transferred or
deposited into the Central Account shall be allocated among the Sub-Accounts as
follows and in the following priority:


(i)       first, to the Basic
Carrying Costs Sub-Account, until an amount equal to the Basic Carrying Costs
Monthly Installment for such Current Month has been allocated to the Basic
Carrying Costs Sub-Account;



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(ii)      second, to the Bank Fees
Sub-Account, until an amount equal to the monthly portion of the fees charged
by the Bank in accordance with the Deposit Account Agreement has been allocated
to the Bank Fees Sub-Account;


(iii)     third, to the Debt
Service Payment Sub-Account, until an amount equal to the Required Debt Service
Payment for the Payment Date occurring in such Current Month has been allocated
to the Debt Service Payment Sub-Account;


(iv)    fourth, to the Recurring
Replacement Reserve Sub-Account, until an amount equal to the Recurring
Replacement Reserve Monthly Installment for such Current Month has been
allocated to the Recurring Replacement Reserve Sub-Account;


(v)     fifth, to the Reletting
Reserve Sub-Account, until an amount equal to the Reletting Reserve Monthly
Installment for such Current Month has been allocated to the Reletting Reserve
Sub-Account; and


(vi)    sixth, all Default
Interest, Late Charges and any other amounts, if any, payable pursuant to the
Loan Documents after the payment of the Required Debt Service Payment has been
allocated to the Debt Service Payment Sub-Account.


Provided that (I) no
Event of Default has occurred and (II) Lender has received the Manager’s
Certification referred to in Section 2.09(d) hereof for the most
recent period for which the same is due, Lender agrees that in each Current
Month any amounts deposited into or remaining in the Central Account after the
Sub-Accounts have been funded in accordance with clauses (i) through (vi) above
with respect to the Current Month and any periods prior thereto, shall be
disbursed by Lender on the Payment Date in such Current Month to Borrower. In
addition, on the date (the “Supplemental Disbursement Date”) that is two
(2) weeks after each Payment Date, provided that no Event of Default has
occurred, Lender agrees that any amounts deposited in the Central Account since
such preceding Payment Date, which amounts exceed the amounts required to be
funded into the Sub-Accounts in accordance with clauses (i) through (vi) above
with respect to the succeeding month (i.e., the month following the
Current Month), shall be disbursed by Lender to Borrower on the Supplemental
Disbursement Date. During the existence of an Event of Default, no funds held
in the Central Account shall be distributed to Borrower, and Lender shall have
the right to apply all or any portion of the funds held in the Central Account
or any Sub-Account or any Escrow Account to the Debt in Lender’s sole
discretion.


(b)           On
each Payment Date, provided that no Event of Default exists, amounts held in
the Sub-Accounts will be transferred or disbursed, as applicable, as
follows:  (i) sums held in the Basic
Carrying Costs Sub-Account shall be transferred to the Basic Carrying Costs
Escrow Account; (ii) sums held in the Debt Service Payment Sub-Account,
together with any amounts deposited into the Central Account that are either (y) Loss
Proceeds that Lender has elected to apply to reduce the Debt in accordance with
the terms of Article III hereof or (z) excess Loss Proceeds remaining
after the completion of any restoration required hereunder, shall be
transferred to Lender to be applied towards the Required Debt Service Payment,
with any excess (1) being applied to the Principal Amount, or (2) being
paid to the applicable Borrower, as determined by Lender in its sole and
absolute discretion; (iii) sums held in the Recurring Replacement Reserve
Sub-Account shall be transferred to the Recurring Replacement Escrow 



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Account and (iv) sums held in the Reletting Reserve Sub-Account
shall be transferred to the Reletting Reserve Escrow Account.


Section 5.06           Payment of Basic Carrying Costs.
Subject to the following provisions of this Section 5.06, Borrower hereby
agrees to pay all Basic Carrying Costs (without regard to the amount of money
in the Basic Carrying Costs Sub-Account or the Basic Carrying Costs Escrow
Account). Provided that no Event of Default has occurred, Lender shall make
payment of the Basic Carrying Costs out of the Basic Carrying Costs Escrow
Account before same shall be delinquent, provided, however, that if there are
not sufficient funds available in the Basic Carrying Costs Escrow Account,
Lender shall not be obligated to release funds to pay any Basic Carrying Costs,
unless Borrower demonstrates to Lender’s reasonable satisfaction that Borrower
has paid or will pay any such deficiency. Upon Lender’s request, Borrower shall
furnish Lender with bills and all other documents necessary, as reasonably
determined by Lender, for the payment of the Basic Carrying Costs which are
then due and payable. Borrower’s obligation to pay (or cause Lender to pay)
Basic Carrying Costs pursuant to this Agreement shall include, to the extent
permitted by applicable law, Impositions resulting from future changes in law
which impose upon Lender an obligation to pay any property taxes or other
Impositions. Notwithstanding the foregoing provisions of this Section 5.06,
Lender acknowledges that Borrower has advised Lender that Borrower maintains a
blanket insurance policy to cover the Projects and pays the premiums for such
policy in advance. Upon presentation to Lender of evidence reasonably
satisfactory to Lender of the payment of such premiums, provided that no Event
of Default has occurred, Lender agrees to release to Borrower from the Basic
Carrying Costs Escrow Account (to the extent of funds on deposit therein) funds
in an amount required to reimburse Borrower for the premiums so paid.


Provided that no Event of
Default shall exist, all funds deposited into the Basic Carrying Costs Escrow
Account shall be held by Lender pursuant to the provisions of this Agreement and
shall be applied in payment of Basic Carrying Costs in accordance with the
terms hereof. Should an Event of Default exist, the sums on deposit in the
Basic Carrying Costs Sub-Account and the Basic Carrying Costs Escrow Account
may be applied by Lender in payment of any Basic Carrying Costs or may be
applied to the payment of the Debt or any other charges affecting all or any
portion of any of the Projects as Lender in its sole discretion may determine; provided, however,
that no such application shall be deemed to have been made by operation of law
or otherwise until actually made by Lender as herein provided.


Section 5.07           Reletting Reserve Escrow Account.
Borrower hereby agrees to pay all Reletting Expenditures (without regard to the
amount of money then available in the Reletting Reserve Escrow Account or the
Reletting Reserve Sub-Account). Upon the execution of any Space Lease with
respect to which Borrower is obligated to undertake or pay for any Reletting
Expenditures, Borrower shall submit to Lender (a) a budget (a “Budget”) outlining in
reasonable detail all of the material expenses relating to said Reletting
Expenditures, (b) with respect to a Lease other than a Major Space Lease,
a copy of the signed Lease to which said Reletting Expenditures relate which is
otherwise in compliance with the provisions of this Agreement, (c) a copy
of the plans and specifications for the proposed Reletting Expenditures (to the
extent applicable), and (d) an Officer’s Certificate with respect to the
items referred to in clauses (a) through (c) and, as applicable,
setting forth an anticipated completion date for the Reletting Expenditures
(other than leasing commissions). Thereafter, provided that no Event of 



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Default shall
exist and that Lender has received a written request from Borrower for payment
or reimbursement of any costs incurred in connection with any Reletting
Expenditures or a portion thereof, together with (i) copies of bills for
such Reletting Expenditures and, if requested by Lender with respect to any single
line item costing in excess of $10,000.00, unconditional lien waivers (other
than conditioned upon payment of the amount requested), (ii) a statement
from an Architect or Engineer, indicating that the Reletting Expenditures or
portion thereof in question have been completed in compliance with all Legal
Requirements, and (iii) such other documentation as may be reasonably
requested by Lender to establish that the Reletting Expenditures (other than
leasing commissions) or portion thereof which are the subject of such request
have been completed, all of which are reasonably acceptable in form and
substance to Lender, Lender shall disburse within five (5) Business Days
after such request to Borrower the amount requested in connection with such
Reletting Expenditures. Borrower may make a request for disbursement of sums
from the Reletting Reserve Escrow Account no more than twice during any month
and any request shall be in a minimum amount of $25,000 (except for the final
disbursement, which may be less than $25,000). With respect to any Reletting
Expenditures that constitute brokerage commissions, upon the receipt of (x) copies
of bills for such Reletting Expenditures and (y) with respect to each
Lease other than a Major Space Lease, a copy of the signed Lease to which said
Reletting Expenditures relate which Lease is in compliance with the provisions
of this Agreement, Lender shall disburse to Borrower the amount requested to
pay for such Reletting Expenditures out of the Reletting Reserve Escrow
Account. Lender shall not be required to make any disbursements out of the
Reletting Reserve Escrow Account if an Event of Default shall exist, if more
than two such requests are made in any month or if sufficient funds are not
available in the Reletting Reserve Sub-Account. Provided that no Event of
Default shall exist, all funds deposited into the Reletting Reserve Escrow
Account shall be held by Lender pursuant to the provisions of this Agreement
and shall be applied in payment of Reletting Expenditures. Should an Event of
Default exist, the sums on deposit in the Reletting Reserve Escrow Account may
be applied by Lender in payment of any Reletting Expenditures or may be applied
to the payment of the Debt or any other charges affecting all or any portion of
the Projects, as Lender, in its sole discretion, may determine; provided, however,
that no such application shall be deemed to have been made by operation of law
or otherwise until actually made by Lender as herein provided.


In addition to the amount
set forth on Exhibit B hereto as the initial deposit to the Reletting
Reserve Escrow Account and the Reletting Monthly Installment, Borrower shall
pay to Lender for deposit in the Reletting Reserve Escrow Account all funds
received by Borrower from tenants in connection with the cancellation of any
Leases, including, but not limited to, any cancellation fees, penalties, tenant
improvements, leasing commissions or other charges (together “Lease
Termination Payments”). Provided that no Default or Event of Default then
exists, Lender agrees to hold such Lease Termination Payments in the Lease
Termination Payment Escrow Account for disbursement pursuant to Section 5.15
hereof.


Section 5.08           Recurring Replacement Reserve
Escrow Account. Borrower hereby agrees to pay all Recurring Replacement
Expenditures with respect to each of the Projects (without regard to the amount
of money then available in the Recurring Replacement Reserve Sub-Account or the
Recurring Replacement Reserve Escrow Account). Provided that Lender has received
written notice from Borrower at least five (5) Business Days prior to the
due date of any payment relating to Recurring Replacement Expenditures and not
more frequently than once 



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each month, and
further provided that no Event of Default exists, that there are sufficient
funds available in the Recurring Replacement Reserve Escrow Account and
Borrower shall have theretofore furnished Lender with copies of bills, invoices
and other documentation as may be reasonably required by Lender to establish
that the Recurring Replacement Expenditures which are the subject of such
request represent amounts due for completed or partially completed capital work
and improvements performed at the Projects, Lender shall promptly make such
payments out of the Recurring Replacement Reserve Escrow Account.


Provided that no Event of
Default shall exist, all funds deposited into the Recurring Replacement Reserve
Escrow Account shall be held by Lender pursuant to the provisions of this
Agreement and shall be applied in payment of Recurring Replacement Expenditures.
Should an Event of Default exist, the sums on deposit in the Recurring
Replacement Reserve Sub-Account and the Recurring Replacement Reserve Escrow
Account may be applied by Lender in payment of any Recurring Replacement
Expenditures or may be applied to the payment of the Debt or any other charges
affecting all or any portion of the Projects, as Lender in its sole discretion
may determine; provided, however, that no such application shall be
deemed to have been made by operation of law or otherwise until actually made
by Lender as herein provided.


Section 5.09           Liquidity Reserve Escrow Account.


(a)           On the Closing Date, Borrower shall
deposit $2,000,000.00 with Lender as a deposit to the Liquidity Reserve Escrow
Account. All funds on deposit in the Liquidity Reserve Escrow Account shall be
held by Lender pursuant to the provisions of this Agreement. Amounts in the
Liquidity Reserve Escrow Account are to be used solely for the purpose of
paying (i) Cash Expenses, (ii) Debt Service and (iii) any other
costs and expenses of owning and operating the Projects that have been approved
by Lender, which approval shall not be unreasonably withheld, conditioned or
delayed (collectively, the “Liquidity Reserve Expenses”), provided, however,
that under no circumstances shall amounts on deposit in the Liquidity Reserve
Escrow Account be used to pay Capital Expenditures.


(b)           So long as no Event of Default
exists, and Lender shall have received (i) a Manager Certification with
respect to all preceding Interest Accrual Periods and (ii) bills and any
other documents reasonably requested by Lender evidencing the Liquidity Reserve
Expenses the payment of which is being requested by Borrower, Lender shall
disburse on each Payment Date from the balance on deposit in the Liquidity
Reserve Escrow Account the amount necessary for Borrower to pay, in full, the
Liquidity Reserve Expenses payable during the month ending on the day preceding
the Payment Date in question, to the extent that the revenues generated by the
Projects remaining after the payments required under clauses (i) — (vi) of
Section 5.05(a) hereof (to the extent that funds generated are
sufficient for the payment thereof) are insufficient to pay the Liquidity
Reserve Expenses due on such Payment Date (each such shortfall, the “Monthly Shortfall”). Borrower
acknowledges that Lender has no obligation to disburse more than (y) the
remaining balance of the Liquidity Reserve Escrow Account if such amount is
less than the full payment due or (z) the amount of the Monthly Shortfall
in question, whichever is less. Notwithstanding the foregoing, neither the
insufficiency of the undisbursed balance of, nor the unavailability of, the
Liquidity Reserve Escrow Account is intended to, and shall therefore not,
constitute a limitation on Borrower’s obligation to pay all Liquidity Reserve
Expenses, any other 



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Operating Expenses and all other costs and expenses
relating to the Mortgaged Property as and when the same become due and payable,
it being understood and agreed that if, on any Payment Date, there shall have
occurred and be continuing any Event of Default or the undisbursed balance of
the Liquidity Reserve Escrow Account shall be insufficient to make any portion
of such payment, Borrower shall nevertheless be obligated to make each such
payment in full as and when due.


(c)           Should an Event of Default exist, the
sums on deposit in the Liquidity Reserve Escrow Account may be applied by
Lender in payment of any Operating Expenses for any of the Projects or may be
applied to the payment of the Debt or any other charges affecting all or any
portion of any of the Projects as Lender, in its sole discretion, may
determine; provided, however, that no such
application shall be deemed to have been made by operation of law or otherwise
until actually made by Lender as herein provided.


Section 5.10           Rate Cap Agreement.  Borrower shall maintain the Rate Cap
Agreement at all times during the term of the Loan and pay all fees, charges
and expenses incurred in connection therewith. Borrower shall comply with all
of its obligations under the terms of the Rate Cap Agreement. All amounts paid
by the issuer of the Rate Cap Agreement (the “Counterparty”) to Borrower or Lender shall be
deposited immediately into the Central Account. Borrower shall take all actions
reasonably requested by Lender to enforce Lender’s rights under the Rate Cap
Agreement in the event of a default by the Counterparty. In the event that (a) the
long-term unsecured debt obligations of the Counterparty are downgraded by the
Rating Agency below “A” or its equivalent or (b) the Counterparty shall
default in any of its obligations under the Rate Cap Agreement, Borrower shall,
at the request of Lender, promptly but in all events within five (5) Business
Days, replace the Rate Cap Agreement with an agreement having identical payment
terms and maturity as the Rate Cap Agreement and which is otherwise in form and
substance substantially similar to the Rate Cap Agreement and otherwise
reasonably acceptable to Lender with a cap provider, the long-term unsecured
debt of which is rated at least “A” (or its equivalent) by each Rating Agency,
or such lower rating approved by the Rating Agencies which will allow each
Rating Agency to reaffirm their then current ratings of all rated certificates
issued in connection with the Secondary Market Transaction. In the event that
Borrower fails to maintain the Rate Cap Agreement as provided in this Section 5.10,
Lender may purchase the Rate Cap Agreement and the cost incurred by Lender in
connection therewith shall be paid by Borrower to Lender with interest thereon
at the Default Rate from the date such cost is incurred until such cost is paid
by Borrower to Lender. In the event the term of the Rate Cap Agreement then in
place does not extend through the Maturity Date or the end of the applicable
Extension Period, as applicable, no later than three (3) Business Days
prior to the expiration of the then existing Rate Cap, Borrower shall deliver
to Lender a replacement Rate Cap Agreement with a term expiring not earlier
than the then current Maturity Date and otherwise in form and substance
reasonably acceptable to Lender which is issued by a Counterparty having a
long-term unsecured debt rating of “A” (or its equivalent) or better from the
Rating Agency (the “Replacement
Rate Cap Agreement”).


Section 5.11           [Reserved].



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Section 5.12           Performance of Engineering Work.


(a)           Borrower shall promptly commence and
diligently thereafter pursue to completion (without regard to the amount of
money then available in the Engineering Escrow Account) the Required
Engineering Work prior to the six (6) month anniversary of the Closing
Date. After Borrower completes an item of Required Engineering Work, Borrower
may submit to Lender an invoice therefor with, if requested by Lender, lien
waivers (which may be conditioned upon payment) and a statement from the
Engineer, reasonably acceptable to Lender, indicating that the portion of the
Required Engineering Work in question has been completed in compliance with all
Legal Requirements, and Lender shall, within twenty (20) days thereafter,
although in no event more frequently than once each month, pay (or reimburse)
such amount to Borrower from the Engineering Escrow Account; provided, however,
that Borrower shall not be paid (or reimbursed) more than the amount set forth
on Exhibit C hereto as the amount allocated to the portion of the Required
Engineering Work for which reimbursement is sought.


