Exhibit 10.11


PREPARED BY AND UPON
RECORDATION

RETURN TO:


Winston & Strawn
LLP

200 Park Avenue

New York, New York

Attention:   Corey A. Tessler, Esq.


	
  Loan No.: 502856397

  	
  5 Becker Farm Road, Roseland, New Jersey

  



 




 





5 BECKER SPE LLC,

as Borrower


to


WACHOVIA BANK, NATIONAL
ASSOCIATION,

as Lender






MORTGAGE, SECURITY
AGREEMENT AND FIXTURE FILING






Date: May 9, 2006




 


















 


TABLE OF CONTENTS


	
  

  	
   

  	
   

  	
   

  	
  Page

  	
   

  
	
  ARTICLE I   REPRESENTATIONS
  AND WARRANTIES OF BORROWER

  	
   

  	
  5

  	
   

  
	
  Section 1.1

  	
   

  	
  Organization;
  Special Purpose

  	
   

  	
  5

  	
   

  
	
  Section 1.2

  	
   

  	
  Title

  	
   

  	
  5

  	
   

  
	
  Section 1.3

  	
   

  	
  No Bankruptcy
  Filing

  	
   

  	
  6

  	
   

  
	
  Section 1.4

  	
   

  	
  Full and
  Accurate Disclosure

  	
   

  	
  6

  	
   

  
	
  Section 1.5

  	
   

  	
  Proceedings;
  Enforceability

  	
   

  	
  6

  	
   

  
	
  Section 1.6

  	
   

  	
  No Conflicts

  	
   

  	
  7

  	
   

  
	
  Section 1.7

  	
   

  	
  Federal Reserve
  Regulations; Investment Company Act

  	
   

  	
  7

  	
   

  
	
  Section 1.8

  	
   

  	
  Taxes

  	
   

  	
  7

  	
   

  
	
  Section 1.9

  	
   

  	
  ERISA

  	
   

  	
  7

  	
   

  
	
  Section 1.10

  	
   

  	
  Property
  Compliance

  	
   

  	
  8

  	
   

  
	
  Section 1.11

  	
   

  	
  Utilities

  	
   

  	
  8

  	
   

  
	
  Section 1.12

  	
   

  	
  Public Access

  	
   

  	
  8

  	
   

  
	
  Section 1.13

  	
   

  	
  Litigation;
  Agreements

  	
   

  	
  8

  	
   

  
	
  Section 1.14

  	
   

  	
  Physical
  Condition

  	
   

  	
  9

  	
   

  
	
  Section 1.15

  	
   

  	
  Contracts

  	
   

  	
  9

  	
   

  
	
  Section 1.16

  	
   

  	
  Leases

  	
   

  	
  9

  	
   

  
	
  Section 1.17

  	
   

  	
  Foreign Person

  	
   

  	
  10

  	
   

  
	
  Section 1.18

  	
   

  	
  Management
  Agreement

  	
   

  	
  10

  	
   

  
	
  Section 1.19

  	
   

  	
  Fraudulent
  Transfer

  	
   

  	
  10

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE II   COVENANTS
  OF BORROWER

  	
   

  	
  10

  	
   

  
	
  Section 2.1

  	
   

  	
  Defense of Title

  	
   

  	
  10

  	
   

  
	
  Section 2.2

  	
   

  	
  Performance of
  Obligations

  	
   

  	
  11

  	
   

  
	
  Section 2.3

  	
   

  	
  Insurance

  	
   

  	
  11

  	
   

  
	
  Section 2.4

  	
   

  	
  Payment of Taxes

  	
   

  	
  16

  	
   

  
	
  Section 2.5

  	
   

  	
  Casualty and
  Condemnation

  	
   

  	
  16

  	
   

  
	
  Section 2.6

  	
   

  	
  Construction
  Liens

  	
   

  	
  19

  	
   

  
	
  Section 2.7

  	
   

  	
  Rents and
  Profits

  	
   

  	
  19

  	
   

  
	
  Section 2.8

  	
   

  	
  Leases

  	
   

  	
  20

  	
   

  
	
  Section 2.9

  	
   

  	
  Alienation and
  Further Encumbrances.

  	
   

  	
  23

  	
   

  
	
  Section 2.10

  	
   

  	
  Payment of
  Utilities, Assessments, Charges, Etc

  	
   

  	
  28

  	
   

  
	
  Section 2.11

  	
   

  	
  Access
  Privileges and Inspections

  	
   

  	
  29

  	
   

  
	
  Section 2.12

  	
   

  	
  Waste;
  Alteration of Improvements

  	
   

  	
  29

  	
   

  
	
  Section 2.13

  	
   

  	
  Zoning

  	
   

  	
  29

  	
   

  
	
  Section 2.14

  	
   

  	
  Financial
  Statements and Books and Records

  	
   

  	
  30

  	
   

  
	
  Section 2.15

  	
   

  	
  Further
  Assurances

  	
   

  	
  31

  	
   

  
	
  Section 2.16

  	
   

  	
  Payment of
  Costs; Reimbursement to Lender

  	
   

  	
  32

  	
   

  
	
  Section 2.17

  	
   

  	
  Security
  Interest

  	
   

  	
  33

  	
   

  
	
  Section 2.18

  	
   

  	
  Security
  Agreement

  	
   

  	
  34

  	
   

  
	
  Section 2.19

  	
   

  	
  Easements and
  Rights-of-Way

  	
   

  	
  35

  	
   

  
	
  Section 2.20

  	
   

  	
  Compliance with
  Laws

  	
   

  	
  35

  	
   

  



 



 i
 






 



 


	
  Section 2.21

  	
   

  	
  Additional Taxes

  	
   

  	
  36

  	
   

  
	
  Section 2.22

  	
   

  	
  Secured
  Indebtedness

  	
   

  	
  36

  	
   

  
	
  Section 2.23

  	
   

  	
  Borrower’s
  Waivers

  	
   

  	
  36

  	
   

  
	
  Section 2.24

  	
   

  	
  SUBMISSION TO
  JURISDICTION; WAIVER OF JURY TRIAL

  	
   

  	
  37

  	
   

  
	
  Section 2.25

  	
   

  	
  Attorney-in-Fact
  Provisions

  	
   

  	
  38

  	
   

  
	
  Section 2.26

  	
   

  	
  Management

  	
   

  	
  38

  	
   

  
	
  Section 2.27

  	
   

  	
  Hazardous Waste
  and Other Substances

  	
   

  	
  38

  	
   

  
	
  Section 2.28

  	
   

  	
  Indemnification;
  Subrogation

  	
   

  	
  43

  	
   

  
	
  Section 2.29

  	
   

  	
  Covenants with
  Respect to Existence, Indebtedness, Operations, Fundamental Changes of
  Borrower

  	
   

  	
  44

  	
   

  
	
  Section 2.30

  	
   

  	
  Embargoed Person

  	
   

  	
  49

  	
   

  
	
  Section 2.31

  	
   

  	
  Anti-Money
  Laundering

  	
   

  	
  49

  	
   

  
	
  Section 2.32

  	
   

  	
  ERISA

  	
   

  	
  49

  	
   

  
	
  Section 2.33

  	
   

  	
  Opinion
  Assumptions

  	
   

  	
  50

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE III   RESERVES
  AND CASH MANAGEMENT

  	
   

  	
  51

  	
   

  
	
  Section 3.1

  	
   

  	
  Reserves
  Generally

  	
   

  	
  51

  	
   

  
	
  Section 3.2

  	
   

  	
  [Payment Reserve

  	
   

  	
   

  	
   

  
	
  Section 3.3

  	
   

  	
  Impound Account

  	
   

  	
  53

  	
   

  
	
  Section 3.4

  	
   

  	
  Immediate
  Repairs Reserve

  	
   

  	
  54

  	
   

  
	
  Section 3.5

  	
   

  	
  Replacement
  Reserve

  	
   

  	
  55

  	
   

  
	
  Section 3.6

  	
   

  	
  [Rollover Reserve]

  	
   

  	
  56

  	
   

  
	
   

  	
   

  	
  [Holdback Reserve

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE IV   EVENTS
  OF DEFAULT

  	
   

  	
  59

  	
   

  
	
  Section 4.1

  	
   

  	
  Events of
  Default

  	
   

  	
  59

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE V   REMEDIES

  	
   

  	
  61

  	
   

  
	
  Section 5.1

  	
   

  	
  Remedies
  Available

  	
   

  	
  61

  	
   

  
	
  Section 5.2

  	
   

  	
  Application of
  Proceeds

  	
   

  	
  63

  	
   

  
	
  Section 5.3

  	
   

  	
  Right and
  Authority of Receiver or Lender in the Event of Default; Power of Attorney 
 	
   

  	
  64

  	
   

  
	
  Section 5.4

  	
   

  	
  Occupancy After
  Foreclosure

  	
   

  	
  65

  	
   

  
	
  Section 5.5

  	
   

  	
  Notice to
  Account Debtors

  	
   

  	
  65

  	
   

  
	
  Section 5.6

  	
   

  	
  Cumulative
  Remedies

  	
   

  	
  65

  	
   

  
	
  Section 5.7

  	
   

  	
  Payment of
  Expenses

  	
   

  	
  65

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE VI   MISCELLANEOUS
  TERMS AND CONDITIONS

  	
   

  	
  66

  	
   

  
	
  Section 6.1

  	
   

  	
  Time of Essence

  	
   

  	
  66

  	
   

  
	
  Section 6.2

  	
   

  	
  Release of
  Mortgage

  	
   

  	
  66

  	
   

  
	
  Section 6.3

  	
   

  	
  Certain Rights
  of Lender

  	
   

  	
  66

  	
   

  
	
  Section 6.4

  	
   

  	
  Waiver of
  Certain Defenses

  	
   

  	
  66

  	
   

  
	
  Section 6.5

  	
   

  	
  Notices

  	
   

  	
  66

  	
   

  
	
  Section 6.6

  	
   

  	
  Successors and
  Assigns; Joint and Several Liability

  	
   

  	
  67

  	
   

  
	
  Section 6.7

  	
   

  	
  Severability

  	
   

  	
  67

  	
   

  
	
  Section 6.8

  	
   

  	
  Gender

  	
   

  	
  67

  	
   

  
	
  Section 6.9

  	
   

  	
  Waiver;
  Discontinuance of Proceedings

  	
   

  	
  67

  	
   

  



 



 ii
 






 



 


	
  Section 6.10

  	
   

  	
  Section Headings

  	
   

  	
  68

  	
   

  
	
  Section 6.11

  	
   

  	
  GOVERNING LAW

  	
   

  	
  68

  	
   

  
	
  Section 6.12

  	
   

  	
  Counting of Days

  	
   

  	
  68

  	
   

  
	
  Section 6.13

  	
   

  	
  Relationship of
  the Parties

  	
   

  	
  68

  	
   

  
	
  Section 6.14

  	
   

  	
  Application of
  the Proceeds of the Note

  	
   

  	
  68

  	
   

  
	
  Section 6.15

  	
   

  	
  Unsecured
  Portion of Indebtedness

  	
   

  	
  68

  	
   

  
	
  Section 6.16

  	
   

  	
  Cross Default

  	
   

  	
  68

  	
   

  
	
  Section 6.17

  	
   

  	
  Interest After
  Sale

  	
   

  	
  68

  	
   

  
	
  Section 6.18

  	
   

  	
  Inconsistency
  with Other Loan Documents

  	
   

  	
  69

  	
   

  
	
  Section 6.19

  	
   

  	
  Construction of
  this Document

  	
   

  	
  69

  	
   

  
	
  Section 6.20

  	
   

  	
  No Merger

  	
   

  	
  69

  	
   

  
	
  Section 6.21

  	
   

  	
  Rights With
  Respect to Junior Encumbrances

  	
   

  	
  69

  	
   

  
	
  Section 6.22

  	
   

  	
  Lender
  May File Proofs of Claim

  	
   

  	
  69

  	
   

  
	
  Section 6.23

  	
   

  	
  Fixture Filing

  	
   

  	
  69

  	
   

  
	
  Section 6.24

  	
   

  	
  After-Acquired
  Property

  	
   

  	
  70

  	
   

  
	
  Section 6.25

  	
   

  	
  No
  Representation

  	
   

  	
  70

  	
   

  
	
  Section 6.26

  	
   

  	
  Counterparts

  	
   

  	
  70

  	
   

  
	
  Section 6.27

  	
   

  	
  Personal
  Liability

  	
   

  	
  70

  	
   

  
	
  Section 6.28

  	
   

  	
  Recording and
  Filing

  	
   

  	
  70

  	
   

  
	
  Section 6.29

  	
   

  	
  Entire Agreement
  and Modifications

  	
   

  	
  70

  	
   

  
	
  Section 6.30

  	
   

  	
  Intentionally
  Reserved

  	
   

  	
  71

  	
   

  
	
  Section 6.31

  	
   

  	
  Secondary Market

  	
   

  	
  71

  	
   

  
	
  Section 6.32

  	
   

  	
  Dissemination of
  Information

  	
   

  	
  71

  	
   

  
	
  Section 6.33

  	
   

  	
  Certain Matters
  Relating to Property Located in the State of

  	
   

  	
  71

  	
   

  
	
  Section 6.34

  	
   

  	
  REMIC Opinions

  	
   

  	
  71

  	
   

  
	
  Section 6.35

  	
   

  	
  [For Loans in Excess of
  $20,000,000

  	
   

  	
  71

  	
   

  




 iii















MORTGAGE, SECURITY AGREEMENT AND
FIXTURE FILING


THIS MORTGAGE, SECURITY AGREEMENT AND FIXTURE
FILING (as the same may be from time to time amended,
consolidated, renewed or replaced, this “Mortgage”) is made as of May 9, 2006 by 5
BECKER SPE LLC, a Delaware limited liability company, as grantor (“Borrower”),
whose address c/o Mack-Cali Realty,
L.P. at 11 Commerce Drive, Cranford, New Jersey 07016, to WACHOVIA BANK,
NATIONAL ASSOCIATION, a national banking association, as beneficiary (together
with its successors and assigns, “Lender”),
whose address is Commercial Real Estate Services, 8739 Research Drive URP — 4,
NC 1075, Charlotte, North Carolina 28262.


W I  T  N  E  S
S  E  T  H:


THAT FOR AND IN
CONSIDERATION OF THE SUM OF TEN AND NO/100 DOLLARS ($10.00), AND OTHER VALUABLE
CONSIDERATION, THE RECEIPT AND SUFFICIENCY OF WHICH ARE HEREBY ACKNOWLEDGED,
BORROWER HEREBY IRREVOCABLY MORTGAGES, GRANTS, BARGAINS, SELLS, CONVEYS,
TRANSFERS, PLEDGES, SETS OVER AND ASSIGNS, with power of sale, all of Borrower’s
estate, right, title and interest in, to and under any and all of the following
described property, whether now owned or hereafter acquired by Borrower
(collectively, the “Property”):


(A)          All that certain real
property situated in the County of Essex, State of New Jersey, more
particularly described on Exhibit A attached hereto and
incorporated herein by this reference (the “Premises”), together with all of the easements,
rights, privileges, franchises, tenements, hereditaments and appurtenances now
or hereafter thereunto belonging or in any way appertaining thereto, and all of
the estate, right, title, interest, claim and demand whatsoever of Borrower
therein or thereto, either at law or in equity, in possession or in expectancy,
now or hereafter acquired;


(B)           All structures,
buildings and improvements of every kind and description now or at any time
hereafter located or placed on the Premises (the “Improvements”);


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









 



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


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


(F)           All minerals, crops,
timber, trees, shrubs, flowers and landscaping features now or hereafter located
on, under or above the Premises;


(G)           All cash funds,
deposit accounts and other rights and evidence of rights to cash, now or
hereafter created or held by Lender pursuant to this Mortgage or any other of
the Loan Documents (as hereinafter defined), including, without limitation, all
funds now or hereafter on deposit in the Reserves (as hereinafter defined);


(H)          All leases
(including, without limitation, oil, gas and mineral leases), licenses,
concessions and occupancy agreements of all or any part of the Premises or the
Improvements (each, a “Lease”
and collectively, “Leases”),
whether written or oral, now or hereafter entered into and all rents,
royalties, issues, profits, bonus money, revenue, income, rights and other
benefits (collectively, the “Rents
and Profits”) of the Premises or the Improvements, now or
hereafter arising from the use or enjoyment of all or any portion thereof or
from any present or future Lease or other agreement pertaining thereto or
arising from any of the Leases or any of the General Intangibles (as
hereinafter defined) and all cash or securities deposited to secure performance
by the tenants, lessees or licensees (each, a “Tenant” and collectively, “Tenants”), as
applicable, of their obligations under any such Leases, whether said cash or
securities are to be held until the expiration of the terms of said Leases or
applied to one or more of the installments of rent coming due prior to the
expiration of said terms, subject, however, to the provisions contained in Section 2.7
hereinbelow;


(I)            All contracts and
agreements now or hereafter entered into covering any part of the Premises or
the Improvements (collectively, the “Contracts”) and all revenue, income and other
benefits thereof, including, without limitation, management agreements, service
contracts, maintenance contracts, equipment leases, personal property leases
and any contracts or documents relating to construction on any part of the
Premises or the Improvements (including plans, drawings, surveys, tests,
reports, bonds and governmental approvals) or to the management or operation of
any part of the Premises or the Improvements;



 2
 






 



(J)            All present and
future monetary deposits given to any public or private utility with respect to
utility services furnished to any part of the Premises or the Improvements;


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


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


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


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


(O)          All proceeds,
products, substitutions and accessions (including claims and demands therefor)
of the conversion, voluntary or involuntary, of any of the foregoing into cash
or liquidated claims, including, without limitation, proceeds of insurance and
condemnation awards; and


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


FOR THE PURPOSE OF
SECURING:


(1)           The loan (the “Loan”) evidenced by
that certain Promissory Note (such Promissory Note, together with any and all
renewals, amendments, modifications, consolidations and extensions thereof, is
hereinafter referred to as the “Note”)
of even date with this Mortgage, made by Borrower payable to the order of
Lender in the principal face amount of FIFTEEN MILLION FIVE HUNDRED THOUSAND
AND NO/100 DOLLARS ($15,500,000.00), together with interest as therein
provided;



 3
 






 



(2)           The full and prompt
payment and performance of all of the provisions, agreements, covenants and
obligations herein contained and contained in any other agreements, documents
or instruments now or hereafter evidencing, securing or otherwise relating to
the Debt (as hereinafter defined), the Environmental Indemnity Agreement (as
hereinafter defined) and the Indemnity and Guaranty Agreement (as hereinafter
defined) (the Note, this Mortgage, and such other agreements, documents and
instruments, together with any and all renewals, amendments, extensions and
modifications thereof, are hereinafter collectively referred to as the “Loan Documents”) and
the payment of all other sums herein or therein covenanted to be paid;


(3)           Any and all
additional advances made by Lender to protect or preserve the Property or the
lien or security interest created hereby on the Property, or for taxes,
assessments or insurance premiums as hereinafter provided or for performance of
any of Borrower’s obligations hereunder or under the other Loan Documents or
for any other purpose provided herein or in the other Loan Documents (whether
or not the original Borrower remains the owner of the Property at the time of
such advances); and


(4)           Any and all other
indebtedness now owing or which may hereafter be owing by Borrower to Lender,
including, without limitation, all prepayment fees, however and whenever
incurred or evidenced, whether express or implied, direct or indirect, absolute
or contingent, or due or to become due, and all renewals, modifications,
consolidations, replacements and extensions thereof, it being contemplated by
Borrower and Lender that Borrower may hereafter become so indebted to Lender.


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


TO HAVE AND TO HOLD the Property unto Lender, its successors and
assigns forever, and Borrower does hereby bind itself, its successors and
assigns, to WARRANT AND FOREVER DEFEND the title to the Property, subject to
the Permitted Encumbrances (as hereinafter defined), to Lender against every
person whomsoever lawfully claiming or to claim the same or any part thereof;


PROVIDED, HOWEVER, that if the principal and interest and all other
sums due or to become due under the Note or under the other Loan Documents,
including, without limitation, any prepayment fees required pursuant to the
terms of the Note, shall have been paid at the time and in the manner
stipulated therein and the Debt shall have been paid and all other covenants
contained in the Loan Documents shall have been performed, then, in such case,
the liens, security interests, estates and rights granted by this Mortgage
shall be satisfied and the estate, right, title and interest of Lender in the
Property shall cease, and upon payment to Lender of all costs and expenses
incurred for the preparation of the release hereinafter referenced and all
recording costs if allowed by law, Lender shall promptly satisfy and release
this Mortgage of record and the lien hereof by proper instrument.



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ARTICLE I


REPRESENTATIONS
AND WARRANTIES OF BORROWER


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


Section 1.1             Organization;
Special Purpose. Borrower has been duly organized and is validly existing
and in good standing under the laws of the state of its formation, with
requisite power and authority, and all rights, licenses, permits and
authorizations, governmental or otherwise, necessary to own its properties and
to transact the business in which it is now engaged. Borrower is duly qualified
to do business and is in good standing in each jurisdiction where it is
required to be so qualified in connection with its properties, business and
operations. Borrower possesses all franchises, patents, copyrights, trademarks,
trade names, licenses and permits necessary for the conduct of its business
substantially as now conducted. Borrower is a Single-Purpose Entity in
compliance with the provisions of Section 2.29 hereof. All of the assumptions made in that certain
substantive non-consolidation opinion letter dated the date hereof, delivered
by Borrower’s counsel in connection with the Loan and any subsequent
non-consolidation opinion delivered in accordance with the terms and conditions
of this Mortgage (the “Non-Consolidation
Opinion”), including, but not limited to, any exhibits
attached thereto, are true and correct in all respects.


Section 1.2             Title. Borrower has good,
marketable and indefeasible fee simple title to the Property, subject only to
those matters expressly set forth as exceptions to or subordinate matters in
the title insurance policy insuring the lien of this Mortgage delivered as of
the date hereof which Lender has agreed to accept, excepting therefrom all
preprinted and/or standard exceptions (such items being the “Permitted
Encumbrances”), and has full power and lawful authority to grant, bargain,
sell, convey, assign, transfer, encumber and mortgage its interest in the
Property in the manner and form hereby done or intended. Borrower will preserve
its interest in and title to the Property and will forever warrant and defend
the same to Lender against any and all claims whatsoever and will forever
warrant and defend the validity and priority of the lien and security interest
created herein against the claims of all persons and parties whomsoever,
subject to the Permitted Encumbrances. This Mortgage creates (i) a valid,
perfected lien on the Premises, subject only to Permitted Encumbrances and the
liens created by the Loan Documents and (ii) perfected security interests
in and to, and perfected collateral assignments of, all personalty, all in
accordance with the terms thereof, in each case subject only to any applicable
Permitted Encumbrances, such other liens as are permitted pursuant to the Loan
Documents and the liens created by the Loan Documents. There are no security
agreements or financing statements affecting all or any portion of the Property
other than (i) as disclosed in writing by Borrower to Lender prior to the
date hereof and (ii) the security agreements and financing statements
created in favor of Lender. There are no claims for payment for work, labor or
materials affecting the Premises which are or may become a lien prior to, or of
equal priority with, the liens created by the Loan Documents. None of the
Permitted Encumbrances, individually or in the aggregate, materially interfere
with the benefits of the security intended to be provided by this Mortgage,
materially and adversely affect the value of the Premises, impair the use or
operations of the Premises or impair Borrower’s ability to pay its obligations
in a timely manner. The foregoing warranty of title shall survive the
foreclosure of this Mortgage 



 5
 






 



and shall
inure to the benefit of and be enforceable by Lender in the event Lender
acquires title to the Property pursuant to any foreclosure.


Section 1.3             No Bankruptcy Filing. No
bankruptcy, insolvency proceedings or liquidation of all or a substantial
portion of the Property is pending or contemplated by Borrower or, to the best
knowledge of Borrower, against Borrower or by or against any endorser or
cosigner of the Note or of any portion of the Debt, or any guarantor or
indemnitor under any guaranty or indemnity agreement, including, without
limitation, that certain Indemnity and Guaranty Agreement, dated the date
hereof, executed by Mack-Cali Realty, L.P., a Delaware limited partnership, in
favor of Lender (the “Guaranty Agreement”), executed in connection with the
Note or the loan evidenced thereby and secured hereby (an “Indemnitor”). No
petition in bankruptcy has been filed against Borrower or any general partner,
manager, sole member, managing member or majority shareholder of Borrower, as
applicable (collectively, the “Borrower Parties”, each a “Borrower Party”), and
neither Borrower Party or any principal of a Borrower Party has ever made an
assignment for the benefit of creditors or taken advantage of any insolvency
act for the benefit of debtors.


 


Section 1.4             Full
and Accurate Disclosure. No statement of fact made by Borrower in any Loan
Documents contains any untrue statement of a material fact or omits to state
any material fact necessary to make statements contained therein not misleading.
There is no material fact presently known to Borrower that has not been
disclosed to Lender which adversely affects, or, as far as Borrower can
foresee, might adversely affect, the Property or the business, operations or
condition (financial or otherwise) of Borrower. All financial data, including
the statements of cash flow and income and operating expense, that have been
delivered to Lender in respect of Borrower and the Property (i) are true,
complete and correct in all material respects, (ii) accurately represent
the financial condition of  Borrower and
the Property as of the date of such reports, and (iii) to the extent
prepared by an independent certified public accounting firm, have been prepared
in accordance with generally accepted accounting principles consistently
applied throughout the periods covered, except as disclosed therein. Borrower
has no contingent liabilities, liabilities for taxes, unusual forward or
long-term commitments, unrealized or anticipated losses from any unfavorable
commitments or any liabilities or obligations not expressly permitted by this
Mortgage. Since the date of such financial statements, there has been no
materially adverse change in the financial condition, operations or business of
Borrower or the Property from that set forth in said financial statements.


Section 1.5             Proceedings;
Enforceability. The execution, delivery and performance of this Mortgage,
the Note and all of the other Loan Documents have been duly authorized by all
necessary action to be, and are, binding and enforceable against Borrower in
accordance with the respective terms thereof and do not contravene, result in a
breach of or constitute a default (nor upon the giving of notice or the passage
of time or both will same constitute a default) under the partnership
agreement, articles of incorporation, operating agreement or other
organizational documents of Borrower or any contract or agreement of any nature
to which Borrower is a party or by which Borrower or any of its property may be
bound and do not violate or contravene any law, order, decree, rule or
regulation to which Borrower is subject. The Loan Documents are not subject to,
and Borrower has not asserted, any right of rescission, set-off, counterclaim
or defense, including the defense of usury.



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Section 1.6             No
Conflicts. Borrower is not required to obtain any consent, approval or
authorization from or to file any declaration or statement with, any
governmental authority or agency in connection with or as a condition to the
execution, delivery or performance of this Mortgage, the Note or the other Loan
Documents which has not been so obtained or filed. Borrower has obtained or
made all necessary (i) consents, approvals and authorizations and
registrations and filings of or with all governmental authorities or agencies
and (ii) consents, approvals, waivers and notifications of partners,
stockholders, members, creditors, lessors and other non-governmental persons
and/or entities, 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.


