Exhibit 10.9


PREPARED BY AND UPON
RECORDATION

RETURN TO:


Winston & Strawn
LLP

200 Park Avenue

New York, New York

Attention:   Corey A. Tessler, Esq.


	
  Loan No.: 502856398

  	
   

  	
  210 Clay Avenue, Lyndhurst, New Jersey

  



 






210 CLAY 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

  	
   

  	
  63

  	
   

  
	
  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

  	
   

  	
  65

  	
   

  
	
  Section 6.1

  	
   

  	
  Time of Essence

  	
   

  	
  65

  	
   

  
	
  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

  	
   

  	
  66

  	
   

  
	
  Section 6.7

  	
   

  	
  Severability

  	
   

  	
  67

  	
   

  
	
  Section 6.8

  	
   

  	
  Gender

  	
   

  	
  67

  	
   

  
	
  Section 6.9

  	
   

  	
  Waiver; Discontinuance
  of Proceedings

  	
   

  	
  67

  	
   

  



 



 ii
 






 



 


	
  Section 6.10

  	
   

  	
  Section Headings

  	
   

  	
  67

  	
   

  
	
  Section 6.11

  	
   

  	
  GOVERNING LAW

  	
   

  	
  67

  	
   

  
	
  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

  	
   

  	
  68

  	
   

  
	
  Section 6.19

  	
   

  	
  Construction of this
  Document

  	
   

  	
  68

  	
   

  
	
  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

  	
   

  	
  69

  	
   

  
	
  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

  	
   

  	
  70

  	
   

  
	
  Section 6.31

  	
   

  	
  Secondary Market

  	
   

  	
  70

  	
   

  
	
  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 210
CLAY 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 Bergen, 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 SIXTEEN MILLION AND NO/100 DOLLARS
($16,000,000.00), 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 



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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 co-



 11
 






 



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.



 15
 






 



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:



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(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 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-



 25
 






 



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 



 30
 






 



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 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



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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 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 



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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, 



 40
 






 



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 



 43
 






 



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 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 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
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 and
the Rollover Reserve and shall be disbursed for payment of the items for which
other funds in the Replacement Reserve, the Free Rent Reserve, the Outstanding
TILC 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 



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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 $49,325.00 (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 $2,020.08 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 $18,750.00 on each Payment
Date (the “Rollover Reserve”) provided,
however, that Borrower shall not be required to make deposits to the
Rollover Reserve in any month to the extent that, after deducting therefrom any
pending requests for disbursements from the Rollover Reserve, such deposit
would increase the balance in the Rollover Reserve above $1,900,000.00. 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 relating to the Sony
Replacement Event (as defined below); (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 relating to the Sony Replacement Event; 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) such 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 relating to
the Sony Replacement Event 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 the event of evidence satisfactory to Lender of a Sony
Replacement Event, Lender shall disburse all remaining funds then-held by
Lender in the Rollover Reserve to Borrower 



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(after
application of same, in accordance with Section 3.6(a) above), within
fifteen (15) days after the delivery by Borrower to Lender of a request
therefor.


(c)  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 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).


(d) In
connection with this Section 3.6, the following definitions shall
apply with respect to a Sony Replacement Event:


“Sony Replacement Event” shall mean,
provided no Event of Default has occurred and is continuing, the occurrence of:



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Lender’s receipt of evidence in form and substance satisfactory to
Lender that Sony BMG Music Entertainment, a Delaware general partnership
(collectively, with its successors and/or assigns, “Sony”) has renewed and/or extended that certain lease
between Borrower, as landlord and Sony, dated as of December 23, 2004, as
same has been and maybe further amended and/or modified from time to time (the “Sony Lease”) of the premises at the Property leased to Sony
(the “Sony Space”) or entered into a new
lease of the Sony Space with a replacement tenant (“Sony
Replacement Tenant”), in either case, on economic terms at least as
favorable as those contained in the Sony Lease (including, without limitation,
for base rent in an amount equal to or greater than the then current base rent
set forth in the Sony Lease) and otherwise in form and substance reasonably
satisfactory to Lender and for a term expiring on or after July 11, 2016
(the “Sony Renewal Lease”), which evidence
shall include, without limitation, a copy of the Sony Renewal Lease and a
tenant estoppel certificate from Sony or the Sony Replacement Tenant, as
applicable, which shall be in form and substance satisfactory to Lender and
provide, among other things, that (i) Sony or the Sony Replacement Tenant,
as applicable, is occupying all of the Sony
Space, is open for business in its ordinary course and paying base rent of no
less than the amount being paid for the year prior to the expiration or
termination, as applicable, of the Sony Lease in accordance with the Sony Renewal Lease, (ii) all of
the obligations of Borrower under the Sony
Renewal 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 Sony or the Sony Replacement Tenant,
as applicable, for any tenant improvements at the Sony Space, and to Borrower’s best knowledge, the improvements
described in the Sony Renewal
Lease have been constructed substantially in accordance with the plans and
specifications therefor, lien-free, and have been accepted by Sony or the Sony Replacement Tenant,
as applicable, (iii) Sony
or the Sony Replacement Tenant, as applicable, is not then entitled to any
concession or rebate of rent or other charges from time to time due and payable
under the Sony Renewal 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 Sony or the Sony Replacement
Tenant, as applicable, under the Sony
Renewal Lease which are then due and payable, and (v) to Borrower’s best
knowledge there are no defaults by Borrower under the Sony Renewal Lease; and
in connection with a new lease to a Sony Replacement Tenant, Borrower shall
deliver or cause to be delivered to Lender, at Lender’s option, a
subordination, non-disturbance and attornment agreement from the Sony Replacement Tenant
in form and substance satisfactory to Lender.