(b)           From
and after the date all of the Required Engineering Work is completed, Borrower
may submit a written request, which request shall be delivered together with
final lien waivers (which may be conditioned upon payment from the requested
disbursement) and a statement from the Engineer, as the case may be, reasonably
acceptable to Lender, indicating that all of the Required Engineering Work has
been completed in compliance with all Legal Requirements, and Lender shall,
within twenty (20) days thereafter, disburse any balance of the Engineering
Escrow Account to Borrower. Should an Event of Default exist, the sums on
deposit in the Engineering Escrow Account may be applied by Lender in payment
of any Required Engineering Work or may be applied to the payment of the Debt
or any other charges affecting all or any portion of the Projects, as Lender in
its sole discretion may determine; provided,
however, that no such application shall be
deemed to have been made by operation of law or otherwise until actually made
by Lender as herein provided.


Section 5.13           Loss Proceeds. In the event of
a casualty to any Project, unless Lender elects, or is required pursuant to Article III
hereof to make all of the Insurance Proceeds available to Borrower for
restoration, Lender and Borrower shall cause all such Insurance Proceeds to be
paid by the insurer directly to the Central Account, whereupon Lender shall,
after deducting Lender’s reasonable costs of recovering and paying out such
Insurance Proceeds, including without limitation, reasonable attorneys’ fees,
apply same to reduce the Debt in accordance with the terms of the Note; provided, however,
that if Lender elects, is required to elect or is deemed to have elected, to
make the Insurance Proceeds available for restoration, all Insurance Proceeds
in respect of rent loss, business interruption or similar coverage shall be
maintained in the Central Account, to be applied by Lender in the same manner
as Rent received with respect to the operation of the Projects; provided,
further, however, that in the event that the Insurance Proceeds with respect to
such rent loss, business interruption or similar insurance policy are paid in
one or more lump sums in advance, Lender shall hold such Insurance Proceeds in
a segregated interest-bearing escrow account, which shall be an Eligible
Account, shall estimate, in Lender’s reasonable discretion, the number of
months required for Borrower to restore the damage caused by the casualty,
shall divide the aggregate rent loss, business interruption or similar
Insurance Proceeds by such number of months, and shall disburse from such bank
account into the Central Account each month during the performance of such
restoration such monthly installment of said Insurance Proceeds. In the event
that Insurance 



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Proceeds are to be
applied toward restoration, Lender shall hold such funds in a segregated bank
interest-bearing account at the Bank, which shall be an Eligible Account, and
shall disburse same in accordance with the provisions of Section 3.04
hereof. Unless Lender elects, or is required pursuant to Section 6.01 hereof
to make all of the Condemnation Proceeds available to Borrower for restoration,
Lender and Borrower shall cause all such Condemnation Proceeds to be paid to
the Central Account, whereupon Lender shall, after deducting Lender’s
reasonable costs of recovering and paying out such Condemnation Proceeds,
including without limitation, reasonable attorneys’ fees, apply same to reduce
the Debt in accordance with the terms of the Note; provided, however, that any
Condemnation Proceeds received in connection with a temporary Taking shall be
maintained in the Central Account, to be applied by Lender in the same manner
as Rent received with respect to the operation of the Projects; provided,
further, however, that in the event that the Condemnation Proceeds of any such
temporary Taking are paid in a lump sum in advance, Lender shall hold such
Condemnation Proceeds in a segregated interest-bearing bank account, which
shall be an Eligible Account, shall estimate, in Lender’s reasonable
discretion, the number of months that the Project shall be affected by such
temporary Taking, shall divide the aggregate Condemnation Proceeds in
connection with such temporary Taking by such number of months, and shall
disburse from such bank account into the Central Account each month during the
pendency of such temporary Taking such monthly installment of said Condemnation
Proceeds. In the event that Condemnation Proceeds are to be applied toward
restoration, Lender shall hold such funds in a segregated interest-bearing bank
account at the Bank, which shall be an Eligible Account, and shall disburse
same in accordance with the provisions of Section 3.04 hereof. If any Loss
Proceeds are received by Borrower, such Loss Proceeds shall be received in
trust for Lender, shall be segregated from other funds of Borrower, and shall
be forthwith paid into the Central Account, or paid to Lender to hold in a
segregated interest-bearing bank account at the Bank, in each case to be
applied or disbursed in accordance with the foregoing. Any Loss Proceeds (other
than proceeds of business interruption, loss of rents or a temporary taking)
made available to Borrower for restoration in accordance herewith, to the
extent not used by Borrower in connection with, or to the extent they exceed
the cost of, such restoration, shall be deposited into the Central Account,
whereupon Lender shall apply the same to reduce the Debt in accordance with the
terms of the Note.


Section 5.14           Accrued Lease Liability Escrow
Account. Borrower has deposited in the Accrued Lease Liability Escrow
Account, on the date hereof, the amount set forth on Exhibit B hereto for
payment of Accrued Lease Liability Expenses. Provided that no Event of Default
shall exist, Lender shall, from time to time after the written request of
Borrower, but not more than once in any month, disburse to the Borrower or, at
Lender’s option with respect to any single payment to a tenant or other payee
in excess of $100,000.00, directly to the appropriate tenant or other payee,
the amount of the Accrued Lease Liability Expenses due and payable to such
tenant or other payee pursuant to the express terms of such tenant’s Lease or
the agreement with such other payee, as the case may be. Any such request by
Borrower for disbursement of funds held in the Accrued Lease Liability Escrow
Account shall be accompanied by an Officer’s Certificate stating that such
requested amount is then due and payable under the applicable tenant’s Lease. From
and after the date upon which all of the obligations under the Leases with
respect to which the Accrued Lease Liability Escrow Account has been
established have been fully performed, Borrower may submit a written request,
which request shall be delivered with an Officer’s Certification reasonably
satisfactory to Lender confirming that all such obligations under all such
Leases have been so fully performed, and Lender shall, within ten (10) days




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thereafter,
disburse any balance of the Accrued Lease Liability Escrow Account to Borrower.
Should an Event of Default exist, the sums on deposit in the Accrued Lease
Liability Escrow Account may be applied by Lender in payment of any Accrued
Lease Liability Expenses or may be applied to the payment of the Debt or any
other charges affecting all or any portion of the Property, as Lender, in its sole
discretion, shall determine; provided, however, that no such
application shall be deemed to have been made by operation of law or otherwise
until actually made by Lender as herein provided.


Section 5.15           Lease Termination Payment Escrow
Account. Borrower may request a disbursement from the Lease Termination
Payment Escrow Account no more than one (1) time per calendar month for
one or more of the following uses: (i) for the payment of Reletting
Expenditures (in which event such funds shall be distributed in accordance with
Section 5.07 hereof); (ii) for the payment of Debt Service on the
Note to the extent that Lender has reasonably determined on any Payment Date
that there are insufficient funds in the Debt Service Payment Sub-Account to
pay the then owing Required Debt Service Payment; or (iii) for the payment
of Cash Expenses to the extent that Lender has reasonably determined on any
Payment Date that there are insufficient funds in the Central Account, after
the Sub-Accounts have been funded in accordance with clauses (i) through (vi) of
Section 5.05 hereof, to pay for the Cash Expenses for the Current Month
pursuant to the related Approved Annual Budget. Should an Event of Default
exist, the sums on deposit in the Lease Termination Payment Escrow Account may
be applied by Lender in payment of any Operating Expenses for any of the
Projects or may be applied to the payment of the Debt or any other charges
affecting all or any portion of any of the Projects as Lender, in its sole
discretion, may determine; provided, however, that no such application shall be
deemed to have been made by operation of law or otherwise until actually made
by Lender as herein provided.


Section 5.16           REIT Limitations on Investment of
Sums in Escrow Accounts.


(a)           Notwithstanding anything herein to
the contrary, Lender hereby acknowledges the status of each of MCC and SLG as a
real estate investment trust (“REIT”) and Lender agrees that it shall
only invest amounts held in the Escrow Accounts in a manner that is not
inconsistent with the status of each of MCC and SLG as a REIT and which will
not cause MCC and SLG to fail: (a) the annual gross income tests set forth
in Section 856(c)(2) and (3) of the Code; and (b) the
quarterly assets tests set forth in Section 856(c)(4) of the Code and
which minimizes federal, state and local income and excise taxes incurred by
MCC or SLG or any of their respective Affiliates, including taxes under Section 857(b),
860(c) and 4981 of the Code.


(b)           Lender may invest the sums held in the Escrow Accounts in
Permitted Investments. Notwithstanding anything herein to the contrary, the
Lender shall not invest the sums held in the Escrow Accounts, except as set
forth in this Section 5.16, without the prior written approval of the
Manager, which consent shall not be unreasonably withheld, conditioned or
delayed.



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ARTICLE
VI


CONDEMNATION


Section 6.01           Condemnation.


(a)           Borrower shall notify Lender promptly
of the commencement or threat of any Taking of all or any portion of a Project.
Lender is hereby irrevocably appointed as Borrower’s attorney-in-fact, coupled
with an interest, with exclusive power to collect, receive and retain the
proceeds of any such Taking in accordance with the terms of this Agreement,
Borrower shall not make any compromise or settlement in connection with such
proceedings without the prior written consent of Lender, which consent shall
not be unreasonably withheld or delayed (except during the existence of an
Event of Default, in which event Borrower’s approval shall not be required), provided, however,
that Borrower may, without Lender’s consent, compromise or settle any such
proceeding with respect to Condemnation Proceeds in an amount less than five
percent (5%) of the Allocated Loan Amount of the affected Project. Borrower
shall execute and deliver to Lender any and all instruments reasonably required
in connection with any such proceeding promptly after request therefor by
Lender. All Condemnation Proceeds are hereby assigned to and shall be paid to
Lender. If any Condemnation shall result in the actual constructive loss of
fifteen percent (15%) or more of the fair market value of any Project, Lender
shall have the option, in Lender’s sole discretion, to apply such Condemnation
Proceeds (less any cost to Lender of recovering and paying out such proceeds,
including, without limitation, reasonable attorneys’ fees and disbursements and
costs allocable to inspecting any repair, restoration or rebuilding work and
the plans and specifications therefor), toward the payment of the Debt or to
allow such proceeds to be used for the Work; provided, however,
with respect to any other Condemnation, Lender shall make such proceeds
available to Borrower for restoration in accordance with Section 3.04(b). In
the event Lender elects or is required to make Condemnation Proceeds available
to be used toward the restoration or rebuilding of the affected Project to a
usable whole, such Condemnation Proceeds shall be disbursed in the manner and
subject to the conditions set forth in Section 3.04(b) hereof. Any
excess proceeds remaining after completion of such restoration or rebuilding
shall be applied to the repayment of the Debt. If the Condemnation Proceeds are
used to reduce the Debt, they shall be applied in accordance with the
provisions of the Note with no prepayment fee or charge of any kind. In
addition, in the event that Lender shall elect to apply such Condemnation
Proceeds to reduce the Debt, (i) the Allocated Loan Amount of the affected
Project shall be reduced on a dollar for dollar basis with the amount of
proceeds so applied, (ii) Borrower shall have the right, notwithstanding
whether the Lockout Date has or has not occurred, to cause a Release of such
Project and (iii) in connection with such Release, the Release Amount
shall be the Allocated Loan Amount of such Project as so reduced. Borrower
shall promptly execute and deliver all instruments requested by Lender for the
purpose of confirming the assignment of the Condemnation Proceeds to Lender.


(b)           Application
of all or any part of the Condemnation Proceeds to the Debt shall be made in
accordance with the provisions of Sections 3.06 and 3.07 hereof. No application
of the Condemnation Proceeds to the reduction of the Debt shall have the effect
of releasing the lien of any Mortgage until the remainder of the Debt has been
paid in full; provided, however, (i) the Allocated Loan
Amount of such Project shall be reduced on a dollar for dollar basis with the
amount of such Condemnation Proceeds, (ii) notwithstanding the 



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Lockout Date, Borrower may cause a Release of such Project in
accordance with the terms and provisions of this Agreement and the other Loan
Documents, and (iii) the Release Amount of such Project shall equal its
remaining Allocated Loan Amount. In the case of any Taking, Lender, to the
extent that Lender has not been reimbursed by Borrower, shall be entitled, as a
first priority out of any Condemnation Proceeds, to reimbursement for all
costs, fees and expenses reasonably incurred in the determination and
collection of any Condemnation Proceeds. All Condemnation Proceeds deposited
with Lender pursuant to this Section, until expended or applied as provided
herein, shall be held in accordance with Section 3.04(b) hereof and
shall constitute additional security for the payment of the Debt and the payment
and performance of Borrower’s obligations, but Lender shall not be deemed a
trustee or other fiduciary with respect to its receipt of such Condemnation
Proceeds or any part thereof. All awards so deposited with Lender shall be held
by Lender in a segregated interest-bearing Eligible Account but Lender makes no
representation or warranty as to the rate or amount of interest, if any, which
may accrue on any such deposit and shall have no liability in connection
therewith. For purposes hereof, any reference to the award shall be deemed to
include interest, if any, which has accrued thereon.


ARTICLE
VII


LEASING AND MANAGEMENT


Section 7.01           Leases.


(a)           Borrower shall deliver copies of all
Space Leases, and amendments, modifications and renewals thereof entered into
after the date hereof, to Lender. All new Space Leases shall provide for rental
rates comparable to then existing local market rates and terms and conditions
which constitute good and prudent business practice and are consistent with
prevailing market terms and conditions, and, except for Space Leases with the
Manager not in excess of 4,000 square feet with respect to any Project, shall
be arms-length transactions. Borrower has delivered to Lender, and Lender has
approved, standard forms of Space Lease for the Projects, which provide that
they are subordinate to the Loan and that the lessees thereunder will attorn to
Lender.


(b)           Borrower
shall not enter into a proposed Major Space Lease or a proposed renewal,
extension or modification (affecting monetary terms and/or other terms that are
material in nature) of an existing Major Space Lease without the prior written
consent of Lender which consent shall not, so long as no Event of Default
exists, be unreasonably withheld or delayed (it being agreed and acknowledged
by Borrower that Lender may consider, in connection with a request for its
consent under this subsection (b), inter  alia, Borrower’s ability
to pay the anticipated tenant improvement costs and leasing commissions); provided, however,
that with respect to any existing Major Space Lease, the foregoing shall not be
deemed to limit the right of any tenant to extend or renew its lease pursuant
to any such right or option in favor of any such tenant expressly set forth in
its Lease. Any request by Borrower for Lender’s approval of a proposed Major
Space Lease shall be in writing and shall be accompanied by a copy of such
proposed Major Space Lease, together with a summary of the material terms
thereof (including, but not limited to, the proposed tenant improvement costs
and leasing commissions) and a copy of such proposed lease as blacklined to
show changes from the Standard Lease Form approved



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by Lender. Lender
shall approve or disapprove each proposed Major Space Lease or proposed
renewal, extension or modification of an existing Major Space Lease for which
Lender’s approval is required under this Agreement within ten (10) Business
Days after the submission by Borrower to Lender of such written request for
such approval, after which such proposed Major Space Lease shall be deemed to
have been approved by Lender. If requested by Borrower, within five (5) Business
Days after request therefor, Lender will grant conditional approval of proposed
Major Space Leases or proposed renewals, extensions or modifications of
existing Major Space Leases based upon the initial summary of material terms,
provided that Lender shall retain the right to disapprove any such proposed
Major Space Lease or proposed renewal, extension or modification of an existing
Major Space Lease, if subsequent to any preliminary approval material changes
are made to the terms previously approved by Lender, or additional material terms
are added that had not previously been considered and approved by Lender in
connection with such proposed Major Space Lease or proposed renewal, extension
or modification of an existing Major Space Lease or if the form of proposed
Major Space Lease reflects material revisions to the Standard Lease Form that
are not either (y) required to reflect the approved terms and conditions
of the proposed Major Space Lease or (z) consistent with changes then
being made generally to lease documents in the then current leasing market for
comparable space in similar buildings in the locale of the Project in question.
If requested by Borrower with respect to a tenant (i) under a proposed
Major Space Lease, and/or (ii) that is a “national” or “credit” tenant,
Lender agrees to enter into its standard form of Subordination, Non-disturbance
and Attornment agreement with such tenant, with such revisions to such form as
are requested by the proposed tenant and are reasonably acceptable to Lender.


(c)           Any new Space Lease
or renewal, amendment and modification of any existing Space Lease that does
not constitute a Major Space Lease shall not be subject to the prior approval
of Lender; provided that (i) No Event of Default exists; (ii) the
proposed Space Lease shall be written substantially in accordance with the
standard form of Space Lease approved by Lender with respect to the applicable
Project, subject to arms-length negotiated terms in accordance with reasonable
commercial practices, (iii) the proposed Space Lease provide for rental
rates comparable to then existing local market rates and terms and conditions
which constitute good and prudent business practice and are consistent with
prevailing market terms and conditions and (iv) shall have a term
(together with all renewal options) of not greater than fifteen years.