Section 1.7             Federal
Reserve Regulations; Investment Company Act. 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 Regulation T, U or X of the Board of Governors of the
Federal Reserve System or for any other purpose that would be inconsistent with
such Regulation T, U or X or any other regulation of such Board of Governors,
or for any purpose prohibited by law or any Loan Document. Borrower is not (i) an
“investment company” or a company “controlled” by an “investment company,”
within the meaning of 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.


Section 1.8             Taxes.
Borrower and any general partner or managing member of Borrower, if any, has
filed all federal, state and local tax returns required to be filed as of the
date hereof and has paid or made adequate provision for the payment of all
federal, state and local taxes, charges and assessments payable by Borrower and
any general partner or managing member, if any, as of the date hereof. Borrower
and any general partner or managing member, if any, believe that their
respective tax returns properly reflect the income and taxes of Borrower and
said general partner or managing member, if any, for the periods covered
thereby, subject only to reasonable adjustments required by the Internal
Revenue Service or other applicable tax authority upon audit. Borrower and the
Property are free from any past due obligations for sales and payroll taxes.


Section 1.9             ERISA. Borrower (i) has
no knowledge of any material liability that has been incurred or is expected to
be incurred by Borrower that is or remains unsatisfied for any taxes or
penalties with respect to any “employee benefit plan”, as defined in section 3(3) of
the Employee Retirement Income Security Act of 1974, as amended (“ERISA”), or
any “plan” within the meaning of Section 4975(e)(1) of the Internal
Revenue Code of 1986, as amended (the “Code”) or any other benefit plan (other
than a multi-employer plan) maintained, contributed to, or required to be
contributed to by Borrower or by any entity that is under the common control
with Borrower within the meaning of ERISA Section 4001(a)(14)
(collectively, a “Plan”) or any plan that would be a Plan but for the fact that
it is a multi-employer plan within the meaning of ERISA Section 3(37) and (ii) has
made and shall continue to make when due all required contributions to all such
Plans, if any. Each such Plan, if any, has been and will be administered in
compliance with its terms and the applicable provisions of ERISA, the Code and
any other applicable Federal or state law and no action shall be taken or fail
to be taken that would result in 



 7
 






 



the disqualification or loss of the tax-exempt status of any such Plan,
if any, intended to be qualified or tax-exempt. The assets of Borrower do not
constitute “plan assets” of one or more such plans within the meaning of 29
C.F.R. Section 2510.3-101.


 


Section 1.10           Property
Compliance. The Premises and the Improvements and the current intended use
thereof by Borrower comply in all material respects with all applicable
restrictive covenants, zoning ordinances, subdivision and building codes, flood
disaster laws, health and environmental laws and regulations and all other
ordinances, orders or requirements issued by any state, federal or municipal
authorities having or claiming jurisdiction over the Property, except as
otherwise previously disclosed to Lender in writing. In the event that all or
any part of the Improvements are destroyed or damaged, said Improvements can be
legally reconstructed to their condition prior to such damage or destruction,
and thereafter exist for the same use without violating any zoning or other
ordinances applicable thereto and without the necessity of obtaining any
variances or special permits. No legal proceedings are pending or, to the
knowledge of Borrower, threatened with respect to the zoning of the Premises. Neither
the zoning nor any other right to construct, use or operate the Premises is in
any way dependent upon or related to any property other than the Premises. All
certifications, permits, licenses and approvals, including certificates of
completion and occupancy permits required for the legal use, occupancy and
operation of the Premises have been obtained and are in full force and effect. The
Premises and Improvements constitute one or more separate tax parcels for
purposes of ad valorem taxation. The Premises and Improvements do not require
any rights over, or restrictions against, other property in order to comply
with any of the aforesaid governmental ordinances, orders or requirements.


Section 1.11           Utilities.
All utility services necessary and sufficient for the full use, occupancy,
operation and disposition of the Premises and the Improvements for their
intended purposes are available to the Property, including water, storm sewer,
sanitary sewer, gas, electric, cable and telephone facilities, through public
rights-of-way or perpetual private easements approved by Lender. The Property
is free from delinquent water charges, sewer rents, taxes and assessments.


Section 1.12           Public
Access. All streets, roads, highways, bridges and waterways necessary for
access to and full use, occupancy, operation and disposition of the Premises
and the Improvements have been completed, have been dedicated to and accepted
by the appropriate municipal authority and are open and available to the
Premises and the Improvements without further condition or cost to Borrower. All
curb cuts, driveways and traffic signals shown on the survey delivered to
Lender prior to the execution and delivery of this Mortgage are existing and
have been fully approved by the appropriate governmental authority.


Section 1.13           Litigation;
Agreements. There are no judicial, administrative, mediation or arbitration
actions, suits or proceedings pending or threatened against or affecting
Borrower (or, if Borrower is a partnership or a limited liability company, any
of its general partners or members) or the Property which, if adversely
determined, would materially impair either the Property or Borrower’s ability
to perform the covenants or obligations required to be performed under the Loan
Documents. Borrower is not a party to any agreement or instrument or subject to
any restriction which might adversely affect Borrower or the Property, or
Borrower’s business, properties, operations or condition, financial or
otherwise. Borrower is not in default in any 



 8
 






 



material
respect in the performance, observance or fulfillment of any of the
obligations, covenants or conditions contained in any Permitted Encumbrance or
any other agreement or instrument to which it is a party or by which it or the
Property is bound.


Section 1.14           Physical Condition. As of the
date of this Mortgage, (i) the Property is free from unrepaired damage
caused by fire, flood, accident or other casualty, (ii) no part of the
Premises or the Improvements has been taken in condemnation, eminent domain or
like proceeding nor is any such proceeding pending or, to Borrower’s knowledge
and belief, threatened or contemplated, (iii) except as may otherwise be
disclosed in that certain Property Condition Report (the “Property Condition
Report”) dated May 5, 2006 and prepared by IVI Due Diligence Services, Inc.,
the Improvements are structurally sound, in good repair and free of defects in
materials and workmanship and have been constructed and installed in
substantial compliance with the plans and specifications relating thereto, and (iv) all
major building systems located within the Improvements, including, without
limitation, the heating and air conditioning systems and the electrical and
plumbing systems, are in good working order and condition.


 


Section 1.15           Contracts.
Borrower has delivered to Lender true, correct and complete copies of all
Contracts and all amendments thereto or modifications thereof. Each Contract
constitutes the legal, valid and binding obligation of Borrower and, to the
best of Borrower’s knowledge and belief, is enforceable against any other party
thereto. No default exists, or with the passing of time or the giving of notice
or both would exist, under any Contract which would, in the aggregate, have a
material adverse effect on Borrower or the Property. No Contract provides any
party with the right to obtain a lien or encumbrance upon the Property superior
to the lien of this Mortgage. All Contracts affecting the Property have been
entered into at arms-length in the ordinary course of Borrower’s business and
provide for the payment of fees in amounts and upon terms comparable to
existing market rates.


Section 1.16           Leases. Borrower has delivered
(i) a true, correct and complete schedule (the “Rent Roll”) of all Leases
affecting the Property as of the date hereof, which accurately and completely
sets forth in all material respects for each such Lease, the following: the
name of the Tenant, the Lease expiration date, extension and renewal
provisions, the base rent payable, the security deposit held thereunder and any
other material provisions of such Lease and (ii) true, correct and
complete copies of all Leases described in the Rent Roll. Each Lease
constitutes the legal, valid and binding obligation of Borrower and, to the
best of Borrower’s knowledge and belief, is enforceable against the Tenant
thereof. No default exists, or with the passing of time or the giving of notice
or both would exist, under any Lease which would, in the aggregate, have a
material adverse effect on Borrower or the Property. No Tenant under any Lease
has, as of the date hereof, paid rent more than thirty (30) days in advance,
and the rents under such Leases have not been waived, released, or otherwise
discharged or compromised. All security deposits required under such Leases
have been fully funded and are held by Borrower as permitted by applicable law.
All work to be performed by Borrower under the Leases has been substantially
performed, all contributions to be made by Borrower to the Tenants thereunder
have been made and all other conditions precedent to each such Tenant’s
obligations thereunder have been satisfied. Each Tenant under a Lease has
entered into occupancy of the demised premises. To the best of Borrower’s
knowledge and belief, each Tenant is free from bankruptcy, reorganization or
arrangement proceedings or a general assignment for the benefit of creditors.



 9














 


No Lease
provides any party with the right to obtain a lien or encumbrance upon the
Property superior to the lien of this Mortgage.


Section 1.17           Foreign
Person. Borrower is not a “foreign person” within the meaning of §1445(f)(3) of
the Code, and the related Treasury Department regulations, including temporary
regulations.


Section 1.18           Management
Agreement. The property management agreement relating to the Premises (the “Management
Agreement”) is in full force and effect and to the best of Borrower’s knowledge,
there is no default, breach or violation existing thereunder by any party
thereto beyond the expiration of applicable notice and grace periods thereunder
and no event has occurred (other than payments due but not yet delinquent)
that, with the passage of time or the giving of notice, or both, would
constitute a default, breach or violation by any party thereunder. The fee due
under the Management Agreement, and the terms and provisions of the Management
Agreement, are subordinate to this Mortgage.


Section 1.19           Fraudulent
Transfer. Borrower has not entered into the Loan or any Loan Document with
the actual intent to hinder, delay, or defraud any creditor, and Borrower has
received reasonably equivalent value in exchange for its obligations under the
Loan Documents. Giving effect to the transactions contemplated by the Loan
Documents, the fair saleable value of Borrower’s assets exceeds and will,
immediately following the execution and delivery of the Loan Documents, exceed
Borrower’s total liabilities, including subordinated, unliquidated, disputed or
contingent liabilities, including the maximum amount of its contingent
liabilities or its debts as such debts become absolute and matured. Borrower’s
assets do not and, immediately following the execution and delivery of the Loan
Documents will not, constitute unreasonably small capital to carry out its
business as conducted or as proposed to be conducted. Borrower does not intend
to, and does not believe that it will, incur debts and liabilities (including
contingent liabilities and other commitments) beyond its ability to pay such
debts as they mature (taking into account the timing and amounts to be payable
on or in respect of obligations of Borrower).


All of the representations and warranties in this Article I
and elsewhere in the Loan Documents (i) shall survive for so long as any
portion of the Debt remains owing to Lender and (ii) shall be deemed to
have been relied upon by Lender notwithstanding any investigation heretofore or
hereafter made by Lender or on its behalf.


ARTICLE
II


COVENANTS
OF BORROWER


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


Section 2.1             Defense
of Title. If, while this Mortgage is in force, the title to the Property or
the interest of Lender therein shall be the subject, directly or indirectly, of
any action at law or in equity, or be attached directly or indirectly, or
endangered, clouded or adversely 



 10
 






 



affected in
any manner, Borrower, at Borrower’s expense, shall take all necessary and
proper steps for the defense of said title or interest, including the
employment of counsel approved by Lender, the prosecution or defense of litigation,
and the compromise or discharge of claims made against said title or interest. Notwithstanding
the foregoing, in the event that Lender determines that Borrower is not
adequately performing its obligations under this Section, Lender may, without limiting
or waiving any other rights or remedies of Lender hereunder, take such steps
with respect thereto as Lender shall deem necessary or proper and any and all
costs and expenses incurred by Lender in connection therewith, together with
interest thereon at the Default Interest Rate (as defined in the Note) 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 Mortgage and by all of
the other Loan Documents securing all or any part of the indebtedness evidenced
by the Note.


Section 2.2             Performance
of Obligations. Borrower shall pay when due the principal of and the
interest on the Debt in accordance with the terms of the Note. Borrower shall
also pay all charges, fees and other sums required to be paid by Borrower as
provided in the Loan Documents, in accordance with the terms of the Loan
Documents, and shall observe, perform and discharge all obligations, covenants
and agreements to be observed, performed or discharged by Borrower set forth in
the Loan Documents in accordance with their terms. Further, Borrower shall
promptly and strictly perform and comply with all covenants, conditions,
obligations and prohibitions required of Borrower in connection with any other
document or instrument affecting title to the Property, or any part thereof,
regardless of whether such document or instrument is superior or subordinate to
this Mortgage.


Section 2.3             Insurance.
Borrower shall, at Borrower’s expense, maintain in force and effect on the
Property at all times while this Mortgage continues in effect the following
insurance:


(a)           Insurance against
loss or damage to the Property by fire, lightning, windstorm, tornado, hail,
terrorism, riot and civil commotion, vandalism, malicious mischief, burglary
and theft and against loss and damage by such other, further and additional
risks as may be now or hereafter embraced by a “special causes of loss” type of
insurance policy. The amount of such insurance shall be not less than one
hundred percent (100%) of the full replacement cost (insurable value) of the
Improvements (as established by a Member of the Appraisal Institute appraisal),
without reduction for depreciation. The determination of the replacement cost
amount shall be adjusted annually to comply with the requirements of the
insurer issuing such coverage or, at Lender’s election, by reference to such
indices, appraisals or information as Lender determines in its reasonable
discretion in order to reflect increased value due to inflation. Absent such
annual adjustment, each policy shall contain inflation guard coverage insuring
that the policy limit will be increased over time to reflect the effect of
inflation. “Full replacement cost,” as used herein and elsewhere in this Section 2.3,
means, with respect to the Improvements, the cost of replacing the Improvements
without regard to deduction for depreciation, exclusive of the cost of
excavations, foundations and footings below the lowest basement floor. Borrower
shall also maintain insurance against loss or damage to furniture, furnishings,
fixtures, equipment and other items (whether personalty or fixtures) included
in the Property and owned by Borrower from time to time to the extent
applicable. Each policy shall contain a waiver of any 



 11
 






 



co-insurance
provisions, subject to Lender’s approval. The maximum deductible shall be
$100,000.00.


(b)           If the “special
causes of loss” policy required in subsection (a) above excludes coverage
for wind damage, Borrower shall maintain separate coverage for such risk. Furthermore,
if the Property is located in the State of Florida, or within twenty five (25)
miles of the ocean coast of the states of Texas, Louisiana, Mississippi,
Alabama, Georgia, North Carolina, Hawaii or South Carolina, windstorm insurance
must be maintained in an amount equal to the lesser of (i) the full
replacement cost of the Property or (ii) the maximum limit of coverage
available with respect to the Improvements and Equipment. If available, a
minimum of eighteen (18) months general business income coverage specifically
relating to wind damage shall be required. The maximum deductible shall be
$100,000.00, which deductible shall only apply to “tier one” coverages.


(c)           Ordinance and law
insurance is required if the Property is “non-conforming” with respect to any
zoning requirements. Borrower shall maintain “Coverage A” against loss on value
to the undamaged portion of the Improvements for the full replacement cost of
the Improvements. Borrower shall also maintain “Coverage B” against the cost of
demolition in an amount equal to ten percent (10%) of the total value of the
Improvements and “Coverage C” against increased cost of reconstruction in an
amount equal to twenty percent (20%) of the total value of the Improvements.
The maximum deductible shall be $100,000.00; provided that if the insurance
required under this Section 2.3(c) is fully covered by the
insurance required in Section 2.3(a) above, then no separate
deductible shall be required, and the maximum deductible of $100,000.00 shall
apply for the combined insurance for Section 2.3(a) and Section 2.3(c).


(d)           Commercial General
Liability Insurance against claims for personal injury, bodily injury, death
and property damage occurring on, in or about the Premises or the Improvements
in amounts not less than $1,000,000.00 per occurrence and $2,000,000.00 in the
aggregate plus umbrella coverage in an amount not less than $25,000,000. Lender
hereby retains the right to periodically review the amount of said liability
insurance being maintained by Borrower and to require an increase in the amount
of said liability insurance should Lender deem an increase to be reasonably
prudent under then existing circumstances. The maximum deductible shall be
$25,000.00.


(e)           Equipment breakdown
(also known as boiler and machinery) insurance is required if steam boilers or
other pressure-fired vessels are in operation at the Premises. Minimum
liability coverage per accident must equal the greater of the replacement cost
(insurable value) of the Improvements housing such boiler or pressure-fired
machinery or $2,000,000.00. If one or more large HVAC units is in operation at
the Premises, “Systems Breakdowns” coverage shall be required, as determined by
Lender. Minimum liability coverage per accident must equal the value of such
unit(s). If available, a minimum of eighteen (18) months general business
income coverage specifically relating to boiler and machinery damage shall be
required. The maximum deductible shall be $100,000.00. Co-insurance is
prohibited.


(f)            If the Improvements
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 lesser of:  (i) the minimum amount 



 12
 






 



required,
under the terms of coverage, to compensate for any damage or loss on a
replacement basis (or the unpaid balance of the Debt if replacement cost
coverage is not available for the type of building insured), or (ii) the
maximum insurance available under the appropriate National Flood Insurance
Administration program. If available, a minimum of eighteen (18) months general
business income coverage specifically relating to flood damage shall be
required. The maximum deductible shall be $5,000.00 per building or a higher
minimum amount as required by FEMA or other applicable law.


(g)           If the Property is
situated in an area designated by FEMA as a high probability earthquake area
(Zone 2b or greater), Lender may require a Probable Maximum Loss (“PML”)
study to be conducted at the Property. If the PML study reveals a PML equal to
or exceeding twenty percent (20%) of the full replacement cost of the
Improvements, Borrower shall be required to maintain earthquake insurance in an
amount equal to the PML percentage of full replacement cost of the Improvements.
If available, a minimum of eighteen (18) months Business Income coverage
specifically relating to earthquake damage shall be required. The maximum
deductible shall be no more than five percent (5%) of the value at risk or the
lowest deductible available in the State in which the Property is located.


(h)           During the period of
any construction, renovation or alteration of the existing Improvements which
exceeds the lesser of 10% of the principal amount of the Note or $500,000, at
Lender’s request, a completed value, “All Risk” Builder’s Risk form or “Course
of Construction” insurance policy in non-reporting form, in an amount approved
by Lender, may be required. During the period of any construction of any addition
to the existing Improvements, a completed value, “All Risk” Builder’s Risk form
or “Course of Construction” insurance policy in non-reporting form, in an
amount approved by Lender, shall be required. The maximum deductible shall be
$100,000.00.


(i)            When required by
applicable law, ordinance or other regulation, Worker’s Compensation and
Employer’s Liability Insurance covering all persons subject to the worker’s
compensation laws of the state in which the Property is located. Additionally,
if Borrower has direct employees, Hired and Non-Owned Auto Insurance is
required in an amount equal to $1,000,000 per occurrence. The maximum
deductible shall be $25,000.00.


(j)            In addition to the
specific risk coverages required herein, general business income (loss of
rents) insurance in amounts sufficient to compensate Borrower for all Rents and
Profits or income during a period of not less than eighteen (18) months. The “actual
loss” amount of coverage shall be adjusted annually to reflect the greater
of (i) estimated Rents and Profits or income payable during the succeeding
eighteen (18)
month period or (ii) the projected operating expenses, capital expenses
and debt service for the Property as approved by Lender in its sole discretion.
The maximum deductible shall be $100,000.00.


(k)           Such other insurance
on the Property or on any replacements or substitutions thereof or additions
thereto as may from time to time be required by Lender against other insurable
hazards or casualties which at the time are commonly insured against in the
case of property similarly situated including, without limitation, Sinkhole,
Mine Subsidence and Environmental insurance, due regard being given to the
height and type of buildings, their construction, location, use and occupancy.



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(l)            At Borrower’s
election, in lieu of the maximum deductible required for insurance coverage
required under Sections 2.3(d) of the Mortgage, Borrower shall be required to maintain a Self-insured Retention in connection with
its General Liability Insurance coverage, in an amount not to exceed
$150,000.00, provided that Borrower shall be personally liable for the
payment of all claims within the limits of the Self-insured Retention, as if
such obligation of Borrower were included as an exception to the Exculpation
provisions in Section 2.6(c) of the Note and the Indemnitor shall
also be liable for the payment of such claims pursuant to its Indemnity and
Guaranty Agreement of even date herewith for the benefit of Lender.


(m)          Borrower shall maintain insurance against
damage resulting from acts of terrorism, or an insurance policy without an
exclusion for damages resulting from terrorism, on terms consistent with the
commercial property insurance policy required under subsections (a) and (j) above,
provided, however, that in the event the commercial property and
business income insurance required under subsection (a) and (j) above
excludes perils of terrorism and acts of terrorism, then Borrower shall
maintain a separate commercial property and business income insurance policy
for loss resulting from perils and acts of terrorism on terms (including
amounts, except as provided for below) consistent with those required under
subsection (a) and (j) above ( a “Stand Alone Terrorism Insurance
Policy”) all times during the term of the Loan; provided, that, Borrower shall
not be required to maintain terrorism coverage for amounts in excess of the
amount of coverage that, could be obtained under a Stand Alone Terrorism
Insurance Policy upon the payment of an annual premium in an amount (the “Terrorism
Insurance Cap”) equal to two hundred fifty percent
(250%) of the cost of obtaining
a Stand Alone Terrorism Insurance Policy as of the date hereof and in the event
the annual premium for terrorism coverage satisfying the requirements of this Section 2.3
shall exceed the Terrorism Insurance Cap, Borrower shall only be required to
obtain and maintain terrorism coverage for as much of the coverage as is
available for a premium equal to the Terrorism Insurance Cap.


All such insurance shall (i) be with insurers fully licensed and
authorized to do business in the state within which the Premises is located and
who have and maintain a rating of at least (A) A or higher from Standard &
Poors and (B) AX or higher from A.M. Best, (ii) contain the
complete address of the Premises (or a complete legal description), (iii) be
for terms of at least one year, with premium prepaid, and (iv) be subject
to the approval of Lender as to insurance companies, amounts, content, forms of
policies, method by which premiums are paid and expiration dates, and (v) include
a standard, non-contributory, mortgagee clause naming EXACTLY:


Wachovia Bank, National Association,

its Successors and Assigns ATIMA

c/o Wachovia Bank, National Association, as Servicer

P.O. Box 563956

Charlotte, North Carolina 28256-3956


(A) as an additional insured under all
liability insurance policies, (B) as the first mortgagee on all
property insurance policies and (C) as the loss payee on all loss
of rents or loss of business income insurance policies.



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Borrower shall, as of the date hereof, deliver to Lender evidence that
said insurance policies have been prepaid as required above and certified
copies of such insurance policies and original certificates of insurance signed
by an authorized agent of the applicable insurance companies evidencing such
insurance satisfactory to Lender. Borrower shall renew all such insurance and
deliver to Lender an Acord 28 certificate for proof of commercial property
insurance and an Acord 25 certificate for proof of liability insurance,
together with such other certificates reasonably requested by Lender. Borrower
further agrees that each such insurance policy: 
(i) shall provide for at least thirty (30) days’ prior written
notice to Lender prior to any policy reduction or cancellation for any reason
other than non-payment of premium and at least ten (10) days’ prior
written notice to Lender prior to any cancellation due to non-payment of
premium; (ii) shall contain an endorsement or agreement by the insurer
that any loss shall be payable to Lender in accordance with the terms of such
policy notwithstanding any act or negligence of Borrower which might otherwise
result in forfeiture of such insurance; (iii) shall waive all rights of
subrogation against Lender; and (iv) may be in the form of a blanket
policy provided that, in the event that any such coverage is provided in
the form of a blanket policy, Borrower hereby acknowledges and agrees that
failure to pay any portion of the premium therefor which is not allocable to
the Property or by any other action not relating to the Property which would
otherwise permit the issuer thereof to cancel the coverage thereof, would
require the Property to be insured by a separate, single-property policy. The
blanket policy must properly identify and fully protect the Property as if a
separate policy were issued for 100% of Replacement Cost at the time of loss
and otherwise meet all of Lender’s applicable insurance requirements set forth
in this Section 2.3. The delivery to Lender of the insurance
policies or the certificates of insurance as provided above shall constitute an
assignment of all proceeds payable under such insurance policies relating to
the Property by Borrower to Lender as further security for the Debt. In the
event of foreclosure of this Mortgage, or other transfer of title to the
Property in extinguishment in whole or in part of the Debt, all right, title
and interest of Borrower in and to all proceeds payable under such policies
then in force concerning the Property shall thereupon vest in the purchaser at
such foreclosure, or in Lender or other transferee in the event of such other
transfer of title. Approval of any insurance by Lender shall not be a
representation of the solvency of any insurer or the sufficiency of any amount
of insurance. In the event Borrower fails to provide, maintain, keep in force
or deliver and furnish to Lender the policies of insurance required by this
Mortgage or evidence of their renewal as required herein, Lender may, but shall
not be obligated to, procure such insurance and Borrower shall pay all amounts
advanced by Lender therefor, together with interest thereon at the Default
Interest Rate from and after the date advanced by Lender until actually repaid
by Borrower, promptly upon demand by Lender. Any amounts so advanced by Lender,
together with interest thereon, shall be secured by this Mortgage and by all of
the other Loan Documents securing all or any part of the Debt. Lender shall not
be responsible for nor incur any liability for the insolvency of the insurer or
other failure of the insurer to perform, even though Lender has caused the
insurance to be placed with the insurer after failure of Borrower to furnish
such insurance. Borrower shall not obtain insurance for the Property in
addition to that required by Lender without the prior written consent of
Lender, which consent will not be unreasonably withheld provided that (i) Lender
is a named insured on such insurance, (ii) Lender receives complete copies
of all policies evidencing such insurance, and (iii) such insurance
complies with all of the applicable requirements set forth herein.



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Section 2.4             Payment
of Taxes. Borrower shall pay or cause to be paid, except to the extent
provision is actually made therefor pursuant to Section 3.3 of this
Mortgage, all taxes and assessments which are or may become a lien on the
Property or which are assessed against or imposed upon the Property. Borrower
shall furnish Lender with receipts (or if receipts are not immediately
available, with copies of canceled checks evidencing payment with receipts to
follow promptly after they become available) showing payment of such taxes and
assessments at least fifteen (15) days prior to the applicable delinquency date
therefor. Notwithstanding the foregoing, Borrower may, in good faith, by
appropriate proceedings and upon notice to Lender, contest the validity,
applicability or amount of any asserted tax or assessment so long as (a) such
contest is diligently pursued, (b) Lender determines, in its subjective
opinion, that such contest suspends the obligation to pay the tax and that
nonpayment of such tax or assessment will not result in the sale, loss,
forfeiture or diminution of the Property or any part thereof or any interest of
Lender therein, and (c) prior to the earlier of the commencement of such
contest or the delinquency date of the asserted tax or assessment, Borrower
deposits in the Impound Account (as hereinafter defined) an amount determined
by Lender to be adequate to cover the payment of such tax or assessment and a
reasonable additional sum to cover possible interest, costs and penalties;
provided, however, that Borrower shall promptly cause to be paid any amount
adjudged by a court of competent jurisdiction to be due, with all interest,
costs and penalties thereon, promptly after such judgment becomes final; and
provided further that in any event each such contest shall be concluded and the
taxes, assessments, interest, costs and penalties shall be paid prior to the
date any writ or order is issued under which the Property may be sold, lost or
forfeited.