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 $42,112.98 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 Sony.
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 Sony together with (x) copies of all
documentation required to be delivered by Sony to Borrower under the Sony Lease
as a prerequisite to Sony receiving its tenant allowance, (y) an estoppel
by Sony stating that the tenant allowance due to Sony is due and payable, that
Sony is in possession of its demised premises, is open for business and is
paying base rent under the Sony Lease, and that there are no material defaults
under the Sony Lease to Sony and (z) a copy of the check sent by Borrower
to Sony 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 $42,112.98. All
funds deposited into the Outstanding TILC Reserve shall be held by Lender
pursuant to the provisions of this Mortgage 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 Sony. 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 Sony 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 Sony, 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 $63,846.79 in connection
with the free rent and/or rent concessions due to Sony under the Sony Lease. 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 B attached
hereto for each such month for the number of months set forth on Exhibit B.


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 (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 



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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
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 



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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 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 



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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 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.



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(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.


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 



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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 (r) 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 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.



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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 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.



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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
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 



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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 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 



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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 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 



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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 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.



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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 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, 



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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 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:

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  210 CLAY 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 210 Clay 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

  
	
   

  	
   

  	
   

  	
   

  	
   

  



 















 


EXHIBIT A


Legal Description


 


All that certain tract,
lot and parcel of land lying and being in the township of Lyndhurst, County of
Bergen and State of New Jersey, being more particularly described as follows:


Beginning at a found 1/2”
iron rod on the easterly side of Clay Avenue, thence along the easterly side of
Clay Avenue from the southerly side of Wall Street West if both streets were
extended to their intersection point South 26 degrees 31 minutes 00 seconds
East, a distance of 296.35 feet to a point of a curve to the right; thence
along said curve to the right on the easterly right to way of Clay Avenue with
a radius of 455.00 feet, an arc length of 199.47 feet, a tangent distance of
101.36 and a delta angel of 25 degrees 07 minutes 06 seconds to a point; thence
South 01 degree 23 minutes 35 seconds East, a distance of 85.17 feet to a found
1/2” iron rod and to the true point of beginning; thence


1. Still southerly along
the easterly side of Clay Avenue South 01 degrees 23 minutes 55 seconds East
220.87 feet to a point of curvature; running thence


2. Still along the
easterly side of Clay Avenue on a curve to the right having a radius of 555.00
feet, an arc length of 161.22 feet to a point; thence


3. South 65 degrees 31
minutes 25 seconds East 569.99 feet to a point; thence


4. South 00 degrees 23
minutes 13 seconds East 6.64 feet to a point; thence


5. North 89 degrees 36
minutes 47 seconds East 67.08 feet to a point; thence


6. North 10 degrees 05
minutes 15 seconds West, 713.18 feet to a point; thence


7. South 79 degrees 54
minutes 45 seconds West, 454.02 feet to the point or place of beginning.


This description is in
accordance with a survey prepared by Earl N. Strom, PLS for International Land
Services, Inc., dated 2/27/06, last revised 4/7/06, job number 06-02-013:002A.


FOR INFORMATIONAL
PURPOSES ONLY:

“In compliance with Chapter 157, Laws of 1977, premises herein is Lot 10.01
(HM) in Block 230 on the Tax Map of the Township of Lyndhurst, County of
Bergen, State of New Jersey.



 A-1














 


EXHIBIT B


(Free Rent Tenant /
Monthly Allocated Amount)


1. Sony Lease (Allocated
Free Rent: $63,846.79; Monthly Amount: $9,120.97 for 4/1/2006 - 10/31/2006)


 



 A-1