(d)           Borrower (i) shall
observe and perform all of its material obligations under the Leases pursuant
to applicable Legal Requirements and shall not do or permit to be done anything
to impair the value of the Space Leases as security for the Debt; (ii) shall
promptly send copies to Lender of all material notices of default which
Borrower shall receive under the Space Leases; (iii) shall, consistent
with the Approved Manager Standard, enforce the material terms, covenants and
conditions contained in the Space Leases to be observed or performed; (iv) shall
not collect any of the Rents under the Space Leases more than one (1) month
in advance (except that Borrower may collect in advance such security deposits
as are permitted pursuant to applicable Legal Requirements and are commercially
reasonable in the prevailing market); (v) shall not execute any other
assignment of lessor’s interest in the Space Leases or the Rents except as
otherwise expressly permitted pursuant to this Agreement; (vi) shall not
cancel or terminate any of the Space Leases or accept a surrender thereof in
any manner inconsistent with the Approved Manager Standard; (vii) shall
not convey, transfer or suffer or permit a conveyance



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or transfer of
all or any part of the Projects or the Improvements or of any interest therein
so as to effect a merger of the estates and rights of, or a termination or
diminution of the obligations of, lessees thereunder; (viii) shall not,
without Lender’s prior written approval (not to be unreasonably withheld,
conditioned or delayed) alter, modify or change the material terms of any
guaranty of any Major Space Lease or cancel or terminate any such guaranty; (ix) shall,
in accordance with the Approved Manager Standard, make all reasonable efforts
to seek lessees for space as it becomes vacant and enter into Space Leases in
accordance with the terms hereof; (x) shall not, without Lender’s prior
written approval (not to be unreasonably withheld, conditioned or delayed)
materially modify, alter or amend any Major Space Lease or Property Agreement;
and (xi) shall, without limitation to any other provision hereof, execute and
deliver at the request of Lender all such further assurances, confirmations and
assignments in connection with the Projects as are required herein and as
Lender shall from time to time reasonably require.


(e)           All security
deposits of lessees, whether held in cash or any other form, shall be treated
by Borrower as trust funds, but shall not be commingled with any other funds of
Borrower and, if cash, shall be deposited by Borrower in the Security Deposit
Account. Any bond or other instrument which Borrower is permitted to hold in
lieu of cash security deposits under applicable Legal Requirements shall be
maintained in full force and effect unless replaced by cash deposits as
hereinabove described, shall be issued by a Person reasonably satisfactory to
Lender, shall, if permitted pursuant to Legal Requirements, at Lender’s option,
name Lender as payee or mortgagee thereunder or be fully assignable to Lender
and shall, in all respects, comply with applicable Legal Requirements and
otherwise be reasonably satisfactory to Lender. Borrower shall, upon request,
provide Lender with evidence reasonably satisfactory to Lender of Borrower’s
compliance with the foregoing. Following the occurrence and during the
continuance of any Event of Default, Borrower shall, upon Lender’s request, if
permitted by applicable Legal Requirements, turn over the security deposits
(and any interest thereon) to Lender to be held by Lender in accordance with
the terms of this Agreement, the Leases and all Legal Requirements.


Section 7.02           Management of Projects.


(a)           Borrower shall manage the Projects or
cause the Projects to be managed in accordance with the Approved Manager
Standard.


(b)           Borrower covenants
and agrees with Lender that (i) each Project will be managed by Manager
pursuant to the management agreements in effect, as of the date hereof, which
are hereby approved by Lender (collectively, the “Initial Management
Agreement”), until such time as the Initial Management Agreement is
replaced, as more particularly described in subsection (c) below, (ii) after
Borrower has knowledge of a fifty percent (50%) or more change in the ultimate
beneficial control of the ownership of Manager, Borrower will promptly give
Lender notice thereof (a “Manager Control Notice”) and (iii) the
Management Agreement may be terminated by Lender at any time (A) for cause
(including, but not limited to, Manager’s gross negligence, misappropriation of
funds, willful misconduct or fraud), or (B) during the existence of an
Event of Default, or (C) following the receipt of a Manager Control
Notice, or (D) that the Manager has defaulted in its obligations beyond
any applicable notice and cure period as set forth in the Management Agreement,
or (E) after the Manager takes an action or becomes the subject of an
action taken as to it that is described in Section 13.01(h) or (i) hereof,
but without



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giving effect
to the qualifying proviso in Section 13.01(i), and a substitute managing
agent satisfying the Approved Manager Standard shall be appointed by Borrower. Borrower
may from time to time appoint a successor manager to manage the Projects,
provided that any such successor manager shall be a reputable management
company which meets the Approved Manager Standard or is an Affiliate of
Borrower. Borrower further covenants and agrees that Borrower shall require
Manager (or any successor managers) to maintain at all times during the term of
the Loan worker’s compensation insurance as required by Governmental
Authorities.


(c)           Borrower covenants
and agrees that, within sixty (60) days after the date hereof, Borrower will (i) enter
into replacement management agreements for the Projects with Manager, which
replacement management agreements will be in form and substance reasonably
acceptable to Lender and shall be submitted to Lender for its reasonable
approval not less than five (5) Business Days prior to the date of
execution (such replacement management agreements, together with the Initial
Management Agreement, collectively, the “Management Agreement”), and (ii) enter
into and cause Manager to enter into, for the benefit of Lender, a consent and
subordination agreement in the form executed and delivered by Manager and
Borrower to Lender on the date hereof.


ARTICLE VIII


MAINTENANCE AND REPAIR


Section 8.01           Maintenance and Repair of the
Projects; Alterations; Replacement of Equipment. Borrower hereby covenants
and agrees:


(a)           Borrower shall not (i) desert
or abandon any Project, (ii) change the use of any Project or cause or
permit the use or occupancy of any part of any Project to be discontinued if
such discontinuance or use change would violate any zoning or other law,
ordinance or regulation; (iii) consent to or seek any lowering of the
zoning classification, or greater zoning restriction affecting any Project; or (iv) take
any steps whatsoever to convert any Project, or any portion thereof, to a
condominium or cooperative form of ownership.


(b)           Borrower shall, at
its expense, (i) take good care of all of the Projects including grounds
generally, and utility systems and sidewalks, roads, alleys, and curbs therein,
and shall keep the same in good, safe and insurable condition and in all material
respects in compliance with all applicable Legal Requirements, (ii) promptly
make all repairs to the Projects, above grade and below grade, interior and
exterior, structural and nonstructural, ordinary and extraordinary, unforeseen
and foreseen, and maintain the Projects in a manner appropriate for the
facility and (iii) not commit or suffer to be committed any waste of the
Projects or do or suffer to be done anything which will increase the risk of
fire or other hazard to any of the Projects or impair the value thereof. Borrower
shall keep the sidewalks, vaults, gutters and curbs comprising, or adjacent to,
each of the Projects, clean and free from dirt, snow, ice, rubbish and
obstructions. All repairs made by Borrower shall be made with first-class materials,
in a good and workmanlike manner, shall be equal or better in quality to the
original work and shall comply with all applicable Legal Requirements and
Insurance Requirements. To the extent any of the above obligations are
obligations of tenants under Space Leases or other Persons under Property
Agreements, Borrower may fulfill its obligations hereunder by causing



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such tenants
or other Persons, as the case may be, to perform their obligations thereunder. As
used herein, the terms “repair” and “repairs” shall be deemed to include all
necessary replacements.


(c)           Borrower shall not
demolish, remove, construct, or, except as otherwise expressly provided herein,
restore, or alter any of the Projects or any portion thereof; nor consent to or
permit any such demolition, removal, construction, restoration, addition or
alteration which would diminish the value of the Projects. Borrower may,
without Lender’s consent, perform alterations to the Improvements and Equipment
which (i) do not constitute a Material Alteration (as hereinafter
defined), (ii) could not reasonably be expected to have a Material Adverse
Effect on the applicable Project or to Borrower and (iii) are in the
ordinary course of Borrower’s business. Borrower shall not perform any Material
Alteration without Lender’s prior written consent, which consent shall not be
unreasonably withheld, conditioned or delayed; provided,
however, Lender reserves the right to condition its consent to any Material
Alteration on the following:  (i) such
conditions as would be required by a prudent interim construction lender,
including, but not limited to, the prior approval by Lender of plans and
specifications, construction budgets and the furnishing to Lender of evidence
regarding funds, permits and insurance, in form and substance reasonably
satisfactory to Lender; and (iii) Mortgagor’s agreement to pay all fees,
costs and expenses reasonably incurred by Mortgagee in granting such consent,
including, without limitation, reasonable attorneys’ fees and expenses. As used
herein, “Material Alteration” shall mean any alteration affecting
structural elements of the applicable Project the cost of which exceeds
$500,000; provided, however, that in no event shall (i) any
Required Engineering Work, (ii) any Recurring Replacement Expenditures, (iii) any
Reletting Expenditures or (iv) alterations performed as part of a
restoration after a Casualty or Condemnation, constitute a Material Alteration.


(d)           Borrower represents
and warrants to Lender that (i) there are no fixtures, machinery,
apparatus, tools, equipment or articles of personal property attached or
appurtenant to, or located on, or used by Borrower in connection with the
management, operation or maintenance of the Projects, except for the Equipment
and Fixtures and equipment leased by Borrower for the management, operation or
maintenance of the Projects in accordance with the Loan Documents; (ii) the
Equipment, Fixtures and the leased equipment constitute all of the fixtures,
machinery, apparatus, tools, equipment and articles of personal property
necessary to the proper operation and maintenance of the Projects; and (iii) all
of the Equipment and Fixtures are free and clear of all liens, except for the
lien of the Mortgage(s) and the Permitted Encumbrances, and except for
such indebtedness as is permitted pursuant to Section 2.02(g) (viii) hereof.
All right, title and interest of Borrower in and to all extensions,
improvements, betterments, renewals and appurtenances to the Projects hereafter
acquired by, or released to, Borrower or constructed, assembled or placed by
Borrower in the Projects, and all changes and substitutions of the security
constituted thereby, shall be and, in each such case, without any further
mortgage, encumbrance, conveyance, assignment or other act by Lender or
Borrower, shall become subject to the lien and security interest of this
Agreement as fully and completely, and with the same effect, as though now
owned by Borrower and specifically described in this Agreement, but at any and
all times Borrower shall execute and deliver to Lender any documents Lender may
reasonably deem necessary or appropriate for the purpose of specifically
subjecting the same to the lien and security interest of this Agreement.



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(e)           Notwithstanding the
provisions of this Agreement to the contrary, Borrower shall have the right, at
any time and from time to time, to remove and dispose of Equipment which may
have become obsolete or unfit for use or which is no longer useful in the
management, operation or maintenance of the Projects. Borrower shall promptly
replace any such Equipment so disposed of or removed with other Equipment of
equal value and utility, free of any security interest or superior title, liens
or claims (except for such purchase money security interests granted by
Borrower, provided the same are permitted pursuant to Section 2.02(g)(viii) hereof);
except that, if by reason of technological or other developments, replacement
of the Equipment so removed or disposed of is not necessary or desirable for
the proper management, operation or maintenance of the Projects, Borrower shall
not be required to replace the same. All such replacements or additional
equipment shall be deemed to constitute “Equipment” and shall be covered
by the security interest herein granted.


ARTICLE IX


TRANSFER OR ENCUMBRANCE OF THE PROJECTS


Section 9.01           Other Encumbrances. Borrower
shall not further encumber or permit the further encumbrance in any manner
(whether by grant of a pledge, security interest or otherwise) of the Projects
or any part thereof or interest therein, including, without limitation, of the
Rents therefrom. In addition, Borrower shall not further encumber and shall not
permit the further encumbrance in any manner (whether by grant of a pledge,
security interest or otherwise) of Borrower or any direct or indirect interest
in Borrower, except for the Permitted MCRLP Financing, if any, and as expressly
permitted pursuant to this Agreement.


Section 9.02           No Transfer. Borrower
acknowledges that Lender has examined and relied on the expertise of Borrower,
MCC and SLG, in owning and operating properties such as the Projects in
agreeing to make the Loan and will continue to rely on Borrower’s ownership of
the Projects as a means of maintaining the value of the Projects as security
for repayment of the Debt and Borrower acknowledges that Lender has a valid
interest in maintaining the value of the Projects. Borrower shall not Transfer,
nor permit any Transfer, other than a Permitted Transfer, without the prior
written consent of Lender, which consent Lender may withhold in its sole and
absolute discretion. Lender shall not be required to demonstrate any actual
impairment of its security or any increased risk of default hereunder in order
to declare the Debt immediately due and payable upon a Transfer, other than a
Permitted Transfer, without Lender’s consent. This provision shall apply to
every Transfer other than a Permitted Transfer, regardless of whether voluntary
or not, or whether or not Lender has consented to any previous Transfer.


Section 9.03           Due on Sale. Lender may
declare the Debt immediately due and payable upon any Transfer, other than a
Permitted Transfer, without Lender’s consent without regard to whether any
impairment of its security or any increased risk of default hereunder can be
demonstrated. This provision shall apply to every Transfer, other than a
Permitted Transfer, of the Projects or any part thereof or interest in the
Projects or in Borrower or Sole Member regardless of whether voluntary or not,
or whether or not Lender has consented to any previous Transfer of the Projects
or interest in Borrower or Sole Member.



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Section 9.04           Transfer of Projects; Loan
Assumption. Notwithstanding the foregoing set forth in Sections 9.02 and
9.03, neither Lender’s consent nor a Rating Comfort Letter shall be required
for, and Borrower shall have the one-time right to effect, a sale or transfer
of (a) fee title to all of the Projects or (b) 100% of the direct
and/or indirect ownership interests in the Borrower, in either case in a single
transaction (“Special Transfer”) to a Qualified Transferee, provided
that Borrower satisfies the following conditions:


	
  (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)

  	
   

  	
  Lender shall have received from Borrower not less
  than thirty (30) days’ prior written notice of the proposed sale or transfer;

  
	
   

  	
   

  	
   

  
	
  (iii)

  	
   

  	
  Lender shall have received information satisfactory
  to it regarding such Qualified Transferee’s compliance with the Patriot Act;

  
	
   

  	
   

  	
   

  
	
  (iv)

  	
   

  	
  such Qualified Transferee and its property manager
  shall have sufficient experience in the ownership and management of
  properties similar to the Projects, and Lender shall be provided with
  reasonable evidence thereof (and Lender reserves the right to reasonably
  withhold approval of the substitution of the property manager);

  
	
   

  	
   

  	
   

  
	
  (v)

  	
   

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

  
	
   

  	
   

  	
   

  
	
  (vi)

  	
   

  	
  Lender shall have received evidence satisfactory to
  it (which shall include a legal non-consolidation opinion reasonably
  acceptable to (A) prior to a Secondary Market Transaction, Lender or
  (B) after a Secondary Market Transaction, the Rating Agency) that the
  single-purpose nature and bankruptcy remoteness of Borrower and its
  shareholders, partners or members, as the case may be, following such
  transfers are in accordance with the standards of the Rating Agency;

  
	
   

  	
   

  	
   

  
	
  (vii)

  	
   

  	
  Lender shall have received on or prior to the date
  of the sale or transfer (A) an application fee in the amount of
  $5,000.00 and (B) the payment of all actual out-of-pocket costs and
  expenses incurred by Lender and, if applicable, the Rating Agency, in
  connection with such assumption (including reasonable attorneys’ fees and
  costs);

  
	
   

  	
   

  	
   

  
	
  (viii)

  	
   

  	
  such Qualified Transferee is a Single Purpose Entity
  that complies with the representations and covenants set forth in
  Section 2.02(g), Section 2.02(t) and
  Section 2.02(w) hereof;

  



 



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  (ix)

  	
   

  	
  Borrower and the Qualified Transferee execute and
  cause to be filed in such public records as Lender deems appropriate, without
  any cost or expense to Lender, new financing statements or financing
  statement amendments and any additional documents reasonably requested by
  Lender to grant, reaffirm or continue the liens and security interests held
  by Lender under the Loan Documents;

  
	
   

  	
   

  	
   

  
	
  (x)

  	
   

  	
  Borrower causes to be delivered to Lender, without
  any cost or expense to Lender, such property and liability insurance endorsements
  or certificates and other similar materials as Lender may reasonably deem
  necessary at the time of the Special Transfer, all in form and substance
  reasonably satisfactory to Lender;

  
	
   

  	
   

  	
   

  
	
  (xi)

  	
   

  	
  Borrower executes and delivers to Lender, without
  any cost or expense to Lender, a release of Lender, its officers, directors,
  employees and agents, from all claims and liability relating to the
  transactions evidenced by the Loan Documents through and including the date
  of the closing of the Special Transfer, which agreement shall be in form and
  substance reasonably satisfactory to Lender and shall be binding upon the
  Qualified Transferee;

  
	
   

  	
   

  	
   

  
	
  (xii)

  	
   

  	
  Subject to the provisions of Section 18.32
  hereof, such Special 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 Special 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 Special 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 Special Transfer;

  
	
   

  	
   

  	
   

  
	
  (xiii)

  	
   

  	
  An Acceptable Substitute Guarantor shall have
  assumed the Guaranty or shall have executed a replacement guaranty substantially
  similar to the Guaranty and such successor Guarantor executes such documents
  as may be reasonably required by Lender to evidence such assumption. The
  original Guarantor shall be released from and relieved of any of its
  obligations under any indemnity or guaranty executed in connection with the
  Loan for any acts or events occurring or obligations arising after the
  closing of such Special 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 Special Transfer;

  



 



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  (xiv)

  	
   

  	
  the Qualified Transferee shall assume the
  obligations of Borrower under any management agreements pertaining to the
  Projects, or shall cause the new manager and management agreement to satisfy
  the requirements of Section 7.02 hereof, as applicable;

  
	
   

  	
   

  	
   

  
	
  (xv)

  	
   

  	
  the Qualified Transferee shall furnish an opinion of
  counsel reasonably satisfactory to Lender that the acquisition of the
  Projects and the assumption of the Loan and the Loan Documents by Qualified
  Transferee and, to the extent applicable, successor Guarantor, were validly
  authorized, and duly executed and delivered, and constitute the legal, valid
  and binding obligations of Qualified Transferee and such successor Guarantor,
  enforceable against each of them in accordance with their respective terms,
  and with respect to such other matters as Lender may reasonably require;

  
	
   

  	
   

  	
   

  
	
  (xvi)

  	
   

  	
  the Qualified Transferee shall provide Lender with
  fully executed copies of (A) deeds covering the Projects, (B) bills
  of sale covering the personal property with respect to each Project and
  (C) assignments and assumption agreements (in respect of the Leases) in
  form and substance reasonably satisfactory to Lender; and

  
	
   

  	
   

  	
   

  
	
  (xvii)

  	
   

  	
  Buyer shall provide Lender a Rate Cap Agreement
  reasonably satisfactory to Lender and satisfying the provisions of
  Section 5.10 hereof (in which case Lender shall release the Borrower’s
  then-existing Rate Cap Agreement to Borrower), which requirement may also be
  satisfied by the assumption by Buyer of the Rate Cap Agreement in place on
  the date hereof or any extension or replacement thereof delivered pursuant to
  Section 5.10 hereof.