Section 2.5             Casualty
and Condemnation. Borrower shall give Lender prompt written notice of (i) the
occurrence of any casualty affecting the Property or any portion thereof, (ii) the
institution of any proceedings for eminent domain or for the condemnation of
the Property or any portion thereof or (iii) any written notification
threatening the institution of any proceedings for eminent domain or for the
condemnation of the Property or any portion thereof or any written request to
execute a deed in lieu of condemnation affecting the Property or any portion
thereof. All insurance proceeds on the Property, and all causes of action,
claims, compensation, awards and recoveries for any damage, condemnation or
taking, or any deed in lieu of condemnation, affecting all or any part of the
Property or for any damage or injury to it for any loss or diminution in value
of the Property, are hereby assigned to and shall be paid to Lender. Lender may
participate in any suits or proceedings relating to any such proceeds, causes
of action, claims, compensation, awards or recoveries, and Lender is hereby
authorized, in its own name or in Borrower’s name, to adjust any loss covered
by insurance or any condemnation claim or cause of action, and to settle or
compromise any claim or cause of action in connection therewith, and Borrower
shall from time to time deliver to Lender any instruments required to permit
such participation; provided, however, that, so long as no Event of Default has
occurred, and no event has occurred or failed to occur which with the passage
of time, the giving of notice, or both would constitute an Event of Default (a “Default”),
Lender shall not have the right to participate in the adjustment of any loss
which is not in excess of the lesser of (i) five percent (5%) of the then
outstanding principal balance of the Note and (ii) $250,000. Lender shall
apply any sums received by it under this Section first to the payment of
all of its costs and expenses (including, but not limited to, reasonable legal
fees and disbursements) incurred in obtaining those sums, and then, as follows:



 16
 






 



(a)           In the event that
less than (x) — fifteen percent (15%), in the case of condemnation, or
thirty percent (30%), in the case of casualty, of the fair market value or net
rentable square footage of the Improvements located on the Premises have been
taken or destroyed and (y) Leases covering in the aggregate at least
sixty-five percent (65%) of the total rentable space in the Property which has
been demised under executed and delivered Leases in effect as of the date of
the occurrence of such casualty or condemnation, whichever the case may be, and
each Major Lease (as hereinafter defined) in effect as of such date shall remain
in full force and effect during and after the completion of the restoration
without abatement of rent beyond the time required for restoration, then if and
so long as:


(1)           no Default or Event of Default has
occurred hereunder or under any of the other Loan Documents, and


(2)           the Property can, in Lender’s
judgment, with diligent restoration or repair, be returned to a condition at
least equal to the condition thereof that existed prior to the casualty or
partial taking causing the loss or damage within the earlier to occur of (A) nine
(9) months after the initial receipt of any insurance proceeds or
condemnation awards by either Borrower or Lender but in any event prior to the
expiration or lapse of rent loss or general business income necessary to
satisfy current obligations of the Loan, and (B) six (6) months prior
to the stated maturity date of the Note, and


(3)           all necessary governmental approvals
can be obtained to allow the rebuilding and reoccupancy of the Property as
described in Section (a)(2) above, and


(4)           there are sufficient sums available
(through insurance proceeds or condemnation awards and contributions by
Borrower, the full amount of which shall, at Lender’s option, have been
deposited with Lender) for such restoration or repair (including, without
limitation, for any costs and expenses of Lender to be incurred in
administering said restoration or repair) and for payment of principal and
interest to become due and payable under the Note during such restoration or
repair, and


(5)           the economic feasibility of the
Improvements after such restoration or repair will be such that income from
their operation is reasonably anticipated to be sufficient to pay operating
expenses of the Property and debt service on the Debt in full with the same
coverage ratio considered by Lender in its determination to make the loan
secured hereby, and


(6)           in the event that the insurance
proceeds or condemnation awards received as a result of such casualty or
partial taking exceed the lesser of (i) five percent (5%) of the then
outstanding principal balance of the Note and (ii) $250,000, Borrower
shall have delivered to Lender, at Borrower’s sole cost and expense, an
appraisal report in form and substance satisfactory to Lender appraising the
value of the Property as proposed to be restored or repaired to be not less
than the appraised value of the Property considered by Lender in its
determination to make the loan secured hereby, and


(7)           Borrower so elects by written notice
delivered to Lender within five (5) days after settlement of the aforesaid
insurance or condemnation claim.



 17
 






 



Lender shall, solely for the purposes of such restoration or repair,
advance so much of the remainder of such sums as may be required for such
restoration or repair, and any funds deposited by Borrower therefor, to
Borrower in the manner and upon such terms and 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, contractors and form of
construction contracts and the furnishing to Lender of permits, bonds, lien
waivers, invoices, receipts and affidavits from contractors and subcontractors,
in form and substance satisfactory to Lender in its discretion, with any
remainder being applied by Lender for payment of the Debt in whatever order
Lender directs in its absolute sole discretion, or at the discretion of Lender,
the same may be paid, either in whole or in part, to, or for the benefit of,
Borrower for such purposes as Lender shall designate in its discretion.


(b)           In all other cases,
namely, in the event that (x) more than fifteen percent (15%), in the case
of condemnation, or thirty percent (30%), in the case of casualty, of the fair
market value or net rentable square footage of the Improvements located on the
Premises have been taken or destroyed (y) Leases covering in the aggregate
at least sixty-five percent (65%) of the total rentable space in the Property
which has been demised under executed and delivered Leases in effect as of the
date of the occurrence of such casualty or condemnation, whichever the case may
be, and each Major Lease (as hereinafter defined) in effect as of such date
will not remain in full force and effect during and after the completion of the
restoration without abatement of rent beyond the time required for restoration,
or (z) Borrower does not elect to restore or repair the Property pursuant
to clause (a) above or otherwise fails to meet the requirements of clause
(a) above, then, in any of such events, Lender shall elect, in Lender’s
absolute discretion and without regard to the adequacy of Lender’s security to
do either of the following:  (1) accelerate
the maturity date of the Note and declare any and all of the Debt to be
immediately due and payable and apply the remainder of such sums received
pursuant to this Section to the payment of the Debt in whatever order
Lender directs in its absolute discretion, with any remainder being paid to
Borrower, or (2) notwithstanding that Borrower may have elected not to
restore or repair the Property pursuant to the provisions of Section 2.5(a)(7)
above, so long as the proceeds of any such award with respect to any casualty
or condemnation are made available to the Borrower for restoration, require
Borrower to restore or repair the Property in the manner and upon such terms
and conditions as would be required by a prudent interim construction lender,
including, but not limited to, the deposit by Borrower with Lender, within
thirty (30) days after demand therefor, of any deficiency reasonably determined
by Lender to be necessary in order to assure the availability of sufficient
funds to pay for such restoration or repair, including Lender’s costs and
expenses to be incurred in connection therewith, the prior approval by Lender
of plans and specifications, contractors and form of construction contracts and
the furnishing to Lender of permits, bonds, lien waivers, invoices, receipts
and affidavits from contractors and subcontractors, in form and substance
satisfactory to Lender in its discretion, and apply the remainder of such sums
toward such restoration and repair, with any balance thereafter remaining being
applied by Lender for payment of the Debt in whatever order Lender directs in
its absolute sole discretion, or at the discretion of Lender, the same may be
paid, either in whole or in part, to, or for the benefit of, Borrower for such
purposes as Lender shall designate in its discretion. No such prepayment of the
Debt in connection with this Section 2.5(b) shall occasion prepayment
penalties or premiums of any kind subject to and in accordance with Section1.5(c)
of the Note.



 18
 






 



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


Section 2.6             Construction
Liens. Borrower shall pay when due all claims and demands of mechanics,
materialmen, laborers and others for any work performed or materials delivered
for the Premises or the Improvements; provided, however, that, Borrower shall
have the right to contest in good faith any such claim or demand, so long as it
does so diligently, by appropriate proceedings and without prejudice to Lender
and provided that neither the Property nor any interest therein would be in any
danger of sale, loss or forfeiture as a result of such proceeding or contest. In
the event Borrower shall contest any such claim or demand, Borrower shall
promptly notify Lender of such contest and thereafter shall, upon Lender’s
request, promptly provide a bond, cash deposit or other security satisfactory
to Lender to protect Lender’s interest and security should the contest be
unsuccessful. If Borrower shall fail to immediately discharge or provide
security against any such claim or demand as aforesaid, Lender may do so and
any and all expenses incurred by Lender, together with interest thereon at the
Default Interest Rate from the date incurred by Lender until actually paid by
Borrower, shall be immediately paid by Borrower on demand and shall be secured
by this Mortgage and by all of the other Loan Documents securing all or any
part of the Debt.


Section 2.7             Rents
and Profits. As additional and collateral security for the payment of the
Debt and cumulative of any and all rights and remedies herein provided for,
Borrower hereby absolutely and presently assigns to Lender all existing and
future Rents and Profits. Borrower hereby grants to Lender the sole, exclusive
and immediate right, without taking possession of the Property, to demand,
collect (by suit or otherwise), receive and give valid and sufficient receipts 



 19
 






 



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


Section 2.8             Leases.
Borrower covenants and agrees that it shall not enter into any Lease (i) affecting
6,000 square feet or more of the Property or (ii) having a term of five (5) years
or more (inclusive of any renewals or extensions) (each, a “Major Lease”) without
the prior written approval of Lender, which approval shall not be unreasonably
withheld. The request for approval of each such proposed new Lease shall be
made to Lender in writing and shall state that, pursuant to the terms of this
Mortgage, failure to approve or disapprove such proposed Lease within fifteen
(15) business days is deemed approval and Borrower shall furnish to Lender



 20














 


(and any loan
servicer specified from time to time by Lender): (i) such biographical and
financial information about the proposed Tenant as Lender may reasonably
require in conjunction with its review, (ii) a copy of the proposed form
of Lease, and (iii) a summary of the material terms of such proposed Lease
(including, without limitation, rental terms and the term of the proposed lease
and any options). It is acknowledged that Lender intends to include among its
criteria for approval of any such proposed Lease the following: (i) such
Lease shall be with a bona-fide arm’s-length Tenant; (ii) such Lease shall
not contain any rental or other concessions which are not then customary and
reasonable for similar properties and Leases in the market area of the Premises;
(iii) such Lease shall provide that the Tenant pays for its expenses; (iv) the
rental shall be at least at the market rate then prevailing for similar
properties and leases in the market areas of the Premises; and (v) such
Lease shall contain subordination and attornment provisions in form and content
reasonably acceptable to Lender. Failure of Lender to approve or disapprove any
such proposed Lease within fifteen (15) business days after receipt of such
written request and all the documents and information required to be furnished
to Lender with such request shall be deemed approval, provided that the written
request for approval specifically mentioned the same.


(a)           Prior to execution
of any Leases of space in the Improvements after the date hereof, Borrower
shall submit to Lender, for Lender’s prior approval, which approval shall not
be unreasonably withheld, a copy of the form Lease Borrower plans to use in
leasing space in the Improvements or at the Property. All such Leases of space
in the Improvements or at the Property shall be on terms consistent with the
terms for similar leases in the market area of the Premises, shall provide for
free rent only if the same is consistent with prevailing market conditions and
shall provide for market rents then prevailing in the market area of the
Premises. Such Leases shall also provide for security deposits in reasonable
amounts consistent with prevailing market conditions. Borrower shall also
submit to Lender for Lender’s approval, which approval shall not be unreasonably
withheld, prior to the execution thereof, any proposed Lease of the
Improvements or any portion thereof that differs materially and adversely from
the aforementioned form Lease. Borrower shall not execute any Lease for all or
a substantial portion of the Property, except for an actual occupancy by the
Tenant, lessee or licensee thereunder, and shall at all times promptly and
faithfully perform, or cause to be performed, all of the covenants, conditions
and agreements contained in all Leases with respect to the Property, now or
hereafter existing, on the part of the landlord, lessor or licensor thereunder
to be kept and performed. Borrower shall furnish to Lender, within ten (10) days
after a request by Lender to do so, but in any event by January 1 of each
year, a current Rent Roll, certified by Borrower as being true and correct,
containing the names of all Tenants with respect to the Property, the terms of
their respective Leases, the spaces occupied and the rentals or fees payable
thereunder and the amount of each Tenant’s security deposit. Upon the request
of Lender, Borrower shall deliver to Lender a copy of each such Lease. Borrower
shall not do or suffer to be done any act, or omit to take any action, that
might result in a default by the landlord, lessor or licensor under any such
Lease or allow the Tenant thereunder to withhold payment of rent or cancel or
terminate same and shall not further assign any such Lease or any such Rents
and Profits. Borrower, at no cost or expense to Lender, shall enforce, short of
termination, the performance and observance of each and every condition and
covenant of each of the parties under such Leases and Borrower shall not
anticipate, discount, release, waive, compromise or otherwise discharge any
rent payable under any of the Leases. Borrower shall not, without the prior
written consent of Lender, modify any of the Leases, terminate or accept the
surrender of any Leases, waive or release any other party 



 21
 






 



from the
performance or observance of any obligation or condition under such Leases
except, with respect only to Leases which are not Major Leases, in the normal
course of business in a manner which is consistent with sound and customary
leasing and management practices for similar properties in the community in
which the Property is located. Lender reserves the right to condition its
consent to any termination or surrender of any Lease upon the payment to Lender
of any lease termination or other payment due from the applicable tenant in
connection with such termination or surrender. Borrower and Lender agree that
all such sums paid to Lender shall be held by Lender as a tenant improvement
and leasing commission reserve and shall be considered a “Reserve” as described
in Section 3.1 hereof and all such amounts shall be held,
maintained, applied and disbursed in accordance with Lender’s standard
procedures relating to similar reserves. Borrower shall not permit the
prepayment of any rents under any of the Leases for more than one (1) month
prior to the due date thereof.


(b)           Each Lease executed
after the date hereof affecting any of the Premises or the Improvements must
provide, in a manner approved by Lender, that the Tenant will recognize as its
landlord, lessor or licensor, as applicable, and attorn to any person
succeeding to the interest of Borrower upon any foreclosure of this Mortgage or
deed in lieu of foreclosure. Each such Lease shall also provide that, upon
request of said successor-in-interest, the Tenant shall execute and deliver an
instrument or instruments confirming its attornment as provided for in this
Section; provided, however, that neither Lender nor any
successor-in-interest shall be bound by any payment of rent for more than one (1) month
in advance, or any amendment or modification of said Lease made without the
express written consent of Lender or said successor-in-interest.


(c)           Upon the occurrence
of an Event of Default under this Mortgage, whether before or after the whole
principal sum secured hereby is declared to be immediately due or whether
before or after the institution of legal proceedings to foreclose this
Mortgage, forthwith, upon demand of Lender, Borrower shall surrender to Lender,
and Lender shall be entitled to take actual possession of, the Property or any
part thereof personally, or by its agent or attorneys. In such event, Lender
shall have, and Borrower hereby gives and grants to Lender, the right, power
and authority to make and enter into Leases with respect to the Property or
portions thereof for such rents and for such periods of occupancy and upon
conditions and provisions as Lender may deem desirable in its sole discretion,
and Borrower expressly acknowledges and agrees that the term of any such Lease
may extend beyond the date of any foreclosure sale of the Property, it being
the intention of Borrower that in such event Lender shall be deemed to be and
shall be the attorney-in-fact of Borrower for the purpose of making and
entering into Leases of parts or portions of the Property for the rents and
upon the terms, conditions and provisions deemed desirable to Lender in its
sole discretion and with like effect as if such Leases had been made by
Borrower as the owner in fee simple of the Property free and clear of any
conditions or limitations established by this Mortgage. The power and authority
hereby given and granted by Borrower to Lender shall be deemed to be coupled
with an interest, shall not be revocable by Borrower so long as any portion of
the Debt is outstanding, shall survive the voluntary or involuntary dissolution
of Borrower and shall not be affected by any disability or incapacity suffered
by Borrower subsequent to the date hereof. In connection with any action taken
by Lender pursuant to this Section, Lender shall not be liable for any loss
sustained by Borrower resulting from any failure to let the Property, or any
part thereof, or from any other act or omission of Lender in managing the
Property, nor shall Lender be obligated to perform or discharge any obligation,
duty or liability under any Lease covering the Property or any part 



 22
 






 



thereof or
under or by reason of this instrument or the exercise of rights or remedies
hereunder. Borrower shall, and does hereby, indemnify Lender for, and hold
Lender harmless from, any and all claims, actions, demands, liabilities, loss
or damage which may or might be incurred by Lender under any such Lease or
under this Mortgage or by the exercise of rights or remedies hereunder and from
any and all claims and demands whatsoever which may be asserted against Lender
by reason of any alleged obligations or undertakings on its part to perform or
discharge any of the terms, covenants or agreements contained in any such Lease
other than those finally determined by a court of competent jurisdiction to
have resulted solely from the gross negligence or willful misconduct of Lender.
Should Lender incur any such liability, the amount thereof, including, without
limitation, costs, expenses and reasonable attorneys’ fees, together with
interest thereon at the Default Interest Rate from the date incurred by Lender
until actually paid by Borrower, shall be immediately due and payable to Lender
by Borrower on demand and shall be secured hereby and by all of the other Loan
Documents securing all or any part of the Debt. Nothing in this Section shall
impose on Lender any duty, obligation or responsibility for the control, care,
management or repair of the Property, or for the carrying out of any of the
terms and conditions of any such Lease, nor shall it operate to make Lender
responsible or liable for any waste committed on the Property by the Tenants or
by any other parties or for any dangerous or defective condition of the
Property, or for any negligence in the management, upkeep, repair or control of
the Property. Borrower hereby assents to, ratifies and confirms any and all
actions of Lender with respect to the Property taken under this Section.


(d)           If requested by
Lender, Borrower shall furnish, or shall cause the applicable tenant to
furnish, to Lender financial data and/or financial statements in accordance
with Regulation AB (as defined herein) for any tenant of any Property if, in
connection with a securitization, Lender expects there to be, with respect to
such tenant or group of affiliated tenants, a concentration within all of the
mortgage loans included or expected to be included, as applicable, in such
securitization such that such tenant or group of affiliated tenants would
constitute a Significant Obligor (as defined herein); provided, however, that
in the event the related lease does not require the related tenant to provide
the foregoing information, Borrower shall use commercially reasonable efforts
to cause the applicable tenant to furnish such information.


Section 2.9             Alienation
and Further Encumbrances.


(a)           Borrower
acknowledges that Lender has relied upon the principals of Borrower and their
experience in owning and operating the Property and properties similar to the
Property in connection with the closing of the loan evidenced by the Note. Accordingly,
except as specifically allowed hereinbelow in this Section and
notwithstanding anything to the contrary contained in Section 6.6
hereof, in the event that the Property or any part thereof or direct or
indirect interest therein or direct or indirect interest in Borrower shall be sold,
conveyed, disposed of, alienated, hypothecated, leased (except to Tenants of
space in the Improvements in accordance with the provisions of Section 2.8
hereof), assigned, pledged, mortgaged, further encumbered or otherwise
transferred or Borrower shall be divested of its title to the Property or any
direct or indirect interest therein, in any manner or way, whether voluntarily
or involuntarily (each, a “Transfer”), without the prior written consent
of Lender being first obtained, which consent may be withheld in Lender’s sole discretion, then the same shall
constitute an Event of Default and Lender shall have the right, at its option,
to declare any or all of the Debt, 



 23
 






 



irrespective
of the maturity date specified in the Note, immediately due and payable and to
otherwise exercise any of its other rights and remedies contained in Article V
hereof.


(b)            A Transfer within
the meaning of this Section 2.9 shall be deemed to include, among
other things: (i) an installment sales agreement wherein Borrower agrees
to sell the Property or any part thereof for a price to be paid in
installments; and (ii) an agreement by Borrower leasing all or a
substantial part of the Property for other than actual occupancy by a space
tenant thereunder 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 Rents and Profits.


(c)           Notwithstanding the
foregoing, the following Transfers shall be permitted under this Section 2.9
without the prior consent of Lender: (i) a Transfer of corporate stock,
limited partnership interests and/or non-managing member interests in Borrower,
or in any partner or member of Borrower, or any direct or indirect legal or
beneficial owner of Borrower, so long as following such Transfer (whether in
one or a series of transactions) or, with respect to any creation or issuance
of new limited partnership interests or membership interests, not more than 49%
of the beneficial economic interest in Borrower (whether directly or
indirectly) has been transferred in the aggregate, there is no Change of
Control and the persons responsible for the day to day management of the
Property and Borrower remain unchanged following such Transfer, (ii) any
involuntary Transfer caused by the death of Borrower, or any partner,
shareholder, joint venturer, member or beneficial owner of a trust, or any
direct or indirect legal or beneficial owner of Borrower, so long as Borrower
is promptly reconstituted, if required, following such death and so long as
there is no Change of Control and those persons responsible for the day to day
management of the Property and Borrower remain unchanged as a result of such
death or any replacement management or controlling parties are approved by
Lender, and (iii) a Transfer comprised of gifts for estate planning
purposes of any individual’s interests in Borrower, or in any of Borrower’s
partners, members, shareholders, beneficial owners of a trust or joint
venturers, or any direct or indirect legal or beneficial owner of Borrower, to
the spouse or any lineal descendant of such individual, or to a trust for the
benefit of any one or more of such individual, spouse or lineal descendant, so
long as Borrower is reconstituted promptly, if required, following such gift
and so long as there is no Change of Control and those persons responsible for
the day to day management of the Property and Borrower remain unchanged
following such gift. Notwithstanding any provision of this Mortgage to the
contrary, no person or entity may become an owner of a direct or indirect
interest in Borrower, which interest exceeds forty-nine (49%) percent, without
Lender’s prior written consent unless Borrower has complied with the provisions
set forth in Section 2.9(d) below. For purposes of this Section 2.9(c),
“Change of Control” shall mean a change in the identity of the
individual or entities or group of individuals or entities who have the right,
by virtue of any partnership agreement, articles of incorporation, by-laws,
articles of organization, operating agreement or any other agreement, with or
without taking any formative action, to cause Borrower to take some action or
to prevent, restrict or impede Borrower from taking some action which, in
either case, Borrower could take or could refrain from taking were it not for
the rights of such individuals. Notwithstanding any provision of this Mortgage
to the contrary, provided no Event of Default has occurred and is continuing,
Lender’s prior consent shall not be required with respect to any of the
following: (i) the creation, issuance or transfer of limited partnership
interests in Mack-Cali Realty, L.P., a Delaware limited partnership (“Mack-Cali
Partnership”), so long as (x) Mack-Cali Realty Corporation, a Maryland
corporation (“Mack-Cali Realty”), maintains at least a 51% 



 24
 






 



limited
partnership interest in Mack-Cali Partnership and remains as the general
partner of Mack-Cali Partnership, and (y) the managerial control of
Mack-Cali Partnership remains unchanged; provided,
that to the extent such transfer of interests in Mack-Cali Partnership results
in a change in the managerial control of Mack-Cali Partnership, unless due to a
public offering of stock of Mack-Cali Realty, merger, reorganization or
consolidation, such transfer of interests in Mack-Cali Partnership shall comply
with the conditions of 1.13(d) below; and (ii) so long as the
securities of Mack-Cali Realty are publicly traded, the acquisition, issuance
or transfer (whether in one transaction or in a series of transactions) of
securities in Mack-Cali Realty which does not result in a Change in Control of
Borrower, Mack-Cali Partnership or Mack-Cali Realty, provided further that (x) Mack-Cali
Realty shall not merge, reorganize or consolidate into another entity (i.e.,
where Mack-Cali Realty is not the surviving entity) (a “Merger”), and (y) any
transfer of interests or series of transfers in interests in Mack-Cali Realty
shall not result in more than 49% of Mack-Cali Realty being owned by any single
person or entity (or related group of people or entities) (a “Majority Transfer”);
provided, however, that a
Merger or Majority Transfer shall not be prohibited, or constitute an Event of
Default under the Loan Documents so long as, with respect to such Merger or
Majority Transfer (a) to the extent permitted by law, Lender receives not
less than thirty (30) days prior written notice of any such proposed Merger or
Majority Transfer, (b) the surviving entity executes any and all documents
as are reasonably necessary to evidence the assumption of Mack-Cali Realty’s
obligations relative to the loan evidenced by the Note and delivers such
certificates and opinions covering such subjects (including, but not limited
to, nonconsolidation) as may be reasonably required by Lender, (c) the
surviving entity shall have a net worth of not less than $200,000,000.00 as of
the date of the completion of such Merger or Majority Transfer, (d) if, as
a result of such Merger or Majority Transfer, the manager of the Property
changes, the replacement manager is a “Qualified Manager” (as defined below) or
such replacement manager is approved by Lender, and (e) Borrower satisfies
the provisions of paragraph (12) of Section 1.13(d) below and causes
to be delivered to Lender a substantive non-consolidation opinion, in form and
substance satisfactory to Lender and prepared by counsel reasonably acceptable
to Lender with respect to the transferee and such of its constituent entities
and/or affiliates, as Lender may in its discretion require. As used herein, the
term “Qualified Manager” shall mean a property manager of the Property which (i) is
a reputable management company having at least five (5) years’ experience
in the management of commercial properties with similar uses as the Property
and in the jurisdiction in which the Property are located, (ii) has, for
at least five (5) years prior to its engagement as property manager,
managed at least (5) properties of the same property type as the Property,
(iii) at the time of its engagement as property manager has leasable square
footage of the same property type as the Property equal to the lesser of (A) 1,000,000
leasable square feet and (B) five (5) times the leasable square feet
of the Property and (iv) is not the subject of a bankruptcy or similar
insolvency proceeding. So long as the provisions of this Section 2.9(c) are
fully satisfied in all respects and provided that there is no Change in Control
of Borrower, Mack-Cali Realty or Mack-Cali Partnership, (A) at any time
after the execution of this Mortgage, Gale SLG NJ Mezz LLC (“Mezz”) may merge
into Gale SLG NJ Operating Partnership, L.P. (“OP”) and the surviving entity (“Surviving OP”) may be renamed, and (B) at any time after May 1, 2007
and/or following the merger described above in part (A), Surviving OP may make
an 



 25
 






 



in-kind distribution of its
direct or indirect ownership interest in Borrower to its partners in proportion
to their respective percentage ownership interests (as such percentage
interests may be reduced to reflect the cash-out of one or more of the limited
partners (other than Mack-Green-Gale LLC (“MGG”)) and MGG may make an in-kind
distribution of its direct or indirect ownership interest in Borrower to (i) Mack
Cali Ventures, L.L.C. (“MCV”) or Gale SLG NJ LLC (“Gale SLG”) in accordance
with the same percentage interests set forth in the operating agreement of MGG
or (ii) one or more limited liability companies owned by MCV and Gale SLG
in accordance with the same percentage interests set forth in the operating
agreement of MGG (i.e. the ninety-five percent (95%) Class A interests in
MGG shall not be reduced and shall be distributed to MCV or a limited liability
company owned by MCV).