  



 


ARTICLE X


CERTIFICATES


Section 10.01         Estoppel Certificates.


(a)           After request by Lender, Borrower,
within fifteen (15) days and at its expense, will furnish Lender with a
statement, duly acknowledged and certified, setting forth (i) the amount
of the original principal amount of the Note, and the unpaid principal amount
of the Note, (ii) the rate of interest of the Note, (iii) the date
payments of interest and/or principal were last paid, (iv) any offsets or
defenses to the payment of the Debt, and if any are alleged, the nature
thereof, (v) that the Note and this Agreement have not been modified or if
modified, giving particulars of such modification and (vi) no Default by
Borrower exists or if such Default by Borrower exists, the nature thereof, the
period of time it has existed, and the action being taken to remedy such
Default.


(b)           Within fifteen (15)
days after written request by Borrower, Lender shall furnish to Borrower a
written statement confirming (i) the amount of the Debt, (ii) the
maturity



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date of the
Note, (iii) the date to which interest has been paid, and (iv) whether,
to Lender’s knowledge, there exist any uncured Events of Default for which
Lender has provided written notice. Lender agrees to provide such statement
regardless of whether any notice of an uncured Event of Default has been
delivered to Borrower.


(c)           Borrower shall use
all commercially reasonable efforts to obtain estoppel certificates from
tenants in form and substance reasonably acceptable to Lender or as required
under a tenant’s Space Lease, upon the reasonable request of Lender, provided,
that, Borrower shall not be required to request such estoppel certificates from
tenants more than twice in the calendar year that the Lender anticipates
including the Loan in a Secondary Market Transaction or once per year in any
other calendar year.


ARTICLE XI


NOTICES


Section 11.01         Notices. Any notice, demand,
statement, request or consent made hereunder shall be in writing and delivered
personally or sent to the party to whom the notice, demand or request is being
made by Federal Express or other nationally recognized overnight delivery
service, as follows and shall be deemed given when delivered personally or one (1) Business
Day after being deposited with Federal Express or such other nationally
recognized delivery service:


	
  If to Lender:

  	
   

  	
  To Lender, at the address first written above,

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  with a copy to:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Solomon and Weinberg LLP

  
	
   

  	
   

  	
  900 Third Avenue

  
	
   

  	
   

  	
  New York, New York 10022

  
	
   

  	
   

  	
  Attention: Gary S. Kleinman, Esq.

  
	
   

  	
   

  	
   

  
	
  If to Borrower:

  	
   

  	
  To Borrower, at the address first written above,

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  with a copy to:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Greenbaum Rowe Smith & Davis LLP

  
	
   

  	
   

  	
  99 Wood Avenue South

  
	
   

  	
   

  	
  Iselin, New Jersey 08830

  
	
   

  	
   

  	
  Attention: Martin Dollinger, Esq.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  with a further copy to :

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Greenberg Traurig LLP

  
	
   

  	
   

  	
  200 Park Avenue

  
	
   

  	
   

  	
  New York, New York 10166

  
	
   

  	
   

  	
  Attention: Joseph Kishel, Esq.

  




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


ARTICLE XII


INDEMNIFICATION


Section 12.01         Indemnification Covering Projects.
In addition, and without limitation of any other provision of this Agreement or
any other Loan Document, Borrower shall protect, indemnify and save harmless
Lender and its successors and assigns, and each of their agents, employees,
officers, directors, stockholders, partners and members (collectively, “Indemnified
Parties”) for, from and against any claims, demands, penalties, fines,
liabilities, settlements, losses damages, fees, costs and expenses of whatever
kind or nature, known or unknown, contingent or otherwise, whether incurred or
imposed within or outside the judicial process, including, without limitation,
reasonable attorneys’ fees and disbursements imposed upon or incurred by or
asserted against any of the Indemnified Parties (collectively, “Liabilities”)
by reason of (a) ownership of this Agreement, the Assignment, the Projects
or any part thereof or any interest therein or receipt of any Rents; (b) any
accident, injury to or death of any person or loss of or damage to property
occurring in, on or about the Projects or any part thereof or on the adjoining
sidewalks, curbs, parking areas, streets or ways; (c) any use, nonuse or
condition in, on or about, or possession, alteration, repair, operation,
maintenance or management of, the Projects or any part thereof or on the
adjoining sidewalks, curbs, parking areas, streets or ways; (d) any
failure on the part of Borrower to perform or comply with any of the terms of
this Agreement or the Assignment; (e) performance of any labor or services
or the furnishing of any materials or other property in respect of the Projects
or any part thereof; (f) any claim by brokers, finders or similar Persons
claiming to be entitled to a commission in connection with any Lease or other
transaction involving the Projects or any part thereof; (g) any Imposition
including, without limitation, any Imposition attributable to the execution,
delivery, filing, or recording of any Loan Document, Lease or memorandum
thereof; (h) any lien or claim arising on or against the Projects or any
part thereof under any Legal Requirement or any liability asserted against any
of the Indemnified Parties with respect thereto; (i) any claim arising out
of or in any way relating to any tax or other imposition on the making and/or
recording of this Agreement, the Note or any of the other Loan Documents; (j) a
Default under Sections 2.02(f) or 2.02(g) hereof, (k) the
failure of any Person to file timely with the Internal Revenue Service an
accurate Form 1099-B, Statement for Recipients of Proceeds from Real
Estate, Broker and Barter Exchange Transactions, which may be required in
connection with the Loan, or to supply a copy thereof in a timely fashion to
the recipient of the proceeds of the Loan; or (l) the claims of any lessee
or any Person acting through or under any lessee or otherwise arising under or
as a consequence of any Lease. Notwithstanding the foregoing provisions of this
Section 12.01 to the contrary, Borrower shall have no obligation to
indemnify the Indemnified Parties pursuant to this Section 12.01 for
liabilities, obligations, claims, damages, penalties, causes of action, costs
and expenses relative to the foregoing which result from Lender’s, and its
successors’ or assigns’, willful misconduct



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or gross
negligence. Any amounts payable to Lender by reason of the application of this Section 12.01
shall constitute a part of the Debt secured by this Agreement and the other
Loan Documents and shall become immediately due and payable and shall bear
interest at the Default Rate from the date the liability, obligation, claim, cost
or expense is sustained by Lender, as applicable, until paid. The provisions of
this Section 12.01 shall survive the termination of this Agreement whether
by repayment of the Debt, foreclosure or delivery of a deed in lieu thereof,
assignment or otherwise. In case any action, suit or proceeding is brought
against any of the Indemnified Parties by reason of any occurrence of the type
set forth in (a) through (l) above, Borrower shall, at Borrower’s
expense, resist and defend such action, suit or proceeding or will cause the
same to be resisted and defended by counsel at Borrower’s expense for the
insurer of the liability or by counsel designated by Borrower (unless
reasonably disapproved by Lender promptly after Lender has been notified of
such counsel); provided, however, that
nothing herein shall compromise the right of Lender (or any other Indemnified
Party) to appoint its own counsel at Borrower’s expense for its defense with
respect to any action which, in the reasonable opinion of Lender or such other
Indemnified Party, as applicable, presents a conflict or potential conflict
between Lender or such other Indemnified Party that would make such separate
representation advisable. Any Indemnified Party will give Borrower prompt
notice after such Indemnified Party obtains actual knowledge of any potential
claim by such Indemnified Party for indemnification hereunder. The Indemnified
Parties shall not settle or compromise any action, proceeding or claim as to
which it is indemnified hereunder without notice to Borrower.


ARTICLE XIII


DEFAULTS


Section 13.01         Events of Default. The Debt
shall become immediately due at the option of Lender upon any one or more of
the following events (“Event of Default”):


(a)           if the final payment
due under the Note shall not be paid on Maturity or earlier prepayment of the
Loan, as the case may be;


(b)           if any monthly
payment of interest and/or principal due under the Note (other than the sums
described in (a) above) shall not be fully paid on the date upon which the
same is due and payable thereunder;


(c)           if payment of any
sum (other than the sums described in (a) above or (b) above)
required to be paid pursuant to the Note, this Agreement or any other Loan
Document shall not be paid within five (5) Business Days after Lender
delivers written notice to Borrower that payment of same was not made timely
thereunder or hereunder;


(d)           if Borrower, Sole
Member or Guarantor shall institute or cause to be instituted any proceeding
for the termination or dissolution of Borrower or Sole Member;


(e)           if the insurance
policies required hereunder are not kept in full force and effect, or if the
insurance policies or certificates evidencing such insurance policies (in form
and substance reasonably satisfactory to Lender) are not assigned and delivered
to Lender as herein required for five (5) Business Days after notice from
Lender;



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(f)            if Borrower
attempts to assign its rights under this Agreement or any other Loan Document
or any interest herein or therein, or if any Transfer occurs other than a Permitted
Transfer or other Transfer permitted in accordance with the provisions hereof;


(g)           if any
representation or warranty of Borrower or Guarantor made herein or in any other
Loan Document or in any certificate, report, financial statement or other instrument
or agreement furnished to Lender shall prove false or misleading in any
material and adverse respect;


(h)           if Borrower or Sole
Member shall make an assignment for the benefit of creditors or shall admit in
writing its inability to pay its debts generally as they become due;


(i)            if a receiver,
liquidator or trustee of Borrower or Sole Member shall be appointed or if
Borrower or Sole Member shall be adjudicated 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 or Sole Member or if any
proceeding for the dissolution or liquidation of Borrower or Sole Member shall
be instituted; however, if such appointment, adjudication, petition or
proceeding was involuntary and not consented to by Borrower or Sole Member, as
applicable, upon the same not being discharged, stayed or dismissed within
ninety (90) days or if Borrower or Sole Member shall generally not be paying
its debts as they become due.


(j)            if Borrower shall
be in default beyond any notice or grace period, if any, under any mortgage or
deed of trust or security agreement covering any part of the Projects other
than the Mortgages (and other than the first mortgage on the Livingston
Project), without regard to its priority relative to the Mortgages; provided, however, this provision shall not be
deemed a waiver of the provisions of Article IX prohibiting further
encumbrances affecting the Projects or any other provision of this Agreement;


(k)           if a Project becomes
subject (i) to any lien which is superior to the lien of the applicable
Mortgage, other than a lien for real estate taxes and assessments not due and
payable, or (ii) to any mechanic’s, materialman’s or other lien which is
or is asserted to be superior to the lien of such Mortgage, and such lien shall
remain undischarged (by payment, bonding, or otherwise) for thirty (30) days
unless contested in accordance with the terms hereof;


(l)            if Borrower
abandons a Project;


(m)          except as permitted
in this Agreement, Borrower undertakes any Material Alteration of any of the
Improvements without the prior consent of Lender;


(n)           if Borrower
consummates a transaction which would cause this Agreement or Lender’s rights
under this Agreement, the Note or any other Loan Document to constitute a
non-exempt prohibited transaction under ERISA or result in a violation of a
state statute regulating government plans subjecting Lender to liability for a
violation of ERISA or a state statute;


(o)           if Borrower shall be
in default under Section 2.12(d) hereof, beyond all applicable
notice, grace and cure periods therein contained;



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(p)           if Borrower or Sole
Member shall fail to be in compliance with Section 2.02(g) hereof; provided,
however, that a breach of any covenant contained in Section 2.02(g) hereof
shall not constitute an Event of Default if (i) such breach was
inadvertent, immaterial and non-recurring, (ii) such breach is curable and
Borrower shall promptly cure such breach within fifteen (15) Business Days of
notice from Lender and (iii) within fifteen (15) Business Days of the
request by Lender, Borrower causes counsel to deliver to Lender a revised or
updated substantive legal non-consolidation opinion to the effect that such
breach shall not in any material manner impair, negate or amend the opinions
rendered in the non-consolidation opinion delivered in connection with the
closing of the Loan, which opinion and counsel shall be acceptable to Lender in
its reasonable discretion;


(q)           if at any time a
Rate Cap Agreement fails to be obtained or maintained in accordance with the
terms hereof and Borrower has not cured such failure within seven (7) Business
Days after notice from Lender; or


(r)            if a default shall
occur under any of the other terms, covenants or conditions of the Note, this
Agreement or any other Loan Document, other than as set forth in (a) through
(q) above, for ten (10) days after notice from Lender in the case of
any default which can be cured by the payment of a sum of money, or for thirty
(30) days after notice from Lender in the case of any other default or an
additional one hundred fifty (150) days if Borrower is diligently and
continuously effectuating a cure of a curable non-monetary default, other than
as set forth in (a) through (q) above.


Section 13.02         Remedies.


(a)           Upon the occurrence and during the
continuance of any Event of Default, Lender may, in addition to any other
rights or remedies available to it hereunder or under any other Loan Document,
at law or in equity, take such action, without notice or demand, as it
reasonably deems advisable to protect and enforce its rights against Borrower
and in and to the Projects including, but not limited to, the following actions,
each of which may be pursued singly, concurrently or otherwise, at such time
and in such order as Lender may determine, in its sole discretion, without
impairing or otherwise affecting any other rights and remedies of Lender
hereunder, at law or in equity to declare all or any portion of the unpaid Debt
to be immediately due and payable; provided,
however, that upon the occurrence of any of the events specified in Section 13.01(i),
the entire Debt will be immediately due and payable without notice or demand or
any other declaration of the amounts due and payable. Without limiting the
generality of the foregoing, Borrower agrees that if an Event of Default is
continuing, (i) to the extent permitted by applicable law, Lender is not,
and shall not be, subject to any “one action” or “election of remedies” law or
rule, and (ii) all Liens and other rights, remedies or privileges provided
to Lender shall remain in full force and effect until Lender has exhausted all
of its remedies against all of the Projects, the Mortgages have been
foreclosed, all of the Projects have been sold and/or otherwise realized upon
in satisfaction of the Debt or the Debt has been paid in full. To the extent
permitted by applicable law, nothing contained in any Loan Document shall be construed
as requiring Lender to resort to any portion of the Projects for the
satisfaction of any of the Debt in preference or priority to any other portion,
and Lender may seek satisfaction out of any Project or all Projects, in its
discretion.



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(b)           During the existence
of an Event of Default (but without limitation to any of Lender’s rights under Section 17.08),
Lender shall have the right from time to time to sever the Note and the other
Loan Documents into one or more separate notes, mortgages and other security
documents (and, in connection therewith, to bifurcate or otherwise modify the
nature of the collateral that secures such notes) in such denominations and
priorities of payment and liens as Lender shall determine in its discretion for
purposes of evidencing and enforcing its rights and remedies. Borrower shall
execute and deliver to Lender from time to time, promptly after the request of
Lender, a severance agreement and such other documents as Lender shall request
in order to effect the severance described in the preceding sentence, all in
form and substance reasonably satisfactory to Lender. Borrower hereby
absolutely and irrevocably appoints Lender as its true and lawful attorney,
coupled with an interest, in its name and stead to make and execute all
documents necessary or desirable to effect such severance in accordance with
the foregoing, Borrower ratifying all that such attorney shall do by virtue
thereof.


(c)           No delay or omission
to exercise any remedy, right or power accruing during the existence of an
Event of Default, or the granting of any indulgence or compromise by Lender
shall impair any such remedy, right or power hereunder or be construed as a
waiver thereof, but any such remedy, right or power may be exercised from time
to time and as often as may be deemed expedient. A waiver of one Default or
Event of Default shall not be construed to be a waiver of any subsequent
Default or Event of Default or to impair any remedy, right or power consequent
thereon. Notwithstanding any other provision of this Agreement, Lender reserves
the right to seek a deficiency judgment or preserve a deficiency claim in
connection with the foreclosure of the Mortgages to the extent necessary to
foreclose on all or any portion of the Projects, the Rents, the Sub-Accounts,
the Escrow Accounts or any other collateral.


(d)           If Borrower fails to
perform any covenant or obligation contained herein and such failure shall
continue beyond any notice and cure period, without in any way limiting Lender’s
right to exercise any of its rights, powers or remedies as provided hereunder,
or under any of the other Loan Documents, Lender may, but shall have no
obligation to, perform, or cause performance of, such covenant or obligation,
and all costs, expenses, liabilities, penalties and fines of Lender incurred or
paid in connection therewith shall be payable by Borrower to Lender upon demand
and if not paid shall be added to the Debt (and to the extent permitted under
applicable laws, secured by the Mortgage and other Loan Documents) and shall
bear interest thereafter at the Default Rate. Notwithstanding the foregoing,
Lender shall have no obligation to send notice to Borrower of any such failure.


Section 13.03         Payment of Debt After Default. If,
following the occurrence of any Event of Default, Borrower shall tender payment
of an amount sufficient to satisfy the Debt in whole or in part at any time
prior to a foreclosure sale of the Projects, and if at the time of such tender
prepayment of the principal balance of the Note is not permitted by the Note or
this Agreement (i.e., such payment is tendered prior to the Lockout
Date), Borrower shall, in addition to the entire Debt, also pay to Lender a sum
equal to interest which would have accrued on the principal balance of the Note
at an interest rate equal to the LIBOR Margin for the Note from the date of
such tender to the Maturity Date (such sum, the “Yield Maintenance Premium”).
If at the time of such tender, prepayment of the principal balance of the Note
is permitted (i.e., on or after the Lockout Date), such tender by
Borrower shall be deemed to be a voluntary prepayment of the principal balance
of the Note.