(d)           Notwithstanding the
foregoing provisions of this Section, Lender shall consent to (x) one or
more Transfers of the Property in its entirety, or (y) one or more
Transfers of direct or indirect interests in the Borrower for which consent is
required under this Section 2.9 
(any such hereinafter, a “Sale”)
to any person or entity provided that, for each Sale, each of the following
terms and conditions are satisfied:


(1)           No Default and no Event of Default is
then continuing hereunder or under any of the other Loan Documents;


(2)           Borrower gives Lender written notice
of the terms of such prospective Sale not less than sixty (60) days before the
date on which such Sale is scheduled to close and, concurrently therewith,
gives Lender all such information concerning the proposed transferee of the
Property or the proposed owner of the direct or indirect interest in the
Borrower for which consent is required under this Section 2.9, as
applicable (hereinafter, “Buyer”)
as Lender would require in evaluating an initial extension of credit to a
borrower and pays to Lender a non-refundable application fee in the amount of
$5,000. Lender shall have the right to approve or disapprove the proposed Buyer.
In determining whether to give or withhold its approval of the proposed Buyer,
Lender shall consider the Buyer’s experience and track record in owning and
operating facilities similar to the Property, the Buyer’s financial strength,
the Buyer’s general business standing and the Buyer’s relationships and
experience with contractors, vendors, tenants, lenders and other business
entities; provided, however, that, notwithstanding Lender’s
agreement to consider the foregoing factors in determining whether to give or
withhold such approval, such approval shall be given or withheld based on what
Lender determines to be commercially reasonable in Lender’s sole discretion
and, if given, may be given subject to such conditions as Lender may deem
appropriate;


(3)           Borrower pays Lender, concurrently
with the closing of such Sale, a non-refundable assumption fee in an amount
equal to all out-of-pocket costs and expenses, including, without limitation,
reasonable attorneys’ fees and Rating Agency fees, incurred by Lender in
connection with the Sale, plus an amount equal to one-half of one percent
(0.5%) of the then
outstanding principal balance of the Note on the first Sale, and one percent
(1.0%) of the then outstanding principal balance of the Note on each Sale
thereafter;


(4)           In the event that such Sale is a
Transfer of the Property in its entirety, the Buyer assumes and agrees to pay
the Debt subject to the provisions of Section 6.27 hereof and, in
all cases (whether such Sale is a Transfer of the Property in its entirety or a
Transfer of direct or indirect interests in the Borrower for which consent is 



 26
 






 



required under this Section 2.9),
prior to or concurrently with the closing of such Sale, the Buyer executes, without
any cost or expense to Lender, such documents and agreements as Lender shall
reasonably require to evidence and effectuate said assumption and delivers such
legal opinions (including, without limitation, a REMIC opinion) as Lender may
require;


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


(6)           Borrower and the Buyer execute,
without any cost or expense to Lender, new financing statements or financing
statement amendments (and new financing statements as may be necessary) and any
additional documents reasonably requested by Lender;


(7)           Borrower delivers to Lender, without
any cost or expense to Lender, such replacement policy or endorsements to
Lender’s title insurance policy, hazard insurance policy endorsements or
certificates and other similar materials as Lender may deem necessary at the
time of the Sale, all in form and substance satisfactory to Lender, including,
without limitation, a replacement policy or an endorsement or endorsements to
Lender’s title insurance policy insuring the lien of this Mortgage, extending
the effective date of such policy to the date of execution and delivery (or, if
later, of recording) of the assumption agreement referenced above in
subparagraph (4) of this Section, with no additional exceptions added to
such policy, and, in the event that such Sale is a Transfer of the Property in
its entirety, insuring that fee simple title to the Property is vested in the
Buyer;


(8)           Borrower and any current Indemnitor
execute and deliver to Lender, without any cost or expense to Lender, a release
of Lender, its officers, directors, employees and agents, from all claims and
liability relating to the transactions evidenced by the Loan Documents, through
and including the date of the closing of the Sale, which agreement shall be in
form and substance satisfactory to Lender and shall be binding upon the Buyer
and any new Indemnitor;


(9)           Subject to the provisions of Section 6.27
hereof, such Sale is not construed so as to relieve Borrower of any personal
liability under the Note or any of the other Loan Documents for any acts or
events occurring or obligations arising prior to or simultaneously with the
closing of such Sale, whether or not same is discovered prior or subsequent to
the closing of such Sale, and Borrower executes, without any cost or expense to
Lender, such documents and agreements as Lender shall reasonably require to
evidence and effectuate the ratification of said personal liability. In the
event that such Transfer is a Sale of the Property in its entirety, Borrower
shall be released from and relieved of any personal liability under the Note or
any of the other Loan Documents for 



 27
 






 



any acts or events occurring or obligations
arising after the closing of such Sale which are not caused by or arising out
of any acts or events occurring or obligations arising prior to or simultaneously
with the closing of such Sale;


(10)         Such Sale is not construed so as to
relieve any current Indemnitor of its obligations under any guaranty or
indemnity agreement for any acts or events occurring or obligations arising
prior to or simultaneously with the closing of such Sale, and each such current
Indemnitor executes, without any cost or expense to Lender, such documents and
agreements as Lender shall reasonably require to evidence and effectuate the
ratification of each such guaranty and indemnity agreement. In the event that
such Sale is a Transfer of the Property in its entirety, each such current
Indemnitor shall be released from and relieved of any of its obligations under
any guaranty or indemnity agreement executed in connection with the loan secured
hereby for any acts or events occurring or obligations arising after the
closing of such Sale which are not caused by or arising out of any acts or
events occurring or obligations arising prior to or simultaneously with the
closing of such Sale;


(11)         The Buyer shall furnish, if the Buyer
is a corporation, partnership or other entity, all appropriate papers
evidencing the Buyer’s capacity and good standing, and the qualification of the
signers to execute the assumption of the Debt, which papers shall include
certified copies of all documents relating to the organization and formation of
the Buyer and of the entities, if any, which are partners of the Buyer. In the
event that such Sale is a Transfer of the Property in its entirety, the Buyer
shall be a Single Purpose Entity whose formation documents shall be approved by
counsel to Lender, and who shall comply with the requirements set forth in Section 2.29
hereof;


(12)         Borrower delivers to Lender
confirmation in writing (a “No-Downgrade Confirmation”) from each Rating
Agency that such Sale will not result in a qualification, downgrade or
withdrawal of any ratings issued in connection with any Secondary Market
Transaction (as hereinafter defined) or, in the event the Secondary Market
Transaction has not yet occurred, Lender shall, in its sole discretion, have
approved the Sale;


(13)         The applicable transfer will not result
in an increase in the real property taxes for the Premises and Improvements
that would cause the debt service coverage ratio of the Debt with respect to
the immediately succeeding twelve (12) month period to be less than the debt
service coverage ratio of the Debt for the twelve (12) month period immediately
preceding such transfer, in each case as determined by Lender; and


(14)         Borrower delivers to
Lender an opinion with respect to substantive non-consolidation opinion after
giving effect to such transfer in form and substance and from a law firm
acceptable to Lender and the Rating Agencies.


Section 2.10           Payment
of Utilities, Assessments, Charges, Etc. Borrower shall pay when due all
utility charges which are incurred by Borrower or which may become a charge or
lien against any portion of the Property for gas, electricity, water and sewer
services furnished to 



 28
 






 



the Premises
and/or the Improvements and all other assessments or charges of a similar
nature, or assessments payable pursuant to any restrictive covenants, whether
public or private, affecting the Premises and/or the Improvements or any
portion thereof, whether or not such assessments or charges are or may become
liens thereon.


Section 2.11           Access
Privileges and Inspections. Lender and the agents, representatives and
employees of Lender shall, subject to the rights of Tenants, have full and free
access to the Premises and the Improvements and any other location where books
and records concerning the Property are kept at all reasonable times and,
except in the event of an emergency, upon not less than 24 hours prior notice
(which notice may be telephonic) for the purposes of inspecting the Property
and of examining, copying and making extracts from the books and records of
Borrower relating to the Property. Borrower shall lend assistance to all such
agents, representatives and employees of Lender.


Section 2.12           Waste;
Alteration of Improvements. Borrower shall not commit, suffer or permit any
waste on the Property nor take any actions that might invalidate any insurance
carried on the Property. Borrower shall maintain the Property in good condition
and repair. No part of the Improvements may be removed, demolished or
materially altered, without the prior written consent of Lender other than in
connection with non-structural day to day maintenance and except for tenant
improvements under Leases. Without the prior written consent of Lender,  Borrower shall not commence construction of
any improvements on the Premises other than improvements required for the
maintenance or repair of the Property. Lender reserves the right to condition
its consent to any material alteration, removal, demolition or new construction
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, contractors and form of construction
contracts and the furnishing to Lender of evidence regarding funds, permits,
approvals bonds, insurance, lien waivers, title endorsements, appraisals,
surveys, certificates of occupancy, certificates regarding completion,
invoices, receipts and affidavits from contractors and subcontractors, in form
and substance satisfactory to Lender in its discretion, (ii) the delivery
of an opinion from counsel satisfactory to Lender in its discretion and in form
and substance satisfactory to Lender in its discretion opining as to such
matters as Lender may reasonably require, including, without limitation, an
opinion that such alteration, removal, demolition or new construction will not
have an adverse effect on the status of any trust formed in connection with a
Secondary Market Transaction a “real estate mortgage investment conduit” within
the meaning of Section 860D of the Code (“REMIC”), and (iii) Borrower’s
agreement to pay all fees, costs and expenses incurred by Lender in granting
such consent, including, without limitation, reasonable attorneys’ fees and
expenses.


Section 2.13           Zoning.
Without the prior written consent of Lender, Borrower shall not seek, make,
suffer, consent to or acquiesce in any change in the zoning or conditions of
use of the Premises or the Improvements. Borrower shall comply with and make
all payments required under the provisions of any covenants, conditions or
restrictions affecting the Premises or the Improvements. Borrower shall comply
with all existing and future requirements of all governmental authorities
having jurisdiction over the Property. Borrower shall keep all licenses,
permits, franchises and other approvals necessary for the operation of the
Property in full force and effect. Borrower shall operate the Property as an office
building for so long as the Debt is outstanding. If, under applicable zoning
provisions, the use of all or any part of the Premises or 



 29
 






 



the
Improvements is or becomes a nonconforming use, Borrower shall not cause or
permit such use to be discontinued or abandoned without the prior written
consent of Lender. Further, without Lender’s prior written consent, Borrower
shall not file or subject any part of the Premises or the Improvements to any
declaration of condominium or co-operative or convert any part of the Premises
or the Improvements to a condominium, co-operative or other form of multiple
ownership and governance.


Section 2.14           Financial
Statements and Books and Records. Borrower shall keep accurate books and
records of account of the Property and its own financial affairs sufficient to
permit the preparation of financial statements therefrom in accordance with
generally accepted accounting principles. Lender and its duly authorized
representatives shall have the right to examine, copy and audit Borrower’s
records and books of account at all reasonable times. So long as this Mortgage
continues in effect, Borrower shall provide to Lender, in addition to any other
financial statements required hereunder or under any of the other Loan
Documents, the following financial statements and information, all of which
must be certified to Lender as being true and correct by the Chief Financial
Officer of Borrower or the person or entity to which they pertain, as
applicable, and, be prepared in accordance with generally accepted accounting
principles consistently applied and be in form and substance acceptable to
Lender:


(a)           copies of all tax
returns filed by Borrower, within forty-five (45) days after the date of
filing;


(b)           monthly operating
statements for the Property within forty-five (45) days after the end of each
month until the earlier to occur of (X) the date that is twelve (12)
months following the date hereof and (Y) the occurrence of a Secondary
Market Transaction;


(c)           quarterly operating
statements for the Property, within forty-five (45) days after the end of each
calendar quarter from and after the earlier to occur of (X) the date that
is twelve (12) months following the date hereof and (Y) the occurrence of
a Secondary Market Transaction;


(d)           annual balance
sheets for the Property and annual financial statements for Borrower, and each
Indemnitor (including any Form 10K filings), within one hundred twenty
(120) days after the end of each calendar year; and


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


(f)            If,
at the time one or more Disclosure Documents are being prepared for a
securitization, Lender expects that Borrower alone or Borrower and one or more
affiliates of Borrower collectively, or the Property alone or the Property and
any other parcel(s) of real property, together with improvements thereon
and personal property related thereto, that is “related”, within the meaning of
the definition of Significant Obligor, to the Property (a “Related Property”)
collectively, will be a Significant Obligor, Borrower shall furnish to Lender
upon request (i) the selected financial data or, if applicable, net
operating income, required under Item 1112(b)(1) of Regulation AB and
meeting the requirements thereof, if Lender expects that the principal amount
of the Loan, together with any loans made to an affiliate of Borrower or
secured by a Related Property that is included in a securitization with the
Loan (a “Related Loan”), as of the cut-off date for such securitization may, or
if the principal amount of the Loan together with any Related Loans as of the
cut-off date for such securitization and at any time during which the Loan and
any Related Loans are included in a securitization does, equal or exceed ten
percent (10%) (but less than twenty percent (20%)) of the aggregate principal
amount of all mortgage loans included or expected to be included, as
applicable, in the securitization or (ii) the financial statements
required under Item 1112(b)(2) of Regulation AB and meeting the
requirements thereof, if Lender expects that the 



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principal amount of the Loan together with any Related Loans as of the
cut-off date for such securitization may, or if the principal amount of the
Loan together with any Related Loans as of the cut-off date for such
securitization and at any time during which the Loan and any Related Loans are
included in a securitization does, equal or exceed twenty percent (20%) of the
aggregate principal amount of all mortgage loans included or expected to be
included, as applicable, in the securitization. Such financial data or
financial statements shall be furnished to Lender (A) within ten (10) Business
Days after notice from Lender in connection with the preparation of Disclosure
Documents for the securitization, (B) not later than thirty (30) days
after the end of each fiscal quarter of Borrower and (C) not later than
seventy-five (75) days after the end of each fiscal year of Borrower; provided,
however, that Borrower shall not be obligated to furnish financial data or
financial statements pursuant to clauses (B) or (C) of this sentence
with respect to any period for which a filing pursuant to the Securities
Exchange Act of 1934 in connection with or relating to the securitization (an “Exchange
Act Filing”) is not required. As used herein, “Regulation AB” shall mean
Regulation AB under the Securities Act of 1933 and the Securities Exchange Act
of 1934 (as amended). As used herein, “Disclosure Documents” shall mean a
prospectus, prospectus supplement, private placement memorandum, or similar
offering memorandum or offering circular, in each case in preliminary or final
form, used to offer securities in connection with a securitization. As used
herein, “Significant Obligor” shall have the meaning set forth in Item 1101(k) of
Regulation AB.


If any of the aforementioned materials are not furnished to Lender
within the applicable time periods, are not prepared in accordance with
generally accepted accounting principles or Lender is dissatisfied with the
form of any of the foregoing and has notified Borrower of its dissatisfaction,
in addition to any other rights and remedies of Lender contained herein and
provided Lender has given Borrower at least ten (10) days notice of such
failure and opportunity to cure, (i) Borrower shall pay to Lender upon
demand, at Lender’s option and in its sole discretion, an amount equal to
$2,500 per reporting period, and (ii) Lender shall have the right, but not
the obligation, to obtain the same by means of an audit by an independent
certified public accountant selected by Lender, in which event Borrower agrees
to pay, or to reimburse Lender for, any expense of such audit and further
agrees to provide all necessary information to said accountant and to otherwise
cooperate in the making of such audit.


Section 2.15           Further
Assurances. Borrower shall, on the request of Lender and at the expense of
Borrower:  (a) promptly correct any
defect, error or omission which may be discovered in the contents of this
Mortgage or in the contents of any of the other Loan Documents; (b) promptly
execute, acknowledge, deliver and record or file such further instruments
(including, without limitation, further mortgages, deeds of trust, security
deeds, security agreements, financing statements, continuation statements and
assignments of rents or leases) and promptly do such further acts as may be necessary,
desirable or proper to carry out



 31














 


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


Section 2.16           Payment
of Costs; Reimbursement to Lender. Borrower shall pay all costs and
expenses of every character reasonably incurred in connection with the closing
of the loan evidenced by the Note and secured hereby, attributable or
chargeable to Borrower as the owner of the Property or otherwise attributable
to any consent requested of Lender or any Rating Agency under the terms hereof
or any other Loan Document, including, without limitation, customary servicing
and consent fees, appraisal fees, recording fees, documentary, stamp, mortgage
or intangible taxes, brokerage fees and commissions, title policy premiums and
title search fees, uniform commercial code/tax lien/litigation search fees,
escrow fees, consultants’ fees, No-Downgrade Confirmations and reasonable
attorneys’ fees. If Borrower defaults in any such payment, which default is not
cured within any applicable grace or cure period, Lender may pay the same and
Borrower shall reimburse Lender on demand for all such costs and expenses
incurred or paid by Lender, together with such interest thereon at the Default
Interest Rate from and after the date of Lender’s making such payment until
reimbursement thereof by Borrower. Any such sums disbursed by Lender, together
with such interest thereon, shall be additional indebtedness of Borrower
secured by this Mortgage and by all of the other Loan Documents securing all or
any part of the Debt. Further, Borrower shall promptly notify Lender in writing
of any litigation or threatened litigation affecting the Property, or any other
demand or claim which, if enforced, could impair or threaten to impair Lender’s
security hereunder. Without limiting or waiving any other rights and remedies
of Lender hereunder, if Borrower fails to perform any of its covenants or
agreements contained in this Mortgage or in any of the other Loan 



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Documents and
such failure is not cured within any applicable grace or cure period, or if any
action or proceeding of any kind (including, but not limited to, any
bankruptcy, insolvency, arrangement, reorganization or other debtor relief
proceeding) is commenced which might affect Lender’s interest in the Property
or Lender’s right to enforce its security, then Lender may, at its option, with
or without notice to Borrower, make any appearances, disburse any sums and take
any actions as may be necessary or desirable to protect or enforce the security
of this Mortgage or to remedy the failure of Borrower to perform its covenants
and agreements (without, however, waiving any default of Borrower). Borrower
agrees to pay on demand all expenses of Lender incurred with respect to the
foregoing (including, but not limited to, reasonable fees and disbursements of
counsel), together with interest thereon at the Default Interest Rate from and
after the date on which Lender incurs such expenses until reimbursement thereof
by Borrower. Any such expenses so incurred by Lender, together with interest
thereon as provided above, shall be additional indebtedness of Borrower secured
by this Mortgage and by all of the other Loan Documents securing all or any
part of the Debt. The necessity for any such actions and of the amounts to be
paid shall be determined by Lender in its discretion. Lender is hereby
empowered to enter and to authorize others to enter upon the Property or any
part thereof for the purpose of performing or observing any such defaulted
term, covenant or condition without thereby becoming liable to Borrower or any
person in possession holding under Borrower. Borrower hereby acknowledges and
agrees that the remedies set forth in this Section 2.16 shall be
exercisable by Lender, and any and all payments made or costs or expenses
incurred by Lender in connection therewith shall be secured hereby and shall
be, without demand, immediately repaid by Borrower with interest thereon at the
Default Interest Rate, notwithstanding the fact that such remedies were exercised
and such payments made and costs incurred by Lender after the filing by
Borrower of a voluntary case or the filing against Borrower of an involuntary
case pursuant to or within the meaning of the Bankruptcy Reform Act of 1978, as
amended, Title 11 U.S.C., or after any similar action pursuant to any other
debtor relief law (whether statutory, common law, case law or otherwise) of any
jurisdiction whatsoever, now or hereafter in effect, which may be or become
applicable to Borrower, Lender, any Indemnitor, the Debt or any of the Loan
Documents. Borrower hereby indemnifies and holds Lender harmless from and
against all loss, cost and expenses with respect to any Event of Default
hereof, any liens (i.e., judgments, mechanics’ and materialmen’s liens, or
otherwise), charges and encumbrances filed against the Property, and from any
claims and demands for damages or injury, including claims for property damage,
personal injury or wrongful death, arising out of or in connection with any
accident or fire or other casualty on the Premises or the Improvements or any
nuisance made or suffered thereon, except those that are due to Lender’s gross
negligence or willful misconduct as finally determined by a court of competent
jurisdiction, including, without limitation, in any case, reasonable attorneys’
fees, costs and expenses as aforesaid, whether at pretrial, trial or appellate
level, and such indemnity shall survive payment in full of the Debt. This Section shall
not be construed to require Lender to incur any expenses, make any appearances
or take any actions.


Section 2.17           Security
Interest. This Mortgage is also intended to encumber and create a security
interest in, and Borrower hereby grants to Lender a security interest in, all
sums on deposit with Lender pursuant to the provisions of Article III
hereof or any other Section hereof or of any other Loan Document and all
fixtures, chattels, accounts, equipment, inventory, contract rights, general
intangibles and other personal property included within the Property, all renewals,
replacements of any of the aforementioned items, or articles in substitution
therefor or in addition thereto or the proceeds thereof (said property is
hereinafter referred to collectively as the “Collateral”), whether or not the
same shall be attached to the Premises or the Improvements in any manner. It is
hereby agreed that to the extent permitted by law, all of the foregoing
property is to be deemed and held to be a part of and affixed to the Premises
and the Improvements. The foregoing security interest shall also cover Borrower’s
leasehold interest in any of the foregoing property which is leased by Borrower.
Notwithstanding the foregoing, all of the foregoing property shall be owned by
Borrower and no leasing or installment sales or other financing or title
retention agreement in connection therewith shall be permitted without the
prior written approval of Lender. Borrower shall, from time to time upon the
request of Lender, supply Lender with a current inventory of all of the
property in which Lender is granted a security interest hereunder, in such
detail as Lender may reasonably require. Borrower shall promptly replace all of
the Collateral subject to the lien or security interest of this Mortgage when
worn or obsolete with Collateral comparable to the worn out or obsolete
Collateral when new and will not, without the prior written consent of Lender,
remove from the Premises or the Improvements 



 33
 






 



any of the
Collateral subject to the lien or security interest of this Mortgage except
such as is replaced by an article of equal suitability and value as above
provided, owned by Borrower free and clear of any lien or security interest
except that created by this Mortgage and the other Loan Documents. All of the
Collateral shall be kept at the location of the Premises except as otherwise
required by the terms of the Loan Documents. Borrower shall not use any of the
Collateral in violation of any applicable statute, ordinance or insurance
policy.


Section 2.18           Security
Agreement. This Mortgage constitutes a security agreement between Borrower
and Lender with respect to the Collateral in which Lender is granted a security
interest hereunder, and, cumulative of all other rights and remedies of Lender
hereunder, Lender shall have all of the rights and remedies of a secured party
under any applicable Uniform Commercial Code. Borrower hereby agrees to execute
and deliver on demand and hereby irrevocably constitutes and appoints Lender
the attorney-in-fact of Borrower to execute and deliver and, if appropriate, to
file with the appropriate filing officer or office, such security agreements,
financing statements, continuation statements or other instruments as Lender
may request or require in order to impose, perfect or continue the perfection
of the lien or security interest created hereby. To the extent specifically
provided herein, Lender shall have the right of possession of all cash,
securities, instruments, negotiable instruments, documents, certificates and
any other evidences of cash or other property or evidences of rights to cash
rather than property, which are now or hereafter a part of the Property, and
Borrower shall promptly deliver the same to Lender, endorsed to Lender, without
further notice from Lender. Borrower agrees to furnish Lender with notice of
any change in the name, identity, organizational structure, residence, or
principal place of business or mailing address of Borrower within ten (10) days
of the effective date of any such change. Upon the occurrence of any Event of
Default, Lender shall have the rights and remedies as prescribed in this
Mortgage, or as prescribed by general law, or as prescribed by any applicable
Uniform Commercial Code, all at Lender’s election. Any disposition of the
Collateral may be conducted by an employee or agent of Lender. Any person,
including both Borrower and Lender, shall be eligible to purchase any part or
all of the Collateral at any such disposition. Expenses of retaking, holding,
preparing for sale, selling or the like (including, without limitation, Lender’s
reasonable attorneys’ fees and legal expenses), together with interest thereon
at the Default Interest Rate from the date incurred by Lender until actually
paid by Borrower, shall be paid by Borrower on demand and shall be secured by
this Mortgage and by all of the other Loan Documents securing all or any part
of the Debt. Lender shall have the right to enter upon the Premises and the
Improvements or any real property where any of the property which is the
subject of the security interest granted herein is located to take possession
of, assemble and collect the same or to render it unusable, or Borrower, upon
demand of Lender, shall assemble such property and make it available to Lender
at the Premises, or at a place which is mutually agreed upon or, if no such
place is agreed upon, at a place reasonably designated by Lender to be
reasonably convenient to Lender and Borrower. If notice is required by law,
Lender shall give Borrower at least ten (10) days’ prior written notice of
the time and place of any public sale of such property, or adjournments
thereof, or of the time of or after which any private sale or any other
intended disposition thereof is to be made, and if such notice is sent to
Borrower, as the same is provided for the mailing of notices herein, it is
hereby deemed that such notice shall be and is reasonable notice to Borrower. No
such notice is necessary for any such property which is perishable, threatens
to decline speedily in value or is of a type customarily sold on a recognized
market. Any sale made pursuant to the provisions of this Section shall be
deemed to have been a public sale conducted in a commercially reasonable manner
if held 



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contemporaneously
with a foreclosure sale as provided in Section 5.1(e) hereof upon
giving the same notice with respect to the sale of the Property hereunder as is
required under said Section 5.1(e). Furthermore, to the extent permitted
by law, in conjunction with, in addition to or in substitution for the rights
and remedies available to Lender pursuant to any applicable Uniform Commercial
Code:


(a)           In the event of a
foreclosure sale, the Property may, at the option of Lender, be sold as a
whole; and


(b)           It shall not be
necessary that Lender take possession of the aforementioned Collateral, or any
part thereof, prior to the time that any sale pursuant to the provisions of
this Section is conducted and it shall not be necessary that said
Collateral, or any part thereof, be present at the location of such sale; and


(c)           Lender may appoint
or delegate any one or more persons as agent to perform any act or acts
necessary or incident to any sale held by Lender, including the sending of
notices and the conduct of the sale, but in the name and on behalf of Lender. The
name and address of Borrower (as Debtor under any applicable Uniform Commercial
Code) are as set forth on the first page hereof. The name and address of
Lender (as Secured Party under any applicable Uniform Commercial Code) are as
set forth on the first page hereof.


Section 2.19           Easements
and Rights-of-Way. Borrower shall not grant any easement or right-of-way
with respect to all or any portion of the Premises or the Improvements without
the prior written consent of Lender. Borrower shall comply with all easements
affecting the Property. The purchaser at any foreclosure sale hereunder may, at
its discretion, disaffirm any easement or right-of-way granted in violation of
any of the provisions of this Mortgage and may take immediate possession of the
Property free from, and despite the terms of, such grant of easement or
right-of-way. If Lender consents to the grant of an easement or right-of-way,
Lender agrees to grant such consent without charge to Borrower other than
expenses, including, without limitation, reasonable attorneys’ fees, incurred
by Lender in the review of Borrower’s request and in the preparation of
documents effecting the subordination.


Section 2.20           Compliance
with Laws. Borrower shall at all times comply with all statutes,
ordinances, regulations and other governmental or quasi-governmental
requirements and private covenants now or hereafter relating to the ownership,
construction, use or operation of the Property, including, but not limited to,
those concerning employment and compensation of persons engaged in operation
and maintenance of the Property and any environmental or ecological
requirements, even if such compliance shall require structural changes to the
Property; provided, however, that, Borrower may, upon providing Lender with
security satisfactory to Lender, proceed diligently and in good faith to
contest the validity or applicability of any such statute, ordinance,
regulation or requirement so long as during such contest the Property shall not
be subject to any lien, charge, fine or other liability and shall not be in
danger of being forfeited, lost or closed. Borrower shall not use or occupy, or
allow the use or occupancy of, the Property in any manner which violates any
Lease of or any other agreement applicable to the Property or any applicable
law, rule, regulation or order or which constitutes a public or private
nuisance or which makes void, voidable or cancelable, or increases the premium
of, any insurance then in force with respect thereto.



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Section 2.21           Additional
Taxes. In the event of the enactment after the date hereof of any law of
the state in which the Property is located or of any other governmental entity
deducting from the value of the Property for the purpose of taxing any lien or
security interest thereon, or imposing upon Lender the payment of the whole or any
part of the taxes or assessments or charges or liens herein required to be paid
by Borrower, or changing in any way the laws relating to the taxation of deeds
of trust, mortgages or security agreements or debts secured by deeds of trust,
mortgages or security agreements or the interest of the Lender, mortgagee or
secured party in the property covered thereby, or the manner of collection of
such taxes, so as to adversely affect this Mortgage or the Debt or Lender,
then, and in any such event, Borrower, upon demand by Lender, shall pay such
taxes, assessments, charges or liens, or reimburse Lender therefor; provided,
however, that if in the opinion of counsel for Lender (a) it might be
unlawful to require Borrower to make such payment, or (b) the making of
such payment might result in the imposition of interest beyond the maximum
amount permitted by law, then and in either such event, Lender may elect, by
notice in writing given to Borrower, to declare all of the Debt to be and
become due and payable in full thirty (30) days from the giving of such notice,
and, in connection with the payment of such Debt, no prepayment premium or fee
shall be due unless, at the time of such payment, an Event of Default or a
Default shall have occurred, which Default or Event of Default is unrelated to
the provisions of this Section 2.21, in which event any applicable
prepayment premium or fee in accordance with the terms of the Note shall be due
and payable.


Section 2.22           Secured
Indebtedness. It is understood and agreed that this Mortgage shall secure
payment of not only the indebtedness evidenced by the Note but also any and all
substitutions, replacements, renewals and extensions of the Note, any and all
indebtedness and obligations arising pursuant to the terms hereof and any and
all indebtedness and obligations arising pursuant to the terms of any of the
other Loan Documents, all of which indebtedness is equally secured with and has
the same priority as any amounts advanced as of the date hereof. It is agreed
that any future advances made by Lender to or for the benefit of Borrower from
time to time under this Mortgage or the other Loan Documents and whether or not
such advances are obligatory or are made at the option of Lender, or otherwise,
made for any purpose, and all interest accruing thereon, shall be equally
secured by this Mortgage and shall have the same priority as all amounts, if
any, advanced as of the date hereof and shall be subject to all of the terms
and provisions of this Mortgage.


Section 2.23           Borrower’s
Waivers. To the full extent permitted by law, Borrower agrees that Borrower
shall not at any time insist upon, plead, claim or take the benefit or
advantage of any law now or hereafter in force providing for any appraisement,
valuation, stay, moratorium or extension, or any law now or hereafter in force
providing for the reinstatement of the Debt prior to any sale of the Property
to be made pursuant to any provisions contained herein or prior to the entering
of any decree, judgment or order of any court of competent jurisdiction, or any
right under any statute to redeem all or any part of the Property so sold. Borrower,
for Borrower and Borrower’s successors and assigns, and for any and all persons
ever claiming any interest in the Property, to the full extent permitted by
law, hereby knowingly, intentionally and voluntarily, with and upon the advice
of competent counsel:  (a) waives,
releases, relinquishes and forever forgoes all rights of valuation,
appraisement, stay of execution, reinstatement and notice of election or
intention to mature or declare due the Debt (except such notices as are
specifically provided for herein); (b) waives, releases, relinquishes and
forever forgoes all right to a 



 36
 






 



marshaling of
the assets of Borrower, including the Property, to a sale in the inverse order
of alienation, or to direct the order in which any of the Property shall be
sold in the event of foreclosure of the liens and security interests hereby
created and agrees that any court having jurisdiction to foreclose such liens
and security interests may order the Property sold as an entirety; and (c) waives,
releases, relinquishes and forever forgoes all rights and periods of redemption
provided under applicable law. To the full extent permitted by law, Borrower
shall not have or assert any right under any statute or rule of law
pertaining to the exemption of homestead or other exemption under any federal,
state or local law now or hereafter in effect, the administration of estates of
decedents or other matters whatever to defeat, reduce or affect the right of
Lender under the terms of this Mortgage to a sale of the Property, for the
collection of the Debt without any prior or different resort for collection, or
the right of Lender under the terms of this Mortgage to the payment of the Debt
out of the proceeds of sale of the Property in preference to every other
claimant whatever. Furthermore, Borrower hereby knowingly, intentionally and
voluntarily, with and upon the advice of competent counsel, waives, releases,
relinquishes and forever forgoes all present and future statutes of limitations
as a defense to any action to enforce the provisions of this Mortgage or to
collect any of the Debt to the fullest extent permitted by law. Borrower
covenants and agrees that upon the commencement of a voluntary or involuntary
bankruptcy proceeding by or against Borrower, Borrower shall not seek a
supplemental stay or otherwise shall not seek pursuant to 11 U.S.C. §105 or any
other provision of the Bankruptcy Reform Act of 1978, as amended, or any other
debtor relief law (whether statutory, common law, case law, or otherwise) of
any jurisdiction whatsoever, now or hereafter in effect, which may be or become
applicable, to stay, interdict, condition, reduce or inhibit the ability of
Lender to enforce any rights of Lender against any guarantor or indemnitor of
the secured obligations or any other party liable with respect thereto by
virtue of any indemnity, guaranty or otherwise.


Section 2.24           SUBMISSION
TO JURISDICTION; WAIVER OF JURY TRIAL.


(a)           BORROWER AND LENDER, TO THE FULL EXTENT PERMITTED BY
LAW, HEREBY KNOWINGLY, INTENTIONALLY AND VOLUNTARILY, WITH AND UPON THE ADVICE
OF COMPETENT COUNSEL, (i) SUBMIT TO PERSONAL JURISDICTION IN THE STATE IN
WHICH THE PREMISES IS LOCATED OVER ANY SUIT, ACTION OR PROCEEDING BY ANY PERSON
ARISING FROM OR RELATING TO THE NOTE, THIS MORTGAGE OR ANY OTHER OF THE LOAN
DOCUMENTS, (ii) AGREE THAT ANY SUCH ACTION, SUIT OR PROCEEDING MAY BE
BROUGHT IN ANY STATE OR FEDERAL COURT OF COMPETENT JURISDICTION SITTING IN THE COUNTY
IN WHICH THE PREMISES IS LOCATED, (iii) SUBMIT TO THE JURISDICTION OF SUCH
COURTS, AND (iv) TO THE FULLEST EXTENT PERMITTED BY LAW, AGREE THAT IT
WILL NOT BRING ANY ACTION, SUIT OR PROCEEDING IN ANY OTHER FORUM (BUT NOTHING
HEREIN SHALL AFFECT THE RIGHT OF LENDER TO BRING ANY ACTION, SUIT OR PROCEEDING
IN ANY OTHER FORUM).


(b)           BORROWER AND LENDER, TO THE FULL EXTENT PERMITTED BY
LAW, HEREBY KNOWINGLY, INTENTIONALLY AND VOLUNTARILY, WITH AND UPON THE ADVICE
OF COMPETENT COUNSEL, WAIVE, RELINQUISH AND FOREVER FORGO THE RIGHT TO A TRIAL
BY JURY 



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IN
ANY ACTION OR PROCEEDING BASED UPON, ARISING OUT OF, OR IN ANY WAY RELATING TO
THE DEBT OR ANY CONDUCT, ACT OR OMISSION OF LENDER OR BORROWER, OR ANY OF THEIR
RESPECTIVE DIRECTORS, OFFICERS, PARTNERS, MEMBERS, EMPLOYEES, AGENTS OR
ATTORNEYS, OR ANY OTHER PERSONS AFFILIATED WITH LENDER OR BORROWER, IN EACH OF
THE FOREGOING CASES, WHETHER SOUNDING IN CONTRACT, TORT OR OTHERWISE.


Section 2.25           Attorney-in-Fact
Provisions. With respect to any provision of this Mortgage or any other
Loan Document whereby Borrower grants to Lender a power-of-attorney, provided
no Default or Event of Default has occurred under this Mortgage, Lender shall
first give Borrower written notice at least three (3) days prior to acting
under such power, which notice shall demand that Borrower first take the
proposed action within such period and advising Borrower that if it fails to do
so, Lender will so act under the power; provided, however, that, in the event
that a Default or an Event of Default has occurred, or if necessary to prevent
imminent death, serious injury, damage, loss, forfeiture or diminution in value
to the Property or any surrounding property or to prevent any adverse affect on
Lender’s interest in the Property, Lender may act immediately and without first
giving such notice. In such event, Lender will give Borrower notice of such
action as soon thereafter as reasonably practical.


Section 2.26           Management.
The management of the Property shall be by either:  (a) Borrower or an entity affiliated
with Borrower approved by Lender for so long as Borrower or said affiliated
entity is managing the Property in a first class manner; or (b) a
professional property management company approved by Lender. Such management by
an affiliated entity or a professional property management company shall be
pursuant to a written agreement approved by Lender. In no event shall any
manager be removed or replaced or the terms of any management agreement
modified or amended without the prior written consent of Lender which approval
may be conditioned upon, among other things, receipt by Lender of a
No-Downgrade Confirmation from each Rating
Agency. After an Event of Default or a default under any management contract
then in effect, which default is not cured within any applicable grace or cure
period or if at any time during the term of the Loan the debt service coverage
ratio of the Property is ever less than 1.05:1, as determined by Lender, Lender
shall have the right to terminate, or to direct Borrower to terminate, such
management contract upon thirty (30) days’ notice and to retain, or to direct
Borrower to retain, a new management agent approved by Lender which approval
may be conditioned upon, among other things, receipt by Lender of a
No-Downgrade Confirmation from each Rating
Agency. All Rents and Profits generated by or derived from the Property shall
first be utilized solely for current expenses directly attributable to the
ownership and operation of the Property, including, without limitation, current
expenses relating to Borrower’s liabilities and obligations with respect to
this Mortgage and the other Loan Documents, and none of the Rents and Profits
generated by or derived from the Property shall be diverted by Borrower and
utilized for any other purposes unless all such current expenses attributable
to the ownership and operation of the Property have been fully paid and
satisfied.


Section 2.27           Hazardous
Waste and Other Substances.


(a)           Borrower hereby
represents and warrants to Lender that, as of the date hereof to the best of
Borrower’s knowledge, information and belief and other than as set forth in 



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the
Environmental Report:  (i) none of
Borrower nor the Property nor any Tenant at the Premises nor the operations
conducted thereon is in direct or indirect violation of or otherwise exposed to
any liability under any local, state or federal law, rule or regulation or
common law duty pertaining to human health, natural resources or the
environment, including, without limitation, the Comprehensive Environmental
Response, Compensation and Liability Act of 1980 (42 U.S.C. §9601 et  seq.)
(“CERCLA”), 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.), the Clean Air Act (42 U.S.C. §7401 et
seq.), the Emergency Planning and Community-Right-to-Know Act (42 U.S.C.
§11001 et  seq.), the Endangered Species Act (16 U.S.C. §1531 et
seq.), the Toxic Substances Control Act (15 U.S.C. §2601 et  seq.),
the Occupational Safety and Health Act (29 U.S.C. §651 et  seq.),
the Industrial Site Recovery Act, N.J.S.A. 13:1K-6, et seq. (“ISRA”); the
Spill Compensation and Control Act, N.J.S.A. 58:10-23.11, et seq. (“Spill
Act”); the Underground Storage of Hazardous Substances Act, N.J.S.A. 58:10A-21,
et seq.; the Toxic Catastrophe Prevention Act N.J.S.A. 13:1K-19, et seq.;
the Worker and Community Right to Know Act, N.J.S.A. 34:5A-1, et seq.;
the Pollution Prevention Act, N.J.S.A. 13:1D-35, et seq.; the Air
Pollution Control Act, N.J.S.A. 26:2C-1, et seq.; the Solid Waste
Management Act, N.J.S.A. 13:1E-1, et seq.; the Sanitary Landfill Closure
and Contingency Fund Act, N.J.S.A. 13:1E-100, et seq.; the Solid Waste
Utility Control Act, N.J.S.A. 48:13A-1, et seq.; the Water Pollution
Control Act, N.J.S.A. 58:10A-1, et seq.; the Flood Hazard Control Act,
N.J.S.A. 58:16A-50, et seq.; the Freshwater Wetlands Protection Act,
N.J.S.A. 13:9B-1, et seq.; the Coastal Area Facility Review Act, N.J.S.A.
13:19-1, et seq.; the Wetlands Act of 1970, N.J.S.A. 13:9A-1, et
seq.; the Waterfront and Harbor Facilities Act, N.J.S.A. 12:5-1, et seq.;
the Noise Control Act, N.J.S.A. 13:1G-1, et seq.; and the Pesticide
Control Act, N.J.S.A. 13:1F-1, et seq., and the Hazardous Materials
Transportation Act (49 U.S.C. §1801 et  seq.), and those relating
to Lead Based Paint (as hereinafter defined) and the regulations promulgated
pursuant to said laws, all as amended from time to time (collectively, “Environmental
Laws”) or otherwise exposed to any liability under any Environmental Law
relating to or affecting the Property, whether or not used by or within the
control of Borrower; (ii) no hazardous, toxic or harmful substances,
wastes, materials, pollutants or contaminants (including, without limitation,
asbestos or asbestos-containing materials, lead based paint, Toxic Mold (as
hereinafter defined) polychlorinated biphenyls, petroleum or petroleum products
or byproducts, flammable explosives, radioactive materials, infectious
substances or raw materials which include hazardous constituents) or any other
substances or materials which are included under or regulated by Environmental
Laws (collectively, “Hazardous Substances”) are located on, in or under
or have been handled, generated, stored, processed or disposed of on or released
or discharged from the Property (including underground contamination), except
for those substances used by Borrower or any Tenant in the ordinary course of
their respective businesses and in compliance with all Environmental Laws and
where such Hazardous Substances could not reasonably be expected to give rise
to liability under Environmental Laws; (iii) radon is not present at the
Property in excess or in violation of any applicable thresholds or standards or
in amounts that require disclosure under applicable law to any tenant or
occupant of or invitee to the Property or to any governmental agency or the
general public; (iv) the Property is not subject to any private or
governmental lien or judicial or administrative notice or action arising under
Environmental Laws; (v) there is no pending, nor, to Borrower’s knowledge,
information or belief, threatened litigation arising under Environmental Laws
affecting Borrower or the Property; (vi) there are no and have been no
existing or closed underground storage tanks or other underground storage 



 39
 






 



receptacles
for Hazardous Substances or landfills or dumps on the Property; (vii) Borrower
has received no notice of, and to the best of Borrower’s knowledge and belief,
there exists no investigation, action, proceeding or claim by any agency,
authority or unit of government or by any third party which could result in any
liability, penalty, sanction or judgment under any Environmental Laws with
respect to any condition, use or operation of the Property, nor does Borrower
know of any basis for such an investigation, action, proceeding or claim; and (viii) Borrower
has received no notice of and, to the best of Borrower’s knowledge and belief,
there has been no claim by any party that any use, operation or condition of the
Property has caused any nuisance or any other liability or adverse condition on
any other property, nor does Borrower know of any basis for such an
investigation, action, proceeding or claim. For the purposes hereof, “Toxic
Mold” shall mean any mold or fungus at the Property which is of a type (i) that
might pose a significant risk to human health or the environment or (ii) that
would negatively impact the value of the Property.


(b)           Borrower has not
received nor to the best of Borrower’s knowledge, information and belief has
there been issued, any notice, notification, demand, request for information,
citation, summons, or order in any way relating to any actual, alleged or
potential violation or liability arising under Environmental Laws.


(c)           Neither the
Property, nor to the best of Borrower’s knowledge, information and belief, any
property to which Borrower has, in connection with the maintenance or operation
of the Property, directly or indirectly transported or arranged for the
transportation of any Hazardous Substances is listed or, to the best of
Borrower’s knowledge, information and belief, proposed for listing on the
National Priorities List promulgated pursuant to CERCLA, or CERCLIS (as defined
in CERCLA) or on any similar federal or state list of sites requiring
environmental investigation or clean-up.


(d)           Borrower shall
comply with all applicable Environmental Laws. Borrower shall keep the Property
or cause the Property to be kept free from Hazardous Substances (except those
substances used by Borrower or any Tenant in the ordinary course of their
respective businesses and except in compliance with all Environmental Laws and
where such Hazardous Substances  could
not reasonably be expected to give rise to liability under Environmental Laws)
and in compliance with all Environmental Laws, Borrower shall not install or
use any underground storage tanks, shall expressly prohibit the use,
generation, handling, storage, production, processing and disposal of Hazardous
Substances by all Tenants in quantities or conditions that would violate or
give rise to any obligation to take remedial or other action under any
applicable Environmental Laws. Without limiting the generality of the
foregoing, during the term of this Mortgage, Borrower shall not install in the
Improvements or permit to be installed in the Improvements any asbestos or
asbestos-containing materials.


(e)           Borrower shall
promptly notify Lender if Borrower shall become aware of (i) the actual or
potential existence of any Hazardous Substances on the Property other than
those occurring in the ordinary course of Borrower’s business and which do not
violate, or would not otherwise give rise to liability under Environmental
Laws, (ii) any direct or indirect violation of, or other exposure to
liability under, any Environmental Laws, (iii) any lien, action or notice
affecting the Property or Borrower resulting from any violation or alleged
violation of or liability or alleged liability under any Environmental Laws, (iv) the
institution of any investigation, 



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inquiry or
proceeding concerning Borrower or the Property pursuant to any Environmental
Laws or otherwise relating to Hazardous Substances, or (v) the discovery
of any occurrence, condition or state of facts which would render any
representation or warranty contained in this Mortgage incorrect in any respect
if made at the time of such discovery. Immediately upon receipt of same,
Borrower, shall deliver to Lender copies of any and all requests for
information, complaints, citations, summonses, orders, notices, reports or
other communications, documents or instruments in any way relating to any
actual, alleged or potential violation or liability of any nature whatsoever
arising under Environmental Laws and relating to the Property or to Borrower. Borrower
shall remedy or cause to be remedied in a timely manner (and in any event
within the time period permitted by applicable Environmental Laws) any
violation of Environmental Laws or any condition that could give rise to
liability under Environmental Laws. Without limiting the foregoing, Borrower
shall, promptly and regardless of the source of the contamination or threat to
the environment or human health, at its own expense, take all actions as shall
be necessary or prudent, for the clean-up of any and all portions of the
Property or other affected property, including, without limitation, all
investigative, monitoring, removal, containment and remedial actions in
accordance with all applicable Environmental Laws (and in all events in a
manner satisfactory to Lender) and shall further pay or cause to be paid, at no
expense to Lender, all clean-up, administrative and enforcement costs of
applicable governmental agencies which may be asserted against the Property. In
the event Borrower fails to do so, Lender may, but shall not be obligated to,
cause the Property or other affected property to be freed from any Hazardous
Substances or otherwise brought into conformance with Environmental Laws and
any and all costs and expenses incurred by Lender in connection therewith,
together with interest thereon at the Default Interest Rate from the date
incurred by Lender until actually paid by Borrower, shall be immediately paid
by Borrower on demand and shall be secured by this Mortgage and by all of the
other Loan Documents securing all or any part of the Debt. Borrower hereby
grants to Lender and its agents and employees access to the Property and a
license to remove any items deemed by Lender to be Hazardous Substances and to
do all things Lender shall deem necessary to bring the Property into
conformance with Environmental Laws.


(f)            Borrower covenants
and agrees, at Borrower’s sole cost and expense, to indemnify, defend (at trial
and appellate levels, and with attorneys, consultants and experts acceptable to
Lender), and hold Lender harmless from and against any and all liens, damages
(including without limitation, punitive or exemplary damages), losses,
liabilities (including, without limitation, strict liability), obligations,
settlement payments, penalties, fines, assessments, citations, directives,
claims, litigation, demands, defenses, judgments, suits, proceedings, costs,
disbursements or expenses of any kind or of any nature whatsoever (including,
without limitation, reasonable attorneys’, consultants’ and experts’ fees and
disbursements actually incurred in investigating, defending, settling or
prosecuting any claim, litigation or proceeding) which may at any time be
imposed upon, incurred by or asserted or awarded against Lender or the
Property, and arising directly or indirectly from or out of:  (i) any violation or alleged violation
of, or liability or alleged liability under, any Environmental Law; (ii) the
presence, release or threat of release of or exposure to any Hazardous
Substances or radon on, in, under or affecting all or any portion of the
Property or any surrounding areas, regardless of whether or not caused by or
within the control of Borrower; (iii) any transport, treatment, recycling,
storage, disposal or arrangement therefor of Hazardous Substances whether on
the Property, originating from the Property, or otherwise associated with
Borrower or any 



 41
 






 



operations
conducted on the Property at any time; (iv) the failure by Borrower to
comply fully with the terms and conditions of this Section 2.27; (v) the
breach of any representation or warranty contained in this Section 2.27;
or (vi) the enforcement of this Section 2.27, including,
without limitation, the cost of assessment, investigation, containment, removal
and/or remediation of any and all Hazardous Substances from all or any portion
of the Property or any surrounding areas, the cost of any actions taken in
response to the presence, release or threat of release of any Hazardous
Substances on, in, under or affecting any portion of the Property or any surrounding
areas to prevent or minimize such release or threat of release so that it does
not migrate or otherwise cause or threaten danger to present or future public
health, safety, welfare or the environment, and costs incurred to comply with
Environmental Laws in connection with all or any portion of the Property or any
surrounding areas. The indemnity set forth in this Section 2.27
shall also include any diminution in the value of the security afforded by the
Property or any future reduction in the sales price of the Property by reason
of any matter set forth in this Section 2.27. The foregoing
indemnity shall specifically not include any such costs relating to Hazardous
Substances which are initially placed on, in or under the Property after
foreclosure or other taking of title to the Property by Lender or its successor
or assigns. Lender’s rights under this Section shall survive payment in
full of the Debt and shall be in addition to all other rights of Lender under
this Mortgage, the Note and the other Loan Documents.


(g)           Upon Lender’s
request, at any time after the occurrence of an Event of Default or at such
other time as Lender has reasonable grounds to believe that Hazardous
Substances are or have been released, stored or disposed of on the Property, or
on property contiguous with the Property, or that the Property may be in
violation of the Environmental Laws, Borrower shall perform or cause to be
performed, at Borrower’s sole cost and expense and in scope, form and substance
satisfactory to Lender, an inspection or audit of the Property prepared by a
hydrogeologist or environmental engineer or other appropriate consultant
approved by Lender indicating the presence or absence of Hazardous Substances
on the Property, the compliance or non-compliance status of the Property and
the operations conducted thereon with applicable Environmental Laws, or an
inspection or audit of the Property prepared by an engineering or consulting
firm approved by Lender indicating the presence or absence of friable asbestos or
substances containing asbestos or lead or substances containing lead or lead
based paint (“Lead Based Paint”) on the Property. If Borrower fails to
provide reports of such inspection or audit within thirty (30) days after such
request, Lender may order the same, and Borrower hereby grants to Lender and
its employees and agents access to the Property and an irrevocable license to
undertake such inspection or audit. The cost of such inspection or audit,
together with interest thereon at the Default Interest Rate from the date
incurred by Lender until actually paid by Borrower, shall be immediately paid
by Borrower on demand and shall be secured by this Mortgage and by all of the
other Loan Documents securing all or any part of the Debt.


(h)           Reference is made to
that certain Environmental Indemnity Agreement of even date herewith by and
among Borrower and any other principal signatory named therein in favor of
Lender (the “Environmental Indemnity Agreement”). The provisions of this
Mortgage and the Environmental Indemnity Agreement shall be read together to
maximize the coverage with respect to the subject matter thereof, as determined
by Lender.



 42














 


(i)            If prior to the
date hereof, it was determined that the Property 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,
satisfactory to Lender, with respect to ACM’s, 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 Debt 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 residents to ACM’s at all times. Without limiting the
generality of the preceding sentence, Lender may require (i) periodic
notices or reports to Lender in form, substance and at such intervals as Lender
may specify, (ii) an amendment to such operations and maintenance program
to address changing circumstances, laws or other matters, (iii) at
Borrower’s sole expense, supplemental examination of the Property by
consultants specified by Lender, and (iv) variation of the operations and
maintenance program in response to the reports provided by any such
consultants.


(j)            If, prior to the
date hereof, it was determined that the Property contains Lead Based Paint,
Borrower had prepared an assessment report describing the location and
condition of the Lead Based Paint (a “Lead Based Paint Report”). If, at
any time hereafter, Lead Based Paint is suspected of being present on the
Property, Borrower agrees, at its sole cost and expense and within twenty (20)
days thereafter, to cause to be prepared a Lead Based Paint Report prepared by
an expert, and in form, scope and substance, acceptable to Lender. Borrower
agrees that if it has been, or if at any time hereafter it is, determined that
the Property 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 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 Property, which plan shall be prepared by an expert, and be in
form, scope and substance, 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 Laws.


Section 2.28           Indemnification;
Subrogation.


(a)           Borrower shall
indemnify, defend and hold Lender harmless against: (i) any and all claims
for brokerage, leasing, finders or similar fees which may be made relating to
the Property or the Debt, and (ii) any and all liability, obligations,
losses, damages, penalties, claims, actions, suits, costs and expenses
(including Lender’s reasonable attorneys’ fees) of whatever kind or nature
which may be asserted against, imposed on or incurred by Lender in connection
with the Debt, this Mortgage, the Property, or any part thereof, or the
exercise by Lender of any rights or remedies granted to it under this Mortgage
or arise from the information provided in accordance with the terms hereof; provided,
however, that nothing herein shall be construed to obligate Borrower to
indemnify, defend and hold harmless Lender from and against 



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any and all
liabilities, obligations, losses, damages, penalties, claims, actions, suits,
costs and expenses enacted against, imposed on or incurred by Lender by reason
of Lender’s willful misconduct or gross negligence.