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Section 13.04         Possession of the Projects. Upon
the occurrence of any Event of Default hereunder and the acceleration of the Debt
or any portion thereof, Borrower, if an occupant of any Project or any part
thereof, upon demand of Lender, shall immediately surrender possession of such
Project(s) (or the portion thereof so occupied) to Lender, and if Borrower
is permitted to remain in possession, the possession shall be as a month to
month tenant of Lender and, on demand, Borrower shall pay to Lender monthly, in
advance, a reasonable rental for the space so occupied and in default thereof
Borrower may be dispossessed. The covenants herein contained may be enforced by
a receiver of the Projects or any part thereof. Nothing in this Section 13.04
shall be deemed to be a waiver of the provisions of this Agreement making the
Transfer of the Projects or any part thereof without Lender’s prior written
consent an Event of Default.


Section 13.05         Interest After Default. If any
amount due under the Note, this Agreement or any of the other Loan Documents is
not paid within any applicable notice and grace period after same is due,
whether such date is the stated due date, any accelerated due date or any other
date or at any other time specified under any of the terms hereof or thereof,
then, in  such event, Borrower shall pay
interest on the amount not so paid from and after the date on which such amount
first becomes due at the Default Rate; and such interest shall be due and
payable at such rate until the earlier of the cure of all Events of Default or
the payment of the entire amount due to Lender, whether or not any action shall
have been taken or proceeding commenced to recover the same or to foreclose
this Agreement. All unpaid and accrued interest shall be secured by this
Agreement as part of the Debt. Nothing in this Section 13.05 or in any
other provision of this Agreement shall constitute an extension of the time for
payment of the Debt.


Section 13.06         Borrower’s Actions After Default.
After the happening of any Event of Default and immediately upon the
commencement of any action, suit or other legal proceedings by Lender to obtain
judgment for the Debt, or of any other nature in aid of the enforcement of the
Loan Documents, Borrower will (a) after receipt of notice of the
institution of any such action, waive the issuance and service of process and
enter its voluntary appearance in such action, suit or proceeding, and (b) if
required by Lender, consent to the appointment of a receiver or receivers of
the Projects or any part thereof and of all the earnings, revenues, rents,
issues, profits and income thereof.


Section 13.07         Control by Lender After Default.
Notwithstanding the appointment of any custodian, receiver, liquidator or
trustee of Borrower, or of any of its property, or of the Projects or any part
thereof, to the extent permitted by Legal Requirements, Lender shall be
entitled to obtain possession and control of all property now and hereafter
covered by this Agreement and the Assignment in accordance with the terms
hereof.


Section 13.08         Right to Cure Defaults.


(a)           During the existence of any Event of
Default, Lender or its agents may, but without any obligation to do so and
without notice to or demand on Borrower and without releasing Borrower from any
obligation hereunder, make or do the same in such manner and to such extent as
Lender may deem necessary to protect the security hereof. Lender and its agents
are authorized to enter upon the Projects or any part thereof for such
purposes, or appear in,



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defend, or bring
any action or proceedings to protect Lender’s interest in the Projects or any
part thereof or to foreclose this Agreement or collect the Debt, and the cost
and expense thereof (including reasonable attorneys’ fees to the extent
permitted by law), with interest as provided in this Section 13.08, shall
constitute a portion of the Debt and shall be immediately due and payable to
Lender upon demand. All such costs and expenses incurred by Lender or its
agents in remedying such Event of Default or in appearing in, defending, or
bringing any such action or proceeding shall bear interest at the Default Rate,
for the period from the date so demanded to the date of payment to Lender. All
such costs and expenses incurred by Lender or its agents together with interest
thereon calculated at the above rate shall be deemed to constitute a portion of
the Debt and be secured by this Agreement.


(b)           If Lender makes any payment or advance that Lender is
authorized by this Agreement to make in the place and stead of Borrower (i) relating
to the Impositions or tax liens asserted against the Projects, Lender may do so
according to any bill, statement or estimate procured from the appropriate
public office without inquiry into the accuracy of the bill, statement or
estimate or into the validity of any of the Impositions or the tax liens or
claims thereof; (ii) relating to any apparent or threatened adverse title,
lien, claim of lien, encumbrance, claim or charge, Lender will be the sole
judge of the legality or validity of same; or (iii) relating to any other
purpose authorized by this Agreement but not enumerated in this Section 13.08,
Lender may do so whenever, in its judgment and discretion, the payment or
advance seems necessary or desirable to protect the Projects and the full
security interest intended to be created by this Agreement. In connection with
any payment or advance made pursuant to this Section 13.08, Lender has the
option and is authorized, but in no event shall be obligated, to obtain a
continuation report of title prepared by a title insurance company. The
payments and the advances made by Lender pursuant to this Section 13.08
and the cost and expenses of said title report will be due and payable by
Borrower on demand, together with interest at the Default Rate, and will be
secured by this Agreement.


Section 13.09         Late Payment Charge. If any
portion of the Debt is not paid in full on or before the day on which it is due
and payable hereunder, Borrower shall pay to Lender an amount equal to three
percent (3%) of such unpaid portion of the Debt (“Late Charge”) to
defray the expense incurred by Lender in handling and processing such delinquent
payment, and such amount shall constitute a part of the Debt. The Late Charge
shall not apply to the payment of the Principal Amount at Maturity.


Section 13.10         Recovery of Sums Required to Be Paid.
Lender shall have the right from time to time to take action to recover any sum
or sums which constitute a part of the Debt as the same become due and payable
hereunder (after the expiration of any grace period or the giving of any notice
herein provided, if any), without regard to whether or not the balance of the
Debt shall be due, and without prejudice to the right of Lender thereafter to
bring an action of foreclosure, or any other action, for a default or defaults
by Borrower existing at the time such earlier action was commenced.


Section 13.11         Marshalling and Other Matters. Borrower
hereby waives, to the fullest extent permitted by law, the benefit of all
appraisement, valuation, stay, extension, reinstatement, redemption (both
equitable and statutory) and homestead laws now or hereafter in force and all
rights of marshalling in the event of any sale hereunder of the Projects or any
part



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thereof or any
interest therein. Further, Borrower hereby expressly waives any and all rights
of redemption from sale under any order or decree of foreclosure of any or all
of the Mortgages on behalf of Borrower, whether equitable or statutory and on
behalf of each and every Person acquiring any interest in or title to the
Projects or any part thereof subsequent to the date of this Agreement and on
behalf of all Persons to the fullest extent permitted by applicable law.


Section 13.12         Tax Reduction Proceedings. After
an Event of Default, Borrower shall be deemed to have appointed Lender as its
attorney-in-fact to seek a reduction or reductions in the assessed valuation of
the Projects for real property tax purposes or for any other purpose and to
prosecute any action or proceeding in connection therewith. This power, being
coupled with an interest, shall be irrevocable for so long as any part of the
Debt remains unpaid and any Event of Default shall exist.


Section 13.13         General
Provisions Regarding Remedies


(a)           Right
to Terminate Proceedings. Lender may terminate or rescind any proceeding or
other action brought in connection with its exercise of the remedies provided
in Section 13.02 at any time before the conclusion thereof, as determined
in Lender’s sole discretion and without prejudice to Lender.


(b)           No Waiver or
Release. The failure of Lender to exercise any right, remedy or option
provided in the Loan Documents shall not be deemed a waiver of such right,
remedy or option or of any covenant or obligation contained in the Loan
Documents. No acceptance by Lender of any payment after the occurrence of an
Event of Default and no payment by Lender of any payment or obligation for
which Borrower is liable hereunder shall be deemed to waive or cure any Event
of Default. No sale of all or any portion of the Projects, no forbearance on
the part of Lender, and no extension of time for the payment of the whole or
any portion of the Debt or any other indulgence given by Lender to Borrower or
any other Person, shall operate to release or in any manner affect the interest
of Lender in the Projects or the liability of Borrower to pay the Debt. No
waiver by Lender shall be effective unless it is in writing and then only to
the extent specifically stated.


(c)           No Impairment; No
Releases. The interests and rights of Lender under the Loan Documents shall
not be impaired by any indulgence, including (i) any renewal, extension or
modification which Lender may grant with respect to any of the Debt; (ii) any
surrender, compromise, release, renewal, extension, exchange or substitution
which Lender may grant with respect to the Projects or any portion thereof; or (iii) any
release or indulgence granted to any maker, endorser, guarantor or surety of
any of the Debt.


ARTICLE XIV


COMPLIANCE WITH REQUIREMENTS


Section 14.01         Compliance with Legal Requirements.


(a)           Borrower shall promptly comply in all
material respects with all present and future Legal Requirements, foreseen and
unforeseen, ordinary and extraordinary, whether



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requiring
structural or nonstructural repairs or alterations including, without
limitation, all zoning, subdivision, building, safety and environmental
protection, land use and development Legal Requirements, all Legal Requirements
which may be applicable to the curbs adjoining the Projects or to the use or
manner of use thereof, and all rent control, rent stabilization and all other
similar Legal Requirements relating to rents charged and/or collected in
connection with the Leases. Borrower represents and warrants that each Project
is in compliance in all material respects with all Legal Requirements as of the
date hereof, no notes or notices of any uncured material violations of any Legal
Requirements have been entered or received by Borrower and to Borrower’s
knowledge, there is no basis for the entering of such note or notices.


(b)           Borrower shall have
the right to contest by appropriate legal proceedings diligently conducted in
good faith, without cost or expense to Lender, the validity or application of
any Legal Requirement and to suspend compliance therewith if permitted under
applicable Legal Requirements, provided (i) failure to comply therewith
may not subject Lender to any civil or criminal liability, (ii) prior to
and during such contest, Borrower shall furnish to Lender security reasonably
satisfactory to Lender, in its discretion, against loss or injury by reason of
such contest or non compliance with such Legal Requirement, (iii) no
monetary Default or Event of Default shall exist during such proceedings and
such contest shall not otherwise violate any of the provisions of any of the
Loan Documents, (iv) such contest shall not (unless Borrower shall comply
with the provisions of clause (ii) of this Section 14.01(b)) subject
the Project to any lien or encumbrance the enforcement of which is not
suspended or otherwise affect the priority of the lien of the related
Mortgage(s); (v) such contest shall not adversely affect the ownership,
use or occupancy of the Project, other than in a de minimis
manner; (vi) the Project or any part thereof or any interest therein shall
not be in any danger of being sold, forfeited or lost by reason of such contest
by Borrower; (vii) Borrower shall give Lender prompt notice of the
commencement of such proceedings and, upon request by Lender, notice of the
status of such proceedings and/or confirmation of the continuing satisfaction
of the conditions set forth in clauses (i) - (vi) of this Section 14.01(b);
and (viii) upon a final determination of such proceeding, Borrower shall
take all steps necessary to comply with any requirements arising therefrom.


Section 14.02         Compliance with Recorded Documents;
No Future Grants. Borrower shall promptly perform and observe or cause to
be performed and observed, all of the material terms, covenants and conditions
of all material Property Agreements and all things necessary to preserve intact
and unimpaired any and all material appurtenances or other interests or rights
affecting the Projects.


ARTICLE XV


PREPAYMENT


Section 15.01         Prepayment.


(a)           Except as set forth
in Section 15.01(b) hereof, no prepayment of the Debt may be made in
whole or in part.


(b)           Borrower may prepay
the Loan, in whole or in part, as of the last day of an Interest Accrual Period
only in accordance with the following provisions:



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(i)       No portion of the Debt may be prepaid
prior to the Lockout Date;


(ii)      Lender shall have received from Borrower,
not less than twenty (20) days’, nor more than ninety (90) days’, prior written
notice specifying the date proposed for such prepayment, and the amount which
is to be prepaid and whether a Release is requested in connection therewith;


(iii)     Borrower shall pay to Lender all interest
due through and including the last day of the Interest Accrual Period in which
such prepayment is being made, together with any and all other amounts due and
owing pursuant to the terms of the Note, this Agreement or the other Loan
Documents;


(iv)    Any partial prepayment, other than in
connection with a Release, shall be in a minimum amount not less than
$1,000,000.00 and shall be in whole multiples of $1,000 in excess thereof;


(v)     Any prepayment of the Debt shall be
accompanied by the Exit Fee payable with respect to the Principal Amount or
portion thereof being prepaid;


(vi)    Any partial prepayment of the Principal
Amount other than in connection with a Release, including, without limitation,
Unscheduled Payments, shall not release or relieve Borrower from the obligation
to pay the regularly scheduled installments of interest becoming due under the
Note;


(vii)   With respect to any prepayment occurring on
or after the Lockout Date, Borrower shall not be required to pay to Lender the
Yield Maintenance Premium; provided, however, that any prepayment tendered
prior to the Lockout Date (other than a permitted prepayment in connection with
a casualty or condemnation affecting a Project) shall be deemed to constitute
an express intention and attempt to evade the prohibition against prepayment
prior to the Lockout Date and any such prepayment, if accepted by Lender (it
being agreed and acknowledged that Lender shall have no obligation to accept
any such prepayment), shall be accompanied by payment of the Yield Maintenance
Premium; and


(viii)  If following an Event of Default that occurs
prior to the Lockout Date, payment of all or any part of the Debt is tendered
by Borrower or otherwise recovered by Lender (including, without limitation,
through application of any funds in any of the Escrow Accounts), such tender or
recovery shall be (y) made on the next occurring Payment Date and (z) deemed
a voluntary prepayment by Borrower in violation of the prohibition against
prepayment set forth in Section 15.01(a) and Borrower shall pay, in
addition to the Debt, the Yield Maintenance Premium.


Section 15.02         Release of Project. Borrower may
obtain the release of one or more of the Projects from the lien of the
applicable Mortgage and related Loan Documents (each a “Release,” and “Released”
shall have the meaning correlative thereto) in connection with a prepayment
permitted under, and made in accordance with, Section 15.01(b), provided
that such Release may not occur until after the Lockout Date; provided,
further, that, in each instance, each of the following conditions shall be
satisfied:


 



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(a)           The
Release shall be in connection with a sale of a Project or a Release that is
permitted pursuant to this Agreement to be effected in connection with a
casualty or condemnation affecting a Project;


(b)           Borrower
shall pay to Lender (i) all accrued and unpaid interest on the portion of
the Principal Amount being prepaid pursuant to clause (ii) of this clause (b) (including,
if such payment is not made on a Payment Date, interest through the end of the
current Interest Accrual Period) and (ii) on account of the Principal
Amount, an amount equal to the Release Amount and (iii) the Exit Fee
computed by reference to the Release Amount;


(c)           both
immediately before such Release and immediately thereafter, no Event of Default
shall exist;


(d)           after
giving effect to such Release and the prepayment resulting therefrom, the Debt
Service Coverage Ratio shall not be less than the lesser of (i) the Debt
Service Coverage Ratio immediately prior to such Release and (ii) 1.25:1.00;


(e)           Reserved;


(f)            the
representations and warranties made in this Agreement and the other Loan
Documents shall be true and correct in all material respects on and as of the
date of such Release (and after giving effect to such Release);


(g)           Borrower
shall have accompanied its notice to Lender under Section 15.01(b)(ii) with
(i) a detailed calculation of evidence of satisfaction of the condition
set forth in clause (d) above, such calculations being subject to Lender’s
confirmation, which shall not be arbitrarily withheld (Lender hereby agreeing to
notify Borrower promptly of its decision following its receipt of all items and
information necessary for it to perform its review); and (ii) a copy of
the applicable contract of sale (if any, and whether executed or not executed)
and any related documents, and, not less than ten (10) days prior to
closing of such sale, shall deliver to Lender drafts of any documents necessary
to effectuate such Release (which shall be subject to Lender’s approval, which
shall not be unreasonably withheld);


(h)           Borrower
shall have paid to Lender all out-of-pocket costs and expenses (including
reasonable attorneys’ fees and disbursements) reasonably incurred by Lender in
connection with such Release; and


(i)            Borrower
and Guarantor shall have executed and delivered such documents as Lender may
reasonably request to confirm the continued validity of the Loan Documents and
the liens thereof.


ARTICLE
XVI


ENVIRONMENTAL COMPLIANCE


Section 16.01         Covenants, Representations and Warranties.
(a) As to each Project, Borrower hereby represents and warrants to Lender
that, as of the date hereof: (i) except as may 



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be disclosed in the Environmental Report, to the best of Borrower’s
knowledge, information and belief, the Project is not in direct or indirect
violation of any Environmental Statute; (ii) except as may be disclosed in
the Environmental Report, to the best of Borrower’s knowledge, information and
belief, no Hazardous Materials are located on or have been handled, generated,
stored, processed or disposed of on or released or discharged from the Project
(including underground contamination) except for those Hazardous Materials used
by Borrower or any Tenants in the ordinary course of its business and in
material compliance with all Environmental Statutes; (iii) to the best of
Borrower’s knowledge, information and belief, the Project is not subject to any
private or governmental lien or judicial or administrative notice or action
relating to Hazardous Materials; (iv) to the best of Borrower’s knowledge,
except as may be disclosed in the Environmental Report, there are no existing
or closed underground storage tanks or other underground storage receptacles
for Hazardous Materials on the Project; (v) Borrower has received no
written notice of, and to the best of Borrower’s knowledge and belief, there
exists no investigation, action, proceeding or claim by any agency, authority
or unit of government or by any third party which would result in any
liability, penalty, sanction or judgment under any Environmental Statutes with
respect to any condition, use or operation of the Project nor does Borrower
know of any basis for such a claim; and (vi) Borrower has received no
written notice of and, to the best of Borrower’s knowledge and belief, there
has been no claim by any party that any use, operation or condition of the
Project has caused any nuisance or any other liability or adverse condition on
any other property nor does Borrower know of any basis for such a claim.


(b)           Borrower
shall keep or cause the Project to be kept free from Hazardous Materials
(except those substances used by Borrower or Tenants in the ordinary course of
their respective business and in material compliance with all Environmental
Statutes) and in material compliance with all Environmental Statutes, shall not
install or use any underground storage tanks, shall expressly prohibit the use,
generation, handling, storage, production, processing and disposal of Hazardous
Materials by all Tenants (except those Hazardous Materials used in the ordinary
course of such Tenant’s respective business and in compliance with all
Environmental Statutes), and, without limiting the generality of the foregoing,
during the term of this Agreement, shall not install in the Improvements or
permit to be installed in the Improvements asbestos or any substance containing
asbestos.


(c)           Borrower
shall promptly notify Lender if Borrower shall become aware of the possible
existence of any Hazardous Materials on a Project in violation of Environmental
Statutes or this Agreement or if Borrower shall become aware that the Project
is or may be in direct or indirect violation, in any material respect, of any
Environmental Statutes. Further, promptly (but in any event within five (5) Business
Days) after receipt of the same, Borrower shall deliver to Lender copies of any
and all orders, notices, permits, applications, reports, and other
communications, documents and instruments pertaining to the actual, alleged or
potential presence or existence of any Hazardous Materials at, on, about,
under, within or in connection with the Project in violation of this Agreement
or any Environmental Statutes. Borrower shall, promptly and when and as
required pursuant to Environmental Statutes or as reasonably required by
Lender, at Borrower’s sole cost and expense, take all actions as shall be
reasonably necessary or advisable for the clean up of any and all portions of
the Project or other affected property to which Hazardous Materials emanating
from the Project have migrated (unless arising (y) directly from the gross
negligence or willful misconduct of Lender or any agents, contractors or
invitees of Lender or (z) from Hazardous Substances which are initially
placed in, on or under (or 



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introduced in, on or under) the Property, by any parties other than
Borrower, its Affiliates and/or their respective agents or contractors after
the foreclosure, deed-in-lieu or other taking of title by Lender, its
successors or assigns), including, without limitation, all investigative,
monitoring, removal, containment and remedial actions in accordance with all
applicable Environmental Statutes (and in all events in a manner reasonably
satisfactory to Lender), and shall further pay or cause to be paid, at no
expense to Lender, all clean up, administrative and enforcement costs of
applicable governmental agencies which may be asserted against the Project. In
the event Borrower fails to do so or commence doing same after thirty (30) days
notice of such necessary clean-up and to diligently prosecute same to
completion, Lender may, but shall not be obligated to, cause the Project or
other affected property to which Hazardous Materials emanating from the Project
have migrated to be cleaned up from any such Hazardous Materials or otherwise
brought into conformance with Environmental Statutes and any and all reasonable
costs and expenses incurred by Lender in connection therewith, together with
Default Rate Interest thereon from the date incurred by Lender until actually
paid by Borrower, shall be immediately paid by Borrower on demand and shall be
secured by this Agreement and by all of the other Loan Documents securing all
or any part of the indebtedness evidenced by the Note. Borrower hereby grants
to Lender and its agents and employees access to the Project and a license to
remove any items Lender has reasonable grounds to believe to be Hazardous
Materials in violation of any Environmental Statutes or this Agreement and to
do all things Lender shall deem reasonably necessary to bring the Project in
conformance with Environmental Statutes. Borrower covenants and agrees, at
Borrower’s sole cost and expense, to indemnify, defend (at trial and appellate
levels, and with attorneys, consultants and experts reasonably acceptable to
Lender), and hold Lender harmless from and against any and all liens, damages,
losses, liabilities, obligations, settlement payments, penalties, assessments,
citations, directives, claims, litigation, demands, defenses, judgments, suits,
proceedings, costs, disbursements or expenses of any kind or of any nature
whatsoever (including, without limitation, reasonable attorneys’, consultants’
and experts’ fees and disbursements actually incurred in investigating,
defending, settling or prosecuting any claim, litigation or proceeding) which
may at any time be imposed upon, incurred by or asserted or awarded against
Lender or the Project (if and to the extent any costs imposed against the
Project result in a loss to Lender), and arising directly or indirectly from or
out of:  (i) the presence, release
or threat of release of any Hazardous Materials in violation of any
Environmental Statutes or this Agreement on, in, under or affecting all or any
portion of the Project or any surrounding areas to which Hazardous Materials
emanating from the Project have migrated, regardless of whether or not caused
by or within the control of Borrower; (ii) the violation of any
Environmental Statutes relating to or affecting the Project, whether or not
caused by or within the control of Borrower; (iii) the failure by Borrower
to comply in all material respects with the terms and conditions of this Section 16.01;
(iv) the breach of any representation or warranty contained in this Section 16.01;
or (v) the enforcement of this Section 16.01, including,
without limitation, the cost of assessment, containment and/or removal of any
and all Hazardous Materials in violation of any Environmental Statutes or this
Agreement from all or any portion of the Project or any surrounding areas to
which Hazardous Materials emanating from the Project have migrated, the cost of
any actions taken in response to the presence, release or threat of release of
any Hazardous Materials on, in, under or affecting any portion of the Project
or any surrounding areas to which Hazardous Materials emanating from the
Project have migrated to prevent or minimize such release or threat of release
in accordance with all Environmental Statutes, so that it does not migrate or
otherwise cause or threaten danger 



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to present or future public health, safety, welfare or the environment,
and costs incurred to comply with the Environmental Statutes in connection with
all or any portion of the Project or any such surrounding areas. The indemnity
set forth in this Section 16.01(c) shall also include any
diminution in the value of the security afforded by the Project or any future
reduction in the sales price of the Project by reason of any matter set forth
in this Section 16.01(c), to the extent that a loss is actually
suffered or incurred by Lender. Lender’s rights under this Section shall
survive payment in full of the indebtedness secured hereby and shall be in
addition to all other rights of Lender under this Agreement, the Mortgage, the
Note and the other Loan Documents. The foregoing indemnity in this Section 16.01(c) shall
not include any costs which arise directly from (x) the gross negligence
or willful misconduct of Lender or any agents, contractors or invitees of
Lender, or (y) Hazardous Materials which are initially placed in, on or
under the Project after the foreclosure, deed-in-lieu or other taking of title
by Lender, its successors and assigns.


(d)           Upon
Lender’s request, at any time after the occurrence and during the continuance
of an Event of Default hereunder or at such other time as Lender has reasonable
grounds to believe that Hazardous Materials are or have been released, stored
or disposed of on or around the Project in violation of any Environmental
Statutes or this Agreement or that the Project may otherwise be in violation of
the Environmental Statutes, Borrower shall provide to Lender, at Borrower’s
sole cost and expense, an inspection or audit of the Project prepared by a
hydrogeologist or environmental engineer or other appropriate consultant
reasonably approved by Lender indicating the presence or absence of Hazardous
Materials on the Project in violation of any Environmental Statutes or this
Agreement or an inspection or audit of the Improvements prepared by an
engineering or consulting firm reasonably approved by Lender indicating the
presence or absence of friable asbestos or substances containing asbestos on
the Project. If Borrower fails to provide such inspection or audit within
forty-five (45) days after such request, Lender may, upon notice to Borrower,
order the same, and Borrower hereby grants to Lender and its employees and agents
access to the Project and a license to undertake such inspection or audit. The
cost of such inspection or audit, together with Default Rate Interest thereon
from the date incurred by Lender until actually paid by Borrower, shall be
immediately due and payable to Lender by Borrower on demand and shall be
secured hereby and by all of the other Loan Documents securing all or any part
of the indebtedness evidenced by the Note.


(e)           In
the event of a conflict or inconsistency between any provision of this Agreement
and any provision of the Hazardous Substances Indemnity Agreement, the
provision that affords to Lender the greatest protection and/or broadest rights
and remedies shall be controlling.


(f)            If,
at any time hereafter, Borrower or Lender acquires knowledge or reasonably
suspects that lead based paint is present on the Project, Borrower agrees, at
its sole cost and expense and within thirty (30) days thereafter, to cause to
be prepared a lead based paint report prepared by an expert, and in form, scope
and substance, reasonably acceptable to Lender.


(g)           Borrower
agrees that if it has been, or if at any time hereafter it is, determined that
the Project contains lead based paint, on or before thirty (30) days following (i) the
date hereof, if such determination was made prior to the date hereof or (ii) such
determination, if such determination is hereafter made, as applicable, Borrower
shall, at its sole 



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cost and expenses, develop and implement, and thereafter diligently and
continuously carry out (or cause to be developed and implemented and thereafter
diligently and continually to be carried out), an operations, abatement and
maintenance plan for the lead based paint on the Project, which plan shall be
prepared by an expert, and be in form, scope and substance, reasonably
acceptable to Lender (together with any Lead Based Paint Report, the “O&M
Plan”). (If an O&M Plan has been prepared prior to the date hereof,
Borrower agrees to diligently and continually carry out (or cause to be carried
out) the provisions thereof). Compliance with the O&M Plan shall require or
be deemed to require, without limitation, the proper preparation and
maintenance of all records, papers and forms required under the Environmental
Statutes.


(h)           With
respect to any Project, the Environmental Report for which states that such
Project contains asbestos containing materials (“ACM’s”), Borrower
covenants and agrees to institute, within thirty (30) days after the date
hereof, an operations and maintenance program (the “Maintenance Program”)
designed by an environmental consultant, reasonably satisfactory to the Lender,
consistent with “Guidelines for Controlling Asbestos-Containing Materials in
Buildings” (USEPA, 1985) and other relevant guidelines, and such Maintenance
Program will hereafter continuously remain in effect until the indebtedness
secured hereby is repaid in full. In furtherance of the foregoing, Borrower
shall inspect and maintain all ACM’s on a regular basis and ensure that all ACM’s
shall be maintained in a condition that prevents exposure of occupants to ACM’s
at all times. Without limiting the generality of the preceding sentence, Lender
may reasonably require (i) periodic notices or reports to Lender in form,
substance and at such intervals as Lender may specify, (ii) an amendment
to such Maintenance Program to address changing circumstances, laws or other
matters, (iii) at Borrower’s sole expense, supplemental examination of the
Project by consultants specified by Lender, and (iv) variation of the
Maintenance Program in response to the reports provided by any such
consultants.


ARTICLE
XVII


COOPERATION; SECONDARY MARKET TRANSACTION


Section 17.01         Cooperation. Borrower shall, at
the request of Lender, in connection with one or more sales or assignments of
the Note or participations therein or securitizations of rated single or
multi-class securities (the “Securities”)
secured by or evidencing ownership interests in the Note and the Mortgages
(each such sale, assignment, participation and/or securitization, a “Secondary Market Transaction”):
(a) (i)  provide such financial and other information with respect to
the Projects, Borrower and its Affiliates, Manager and, to the extent in
Borrower’s possession, any tenants of the Projects, (ii) provide business
plans and budgets relating to the Projects and (iii) perform or permit or
cause to be performed or permitted such site inspection, appraisals, surveys,
market studies, environmental reviews and reports, engineering reports and
other due diligence investigations of the Projects, as may be reasonably
requested from time to time by Lender or the Rating Agencies in connection with
a Secondary Market Transaction or Exchange Act requirements (the items provided
to Lender pursuant to this paragraph (a) being called the “Provided Information”),
together, if customary, with appropriate verification of and/or consents to the
Provided Information through letters of auditors or opinions of counsel of
independent attorneys acceptable to Lender and the Rating Agencies; (b) cause




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counsel to render
opinions as to non-consolidation and any other opinion customary in
securitization transactions with respect to the Projects, Borrower and its
Affiliates, which counsel and opinions shall be reasonably satisfactory to
Lender and the Rating Agencies; (c) make such representations and
warranties as of the closing date of any Secondary Market Transaction with
respect to the Projects, Borrower and the Loan Documents as are customarily
provided in such transactions and as may be reasonably requested by Lender 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; (d) provide
current certificates of good standing and qualification with respect to
Borrower, its Affiliates and/or Guarantor from appropriate Governmental
Authorities; and (e) execute such amendments to the Loan Documents and
Borrower’s organizational documents, as may be requested by Lender or the
Rating Agencies or otherwise to effect a Secondary Market Transaction, provided
that nothing contained in this subsection (e) shall (i) result in a
material economic change in the transaction (ii) change the Maturity Date
or the LIBOR Margin, except in connection with a bifurcation of the Loan which
may result in varying LIBOR Margins, but which LIBOR Margins shall have a
weighted average that equals the LIBOR Margin of the original Loan (which
initial weighted average shall not change), except in the event of the
application of Net Proceeds to the prepayment of the Loan, (iii) modify or
amend any other material economic terms of the Loan, (iv) increase, in
more than a de minimis manner, Borrower’s obligations and liabilities or
decrease in more than a de minimis manner, Borrower’s rights under the Loan
Documents, or (v) increase, in more than a de minimis manner, Lender’s
rights under the Loan Documents. Lender shall pay its own costs and expenses in
connection with the foregoing and shall reimburse Borrower for any reasonable
out-of-pocket costs and expenses incurred by Borrower in connection with
actions taken by Borrower at Lender’s request pursuant to this Section 17.01,
other than Borrower’s legal fees and expenses in connection with a Secondary
Market Transaction (other than those attendant to a restructuring of the Loan,
which reasonable fees and disbursements shall be reimbursed by Lender). Borrower’s
cooperation obligations set forth herein shall continue until the Loan has been
paid in full.


Section 17.02         Use of Information. Borrower
understands that all or any portion of the Provided Information and the
Required Records may be included in disclosure documents in connection with a
Secondary Market Transaction, including a prospectus 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 Act”), or
provided or made available to investors or prospective investors in the
Securities, the Rating Agencies, and service providers or other parties
relating to the Secondary Market Transaction. Lender shall provide Borrower a
reasonable opportunity to review and comment on all Provided Information. If
the Disclosure Document is required to be revised, Borrower shall cooperate
with Lender in updating the Provided Information or Required Records for
inclusion or summary in the Disclosure Document or for other use reasonably
required in connection with a Secondary Market Transaction by providing all
current information pertaining to Borrower, Manager and the Projects necessary
to keep the Disclosure Document accurate and complete in all material respects
with respect to such matters.


Section 17.03         Borrower Obligations Regarding
Disclosure Documents. In connection with a Disclosure Document, Borrower
shall: (a) if requested by Lender, certify in 



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writing that Borrower has
carefully examined those portions of such Disclosure Document, pertaining to
Borrower, the Projects, Manager and the Loan which have been identified by
Lender in writing as requiring Borrower’s review (the “Applicable Portions”),
and that such portions, to Borrower’s knowledge, do not contain any untrue
statement of a material fact or omit to state a material fact necessary in
order to make the statements made, in the light of the circumstances under
which they were made, not misleading; and (b) indemnify (in a separate
instrument of indemnity, if so requested by Lender) (i) any underwriter,
syndicate member or placement agent (collectively, the “Underwriters”)
retained by Lender or its issuing company affiliate (the “Issuer”) in connection
with a Secondary Market Transaction, (ii) Lender and (iii) the Issuer
that is named in the Disclosure Document or registration statement relating to
a Secondary Market Transaction (the “Registration Statement”), and each of the Issuer’s
directors, each of its officers who have signed the Registration Statement and
each person or entity who controls the Issuer or the Lender within the meaning
of Section 15 of the Securities Act or Section 30 of the Exchange Act
(collectively within (iii), the “Issuer
Group”), and each of its directors and each person who
controls each of the Underwriters, within the meaning of Section 15 of the
Securities Act and Section 20 of the Exchange Act (collectively, the “Underwriter Group”)
for any Liabilities to which Lender, the Issuer Group or the Underwriter Group
may become subject (including reimbursing all of them for any reasonable legal
or other expenses actually incurred in connection with investigating or
defending the Liabilities) insofar as the Liabilities arise out of or are based
upon any untrue statement or alleged untrue statement of any material fact
contained in any of the Provided Information or in any of the Applicable
Portions applicable to Borrower, Manager, the Projects or the Loan, or arise
out of or are based upon the omission or alleged omission to state therein a
material fact required to be stated in the Applicable Portions or necessary in
order to make the statements in the Applicable Portions of such sections in
light of the circumstances under which they were made, not misleading, provided,
however, notwithstanding anything in this Article XVII to the
contrary, that Borrower shall not be required to indemnify Lender, the Issuer
Group or the Underwriter Group for any Liabilities relating to (i) untrue
statements or omissions which Borrower identified to Lender in writing at the
time of Borrower’s examination of such Disclosure Document, or (ii) information
contained in Provided Information reviewed but not prepared by Borrower,
Guarantor or any of their respective Affiliates and not known by Borrower to be
untrue or incorrect in any material respect.