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


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


Section 2.29           Covenants
with Respect to Existence, Indebtedness, Operations, Fundamental Changes of
Borrower.


(a)           Borrower, and any
general partner or managing member of Borrower, as applicable, have each done
since the date of their formation and shall do or cause to be done all things
necessary to (i) preserve, renew and keep in full force and effect its
existence, rights, and franchises, (ii) continue to engage in the business
presently conducted by it, (iii) obtain and maintain all licenses, and (iv) qualify
to do business and remain in good standing under the laws of each jurisdiction,
in each case as and to the extent required for the ownership, maintenance,
management and operation of the Property. Borrower hereby represents, warrants
and covenants as of the date hereof and until such time as the Debt is paid in
full, that Borrower has been, since the date of its formation, is and shall
remain a Single-Purpose Entity (as hereinafter defined). Each general partner
or the SPE Member (as hereinafter defined) of Borrower (each, an “SPE Equity
Owner”), has since the date of its formation complied and will at all times
comply, with each of the representations, warranties and covenants contained in
this Section 2.29 as if such 



 44
 






 



representation,
warranty or covenant was made directly by such SPE Equity Owner. A “Single-Purpose
Entity” or “SPE” means a corporation, limited partnership or limited
liability company that:


(1)           if a corporation, must have at least
two Independent Directors (as hereinafter defined), or if requested by Lender
(which request Borrower shall comply with within five (5) business days)
in connection with a Secondary Market Transaction, two Independent Directors,
and must not take any action that, under the terms of any certificate or
articles of incorporation, by-laws, or any voting trust agreement with respect
to such entity’s common stock, requires the unanimous affirmative vote of 100%
of the members of the board of directors unless all of the directors,
including, without limitation, all Independent Directors, shall have
participated in such vote (“SPE Corporation”);


(2)           if a limited partnership, must have
each general partner be an SPE Corporation;


(3)           if a limited liability company, must
have one managing member (the “SPE Member”) and such managing member
must be an SPE Corporation. Only the SPE Member may be designated as a manager
under Borrower’s operating agreement and pursuant to the law where Borrower is
organized. Borrower may be a single member Delaware limited liability company
without an SPE Corporation managing member so long as Borrower complies with
the provisions set forth in Sections 2.29(b) and (c) below;


(4)           was and will be organized solely for
the purpose of (i) owning an interest in the Property, (ii) acting as
a general partner of a limited partnership that owns an interest in the
Property, or (iii) acting as the managing member of a limited liability
company that owns an interest in the Property;


(5)           will not, nor will any partner,
limited or general, member or shareholder thereof, as applicable, amend, modify
or otherwise change its partnership certificate, partnership agreement, articles
of incorporation, by-laws, operating agreement, articles of organization, or
other formation agreement or document, as applicable, in any material term or
manner, or in a manner which adversely affects Borrower’s existence as a Single
Purpose Entity;


(6)           will not liquidate or dissolve (or
suffer any liquidation or dissolution), or enter into any transaction of merger
or consolidation, or acquire by purchase or otherwise all or substantially all
the business or assets of, or any stock or other evidence of beneficial
ownership of any entity;


(7)           will not, nor will any partner,
limited or general, member or shareholder thereof, as applicable, violate the
terms of its partnership certificate, partnership agreement, articles of
incorporation, by-laws, operating agreement, articles of organization, or other
formation agreement or document, as applicable;



 45
 






 



(8)           has not and will not guarantee,
pledge its assets for the benefit of, or otherwise become liable on or in
connection with, any obligation of any other person or entity;


(9)           does not own and will not own any
asset other than (i) the Property, and (ii) incidental personal
property necessary for the operation of the Property;


(10)         is not engaged and will not engage,
either directly or indirectly, in any business other than the ownership,
management and operation of the Property;


(11)         will not enter into any contract or
agreement with any general partner, principal, affiliate or member of Borrower,
as applicable, or any affiliate of any general partner, principal or member of
Borrower, except upon terms and conditions that are intrinsically fair and
substantially similar to those that would be available on an arms-length basis
with third parties other than an affiliate;


(12)         has not incurred and will not incur any
debt, secured or unsecured, direct or contingent (including guaranteeing any
obligation), other than (i) the Debt, and (ii) trade payables or
accrued expenses incurred in the ordinary course of business of operating the
Property customarily satisfied within thirty (30) days not evidenced by a note
and in an aggregate amount not to exceed two percent (2.0%) of the existing
principal balance of the Note, and no other debt will be secured (senior,
subordinate or pari passu) by the Property;


(13)         has not made and will not make any
loans or advances to any third party (including any affiliate);


(14)         is and will be solvent and pay its
debts from its assets as the same shall become due;


(15)         has done or caused to be done and will
do all things necessary to preserve its existence, and will observe all
formalities applicable to it;


(16)         will conduct and operate its business
in its own name and as presently conducted and operated;


(17)         will maintain financial statements,
books and records and bank accounts separate from those of its affiliates,
including, without limitation, its general partners or members, as applicable;


(18)         will be, and at all times will hold
itself out to the public as, a legal entity separate and distinct from any
other entity (including, without limitation, any affiliate, general partner, or
member, as applicable, or any affiliate of any general partner or member of
Borrower, as applicable) and will correct any known misunderstanding concerning
its separate identity;


(19)         will file its own tax returns;



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(20)         will maintain adequate capital for the
normal obligations reasonably foreseeable in a business of its size and
character and in light of its contemplated business operations;


(21)         will establish and maintain an office
through which its business will be conducted separate and apart from those of
its affiliates or shall allocate fairly and reasonably any overhead and expense
for shared office space;


(22)         will not commingle the funds and other
assets of Borrower with those of any general partner, member, affiliate,
principal or any other person;


(23)         has and will maintain its assets in
such a manner that it is not costly or difficult to segregate, ascertain or
identify its individual assets from those of any affiliate or any other person;


(24)         does not and will not hold itself out
to be responsible for the debts or obligations of any other person;


(25)         will pay the salaries of its own
employees (if any) from its own funds and maintain a sufficient number of
employees (if any) in light of its contemplated business operations;


(26)         will pay any liabilities out of its own
funds, including salaries of its employees, not funds of any affiliate; and


(27)         will use stationery, invoices, and
checks separate from its affiliates.


(b)           In the event
Borrower is a single-member Delaware limited liability company, the limited
liability company agreement of Borrower (the “LLC Agreement”) shall
provide that (i) upon the occurrence of any event that causes the sole
member of Borrower (“Member”) to cease to be the member of Borrower
(other than (A) upon an assignment by Member of all of its limited
liability company interest in Borrower and the admission of the transferee, or (B) the
resignation of Member and the admission of an additional member in either case
in accordance with the terms of the Loan Documents and the LLC Agreement), any
person acting as Independent Director of Borrower shall without any action of
any other Person and simultaneously with the Member ceasing to be the member of
Borrower, automatically be admitted to Borrower (“Special Member”) and
shall continue Borrower without dissolution and (ii) Special Member may
not resign from Borrower or transfer its rights as Special Member unless (A) a
successor Special Member has been admitted to Borrower as Special Member in
accordance with requirements of Delaware law and (B) such successor
Special Member has also accepted its appointment as an Independent Director. The
LLC Agreement shall further provide that (i) Special Member shall
automatically cease to be a member of Borrower upon the admission to Borrower
of a substitute Member, (ii) Special Member shall be a member of Borrower
that has no interest in the profits, losses and capital of Borrower and has no
right to receive any distributions of Borrower assets, (iii) pursuant to Section 18-301
of the Delaware Limited Liability Company Act (the “Act”), Special
Member shall not be required to make any capital contributions to Borrower and
shall not receive a limited liability company interest in Borrower, (iv) Special
Member, in its capacity as Special Member, may not bind Borrower, and 



 47
 






 



(v) except
as required by any mandatory provision of the Act, Special Member, in its
capacity as Special Member, shall have no right to vote on, approve or
otherwise consent to any action by, or matter relating to, Borrower, including,
without limitation, the merger, consolidation or conversion of Borrower; provided,
however, such prohibition shall not limit the obligations of Special
Member, in its capacity as Independent Director, to vote on such matters
required by the Loan Documents or the LLC Agreement. In order to implement the
admission to Borrower of Special Member, Special Member shall execute a
counterpart to the LLC Agreement. Prior to its admission to Borrower as Special
Member, Special Member shall not be a member of Borrower.


(c)           Upon the occurrence
of any event that causes the Member to cease to be a member of Borrower, to the
fullest extent permitted by law, the personal representative of Member shall,
within ninety (90) days after the occurrence of the event that terminated the
continued membership of Member in Borrower, agree in writing (i) to
continue Borrower and (ii) to the admission of the personal representative
or its nominee or designee, as the case may be, as a substitute member of
Borrower, effective as of the occurrence of the event that terminated the
continued membership of Member of Borrower in Borrower. Any action initiated by
or brought against Member or Special Member under any creditors rights laws shall
not cause Member or Special Member to cease to be a member of Borrower and upon
the occurrence of such an event, the business of Borrower shall continue
without dissolution. The LLC Agreement shall provide that each of Member and
Special Member waives any right it might have to agree in writing to dissolve
Borrower upon the occurrence of any action initiated by or brought against
Member or Special Member under any creditors rights laws, or the occurrence of
an event that causes Member or Special Member to cease to be a member of
Borrower.


As used in this Section 2.29, “Independent Director”
shall mean a duly appointed member of the board of directors of any SPE
Corporation or board of managers or of a single member Delaware limited
liability company which is an SPE who is provided by a nationally-recognized
company that provides professional independent directors who shall not have
been at the time of initial appointment or at any time while serving as an
Independent Director, and may not have been at any time (i) a stockholder,
director, officer, employee, partner, attorney or counsel of such SPE
Corporation, single member Delaware limited liability company which is an SPE,
Borrower or any affiliate of any of them, (ii) a customer, supplier or
other Person who derives any of its purchases or revenues from its activities
with such SPE Corporation, single member Delaware limited liability company
which is an SPE, Borrower or any affiliate of any of them, (iii) a Person
or other entity controlling or under common control with any such stockholder,
partner, customer, supplier or other Person, or (iv) a member of the
immediate family of any such stockholder, director, officer, employee, partner,
customer, supplier or other Person. As used in this definition, the term “control”
means the possession, directly or indirectly, of the power to direct or cause
the direction of the management, policies or activities of a Person, whether
through ownership of voting securities, by contract or otherwise. As used
herein, the term “affiliate” shall mean: 
(1)  any person or entity directly or indirectly owning,
controlling or holding with power to vote ten percent (10%) or more of the
outstanding voting securities or interests of such other person or entity; (2) any
person or entity ten percent (10%) or more of whose outstanding voting
securities are directly or indirectly owned, controlled or held with power to
vote by such other person or entity; (3) any person or entity directly or
indirectly controlling, controlled by or under common control with such other
person or entity; (4) any officer, director or partner of such other
person or entity; (5) if such other person or entity is an 



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officer, director or partner, any company for which such person or
entity acts in any such capacity; and (6) any close relative or spouse of
the specified person.


Section 2.30           Embargoed
Person. At all times throughout the term of the Loan, including after
giving effect to any Sale hereunder, (a) none of the funds or assets of
Indemnitor that are used to repay the Loan or of Borrower shall constitute
property of, or shall be beneficially owned directly or, to Borrower’s best
knowledge, indirectly, by any person subject to sanctions or trade restrictions
under United States law (“Embargoed Person” or “Embargoed Persons”) that are
identified on (1) the “List of Specially Designated Nationals and Blocked
Persons” maintained by the Office of Foreign Assets Control (OFAC), U.S.
Department of the Treasury, and/or to Borrower’s best knowledge, as of the date
thereof, based upon reasonable inquiry by Borrower, on any other similar list
maintained by OFAC pursuant to any authorizing statute including, but not
limited to, the International Emergency Economic Powers Act, 50 U.S.C. §§ 1701
et seq., The Trading with the Enemy Act, 50 U.S.C. App. 1 et seq., and any
Executive Order or regulation promulgated thereunder, with the result that the
investment in Borrower or any Indemnitor, as applicable (whether directly or
indirectly), is prohibited by law, or the Loan made by Lender would be in
violation of law, or (2) Executive Order 13224 (September 23, 2001)
issued by the President of the United States (“Executive Order Blocking
Property and Prohibiting Transactions with Persons Who Commit, Threaten to
Commit, or Support Terrorism”), any related enabling legislation or any other
similar Executive Orders, and (b) no Embargoed Person shall have any
direct interest, and to Borrower’s best knowledge, as of the date hereof, based
upon reasonable inquiry by Borrower, indirect interest, of any nature
whatsoever in Borrower or any Indemnitor, as applicable, with the result that
the investment in Borrower or any Indemnitor, as applicable (whether directly
or indirectly), is prohibited by law or the Loan is in violation of law. Notwithstanding
the foregoing, Borrower makes no representation, warranty or covenant as to the
individual shareholders of Mack-Cali Realty Corporation, a Maryland
corporation, a publicly traded company that would otherwise be covered by the
foregoing representations, warranties and covenants.


Section 2.31           Anti-Money
Laundering. At all times throughout the term of the Loan, including after
giving effect to any Transfers permitted pursuant to the Loan Documents, none
of the funds of Borrower or any Indemnitor, as applicable, that are used to
repay the Loan shall be derived from any unlawful activity, with the result
that the investment in Borrower or any Indemnitor, as applicable (whether
directly or indirectly), is prohibited by law or the Loan is in violation of
law.


Section 2.32           ERISA.


(a)           Borrower shall not
engage in any transaction which would cause any obligation, or action taken or
to be taken, hereunder (or the exercise by Lender of any of its rights under
the Note, this Mortgage or any of the other Loan Documents) to be a non-exempt
(under a statutory or administrative class exemption) prohibited transaction
under ERISA.


(b)           Borrower further
covenants and agrees to deliver to Lender such certifications or other evidence
from time to time throughout the term of this Mortgage, as requested by Lender
in its sole discretion, that (i) Borrower is not an “employee benefit plan”
as defined in Section 3(3) of ERISA, which is subject to Title I of
ERISA, or a “governmental plan” 



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within the
meaning of Section 3(32) of ERISA; (ii) Borrower is not subject to
Federal or state statutes regulating investments and fiduciary obligations with
respect to governmental plans; and (iii) one or more of the following
circumstances is true:


(1)           Equity interests in Borrower are
publicly offered securities within the meaning of 29 C.F.R. Section 2510.3-101(b)(2);


(2)           Less than 25 percent of each
outstanding class of equity interests in Borrower are held by “benefit plan
investors” within the meaning of 29 C.F.R. Section 2510.3-101(f)(2);
or


(3)           Borrower qualifies as an “operating
company” within the meaning of 29 C.F.R. Section 2510.3-101 or an
investment company registered under the Investment Company Act of 1940.


(c)           Borrower shall
indemnify Lender and defend and hold Lender harmless from and against all civil
penalties, excise taxes, or other loss, cost damage and expense (including,
without limitation, reasonable attorneys’ fees and disbursements and costs
incurred in the investigation, defense and settlement of claims and losses
incurred in correcting any prohibited transaction or in the sale of a
prohibited loan, and in obtaining any individual prohibited transaction
exemption under ERISA that may be required, in Lender’s sole discretion) that
Lender may incur, directly or indirectly, as a result of a default under this
Section. This indemnity shall survive any termination, satisfaction or
foreclosure of this Mortgage.


Section 2.33           Opinion
Assumptions. Borrower shall at all times conduct its business so that the
assumptions made with respect to Borrower in the Non-Consolidation Opinion
shall be true and correct in all respects.


Section 2.34           Certificates
of Occupancy. Borrower acknowledges that it is not in possession of certain
certificates of occupancy for the Building and/or Improvements located on the
Property (“Certificates of Occupancy”). Borrower undertakes, covenants and
agrees, to use commercially reasonable efforts to obtain or caused to be
obtained any one of the following:  (i) copies
of all missing Certificates of Occupancy, or if same were never issued, to take
any and all required actions in connection therewith in order to obtain the
Certificates of Occupancy as may be required by the appropriate municipality or
governmental authority, (ii) proof reasonably acceptable to Lender that a
Certificate of Occupancy is not required by the applicable municipality for the
Property, for which a legal opinion in form and substance reasonably acceptable
to Lender shall be deemed to be satisfactory proof thereof, (iii) proof reasonably
acceptable to Lender that failure to have a Certificate of Occupancy is not a
violation of law and that the buildings missing a Certificate of Occupancy can
remain legally occupied, for which a legal opinion in form and substance
reasonably acceptable to Lender shall be deemed to be satisfactory proof
thereof, (iv) a letter from the municipality stating either (A) that
the Property predates any requirement for Certificate of Occupancy or (B) that
although it no longer maintains copies of Certificates of Occupancy the
Property can remain legally occupied, in either case, with proof reasonably
acceptable to Lender that no material zoning code or building code violations
exist with respect to the Property, or (v) a letter from the applicable
municipality stating that such municipality does not have the Certificates of
Occupancy because they have 



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been lost,
misplaced or purged and that the Property can remain legally occupied ((i)-(v) above,
collectively, a “Certificate of Occupancy Satisfaction Event”). Borrower’s
failure to use commercially reasonable efforts to obtain any of the
aforementioned items shall constitute an “Event of Default” under this Security
Instrument. Borrower shall keep Lender apprised periodically, which shall be on
a basis reasonably acceptable to Lender, on the progress of Borrower’s efforts
to satisfy the foregoing obligation. Borrower’s obligations under this Section 2.34
with respect to each missing Certificate of Occupancy shall be deemed satisfied
by the occurrence of a Certificate of Occupancy Satisfaction Event with respect
to such missing Certificate of Occupancy.


Section 2.35           Violations.
Borrower undertakes, covenants and agrees, to use commercially reasonable
efforts to correct and satisfy any and all violations against the Property
(including, without limitation, zoning, floor area, building code and fire and
safety) (the “Property Violations”). Borrower’s failure to use commercially
reasonable efforts to correct and satisfy any and all Property Violations shall
constitute an “Event of Default” under this Security Instrument. Borrower shall
keep Lender apprised periodically, which shall be on a basis reasonably
acceptable to Lender, on the progress of the satisfaction and release of the
Property Violations.


ARTICLE
III


RESERVES
AND CASH MANAGEMENT


Section 3.1             Reserves
Generally.


(a)           As additional
security for the payment and performance by Borrower of all duties,
responsibilities and obligations under the Note and the other Loan Documents,
Borrower hereby unconditionally and irrevocably assigns, conveys, pledges,
mortgages, transfers, delivers, deposits, sets over and confirms unto Lender,
and hereby grants to Lender a security interest in, (i) the Impound
Account, the Immediate Repairs Reserve, the Replacement Reserve, the Vacancy
Reserve, the
Outstanding TILC Reserve, the Free Rent Reserve, the Rollover Reserve, as
applicable (each as hereinafter defined) and any other reserve or escrow
account established pursuant to the terms hereof or of any other Loan Document
(collectively, the “Reserves”), (ii) the accounts into which the Reserves
have been deposited, (iii) all insurance on said accounts, (iv) all
accounts, contract rights and general intangibles or other rights and interests
pertaining thereto, (v) all sums now or hereafter therein or represented
thereby, (vi) all replacements, substitutions or proceeds thereof, (vii) all
instruments and documents now or hereafter evidencing the Reserves or such
accounts, (viii) all powers, options, rights, privileges and immunities pertaining
to the Reserves (including the right to make withdrawals therefrom), and (ix) all
proceeds of the foregoing. Borrower hereby authorizes and consents to the
account into which the Reserves have been deposited being held in Lender’s name
or the name of any entity servicing the Note for Lender and hereby acknowledges
and agrees that Lender, or at Lender’s election, such servicing agent, shall
have exclusive control over said account. Notice of the assignment and security
interest granted to Lender herein may be delivered by Lender at any time to the
financial institution wherein the Reserves have been established, and Lender,
or such servicing entity, shall have possession of all passbooks or other
evidences of such accounts. Borrower hereby assumes all risk of loss with
respect to amounts on deposit in the Reserves. 



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Funds on
deposit in the Replacement Reserve, the Vacancy Reserve,
the Outstanding TILC Reserve, the Free Rent Reserve,  and the Rollover Reserve shall bear interest
at a rate equal to the then prevailing commercial money market rate. All
amounts deemed earned on funds contributed to the Replacement Reserve, the
Vacancy Reserve, the Outstanding TILC
Reserve, the Free Rent Reserve and the Rollover Reserve at the rate
referenced in the immediately preceding sentence shall be retained by Lender
and accumulated for the benefit of Borrower and added to the balance in the
Replacement Reserve, the Outstanding
TILC Reserve, the Free Rent Reserve, the Vacancy Reserve and the
Rollover Reserve and shall be disbursed for payment of the items for which
other funds in the Replacement Reserve,
the Outstanding TILC Reserve, the Free Rent Reserve, the Vacancy Reserve
and the Rollover Reserve are to be disbursed. Borrower shall not be entitled to
earn any interest with respect to funds on deposit in the Impound Account and
the Immediate Repairs Reserve. Borrower hereby knowingly, voluntarily and
intentionally stipulates, acknowledges and agrees that the advancement of the
funds from the Reserves as set forth herein is at Borrower’s direction and is
not the exercise by Lender of any right of set-off or other remedy upon a
Default or an Event of Default. Borrower hereby waives all right to withdraw
funds from the Reserves except as provided for in this Mortgage. If an Event of
Default shall occur hereunder or under any other of the Loan Documents Lender
may, without notice or demand on Borrower, at its option:  (A) withdraw any or all of the funds
(including, without limitation, interest) then remaining in the Reserves and
apply the same, after deducting all costs and expenses of safekeeping,
collection and delivery (including, but not limited to, reasonable attorneys’
fees, costs and expenses) to the Debt or any other obligations of Borrower
under the other Loan Documents in such manner as Lender shall deem appropriate
in its sole discretion, and the excess, if any, shall be paid to Borrower, (B) exercise
any and all rights and remedies of a secured party under any applicable Uniform
Commercial Code, or (C) exercise any other remedies available at law or in
equity. No such use or application of the funds contained in the Reserves shall
be deemed to cure any Default or Event of Default.


(b)           The Reserves shall
not, unless otherwise explicitly required by applicable law, be or be deemed to
be escrow or trust funds, but, at Lender’s option and in Lender’s discretion,
may either be held in a separate account or be commingled by Lender with the
general funds of Lender. The Reserves are solely for the protection of Lender and
entail no responsibility on Lender’s part beyond the payment of the respective
items for which they are held following receipt of bills, invoices or
statements therefor in accordance with the terms hereof and beyond the allowing
of due credit for the sums actually received. Upon assignment of this Mortgage
by Lender, any funds in the Reserves shall be turned over to the assignee and
any responsibility of Lender, as assignor, with respect thereto shall terminate.
If the funds in the applicable Reserve shall exceed the amount of payments
actually applied by Lender for the purposes and items for which the applicable
Reserve is held, such excess may be credited by Lender on subsequent payments
to be made hereunder or, at the option of Lender, refunded to Borrower. If,
however, the applicable Reserve shall not contain sufficient funds to pay the
sums required by the dates on which such sums are required to be on deposit in
such account, Borrower shall, within ten (10) days after receipt of
written notice thereof, deposit with Lender the full amount of any such
deficiency. If Borrower shall fail to deposit with Lender the full amount of
such deficiency as provided above, Lender shall have the option, but not the
obligation, to make such deposit, and all amounts so deposited by Lender,
together with interest thereon at the Default Interest Rate from the date so
deposited by Lender until actually paid by Borrower, shall be immediately paid
by Borrower on demand and shall be secured by this 



 52
 






 



Mortgage and
by all of the other Loan Documents securing all or any part of the Debt. If
there is an Event of Default under this Mortgage, Lender may, but shall not be
obligated to, apply at any time the balance then remaining in any or all of the
Reserves against the Debt in whatever order Lender shall subjectively determine.
No such application of any or all of the Reserves shall be deemed to cure any
Event of Default. Upon full payment of the Debt in accordance with its terms or
at such earlier time as Lender may elect, the balance of any or all of the
Reserves then in Lender’s possession shall be paid over to Borrower and no
other party shall have any right or claim thereto.


Section 3.2             Intentionally
Omitted


Section 3.3             Impound
Account. Borrower shall establish and maintain at all times while this
Mortgage continues in effect an impound account (the “Impound Account”) with
Lender for payment of real estate taxes and assessments and insurance on the
Property and as additional security for the Debt. Simultaneously with the
execution hereof, Borrower shall deposit in the Impound Account an amount
determined by Lender to be necessary to ensure that there will be on deposit
with Lender an amount which, when added to the monthly payments subsequently
required to be deposited with Lender hereunder on account of real estate taxes,
assessments and insurance premiums, will result in there being on deposit with
Lender in the Impound Account an amount sufficient to pay the next due
installment of real estate taxes and assessments on the Property at least one (1) month
prior to the earlier of (a) the due date thereof or (b) any such date
by which Borrower or Lender is required by law to pay same and the next due
annual insurance premiums with respect to the Property at least one (1) month
prior to the due date thereof. Commencing on the first monthly payment date
under the Note and continuing thereafter on each monthly payment date under the
Note, Borrower shall pay to Lender, concurrently with and in addition to the
monthly payment due under the Note and until the Debt is fully paid and
performed, deposits in an amount equal to one-twelfth (1/12) of the amount of
the annual real estate taxes and assessments that will next become due and
payable on the Property, plus one-twelfth (1/12) of the amount of the annual
premiums that will next become due and payable on insurance policies which
Borrower is required to maintain hereunder, each as estimated and determined by
Lender. So long as no Default or Event of Default has occurred, and no event
has occurred or failed to occur which with the passage of time, the giving of
notice, or both would constitute an Event of Default (a “Default”), all sums in
the Impound Account shall be held by Lender in the Impound Account to pay said
taxes, assessments and insurance premiums before the same become delinquent. Borrower
shall be responsible for ensuring the receipt by Lender, at least thirty (30)
days prior to the respective due date for payment thereof, of all bills,
invoices and statements for all taxes, assessments and insurance premiums to be
paid from the Impound Account, and so long as no Event of Default has occurred,
Lender shall pay the governmental authority or other party entitled thereto
directly to the extent funds are available for such purpose in the Impound
Account. In making any payment from the Impound Account, Lender shall be
entitled to rely on any bill, statement or estimate procured from the
appropriate public office or insurance company or agent without any inquiry
into the accuracy of such bill, statement or estimate and without any inquiry
into the accuracy, validity, enforceability or contestability of any tax,
assessment, valuation, sale, forfeiture, tax lien or title or claim thereof.