Section 17.04         Borrower Indemnity Regarding Filings.
In connection with filings under the Exchange Act, Borrower shall (i) indemnify
Lender, the Issuer Group and the Underwriter Group for any Liabilities to which
Lender, the Issuer Group or the Underwriter Group may become subject insofar as
the Liabilities arise out of or are based upon the omission or alleged omission
to state in the Provided Information a material fact required to be stated in the
Provided Information in order to make the statements in the Provided
Information, in light of the circumstances under which they were made not misleading
and (ii) reimburse Lender, the Issuer Group or the Underwriter Group for
any legal or other expenses actually incurred by Lender, Issuer Group or the
Underwriter Group in connection with defending or investigating the
Liabilities, provided,  however, notwithstanding anything in this Article XVII
to the contrary, that Borrower shall not be required to indemnify Lender, the
Issuer Group or the Underwriter Group for any Liabilities relating to (i) untrue
statements or omissions which Borrower identified to Lender in writing at the
time of Borrower’s examination of such Disclosure Document, or (ii) information
contained in Provided Information reviewed but not prepared by Borrower, 



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Guarantor or any of their
respective Affiliates and not known by Borrower to be untrue or incorrect in
any material respect.


Section 17.05         Indemnification Procedure. Promptly
after receipt by an indemnified party under Section 17.03 or 17.04 of
notice of the commencement of any action for which a claim for indemnification
is to be made against Borrower, such indemnified party shall notify Borrower in
writing of such commencement, but the omission to so notify Borrower will not
relieve Borrower from any liability that it may have to any indemnified party
hereunder except to the extent that failure to notify causes prejudice to
Borrower. If any action is brought against any indemnified party, and it
notifies Borrower of the commencement thereof, Borrower will be entitled,
jointly with any other indemnifying party, to participate therein and, to the
extent that it (or they) may elect by written notice delivered to the
indemnified party promptly after receiving the aforesaid notice of
commencement, to assume the defense thereof with counsel satisfactory to such
indemnified party in its reasonable discretion. After notice from Borrower to
such indemnified party under this Section 17.05, Borrower shall not be
responsible for any legal or other expenses subsequently incurred by such
indemnified party in connection with the defense thereof other than reasonable
costs of investigation; provided, however, if the defendants in
any such action include both Borrower and an indemnified party, and any
indemnified party shall have reasonably concluded that there are any legal
defenses available to it and/or other indemnified parties that are different
from or additional to those available to Borrower, then the indemnified party
or parties shall have the right to select separate counsel to assert such legal
defenses and to otherwise participate in the defense of such action on behalf
of such indemnified party or parties. Borrower shall not be liable for the
expenses of more than one separate counsel unless there are legal defenses
available to it that are different from or additional to those available to
another indemnified party.


Section 17.06         Contribution. In order to
provide for just and equitable contribution in circumstances in which the
indemnity agreement provided for in Section 17.03 or 17.04 is for any
reason held to be unenforceable by an indemnified party in respect of any
Liabilities (or action in respect thereof) referred to therein which would
otherwise be indemnifiable under Section 17.03 or 17.04, Borrower shall
contribute to the amount paid or payable by the indemnified party as a result
of such Liabilities (or action in respect thereof); provided,  however,
that no Person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of
the Securities Act) shall be entitled to contribution from any Person not
guilty of such fraudulent misrepresentation.  In determining the amount of contribution to
which the respective parties are entitled, the following factors shall be
considered:  (i) the Issuer Group’s
and Borrower’s relative knowledge and access to information concerning the
matter with respect to which the claim was asserted; (ii) the opportunity
to correct and prevent any statement or omission; and (iii) any other
equitable considerations appropriate in the circumstances. Lender and Borrower
hereby agree that it may not be equitable if the amount of such contribution
were determined by pro rata or per capita allocation.


Section 17.07         Rating Surveillance. Lender will
retain the Rating Agencies to provide rating surveillance services on
Securities. The pro rata expenses of such surveillance will be paid for by
Borrower based on the applicable percentage of such expenses determined by
dividing the then outstanding Principal Amount by the then aggregate
outstanding amount of the pool created in the Secondary Market Transaction
which includes the Loan.



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Section 17.08         Severance of Loan. Lender shall
have the right, at any time (whether prior to, in connection with, or after any
Secondary Market Transaction), with respect to all or any portion of the Loan,
to modify, split and/or sever all or any portion of the Loan as hereinafter
provided. Without limiting the foregoing, Lender may (i) cause the Note
and one or more of the Mortgages to be split into a first and second mortgage
loans, (ii) create one or more senior and subordinate notes (e.g., an A/B,
A/B/C or A/B/C/D structure), (iii) create multiple components of the Note
or Notes (and allocate or reallocate the principal balance of the Loan among
such components) or (iv) otherwise sever the Loan into two or more loans
secured by mortgages and by pledges of membership interests (directly or
indirectly) in Borrower (e.g., a senior loan/mezzanine loan structure), in each
such case, in whatever proportion and whatever priority Lender determines; provided,
however,in each such instance (a) the outstanding principal balance
of all the Notes evidencing the Loan (or components of such Notes) immediately
after the effective date of such modification equals the outstanding principal
balance of the Loan immediately prior to such modification, (b) the
weighted average of the LIBOR Margins for all such Notes (or components of such
Notes) immediately after the effective date of such modification equals the
LIBOR Margin of the original Note immediately prior to such modification, and (c) such
restructuring of the Loan does not increase, in more than a de minimis manner,
Lender’s rights or Borrower’s obligations and liabilities or decrease, in more
than a de minimis manner, Borrower’s rights under the Loan Documents. If
requested by Lender, Borrower (and Borrower’s constituent members, if
applicable, and Guarantor) shall execute within ten (10) Business Days
after such request, such documentation as Lender may reasonably request to
evidence and/or effectuate any such modification or severance. Borrower agrees
to cooperate with Lender in connection with the exercise of its rights under
this Section 17.08, which cooperation shall be at no cost or expense to
Lender, provided that all costs and expenses of Borrower for which Lender shall
be responsible hereunder shall have been reasonably incurred by Borrower.


ARTICLE
XVIII


MISCELLANEOUS


Section 18.01         Right of Entry. Lender and its
agents shall have the right to enter and inspect the Projects or any part
thereof at all reasonable times, subject to the rights of tenants, and, except
in the event of an emergency, upon reasonable notice and to inspect Borrower’s
books and records and to make abstracts and reproductions thereof.


Section 18.02         Cumulative Rights. The rights of
Lender under this Agreement shall be separate, distinct and cumulative and none
shall be given effect to the exclusion of the others. No act of Lender shall be
construed as an election to proceed under any one provision herein to the
exclusion of any other provision. Lender shall not be limited exclusively to
the rights and remedies herein stated but shall be entitled, subject to the
terms of this Agreement, to every right and remedy now or hereafter afforded by
law.


Section 18.03         Liability. If Borrower consists
of more than one Person, the obligations and liabilities of each such Person
hereunder shall be joint and several.



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Section 18.04         Exhibits Incorporated. The
information set forth on the cover hereof, and the Exhibits annexed hereto, are
hereby incorporated herein as a part of this Agreement with the same effect as
if set forth in the body hereof.


Section 18.05         Severable Provisions. If any
term, covenant or condition of the Loan Documents including, without
limitation, the Note or this Agreement, is held to be invalid, illegal or
unenforceable in any respect, such Loan Document shall be construed without
such provision.


Section 18.06         Duplicate Originals. This
Agreement may be executed in any number of duplicate originals and each such
duplicate original shall be deemed to constitute but one and the same
instrument.


Section 18.07         No Oral Change. The terms of
this Agreement, together with the terms of the Note and the other Loan
Documents constitute the entire understanding and agreement of the parties
hereto and supersede all prior agreements, understandings and negotiations
between Borrower and Lender with respect to the Loan. This Agreement, and any
provisions hereof, may not be modified, amended, waived, extended, changed,
discharged or terminated orally or by any act on the part of Borrower or
Lender, but only by an agreement in writing signed by the party against whom
enforcement of any modification, amendment, waiver, extension, change,
discharge or termination is sought.


Section 18.08         Waiver of Counterclaim, Etc. BORROWER
HEREBY WAIVES THE RIGHT TO ASSERT A COUNTERCLAIM, OTHER THAN A COMPULSORY
COUNTERCLAIM, IN ANY ACTION OR PROCEEDING BROUGHT AGAINST IT BY LENDER OR ITS
AGENTS, AND WAIVES TRIAL BY JURY IN ANY ACTION OR PROCEEDING BROUGHT BY EITHER
PARTY HERETO AGAINST THE OTHER OR IN ANY COUNTERCLAIM BORROWER MAY BE
PERMITTED TO ASSERT HEREUNDER OR WHICH MAY BE ASSERTED BY LENDER OR ITS AGENTS,
AGAINST BORROWER, OR IN ANY MATTERS WHATSOEVER ARISING OUT OF OR IN ANY WAY
CONNECTED WITH THIS AGREEMENT OR THE DEBT.


Section 18.09         Headings; Construction of Documents;
etc. The table of contents, headings and captions of various paragraphs of
this Agreement 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. Each of Lender and Borrower acknowledges that it was
represented by competent counsel in connection with the negotiation and
drafting of this Agreement and the other Loan Documents and that neither this
Agreement nor the other Loan Documents shall be subject to the principle of
construing the meaning against the Person who drafted same.


Section 18.10         Sole Discretion of Lender. Whenever
Lender exercises any right given to it to approve or disapprove, or any
arrangement or term is to be satisfactory to Lender, the decision of Lender to
approve or disapprove or to decide that arrangements or terms are satisfactory
or not satisfactory shall be in the sole discretion of Lender and shall be
final and conclusive, except as may be otherwise specifically provided herein.



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Section 18.11         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 Agreement or any other Loan Document
specifically and expressly provides for the giving of notice by Lender to
Borrower and except with respect to matters for which Borrower is not, pursuant
to applicable Legal Requirements, permitted to waive the giving of notice.


Section 18.12         Binding Effect. All of the
grants, covenants, terms, provisions and conditions herein shall be binding
upon Borrower and shall inure to the benefit of Lender, subsequent holders of
this Agreement and their successors and assigns. Without limitation to any
provision hereof, the term “Borrower”
shall include and refer to the borrower named herein, any subsequent owner of
the Projects, and its respective heirs, executors, legal representatives,
successors and assigns. The representations, warranties and agreements
contained in this Agreement and the other Loan Documents are intended solely
for the benefit of the parties hereto, shall confer no rights hereunder, whether
legal or equitable, in any other Person and no other Person shall be entitled
to rely thereon.


Section 18.13         Applicable Law. THIS AGREEMENT
WAS NEGOTIATED IN THE STATE OF NEW YORK, THE LOAN WAS MADE BY LENDER AND
ACCEPTED BY BORROWER IN THE STATE OF NEW YORK, AND THE PROCEEDS OF THE LOAN
DELIVERED PURSUANT HERETO WERE DISBURSED FROM THE STATE OF NEW YORK, WHICH
STATE THE PARTIES AGREE HAS A SUBSTANTIAL RELATIONSHIP TO THE PARTIES AND TO
THE UNDERLYING TRANSACTION EMBODIED HEREBY, AND IN ALL RESPECTS, INCLUDING,
WITHOUT LIMITING THE GENERALITY OF THE FOREGOING, MATTERS OF CONSTRUCTION,
VALIDITY AND PERFORMANCE, THIS AGREEMENT, THE NOTE AND THE OTHER LOAN DOCUMENTS
AND THE OBLIGATIONS ARISING HEREUNDER AND THEREUNDER SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO
CONTRACTS MADE AND PERFORMED IN SUCH STATE (WITHOUT REGARD TO PRINCIPLES OF
CONFLICT OF LAWS) AND ANY APPLICABLE LAW OF THE UNITED STATES OF AMERICA,
EXCEPT THAT AT ALL TIMES THE PROVISIONS FOR THE CREATION, PERFECTION, AND
ENFORCEMENT OF THE LIEN AND SECURITY INTEREST CREATED PURSUANT HERETO AND
PURSUANT TO THE OTHER LOAN DOCUMENTS (OTHER THAN WITH RESPECT TO LIENS AND
SECURITY INTERESTS IN PROPERTY WHOSE PERFECTION AND PRIORITY IS COVERED BY ARTICLE
9 OF THE UCC (INCLUDING, WITHOUT LIMITATION, THE CENTRAL ACCOUNT AND THE
RESERVE ACCOUNTS) WHICH SHALL BE GOVERNED BY THE LAW OF THE JURISDICTION
APPLICABLE THERETO IN ACCORDANCE WITH SECTIONS 9-301 THROUGH 9-307
OF THE UCC AS IN EFFECT IN THE STATE OF NEW YORK) SHALL BE GOVERNED BY AND
CONSTRUED ACCORDING TO THE LAW OF THE STATE IN WHICH THE PROPERTY IS LOCATED,
IT BEING UNDERSTOOD THAT, TO THE FULLEST EXTENT PERMITTED BY THE LAW OF SUCH
STATE, THE LAW OF THE STATE OF NEW YORK SHALL GOVERN THE CONSTRUCTION, VALIDITY
AND ENFORCEABILITY OF ALL LOAN DOCUMENTS AND ALL OF THE OBLIGATIONS ARISING
HEREUNDER OR THEREUNDER. TO THE FULLEST EXTENT PERMITTED BY LAW, BORROWER
HEREBY UNCONDITIONALLY AND IRREVOCABLY WAIVES ANY CLAIM TO ASSERT THAT THE LAW
OF ANY OTHER JURISDICTION GOVERNS THIS 



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AGREEMENT, THE NOTE AND
THE OTHER LOAN DOCUMENTS, AND THIS AGREEMENT, THE NOTE AND THE OTHER LOAN
DOCUMENTS SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF NEW YORK PURSUANT TO SECTION 5-1401 OF THE NEW YORK GENERAL
OBLIGATIONS LAW EXCEPT AS SPECIFICALLY SET FORTH ABOVE.


Section 18.14         Intentionally Deleted.


Section 18.15         Actions and Proceedings. Lender
has the right to appear in and defend any action or proceeding brought with
respect to any Project in its own name or, if required by Legal Requirements
or, if in Lender’s reasonable judgment, it is necessary, in the name and on
behalf of Borrower, which Lender believes will adversely affect the Projects or
this Agreement and to bring any action or proceedings, in its name or in the
name and on behalf of Borrower, which Lender, in its discretion, decides should
be brought to protect its interest in the Projects.


Section 18.16         Usury Laws. This Agreement and
the Note are subject to the express condition, and it is the expressed intent
of the parties, that at no time shall Borrower be obligated or required to pay
interest on the principal balance due under the Note at a rate which could
subject the holder of the Note to either civil or criminal liability as a
result of being in excess of the maximum interest rate which Borrower is
permitted by law to contract or agree to pay. If by the terms of this Agreement
or the Note, Borrower is at any time required or obligated to pay interest on
the principal balance due under the Note at a rate in excess of such maximum
rate, such rate of interest shall be deemed to be immediately reduced to
such  maximum rate and the interest
payable shall be computed at such maximum rate and all prior interest payments
in excess of such maximum rate shall be applied and shall be deemed to have
been payments in reduction of the principal balance of the Note. No application
to the principal balance of the Note pursuant to this Section 18.16 shall
give rise to any requirement to pay any prepayment fee or charge of any kind
due hereunder, if any.


Section 18.17         Remedies of Borrower. In the
event that a claim or adjudication is made that Lender has acted unreasonably
or unreasonably delayed acting in any case where by law or under the Note, this
Agreement or the Loan Documents, it has an obligation to act reasonably or
promptly, Lender shall not be liable for any monetary damages, and Borrower’s
remedies shall be limited to injunctive relief or declaratory judgment.


Section 18.18         Offsets, Counterclaims and Defenses.
Any assignee of this Agreement, the Assignment and the Note shall take the same
free and clear of all offsets, counterclaims or defenses which are unrelated to
the Note, the Assignment or this Agreement which Borrower may otherwise have
against any assignor of this Agreement, the Assignment and the Note and no such
unrelated counterclaim or defense shall be interposed or asserted by Borrower
in any action or proceeding brought by any such assignee upon this Agreement,
the Assignment or the Note and any such right to interpose or assert any such
unrelated offset, counterclaim or defense in any such action or proceeding is
hereby expressly waived by Borrower.



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Section 18.19         No Merger. If Borrower’s and
Lender’s estates become the same including, without limitation, upon the
delivery of a deed by Borrower in lieu of a foreclosure sale, or upon a
purchase of the Projects by Lender in a foreclosure sale, this Agreement and
the lien by the Mortgage shall not be destroyed or terminated by the
application of the doctrine of merger and in such event Lender shall continue
to have and enjoy all of the rights and privileges of Lender as to the separate
estates; and, as a consequence thereof, upon the foreclosure of the lien
created by this Agreement, any Leases or subleases then existing and created by
Borrower shall not be destroyed or terminated by application of the law of
merger or as a result of such foreclosure unless Lender or any purchaser at any
such foreclosure sale shall so elect. No act by or on behalf of Lender or any
such purchaser shall constitute a termination of any Lease or sublease unless
Lender or such purchaser shall give written notice thereof to such lessee or
sublessee.


Section 18.20         Restoration of Rights. In case
Lender shall have proceeded to enforce any right under this Agreement by
foreclosure sale, entry or otherwise, and such proceedings shall have been
discontinued or abandoned for any reason or shall have been determined
adversely, then, in every such case, Borrower 
and Lender shall be restored to their former positions and rights
hereunder with respect to the Projects subject to the lien hereof.


Section 18.21         Waiver of Statute of Limitations.
The pleadings of any statute of limitations as a defense to any and all
obligations secured by this Agreement are hereby waived to the full extent
permitted by Legal Requirements.


Section 18.22         Intentionally Deleted.


Section 18.23         Application of Default Rate Not a
Waiver. Application of the Default Rate shall not be deemed to constitute a
waiver of any Default or Event of Default or any rights or remedies of Lender
under this Agreement, any other Loan Document or applicable Legal Requirements,
or a consent to any extension of time for the payment or performance of any
obligation with respect to which the Default Rate may be invoked.