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Notwithstanding the foregoing, so long as an Event of Default has not
occurred, Borrower shall not be required to deposit into the Impound Account
payments with respect to insurance premiums in connection with the Property so
long as Borrower promptly provides Lender with proof of payment of all
insurance premiums and other charges in connection with the insurance premiums
required in connection with the Property and evidence that such required
insurance is in place and is renewed at least thirty (30) days prior to the
expiration of any insurance coverage. In the event that (i) an Event of
Default occurs, and/or (ii) Borrower fails to provide Lender with the
foregoing proof of payment of insurance premiums and/or evidence that the
insurance required is in place at least thirty (30) days prior to the due date
thereof, Borrower shall be required to deposit payments into the Impound
Account with respect to insurance premiums in connection with the Property as
set forth in this Section 3.3.


Section 3.4             Immediate
Repairs Reserve. Prior to the execution of this Mortgage, Lender has caused
the Property to be inspected and such inspection has revealed that the Property
is in need of certain maintenance, repairs and/or remedial or corrective work. Contemporaneously
with the execution hereof, Borrower has established with Lender a reserve in
the amount of $10,000.00 (the “Immediate Repair Reserve”) by depositing
such amount with Lender. Borrower shall cause each of the items described in
that certain Property Condition Report (the “Deferred Maintenance”) to
be completed, performed, remediated and corrected to the satisfaction of Lender
and as necessary to bring the Property into compliance with all applicable
laws, ordinances, rules and regulations on or before the expiration of six
(6) months after the effective date hereof, as such time period may be
extended by Lender in its sole discretion. So long as no Event of Default has
occurred, all sums in the Immediate Repair Reserve shall be held by Lender in
the Immediate Repair Reserve to pay the costs and expenses of completing the
Deferred Maintenance. So long as no Default or Event of Default has occurred,
Lender shall, to the extent funds are available for such purpose in the
Immediate Repair Reserve, disburse to Borrower the amount paid or incurred by
Borrower in completing, performing, remediating or correcting the Deferred
Maintenance upon (a) the receipt by Lender of a written request from
Borrower for disbursement from the Immediate Repair Reserve and a certification
by Borrower in a form as may be required by Lender that the applicable item of
Deferred Maintenance has been completed in accordance with the terms of this
Mortgage, (b) delivery to Lender of invoices, receipts or other evidence
satisfactory to Lender verifying the costs of the Deferred Maintenance to be
reimbursed, (c) delivery to Lender of a certification from an inspecting
architect, engineer or other consultant reasonably acceptable to Lender
describing the completed work, verifying the completion of the work and the
value of the completed work and, if applicable, certifying that the Property
is, as a result of such work, in compliance with all applicable laws,
ordinances, rules and regulations relating to the Deferred Maintenance so
performed, and (d) delivery to Lender of affidavits, lien waivers or other
evidence reasonably satisfactory to Lender showing that all materialmen,
laborers, subcontractors and any other parties who might or could claim
statutory or common law liens and are furnishing or have furnished materials or
labor to the Property have been paid all amounts due for such labor and
materials furnished to the Property. Lender shall not be required to make
advances from the Immediate Repair Reserve more frequently than once in any
thirty (30) day period. In making any payment from the Immediate Repair
Reserve, Lender shall be entitled to rely on such request from Borrower without
any inquiry into the accuracy, validity or contestability of any such amount. Borrower
hereby grants to Lender a power-of-attorney, coupled with an interest, to cause
the Deferred Maintenance to be completed, performed, 



 54
 






 



remediated and
corrected to the satisfaction of Lender upon Borrower’s failure to do so in
accordance with the terms and conditions of this Section 3.4, and to apply
the amounts on deposit in the Immediate Repair Reserve to the costs associated
therewith, all as Lender may determine in its sole and absolute discretion but
without obligation to do so.


Section 3.5             Replacement
Reserve. As additional security for the Debt, Borrower shall establish and
maintain at all times while this Mortgage continues in effect a repair reserve
(the “Replacement Reserve”) with Lender for payment of costs and expenses
incurred by Borrower in connection with the performance of work to the roofs,
chimneys, gutters, downspouts, paving, curbs, ramps, driveways, balconies,
porches, patios, exterior walls, exterior doors and doorways, windows,
elevators and mechanical and HVAC equipment (collectively, the “Repairs”). Commencing
on the first monthly Payment Date under the Note and continuing thereafter on
each monthly Payment Date under the Note, Borrower shall pay to Lender,
concurrently with and in addition to the monthly payment due under the Note and
until the Debt is fully paid and performed, a deposit to the Replacement
Reserve in an amount equal to $1,479.24 per month. So long as no Event of
Default has occurred, all sums in the Replacement Reserve shall be held by
Lender in the Replacement Reserve to pay the costs and expenses of Repairs. So
long as no Default or Event of Default has occurred, Lender shall, to the
extent funds are available for such purpose in the Replacement Reserve,
disburse to Borrower the amount paid or incurred by Borrower in performing such
Repairs within ten (10) days following: (a) the receipt by Lender of
a written request from Borrower for disbursement from the Replacement Reserve
and a certification by Borrower in a form approved in writing by Lender that
the applicable item of Repair has been completed; (b) the delivery to
Lender of invoices, receipts or other evidence satisfactory to Lender,
verifying the cost of performing the Repairs; (c) for disbursement
requests in excess of $25,000.00, the delivery to Lender of affidavits, lien
waivers or other evidence reasonably satisfactory to Lender showing that all
materialmen, laborers, subcontractors and any other parties who might or could
claim statutory or common law liens and are furnishing or have furnished
material or labor to the Property have been paid all amounts due for labor and
materials furnished to the Property; (d) for disbursement requests in
excess of $25,000.00, delivery to Lender of a certification from an inspecting
architect or other third party acceptable to Lender describing the completed
Repairs and verifying the completion of the Repairs and the value of the
completed Repairs; and (e) for disbursement requests in excess of
$25,000.00, delivery to Lender of a new certificate of occupancy for the
portion of the Improvements covered by such Repairs, if said new certificate of
occupancy is required by law, or a certification by Borrower that no new
certificate of occupancy is required. Lender shall not be required to make
advances from the Replacement Reserve more frequently than once in any thirty
(30) day period. In making any payment from the Replacement Reserve, Lender
shall be entitled to rely on such request from Borrower without any inquiry
into the accuracy, validity or contestability of any such amount. Lender may,
at Borrower’s expense, make or cause to be made during the term of this
Mortgage an annual inspection of the Property to determine the need, as
determined by Lender in its reasonable judgment, for further Repairs of the
Property. In the event that such inspection reveals that further Repairs of the
Property are required, Lender shall provide Borrower with a written description
of the required Repairs and Borrower shall complete such Repairs to the
reasonable satisfaction of Lender within ninety (90) days after the receipt of
such description from Lender, or such later date as may be approved by Lender
in its sole discretion.



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Section 3.6             Rollover
Reserve. (a)  Borrower shall pay to Lender $12,326.92 on each Payment
Date (the “Rollover Reserve”). Borrower shall also pay to Lender for transfer
into the Rollover Reserve all payments received from tenants in connection with
the early termination or cancellation of any Leases, including fees, penalties
and commissions.  If Lender determines in
its reasonable judgment that the funds in the Rollover Reserve will be
insufficient to pay (or in excess of) the amounts due or to become due for
Approved Leasing Expenses (as hereinafter defined), Lender may increase (or
decrease) the monthly contribution required to be made by Borrower to the
Rollover Reserve. Provided that no Event of Default has occurred and is
continuing, Lender shall disburse funds held in the Rollover Reserve to
Borrower, within fifteen (15) days after the delivery by Borrower to Lender of
a request therefor (but not more often than once per month), in increments of
at least $5,000, provided (i) such disbursement is for an Approved Leasing
Expense; (ii) Lender shall have (if it desires) verified (by an inspection
conducted at Borrower’s expense) performance of any construction work
associated with such Approved Leasing Expense; and (iii) the request for
disbursement is accompanied by (A) an officer’s certificate from an
authorized officer of the Borrower certifying (v) that such funds will be
used only to pay (or reimburse Borrower for) Approved Leasing Expenses and a
description thereof, (w) that all outstanding trade payables (other than
those to be paid from the requested disbursement) have been paid in full, (x) that
the same has not been the subject of a previous disbursement, (y) that all
previous disbursements have been used only to pay (or reimburse Borrower for)
the previously identified Approved Leasing Expenses and (z) that any
construction work associated with such Approved Leasing Expenses has been
completed in a good and workmanlike manner and in accordance with all
applicable legal requirements, (B) reasonably detailed supporting
documentation as to the amount, necessity and purpose therefor, (C) copies
of appropriate lien waivers or other evidence of payment satisfactory to Lender
in connection with any construction work associated with such Approved Leasing
Expenses and (D) at Lender’s option, a title search for the Property
indicating that it is free from all liens not previously approved by Lender. Any
such disbursement of more than $10,000 to pay (rather than reimburse) Approved
Leasing Expenses may, at Lender’s option, be made by joint check payable to
Borrower and the payee of such Approved Leasing Expenses. For the purposes
hereof an “Approved Leasing Expense” shall mean the actual out-of-pocket
expenses incurred by Borrower and payable to third parties that are not
affiliates of Borrower or any Indemnitor in leasing space at the Premises
pursuant to Leases entered into in accordance with the Loan Documents,
including brokerage commissions and tenant improvements, which expenses (i) are
(A) specifically approved by Lender in connection with approving the
applicable Lease, (B) incurred in the ordinary course of business and on
market terms and conditions in connection with Leases which do not require
Lender’s approval under the Loan Documents, or (C) otherwise approved by
Lender, which approval shall not be unreasonably withheld or delayed, and (ii) are
substantiated by executed Lease documents and brokerage agreements.


(b)  In connection with the sums deposited into the Rollover
Reserve pursuant to this Section 3.6, at the end of each calendar year,
Borrower shall have the option upon thirty (30) days prior written notice to
Lender, to deliver or cause to be delivered to Lender and deposited into the
Rollover Reserve a clean, unconditional, irrevocable and freely transferable,
sight-draft, issued by a bank having a rating of “AA” or better by Standard &
Poor’s (or equivalent rating agency) and being acceptable to Lender (in its
sole and absolute discretion), having an initial expiry date of not earlier
than one year after the delivery of such letter of credit, containing an “evergreen”
provision for renewals of successive twelve (12) month terms, and otherwise in
form 



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and substance
acceptable to Lender (“Letter of
Credit”) equal to the amount of cash then on deposit in the Rollover
Reserve. Upon the delivery of the Letter of Credit to Lender, Lender shall,
within fifteen (15) days receipt of such Letter of Credit, deliver to Borrower
the cash funds then-held in the Rollover Reserve equal to the amount of the
Letter of Credit, which disbursement shall in no event be of more funds than
Lender then-holds in the Rollover Reserve in cash sums. At any time after
delivery of the Letter of Credit, (i) after the occurrence of an Event of
Default, Lender shall have the right to draw upon the Letter of Credit, at
Lender’s option, and, from the proceeds thereof (which shall be deposited in
the Rollover Reserve), advance to itself any amounts held therein pursuant to
Lender’s rights and remedies under the Loan Documents, and (ii) so long as
no Event of Default has occurred and is continuing and if Borrower requests a
disbursement from the Rollover Reserve in accordance with Section 3.6(a) at
a time when there is a Letter of Credit outstanding in the amount of such
disbursement request but for which there are insufficient cash funds then-held
in the Rollover Reserve, at Borrower’s request, Borrower shall have the right
to request that Lender draw upon the Letter of Credit, and, from the proceeds
thereof (which shall be deposited in the Rollover Reserve), advance to Borrower
the amount of the requested disbursement (subject to fulfillment of the
conditions related to such disbursement set forth in this Section 3.6) for
which there is insufficient cash funds then-held in the Rollover Reserve but
sufficient funds held in the Letter of Credit. Notwithstanding anything
contained herein to the contrary, the delivery of the Letter of Credit to
Lender shall in no way waive Borrower’s obligation to continue to make the
monthly deposits into the Rollover Reserve in accordance with this Section 3.6,
and in no event shall the delivery of a Letter of Credit to Lender be deemed a
waiver or termination of such obligation. In connection with the Letter of
Credit, Borrower shall enter into a letter of credit agreement with Lender
pledging the Letter of Credit to Lender and governing the terms and conditions
of such Letter of Credit and otherwise in form and substance satisfactory to
Lender, in Lender’s sole discretion (the “LC Agreement”). Borrower shall pay
any and all fees and costs incurred by Lender in connection with the any of the
LC Agreement and/or the Letter of Credit, including, without limitation, the
review of the LC Agreement and/or the Letter of Credit and the preparation,
execution and delivery of the LC Agreement and/or the Letter of Credit
(including, without limitation, attorneys’ fees).


Section 3.7             Outstanding
TILC Reserve. On the date hereof Borrower has established with Lender a
reserve (the “Outstanding TILC Reserve”) in the amount of $157,621.93 in
connection with certain leasing commissions and tenant improvement obligations
of Borrower that are outstanding as of the date hereof but not yet paid to
those certain tenants (each a “Outstanding TILC Tenant”, and collectively, the “Outstanding
TILC Tenants”) as more particularly set forth on Exhibit B annexed
hereto. Provided that no Event of Default has occurred and is continuing,
Borrower may submit to Lender a written request for disbursement from the
Outstanding TILC Reserve in an amount not to exceed the initial deposit made by
Borrower into the Outstanding TILC 
Reserve on the date hereof, relating to space leased by an Outstanding
TILC Tenant together with (x) copies of all documentation required to be
delivered by the Outstanding TILC Tenant to Borrower under the applicable
Leases as a prerequisite to the Outstanding TILC Tenant receiving its tenant
allowance, (y) an estoppel by the applicable Outstanding TILC Tenant
stating that the tenant allowance due to such Outstanding TILC Tenant is due
and payable, that the Outstanding TILC Tenant is in possession of its demised
premises, is open for business and is paying base rent under its Lease, and
that there are no material defaults under the Lease to the Outstanding TILC
Tenant and (z) a copy of the check sent by Borrower to the Outstanding
TILC Tenant evidencing the payment of the tenant allowance; provided, 



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however,
that Borrower shall not be reimbursed for more than a total of $157,621.93. In
no event shall Borrower be reimbursed for more than the amount allocated for
the applicable Outstanding TILC Tenant as set forth on Exhibit B. All
funds deposited into the Outstanding TILC Reserve shall be held by Lender
pursuant to the provisions of this Security Instrument and, provided that no
Event of Default shall have occurred and be continuing, all such funds shall be
applied in payment of leasing commissions and tenant improvement obligations
with respect to the Outstanding TILC Tenants. Should an Event of Default occur
and be continuing, the sums on deposit in the Outstanding TILC Reserve may be
applied by Lender in payment of any leasing commissions or tenant improvements
with respect to any Outstanding TILC Tenants 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, 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. To the extent
there are any excess funds remaining in the Outstanding TILC Reserve after
Borrower has paid all of its obligations to all Outstanding TILC Tenants, upon
Lender’s receipt of a written request, which request shall be delivered with a
statement from the Borrower that no further leasing commissions, tenant
improvement obligations and/or tenant allowance obligations exist under this Section 3.7,
Lender shall within twenty (20) days thereafter, disburse any of the balance of
the Outstanding TILC Reserve to Borrower.


Section 3.8             Free
Rent Reserve. On the date hereof Borrower has established with Lender a
reserve (the “Free Rent Reserve”) in the amount of $112,866.08 in connection
with the free rent and/or rent concessions due to Walder, Hayden &
Brogan, P.A., a New Jersey professional corporation (“Walder”) under that
certain Agreement of Lease between Borrower (as successor in interest to 5 Becker
Associates, a New Jersey limited partnership) and Walder, dated as of December 3,
1982, as same has been and may be further amended from time to time. So long as
Borrower has made all of Borrower’s required monthly debt service payments
(including reserves and escrows) to Lender in connection with the Loan
Documents and provided that no Event of Default has occurred and is continuing,
Borrower may submit to Lender a written request for disbursement from the Free
Rent Reserve once each month in the amount set forth on Exhibit C attached
hereto for each such month for the number of months set forth on Exhibit C


Section 3.9             Vacancy
Reserve. On the date hereof Borrower has established with Lender a reserve
(the “Vacancy Reserve”) in the amount of $1,000,000 in connection with the
leasing of certain vacant space of Borrower equal to 7,100 square feet (the “Vacant
Space”) at the Property to one or more bona-fide third-party tenants acceptable
to Lender (each an “Outstanding Vacancy Space Tenant”) pursuant to one or more
Leases in form and substance acceptable to Lender (each a “Vacancy Lease”). Provided
that no Event of Default has occurred and is continuing, Borrower may submit to
Lender a written request for disbursement from the Vacancy Reserve in an amount
not to exceed the initial deposit made by Borrower into the Vacancy Reserve on
the date hereof, relating to the Vacant Space leased by an Outstanding Vacancy
Space Tenant together with (x) copies of all documentation in connection
with the Vacancy Lease, and (y) a tenant estoppel certificate from the
Outstanding Vacancy Space Tenant which shall be in form and substance
satisfactory to Lender and provide, among other things, that (i) Outstanding
Vacancy Space Tenant is occupying all of the Vacant Space, is open for business in
its ordinary course and paying base rent in accordance with the lease of the Vacant 



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Space to such Outstanding
Vacancy Space Tenant, (ii) all of the obligations of Borrower under the
Vacancy Lease which are required to be fulfilled as of the date of the tenant
estoppel certificate have been duly performed and completed including, without
limitation, any obligations of Borrower to make or to pay or reimburse
Outstanding Vacancy Space Tenant for any tenant improvements at the premises leased under the Vacancy
Lease, and to Borrower’s best knowledge, the improvements described in the
Vacancy Lease have been constructed substantially in accordance with the plans
and specifications therefor, lien-free, and have been accepted by Outstanding Vacancy Space Tenant, (iii) Outstanding
Vacancy Space Tenant is not then entitled to any concession or rebate of rent
or other charges from time to time due and payable under the Vacancy Lease that
are not acceptable to Lender in its reasonable discretion, (iv) there are
no unpaid or unreimbursed construction or other allowances or other offsets due
Outstanding Vacancy Space Tenant under
the Vacancy Lease which are then due and payable, and (v) to Borrower’s
best knowledge there are no defaults by Borrower under the Vacancy Lease; and Borrower shall deliver
or cause to be delivered to Lender, at Lender’s option, a subordination,
non-disturbance and attornment agreement from the Outstanding Vacancy Space Tenant in form and
substance satisfactory to Lender; provided, however, that
Borrower shall not be reimbursed for more than the proportionate share of the
amount held in the Vacancy Reserve attributable to the portion of the Vacant
Space leased to such Outstanding Vacancy Space Tenant and in the aggregate
Borrower shall not be reimbursed for more than a total of $1,000,000. So long
as no Event of Default shall be have occurred and be continuing, and provided
that the provisions of Section 3.6 hereof have been complied with in full
to Lender’s satisfaction, the sums held in this Vacancy Reserve may be used in
part for tenant improvements and leasing commissions solely with respect to the
Vacant Space in accordance with the disbursement procedures set forth in Section 3.6
hereof. Should an Event of Default occur and be continuing, the sums on deposit
in the Vacancy Reserve may be applied by Lender in payment of any leasing
commissions or tenant improvements with respect to the Vacant Space 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, 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.
Upon Borrower’s written request to Lender and satisfaction of the conditions
set forth in this Section 3.9 to the extent that ninety-four percent (94%)
of the Vacant Space has been leased in accordance with Section 3.6, in
Lender’s reasonable discretion, Lender shall within twenty (20) days
thereafter, disburse any of the balance of the Vacancy Reserve to Borrower.


ARTICLE
IV


EVENTS OF
DEFAULT


Section 4.1             Events
of Default. The occurrence of any of the following events shall be an Event
of Default hereunder:


(a)           Borrower (x) fails
to pay any payments due under the Note or to the Reserves on the date when the
same is due and payable, or (y) fails to pay any money to Lender required
hereunder at the time or within any applicable grace period set forth herein,
or if no grace period is set forth herein, then within seven (7) days of
the date such payment is due 



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(except those
regarding payments to be made under the Note or to the Reserves, which failure
is not subject to any grace or cure period).


(b)           Borrower fails to
provide insurance as required by Section 2.3 hereof or fails to
perform any covenant, agreement, obligation, term or condition set forth in Section 2.27
or Section 2.29 hereof.


(c)           Borrower fails to
perform any other covenant, agreement, obligation, term or condition set forth
herein, other than those otherwise described in this Section 4.1,
and, to the extent such failure or default is susceptible of being cured, the
continuance of such failure or default for thirty (30) days after written
notice thereof from Lender to Borrower; provided, however, that
if such default is susceptible of cure but such cure cannot be accomplished
with reasonable diligence within said period of time, and if Borrower commences
to cure such default promptly after receipt of notice thereof from Lender, and
thereafter prosecutes the curing of such default with reasonable diligence,
such period of time shall be extended for such period of time as may be
necessary to cure such default with reasonable diligence, but not to exceed an
additional sixty (60) days.


(d)           Any representation
or warranty made herein, in or in connection with any application or commitment
relating to the loan evidenced by the Note, or in any of the other Loan
Documents to Lender by Borrower, by any principal, general partner, manager or
member in Borrower, or by any Indemnitor is determined by Lender to have been
false or misleading in any material respect at the time made.


(e)           There shall be a
sale, conveyance, disposition, alienation, hypothecation, leasing, assignment,
pledge, mortgage, granting of a security interest in or other transfer or
further encumbrancing of the Property, Borrower or its general partners or
managing members, or any portion thereof or any interest therein, in violation
of Section 2.9 hereof.


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


(g)           Borrower, general
partner or managing member in Borrower or any Indemnitor becomes insolvent, or
makes a transfer in fraud of creditors, or makes an assignment for the benefit
of creditors, or files a petition in bankruptcy, or is voluntarily adjudicated
insolvent or bankrupt or admits in writing the inability to pay its debts as
they mature, or petitions or applies to any tribunal for or consents to or
fails to contest the appointment of a receiver, trustee, custodian or similar
officer for Borrower, for any such general partner or managing member of
Borrower or for any Indemnitor or for a substantial part of the assets of
Borrower, of any such general partner or managing member of Borrower or of any
Indemnitor, or commences any case, proceeding or other action under any
bankruptcy, reorganization, arrangement, readjustment or debt, dissolution or
liquidation law or statute of any jurisdiction, whether now or hereafter in
effect.


(h)           A petition is filed
or any case, proceeding or other action is commenced against Borrower, against
any general partner or managing member of Borrower or against any Indemnitor
seeking to have an order for relief entered against it as debtor or seeking 



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


(i)            The Property or any
part thereof is taken on execution or other process of law in any action
against Borrower.


(j)            Borrower abandons
all or a portion of the Property.


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


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


(m)          Any dissolution,
termination, partial or complete liquidation, merger or consolidation of
Borrower, any general partner or any managing member, or any Indemnitor.


ARTICLE V


REMEDIES


Section 5.1             Remedies
Available. If there shall occur an Event of Default under this Mortgage,
then this Mortgage is subject to foreclosure as provided by law and Lender may,
at its option and by or through a trustee, nominee, assignee or otherwise, to
the fullest extent permitted by law, exercise any or all of the following
rights, remedies and recourses, either successively or concurrently:


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



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Note and any
applicable prepayment fee provided for in the Note shall then be immediately
due and payable.


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


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


(d)           Appointment of Receiver.
Upon, or at any time prior or after, initiating the exercise of any power of
sale, instituting any judicial foreclosure or instituting any other foreclosure
of the liens and security interests provided for herein or any other legal
proceedings hereunder, make application to a court of competent jurisdiction
for appointment of a receiver for all or any part of the Property, as a matter
of strict right and without notice to Borrower and without regard to the
adequacy of the Property for the repayment of the Debt or the solvency of
Borrower or any person or persons liable for the payment of the Debt, and
Borrower does hereby irrevocably consent to such appointment, waive any and all
notices of and defenses to such appointment and agree not to oppose any
application therefor by Lender, but nothing herein is to be construed to
deprive Lender of any other right, remedy or privilege Lender may now have
under the law to have a receiver appointed, provided, however,
that the appointment of such receiver, trustee or other appointee by virtue of
any court order, statute or regulation shall not impair or in any manner
prejudice the rights of Lender to receive payment of the Rents and Profits
pursuant to other terms and provisions hereof. Any such receiver shall have all
of the usual powers and duties of receivers in similar cases, including,
without limitation, the full power to hold, develop, rent, lease, manage,
maintain, operate and otherwise use or permit the use of the Property upon such
terms and conditions as said receiver may deem to be prudent and reasonable
under the circumstances as more fully set forth in Section 5.3
below. Such receivership shall, at the option of Lender, continue until full
payment of all of the Debt or until title to the Property shall have passed by
foreclosure sale under this Mortgage or deed in lieu of foreclosure.


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



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


(f)            Judicial
Remedies. Proceed by suit or suits, at law or in equity, instituted by or
on behalf of Lender, to enforce the payment of the Debt or the other
obligations of Borrower hereunder or pursuant to the Loan Documents, to
foreclose the liens and security interests of this Mortgage as against all or
any part of the Property, and to have all or any part of the Property sold
under the judgment or decree of a court of competent jurisdiction. This remedy
shall be cumulative of any other non-judicial remedies available to Lender with
respect to the Loan Documents. Proceeding with the request or receiving a
judgment for legal relief shall not be or be deemed to be an election of
remedies or bar any available non-judicial remedy of Lender.


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


Section 5.2             Application
of Proceeds. To the fullest extent permitted by law, the proceeds of any
sale under this Mortgage shall be applied, to the extent funds are so
available, to the following items in such order as Lender in its discretion may
determine:


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


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


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


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



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Section 5.3             Right
and Authority of Receiver or Lender in the Event of Default; Power of Attorney.
Upon the occurrence of an Event of Default, and entry upon the Property
pursuant to Section 5.1(b) hereof or appointment of a receiver
pursuant to Section 5.1(d) hereof, and under such terms and
conditions as may be prudent and reasonable under the circumstances in Lender’s
or the receiver’s sole discretion, all at Borrower’s expense, Lender or said
receiver, or such other persons or entities as they shall hire, direct or
engage, as the case may be, may do or permit one or more of the following,
successively or concurrently:  (a) enter
upon and take possession and control of any and all of the Property; (b) take
and maintain possession of all documents, books, records, papers and accounts
relating to the Property; (c) exclude Borrower and its agents, servants
and employees wholly from the Property; (d) manage and operate the
Property; (e) preserve and maintain the Property; (f) make repairs
and alterations to the Property; (g) complete any construction or repair
of the Improvements, with such changes, additions or modifications of the plans
and specifications or intended disposition and use of the Improvements as
Lender may in its sole discretion deem appropriate or desirable to place the
Property in such condition as will, in Lender’s sole discretion, make it or any
part thereof readily marketable or rentable; (h) conduct a marketing or
leasing program with respect to the Property, or employ a marketing or leasing
agent or agents to do so, directed to the leasing or sale of the Property under
such terms and conditions as Lender may in its sole discretion deem appropriate
or desirable; (i) employ such contractors, subcontractors, materialmen,
architects, engineers, consultants, managers, brokers, marketing agents, or
other employees, agents, independent contractors or professionals, as Lender
may in its sole discretion deem appropriate or desirable to implement and
effectuate the rights and powers herein granted; (j) execute and deliver,
in the name of Lender as attorney-in-fact and agent of Borrower or in its own
name as Lender, such documents and instruments as are necessary or appropriate
to consummate authorized transactions; (k) enter such leases, whether of
real or personal property, or tenancy agreements, under such terms and
conditions as Lender may in its sole discretion deem appropriate or desirable; (1) collect
and receive the Rents and Profits from the Property; (m) eject tenants or
repossess personal property, as provided by law, for breaches of the conditions
of their leases or other agreements; (n) initiate a cause of action for
unpaid Rents and Profits, payments, income or proceeds in the name of Borrower
or Lender; (o) maintain actions in forcible entry and detainer, ejectment
for possession and actions in distress for rent; (p) compromise or give
acquittance for Rents and Profits, payments, income or proceeds that may become
due; (q) delegate or assign any and all rights and powers given to Lender
by this Mortgage; and I do any acts which Lender in its sole discretion deems
appropriate or desirable to protect the security hereof and use such measures,
legal or equitable, as Lender may in its sole discretion deem appropriate or
desirable to implement and effectuate the provisions of this Mortgage. This
Mortgage shall constitute a direction to and full authority to any lessee, or
other third party who has heretofore dealt or contracted or may hereafter deal
or contract with Borrower or Lender, at the request of Lender, to pay all
amounts owing under any Lease, contract, concession, license or other agreement
to Lender without proof of the Event of Default relied upon. Any such lessee or
third party is hereby irrevocably authorized to rely upon and comply with (and
shall be fully protected by Borrower in so doing) any request, notice or demand
by Lender for the payment to Lender of any Rents and Profits or other sums
which may be or thereafter become due under its Lease, contract, concession,
license or other agreement, or for the performance of any undertakings under
any such Lease, contract, concession, license or other agreement, and shall have
no right or duty to inquire whether any Event of Default under this Mortgage or
under any of the other Loan Documents has actually occurred or is then



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existing. Borrower
hereby constitutes and appoints Lender, its assignees, successors, transferees
and nominees, as Borrower’s true and lawful attorney-in-fact and agent, with
full power of substitution in the Property, in Borrower’s name, place and
stead, to do or permit any one or more of the foregoing described rights,
remedies, powers and authorities, successively or concurrently, and said power
of attorney shall be deemed a power coupled with an interest and irrevocable so
long as any portion of the Debt is outstanding. Any money advanced by Lender in
connection with any action taken under this Section 5.3, together with
interest thereon at the Default Interest Rate from the date of making such
advancement by Lender until actually paid by Borrower, shall be a demand
obligation owing by Borrower to Lender and shall be secured by this Mortgage
and by every other instrument securing all or any portion of the Debt.


Section 5.4             Occupancy
After Foreclosure. In the event there is a foreclosure sale hereunder and
at the time of such sale, Borrower or Borrower’s representatives, successors or
assigns, or any other persons claiming any interest in the Property by, through
or under Borrower (except tenants of space in the Improvements subject to
leases entered into prior to the date hereof), are occupying or using the
Property, or any part thereof, then, to the extent not prohibited by applicable
law, each and all shall, at the option of Lender or the purchaser at such sale,
as the case may be, immediately become the tenant of the purchaser at such
sale, which tenancy shall be a tenancy from day-to-day, terminable at the will
of either landlord or tenant, at a reasonable rental per day based upon the
value of the Property occupied or used, such rental to be due daily to the
purchaser. Further, to the extent permitted by applicable law, in the event the
tenant fails to surrender possession of the Property upon the termination of
such tenancy, the purchaser shall be entitled to institute and maintain an
action for unlawful detainer of the Property in the appropriate court of the
county in which the Premises is located.


Section 5.5             Notice
to Account Debtors. Lender may, at any time after an Event of Default,
notify the account debtors and obligors of any accounts, chattel paper,
negotiable instruments or other evidences of indebtedness to Borrower included
in the Property to pay Lender directly. Borrower shall at any time or from time
to time upon the request of Lender provide to Lender a current list of all such
account debtors and obligors and their addresses.


Section 5.6             Cumulative
Remedies. All remedies contained in this Mortgage are cumulative and Lender
shall also have all other remedies provided at law and in equity or in any
other Loan Documents. Such remedies may be pursued separately, successively or
concurrently at the sole subjective direction of Lender and may be exercised in
any order and as often as occasion therefor shall arise. No act of Lender shall
be construed as an election to proceed under any particular provisions of this
Mortgage to the exclusion of any other provision of this Mortgage or as an
election of remedies to the exclusion of any other remedy which may then or
thereafter be available to Lender. No delay or failure by Lender to exercise
any right or remedy under this Mortgage shall be construed to be a waiver of
that right or remedy or of any Event of Default. Lender may exercise any one or
more of its rights and remedies at its option without regard to the adequacy of
its security.


Section 5.7             Payment
of Expenses. Borrower shall pay on demand all of Lender’s expenses incurred
in any efforts to enforce any terms of this Mortgage, whether or not any
lawsuit is filed and whether or not foreclosure is commenced but not completed,
including, but not limited to, reasonable legal fees and disbursements, fees of
any Rating Agency, fees related 



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to any
No-Downgrade Confirmation, foreclosure costs and title charges, together with
interest thereon from and after the date incurred by Lender until actually paid
by Borrower at the Default Interest Rate, and the same shall be secured by this
Mortgage and by all of the other Loan Documents securing all or any part of the
Debt.


ARTICLE
VI



MISCELLANEOUS TERMS AND CONDITIONS


Section 6.1             Time
of Essence. Time is of the essence with respect to all provisions of this
Mortgage.


Section 6.2             Release
of Mortgage. If all of the Debt be paid, then and in that event only, all
rights under this Mortgage, except for those provisions hereof which by their
terms survive, shall terminate and the Property shall become wholly clear of
the liens, security interests, conveyances and assignments evidenced hereby,
which shall be promptly released of record by Lender in due form at Borrower’s
cost. No release of this Mortgage or the lien hereof shall be valid unless
executed by Lender.


Section 6.3             Certain
Rights of Lender. Without affecting Borrower’s liability for the payment of
any of the Debt, Lender may from time to time and without notice to Borrower: (a) release
any person liable for the payment of the Debt; (b) extend or modify the
terms of payment of the Debt; (c) accept additional real or personal
property of any kind as security or alter, substitute or release any property
securing the Debt; (d) recover any part of the Property; (e) consent
in writing to the making of any subdivision map or plat thereof; (f) join
in granting any easement therein; or (g) join in any extension agreement
of this Mortgage or any agreement subordinating the lien hereof.


Section 6.4             Waiver
of Certain Defenses. No action for the enforcement of the lien hereof or of
any provision hereof shall be subject to any defense which would not be good
and available to the party interposing the same in an action at law upon the
Note or any of the other Loan Documents.


Section 6.5             Notices.
All notices, demands, requests or other communications to be sent by one party
to the other hereunder or required by law shall be in writing and shall be
deemed to have been validly given or served by delivery of the same in person
to the intended addressee, or by depositing the same with Federal Express or
another reputable private courier service for next business day delivery, or by
depositing the same in the United States mail, postage prepaid, registered or
certified mail, return receipt requested, in any event addressed to the
intended addressee at its address set forth on the first page of this
Mortgage or at such other address as may be designated by such party as herein
provided. All notices, demands and requests shall be effective upon such
personal delivery, or one (1) business day after being deposited with the
private courier service, or two (2) business days after being deposited in
the United States mail as required above. Rejection or other refusal to accept
or the inability to deliver because of changed address of which no notice was
given as herein required shall be deemed to be receipt of the notice, demand or
request sent. By giving to the other party hereto at least fifteen (15) days’
prior written notice thereof in accordance with the provisions hereof, the 



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parties hereto
shall have the right from time to time to change their respective addresses and
each shall have the right to specify as its address any other address within
the United States of America.


Section 6.6             Successors
and Assigns; Joint and Several Liability. The terms, provisions,
indemnities, covenants and conditions hereof shall be binding upon Borrower and
the successors and assigns of Borrower, including all successors in interest of
Borrower in and to all or any part of the Property, and shall inure to the
benefit of Lender, its directors, officers, shareholders, employees and agents
and their respective successors and assigns and shall constitute covenants
running with the land. All references in this Mortgage to Borrower or Lender
shall be deemed to include all such parties’ successors and assigns, and the
term “Lender” as used herein shall also mean and refer to any lawful holder or
owner, including pledgees and participants, of any of the Debt. If Borrower
consists of more than one person or entity, each is jointly and severally
liable to perform the obligations of Borrower hereunder and all
representations, warranties, covenants and agreements made by Borrower
hereunder are joint and several.


Section 6.7             Severability.
A determination that any provision of this Mortgage is unenforceable or invalid
shall not affect the enforceability or validity of any other provision, and any
determination that the application of any provision of this Mortgage to any person
or circumstance is illegal or unenforceable shall not affect the enforceability
or validity of such provision as it may apply to any other persons or
circumstances.


Section 6.8             Gender.
Within this Mortgage, words of any gender shall be held and construed to
include any other gender, and words in the singular shall be held and construed
to include the plural, and vice versa, unless the context otherwise requires.


Section 6.9             Waiver;
Discontinuance of Proceedings. Lender may waive any single Event of Default
by Borrower hereunder without waiving any other prior or subsequent Event of
Default. Lender may remedy any Event of Default by Borrower hereunder without
waiving the Event of Default remedied. Neither the failure by Lender to
exercise, nor the delay by Lender in exercising, any right, power or remedy
upon any Event of Default by Borrower hereunder shall be construed as a waiver
of such Event of Default or as a waiver of the right to exercise any such
right, power or remedy at a later date. No single or partial exercise by Lender
of any right, power or remedy hereunder shall exhaust the same or shall
preclude any other or further exercise thereof, and every such right, power or
remedy hereunder may be exercised at any time and from time to time. No modification
or waiver of any provision hereof nor consent to any departure by Borrower
therefrom shall in any event be effective unless the same shall be in writing
and signed by Lender, and then such waiver or consent shall be effective only
in the specific instance and for the specific purpose given. No notice to nor
demand on Borrower in any case shall of itself entitle Borrower to any other or
further notice or demand in similar or other circumstances. Acceptance by
Lender of any payment in an amount less than the amount then due on any of the
Debt shall be deemed an acceptance on account only and shall not in any way
affect the existence of an Event of Default. In case Lender shall have
proceeded to invoke any right, remedy or recourse permitted hereunder or under
the other Loan Documents and shall thereafter elect to discontinue or abandon
the same for any reason, Lender shall have the unqualified right to do so and,
in such an event, Borrower and Lender shall be restored to their former
positions 



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with respect
to the Debt, the Loan Documents, the Property and otherwise, and the rights,
remedies, recourses and powers of Lender shall continue as if the same had
never been invoked.


Section 6.10           Section Headings.
The headings of the sections and paragraphs of this Mortgage are for
convenience of reference only, are not to be considered a part hereof and shall
not limit or otherwise affect any of the terms hereof.


Section 6.11           GOVERNING
LAW. THIS MORTGAGE WILL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
LAWS OF THE STATE IN WHICH THE PREMISES IS LOCATED, PROVIDED THAT TO THE EXTENT
THAT ANY OF SUCH LAWS MAY NOW OR HEREAFTER BE PREEMPTED BY FEDERAL LAW,
SUCH FEDERAL LAW SHALL SO GOVERN AND BE CONTROLLING, AND PROVIDED FURTHER THAT
THE LAWS OF THE STATE IN WHICH THE PREMISES IS LOCATED SHALL GOVERN AS TO THE
CREATION, PRIORITY AND ENFORCEMENT OF LIENS AND SECURITY INTERESTS IN THE
PROPERTY LOCATED IN SUCH STATE.


Section 6.12           Counting
of Days. The term “days” when used herein shall mean calendar days. If any
time period ends on a Saturday, Sunday or holiday officially recognized by the
state within which the Premises is located, the period shall be deemed to end
on the next succeeding business day. The term “business day” when used herein
shall mean a weekday, Monday through Friday, except a legal holiday or a day on
which banking institutions in New York, New York are authorized by law to be
closed.


Section 6.13           Relationship
of the Parties. The relationship between Borrower and Lender is that of a
borrower and a lender only and neither of those parties is, nor shall it hold
itself out to be, the agent, employee, joint venturer or partner of the other
party.


Section 6.14           Application
of the Proceeds of the Note. To the extent that proceeds of the Note are
used to pay indebtedness secured by any outstanding lien, security interest,
charge or prior encumbrance against the Property, such proceeds have been
advanced by Lender at Borrower’s request and Lender shall be subrogated to any
and all rights, security interests and liens owned by any owner or holder of
such outstanding liens, security interests, charges or encumbrances,
irrespective of whether said liens, security interests, charges or encumbrances
are released.


Section 6.15           Unsecured
Portion of Indebtedness. If any part of the Debt cannot be lawfully secured
by this Mortgage or if any part of the Property cannot be lawfully subject to
the lien and security interest hereof to the full extent of such indebtedness,
then all payments made shall be applied on said indebtedness first in discharge
of that portion thereof which is unsecured by this Mortgage.


Section 6.16           Cross
Default. An Event of Default hereunder which has not been cured within any
applicable grace or cure period shall be a default under each of the other Loan
Documents.


Section 6.17           Interest
After Sale. In the event the Property or any part thereof shall be sold
upon foreclosure as provided hereunder, to the extent permitted by law, the sum
for which 



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the same shall
have been sold shall, for purposes of redemption (pursuant to the laws of the
state in which the Premises is located), bear interest at the Default Interest
Rate.


Section 6.18           Inconsistency
with Other Loan Documents. In the event of any inconsistency between the
provisions hereof and the provisions in any of the other Loan Documents, it is
intended that the provisions of the Note shall control over the provisions of
this Mortgage, and that the provisions of this Mortgage shall control over the
provisions of the Lease Assignment, the Indemnity and Guaranty Agreement, the
Environmental Indemnity Agreement, and the other Loan Documents.


Section 6.19           Construction
of this Document. This document may be construed as a mortgage, security
deed, deed of trust, chattel mortgage, conveyance, assignment, security
agreement, pledge, financing statement, hypothecation or contract, or any one
or more of the foregoing, in order to fully effectuate the liens and security
interests created hereby and the purposes and agreements herein set forth.


Section 6.20           No
Merger. It is the desire and intention of the parties hereto that this
Mortgage and the lien hereof do not merge in fee simple title to the Property. It
is hereby understood and agreed that should Lender acquire any additional or
other interests in or to the Property or the ownership thereof, then, unless a
contrary intent is manifested by Lender as evidenced by an appropriate document
duly recorded, this Mortgage and the lien hereof shall not merge in such other
or additional interests in or to the Property, toward the end that this
Mortgage may be foreclosed as if owned by a stranger to said other or
additional interests.


Section 6.21           Rights
With Respect to Junior Encumbrances. Any person or entity purporting to
have or to take a junior mortgage or other lien upon the Property or any
interest therein shall be subject to the rights of Lender to amend, modify,
increase, vary, alter or supplement this Mortgage, the Note or any of the other
Loan Documents, and to extend the maturity date of the Debt, and to increase
the amount of the Debt, and to waive or forebear the exercise of any of its
rights and remedies hereunder or under any of the other Loan Documents and to
release any collateral or security for the Debt, in each and every case without
obtaining the consent of the holder of such junior lien and without the lien or
security interest of this Mortgage losing its priority over the rights of any
such junior lien.


Section 6.22           Lender
May File Proofs of Claim. In the case of any receivership, insolvency,
bankruptcy, reorganization, arrangement, adjustment, composition or other
proceedings affecting Borrower or the principals, general partners or managing
members in Borrower, or their respective creditors or property, Lender, to the
extent permitted by law, shall be entitled to file such proofs of claim and
other documents as may be necessary or advisable in order to have the claims of
Lender allowed in such proceedings for the entire Debt at the date of the
institution of such proceedings and for any additional amount which may become
due and payable by Borrower hereunder after such date.


Section 6.23           Fixture
Filing. This Mortgage shall be effective from the date of its recording as
a financing statement filed as a fixture filing with respect to all goods constituting
part of the Property which are or are to become fixtures. This Mortgage shall
also be effective as a financing statement covering minerals or the like
(including oil and gas) and is to be filed for 



 69
 






 



record in the
real estate records of the county where the Premises is situated. The mailing
address of Borrower and the address of Lender from which information concerning
the security interests may be obtained are set forth in Section 2.18
above.


Section 6.24           After-Acquired
Property. All property acquired by Borrower after the date of this Mortgage
which by the terms of this Mortgage shall be subject to the lien and the
security interest created hereby, shall immediately upon the acquisition
thereof by Borrower and without further mortgage, conveyance or assignment
become subject to the lien and security interest created by this Mortgage. Nevertheless,
Borrower shall execute, acknowledge, deliver and record or file, as
appropriate, all and every such further mortgages, security agreements,
financing statements, assignments and assurances as Lender shall require for
accomplishing the purposes of this Mortgage.


Section 6.25           No
Representation. By accepting delivery of any item required to be observed,
performed or fulfilled or to be given to Lender pursuant to the Loan Documents,
including, but not limited to, any officer’s certificate, balance sheet,
statement of profit and loss or other financial statement, survey, appraisal or
insurance policy, Lender shall not be deemed to have warranted, consented to, or
affirmed the sufficiency, legality, effectiveness or legal effect of the same,
or of any term, provision or condition thereof, and such acceptance of delivery
thereof shall not be or constitute any warranty, consent or affirmation with
respect thereto by Lender.


Section 6.26           Counterparts.
This Mortgage may be executed in any number of counterparts, each of which
shall be effective only upon delivery and thereafter shall be deemed an
original, and all of which shall be taken to be one and the same instrument,
for the same effect as if all parties hereto had signed the same signature page.
Any signature page of this Mortgage may be detached from any counterpart
of this Mortgage without impairing the legal effect of any signatures thereon
and may be attached to another counterpart of this Mortgage identical in form
hereto but having attached to it one or more additional signature pages.


Section 6.27           Personal
Liability. Notwithstanding anything to the contrary contained in this
Mortgage, the liability of Borrower and its officers, directors, general
partners, managers, members and principals for the Debt and for the performance
of the other agreements, covenants and obligations contained herein and in the
Loan Documents shall be limited as set forth in the Note.


Section 6.28           Recording
and Filing. Borrower will cause the Loan Documents and all amendments and
supplements thereto and substitutions therefor to be recorded, filed,
re-recorded and re-filed in such manner and in such places as Lender shall
reasonably request, and will pay on demand all such recording, filing,
re-recording and re-filing taxes, fees and other charges. Borrower shall
reimburse Lender, or its servicing agent, for the costs incurred in obtaining a
tax service company to verify the status of payment of taxes and assessments on
the Property.


Section 6.29           Entire
Agreement and Modifications. This Mortgage and the other Loan Documents
contain the entire agreements between the parties relating to the subject
matter hereof and thereof and all prior agreements relative hereto and thereto
which are not contained herein or therein are terminated. This Mortgage and the
other Loan Documents may not be amended, revised, waived, discharged, released
or terminated orally but only by a written 



 70
 






 



instrument or
instruments executed by the party against which enforcement of the amendment,
revision, waiver, discharge, release or termination is asserted. Any alleged
amendment, revision, waiver, discharge, release or termination which is not so
documented shall not be effective as to any party.


Section 6.30           Intentionally
Reserved.


Section 6.31           Secondary
Market. Lender may sell, transfer and deliver the Note and the Loan
Documents to one or more investors in the secondary mortgage market (a “Secondary
Market Transaction”). In connection with such sale, Lender may retain or assign
responsibility for servicing the loan evidenced by the Note or may delegate
some or all of such responsibility and/or obligations to a servicer, including,
but not limited to, any subservicer or master servicer, on behalf of the
Investors (as hereinafter defined). All references to Lender herein shall refer
to and include, without limitation, any such servicer, to the extent
applicable.


Section 6.32           Dissemination
of Information. If Lender determines at any time to sell, transfer or
assign the Note, this Mortgage and the other Loan Documents, and any or all
servicing rights with respect thereto, or to grant participations therein (the “Participations”)
or issue mortgage pass-through certificates or other securities evidencing a
beneficial interest in a rated or unrated public offering or private placement
(the “Securities”), Lender may forward to each purchaser, transferee, Lender,
servicer, participant, investor, or their respective successors in such
Participations and/or Securities (collectively, the “Investors”) or any rating
agency rating such Securities (each a “Rating Agency”), each prospective
Investor and each of the foregoing’s respective counsel, all documents and
information which Lender now has or may hereafter acquire relating to the Debt,
to Borrower, any guarantor, any indemnitor, and the Property, which shall have
been furnished by Borrower and any Indemnitor, as Lender determines necessary
or desirable.


Section 6.33           Intentionally
Omitted.


Section 6.34           REMIC
Opinions. In the event Borrower requests Lender’s consent with respect to
any proposed action or Borrower proposes to take any action not otherwise
requiring Lender’s specific consent under the Loan Documents, which Lender
determines, in its discretion, may affect (i) the “REMIC” status of
Lender, its successors or assigns, or (ii) the status of this Mortgage as
a “qualified mortgage” as defined in Section 860G of the Internal Revenue
Code of 1986 (or any succeeding provision of such law), Lender reserves the
right to require Borrower, at Borrower’s sole expense, to obtain, from counsel
satisfactory to Lender in its discretion, an opinion, in form and substance
satisfactory to Lender in its discretion, that no adverse tax consequences will
arise as a result of the proposed course of action.


Section 6.35           Severed
Loan Documents. 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,
deeds of trust and other security documents (the “Severed Loan Documents”) in
such denominations and priorities as Lender shall determine in its sole
discretion, provided, however, that the terms, provisions and clauses of the
Severed Loan Documents shall be no more adverse to Borrower than those
contained in the Note, this Mortgage and the other Loan Documents. Borrower
shall execute and deliver to Lender from time to time, promptly after the
request of 



 71
 






 



Lender, a
severance agreement and such other documents as Lender shall reasonably 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 the aforesaid severance, Borrower
ratifying all that its said attorney shall do by virtue thereof; provided,
however, that Lender shall not make or execute any such documents under such
power until not less than three (3) days has passed after notice has been
given to Borrower by Lender of Lender’s intent to exercise its rights under
such power.


[THE BALANCE OF THIS PAGE WAS LEFT BLANK INTENTIONALLY]



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


	
   

  	
   

  
	
   

  	
  BORROWER:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  5 BECKER SPE LLC,

  
	
   

  	
  a Delaware limited liability company

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By: 

  	
  /s/ Mitchell E. Hersh

  
	
   

  	
   

  	
  Name: Mitchell E. Hersh

  
	
   

  	
   

  	
  Title: President and Chief Executive Officer

  



 


 


 


STATE OF New York


SS:


COUNTY OF New York


BE
IT REMEMBERED that on the 9th day of May, 2006,
Mitchell E. Hersh personally came before me, and this person acknowledged under
oath, to my satisfaction, that he is the President and Chief Executive Officer
of 5 Becker SPE LLC, a Delaware limited liability company, the entity named in
this document, and this document was signed and delivered by the entity as its
voluntary act duly authorized by a proper resolution of the limited liability
company.


	
   

  	
   

  	
  /s/ Marian J. Abbatepaolo

  
	
   

  	
   

  	
  Marian J.
  Abbatepaolo

  
	
   

  	
   

  	
  Notary Public,
  State of New York

  
	
   

  	
   

  	
  01AB4807522

  
	
   

  	
   

  	
  Certificate
  Filed in New York County

  
	
   

  	
   

  	
  Commission
  Expires November 30, 2006

  




 73














 


EXHIBIT A


Legal Description


All that tract and parcel of land situate, lying and
being in the Borough of Roseland, County of Essex, State of New Jersey and more
particularly described as follows:

Beginning at a point in the southerly sideline of Becker Farm Road, said point
being the northwesterly corner of Lot 13 in Block 30-1 as shown on a map
entitled, “Amended Final Map”, Bellemead Development Corporation and filed in
the Essex County Register’s Office on 5/19/81 as Filed Map No. 3463, said point
being distant 664.84 feet westerly along same from the extended intersection of
the southerly sideline of Becker Farm Road with the westerly sideline of ADP
Boulevard; thence


(1) Along the Westerly line of said Lot 13, South 39
degrees 37 minutes 49 seconds West 439.55 feet to the northerly line of Lot 12
Block 30-1 as shown on the above mentioned map; thence


(2) Along the westerly line of said Lot 12 North 48
degrees 45 minutes 58 seconds West, 32.97 feet to the northwest corner thereof;
thence


(3) Along the westerly line of said Lot 12 South 41
degrees 14 minutes 02 seconds West, 429.83 feet to the northerly line of Lot 2
Block 30-1 as shown on the above mentioned map; thence


(4) Along the northerly line of said Lot 2 North 48
degrees 45 minutes 58 seconds West, 420.10 feet to the southeast corner of Lot
10 Block 30-1 as shown on the above mentioned map; thence


(5) Along the easterly line of said Lot 10, North 39
degrees 37 minutes 49 seconds East, 733.60 feet to the southerly line of Becker
Farm Road; thence


(6) Along said side line on a curve curving to the
left having a radius of 717.16 feet an arc distance of 65.48 feet to a point of
tangency; thence


(7) Still along said sideline South 65 degrees 32
minutes 11 seconds East 415.49 feet to the point and place of beginning.


Also known as Lot 11 Block 30-1 as shown on a map
entitled “Amended Final Map, Bellemead Development Corporation, Borough of
Roseland, Essex County, New Jersey” recorded 5/19/81 in the Essex County
Register’s Office as Filed Map No. 3463.


This description is in accordance with a survey
prepared by Earl N. Strom, PLS for International Land Services, Inc., dated
2/28/06; last revised 4/11/06 job number 06-02-013:007A.


FOR INFORMATIONAL PURPOSES ONLY:


“In compliance with Chapter 157, Laws of 1977, premises
herein is Lot 11 in Block 30.01 on the Tax Map of the Borough of Roseland,
County of Essex, State of New Jersey.


 



 A-1














 


Exhibit B


(Outstanding TILC
Tenants and Applicable TILC Amounts)


	
  1.  Walder (as defined Section 3.8)

  	
   

  	
  $

  	
  152,205.09

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  2.  The Margolis Law Firm, P.A.

  	
   

  	
  $

  	
  4,066.58

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  3.  Toby Solomon, LLC

  	
   

  	
  $

  	
  1,350.26

  	
   

  



 



 A-1














 


EXHIBIT C


(Free Rent Tenant /
Monthly Allocated Amount)


1.  Walder Lease (Allocated Free Rent:
$112,866.08)


·                  Months: 2/1/2007 - 3/31/2007;
Allocated Amount: $38,708.00


·                  Months:
2/1/2008 - 2/29/2008; Allocated Amount: $35,450.08



 A-1