Section 18.24         Intentionally Deleted.


Section 18.25         No Joint Venture or Partnership.
Borrower and Lender intend that the relationship created hereunder be solely
that of borrower and lender. Nothing herein is intended to create a joint
venture, partnership, tenancy in common, or joint tenancy relationship between
Borrower and Lender nor to grant Lender any interest in the Projects other than
as a lender and mortgagee.


Section 18.26         Time of the Essence. Time shall
be of the essence in the performance of all obligations of Borrower hereunder.


Section 18.27         Borrower’s Obligations Absolute.
Borrower acknowledges that Lender and/or certain Affiliates of Lender are
engaged in the business of financing, owning, operating, leasing, managing, and
brokering real estate and in other business ventures which may be viewed as
adverse to or competitive with the business, prospect, profits, operations or
condition (financial or otherwise) of Borrower. Except as set forth to the
contrary in the Loan Documents, all sums payable by Borrower hereunder shall be
paid without notice or demand, 



 108
 






 



counterclaim, set-off,
deduction or defense and without abatement, suspension, deferment, diminution
or reduction, and the obligations and liabilities of Borrower hereunder shall
in no way be released, discharged, or otherwise affected (except as expressly
provided herein) by reason of:  (a) any
damage to or destruction of or any Taking of the Projects or any portion
thereof; (b) any restriction or prevention of or interference with any use
of the Projects or any portion thereof; (c) any title defect or
encumbrance or any eviction from the Projects or any portion thereof by title
paramount or otherwise; (d) any bankruptcy proceeding relating to
Borrower, Sole Member, or any guarantor or indemnitor, or any action taken with
respect to this Agreement or any other Loan Document by any trustee or receiver
of Borrower or Sole Member or any guarantor or indemnitor, or by any court, in
any such proceeding; (e) any claim which Borrower has or might have
against Lender; (f) any default or failure on the part of Lender to
perform or comply with any of the terms hereof or of any other agreement with
Borrower (except to the extent that such default or failure on the part of
Lender is as a result of Lender’s refusal to release funds from any Escrow
Account in contravention of the terms and provisions of this Agreement and the
other Loan Documents); or (g) any other occurrence whatsoever, whether
similar or dissimilar to the foregoing, whether or not Borrower shall have
notice or knowledge of any of the foregoing.


Section 18.28         Publicity. All promotional news
releases, publicity or advertising by Manager, Borrower or their respective
Affiliates through any media intended to reach the general public shall not
refer to the Loan Documents or the financing evidenced by the Loan Documents,
or to Lender or to any of its Affiliates without the prior written approval of
Lender or such Affiliate, as applicable, in each instance, such approval not to
be unreasonably withheld or delayed. Lender shall be authorized to provide
information relating to the Projects, the Loan and matters relating thereto to
rating agencies, underwriters, potential securities investors, auditors,
regulatory authorities and to any Persons which may be entitled to such
information by operation of law.


Section 18.29         Intentionally Deleted.


Section 18.30         Intentionally Deleted.


Section 18.31         Establishment of Working Capital
Account. As a material inducement to Lender to enter into the transactions
contemplated by this Agreement, Borrower represents and warrants to Lender that
there has been established by JV Member, as of the date hereof, a working
capital account in the amount of $2,000,000.00, which account is unencumbered
and is intended to be used solely to make contributions to Borrower to fund
costs and expenses relating to the Loan and the ownership and operation of the
Projects.


Section 18.32         Exculpation. Notwithstanding
anything herein or in any other Loan Document to the contrary, except as
otherwise set forth in this Section 18.32 to the contrary, Lender shall
not enforce the liability and obligation of Borrower or (a) if Borrower is
a partnership, its constituent partners or any of their respective partners, (b) if
Borrower is a trust, its beneficiaries or any of their respective Partners (as
hereinafter defined), (c) if Borrower is a corporation, any of its
shareholders, directors, principals, officers or employees, or (d) if
Borrower is a limited liability company, any of its members (the Persons
described in the foregoing clauses (a) - (d), as the case may be, are
hereinafter referred to as the “Partners”)
to 



 109
 






 



perform and observe the
obligations contained in this Agreement or any of the other Loan Documents by
any action or proceeding wherein a money judgment shall be sought against
Borrower or the Partners, except that Lender may bring a foreclosure action,
action for specific performance, or other appropriate action or proceeding against
Borrower (but not its Partners) (including, without limitation, an action to
obtain a deficiency judgment against Borrower) solely for the purpose of
enabling Lender to realize upon (i) Borrower’s interest in the Projects, (ii) the
Rent to the extent (x) received by Borrower (or received by its Partners)
after the occurrence of an Event of Default, or (y) distributed to
Borrower (or its Partners, but only to the extent received by its Partners)
during or with respect to any period for which Lender did not receive a Manager
Certification accurate in all material respects confirming and certifying that
all Operating Expenses with respect to the Projects which had accrued as of the
applicable date of such Manager Certification had been paid (or if same had not
been paid, that Manager had taken adequate reserves therefor) (all Rent covered
by clauses (x) and (y) being hereinafter referred to as the “Recourse Distributions”)
and (iii) any other collateral given to Lender under the Loan Documents
(the collateral described in the foregoing clauses (i) - (iii) is
hereinafter referred to as the “Default
Collateral”); provided,  however, that any
judgment in any such action or proceeding shall be enforceable against Borrower
only to the extent of any such Default Collateral. The provisions of this Section shall
not, however,


(a)           impair the validity of the Debt
evidenced by the Note or in any way affect or impair the lien of the related
Mortgage(s) or any of the other Loan Documents or the right of Lender to
foreclose this Agreement following the occurrence of an Event of Default;


(b)           impair the right of Lender to name
Borrower as a party defendant in any action or suit for judicial foreclosure
and sale under this Agreement;


(c)           affect the validity or enforceability
of the Note, this Agreement, or any of the other Loan Documents, or impair the
right of Lender to seek a personal judgment against the Guarantor in accordance
with the Guaranty;


(d)           impair the right of Lender to obtain
the appointment of a receiver;


(e)           impair the enforcement of the
Assignment;


(f)            impair the right of Lender to bring
suit for a monetary judgment with respect to fraud or intentional material
misrepresentation by Borrower, Guarantor, any Affiliate of either of them in
connection with this Agreement, the Note or the other Loan Documents, and the
foregoing provisions shall not modify, diminish or discharge the liability, if
any, of Borrower with respect to same;


(g)           impair the right of Lender to bring
suit for a monetary judgment against Borrower or Guarantor (but not the
Partners of Borrower) to obtain the Recourse Distributions received by Borrower
or its Partners, to the extent of any such Recourse Distributions theretofore
distributed to and received by Borrower or such Partners, and the foregoing
provisions shall not modify, diminish or discharge the liability of Borrower or
Guarantor with respect to same;


(h)           impair the right of Lender to bring
suit for a monetary judgment with respect to Borrower’s misappropriation of
tenant security deposits or Rent collected more than 



 110
 






 



one (1) month in
advance, and the foregoing provisions shall not modify, diminish or discharge
the liability, if any, of Borrower with respect to same;


(i)            impair the right of Lender to obtain
Loss Proceeds due to Lender pursuant to this Agreement;


(j)            impair the right of Lender to
enforce the provisions of Sections 2.02(g), 12.01, 16.01, or 17.03 through
17.06, inclusive, of this Agreement, even after repayment in full by Borrower
of the Debt or to bring suit for a monetary judgment against Borrower with
respect to any obligation set forth in said Sections;


(k)           prevent or in any way hinder Lender
from exercising, or constitute a defense, or counterclaim, or other basis for
relief in respect of the exercise of, any other remedy against any or all of
the collateral securing the Note as provided in the Loan Documents;


(l)            impair the right of Lender to bring
suit for a monetary judgment with respect to any misapplication or conversion
of Loss Proceeds, and the foregoing provisions shall not modify, diminish or
discharge the liability of Borrower or Guarantor with respect to same;


(m)          impair the right of Lender to sue for,
seek or demand a deficiency judgment against Borrower solely for the purpose of
foreclosing the Projects or any part thereof, or realizing upon the Default
Collateral; provided,  however, that any such deficiency judgment
referred to in this clause (m) shall be enforceable against Borrower only
to the extent of any of the Default Collateral;


(n)           impair the ability of Lender to bring
suit for a monetary judgment with respect to damage, arson or physical waste to
or of the Projects or with respect to any act or failure to act, by Borrower or
any Affiliate of Borrower with respect to all or any portion of the Projects that
constitutes gross negligence or willful misconduct;


(o)           impair the right of Lender to bring a
suit for a monetary judgment against Borrower in the event of the exercise of
any right or remedy under any federal, state or local forfeiture laws resulting
in the loss of the lien of any Mortgage, or the priority thereof, against all
or any portion of the Projects;


(p)           be deemed a waiver of any right which
Lender may have under Sections 506(a), 506(b), 1111(b) or any other
provision of the Bankruptcy Code to file a claim for the full amount of the
Debt or to require that all collateral shall continue to secure all of the
Debt; or


(q)           impair the right of Lender to bring
suit for monetary judgment with respect to any losses resulting from any
claims, actions or proceedings initiated by Borrower (or any Affiliate of
Borrower) alleging that the relationship of Borrower and Lender is that of
joint venturers, partners, tenants in common, joint tenants or any relationship
other than that of debtor and creditor.


The provisions of
this Section 18.32 shall be inapplicable to Borrower if (a) any
proceeding, action, petition or filing with respect to Borrower or Sole Member
under the Bankruptcy Code, or any similar state or federal law now or hereafter
in effect relating to 



 111
 






 



bankruptcy,
reorganization or insolvency, or the arrangement or adjustment of debts, shall
be filed by or consented to or acquiesced in by, Borrower, Guarantor, Sole
Member or any Affiliate of any thereof, or if any such party shall aid,
solicit, support or otherwise cooperate or collude in the making or
commencement of any such proceeding, action, petition or filing, or if Borrower
or Sole Member shall institute any proceeding for its dissolution or
liquidation, or shall make an assignment for the benefit of creditors, (b) any
voluntary Transfer in violation of Article IX shall occur, (c) Borrower
shall voluntarily further encumber or permit the further encumbrance of, the
Projects, or any of them, or of any direct or indirect interest in Borrower, in
violation of Section 9.01, (d) Borrower, Sole Member or Guarantor or
any of their respective Affiliates contest or in any material way intentionally
interferes with, directly or indirectly (collectively, a “Contest”) any
foreclosure action, UCC sale or other material remedy exercised by Lender upon
the occurrence of any Event of Default, whether by making any motion, bringing
any counterclaim, claiming any defense other than asserting a good-faith
defense to any action brought by Lender, seeking any injunction or other
restraint, commencing any action, or otherwise (provided that if any such
Person obtains a non-appealable order successfully asserting a Contest,
Borrower shall have no liability under this clause (d)), in which event Lender
shall have recourse against all of the assets of Borrower including, without
limitation, any right, title and interest of Borrower in and to the Projects
and any Recourse Distributions received by the Partners of Borrower (but
excluding the other assets of such Partners to the extent Lender would not have
had recourse thereto other than in accordance with the provisions of this Section 18.32).


[SIGNATURE PAGES
FOLLOW]


 



 112














 


IN WITNESS
WHEREOF, Borrower and Lender have duly executed this Agreement the day and year
first above written.


	
  

  	
   

  	
  BORROWER:

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  ONE GRANDE SPE LLC,

  
	
   

  	
   

  	
  a Delaware limited liability company

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  	
  /s/ Mitchell E. Hersh

  
	
   

  	
   

  	
   

  	
   

  	
  Name: Mitchell E. Hersh

  
	
   

  	
   

  	
   

  	
   

  	
  Title: Chief Executive Officer

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  1280 WALL SPE LLC,

  
	
   

  	
   

  	
  a Delaware limited liability company

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  	
  /s/ Mitchell E. Hersh

  
	
   

  	
   

  	
   

  	
   

  	
  Name: Mitchell E. Hersh

  
	
   

  	
   

  	
   

  	
   

  	
  Title: Chief Executive Officer

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  10 SYLVAN SPE LLC,

  
	
   

  	
   

  	
  a Delaware limited liability company

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  	
  /s/ Mitchell E. Hersh

  
	
   

  	
   

  	
   

  	
   

  	
  Name: Mitchell E. Hersh

  
	
   

  	
   

  	
   

  	
   

  	
  Title: Chief Executive Officer

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  5 INDEPENDENCE SPE LLC,

  
	
   

  	
   

  	
  a Delaware limited liability company

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  	
  /s/ Mitchell E. Hersh

  
	
   

  	
   

  	
   

  	
   

  	
  Name: Mitchell E. Hersh

  
	
   

  	
   

  	
   

  	
   

  	
  Title: Chief Executive Officer

  



 


[SIGNATURES CONTINUE ON
NEXT PAGE]









 



 


	
  

  	
   

  	
  1 INDEPENDENCE SPE LLC,

  
	
   

  	
   

  	
  a Delaware limited liability company

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  	
  /s/ Mitchell E. Hersh

  
	
   

  	
   

  	
   

  	
   

  	
  Name: Mitchell E. Hersh

  
	
   

  	
   

  	
   

  	
   

  	
  Title: Chief Executive Officer

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  3 BECKER SPE LLC,

  
	
   

  	
   

  	
  a Delaware limited liability company

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  	
  /s/ Mitchell E. Hersh

  
	
   

  	
   

  	
   

  	
   

  	
  Name: Mitchell E. Hersh

  
	
   

  	
   

  	
   

  	
   

  	
  Title: Chief Executive Officer

  
	
   

  	
   

  	
   

  	
   

  	
   

  



 


[SIGNATURES CONTINUE ON
NEXT PAGE]









 



 


	
  

  	
   

  	
  LENDER:

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  GRAMERCY WAREHOUSE FUNDING I LLC,

  
	
   

  	
   

  	
  a Delaware limited liability company

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  	
  /s/ Robert R. Foley

  
	
   

  	
   

  	
   

  	
   

  	
  Name: Robert R. Foley

  
	
   

  	
   

  	
   

  	
   

  	
  Title: Chief Financial Officer

  



 


 















 


EXHIBIT A


Owners
and Projects


	
  Owners

  	
   

  	
  Projects

  
	
  New Jersey

  	
   

  	
   

  
	
  One Grande SPE LLC

  	
   

  	
  One Grande Commons,
  Bridgewater, New Jersey

  
	
  1280 Wall SPE LLC

  	
   

  	
  1280 Wall Street,
  Lyndhurst, New Jersey

  
	
  10 Sylvan SPE LLC

  	
   

  	
  10 Sylvan Way,
  Parsippany, New Jersey

  
	
  5 Independence SPE LLC

  	
   

  	
  Five Independence Way,
  Princeton, New Jersey

  
	
  1 Independence SPE LLC

  	
   

  	
  One Independence Way,
  Princeton, New Jersey

  
	
  3 Becker SPE LLC

  	
   

  	
  3 Becker Farm Road,
  Roseland, New Jersey

  



 



 B-1














 


EXHIBIT B


Summary
Of Reserves


	
  Reserve Items

  	
   

  	
  Initial Deposit

  Amount

  	
   

  	
  Monthly Installment

  Amount

  	
   

  
	
  Basic Carrying Costs

  ·   Taxes 

  	
   

  	
  $

  	
  176,330.00

  	
   

  	
  $

  	
  176,330.00 

  	
   

  
	
  ·   Insurance Premiums

  	
   

  	
  $

  	
  16,348.00

  	
   

  	
  $

  	
  16,348.00

  	
   

  
	
  Initial Engineering
  Deposits

  ·   Immediate Repairs

  	
   

  	
  $

  	
  -0-

  	
   

  	
  N/A

  	
   

  
	
  Recurring Replacement
  Monthly Installment

  	
   

  	
  $

  	
  -0-

  	
   

  	
  [NOTE 1]

  	
   

  
	
  Reletting Expenses (to
  Reletting Reserve Escrow Account)

  	
   

  	
  $

  	
  -0-

  	
   

  	
  [NOTE 2]

  	
   

  
	
  Accrued Lease Liability
  Expenses (to Accrued Lease Liability Escrow Account)

  	
   

  	
  $

  	
  1,849,951.07

  	
   

  	
  -0-

  	
   

  



 


NOTE 1:  $0.10 per gross rentable square foot of space
in each Project (as set forth on Exhibit B-1 attached hereto) owned
by Borrower, divided by 12.


NOTE 2:  $0.25 per gross rentable square foot of space
in each Project (as set forth on Exhibit B-1 attached hereto) owned
by Borrower, divided by 12.


 



 B-1-1














 


EXHIBIT B-1


Gross
Rentable Square Footage of the Projects


 




	
  Property

  	
   

  	
  City

  	
   

  	
  State

  	
   

  	
  SF

  
	
  One Grande Commons

  	
   

  	
  Bridgewater

  	
   

  	
  NJ

  	
   

  	
  198,376

  
	
  1280 Wall Street

  	
   

  	
  Lyndhurst

  	
   

  	
  NJ

  	
   

  	
  121,314

  
	
  10 Sylvan Way

  	
   

  	
  Parsippany

  	
   

  	
  NJ

  	
   

  	
  125,829

  
	
  Five Independence Way

  	
   

  	
  Princeton

  	
   

  	
  NJ

  	
   

  	
  113,376

  
	
  One Independence Way

  	
   

  	
  Princeton

  	
   

  	
  NJ

  	
   

  	
  111,979

  
	
  3 Becker Farm Road

  	
   

  	
  Roseland

  	
   

  	
  NJ

  	
   

  	
  113,837

  
	
  TOTAL

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  784,711

  






 


 



 C-1